Page 78 - THE MARKET WHISPERER

76 PART 2 - Day Trading And How To Get Star ted

SMART The more money you deposit in your trading account, the
MONEY more you increase your chances of success. “More money”
is a relative value based on your changing financial abilities
and the risk level you acclimate to.

Trading CFD’s

What is a CFD? A CFD (Contract for Difference) is a contract between
a “buyer” and a “seller” certifying that the seller will pay the buyer the

difference between the stock price at time of purchase and its price at time
of sale. In other words, buying a CFD allows the buyer to profit (or lose)
from the difference in stock price without actually buying the stock itself.

Under certain conditions, as described below, and if your broker
allows you to choose between stock or CFD trading, choose CFD without
a moment’s hesitation! CFD is executed in exactly the same way as stock
trading. In fact, if your broker does not expressly state what you’re trading

in, I’m prepared to vouch for the fact that you wouldn’t even sense the

difference.
So how does CFD trading differ from stock trading? When you buy

stocks, you buy them through the stock exchange from a person interested
in selling them at the exact same time you’ve decided to buy. One of the
biggest issues with the stock exchange is the scope of supply and demand.
But we don’t always find the buyer or seller with the required amount, and
we often need to “chase the stock.” Chasing stock generally costs us both
money and health. But when you buy CFD, you’re not buying stock at the
exchange; you’re buying a contract identical to the stock from your broker.

The advantage of this method is that your broker can allow you to buy

or sell any quantity without linking it to stock exchange liquidity.
Think of it this way: Let’s say you want to buy 1000 shares, but sellers

are currently only offering 100. You would have to wait for additional
sellers, or possibly pay a higher price for additional stock. When you trade
in CFDs you are not limited by quantity, and therefore the instant you hit
BUY, you receive the full amount you wanted even if that supply of shares
is not currently available in the stock exchange. Similarly, when you wish
to sell 1000 shares, you will not have to wait for buyers to take the full
quantity. You just sell by hitting the SELL button. If you have experience

in the market, as I have, you must agree that it’s impossible to tag this

method with any description other than “amazing!”

Have you ever heard the claim that students in trading courses who

use the “demo” (which allows practicing how to trade without actually