CFD Forex Trading: Leveraging For Huge Profits By Ade Adewolu http://ezinearticles.com/?CFD-Forex-Trading:-Leveraging-For-Huge-Profits&id=5304238
Trading multiple currencies using Contract for Difference (CFD) is a highly leveraged system that can bring unimaginable profits to the trader as a result of the leveraged factor in trading. If, for any reason the trade goes against the investor, the leveraging power is also there to swallow the investor's funds. It is popularly referred to as a double-edged sword that must be carefully handled. Having a good understanding of the CFD risks and opportunities give you - the trader - a better frame of mind. In understanding the risks, it is easier to mitigate them by arming yourself with appropriate trading strategies trading strategies 路 To minimize the risks 路 Fear and greed are the most common factors that lead new and inexperienced traders to losses in share-trading, Forex, futures or any other trading instruments. 路 The best financial education you can have is to know how to overcome your emotion. This would bring out of you, a more successful CFD trader who avoids most CFD risks and trades for huge profits daily. Top risks to know and plan to mitigate are: - Trading stocks or instruments you have not fully studied or not familiar with - Short-selling stocks against the trend - Inadequate education about CFD leverage and how to safely and profitably use your account - Trading too large after successive wins - Wiping out your CFD trading account Get your head around CFD Leverage: Any savvy investor/trader knows that you - the trader - control the amount of leverage that you have in your account. For mathematical simplicity: CFD Leverage = Total Exposure/Account Size Hint: If you are a beginner trader, it is highly recommended that you start small: eliminate or suspend leverage altogether - if you can - till you are very confident in the instrument you wish to trade in. Education: The Power of Leverage - the capacity to make a gain from small percentage transaction on a share, Forex pair or index is because of the power of leverage. It must be
noted, however, that the leveraging power of the CFD magnifies the underlying movement of the share, which can be both positive and negative. Many CFD traders look only at the additional purchasing ability that leverage makes available to them. Such traders often make the mistake of ignoring the fact that leverage is a double-edged sword. It must be reiterated that there is nothing wrong with CFDs as a trading instrument. The problem is often with the way the investors/traders use them. In view of the fact that it is a turbo-charged product in trading CFD, the trader must know his/her stuff. Summary: Contract for Difference (CFD) Forex trading is an extra-ordinary leverage trading phenomenon. This is because of the profit potentials of CFD and Forex trading. Traders must equip themselves with persistence, patience, and endurance. Success is sure. ADE ADEWOLU - Investor & Entrepreneur More helpful hints and tips at - http://www.forexbulletproof01.info Article Source: http://EzineArticles.com/?expert=Ade_Adewolu
Published on Nov 23, 2010
Hint: If you are a beginner trader, it is highly recommended that you start small: eliminate or suspend leverage altogether - if you can - t...