Characteristics of a CFD Tracker that Ensure Success

A CFD trader is someone who trades in the CFD markets. The CFD markets have been seeing a surge in the number of people who intend to take it on and try their hand in CFD trading. However, there are some things that you need to check about yourself, your personality and your abilities to see if you are likely to become a great CFD trader or not. These traits are signs of a great CFD trader.

A successful CFD trader needs to have a mind that is analytical with regards to numbers. He is one who can look at numbers, create trends and understand the import of the data. Being able to make decisions quickly based on the numbers that you have seen is another important characteristic of a good CFD trader.

Confidence against all odds is another aspect of a CFD trader that can lead to ultimate success. This means that you need to have the confidence about the decisions that you have made with regards to CFD and stick with them. Giving up and calling for stop loss too early is the biggest mistake that a CFD trader can make.

However, it is also an important aspect that the CFD trader understands when he has made a mistake. Calling stop loss at the right time and reducing losses is important because a CFD trader knows that he needs to live to fight another day.

The keen balance of knowing when to hold on and when to quit is of utmost importance for a CFD trader.

CFD trading Singapore: Three Essential Features of Trading Systems

As CFD trading in Singapore gains popularity many people want to know about the best CFD trading system.

However, before we get into CFD trading Singapore, it is necessary to understand what it actually means. CFD trading Singapore basically refers to a derivative product based on an underlying asset where a buyer and seller agree to pay or receive on the basis of difference between the closing and the opening price. No physical ownership is involved and a trader may sell or go short without prior ownership.

Just like any other trading system, a system for CFD trading Singapore is basically a set of criteria for determining entry and exit levels. It may be a mechanical process or discretionary or both. A fully mechanical CFD trading Singapore system means that you adhere to pre-defined rules and you are relieved of having to take decisions.

A discretionary system means that you have to spend a lot of time to learn how to trade and practice trading. You could do that under the tutelage of an experienced trader who can teach you how to use the system’s rules for increasing the number of profitable trades.

Regardless, any CFD trading Singapore system must include the three essential features.

- Stop loss feature. This allows you to exit a trade the as soon as the market starts going against you.
- Trailing stop loss feature. This allows you to lock in the profit when the market goes your way and lets you remain in a profitable position as long as the market keeps moving favourably.
- Acceptable risk-to-reward ratio. This refers to the ratio between how much you stand to gain if the market moves favourable and lose if it moves adverse to your position.

Why a CFD Singapore Broker Allows Trades on Margins without Checking Credit Scores

CFDs can be traded on margin money, which means that a CFD Singapore broker will allow you to place trades of a much larger value than the amount in your account. The balance amount is financed by your CFD Singapore broker.

The question to be asked here is do you need to have a good credit score for margin trading. The simple answer is no. However, a CFD Singapore broker would be more than eager to give you the required margin for trading. The question that crops up to mind is why a broker would lend you money. The answer to this is not that simple and needs to be understood.

A loan means taking a risk. Even a fully secured home loan has an element of risk as it is not easy for the loan provider to sell the mortgaged property. In the case of a margin trading loan there is no collateral but still there is not risk attached to it. It works like this.

Suppose you have 100 dollars in your account with the CFD Singapore broker and you buy a CFD of the value of 4,000 dollar. On the face of it, the broker has loaned you a sum of 3,900 dollars. The reality however is that the loan is at risk only if you happen to lose more than 100 dollars in the trade.

It is this aspect of margin trading that the CFD Singapore is worried about. The moment the loss amount reaches 90 dollars, the automated trading software alerts the broker and you will be asked to deposit more money in the account or the trade will be automatically closed. It is because of this that a CFD Singapore broker has bigger margins for CFDs based on highly volatile assets.

Trading CFD Singapore: Is It Good Only For the Short Term

It is generally believed that CFDs are suitable only for those with a very short time horizons or day traders. One of the reasons given for that is that you pay interest if you carry the position overnight. The longer the period you keep the position open with the CFD Singapore broker the higher the interest amount. 

It is commonsense that if you want to hold a position for long you would rather buy in the cash market where you do not have to pay a regular maintenance charge. But there is another side to it also. If you are paying hard cash for the full investment amount, you are foregoing the interest that you would otherwise get if the money were to remain in a bank deposit. You need to view the interest that you pay to CFD Singapore the same way. It is just like the way a landlord makes it worthwhile by figuring in the expense of constant maintenance of rental property into his profit calculation. 

It should be kept in mind that the CFD Singapore will typically charge an interest rate that is roughly two to three points above the base rate. However, if you go short in a contract with the CFD Singapore, you are paid an interest rate that is 2-3 points lower than the base rate.

The second point to be made in favour is that CFD Singapore is a leveraged product. If have done your research properly and your instinct proves correct, you stand to get a handsome profit on the full value of the contract with an initial outlay of 10% of the contract value.