CFD Trading Strategies for Beginners
27 Apr, 2012, 01:30 ET
LONDON, April 27, 2012 /PRNewswire/ --
With CFD trading provider City Index, investors can access thousands of trading instruments to - including share CFDs, currencies (FX), commodities and indices. As such, deciding on which market to trade could be daunting for some.
CFD Trading Strategy
Before you place a CFD trade, you must create a comprehensive trading strategy.
This strategy should take into account the planning of your trades; including entry points, stop losses and limit orders. As well as a format whereby you can keep track of and measure the success of each trade.
Experienced and professional CFD traders utilise the various City Index trading platforms - including browser-based and mobile - using their trading strategy with the aim of limiting risk (by way of stop loss orders) and locking in profits (by way of limit orders).
Their trading strategy is not only supported by orders, but also thorough analysis of their chosen CFD markets, such as technical and fundamental analysis.
Manage your Trading Risk
The first tactic in managing your trading risk is to apply stop losses to your City Index CFD trading account.
When placing a trade, choose between a Standard and Guaranteed Stop Loss Order (GSLO); with the latter offering the greatest protection, specifically if gapping occurs in your chosen market.
A GSLO is an order to close out a position at a level prearranged by you.
Guaranteed Stop Loss Order Example: In this example, let's say you want to 'go long' and buy following some positive news regarding the price of your chosen market - UK 100. You decide to buy 1 CFD of UK 100 at 5900, but do not want to risk losing more than £200 on your trade.
Therefore, you set up a GSLO at 5700 (200 points lower than the price you buy at).
In the event the market moves against you and hits your GSLO of 5700; your trade would be automatically closed out, preventing you from incurring any further losses.
There is a small charge for providing this added protection - this can vary across different CFD markets.
Why trade with City Index
Markets that were once only accessible to traders through more conventional forms of trading are now accessible to retail and individual investors through City Index.
Trading CFDs with City Index will allow you to access over 12,000 markets such as indices, shares and currencies with low equity commissions, tight spreads and low margins from 1%.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, contracts for difference (CFDs) and, in the UK, spread betting.
We constantly look to improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support. Visit http://www.cityindex.co.uk/ for more information.
SOURCE City Index
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