Mistakes are bound to happen and that is why this article is important so as to learn how to avoid mistakes. However, it is important to note that this article is not written just to “entertain” you but to offer some tips.
Trading forex CFDs requires you to do what is best not necessarily what you think is good. It is not necessarily a case of being “fortunate” where you hit it big or go bankrupt. In this case, you will either hit it big if you work with a good mindset or you will go home all the same.
Use Wider Stop Losses
One irresponsible mistake most people make when it comes to stop losses is fixing a stop loss within the market daily range. Even though this may look like a wonderful idea but the reality is that it is a recipe for failure. Note that stop losses requires a wider margin so placing it at what you think looks best may be throwing away money unnecessarily.
Note that the thing keeping most people from following this simple rule is because they fear that their position size may be reduced. However, it is important to understand that this is in no way a bad idea because you have to look at forex CFDs trading as a game of logics rather than a game of chance.
Adopting a wider stop loss should not be seen as killing your game because at this point, you need to realize that reputation is the key. Therefore, the best thing has always been placing trade with a wider stop loss and not getting too emotional.
Adopt Fewer and Longer Trade
This is also another way to create a winning formula when trading. Instead of placing trades over and over, it is advisable to hold on to some bigger offers for a longer period.
Do not forget that each trade will involve you paying a broker fee. This means that the more broker fees you pay, the more you continually eat into your fund.
One problem with traders is that they begin to over trade when it looks like they have found a winning formula. To be realistic, trading does not really go that way and any trader who thinks in that way is setting himself or herself up for failure.
The best offers may not present itself to you so easily, you need to apply some patience and wait for it to come.
So in the end, forex CFDs trading is not really about how much trade you have placed but how much profit you have made. So if one big trade give you profit but does not come often, it is still better than many trades that keep fluctuating and messing up your trading record.
Patience is What You Need
There is no doubt that patience is the key and this is what traders should have at the back of their minds. Applying the right strategy and patience, it is possible to make it big in the world of CFDs.
The USD/CAD is a currency pair which stands for United States Dollar/ Canadian dollar. It is one of the different currency pairs traded on the forex market. The pair simply means the amount of Canadian dollars required to get a US Dollar. It also means that the Canadian Dollar is regarded as the counter currency while the US Dollar is the base currency and this is the same pattern for any other currency pair.
It is important to note that many forex and economic experts refer the USD/CAD pair as a “Loonie” and this is as a result of the loon found at the rear of the Canadian dollar. Because raw material is what mostly makes up the export base of the Canadian economy, the CAD is normally regarded as a commodity currency.
General Facts and Information
The seventh most traded currency pair in the world is the USD/CAD. There are 3 commodity currencies traded in the world of which the CAD is one of them because natural resources remains the most exported item from Canada. However, note that the Canadian economy depends on the Gross domestic product per capital.
The country Canada is one that is very rich in natural resources which include natural gas, oil and timber. As a result, the strength of the Canadian Dollar will likely be affected by abiotic factors like soil and weather.
Another thing to note about the USD/CAD pair is that it’s importance is also heightened based on the fact that Canada and USA are close neighbors. Due to the close proximity of the two countries, the trade and currency of each of them are linked together. In fact, in some cases, like economic and political factors, both currencies find themselves complimenting each other.
Factors that Affect USD/CAD Pair
There are many factors that tend to affect this currency pair of which interest rate is top of them. Apart from the interest rate, the relationship between the USD/CAD is interesting. For example, a situation where the value of the CAD is rising, the implication is that the export from the country will likely decline and this would affect the economy of Canada. Also, since oil is one of the most important exports of Canada, any change in demand for oil will likely weaken the Canadian dollar.
It is also important to note that since the United States share a very active and physical trading partnership with the US importing from Canada massively, it then means that any issue on the trading practices of one will likely affect the other. Then there is an issue of climate change and natural disasters which impact heavily on Canada export and that is why the USD/CAD pair is seen as uncertain.
However, the USD is also affected by a lot of factors. They include GDP, labor markets, FED decisions etc. In all, the USD is regarded as safe when the factors that tend to affect the US are kept under control.
In all these, the USD/CAD pair is welcomed by traders as they trade heavily on it on daily basis increasing its volatility and liquidity.
Trading on News
Currency trading news shows the direction of the market that go a long way to provide some data for traders who use it to prevent major loses. It is important to be up to date with news and events, economic indicators and other necessary information which tend to affect the forex market.
WB2016034 Publisted 23/12/16
ECN means Electronic Communication Network and the aim is to give market participants especially the smaller ones the option of trading with better liquidity. The ECN acts like a link between the traders and brokers. This linkage is done using sophisticated technology setup named FIX Protocol (Financial Information Exchange Protocol). At one end, the broker obtains liquidity from its liquidity providers and makes it available for trading to its clients. On the other side, the broker delivers clients' orders to Liquidity Providers for execution.
Looking at the past few years, it is important to state that there is a surge in the number of people who are now signing with brokers who now offer the ECN trading. However, it is important to note that even though there are some benefits to get from the ECN trading, note that there are some things you need to conssider. For example the broker will always charge you a fee for trading with the ECN platform. Therefore, don’t just signing up to a broker’s account without asking the right questions.
Note that when trading with ECN, there would be no delay in the market when orders are being executed. For example, the orders are executed directly as soon as they are placed. Then it has the advantage of being secured. For example, the information on the ECN platform is on a secure protocol and that is the financial information exchange protocol. This protocol is simply known as FIX and the good thing is that traders can make trades in just a few seconds without having to worry about delay. Let us not forget that instant trading remains a good feature and no wonder most new traders are jumping to the platform.
The CFDs online trading market is one of the largest trading market in the world today and the implication of this is that there are some market makers that have a lot of impact on the prices. New traders who enter the market are expected to know some things about the market. This is because most people will enter the forex CFDs market with the hope of making it big but unfortunately they end up incurring losses and then exit disappointingly.
Make no mistake; there are a lot of things traders need to understand clearly. In the first place, there is no better way to trade online CFDs in Forex than trading in the ECN market. The question is : what exactly is ECN? An ECN broker uses electronic communications networks (ECNs) to provide its clients direct access to other participants in the CFD markets. Because an ECN broker consolidates price quotations from several market participants, it can generally offer its clients tighter bid/ask spreads than would otherwise be available to them.
ECN brokers will ensure that trading is anonymous. The Electronic Communication Network markets will only work with neutral prices and this gives rise to a level playing field in such a way that no bigger player can really distort the market. This results in neutral trading market which reflects standard trading conditions. Note that these prices reflect the demand, supply, volatility and other market conditions.
Automated Trading Data
There is always a challenge in gaining access to high quality data in the CFDs market. However, it is different if you work with a broker of high repute as you have the option of using their API to connect with different trading models as well as management systems so as to access these market data from different sources. There are a lot of people who base their trading on information strategy and in this case, they try to ensure that they get as much information as possible before making a trade. However, a reputable broker gets you access to a lot of different data and information which is capable of improving your trading experience.
Scalping is a trading strategy that attempts to make profits on small price changes. Traders who implement this strategy place anywhere from 10 to a couple hundred trades in a single day in the belief those small moves in price are easier to catch than large ones; traders who implement this strategy are known as scalpers. Many small profits can easily compound into large gains if a strict exit strategy is used to prevent large losses.
Scalping is just so popular because it is structured in such a way that encourages an aggressive approach with having to risk some heavy losses. However, there is a possibility that it can even yield some bigger profits in the long run. Even though scalping may be ideal for novice traders, it is important to understand that it is not meant for traders who make trades without a careful analysis of the market.
In addition, scalping will require a total attention to the market by the trader. By this, we mean that traders must understand the peak trading hours of the day and also understand how the market is changing with every single trade they make. This then means that scalping is a strategy that will require adequate amount of time. Therefore, traders who intend to trade for just a couple of hours should better stay away from scalping.
Let it be clear that this strategy is not just for everyone. It involves the trader having some specific type of skills and also a good amount of discipline by the trader if profit is to be made. It is better to adopt the scalping strategy once you have had some level of experience in trading instead of just jumping into it as a trading newbie. The truth is that without a considerable level of experience, there is every possibility of ending up with a big loss during trading.