Online CFD trading is not inherently less risky than other instruments. But it offers much better efficiency. If used with boldness and skill, it makes money!
This article is originally referred from XTrade Official Blog.
Online CFD Trading Can Make Millions over Few Years!
Online CFD trading can indeed enable wise traders to make millions. Gradually over few years. This is because the efficiency is so good, that profitability is maximized.
And not only on profitable trades. But CFDs make it possible to hedge losing trades, and minimize the losses. In ways that other instruments never really can. In the hands of a beginner trader, you will likely see no success with CFD trading. And you will definitely not see any profitability with any other instrument, such as futures, options or spread betting.
This is because beginners make all kinds of mistakes. And even the best beginner traders tend to make money trading from Monday through to Thursday, only to lose it all on Friday. Markets are harsh, unforgiving, and offer no easy way to making millions, period! But wise traders have been through long and painful learning curves. They are able to predict around 30% of market direction. And so they are able to make money consistently.
Their profitability is much higher when trading through CFDs. At least 50% higher, in the majority of cases.
And in some cases as much as 80% higher! This is because most markets moves are small in magnitude and futures, options and spread betting all fail to fully capture the move. CFDs capture every penny from start to finish, because they have the most linear pricing. Online CFD brokers make this possible through the infrastructure and the way they operate.
Predicting the Markets for Online CFD Trading
Profitable online CFD trading requires having a relaxed mindset. And also being a specialist. Commodities, as well as commodity related stocks and currencies are the best markets for beginners. Commodities are easier to predict because there is only as much supply as the producers can put out.
You cannot print more of any given commodity to meet rising demand. You cannot replace one commodity with another. Whereas with many currencies and stocks this can happen. Commodity prices are determined by supply and demand. And if supply is known, which in most cases it is. Only demand is left to assess. In the case of crude oil and gold, rising long term demand helps increase supply.
Because rising prices make it economically viable to extract crude oil and gold, from hard to reach reserves. This fundamental force of demand, is always present. And the week to week trend in the market will sooner or later align with the direction of demand.
Beyond all this, a new trader has to become a commodity specialist, and dig deeper into the inner workings of a commodity market. And this is the easiest possible way to making serious money. Every online CFD course deals with some market, which is more or less impacted by some commodity.
Go for Trades Lasting Few Days or More But Pay Attention to Market Makers’ Actions
Traders seeking to make money in online commodity trading through CFDs, should focus on day to day trading. And not exclusively on day trading.
But there is nothing stopping the trader from combining commodity stocks, and level 2 stock trading. By choosing commodity related stocks, and then seeking clues for breakouts. In the level 2 quotes, many false price movements and fake trends can be avoided.
Usually, the commodity in question will move first, and the impacted stock will move somewhat later. If the stock however is very strongly correlated to the commodity price.
Then the two markets will be moving at the same time. The commodity market always carries more weight. And will provide clues as to where the related stock is likely to go next. Level 2 information can help reveal the actions of the market makers, and their true intentions. CFD traders trade these stock price movements very efficiently, and when the underlying trend becomes clear.
Every counter trend move on the stock, is a golden opportunity! This is how it is possible to make consistent profits, week after week. The task of working with level 2 data is a little bit difficult, but is also much more interesting than the typical, weak and often ambiguous classic price charts.
Original Source: XTrade Official Blog