This article was written in partnership with IG, the world’s No. 1 CFD provider (by revenue excluding FX, February 2018). All opinions expressed in the article are the independent opinion of DollarsAndSense.sg
Investment and trade are two different ways of making returns in the financial market. While investors aim to make money by investing in assets that will provide long-term returns (such as higher prices or profits or payment of interest), traders profit from the market successfully capture the price fluctuations in financial assets they trade.
Another main difference is that investors have held their investment for years or even decades, while most merchants are usually suitable for much shorter periods spanning weeks or days or hours or even minutes.
Since asset prices are unlikely to fluctuate significantly in the short term, most of the traders inflate the know through the use of financial leverage. Financial leverage allows investors to small initial amount of capital, but take much larger positions in their trades, enabling them to make a higher profit if successful.
Some of the products traded in often
In the financial market, there are several tools that traders can choose to trade.
These include stocks, foreign currencies (forex), commodities, indices and even cryptocurrencies. Within each category, there are also many markets where traders can trade depending on what you are comfortable with.
Instrument typeexamples of these marketsstockDBS, OCBC, UOB, Tesla, Netflix, Facebookforex,EUR/USD, AUD/USD, USD/JPY, GBP/USDindicators ofthe Singapore Index, Germany 30, Wall Street, Hong Kong HS50commoditiesgold, silver, natural gas, Brent crudeCryptocurrenciesBitcoin, Ethereum, Ripple, Litecoin
These markets, as well as thousands of others, can be traded through the platform, such as IG, who is in the world.1 CFD provider (by revenue excluding FX, February 2018). IG currently provides more than 15,000 markets to more than 195,000 customers throughout the world.
To better understand how it works trading we are normally traded index such as the Singapore Index. When the dealer puts the initial capital of$ 5,000, he/she is able to take advantage of up to 20 times its capital. This means that with just $ 5,000, a trader can enter the market and take a position with a contract value worth up to$ 100,000. Of course, it is not advisable to put all your capital in one trade, no matter how confident you may be.
This can be why frequent trading can accumulate very large value contracts within a short period of time. If the trader can make a lot of pages that have an average contract value of about $ 10,000 in the trade, and make about four of these deals per day, the following will accumulate the total value of the contract is approximately $ 1.2 million by the end of the 30 days.
This may seem incredibly high for those who have never traded, but it is more common for those who are frequent traders.
Risk management is necessary
Since the trade in dealing with such contracts of large values on a regular basis, it is important to adequately manage their risks. This is why risk management techniques are an integral part of trading, if you wish to be successful in the long term.
As the name suggests, risk management is simply being wise about managing your risk. Being a high-risk high-yield activity every trader needs to adopt some form of risk management strategy when executing trades. Without adequate risk management, even the most profitable short-term trade will eventually make a mistake and bust their trading account.
Some important risk management habits include having a stop loss on every trade don’t risk more than 1% of your account on a single trade and focus on trading well, instead of getting on the water.
You can watch this video where we explain what risk management through experience.
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Start trading with IG earn KrisFlyer miles
If you are a frequent trader, you can now earn KrisFlyer miles when you open an account and start trading using IG.
From now until 31 December 2018, the IG works on promotion where new account holders can earn up to 30, 000 KrisFlyer miles when you trade by using IG.
Simply follow these four simple steps:
- Open an account from this page
- Registration of KrisFlyer membership number when you have successfully open an account
- Make a minimum of funding S$5,000
- Trade between 17 September 2018 to 31 January 2019. You can see the number of miles that you can get in the table below. (That’s right, the trading period of one month after the end of the show so you can still enjoy the promotion until when you opened your account in December!)
The number of miles you earn will be based on the total value of the contract that accumulates on the page during the promotion period.
Initial deposit (SGD)ofthe total contract value (USD)KrisFlyer bonus miles$5,000>1,000,0002,000>2,000,0005,000>5,000,00013,000>10,000,00030,000
For example, if the trader were to trade the value of the contract is approximately $ 1.2 million on average a month since the start of the promotion, the following will accumulate a total contract value of more than $ 5 million over a period of four months and a half, earning them 13,000 in KrisFlyer miles.
If you are a frequent trader and not after the IG account holder, this would be the perfect opportunity for you to get on the IG platform, and at the same time earn yourself KrisFlyer miles that you can use in your next vacation.
All miles will be credited within 21 days after the end of the trading period.
All products offered by IG eligible for the promotion but binaries digital 100s, race options markets. You can learn more about the terms and conditions of this offer here.
If you are new to trading, we highly recommend you to start with IG demo account first. A demo account allows you to understand the mentality you need to take as a trader as well as gets you familiar with the different tools that you can use to manage your risk before you put actual money in your craft.
You can also attend online courses or seminars such as those available from the IG Academy – free resources aimed at assisting traders from different trading literacy to progress and become better traders.
If you want to learn more specifically about volatility, and how it offers both opportunities and risks for investors and traders IG collaborated with Bloomberg Media Studios to publish free download ebook that condenses the go you need to know the topics surrounding the volatility. You can download this book here.
This article sponsored by IG, the world’s No. 1 CFD provider (by revenue excluding FX, February 2018). All views, opinions and recommendations expressed in the article are the independent opinion of DollarsAndSense.sg and does not in any way reflect the views, opinions, testimonials or recommendations from IG Asia Pte Ltd (company. Reg. No. 20051002K) (“IG”). Information for educational purposes only and does not constitute any form of investment advice or an offer or an invitation to invest in any financial instrument. No responsibility is accepted by the IG for any loss or damage arising in any way (including negligence) from anyone acting or refraining from acting as a result of such information or materials.