The CFD Edge
CFDs offer much better liquidity as well as a wide range of markets to trade, making them top choice among investors, stock traders, forex and commodity traders. But the top two real benefits are liquidity and linear pricing, especially liquidity is so beneficial that it allows for some very advanced strategies, which non CFD traders can never have.
The Investor Greg website offers valuable and insightful articles into some of these concepts, though the very advanced strategies are not really available anywhere online, but evidence suggests that they do exist and they have been developed by veteran traders, experimenting with CFDs.
With CFDs you have guaranteed stop loss orders, and it’s possible to totally eliminate price slippage, through the use of Limit type orders. This is not possible with spot forex brokers.
All in all CFD trading accounts provide phenomenal flexibility and range of choice, hedgers, and advanced traders do use CFDs in more ways that you can imagine.
Some traders even combine CFDs together with binary options, all in one strategy. Binary options can be used as probability indicators, and as hedging against CFD trading risk.
There are many binary option brokers to choose from, Olymptrade review ratings are among the best, as real traders have found this broker to meet specialized trading requirements.
The Spot Forex Edge
Spot forex is suitable for larger size forex trading, perhaps of greater size than $100 per pip, this is where CFDs no longer can provide superior liquidity, as with all good things in life, there are limitations. Spot forex is good overall, but spot forex brokers tend to provide fewer markets to trade, and this may be a little of a problem for most traders.
Most people using spot forex brokers are specialist traders, focusing on one market at a time, and perhaps only few markets throughout their trading careers.
You may be interested to know that some CFD forex traders actually use spot forex brokers, and specifically ECN type brokers, to monitor the widening of the spreads effect.
Widening of spreads is a unique phenomenon, it only happens on ECN trading accounts, even demo ECN accounts, and it can be used as an indicator of volatility/liquidity. These CFD forex traders watch this phenomenon very closely when a currency pair is testing some important price level.
The idea is that a solid breakout should occur at minimum volatility and smooth conditions, which means moderate widening of spreads, nothing unusual. Extreme widening effect means that there is too much volatility, that is too little liquidity at that very
Extreme widening effect means that there is too much volatility, that is too little liquidity at that very time, and very high risk of a false breakout.
As you can see, you can trade CFD and still use spot forex and ECN brokers to see more of the larger picture in the markets. Where one instrument is used to trade, and the other is used as an indicator, and this applies to binary options too. But each one works at
Where one instrument is used to trade, and the other is used as an indicator, and this applies to binary options too. But each one works at
Where one instrument is used to trade, and the other is used as an indicator, and this applies to binary options too. But each one works at particular and different time frame.
Binary options indicate probability, this works well for intraday and weekly trading, but not well for longer term trading. Veteran traders gradually develop a kind of sixth sense which allows them to read such market indicators and to evaluate the real risk/reward of their trades.