Selecting CFDs to trade, similarities to forex and suggested starting amount

[tom82]

There are thousands of CFDs to choose from, how do you select (potential) CFDs to trade?

CFD trading and forex trading seem to be similar, comments?
Can you use the same technical principals to trade both of these?

How much is recommended to start trading CFDs?

What books, websites etc do you recommend new CFD traders to peruse?
(I know of The Australian edition of CFDs for Dummies)

Thanks

Tom

 

[Paulo30]

CFDs are just contracts on specific markets.. shares, indices, currencies, commodities etc.

The main things to look out for are the spread, commissions, and broker stability/reputation.

CFDs on FX are similar to Spot FX (if that's what you are asking), but you need to factor in interest daily on CFDs. This can be positive or negative depending on the currency you buy/sell.
There's also no currency conversions with CFDs, since it is just a contract on top of the currency price.. rather than actually buying the currency.

There are thousands of CFDs to choose from, how do you select (potential) CFDs to trade?

CFD trading and forex trading seem to be similar, comments?
Can you use the same technical principals to trade both of these?

How much is recommended to start trading CFDs?

What books, websites etc do you recommend new CFD traders to peruse?
(I know of The Australian edition of CFDs for Dummies)

Thanks

Tom

 

[tom82]

CFDs are just contracts on specific markets.. shares, indices, currencies, commodities etc.

The main things to look out for are the spread, commissions, and broker stability/reputation.

CFDs on FX are similar to Spot FX (if that's what you are asking), but you need to factor in interest daily on CFDs. This can be positive or negative depending on the currency you buy/sell.
There's also no currency conversions with CFDs, since it is just a contract on top of the currency price.. rather than actually buying the currency.

That is the only forex market I can possibly be refering to.
However you have mis understood the question. I was not simply refering to CFD forex contracts, I was asking a question / making a comment that CFD and forex are similar markets (obviously with some differences).
I'm not sure what you are talking about with the interest positve or negitive on the CFDs, as you earn or pay interest on positions held in the forex as well.

 

[Paulo30]

There is no "CFD market". You are confusing an instrument (CFDs) with a market (currencies/forex). Currencies can be traded via a variety of instruments.. futures, CFDs, cash, ETFs, etc.

The currency market is the currency market, so a pair will move exactly the same way whether you are trading it via whichever instrument.

You need to clarify exactly what you are asking.

That is the only forex market I can possibly be refering to.
However you have mis understood the question. I was not simply refering to CFD forex contracts, I was asking a question / making a comment that CFD and forex are similar markets (obviously with some differences).
I'm not sure what you are talking about with the interest positve or negitive on the CFDs, as you earn or pay interest on positions held in the forex as well.

 

[tom82]

There is no "CFD market". You are confusing an instrument (CFDs) with a market (currencies/forex). Currencies can be traded via a variety of instruments.. futures, CFDs, cash, ETFs, etc.

The currency market is the currency market, so a pair will move exactly the same way whether you are trading it via whichever instrument.

You need to clarify exactly what you are asking.

You are making it more complicated than needed.
Perhaps you are not well suited enough to provide answers on this?

A market is where people meet for the purpose of buying and selling.

If I was refering to ETFs, futures etc I would have specifically said so.
When I refer to the fx or forex, I am refering to the decentralised market that trades over the counter.
Usually CFDs are traded OTC, each contract has two parties involved the trader and the broker ie the counterparty to the transaction.
CFDs are linked to and based on the underlying instrument.
You have taken the thread away from the original questions.
Maybe we can return and focus on those?

 

[Tanaka]

There are thousands of CFDs to choose from, how do you select (potential) CFDs to trade?

I have a predetermined set of criteria that my software scans at the EOD. I add these to my watch list and monitor them the next few days to see if they become tradable. The criteria is based on divergence patterns and volume changes.

CFD trading and forex trading seem to be similar, comments?
Can you use the same technical principals to trade both of these?

Yes and No. It depends what your trading system is. If your system uses volume, forex doesn’t have transparency, the volume you receive is your broker’s volume and not the whole market.

Both can be high risk trading as both use leverage.

How much is recommended to start trading CFDs?

Can't give recommendations on amount, most brokers will recommend an amount for safety. DYOR it will sink in better if you get a calculator and work it out for yourself.

What books, websites etc do you recommend new CFD traders to peruse?
(I know of The Australian edition of CFDs for Dummies)

If you are trading CFDs based on shares, then the research is the same. Obviously you need to do extra research on how leverage works.

For forex you can't beat babypips.com - they have a free online course and all the info. you need on forex, the lessons on risk management and leverage will translate to CFDs.

 

[tom82]

I have a predetermined set of criteria that my software scans at the EOD. I add these to my watch list and monitor them the next few days to see if they become tradable. The criteria is based on divergence patterns and volume changes.



Yes and No. It depends what your trading system is. If your system uses volume, forex doesn’t have transparency, the volume you receive is your broker’s volume and not the whole market.

Both can be high risk trading as both use leverage.



Can't give recommendations on amount, most brokers will recommend an amount for safety. DYOR it will sink in better if you get a calculator and work it out for yourself.



If you are trading CFDs based on shares, then the research is the same. Obviously you need to do extra research on how leverage works.

For forex you can't beat babypips.com - they have a free online course and all the info. you need on forex, the lessons on risk management and leverage will translate to CFDs.

Thanks Tanaka.
Yes babypips is a very good site, contains lots of info re forex.
I'm more price action inclined, though if I decide to trade share cfds I will have to include some fundies in my research.
Still not sure about selecting CFDs would have to look through soo many.
Thanks