Two Numbers That Guarantee Your CFD Trading Success

By Jeff Cartridge

The two critical numbers to know when you are trading is the risk reward ratio and the winning percentage or hit rate. Understanding these numbers will go a long way to improving your trading.

The risk reward can be calculated by averaging all the wins and dividing by an average of all the losses. The risk reward clearly displays how large your profits are when compared to your losses. The hit rate is simply how often you win and is a count of the winning trades divided by a count of all the trades.

How Does Lotto Compare To CFDs?

Judging by the number of people that play lotto this is the way to generate wealth, but is it really?

The risk is very low, lets say $10 for a ticket, while the reward is potentially huge, with first prize being many millions of dollars, say $10 million. The risk reward ratio of this investment is exceptional at 1 million to 1. There are very few investments that deliver this kind of risk reward.

But it is not how much you win that is important when playing lotto it is how often do you win. An awesome risk reward is coupled with an awful hit rate. To win lotto if you require 6 from 40 balls then your probability of success is 1:3,838,380.

If we were to play Lotto 3,838,380 times then we would expect to win once and lose 3,838,379 times. This means we would win $10 million once and lose $38,383,790, overall losing $28,383,790.

Winning Lotto is more about luck than probability as you may win before you buy you 3,838,380 ticket. But when it comes to building a profitable trading strategy it is not about luck it is about taking advantage of an opportunity that has a profitable edge.

Rugby Versus CFDs

The Crusaders have consistently won the Super 14 rugby competition in NZ managing to secure 7 wins over the last ten years.

For one of the games in 2008 a gambler placed a bet that the Crusaders would win. The odds were 1.08 which means the $100,000 bet that was placed would return just $8,000 profit if the gambler won. With a risk of $100,000 and an upside of just $8,000 the risk reward is very poor at 8:100.

But the probability of the Crusaders winning the game is very high. For this to be a profitable investment the odds would have to be over 90% that the Crusaders would win the game.

The odds are unknown, but assuming they were 95% then the gambler would win 19 out of 20 times. This means he would win $8,000 x 19 - $100,000 x 1. Overall he expects to win $52,000 from this strategy. So despite the risk reward being very poor it is possible that this is a winning strategy.

A successful CFD trader will find a CFD trading strategy that skews the odds in their favour and then implement that strategy to generate profits. - 23221

About the Author:

Jeff Cartridge is the author of Supercharge Your Trading with CFDs and created the website LearnCFDs.com Discover the Truth Behind CFD Brokers

Forex Trading - The Ultimate Course

By James Taylor

When the new currency of exchange? Do not worry, the first steps in Forex trading is easy and you can always test your skills in a demo account first before going "live" with real money. In Forex Trading, we need to know what FOREX is. For novices, forex trading for buying and selling of various currencies around the world.

FOREX is a treat if you buy one currency and selling another at the same time. It is always traded in pairs, EUR / USD, CHF / USD, USD / JPY ... is "short" in one currency to buy, each time with another, and the profit is when you buy low and sell high.

Be on the FOREX market

FOREX market is the largest trading partner in the world. There is an average turnover of $ 1.9 trillion per day and the number is almost 30 times greater than the volume of shares trading in the United States. FOREX trading is very unique, because the transactions are between two partners over electronic network or telephone connections.

There is no central place, such as stocks or futures markets to trade and the clock. Each day begins trading currencies, if the financial centers in Sydney start the day, and travel all over the world to Tokyo, London and New York. Retailers in the month of May, at any time on the market, regardless of local time.

Although forex trading with a large volume of trade today, it is not for the public until 1998. In the past, the FOREX market is not available to small speculators or individual traders on the minimum size of a large company and the strict financial requirements.

At that time, only banks and large multi-national cooperation and currency dealers were able to take advantage of the currency exchange market, extraordinary liquidity and strong trend in the nature of the world, the most major exchange rates.

Only until the late 90s, FOREX brokers should break big giant inter-bank units into smaller units and offer these units to individual traders like you and me. Today with the rapid growth of Internet and communications technology, FOREX trading has become one of the hottest make-money-at-home businesses for those who wish to avoid conventional 9-5 job.

In fact, forex trading, Forex trading is mainly in the large international banks. According to the Wall Street Journal Europe, 73% of the volume is the great ten. Deutsche Bank, at the top of the table, was 17% of all currency, followed by UBS in the second and third Citi Group, 12.5% and 7.5% of the market.

Other large financial cooperation in the list is HSBC, Barclays, Merrill Lynch, JP Morgan Chase, Coldman Sachs, ABN Amro and Morgan Stanley. For market participants segment, about half of the transactions carried out strictly between traders (eg, banking, foreign exchange dealers or large), others are mainly between the merchants and financial institutions.

Why FOREX is popular?

There are several reasons why FOREX is the most popular investment between the world of speculators.

Forex trading, you can for your benefit. The FOREX market is an amazing transformation since the advent of the Internet. The technology now has the opportunity for small investors to play on an equal footing with large companies and banks.

Who with a computer and a will to succeed can trade currencies in the privacy of your home or office. Forex online is the way investors should conduct their activities. With access to your portfolio 24-hours a day, it is quite easy to start. You can choose whether to recruit a professional for your company, or you can choose to do so themselves.

Forex trading also provides a relatively high leverage for the operators. FOREX dealers, the company with up to 200 to 1 leverage rates. With this advantage, the return on investment has increased substantially, and traders can always start with little capital and less than $ 1,000.

Getting Started in Forex Trading

You do not need much to work with Forex trading. A computer with Internet access, a fund account with a FOREX broker change, and a system of exchange should be sufficient to start the ball rolling.

To reduce the risk of losing money, some basic knowledge of tables is also recommended before you start trading FOREX. Forex charts assist the investor by providing a visual representation of exchange rate fluctuations. Many variables affect the rate, as interest rates, bank policies, geopolitics, and also the time of the day May affect the exchange rate.

As pointed out by experts FOREX trader Peter Bain, the graphics are an important tool in forex trading. In his newsletter, he reveals that the daily charts, hourly charts, 15-minutes cards are used, while trading Forex. As stated in its newsletter - "Daily chart will help you understand the general trend from a business point of view, and the hourly rate (one hour) chart will give you an idea of the intraday trend. I 15 minutes for the chart is the entry and exit - with the help of the table for five minutes, if the price is moving quickly, and you are closer to the action. "

As a method of technical, forex charts based on the principle that "history is repeating itself." FOREX traders who study charts predict the market with an assessment of the past, the future market development. The timing for cards in May for the different operators, some analyze the past one week, some prefer six months analysis, and there are also traders who analyze the market for a period of five to ten years in a FOREX trading.

A huge variety of FOREX charts are available on the market. Some charting methods are very simple, with a few FOREX indicators to show the direction of trade, other graphics can be up to forty indicators and those are mainly for advance traders, the more skillfully. MACD Divergence, RSI, RSI range, and the price are some of the known indicators in the charts.

Choose the right FX dealer is a way to avoid unnecessary risks. All forex dealers are not regulated the same way. Although foreign exchange dealers must be regulated by law, companies and individuals can solicit retail dealers in foreign exchange and management of these accounts, without regulation. As a reseller, you must take the responsibility for determining whether the exchange dealers are regulated. Otherwise, you may be exposed to additional risk.

Also beware of dealers with plants, which seems too good to be true. Price warns dealers that you have, and still in the investment. If you are the United States, you can always CFTF (at http://www.cftc.gov) or NFA (at http://www.nfa.org) for more information.

Conclusions

They are without doubt in this article, because you are new to FOREX and were looking for some readings on the internet. To be honest, FOREX can be very profitable, but the risk is located below is equally great. Do not trade with the right strategy and investment plan.

Read books, courses, video seminars, read the newspapers, or even practice first with a dealer demo for you. Trade smart and maximum FOREX - good luck! - 23221

About the Author:

Want to become an expert Forex Trader then all you need to get started is a Forex Account and a Forex Robot like the Best Forex Sniper

How to Lower Your Trading Risks In Penny Stock Investing

By Malcolm Torren

The worst thing that could happen in this business is when you go broke. Nobody ever wants that to happen and so do you. If you run out of your investment funds, the stocks and shares just keep moving on and never stop. Of course you won't be able to operate anymore because you have no money to spare. That couldn't be difficult to understand, right? So that this horrible vision of bankruptcy will not happen, it is important that you set your limitations in penny stock investing.

It cannot be any clearer than that. No matter how cheap the stocks are, it is important to keep your reservoir full as well. The stock market trend is not predictable. You share can sell high today and you could lose it tomorrow. What if that loss was the last investment money you have? Sad story but this can happen to anyone who is not setting clear goals for themselves. This article talks about some random guidelines on how to keep your savings intact.

- Don't spend more than what you earn. This is common sense. You can't spend any more than what you only have. But what this means exactly is that if you are into penny stock investing, don't pour in all your savings. Set aside a budget for your investment to bank roll. A reasonable margin would be not more than ten percent of your personal funds. Any profit made, you can always add it to your savings. But don't go above the 10% mark unless you can really afford it.

- Discover all you can about penny stock investing. In this same way as setting up a business, you have to understand the dynamics and the operations. This will lead you to better understanding of the trade. With it, you can make decisions with better precision, not accurate but better.

- Acquaint yourself of the possible risks. Known to everyone in the trade, penny stock trading ranks the highest in risk scale. The stocks lack liquidity. Fraudulent exercises are very possible in this arena. You could lose your money like bubbles bursting in air. But good investors are natural risk takers. They understand it like it's at the back of their hands. With this mindset, you can set your investment funds better.

- Learn when to invest and when to hold back. Don't get carried away if you stock price goes up. It can go down just as fast. So it is important to learn some timing strategies in penny stock investing. This should save you from losing more money and keep your savings steady.

- Investment is not gambling. If you lose the bet, you can't have it back. So you bet another. Although stock market trading behaves somewhat similar, it's not exactly the same. Investment aims for profit. When you get your share, you bank roll it for more profit. And you're not the only one benefiting it. Gambling is just for entertainment. Penny stock investing is for serious money makers.

Of course, the list on tips can go on and on. But no matter how sensible and persuasive these tips are, it's really up to you. It's your penny stock investing money. You have full authority over it. Small cap trading can make you smile a lot if you stop betting your money and start thinking of it as investment. - 23221

About the Author:

Be careful with hot penny stock pick scams. Learn more about penny stock investing.

What Are Stock Indexes? (Part I)

By Ahmad Hassam

There are hundreds of ETFs and HOLDRS covering key industry benchmarks such as the various Standard & Poor Indexes, Russell Indexes and the Dow Jones Averages or other less well known narrow based sectors.

For example, SPY tracks the Standard & Poors S&P 500 Composite Index. It is the largest of the ETFs. You should know the major indexes as an investor that are either key benchmarks or have ETFs tied to them.

Standard & Poor: Standard & Poor (S&P) is the financial services segment of the McGraw Hill companies. It has been providing independent and objective financial information, analysis and research for nearly 140 years.

It is also the provider of equity indexes. These indexes are also used as the basis for wide variety of financial instruments such as Index Funds, Futures, Options and ETFs. Investors around the globe use S&P Indexes for investment performance measurement.

S&P 500 Composite is one of the most popular indexes in the global financial markets. Hundreds of companies around the world have licenses with the Standards & Poors for their index products and the influence and name recognition of S&P 500 is unparalleled. S&P 500 is also used as a key benchmark for money manager performance.

The S&P 500 is a capitalization weighted index that tracks the performance of 500 large capitalization issues and each year thousands of money managers have the single minded goal of outperforming the S&P 500. S&P 500 represents more than 75% of the capitalization of the entire US Stock Market.

Over the years, the complexion of S&P 500 has changed. 30 years back most of the stocks were from the Industrial Sector. By 1970s, six of the top companies were from the Oil Sector. In 2000s, technology composed about one third of the capitalization of the index. The stocks in the S&P 500 are determined by a nine member committee in accordance with the general guidelines.

The other Standard & Poors indexes are the S&P Midcap 400 Index. It is based on 400 chosen domestic stocks and is also capitalization based. It measures the performance of the midsize companies of the US economy.

S&P SmallCap 600 is also capitalization weighted index and is of interest to institutional and retail investors. The S&P SmallCap 600 Index consists of 600 smallcap domestic stocks and these stocks are chosen for market size and liquidity. There are also sub-indexes based on these S&P Indexes.

NASDAQ: You will often hear the Nasdaq market being up or down on a given day in the media. NASDAQ Composite Index contains more than 4500+ companies representing a market capitalization of trillions of dollars.

There is another Nasdaq Index called the Nasdaq-100. It is composed of the top 100 nonfinancial companies in the Nasdaq Stock Market. The QQQ is based on the Nasdaq-100 Index. NASDAQ-100 is a modified capitalization weighted index. - 23221

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and forex. Know Candlestick Charting. Learn Forex Trading!

Analyzing Currency Trading Online

By Zadoc Robinson

In the 21st century when technology is ahead in position, there are and increasing number of people who are looking to follow their passion in life by relying on their computer and internet connection. This in particular applies in online forex trading.

The practice of trading a currency for another like US Dollars for British Pounds based on the present profit margins and exchange rates is alike with selling and buying stock in the stock markets except the reality that currency isnt grasp for very extended continuous instabilities in the market cost.

With the convenience of being connected online and realizing that the internet is a 24/7 operation, on your leisure you will be able to augment your contact in foreign currency trading to a number of markets. Beforehand, you will have to create a Forex currency trading account on various online trading sites.

For the duration of this moment, you may want to consider looking into an automated Forex currency trading application to go along with. Apart from that you will need to first fund your online account. After you have attained everything, you're now ready to commence.

Provided that there are various time zones from all across the nations, you will have to settle on which markets you will deal with and which ones will be suitable for your present schedule. This is particularly real when you are utilizing any automated application when you are trading.

Another advantage when you are planning to adhere to online currency trading, is to consider the breaks to begetting lavish amounts of profits while trading in high volumes. This factor is imperative when you are distinguishing the market of your choice.

Another benediction when you are engineering currency trading online is that you can earnestly remove the middle man, as well as to monitor your trades placing orders whether to buy or sell as you prefer, and not worrying about paying any commission for the task. This is positively true to a lot of online currency trading programs currently on the market, this fee seems to be incorporated with the price of the application.

Buy any application you should ensure to review the instructions as you would not like to be the center of the lucrative trade and then eventually realizing that you are paying more cash to finish your internet currency trading transaction.

As you are genuinely seeking for a program that will take care of your trades when you are not presently on your computer, make sure that you have researched about it and it is qualified to support you along the way. Also do your due diligence in order to find out what systems will be able to train you more and be able to learn the highs and lows of this very risky but lucrative industry. Keep in mind that you will not become an overnight success story and that there are plenty to be learned in this field, remember preparation is key. - 23221

About the Author:

About the author: Zadoc Robinson has been online currency trading for seven years. Visit his site for free information in theonline foreign currency trading business.