In this article, you will read about trading CFDs on stocks. About martingale, soft martingale and stock market averages. And also learn about the appropriateness of using software trading.
CFDs are contracts for difference – derivatives for making money on changes in the value of the underlying asset that appeared on the London Stock Exchange. CFD contracts allow the broker’s clients to trade shares of different exchanges from one account using intraday strategy, as well as medium and position trading.
On the stock exchange, stock speculation within the day is rarely used. Significant commissions serve as a hindrance; position restriction when trading on sell and leverage is a maximum of 1: 3. CFD – contracts have no restrictions when trading on sell, the speculator bears the costs of the spread only, leverage reaches 1:20.
The key to success with intraday trading depends on the price change of the selected instruments. Stocks should respond quickly to news, keeping the “general” trend during the afternoon session. The parameters by which such securities can be recognized: volatility, average daily or annual change in price as a percentage.
When a lagging stock breaks the lead
CFDs on shares are divided by world exchanges, each of which has its own index, calculated on the basis of liquid securities. This is an indicator of the general economic trend, with which virtually all stock assets of the exchange correlate.
A speculator, before starting a trading session by searching for outsiders who are behind growth, can identify “stocks-rockets.” These outsiders, correlated after diverging from the overall dynamics, can demonstrate an impressive rally.
Trade-in a “familiar zone”
In order not to become a hostage to his ignorance, in which any technique and technique is powerless, a trader should trade in shares known to him. Negative or encouraging data on corporate profits, a change in its management, mergers will lead to changes in the value of shares by several percents per day. So, the sample should contain eminent brands. Transnational corporations are always “at the hearing”, any event – good or negative will be covered in the media. News “bypasses” companies that are insignificant for the global economy; a speculator can “catch a spike” within a day without identifying the cause of the CFD drop in an unfamiliar company.
Martingale and the Soft Martingale
This trading technique involves doubling the trading volume in the event of a failed transaction. If Forex martingale is used relatively actively, although not without risk, then on the stock market this trading technique is not recommended. In case of failure, the “soft” martingale does not imply doubling the rate but increasing it by 20, 30 or 50%. But such an approach will not always be effective.
On the stock market, averaging is less dangerous than on the currency market. Sometimes averaging gives a good result. It is extremely dangerous to average your positions and get caught in a bear market. Suppose you bought stocks at 140 dollars, then bought another at a price of 135 dollars. It is possible that the shares will continue to go up, and it will end with an increase in capital in your account. If the stock becomes cheaper, and you buy more and more when its price drops by $ 5, then nothing can remain of your account. And yet, if for some reason you have taken the path of averaging, then follow this path to the end, and do not exit the deal with huge minuses. Such advice is also relevant for martingale trading.
Japanese candles are said to be harbingers of the future. They were opened to the world by one Japanese who invented them to predict the future price of rice. With their help, they try to determine the yield, weather forecast, the movement of stock prices, currencies, goods, etc. “Rising star”, “shooting star” is the favorite candles of traders on the daily chart. The combinations of candles “bearish grip for the belt” and “bullish grip for the belt” are also very informative.
Trading with an unknown program that you found on the Web is unreasonable. As a rule, all such “miracle systems” are based on the martingale technique. Not surprisingly, such a trade ends badly. Finding a trading program for free on the Internet is easy. It’s hard to find anything worthwhile. Traders who know their business, argue that among free programs on the Internet, less than 1% may be at least something interesting for speculators.
If you are stressed during trading, then you can develop your own trading system and write it down as a program. To do this, it is better to attract a professional programmer, and not do everything yourself. Programs work well in the early days of the new bull market. Then they become less useful.
Hope when trading CFDs
What should a market trader hope for? On discipline and on your winning trading technique. Have you tested your trading methodology for long time periods? Do you have an advantage over the market? If you do not know, then the market will prevail over you. Did everything go wrong according to your scenario? It makes no sense to hope for something: you need to respond to the movement of the chart. The market has puzzled you: reduce trading volumes. Do it again and again. Decreasing your position is unpleasant, but necessary. Otherwise, the market will destroy you. Remember: hope is your enemy!