CFD platform for inexperienced trader?

[Trembling Hand]

Unfortunatly a 2% stop rule with CFD's does not work.

WHY?????????????

$10,000 account. Max risk per trade 2% of $10,000 is $200.

Stock price at $2.00
Stop price at $1.70

Stop value $0.30

$200 / $0.30 = Max amount of shares which is 666Shares

No matter what you use to trade, CFDs, Margin or direct shares

It doesn't mean a 2% share price movement. I don't think you have got MM down at all

 

[Kauri]

I can't for the life of me unnerstand why someone on CFD's wouldnae be in this market... for me the main advantage of CFD's so's the ability to go short... 2 charts below... if you would go long the first one... why would you not be short the second... after all tis only the first one inverted... the only concession I make to the current market is to be using the GSL... those who are into the CFD's only to get the leverage are ... well... running a risk??? I thunk...

Cheers
..........Kauri

P.S CTX...

 

[CitizenKane]

CFD for the inexperienced?

Get a demo a/c and start messing around with it. That's what i did in the early days. Read, read, read and read about as much about CFD as possible. Then open another demo a/c and mess around some more.

You're going to learn much more about CFD with trying it out than someone here telling you about it. Stops, limits, order to open, etc are things that confused the heck out of me in the early stages.

Once you *think* you understand the concepts, open a real trading a/c with about $200 and start learning from first hand experience.

Not sure if IG Markets still has the Trade Sense program, but it allows traders to trade as little as $0.50c/point on the Aussie 200 Cash/Forward index. You'll be risking bugger all and it will be REAL money that you'll be learning with. If you lose all $200,... then you either didn't do enough "messing around". If you do lose some money, consider it as an education fee... formally or informally, you're going to pay for it.

Korrupt,
I take your point -"CFD for the inexperienced" does sound a bit Lemming-like.
Having read through a lot of posts on this forum (and other research) I am very aware of the possible dangers. But I have decided to ratchet my enthusiasm back a few stops before leaping and will spend some more time on educating myself. I do have a demo account which I found confusing initially, thats why I posted the original question. Obviously I need to spend more time on it and other platforms as well.

To Porkpie,TH and Nun
Even though I was aware of the 2% strategy (and intending to apply it!),I appreciate your comments about MM. I wasn't going to risk too much of my hard earned initially anyway but you have certainly reinforced the importance of money management (as well as extensive preparation before trading) to me.

Thanks again to everyone.

 

[porkpie324]

Yes your right Kauri, but the stocks I was trading CFD's were nickel stocks ie MCR IGO SMY, they are stocks I also hold using the physical market, they are stocks I understand and I like to think I understand the fundementals of, these stocks have not been trending, so I am staying out of CFD's for that reason. As I mentioned I was very succesful trading these miners whilst they were trending. I am comfortable trading these using CFD's, I just hate to give hard earned profits back to the market, thats the reason I'm staying cashed up (CFD wise) porkpie

 

[Young Gun]

I think you are getting confused with a 2% stop and a stop as 2 % of the equity.

If you have a $1,000 account and using it to leverage , only risk a maximum loss of 2% x $1,000 or $20.

 

[eric341]

TH is right, the main reason why newbies blow up their margin accounts is due to incorrect risk and money management.

When I started with CMC a month ago, I increased my account balance by 10% on the first day, but I subsequently lost around 30% of the initial balance over the next week. I learnt an important but expensive lesson from this- cut your losses short, and enter trades with targets in mind (profit/loss boundaries).

Also, analysing my trade history has been beneficial. Looking at my past trades, most of my winners were of low-mid worth while my losers tended to be quite heavy ones. Although my winners outnumbered losers 2-1, I ended up with negative expectancy (which means I will probably eventually lose all of my money unless I change my trading style).

Since that analysis the importance of cutting losses short (risk management) has hit home and nowadays I don't suffer as much volatility in my account balance as I used to. I'm still recovering from my loss though.

PS. I'm a novice scalper and I normally trade the DAX and ASX200.