Do Professional CFD Traders Use Guaranteed Stop Losses?

By William Potter

With market volatility at an all-time high, many cautious traders and investors are looking into the possibility of using Guaranteed Stop Losses in order to protect catastrophic losses to their trading account. Today we will have the look at the role of a professional CFD trader and see whether or not they use guaranteed stop losses.

What is a guaranteed stop loss?

First we will discuss the role of a guaranteed stop loss and how some people use them in order to protect their portfolio. A guaranteed stop when trading CFDs enables you to minimise your worst case scenario by capping the downside stoploss. As an example if you were on a stock that is dual listed like BHP, then you will know that BHP has a large tendency to gap each day.

The 5% rule

Most CFD brokers allow you to place your guaranteed stop loss around 5% away from the current price. So if BHP was trading at $30 then you could place your guaranteed stop loss no closer than $28.50. So if the next day BHP happened to open at $28 then you would be guaranteed by the CFD broker to get stopped out at $28.50. For wildly fluctuating markets a guaranteed stop loss can be quite useful.

So do Professional Traders use Guaranteed Stop Losses?

One of the common character traits of professional traders is the fact that they love to minimise the day to day running costs of their business at every possible opportunity. Those traders who use a guaranteed stop loss or GSL usually incur a brokerage fee 3 to 5 times higher than your standard brokerage.

Professional CFD traders know that to stay in the game long term they need to minimise their losses and maximise their gains and trade at relatively low levels of leverage. Due to the fact that most professional traders are experts at money-management they will tend to ignore and not use a guaranteed stop loss.

Instead, a professional CFD trader will be well aware of their exposure to the market at any one time and will look to reduce positions if they see fit or if in fact volatility increases. So instead of using guaranteed stoplosses a professional trader will minimise their risk through correct position sizing and appropriate stop losses.

Discover how to get Insurance on your Stock Market Portfolio and read the full details on How to Trade Safely with Guaranteed Stop Losses

Learn more about the CFD revolution by going to http://www.learncfds.com/

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How Many Different CFD Trading Systems Are Available to Make Consistent Profits?

By William Potter

The number of CFD trading systems is endless but what we are going to look at today are the key components of a CFD trading system and what you might like to focus on when you first get started. The mere fact that you are searching for a CFD Trading System is proof enough that you moving to the next stage of becoming a Professional & Successful CFD Trader.

What is a CFD trading system?

When we look to get started and build our own CFD trading system it is important to have the following components built into it.

• Entry

• Exit (both initial stop and in-profit stops)

• Risk management

Whilst most new traders focus 95% of their time on the entry you might be pleased to know that statistically only around 20% of your overall success comes from the ideal entry point. The next component of your CFD trading system is your exit and it’s vital to have both an initial stop, sometimes referred to as a protective stop, and an in-profit stop.

The last component of a successful Contracts for Difference (CFD) trading system is risk management and it is here that you will determine how many CFDs to buy and the maximum loss you are willing to take. Now as you can imagine the combinations of entry, exit and risk management are literally endless. The number one trading coach to turn to when it comes to risk management is Dr Van Tharp and his book trade your way to financial freedom is a must-read bestseller.

What to focus on in the beginning

The most critical element to get started with as you begin your journey to CFD trading success is to determine your ideal timeframe. This simply means you must know what period of time you are looking to capture your profits over. In addition to this it includes knowing the available hours that you have to trade.

Another suggestion when you first start out is to trial as many different varieties of trading systems as you possibly can. The reason for this is that we all have different psychological profiles and largely we are all better suited to one style of trading over another. As a result what you may want to do is trial several different trading systems or even dozens of different trading systems and find the one that sticks.

Tiger Woods does it

This strategy would be no different to a professional golfer, like Tiger Woods, trialing several different types of drivers in order to find the one that suits his game perfectly. As they say the definition of insanity is doing the same thing over and over again and expecting a different result. Unfortunately, most new traders either learn from a friend or pay thousands of dollars to learn that one specific style of trading only to discover that that style of trading does not fit their psychological profile or even their ideal timeframe.

So as you can see finding the ideal CFD trading system comes down to identifying your ideal timeframe and trialing dozens of different approaches to profit from the markets.

Action: Discover the 7 most Critical CFD Trading Tips and 2 of the most common CFD Trading Strategies. Learn more about the CFD revolution by going to http://www.learncfds.com/

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What is an Option?

When people first start trading stocks and winning, it doesn’t take long to figure out that if they used leverage they would be much better off. Traditionally, options are the next step traders would move to to satisfy the hunger for more leverage.

Option Basics

An option gives you the right, but not the obligation to own a stock at a set price at a set time in the future. It sounds a little convoluted but after a while you can pick them up.

Another alternative to trading Options is to consider Contracts for Difference as they are considerably easy to understand compared to options. There is a great article comparing CFDs vs Options and it outlines all the advantages and disadvantages of each.

What is a CFD?

Basically a Contract for Difference is exactly like trading the stock market except you need a small amount of money up front. There are other subtle differences like CFD financing and CFD leverage but apart from that, if you understand trading stocks you will understand trading CFDs very quickly.

Discover 7 CFD Trading Tips and CFD Strategies here.

Slumdog Millionaire

Having just come back from watching Slumdog Millionaire I can’t stop to think about all the incredible advantages we have living here in Australia compared to say those living in India, in the slums.

As a CFD trader we might complain to our CFD broker about a bad fill or being slipped 5 pips on a Forex trade, but that certainly pails into insignificance when you realise some little kids are fighting for their lives every single day.

Imagine as a youngest getting chased by cops (the bad guys) or being saved by merciless criminals only to burn your eyes so people have pity on you in order to earn more tips.

Next time your CFD Strategy doesn’t quite hit payday for you, just take some time to be grateful for the simple fact that you actually are doing well enough to even have a CFD account with ‘spare’ investment money to throw around.

On a more positive note, watching that movie may inspire your CFD Trading to step up to the next level of success in order to find extra money to help overcome the incredible poverty some people experience in the poorer countries.

Regardless of what happens I am extremely confident that you will be inspired, shocked, overwhelmed, happy, ecstatic, sad and relieved to have watched Slumdog Millionaire.

The top 3 ways to get started with Contracts for Difference or CFDs

Today we’ll take a look at the top 3 ways to make a successful start when looking to trade Contracts for Difference.

1. Websites
2. Seminars
3. CFD books

Before we get into that its important to establish what a Contract for Difference (CFD) is. A CFD is exactly like trading shares except you need a small amount of money up front. There are a couple of other subtle differences like CFD financing and CFD leverage but for the most part they are just like trading the normal stock market.

The good news is if you understand how to trade stocks then you will pick up CFD trading very, very quickly. The CFD strategies are exactly the same but the time frames are generally a little shorter due to the CFD financing.

Websites

A great place to start to learn about trading CFDs is online and a huge resource of information is available at LearnCFDs.com They provide an amazing amount of free information to get you started.

Seminars

Keep your eyes out for free introductory CFD seminars at a location near you. Most of these run for 50 mins to 1.5 hours and cover the general basic information about CFDs and a rundown on the CFD brokers trading platform. Keep in mind there will be a sales spiel at the end, but its a small price to pay for getting a basic education on trading CFDs.

CFD Books

The last method of learning more about CFDs is via CFD books. Jeff Cartridge has written an excellent book along with Eva Diaz and Cat Davey. They all relate to CFD trading specifically and will teach you a heap about this market and how best to trade it.

Good luck.

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