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A brief overview of the most popular trading strategy - CFD trading

A brief overview of the most popular trading strategy - CFD trading

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What do you know about CFDs? Actually, it is not hard to understand the procedures of CFDs. If you are well-versed in share trading you will be able to understand CFDs too. The difference between CFDs and shares is that you need to have a small amount to hold your position. Of course, there are certain financial charges involved but most of the traders believe that CFDs are advantageous. If you consider the Singaporean traders they have succeeded in trading CFDs. If you want to become successful you should focus on learning the strategies related to it.  You need to bear the brokerage cost to trade CFDs and you can hold onto a position as much as you need. If you consider the overnight financing it's a must for you to be cautious about it. As for most of the traders, the CFDs are great so let us check out more about it.

 

Position trading

What is position trading? It means you will be positioned based on the information of intraday and with the intention of holding for two days or weeks.  You can place the trade when you get the trading alerts from the trading platform. You can use different techniques and methods to enter the trades if you are new to the market you should be careful when trading.

 

Zone trading

What is zone trading? This is when you learn the support and resistance levels and based on it you will be trading. You will be buying on the support level and selling near the resistance level. Experienced or naïve traders will be able to understand the support and resistance levels and it is the common strategy which is used by them.

 

Pairs trading

What are pairs trading? This is when you take advantage of the correlated shares which don't get the chance of the correlation. The traders who are highly skilled and have access to the charting software will be considering the pairs trading. If you are a novice trader you should not consider this until you become an experienced trader.

 

Hedging CFDs

What is hedging CFDs? This is when you protect the current position by taking the opposite trade. You will be able to protect the position in a fluctuating market and it helps to improve the portfolio. So, likewise, there are many important things which you should learn about CFD trading.

 

Diversification

There are many advantages in CFDs so among the advantages the best is diversification. You will be able to control the losses through diversification. You should keep in mind that it is important to risk only more than 2% as it will protect the account. If you can diversify the risks it will be the best way to trade successfully. If you learn more about CFDs you will become well-versed so understand that education is essential no matter what. You should consider both the advantages and disadvantages when trading CFDs so you will be able to become a professional trader.

 

Trading the financial instrument is a dynamic profession. As a professional trader, you will always have to stay tuned for the latest market news. Some retail traders often trade the market based on technical analysis but this is one of the most common mistakes that every novice traders make. Make sure that you learn about the fundamental analysis to get a clear overview of the market trend. Sometimes the traders find it hard to understand the fundamental news data but if you stick to this industry for few months then it will be very easy for you.

 

By now you know a lot about the different trading system. But no matter which trading system you follow to trade the market, always keep everything as simpler as possible. Focus on the advance risk management policy to save your investment.

[ Last edited by sandysr at 2017-9-21 15:22 ]

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