CFD Trading Tips for Limiting Risk with City Index Australia

SYDNEY, Australia, April 17, 2012 /PRNewswire/ --

Trading CFDs with City Index Australia can maximize a trader's market involvement from an initial deposit that is only a small percentage of the total contract value, this allows for easy access to thousands of markets 24-hours a day.

Whilst offering multiple benefits, trading CFDs on leverage can also come with great risk and you may not hold an interest in the underlying asset.

Follow our CFD trading tips to help manage your risk effectively and magnify your potential profits.

Orders

Through CFD provider City Index Australia, you can take advantage of helpful risk management tools.

When placing a trade, it is important to consider applying a stop loss order.

You can choose between a Standard and Guaranteed Stop Loss Order (GSLO). The latter offers you the greatest protection, particularly at times of market gapping and slippage, making it the most effective risk management tool available.

A GSLO closes out a position at a trigger value set by you, regardless of the aforementioned gapping or slippage occurring. For this service, you do incur a small charge.

Let us look at an example using the Rio Tinto CFD.

Say you buy 200 Rio Tinto CFDs at $62, and highlight $58 as your maximum loss level.

It will cost you a premium of $37.20 to place the GSLO.

Should Rio Tinto reach $58, the City Index Australia systems will automatically close out your trade at this level, to prevent you from incurring any further losses.
So, for example, if negative copper production figures push Rio Tinto lower to $56, you needn't worry as the City Index Australia systems have automatically closed your position out at $58.

CFD Trading Strategy: Analyse

Prior to placing a trade, you must ensure that you fully understand your chosen market and how it moves.

In the example above, you may have thought that there was a possibility that the market's price may fall as copper production figures would soon be announced, which could be negative.

As a result, you were prepared. This shows how thorough analysis of your market is fundamental to your success.

Through both technical and fundamental analysis, you can familiarize yourself with how your chosen market moves through historical charts, as well as economic factors such as financial news and events that could potentially affect your market's price movement.

By understanding a market, you have the upper-hand to react quickly and correctly when news emerges, such as the example shown above.

Summary

CFD trading with City Index Australia offers traders easy access to thousands of financial markets and various risk managements tools to help limit risk whilst trading with a leverage product.

It is advisable to utilise their suite of trading education tools and resources prior to placing a trade to familiarise yourself with trading CFDs and the City Index Australia trading platform.

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.

City Index is a leading global provider of margined foreign exchange and CFD trading. As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. To learn more visit: http://www.cityindex.com.au/

SOURCE City Index Australia