Posts tagged: CFD

Blackjack Betting and Sitting at the Table with Too Much Leverage

Volatility is in the eye of the beholder, brokers like when day traders without deep pockets use leverage, because they expect their ‘clients’ to get wiped out. Yes, brokers are not your friends in many cases, in fact they are rooting against you in the back rooms of their trading operations. Why? Because they are not actually putting your trade into the cash markets, they are allowing you to trade virtuallly. Think of it as entering a casino.

The casino wants you to bet outrageous sums of money, because they know statistically most gamblers will lose. Again, you have been warned. Your use of leverage is music to the ears of your broker, because they know the volatility of the market will knock you out of a trade if your margin trading is too high and the slightest of technical reversals will produce a losing position for you. Then they will ask you if you want to make another wager. You can continue to sit at the ‘blackjack’ table or walk away.

Learn To Trade Without Getting Ripped Off

The first thing you might want to ask and acknowledge when you begin to trade is how much money can be lost? The answer is all of your money. If the answer being given to you is that there is minimal risk and that you are guaranteed profits – immediately close the website you are looking at and find another. Guaranteed profits equates into assured losses for unsophisticated traders most of the time.

If you are speaking to someone on the phone and the person keeps asking you how much money you want to make, please hang up the phone and speak to someone else. Self proclaimed gurus should be shunned. As someone once said, people tend to use the word guru, because the word charlatan takes too long to spell.

Yes, even in the most reputable and best of companies who provide trading platforms, you are going to lose money sometimes. The art of speculating and successsful trading is a delicate balance between losing money and making money. It is probable if you are a new trader, that unfortunately you are going to lose money and you will become uncomfortable. Sure you could get lucky or be a prodigy who is supremely talented, but you should understand many folks lose money in the beginning. There is a learning curve for day traders and you need good teachers. You also need a calm emotional state of mind.

Finding a Pro to Trade for You

You might want to consider letting someone that you trust and who has a proven track record with verifiable clients you can authenticate to invest your money. However to have a pro trade for you, the amount of money as a minimum you will need for them to consider trading your cash is likely sizeable. It doesn’t seem like a fair question from a social perspective, but are you wealthy enough to allow someone to trade for you?

If you find a person that is reputable to trade for you, make sure they have explained their modus operandi and you agree with their outline. In other words have them discuss their plan of attack and how they perceive complexities within the markets. What sectors do they invest in, what is the break down via percentages regarding the amounts of money they put into various financial assets? Asking questions may seem a bit impolite, but reputable fund managers and family offices should not get flustered by your questions, and they should have answers that are easy to understand. Do not let them talk over your head with fancy words and equations. Clear and concise language is necessary.

You shoud ask how often they rebalance their portfolios and if they issue a quartertly report. Importantly, ask for an example of transparent accounting which shows transaction fees that will be charged in full, including services they are charged by other financial providers within your account. Commission and banking fees can add up quickly. And then ask the magic question regarding drawdowns, and what are the allowable losses in a trade and in an account that can happen before they have to stop trading. You should get clear explanations regarding all of your inquiries.

But You Likely Still Want to Trade for Yourself

If your emotions do not let you take into consideration that there are going to be negative days, perhaps declines for weeks and bad months – simply put, trading isn’t for you. Learning to handle your money and investing should not be a speculative adventure, this is not about having fun. Oh you will certainly experience thrills, but you should try your best to limit crises. Risk management is a way to curb the elements of gambling which every day trader is undertaking.

Will you become a professional investor? What is a professional investor? Nothing like semantics and flattery to get the juices of a prospective investor going. Do not be fooled by flattery. Do not be fooled by the fact that you have a degree. There are folks who do not have high school graduation certificates looking to take advantage of you, some of them are great traders and will eat you alive. Education at the best of colleges or universities is no guarantee you will become a good trader. There is a difference between paper trading and having skin in the game.

The marketplace is waiting for you to enter and anticipates taking your money. Brokers are trying to get you to come to their trading platforms because they want to make money from your transactions and wagers if they are not reputable. These brokers actually do not believe you will make money. Until you prove you know what you are doing you will be treated like a ‘mark’. When you do prove you know what you are doing you will be treated differently in more ways than one, and it might prove difficult to withdraw your winnings.

Trust is Important, but Facts and Regulations Help

You must deal with people and companies you trust. Make sure to do a deep examination of the folks you are about to forge a trading association. Trading virtually via digitalized CFD and Forex houses that are not regulated can lead to financial disaster. And ask where your broker is regulated, and then check on the mandates of the entity and government which has written the rules for brokers – are they legitimate supervisors and who do the regulations favor? There is a lot of work involved before you trade, you must practice due diligence.

AngryMetaTraders wants you to understand the game of trading. We talk about sports often because the world of trading can be closely compared. If you are good and lucky, perhaps the world of investing awaits your success. If you suffer a learning curve like many, you can compare yourself to an athlete that must train to beat the best. You will need patience and dedication. Surround yourself with reputable firms and people to asssociate your speculative endeavors with in order to get solid results long-term.