When the market starts to fall, some investors panic, but there are many ways to take advantage of falling markets, so you don’t need to be afraid and panic, but you need to stay calm and know how to take advantage of lower prices.
Last week, stock trading markets recorded their worst weekly results since 2008, shedding more than 10% from their all-time highs last month, as concerns about the impact of the Corona virus on corporate earnings and the global economy prompted investors to look for safer alternatives. to stocks, especially And that there is great doubt about the duration and depth of the economic consequences.
To avoid big losses in crashing financial markets, market experts advise investing in CFDs, which have a ton of benefits that can give you the opportunity to capitalize on market noise.
In traditional market trading models, the main approach to success is always buying and selling low, which means that money is made when an asset such as a stock rises in value. increase in value to make a profit, so if the price of the acquired asset falls, it will incur losses.
Learn to Trade Contracts for Differences (CFDs) There are many great benefits to be found in a simple buying/selling process, the most important of which is that CFD traders can make money when asset values drop, this is known as shorting or taking. short position.
Short trade or opening a short position
Short trades are not only available to CFD traders as they can be used in other types of derivatives trading such as options and futures to make a profit this way, but the difference between CFDs and other styles of derivatives is flexibility.
In both options and futures, positions are opened at a predetermined time frame, which means that a predetermined date or time will be chosen to close the position directly, while CFDs leave the trader free to decide when to close the position. positions, which gives more flexibility in terms of holding positions, and this can be more profitable over a longer period of time or closing a position threatens significant losses.
short term trading
Shorting should not be confused with short-term trading, as it is a completely different matter, but it also provides much of the attraction of CFDs. CFD trading is subject to fluctuations in the value of any asset, can be applied to a wide range of markets, and is well-suited to very short trading. time frame “in minutes or even seconds”.
Evaluating short-term price movements in a particular market is one of the core skills required to become a successful CFD trader. Various strategies can be used to try to gain an edge, and proven valuation methods such as technical analysis can be used.
stop loss orders
A trading strategy is more than just deciding how to open a trading position at the right time, because it must also include a risk management approach that is appropriate for each individual trader or investor. are open to significant losses because they are a leveraged product, allowing traders to make large trades with a small fraction of the capital outlay that may be required.
Fortunately, there are tools such as stop loss orders that can and should be used in CFD trades. These orders are set when a trade is opened and guarantee that it will be closed automatically if a certain point or position is reached, although this does not mean that CFDs are insured against break-even, however, means that limits and safeguards can be set fairly easily that protect against catastrophic losses.
Source: El Iktisad
