Hey steemittraders and friends,
I am very happy you are still by my side and follow my journey during the preparation of my 100€ trading challange.
Today i want to show you which instruments i am going to use for my trading.
My choice for this challenge are CDFs:
CFD-Contract For Difference
CFDs are financial products that work pretty simple. You place your order and everything that counts is the amount of movement/difference the market does.
For example i buy 10 shares of company x, stockprice goes up 10cents -> im up 1€
the pros are:
-big leverage 1:5-1:10 in stocks – wich gives us much more buying power
even higher leverages in the forex markets- so we can buy much more.
-lots of different markets. There are cfds for nearly every market like forex, indices,commodities and most important stocks.
-low/NO fees. Technically there are no fees in cfd trading. The only thing you pay on top is the spread.
The spread is the difference between a bid and ask price.
For example if you go long a stock. You start at a lower price. But thats just a few cents.
Of course there are some cons as well:
markets tend to be volatile and because of the leverage one big move might wipe out a lot of my money. This is very risky especially over night/ over the weekend when there is no trading and gaps happen at the open.
You can not hold for ever. Cfd trading is only for short term traders because of the leverage- you have to pay interest for the brokers money. Which will be a few cents for every overnight holding.
In the last episode we said cutting the costs in the traiding is one of our top priorities.
So we shouldnt hold the postition to long because of the interest fees.
But if we keep that in mind -> CFDs are best for my trading.
In the next episode i am going to show you how i choose my broker.
I hope you liked the litte update. Dont hesitate to ask if there is anything unclear.
Do you have any additions, ideas or anything like that. Please let me know in the comment section below.
HERE are the other to episodes of the blog
100€ Trading Challenge PREP #1 What WE have (Spoiler: Not much)
https://steemit.com/money/@steemitstocks/100eur-trading-challenge-prep-1-what-we-have-spoiler-not-much
100€ Trading Challenge PREP #2 What WE need
https://steemit.com/money/@steemitstocks/100eur-trading-challenge-prep-2-what-we-need
If you like trading and my blog and you want to stay updated , please UPVOTE, RESTEEM and FOLLOW for more. And use the tag tc100.
Thank you very much for your support
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