How to Improve your CFD Trading Education
About our CFD Trading Education: Trading Lounge is a leading provider of practice based learning in technical analysis, CFD trading strategies and trading for professional development in Trading CFDs.
CFD Trading Education 01
TECHNICAL ANALYSIS, FREESTYLE
TRADING LEVELS CONCEPT
The Trading Levels methodology should be the first step in your TradingLounge journey, if you want to improve your trading and analysis, this simple concept is a proven process to knowing when to get into and out of a market, It's another trading edge to place in your trading toolbox. Plus its free for you.
What can the Trading Levels do for me? Because the trading levels deliver a great insight into market support and resistance, you will have a much better understanding where to trade from and to.
How do they work? Markets are trends and corrections of different degrees, each degree of trend and correction tends to occur between one price and the next of the same price degree. So in a nutshell, expect a larger correction across $10 than $7. the trading levels accounts for every price point within its price ratio matrix. The TradingLevels are divided on a ratio, in order; Major levels, Medium levels, Minor levels, Subminor levels etc. So they can be used for trading large trends or scalping.
GO TO TradingLevels Video Course (please note these videos are based on stocks)
RN Elliott one of the pioneers of technical analysis immersed himself in the records of the stock market of the early 30s. He came up with his “Elliott Wave Principle” as a result. He published his findings in 1938.
TradingLounge's Elliot Wave education moves beyond the classic chart patterns, it accounts for linking all patterns together and labeling for future trend direction.
GO TO Elliott Wave Tutorial
PUMP UP THE VOLUME
Volume links market psychology and price together, understanding how to read volume helps confirm the direction of the market.
CFD Trading Education 02:
TECHNICAL ANALYSIS, MECHANICAL
CFD Trading Strategies
These systems (Daily/Weekly Robo 1, Daily/Weekly Robo 2 and the Switch) form a simplified trading strategy that has all the trading rules build in, that is, entry, stop, trailing stop and exit. Robo Strategy Education Topics for Members include
• The Day Trading Systems
• Psychology of Systems
• Rules & Tactics
• Day Trading with Daily Robo – FAQs
Here we'll start you with Robo 2 — "End of Day Short Term Trading" —perfect for CFD Trading because its the most simple before moving onto Robo1 and The Switch.
Technique for buying on lows and selling at highs safely. Very like the Robo but with a larger pattern set up as the driver, so it’s a pattern recognition set up, it will have clear entry, stop, trailing stop, the exit can be via the trailing stop or a target price.
3. TREND TRADING
Combining Elliott Wave, TradingLevels and Volume for Trade Setups
CFD Trading Education 03:
We'll be covering your important questions:
How much capital is required?
How much should I risk trading CFDs?
How many CFDs should I buy?
Do I need a Share/CFD Trading Portfolio? Yes, we have the software to manage your CFD Trades Professionally
You should always be aware of the capital you have available and be sure to retain a sufficient base to meet your goals and, in the worst case scenario, cover any losses. This goes hand in hand with risk management.
Never trade more than you can afford to lose. Your overall strategy should contain realistic limitations on leverage, trade size and capital outlay. No one knows your situation and capabilities better than you do, so come up with some appropriate guidelines that balance risk with your end goal and adhere to them as much as possible. In trading, you are the sole person in charge of your account, so you are also responsible for managing the amount of risk you expose yourself to.
Defining a strategy will help you guide you towards making trades of an appropriate size and, in turn, help to ensure you don’t overreach by trading too big. The trade sizes you feel are appropriate will be dependent on your available capital and approach to risk
Trade analysis and monitoring
Regularly monitoring the markets will put you in a better position to take action on trades, if any is needed. This is especially important if you are using high leverage where small changes can lead to big losses. In those cases, immediate action can make a big difference. Post-trade analysis of all your trades is equally important as it helps you see the things you do well, along with those things you don’t do so well.
Risks of CFDs
The main risk attached to CFD trading relates to leverage. When you use leverage to trade, you’re exposing yourself to greater levels of risk and, if trades go against you, you may find you lose more than your initial investment.
Like any form of trading, CFDs should not be viewed as a get rich quick scheme. It requires knowledge, skill and a high level of involvement. Diversification and spreading trades across different instruments can help mitigate risk and avoid a ‘putting all you eggs in one basket’ scenario
CFD Trading Strategies & Tips
Every CFD trader will have their own objectives, meaning no one strategy can suit everyone. However, there are some general tips that apply to anyone wanting to trade CFDs.
If you’re not using a Stop Loss, you’re not trading responsibly. This is a safety net in the event that markets conditions work against you and it will help protect your account to some degree. The tool is built in to the MT4 trading platform so there’s no excuse not to put it in place.
Commodities are basic goods that have been used in commercial trade as part of the global production chain, in many cases for hundreds of years. They include raw materials, primary agricultural products, base and precious metals, crude oil and more.
Commodity CFDs give you the opportunity to trade on the movements in these factors of production or stores of wealth without the need to take, or make, physical delivery of the commodity specified.
You can trade a uniform amount of the specified commodity, with a maturity date at a certain point in the future – or at least a rollover date – without the need to physical take receipt of the commodity. In other words, you’re not buying or selling a physical good, for example a kilogram of gold, a barrel of crude oil or a warehouse full of copper. All you’re doing is trading on the real price movements of the commodity in the market, in whatever direction you want.
Individual stocks trading on global exchanges are usually grouped into some kind of index. Think of the names you are familiar with; The Dow Jones, NASDAQ, Nikkei, FTSE and S&P. The ASX (Australian Securities Exchange) – or SPI 200 as the CFD is known – is the local version of these big global indexes.
Because they group the shares of their constituent companies, Indexes are an effective way to measure the collective value of certain sections of the stock market. For example, the Dow Jones represents 30 large publicly owned companies based in the USA; the Nikkei represents the top 225 blue-chip companies on the Tokyo Stock Exchange; the SPI 200 represents the top 200 companies on the ASX, the China A50 represents the top 50 companies in China and the Eurostoxx 50 represents the top 50 companies in Europe.
As we know, CFDs do not require the purchase of an asset, so when you trade Index CFDs you are simply following the price movement of the index as it rises or falls.
Types of CFDs
CFDs are known as derivatives because their value is derived from the real value of a separate asset like a stock or commodity. There are several categories of CFDs.
The most commonly traded CFDs involve shares or stocks. Ordinarily, when you trade stocks you are buying into a company and your profit will depend on that company improving its stock price. But with share CFDs you do not own stock and are simply trading on the price movement of those stocks, either up or down.
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