Page 79 - THE MARKET WHISPERER

THE MARKET WHISPERER 77

involving money) almost always profit? That’s a true claim. One of the
main reasons explaining their success is the fact that training programs,
like CFD trading platforms, do not limit the trader to market liquidity. You
press the button – you’ve bought! You press the button – you’ve sold! Any
quantity, and at lightning speed. Traders in the real market can only dream
of such immediacy. Ask any experienced trader what his or her biggest
problem is, and probably the complaint topping the list will be speed of
execution and liquidity.

More Benefits of CFD Trading

No limit on shorts – In the stock market, some stocks carry limits on
shorts. That’s not true for CFDs. Nor is there any uptick limit which, in the
real market, limits the broker’s ability to execute shorts unless the stock
rises by one cent.
High execution speed – Buy and sell orders of regular stock go through
a long process where the order is sent to the broker, who sends it to the
stock exchange, and back. CFD trading is between you and your broker
alone, making execution super-fast.
High level margin – CFD brokers are not limited to the usual scope of
leverage on stock and can therefore let you margin up to 20:1. How does
that translate? If you deposit a sum of $10,000 in your trading account,
you can execute trades up to a total of $200,000. A word of warning: high
leverage is a blessing to very experienced traders, but can be extremely
dangerous for new traders.

What to Check before Choosing Your CFD Broker

Buy/sell spread – You need to check if you broker allows you to trade in
regular market spreads. In other words, check that he does not “open” the
spread between the seller and buyer price beyond what is shown in the
stock exchange where the real share is being traded. I know of CFD brokers
who, instead of taking execution commissions, open the spreads by three
to ten cents and even more. In this regard I can say that the broker I use,
COLMEX, allows me to trade in real market spreads.
Diversity of Stock – Some 10,000 stocks are traded on the American stock
exchanges. Of these, for a variety of reasons such as volume of activity,
only about 2000 are suited to CFD trading. Check with your broker how
many can be CFD traded. Some brokers only offer a small range, some offer
dozens or a few hundred, and some, like COLMEX, offer a few thousand,
which is all that’s needed for trading.