CFD Trading Now

Option trading can be one of the most financially rewarding of all investment strategies. It requires less investment capital than share trading and if you combine this with the amazing flexibility of option choices you have every opportunity for trading success.

However option trading is a skill that must be mastered. Learning the theory is one thing, putting it into practice is another. This is why paper trading is so important. You need to get a feel for the market – how to read chart patterns correctly, how to know if your option is reasonably priced, how to handle a trade going against you etc.

You may have read some material about option trading, your head may be full of newly acquired knowledge which you’re very excited about and you can’t wait to put into practice so you can begin making money. The process of mastering the interpretation of charts (whether they’re stock, forex or commodity charts, doesn’t matter) is vital before you begin to trade with your hard earned money. By spending the time paper trading you will make all mistakes that you will learn from, but have lost no money wtih. The more time you spend paper trading the more you will get a feel for the market and understand when to trade and when not to.

Getting the “feel” of where a stock is going to go, when looking at a chart, is vital. This is why it’s just as much an art as a science. You need to practice, practice, practice! This exercise will upload the theory into your subconscious. After a while, you will just “know” what works and what to be wary of. You will also learn the value of patience, waiting for the right setup and timing your entry. Then and only then is it time to start trading with your own money.

It’s a true saying that “the most profitable skill you can ever master is the skill of trading”. Happy trading!

Futures trading is a method used to minimize risks that occur when the prices in the market fluctuates. Futures contracts are exchange-traded derivatives. A futures contract is traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price. Basically futures contracts are for assumption or hedging.

There are two groups of futures traders:

Hedgers, are interested in the underlying commodity and are seeking to hedge out the risk of changes in price;

Speculators, are interested in making a profit by predicting market moves and buying a commodity “on paper” for which they have no practical use. e.g., commodities in the market can be bought today at today’s price, with the speculation of selling them at an increased price in the future.

Hedging protects against fluctuations in market prices. This protection is made by allowing the risks of price changes to be transferred to professional risk takers. E.g, a manufacturer can protect itself from price increases in raw materials they need by hedging in the futures market. Hedging has two types, hedge sale and hedge purchase. You can buy a commodity and sell futures at the same quantity as protection against fluctuation in prices when he is still holding the stock.

Although this sounds like gambling, the fact is that speculation refers to the condition of a legitimate enterprise based on the current condition of the market trends. Remember, it is very risky for inexperienced futures traders who try to predict the market and speculate without having enough resources or experience.

Futures trading has become very convenient and simple for an individual, as nowadays many brokers offer their services for trading commodity futures online.

Platinum is an incredibly tough, rare, yet flexible metal and one that is becoming an increasingly crucial material used in industry. South Africa is the world’s largest producer of platinum, with Russia the second. The largest known reserves of platinum come from the Bushveld Complex, which is North of Pretoria in South Africa. Like all commodities platinum has a set of unique factors that will influence its price. Unlike gold it is not used as a hedge in harsh economic times and that’s because it is used in the production of many key consumer items from computers to cars to catalytic converters. When demand for these goods fall then so too the demand for the materials used in their production.

The price of platinum tends to increase in stable economic times and sometimes can be as much as twice the price of gold. As of 1 April 2010 the price of platinum stands well above the $1600 per ounce mark and has increased 7% since late February. Analysts have pointed to this rise and the increase in manufacturing output in the US and Asian markets as evidence of the world continuing to move out of the recession. And with many analysts predicting much stronger results from some of the world’s major car manufacturers including GM, Ford and Toyota the demand for this platinum looks set to rise. However, any downturn in the economic progress seen recently and we could easily see platinum prices falling. So what next for this precious metal?

One of the ways you can take a position on, and take advantage of the global commodity markets and the price of platinum is via CFD trading. Like any investing the greater your knowledge of the instrument you want to trade the better your chances are of success are, especially long-term. As we’ve seen, commodity prices can be subject to fluctuations so it’s important you are aware that guaranteed stops are available on any trade you make.

A good place to start trading CFDs is with IG Markets. They offer an extensive range of research resources and expert market analysis and commentary to help you increase your commodity CFD trading knowledge.

Start CFD trading with IG Markets.