CFD Trading

[GaryG182]

Any PH'ers take part in trading Contracts For Difference? Interested into whether you can actually make money from this, kinda feels like gambling to me and a little risky considering the leverage aspect.

Found this article http://www.timesonline.co.uk/tol/money/investment/... on Times Online a few months ago and revisiting the idea at the moment.

I'm a bit of an amateur trader in all honesty and my knowledge probably isn't at the level it should be but I'm living by the 'he who dares, wins' motto right now haha, probably not a great plan but only live once!

Thoughts?

[Shnozz]

can you just pass me that padlock to close this..........wooooooooooooooooo off she trots.

Edited by Shnozz on Wednesday 1st October 12:42

[Vesuvius 996]

GaryG182 said:

I'm a bit of an amateur trader in all honesty and my knowledge probably isn't at the level it should be

Then it's NOT for you.

I've seen a lot of very wealthy people lose everything in the last few weeks.

[tricky69]

basically like spread betting really... you pay a deposit and go long or short, and then pocket or lose the difference... Good way to make some extra cash as long as you stay true to your model and always stick to your stop losses

as far as deposit goes, i would advice not risking more than about 5% of your trading porfolio on a single trade - good luck

[Shnozz]

Yes, I have done. Yes, you can make money, sometimes very good money. Yes, you can lose money, very quickly but, so long as you set the right perimeters and within your budget you should never lose too badly.

Would I recommend it - yes, if you can use knowledge and foresight and are prepared to still ultimately gamble.

No, if you are sticking a finger in the air and having little more control than a game of roulette.

Edited by Shnozz on Wednesday 1st October 12:51

[tricky69]

Vesuvius 996 said:

GaryG182 said:

I'm a bit of an amateur trader in all honesty and my knowledge probably isn't at the level it should be

Then it's NOT for you.

I've seen a lot of very wealthy people lose everything in the last few weeks.

Stick to a practice account or something for a few months... don't invest anything till you are consistanly ending each day in profit.... Jump straight in with cash and you will lose..

there is always a fool in the market, and if you don't know who it is then it's you - Mr Buffett

[GaryG182]

lol think I'll steer clear then! Don't fancy losing what I have, just fancied finding a way to make some more!

Surely now is a good time to invest in equities though? Must be some undervalued stock out there, I'll keep looking me thinks.

Ta

[tricky69]

GaryG182 said:

lol think I'll steer clear then! Don't fancy losing what I have, just fancied finding a way to make some more!

Surely now is a good time to invest in equities though? Must be some undervalued stock out there, I'll keep looking me thinks.

Ta

Look for stocks that have maybe come off a lot but normally do well in bad times... like imperial tobacco, something with a good brand name

[Shnozz]

GaryG182 said:

lol think I'll steer clear then! Don't fancy losing what I have, just fancied finding a way to make some more!

Surely now is a good time to invest in equities though? Must be some undervalued stock out there, I'll keep looking me thinks.

Ta

If you set appropriate stop losses no reason why you should lose all that you have. Everyone has to learn somewhere but I think with CFDs more than anything you should read up and have a thorough understanding before risking your hard earned.

I also think you really need to analyse what information you are relying upon to justify why you are making the investment, albeit you should be armed with that in some respects before most investments in any event. If you feel that the something is misplaced, and can weigh up all factors as to why it isnt in its correct state of equalibrium, then its ultimately an educated risk, with a stop loss meaning if you do get it wrong, you have set your max exposure. That said, you need to have enough float in that stop loss so that minor movements on the back of short term rumours or the americans silly behaviour isnt enough to simply swipe your chips from the table after a few throws.

[tricky69]

Shnozz said:

GaryG182 said:

lol think I'll steer clear then! Don't fancy losing what I have, just fancied finding a way to make some more!

Surely now is a good time to invest in equities though? Must be some undervalued stock out there, I'll keep looking me thinks.

Ta

If you set appropriate stop losses no reason why you should lose all that you have. Everyone has to learn somewhere but I think with CFDs more than anything you should read up and have a thorough understanding before risking your hard earned.

I also think you really need to analyse what information you are relying upon to justify why you are making the investment, albeit you should be armed with that in some respects before most investments in any event. If you feel that the something is misplaced, and can weigh up all factors as to why it isnt in its correct state of equalibrium, then its ultimately an educated risk, with a stop loss meaning if you do get it wrong, you have set your max exposure. That said, you need to have enough float in that stop loss so that minor movements on the back of short term rumours or the americans silly behaviour isnt enough to simply swipe your chips from the table after a few throws.

The other problem you will find with anything like this is timing, you need to devote a lot of time to it. When i used to trade intraday spot i basically would not do anything until 4 different indicators pointed to the same thing... and only then would i trade, the problem being your timing has to be right, blink and you will miss it... so you have to be on your game to make good money

stick to online poker if i were you.... trading is a mugs game !!

[Shnozz]

tricky69 said:

Shnozz said:

GaryG182 said:

lol think I'll steer clear then! Don't fancy losing what I have, just fancied finding a way to make some more!

Surely now is a good time to invest in equities though? Must be some undervalued stock out there, I'll keep looking me thinks.

Ta

If you set appropriate stop losses no reason why you should lose all that you have. Everyone has to learn somewhere but I think with CFDs more than anything you should read up and have a thorough understanding before risking your hard earned.

I also think you really need to analyse what information you are relying upon to justify why you are making the investment, albeit you should be armed with that in some respects before most investments in any event. If you feel that the something is misplaced, and can weigh up all factors as to why it isnt in its correct state of equalibrium, then its ultimately an educated risk, with a stop loss meaning if you do get it wrong, you have set your max exposure. That said, you need to have enough float in that stop loss so that minor movements on the back of short term rumours or the americans silly behaviour isnt enough to simply swipe your chips from the table after a few throws.

The other problem you will find with anything like this is timing, you need to devote a lot of time to it. When i used to trade intraday spot i basically would not do anything until 4 different indicators pointed to the same thing... and only then would i trade, the problem being your timing has to be right, blink and you will miss it... so you have to be on your game to make good money

stick to online poker if i were you.... trading is a mugs game !!

fair point, and possibly easier in a climate when financial behaviour is the sole news items on any given day.

That said, I recently shorted the FTSE and panic sold 16th September. Sometimes its best to blink, miss it, take a long nap, wipe sleepydust from eyes and then deal.

[tricky69]

Shnozz said:

tricky69 said:

Shnozz said:

GaryG182 said:

lol think I'll steer clear then! Don't fancy losing what I have, just fancied finding a way to make some more!

Surely now is a good time to invest in equities though? Must be some undervalued stock out there, I'll keep looking me thinks.

Ta

If you set appropriate stop losses no reason why you should lose all that you have. Everyone has to learn somewhere but I think with CFDs more than anything you should read up and have a thorough understanding before risking your hard earned.

I also think you really need to analyse what information you are relying upon to justify why you are making the investment, albeit you should be armed with that in some respects before most investments in any event. If you feel that the something is misplaced, and can weigh up all factors as to why it isnt in its correct state of equalibrium, then its ultimately an educated risk, with a stop loss meaning if you do get it wrong, you have set your max exposure. That said, you need to have enough float in that stop loss so that minor movements on the back of short term rumours or the americans silly behaviour isnt enough to simply swipe your chips from the table after a few throws.

The other problem you will find with anything like this is timing, you need to devote a lot of time to it. When i used to trade intraday spot i basically would not do anything until 4 different indicators pointed to the same thing... and only then would i trade, the problem being your timing has to be right, blink and you will miss it... so you have to be on your game to make good money

stick to online poker if i were you.... trading is a mugs game !!

fair point, and possibly easier in a climate when financial behaviour is the sole news items on any given day.

That said, I recently shorted the FTSE and panic sold 16th September. Sometimes its best to blink, miss it, take a long nap, wipe sleepydust from eyes and then deal.

But you have to know how to use the data you get on the news and everywhere else....

Take the past couple of days for example, after no bailout it would be easy to think that cable would start heading back towards 1.900 again... but it didn't it fell and is now down at 1.7840....

If you just look at the main headline i.e. the failed bailout it would seem like a sure bet, but you miss the other market factors such as people believeing the bailout will still go through, Europe having to bail out fortis and dexia, UK being in a mess and now such bailout option on the table.... that coupled with the fact consumer confidence in the US rose in september and business activity has slowed less than forecast means the USD will go in the other direction

You have to have access to all the news and there is so much to digest it can easily catch you out and cost you money...

If you are set on trading though get a system that alows you to plot candle graphs and MACD and buy and sell on that indicator with tight stop losses you should make money but not a lot !

[Shnozz]

I dont disagree with anything that you say and I can only talk from a layman's perspective as an amateur with an interest for no other reason that my own curiosity and in an effort to clear the mortgage noose.

I have crudely over-simplified when making my own investments. I have lost out on some, and made some handsome gains on others. Perhaps I have been extremely fortunate overall to have such a simplistic criteria and have not been stung more times than I have profited, or alternatively perhaps I just play in the infant school playground where its investments for dummies and the more complex stuff is left for you boys that know what you are doing!

[2something]

Like a lot of things you read in the papers, it should be ignored.

If however you are genuinely interested in the markets, work out what your aims are, work out who much you can afford to lose and take it from there.

Knowledge is important, but patience and discipline are more important and tend to be harder to come by.

Before you do anything, work out how often you are likely to trade (you should be able to derive some idea by looking at your aims) and how much bid/ask you are likely to cross. if you trade frequently, the biggest hurdle you will face is making more money than you pay away in bid/ask, most people don't want to face this fact.

[tricky69]

Shnozz said:

I dont disagree with anything that you say and I can only talk from a layman's perspective as an amateur with an interest for no other reason that my own curiosity and in an effort to clear the mortgage noose.

I have crudely over-simplified when making my own investments. I have lost out on some, and made some handsome gains on others. Perhaps I have been extremely fortunate overall to have such a simplistic criteria and have not been stung more times than I have profited, or alternatively perhaps I just play in the infant school playground where its investments for dummies and the more complex stuff is left for you boys that know what you are doing!

I don't agree with that totally to be honest mate... It is far to easy to over comlicate things, when i first started it took me ages to trade because i would wait for the perfect moment ( which never comes ) and my boss said to me after a few days, '' step back, simplify what you are looking and a pick the key points we pay you to follow your instincts, but more importantly GROW SOME FUKING BALLS !!'' Now he was a complete toser, ended blowing himself up but was a good first leason ! haha

i just am a lot more careful cause it is not my money i am investing, and if something goes wrong i have to justify why i did it.... as long as i did it for the right reasons it is fine, but losing money is part of trading so as long as you make money keep going !

Edited by tricky69 on Wednesday 1st October 13:37

[Shnozz]

2something said:

Like a lot of things you read in the papers, it should be ignored.

If however you are genuinely interested in the markets, work out what your aims are, work out who much you can afford to lose and take it from there.

Knowledge is important, but patience and discipline are more important and tend to be harder to come by.

Before you do anything, work out how often you are likely to trade (you should be able to derive some idea by looking at your aims) and how much bid/ask you are likely to cross. if you trade frequently, the biggest hurdle you will face is making more money than you pay away in bid/ask, most people don't want to face this fact.

Couldn't agree more with everything said here.

in particular, it is very hard to act upon patience and discipline when battling emotions relating to your own cash rather than other peoples. I think it is generally unnatural to have this abiliy to remove your emotions from your own finances, and this is the biggest hurdle I face, particularly when chasing a loss. The same can be said for gambling, and its now noticeable in the housing market where for many a loss is too big a pill to swallow so people can make sometimes foolish decisions as a consequence.

[MitchT]

It's taken me five years of spread betting to get to a point where I can make consistent profits... and now I have to build up my modest starting balance to something meaningful, so it'll be a good few more years before I can draw a wage from it.

Anyone starting-out can expect to lose a lot of money before getting anywhere - you have to see this as tuition fees.

Ultimately it's all about discipline and experience. If you want to make a fast buck look elsewhere.

[tricky69]

MitchT said:

It's taken me five years of spread betting to get to a point where I can make consistent profits... and now I have to build up my modest starting balance to something meaningful, so it'll be a good few more years before I can draw a wage from it.

Anyone starting-out can expect to lose a lot of money before getting anywhere - you have to see this as tuition fees.

Ultimately it's all about discipline and experience. If you want to make a fast buck look elsewhere.

out of interest mate what are you trading on ?

[Shnozz]

tricky69 said:

Shnozz said:

I dont disagree with anything that you say and I can only talk from a layman's perspective as an amateur with an interest for no other reason that my own curiosity and in an effort to clear the mortgage noose.

I have crudely over-simplified when making my own investments. I have lost out on some, and made some handsome gains on others. Perhaps I have been extremely fortunate overall to have such a simplistic criteria and have not been stung more times than I have profited, or alternatively perhaps I just play in the infant school playground where its investments for dummies and the more complex stuff is left for you boys that know what you are doing!

I don't agree with that totally to be honest mate... It is far to easy to over comlicate things, when i first started it took me ages to trade because i would wait for the perfect moment ( which never comes ) and my boss said to me after a few days, '' step back, simplify what you are looking and a pick the key points we pay you to follow your instincts, but more importantly GROW SOME FU:CENSORED:KING BALLS !!'' Now he was a complete toser, ended blowing himself up but was a good first leason ! haha

i just am a lot more careful cause it is not my money i am investing, and if something goes wrong i have to justify why i did it.... as long as i did it for the right reasons it is fine, but losing money is part of trading so as long as you make money keep going !

Interesting reading it from a professionals view point and it seems to boil down to the same underpinnings, just with more considerations and based on stronger credentials. Particularly interesting from my perspective as I am actually using my profits to re-qualify into a career whereby I am studying about how all this information is collated and analysed in the first place. There is something ironic in using profits derived that way to fund an education as to how to understand the mechanisms that create those profits...

[MitchT]

tricky69 said:

out of interest mate what are you trading on ?

Forex mainly and occasionally Indices.