Don't Get Burned by Oil

Making a living out of trading, whether you trade using a leveraged account such as CFDs, Futures or otherwise, on normal day to day stocks is hard enough, never mind trying to catch the wild swings we have been having on Crude Oil, recently.

I know of quite a number of experienced traders who have burnt their fingers trying to play with the black stuff with the limited amount of margins they have had at their disposal.

If you are the type of trader who is compulsive in trading an instrument such as Oil, I could only recommend to you that keep your initial stakes at minimal and most definitely use Stop Losses to limit your losses. It is extremely possible that in trading such an instrument a trader could easily get wiped out and throw away the results of months of earnings and efforts on a single trade.

One other thing you should never do as a good trader is try to guess the top or the bottom of any market -- you should just be content with taking a day's pay as how you see a trade develops on any given day, unless you are a big player with a deep pocket, in which case, you could try having swing trades aiming for the big pay-outs.

Day Traders, are you making money?

If you are not, you should be back on the drawing board and reviewing your strategies - the choppiness in the market should always suit the day traders style of trading. Scalping the markets could be very rewarding in the present market conditions if you are day trading and sitting in front of your monitors for many hours of the day - pick your market and use your charts effectively and with a leveraged account such as CFD, Spread betting or Futures, you should be making good money.

Stick to making some 10 points here and there and by the end of the day, you should be showing 50 points profit at least - if you are not making any money in these market conditions then stop trading altogether and go back to learn more as you are definitely doing something wrong!

Have faith in your ability and press that buy/sell button and don't allow your profits turn into a loss by being greedy - be ruthless to the market as the market will be ruthless to you if you let your concentration abandon you.

Above all, only trade using an instrument which you are comfortable trading with.

Futures Trader Faces Uncertain Future

The Markets across the world have been racing against each other to see which market can lose more of its value!

In the meantime, some traders have been losing serious amount of their hard earned capital.

Normally, volatility in the stock market can be considered as a great opportunity for the experienced traders to make vast amount of money. This is more so when trades are being struck on margins i.e. trading CFDs, futures etc. Leveraged trading has its disadvantages too, as it was brought to my attention that this Futures Trader lost most of his capital on a trade position he opened last Friday before the US Market closed.

When I read about his losses, I really felt his pains -- we traders do really have a lot of sympathy for other traders, as "trading the stock markets successfully" requires enduring a lot of pains and lonely days sitting behind a screen to master.

To try to avoid financial disasters like the one happened to our colleague trader, traders must be very vigilant in such market environments of the recent days. Money Management is the absolute "must" - risk and reward must be precisely measured before a trader commits himself to opening a new trade - all trade positions must be closed before the end of the market on the same day, unless a trader trades with unlimited amount of margins!

Trading With No Confidence

All traders at some stage during their trading careers go through a period of time, which they lose their confidence.

This applies even more to those traders who trade on Margins, such as CFD or FOREX traders. The reason is because of the high frequency in the number of trades that some of these daytraders use in order to make their profits -- and the more a trader trades the more he or she is likely to get it wrong -- and when they happen to go through a bad patch, it could really hurt their pockets deeply -- and I guess that is one of the dangers and disadvantages of being a CFD TRADER.

Recently, a CFD TRADER who happens to be a good friend of mine and I have a lot of respect for, has decided to stop trading CFDs and he is trying to take on FOREX TRADING instead -- when I found out about his decision, I was extremely surprised, as he had done pretty well at daytrading using CFDs in stocks and indices for a number of years -- but apparently he must have had a few big hits, which had made him make such a decision.

So, what should a TRADER do when he starts having a bad run and his confidence plummets?

He could do a number of things:

The obvious thing he could do would be to pack up trading for a few weeks and take a break.

But what I would do as a professional CFD daytrader, and I have done this in the past, would be to lower down my stake money to absolute minimum and cut down on the number of my daily trades -- and only trade when I think the odds are heavily in my favour -- I can always increase my stake money when I start getting things right again --- remember the market is always there for you but your money may not!

Some traders may have the opinion that the best thing to do in cases like that would be to stop trading but watch the market more carefully than before and start trading again when you get your full concentration back -- lack of concentration have cost a lot of us a lot of money in this game I am sure -- it's always best not to trade when we cannot fully focus on our trading.

Trade What You See

One of the most used sayings in the Stock Market Trading Business is "Trade What You See ...." and if most traders took this simple advice seriously and understood its real meaning then I am sure they would increase their trading profits multi-fold.

When reading through some of the CFD or Forex forums, one cannot help noticing that the majority of traders seem to form a rigid opinion on how the market will shape or perform in the future; something which I doubt many traders could possibly forecast correctly.

At the moment with the financial mess which the banks have got themselves into it would be extremely unlikely that even the biggest financial guru would be able to come up with "a viable scenario" as what would happen to the stock market 2 days from now never mind months ahead.

Bearing the above comments in mind and having access to a leveraged account such as CFD why not just be content to grab whatever profits that you can make from a market which is not really sure of itself and its direction until the time that a solid trend is formed on the basis of good fundamentals in all foundations which are required to hold a stock market together. So trade what you see and not what you think you will see in order to stay in the game or even prosper from it!

Day Traders' Paradise

The volatility in the STOCK MARKETS across the world due to credit problems with financial establishments in recent weeks have offered some great opportunities for experienced day traders to accumulate wealth.

Most experienced TRADERS and MARKET WATCHERS would agree that the market will carry on being panicky, hence volatile until the day that the credit crisis are put behind us. So if you are trading daily and watching the market's every move you should be well placed to make good profits - in my opinion these are not times for long-term trading and anybody who does that is only throwing away valuable time and of course his or her hard-earned money.

Last Friday, the US Federal Reserve cut down the lending rate to banks, which was a temporary measure to calm down the market and this made a positive effect on the day and consequently made all the major WORLD MARKETS to rally.

The credit crisis cannot disappear overnight and it will stay with us for a while. For instance, last night Capital One, after the close of the US market, hit the market with more negative news that it will close down its wholesale mortgage unit. TODAY, the German Bank WestLB AG warned that it has become very difficult to acquire FOREIGN CREDITS and the FUTURES are already down as a result a considerable amount.

My advice to junior traders who use CFD or other leveraged accounts to trade, is a word of caution. Make sure your stakes are kept to a sensible size and in a volatile market I would always take profits when they arise for the reason that profits can turn to a loss in a blink of an eyelash.