Starting
Capital: $5,000 Finishing Capital: $10,271 2010
Return: 105%(as of June 126
2010)
Engineer
and Active Trader for 7 Years
Tells of His Trading Account Increasing
by 47%In Just over 2 months
using the New CFD Index Strategy.
Listen to what SK has to
say...
Hi Jeff,
I am thanking you for letting me participate in the Nasdaq 100 trades.
Since I started last October and if I am cashing in today, I have doubled
my account and that is just over 5 months. This is something I haven't
experienced before.
CFD trading strategies are exactly like share trading strategies, the main
difference being you only need a small amount of money up front in order to control your total position.
So it goes without saying that theCFD strategies you look to employ shouldn’t differ too much from your current
share trading strategies that you have been successful with.
There is one exception to that rule and that relates
specifically to overnight financing charges. With share trading
strategies you can hold a position for as long as you like and you only pay brokerage to get in and get
out.
WithCFD trading
strategies you need to be aware of the overnight financing for holding positions long term as the CFD financing costs do eat into your
trading profits. One great benefit of short selling is you get paid interest every day you are short.
Going
Long CFDs Goal: Profit from buying low and selling
high CFD Trading strategy: Buy
FMG at $10.00 and close position at $11. Profit in between. Timeframe: All time
frames Suited to: Traders at all
experience levels. Risk Level: Low
Going short CFDs Goal: Profit from selling high and buying
low CFD Trading strategy: Sell
FMG at $10.00 and close position at $9. Profit in between Timeframe: All times
frames Suited to: Traders familiar
with short selling CFDs Risk Level: Medium
Short term trading CFDs Goal: Take advantage of short term movements in
the CFD market. Short term trading CFDs can be from days to several months. It does encompass all timeframes of
which most are discussed below. Given the financing rate of CFDs, short term trading is the preferred
choice. CFD Trading strategy: Identify short to medium term trends CFDs enabling you to profit from days to
months. Timeframe: Days to
months Suited to: All
traders Risk Level: Medium
Swing trading CFDs Goal: Take advantage of
small swings in the market. One of the most widely used terms in trading. Buy the dips on confirmation of uptrend.
Use profit targets or trailing stop losses. CFD Trading strategy: FMG
comes off its uptrend, hits a turning point and starts to track back to new highs. The CFD strategy would be to use
a indicator to identify the turning point, wait for confirmation of uptrend and jump on the new move up. Timeframe: 1 day - 20
days Suited to: All short to
medium term traders confident with stop losses and stop to enter orders. Risk Level: Medium
Intra day trading CFDs Goal: Take advantage of
intraday (within the one trading day) moves and close the position before the market close. CFD Trading strategy: Identify stocks with a good daily range. Sometimes referred to as the ATR (Average True
Range). On open a stock may open and track down, then head back up through its opening price. Some traders like to
go long when it breaks through its opening price on the day. Ride trend using intraday pricing until stop loss or
profit target is hit. Timeframe: Open and close
your position within the same trading day. Suited to: Experienced
traders who are fast on the computer and understand position sizing well. Risk Level: High due to
small moves requiring large amounts of capital to take advantage of.
Position trading
CFDs Goal: Position yourself based on intraday information with the goal to hold for days to weeks. You
work on computers during the day, have your trading platform open with your trading alerts set and when a intraday
alert goes off, you position yourself into the trade. CFD Trading strategy: Set
FMG alert if price breaks resistance at $9.75. When alert gets triggered go long 500 CFDs with stop at
9.59. Timeframe: Intraday (if stop
gets hit) to several weeks. Suited to: Experienced
traders with specific entry orders and those who like to check market depth to help time their entry. Risk Level: Medium to
high.
Zone trading
CFDs Goal: You believe the market has a memory and ranges between support and resistance levels. You
attempt to buy on support and sell on or near resistance levels. CFD Trading strategy: QAN
was ranging between $5.65 and $6.05 in November 2007. Your CFD strategy would be to buy around the $5.65 level and
tighten stops up as QAN approaches $6.00 - $6.05. Timeframe: Days to 2 weeks
usually. Suited to: All levels of
traders. Support and resistance levels are some of the most commonly used CFD strategies. Risk Level: Medium.
Pairs
trading CFDs Goal: To take advantage of highly
correlated shares that slip out of correlation. CFD Trading strategy: NAB
and CBA CFDs move in close unison but you notice that NAB starts outperforming CBA considerably. You take a pairs
trade by Shorting NAB & going long CBA and wait for both stocks to move back into a highly correlated
state. Timeframe: Weeks to
months Suited to: Sophisticated
traders who have access to charting software that can track 2 stocks simultaneously and most importantly are able
to create formula’s to track the correlation between the 2 positions. Risk Level: Low to
medium
News trading
CFDs Goal: Monitor news items in the AFR or business section in your local paper plus websites in order
to find volatile stocks to trade that day. Many stocks that make announcements can jump 5-20% in a day and your
goal is to jump on the right side of a fast moving, emotion driven stock. CFD Trading strategy: MMX offers $1.5 Billion
for Midwest Corporation on the 26th May 2008. Shares of both Midwest and MMX jump considerably during the day. You watch the
highest percentage gainers and notice Midewest ranks highly with an R beside its ticker. Report out. You
investigate and swiftly move to buy both stocks on confirmation of rise in price. Timeframe: Minutes to
days. Suited to: Experienced
traders with excellent and reliable DMA price feed with reports streaming intraday. Risk Level: High
Dividend
stripping Goal: ‘Strip’ the dividend of a stock by buying prior to the stock going ex-dividend and sell
before it goes ex-dividend enjoying a capital appreciation as investors jump on board for the dividend. CFD Trading strategy: Many
stocks looking to pay a dividend have investors getting in prior to the dividend (45 days earlier to receive full
franking credits) and so this has the effect of pushing the share price higher just prior to the dividend itself.
Your goal is to ride the increase leading up to the dividend and close your position just prior to the stock going
ex-dividend. Timeframe: days to
weeks Suited to: Anyone keeping an
eye on high paying dividend stocks Risk Level: Medium
Hedging CFDs Goal: Protect current share trades by taking an
opposite CFD trade. This also helps to reduce portfolio volatility during wildly fluctuating markets. CFD Trading strategy: If you
believe the stock you are on (FMG as an example) has finished its run, then instead of selling your physical stock
you short sell the CFD for the exact quantity of shares you have. Timeframe: days to years
potentially if your stock doesn’t come out of a downtrend. Suited to: Owners of shares
with moderate to high level of experience. Risk Level: Low - The
strategy is designed to reduce risk.
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