CFD Strategy -Trading Strategies using Contracts for Difference (CFDs)

The best trading strategy is the one that suits you

CFD Strategy 

There are hundreds of different CFDs trading strategies to choose, covering all risk profiles. Most people believe that there is a single trading strategy that can make everyone rich, in a matter of months. That is not true. The best trading strategy is the one that suits you. The same trading strategy that can make someone rich, can make another trader poor.

 

Categories of CFD Trading Strategies

These are all key categories of Long & Short CFD Trading Strategies:

  • Scalping Trading Strategies

  • Intraday Trading Strategies

  • Automated CFDs Trade Strategies

  • News trading CFDs Trading Strategies

  • Hedging Trading Strategies

  • Zone trading CFDs Trading Strategies

  • Pairs trading CFDs Trading Strategies

  • Swing Trading Strategies

  • Position Trading Strategies

  • Carry Trading CFDs Trading Strategies

  • Long-Term CFDs Trading Strategies

  • Dividend stripping Trading Strategies

Create Free and Export Indicators for MT4, MT5, or TradeStation to trade Forex, Shares, Indices, and Commodities

 

The Concept of Succesful Trading -Formulating Successful Strategies

These are some key variables determining the adequacy of a trading strategy for a particular trading profile.

Key Variables {(i) to (v)}

(i) Experience in derivatives trading, especially as concerns using high capital leverage

(ii) Knowledge and experience in the asset classes involved (Forex, Indices, Metals, etc.)

(ii) Available time to be devoted for implementing a trading strategy (very important)

(iv) Risk profile of the trader (how much can he afford to lose)

(v) Character of the trader / ability to concentrate during choppy market conditions

 

Trading Strategy and Basic Steps for Succesful Trading

These are some basic steps before applying a trading strategy:

(1) Define your trading profile according to the above five key variables {from (i) to (v)}

(2) Start reviewing different trade strategies and focus only on those that may suit your trading profile

(3) Find a CFD broker that offers the best trading terms for those particular strategies (check below for more on that subject)

(4) Sign a Demo Account with that particular CFD broker and test the performance of your selected strategies

(5) If you are satisfied with the results, open a Real Account with the same broker, and start trading on micro lots (1 lot =$1,000)

(6) If you are satisfied with the results, start trading on standard lots (1 lot =$100,000)

 

Selecting CFD brokers based on the chosen trading strategy

Whatever strategy you choose to apply you need to be aware of the trading spreads and the overnight financing cost (SWAP rates) you are going to pay.

(i) If you select a scalping or another type of intraday strategy, you need to select a CFD broker offering the tightest spreads for the asset classes involved.

(ii) If you apply a Long-Term or Carry Trading strategy, you need to start by choosing the CFD broker offering the most favorable SWAP rates for that particular asset. The overnight financing for holding a certain trade position may be positive or negative.

Compare CFD Brokers: http://cfdagent.com/brokers/compare-cfd-brokers

 

Zero Spread Account

 

Selecting between promotions based on the chosen trading strategy

CFD brokers offer good promotions for opening a new trading account with them. You can take advantage of these promotions and make the implementation of your trading strategy easier. The key when choosing trading promotions is to determine the volume activity generated by your trading strategy, as follows:

(a) If your trading strategy will generate high volume activity (scalping, intraday, or similar trading strategy) then you need to join a rebate plan. A rebate plan can reduce 20-30% your trading cost. Joining a rebate plan is free of charge and it can really make the difference in the long-run.

More on rebate plans: www.Forex-Rebates.com

(b) If your trading strategy is based on positional trading (Swing, Carry, Long-Term strategies) then it will not generate high trading volumes. In that case, search for a credit bonus. This bonus will be used as margin if your capital is lost. Usually, a credit bonus matches 100% your first deposit. Using 100% credit bonus means you can deposit 50% lower and have the same size trade position (cutting your risk 50%). The key here is to make sure that the credit bonus you will receive can be used in a negative account balance (ask your broker via email before making the initial deposit).

Key Notes

(i) a rebate plan is in general more important in the long-run than a credit bonus,

(ii) almost always, you can combine a Rebate Plan with a Credit Bonus (one doesn't cancel the other),

(iii) a credit bonus can be useful as extra margin (minimizing your deposit requirements),

(iv) make sure your credit bonus can be used in negative account balance (otherwise, it is completely useless).

 

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CFD Strategy -Trading Strategies using Contracts for Difference (CFDs)

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