Best Forex & CFD Trading strategies

Successful professional traders do many things that amateurs often forget. They plan a trading strategy, they follow the markets, and they diarize, track, and analyze each of their trades. Reasoning of the trade: Why buy or sell? Which pair? Documentation and analysis of the results. Timing of the trade: Why now? Before economic news releases or after? Day or night? Money management. Trading objective: What is the take profit target? What is the stop loss?

The forex market is the largest and most liquid of the financial markets. Daily activity often exceeds $4 trillion USD a day, with over $1.5 trillion of that conducted in the form of spot trading. It is the existence of volatility within the forex market that enables trader's to take advantage of exchange rate fluctuations for speculative purposes.

 Forex spot trades consist of a contract to trade a given amount of a currency pair with a market-maker, at the advertised buy / sell price . Traders must be aware that greater volatility also means greater risk potential. It is important to understand the correlation between liquidity and market activity. the most successful Forex traders are people recognized for their humility and discipline. These qualities are acquired trough experience and accepting some simple realities of the Forex market.

Online CFD Trading Dubai

CFD is a financial tool similar to a share or index which lets you trade an underlying share, index or commodity contract without having to hold the underlying asset itself. 

 

CFDs (Contracts for Difference) - an arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities.

 

CFDs are considered as one of the easiest methods of settlement as losses and gains are paid by cash. CFDs allow you to trade on one platform on-line.

CFD Share  perform is buying and selling the performance of a share or Index through a CFD is almost identical to a physical equity trade financed by a loan. 

 

A client could borrow $50,000 from a bank to buy Shares. The client would receive the returns from the Shares, but would pay interest on the loan to the bank. CFD encapsulate this process in a single transaction. If a client buys a CFD on a Share, he will receive the daily performance of the Share, and be charged interest (financing) overnight.

This blog is written for Orient Financial Brokers, a leading online forex broker in UAE and Middle East.

Problems that affects Forex Market in UAE

The foreign exchange market  is a global decentralized market for the trading of currencies. This includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of volume of trading, it is by far the largest market in the world.including both short-term and long-term price trends, are the basic requirements for any forex trades. Trends are what cause profit and loss. There are many things contributing to forex market price trends.

Governments and Central Banks: the monitory policy and fiscal policies of governments and central banks include actively managing currency interest rates and money flow. They can actively intervene in forex market to keep the currency exchange rates at optimum range for them.
Supply and Demand: like all other financial instruments currency prices also depend hugely on supply and demand. If there is demand but the supply is low, then the price is obviously going to rise, and in opposite scenario fall.

International Trades and Transactions is Countries that export more are bringing money into their country and countries that import more are allowing money to flow away from their country. The first scenario strengthens their currency over time and second scenario weakens their currency because the more money in a financial system, the better growth stimulus it got.

Speculation and Expectation is everyone related to a financial system have expectation about what the system holds them for the future. These expectations can shape both existing and future trends. The level of how much these expectations and speculations come true can cause positive or negative trends in the market.

What is an Equity Trading

The term equity trading refers to the buying and selling of company shares, stock indices and sector CFDs. Here, shares of big public companies are bought and sold through the major stock exchanges like London Stock Exchange, New York Stock Exchange, and Tokyo Stock Exchange. These exchanges serve as managed auctions for stock trades. But, stock indices in small companies are bought and sold in OTC (over-the-counter) markets.

Deals can be performed by the owner of the stocks, or by an agent. There are two types of trading - Proprietary trading (also called principal trading) and Agency trading. First one is buying and selling for the trader's own profit or loss. Here, the principal is the owner of the shares. In the case of agency trading, an agent (usually a stock broker) buys and sells stocks, on behalf of a client. Stock brokers are paid a commission for performing the trade.

View Trading Example click here
This information provided by Orient Financial Brokers (OFB), licensed and regulated by Central Bank of the UAE , to conduct brokerage in Foreign Exchange, Commodities and Money Markets.

Benefits of CFD Trading over Stock Trading

Contract for Difference (CFDs) are considered as more flexible trading instruments than stock and indices. Here are some of the advantages of CFD trading over stock trading.

Trading Products across the Globe: While stock trading is limited to a handful of country specific or market stocks, CFD traders can trade products in all world markets. Trades can be executed anytime the market is open on the trading platform. Click here to know the CFD range of products Orient Finance offer. 

Better Leverage: CFD trading involves higher leverage than stock trading. Generally stock trading involves 50% margin requirements, meaning you should have capital of 500 for trading a contract size of 1000. But the CFD trading margin ranges from 1% to 20% depending upon the liquidity of the underlying asset. Fore example with 5% margin, one can trade 1000 worth contract with just 50 as capital investment.

No Day Trading Requirements or Shorting Rules: CFD trading has much relaxed rules and regulations than stock trading. There are no day trading requirements; traders can day trade whenever they want. At times stock markets can restrict traders going short; but in CFD trading one can go short any time they want as there is no ownership of underlying asset, no burrowing costs or shorting costs.

Getting Trade Executions with No Fees: Like online forex trading, CFD trading does not involve any trading commissions. The difference in ask and bid spread is the broker's remuneration. This spread is often fixed and usually there are no hidden charges or additional fees. Moreover CFD brokers offer all order types as traditional stock brokers offer.

And a Range of Products: Now CFDs are available on a wide range of underlying products. These include currency pairs, shares, stock indices, commodities, treasury products and more.