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EuropeFX: Everything you need to know about CFDs trading

  
  Analysis
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What you need to know about trading CFDs

EFX
Contracts-for-difference (CFDs) are popular trading instruments that provide investors with unique potential opportunities to profit in specific markets. This includes taking advantage of certain assets price movement, without actually owning the asset itself.

Thousands of CFDs exist, which are now a common fixture amongst brokerages’ offerings. CFDs are quite simplistic, as profit is calculated as the difference between the entry point of the trade and its exit point.

Popular types of CFDs

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Traps and Pitfalls:

  
Analysis, Education
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  1. Bad Markets – A good pattern won’t bail you out of a bad market, so move to the sidelines when conflict and indecision take hold of the tape. Your long-term survival depends on effective trade management. The bottom line: don’t trade when you can’t measure your risk, and stand aside when you can’t find your edge.
  2. Bad Timing – It’s easy to be right but still lose money. Financial instruments are forced to negotiate a minefield of conflicting trends, each dependent on different time frames. Your positions need to align with the majority of these cycles in order to capture the profits visualized in your trade analysis.
  3. Bad Trades – There are a lot of stinkers out there, vying for your attention, so look for perfect convergence before risking capital on a questionable play, and then get out at the first sign of danger. It’s easy to go brain dead and step into a weak-handed position that makes absolutely no sense, whether it moves in your favor or not. The bottom line: it’s never too late to get out of a stupid trade.
  4. Bad Stops – Poor stops will shake you out of good positions. Stops do their best work when placed outside the market noise, while keeping risk to a minimum. Many traders believe professionals hit their stops because they have inside knowledge, but the truth is less mysterious. Most of us stick them in the same old places.
  5. Bad Action – Modern markets try to burn everyone before they launch definable trends. These shakeouts occur because most traders play popular strategies that have been deconstructed by market professionals. In a sense, the buy and sell signals found in TA books are turned against the naïve folks using them.

What should you look for in a trading system?

  
  Education
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1. Profitability: This is a must when we look for a system .Lowering the risk factor and increasing the reward is simply the answer to a profitable system

2. Probability: One of the important elements of a trading system, but it does not always mean it will be a profitable trading system, if the proper money management is not in use.
3. Consistency: Without consistency we will not be able to breath in the on going changing market condition. A consistently profitable system will pick up some drawdown as soon as the extreme condition is over.

4.Flexibility: Providing Simple, Easy and Powerful System which can be used in any time frame and on any financial instrument.

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