Skip to main content

Journey to CFD

SD4_6439
"SD4_6439" by Web Summit is licensed under CC BY 2.0 
It's been a while since I wrote something in this blog. Workload and personal life demanded lots of time lately. During this holiday break, there seems to be something that made me write again.

Last 2016, I decided to try something new as a sort of investment CFD (Contract for Difference). The difference between where a trade is entered and exited is the contract for difference (CFD). A CFD is a tradable instrument that mirrors the movements of the asset underlying it. It allows for profits or losses to be realized when the underlying asset moves in relation to the position taken, but the actual underlying asset is never owned. Essentially, it is a contract between the client and the broker.

My initial strategy is to put 50% of my portfolio into copying trades of others and 50% trading on my own. During my first month, I made several successful trades when I concentrated in trading gold. This time I was able to discover the term "leverage". Leverage in CFD means a multiplier to the rise and fall of a particular asset. Let's say you bought gold 1100$ with X5 leverage. The value of gold went up to 1155$ or 5% up. Instead of you getting 5%, you will have a 25% increase of the value bought. Of course it will definitely hurt if the value of gold fell by 5%. While you can earn from rise of a particular asset, you can also get profits from selling or shorting. Using the same example if you sell gold and it fell by 5% at X5 leverage, you will get an equivalent of 25% profit of your position.

I enjoyed leverage too much, I burned much of my initial profits. High leverage means high risk and high risk will swallow your funds to zero if you don't know how to control yourself. All the profits I got from weeks of trading gone in 2 days. I learned to control my self and leave own trading for while and let my copy trades handle the trading for me. Luckily, I have good copy trades and was able to double my portfolio within 6 months. Along the way, I also learned to use lower leverage even no leverage at all and smaller positions that track the ups and downs of the asset I am trading. This month is my 12th month in CFD and so far, I was able to triple the initial funds for CFD with some additional funds during deep reds. I am trading forex, commodities, indices. I also discovered trading cryptocurrencies, but I think this subject deserves a whole separate article. For my second year trading CFDs, I will include Emerging market ETFs, European and US stocks. Wish me luck please!


Labels:

Comments

Post a Comment

Popular posts from this blog

Who Introduced Stock Market Investing to Most Filipinos?

I posted a survey question 4 years ago about influencers of people to invest in the stock market and these are the results based on the responses. Bro. Bo Sanchez Out of the respondents, 20% answered famous personalities like Bro Bo Sanchez. Bro Bo, with his book “My Maid Invests in the Stock Market” and his group Truly Rich Club apparently influenced a lot of people in this previously perceived rich man’s endeavour. The idea of linking religion with the heavenly side of money and investment seems to be a good formula. Another name of financial guru came out with Bro Bo and this is Mr. Francisco Colayco who advocates financial literacy thru Colayco Foundation. Warren Buffett also is in the list of personalities mentioned since he became rich thru stock market investments. ANC On the Money Runners up on the list are influencers within the workplace and colleagues, 11% of respondents were led by their friends in the office who are already earning in th...
Post a Comment
Read more

Business Adventures by John Brooks (Book Recommendation)

"Business Adventures" by John Brooks is like a fiction touch in a non fiction book. It is jam packed with facts and lessons from great stories that probably shaped business histories. From history of stock market fluctuation, a case of insider trading, the mistakes of a big corporation like Ford in its Edsel model, the challenges and rise of Xerox, history of income taxation, employment issues with regards to intellectual property, to British pound historical devaluation and rescue. Each story presented in such a way that can put you at the edge of your seat.
Post a Comment
Read more

HMO, Health Insurance, and Hybrid Medical Plan

The COVID-19 pandemic crisis may have few positive impact in our lives and one of those is awareness to health. Health is wealth as sickness can drain wealth or worst lead to untimely demise.Sickness can have a factor of protection and prevention which involves the topics of immunity, lifestyle, stress, environment, vitamins, diet, genes, and exercise. Due to vast origin and complex human nature we cannot escape facing illnesses at least few times in our lives.  When we got sick, we usually go through different stages. Diagnosis, wherein we go to a physician for checkup. In this stage there are also specialized equipment and tools necessary to determine the cause of our sickness. After proper diagnosis, the doctors would then recommend medicines or treatment procedures to cure our sickness until recovery. Each of the stages during diagnosis, treatment, and recovery requires substantial amount of money depending on the nature of illnesses. Oftentimes, it is difficult to face illness...
Post a Comment
Read more