Tricks Of The (cfd) Trade?

[TraderKing]

Hi,

I'm new to CFD's and hoping to trade US shares although located in UK - Can anyone with some experience comment on any of the following issues (ot indeed any other issues that someone new to CFD's should consider ) please

1. Are there any 'snags' when it comes to using underlying charts,indicators,patterns etc when compared to the CFD instrument price/quotes?

2. Whats the best approach to Market Entry when Swing Trading using CFD's e.g. If the trading rules say "buy on open" and the CFD is trading 24/7 - how does this affect your timing or strategy?

3. Can anyone trading US markets from UK suggest a daily routine or checklist?

4. What would you consider to be 'best practice' on exit strategies with CFD's e.g If swing trading and you notice a price reversal on the (obviously leveraged) CFD, Do you exit immediately, or wait for a trend reversal, or do you treat intraday price fluctuations as normal activity until profit-targets or trend reverses?

5. Do you need to treat your stop strategies differently to the case where you were trading the actual share? e.g. are there different risk and money management factors to consider?

Lastly - are there any good resources, books or articles or tools you would recommend?

Many thanks in advance for any responses

regards
Paul

 

[henry766]

hi trader king , i'm in same boat as you are, like trading u.s. stocks but with more gearing , main problems i find are either wide spreads and or lack of market coverage ( i.e. cmc are way tighter than anyone else but only cover about 260 or so approx stocks , i think etrade cfd is a lot better with atleast sp500 and nas 100 covered at a slightly ( but not much) wider spread). i'm interested in how u get on , i currently use cmc , but am interested in etrade , some of the other firms may offer good service , but i'm a sucker for a tight spread!!!( tradeing on close helps liquidity , day trading is tough with cfd spreads)

 

[TraderKing]

hi trader king , i'm in same boat as you are, like trading u.s. stocks but with more gearing , main problems i find are either wide spreads and or lack of market coverage QUOTE]

Hi Henry,
Thanks for the response.
I'm using an offshore broker (Thales) but I'm less bothered about the spreads at the moment I'm still trying to get a method with an edge and develop my trading rules. How do you deal with initial risk and position sizing with highly leveaged instruments? Do you have a strategy for rapidly filtering out the losing trades?

Best Regards
paul

 

[techst]

I trade UK stocks using CFD's, i've never ventured into the US stock scene but its something im considering. Mainly because my plan is quite rigid, and finding good stocks to trade at the moment is tricky in UK markets. My main question is regarding exchange rates. How does it effect trading US shares from the UK?

 

[henry766]

i honestly believe the only real question we face is wether or not we are truly profitable once chance is taken into account , most of us believe we are or almost are and most of us arn't , so i suggest a conservative approach till your sure u are truly profitable and then give it a little more time , if i could filter out all my losing trades Trader i wouldn't have to bother finding winners!! As for exchange rates Techst if your making money it won't bother u, i suspect most pros take rough with smooth on that unless they have a strong opinion on the exchange rate , it evens out fairly quickly and isn't a big concern for me , finding winners is always biggest concern!!