Cfd strategy

The best trading strategy is the one that suits you

(2) start reviewing different trade strategies and focus only on those that may suit your trading profile

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Cfd strategy

CFD strategy -trading strategies using contracts for difference (cfds)

The best trading strategy is the one that suits you

There are hundreds of different trading strategies covering all risk profiles. Most people believe that there is a single trading strategy that can make everyone rich, in a matter of months. That is certainly not true. The best trading strategy is the one that suits you. The same trading strategy that can make someone rich, can make another trader poor.

Categories of CFD trading strategies

These are all key categories of long & short CFD trading strategies :

Scalping trading strategies

Intraday trading strategies

Automated cfds trade strategies

News trading cfds trading strategies

Hedging trading strategies

Zone trading cfds trading strategies

Pairs trading cfds trading strategies

Swing trading strategies

Position trading strategies

Carry trading cfds trading strategies

Long-term cfds trading strategies

Dividend stripping trading strategies

The concept of succesful trading -formulating successful strategies

These are some key variables determining the adequacy of a trading strategy for a particular trading profile.

(i) experience in derivatives trading, especially as concerns using high capital leverage

(ii) knowledge and experience in the asset classes involved (forex, indices, metals, etc.)

(ii) available time to be devoted to implementing a trading strategy (very important)

(iv) the risk profile of the trader (how much can he afford to lose)

(v) the character of the trader and the ability to concentrate and make the right decisions during choppy market conditions

Trading strategy and basic steps for succesful trading

These are some basic steps before applying a trading strategy :

(1) define your trading profile according to the above five key variables

(2) start reviewing different trade strategies and focus only on those that may suit your trading profile

(3) find a CFD broker that offers the best trading terms for those particular strategies (check below for more on that subject)

(4) sign a demo account with that particular CFD broker and test the performance of your selected strategies

(5) if you are satisfied with the results, open a real account with the same broker, and start trading on micro-lots (1 lot =$1,000)

(6) if you are satisfied with the results, start trading on standard lots (1 lot =$100,000)

Selecting CFD brokers based on the chosen trading strategy

Whatever strategy you choose to apply you need to be aware of the trading spreads and the overnight financing cost (SWAP rates) you are going to pay.

(i) if you select a scalping or another type of intraday strategy, you need to select a CFD broker offering the tightest spreads for the asset classes involved.

(ii) if you apply a long-term or carry trading strategy, you need to start by choosing the CFD broker offering the most favorable SWAP rates for that particular asset. The overnight financing for holding a certain trade position may be positive or negative.

Selecting between promotions based on the chosen trading strategy

CFD brokers offer good promotions for opening a new trading account with them. You can take advantage of these promotions and make the implementation of your trading strategy easier. The key when choosing trading promotions is to determine the volume activity generated by your trading strategy, as follows:

(a) if your trading strategy will generate high volume activity (scalping, intraday, or similar trading strategy) then you need to join a rebate plan. A rebate plan can reduce 20-30% of your trading cost. Joining a rebate plan is free of charge and it can really make the difference in the long-run.

(b) if your trading strategy is based on positional trading (swing, carry, long-term strategies) then it will not generate high trading volumes. In that case, search for a credit bonus. This bonus will be used as a margin if your capital is lost. Usually, a credit bonus matches 100% of your first deposit. Using a 100% credit bonus means you can deposit 50% lower and have the same size trade position (cutting your risk 50%). The key here is to make sure that the credit bonus you will receive can be used in a negative account balance (ask your broker via email before making the initial deposit).

(i) a rebate plan is, in general, more important in the long-run than a credit bonus,

(ii) almost always, you can combine a rebate plan with a credit bonus (one doesn't cancel the other),

(iii) a credit bonus can be useful as an extra margin (minimizing your deposit requirements),

(iv) make sure your credit bonus can be used in negative account balance (otherwise, it is completely useless).

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■ CFD strategy -trading strategies using contracts for difference (cfds)

CFD trading strategies – effective trading

Having reached a stage where you’re comfortable with what cfds are, how they work and the various different options that present themselves to you as a trader, it’s time to start looking further into the nitty-gritty that is trading strategy. Ask any accomplished trader whether or not he employs a consistent, repeatable strategy, and more often than not you’ll find the answer in the affirmative. Devising a strategy is a central component of successful, sustainable investment – anything else is either highly labour and time intensive, or bordering on guesswork.

Why do you need strategies to trade cfds successfully?

A strategy for investing is like a blueprint for building a house – without those instructions in place, it is hard to ensure you’re consistently hitting the mark, and that the pieces of the puzzle will readily fit together when the time comes. While strategies don’t have to be overly complicated, they are procedures best developed through a combination of knowledge and trading theory, and personal (and often bitter) trading experience.

In the forthcoming segment, we’ve attempted to outline the foundations of common CFD trading strategies for you, collating the collective knowledge of experienced traders to reflect a true and accurate position of some of the most widely used trading strategies and techniques in the CFD market. While it’s up to you which (if any) you choose to implement, it is nevertheless important to bear in mind the value of experience, and to take advantage of the mistakes others have made before you to prevent losing your capital unnecessarily.

Learn from experience

Likewise, there is really no substitute for experience when it comes to trading other than the knowledge of those that have gone before you, and there are invaluable lessons to be learned from devoting time and energy to reading up on trading do’s and don’ts. Like most things in life, there are certain fundamental trading lessons that it pays to learn in the theoretical sphere before you launch unsuspectingly into the markets to learn the hard way.

While there are no hard and fast formulae to which you must adhere when trading cfds, there are certain fundamental trains of thought that have served traders well over the years, and it pays dividends to familiarise yourself with these strategies – if not for personal profit, to give you an insight into the possible mindsets of other traders. So without further ado, here are a few of those key trading strategies, tips and techniques that will stand you in good stead in your future trading efforts.

Why is it important?

One might think why it’s so important to have a trading strategy, think again. One has to follow the plan and stick to it. No matter if the markets go south or north, you have to be prepared for it and that’s where the strategy comes into play as you can weather the storm without paying much attention. You know your goal and you stick to it.

Always remember, it’s your money on the line and you have to stay disciplined and dedicated, make sure you’re in control and stick to your own strategy; otherwise, it’s pointless. Discipline and experience are the vital ingredients which will turn your losing trades into the winning ones.

CFD trading strategies for successful trading

Cfds, or contracts for difference, are derivative off-exchange instruments which allow traders to speculate on longer term price movements. Traded directly with the broker rather than the market, cfds are contracts to buy or sell an underlying instrument at some future point, at a price stipulated today. Like spread betting, cfds allow traders to adopt highly leveraged positions, and can provide traders with an alternative instrument on which to base their market and index projects. There are numerous trading strategies applicable to trading cfds.

The importance of CFD trading strategies is hard to overstate, and without a coherent and defined plan of action it is extremely difficult to get to a stage where your cfds consistently deliver a profit. Trading anything without a strategy is like playing golf blindfolded – while you might hit the ball once or twice, it’s far more feasible to open your eyes and take account of the wider picture with a strategic approach to your CFD trading.

Choosing which CFD trading strategies to employ for best effect is something of a balancing act, and requires you to factor in a number of considerations when making that decision, including your appetite for risk, your trading objectives, the impact of leverage on your positions and your available capital. Nevertheless, finding a trading strategy that works for you is the first step towards more consistent CFD trading, and could set you on your way to building a long-term, profitable trading career.

Two types of strategies

Short term

CFD trading strategies come in a variety of different guises. Some are based on going long, while others are based on selling weak markets short. Others focus on the turning point of markets, while others trade within the boundaries of previous price performance. But aside from the specifics of the nature of an individual strategy will be an underlying concept – it will either focus on long term investment strategy, or a shorter term investment strategy.

While both are equally popular in trading as a whole, cfds tend to fall more often (although not exclusively) into the short-term camp, for the fundamental reason that financing costs can make long-term leverage a problem. But how do short term trading strategies help traders to generate sufficient return to make it worth their efforts, and how do they compare to long term trading strategies on the whole?

Short term trading strategies tend to look at cfds in terms of hours, rather than days, for the simple reasons of financing costs, and the mechanism through which these costs are passed on to traders. Financing costs only become an issue when positions are held overnight, and in allowing a position to roll over the trader is instantly eating into his margin on the day by incurring extra charges. Depending on the nature of the present transaction, this could be sufficient to render a position unprofitable, and you may find yourself in a financially better situation by closing out and taking your profit just before the end of the trading day.

But short term trading strategies also bring other benefits to the table. With a short term position, there’s only so much movement the market can make. While cfds are perhaps best applied in volatile markets, it is a rare occurrence for markets to collapse totally over the course of one day. That’s not to say it doesn’t happen, but you are far less likely to feel the heat of a total market collapse in your CFD positions if they are held over a maximum of one day, rather than, say, a month. By keeping your exposure to different markets brief, short term trading strategies allow you to avoid the dangers of over-exposure.

Similarly, short term trading strategies lend themselves to contracts for difference more naturally because of the high leverage component cfds bring to the table. Cfds are the ideal instrument for a quick in and out, allowing maximum gains to be had in the shortest period of time.

However, trading short term does have its drawbacks, and one of the main concerns many CFD traders express with shorter term trading strategies is that fact that commissions and transaction fees are so significant. It might not seem to be the case when you’re spending a couple of percentage points here and there, but if you were to sit down and accumulate the sheer amount of money short term trading strategies shovel into the pockets of brokers, you would be amazed. With longer term trading strategies, this isn’t so much of a concern, but of course the financing costs start to come into play the longer you hold a position.

Not all trading strategies for cfds have a short-term outlook, despite the vast majority relying on traders opening and trading positions over a short time frame. With cfds, time is most definitely money, and in combating financing costs short-term strategies already have one-up on their longer-term counterparts. However, it’s worth remembering that just because conventional wisdom says short term is the way to go doesn’t necessarily make it any easier or less risky an approach over time than trading on a long-term outlook.

Long term

Conventional wisdom in CFD trading suggests that short term transacting is the best policy, holding open positions for a day or two at the most to counteract the bite of financing costs. Long term trading strategies have long been regarded as the preserve of less highly leveraged trading styles, and tend to go hand in hand with less volatile markets. But is that necessarily a rule to which you must adhere as a CFD trader?

Some CFD trading strategies are in fact designed for those with a longer-term view, and while financing costs are no-doubt an issue that must be borne in mind at all times when dealing with margined investments, they don’t necessarily cancel out the profit potential from a given CFD position.

Take the example of a property developer investing in an office complex. Chances are, the developer will be funded by a bank in order to make the deal happen, and the costs of providing this finance (itself a form of leverage) will accrue over the lifetime of the investment. The developer will of course be required to account for the interest costs and factor in repayments to his financial calculations, but this doesn’t necessarily mean it’s impossible to generate a profit from the transaction. The same is true with holding contracts for difference over the long term.

People don’t tend to invest in cfds, preferring instead to trade them on a quick, short-term basis. But longer-term investment actually have their advantages. One of these core advantages is the ability to ride larger price movements – a door that is abruptly shut to those engaging in shorter term strategies.

Price movements over the course of one day are usually restricted, and it is a rare occurrence the prices will move drastically – even in volatile markets. Contrast that with the potential movements in price that can take place over the course of a couple of months, where serious price rises can make savvy traders serious money – interest costs and all.

Furthermore, the cost of transacting with longer term CFD trading strategies is significantly lower than it is with day trading and other shorter-term outlooks. Because day traders engage in multiple short-lifespan trades, they incur the costs of broker fees and commissions on a much more frequent basis than their longer-term counterparts, and this is a cost that can have a serious impact on your trading bottom line. While it is true to say that longer-term positions generally expose your trading account to greater risk, this can be tempered with lower per-transaction costs, and provided you do your homework, can be an equally, if not more profitable investment approach than going the short term route.

Long term trading strategies are far from the norm in CFD trading, but that’s not to say they are in complete isolation either. Traders who employ long term CFD trading strategies understand that they must bear the brunt of the additional costs, but by striving to stake out for much larger profits, it is hoped that the rising value of open CFD positions will more than cancel out financing costs to deliver a healthy profit over time.

Support and resistance

When trading cfds off the back of technical data, there are few more important terms of which you must be familiar than support and resistance. Support and resistance levels provide traders with clear and defined parameters for trading, and enable decisions to be made over both short and long term outlooks to drive a profit. No matter whether you’re looking at cfds on company shares or cfds on commodities, the interplay of support and resistance makes for a more naturally obvious trading system, and helps define the outer limits of possible CFD transactions.

Support is defined as the bottom end of a market for a particular CFD, that is the point at which downwards momentum halts and buyers re-enter the market in recognition of the under pricing of the CFD. Resistance, in contrast, is the top end of the pricing spectrum, and the point at which traders close out their positions in order to realise their profit – in other words, the point of resistance is the notional ceiling through which the CFD price does not penetrate.

Support and resistance work as trading indicators because markets behave in a relatively cyclical fashion. Take, for example, oil prices. The market for oil is driven by supply and demand, and all things being equal, prices will naturally fluctuate between set levels, revolving around the true value which tends to lie somewhere in the middle. As those that require oil for manufacturing start to buy it, demand increases and forces prices upwards until they reach an unsustainable level, at which point prices fall until they are too cheap, which encourages buyers to re-enter the market, and so the cycle continues.

With investors and price speculators jumping in on the action, and external factors prompting decisions to buy and sell, this serves to make the market a little more volatile and a little less predictable in practice, but nevertheless at a conceptual level, there is both a support and resistance level at which prices become unsustainable at both ends of the spectrum.

Any strategy relying on trading resistance and/or support requires the ability to identify support and resistance levels. One of the key ways in which traders reach conclusions about these thresholds is through graphical analysis, and through closely monitoring the behaviour of prices as the markets move through their cycles.

A one-time low isn’t enough to justify trading that as the market support – a support is a consistent price point, or more accurately prize zone through which the price of the relevant CFD stubbornly does not move, and it is crucial to check and double check these levels as the market moves through its cycle to ensure you’re making a sensible investment decision. Once these levels have been firmly established, its time to sit out and wait the next potential turning point, before riding the wave of the cycle as market trends begin to reverse.

Trading off the back of support and resistance measures allows traders to capitalise on the cyclical nature of the markets, and to take advantage of under and over pricing in specific CFD classes. With the aid of graphical analysis, and a consistent monitoring of CFD prices and external price triggers, trading through support and resistance boundaries can be an effective way to improve your success and consistency when trading contracts for difference.

5 CFD trading tips & strategies every beginner should know – 2020 guide

Stock trading has been around for hundreds of years, but it has always been the market for those that are more financially stronger. However, a lot of things have changed in the 21 st century, making stock buying & much more accessible to a “regular” citizen. In other words, you do not need to have millions of dollars in your bank account to make a transaction in this industry. With easy access to the internet and contracts for difference or CFD, it is not easier than ever to trade.

Nevertheless, just because it is accessible to you, me and everyone else do not make it simple or easy. You can buy and sell with a much smaller amount of money today, but it is still difficult to make a profit out of this as much as it was a hundred years ago.

However, there is no need to lose hope. Today, there is so much information regarding CFD trading, even a beginner could make some real cash out of it. To save you from all those common mistakes you can make as a beginner, I decided to write this guide and tell you about all the trading tips and strategies you need to know about.

Learn more about CFD trading

If all of this is very new to you, the first thing you should probably do is try to understand how this entire industry works. Once you get a good understanding of how it works, you can become a part of it. Otherwise, without any knowledge, you will just end up spending your money aimlessly and you will be left with no capital.

Fortunately, learning about CFD is very easy because there is tons of information regarding the subject on the internet. There are so many different sources you can learn from.

Once you are done doing research, you can start exploring different tips and strategies as a beginner.

Find a good strategy

If you want to be a traitor, you should never rely on luck. This might be the case when you do not have to listen to your gut. Instead, you should use logic to be careful how you invest your capital.

Stock buying or selling can be similar to gambling because there is a risk for you to lose all of your money. That is why it is very important to have a certain strategy and to invest your money as best as you can.

Before you make any kind of move, it is vital that you do some research first on the investment that you want to make.

To truly be successful as a traitor, you will need to find a good strategy. Naturally, you can also build your own strategy, but leave that to the more experienced players in the game. Right now, you are still just a beginner and you should treat yourself as such. Find a strategy that you believe will help you make a profit.

Once you find a strategy, make sure you properly learned and then stick to it no matter what happens. It is very important to stay true to your strategy because there will be moments when you will want to panic sell all your assets. The market is volatile and prices can easily go down and up. Whenever you see a significant price drop, do not panic and stick with your plan.

Pick the right stockbroker

The platform where you will be buying and trading assets is another very important factor that you must consider. Right now, there are probably hundreds of different platforms and applications that allow you to trade cfds.

However, not every platform can be good for you. There are some out there that might try to scam you out of your money or force high fees on you. As a beginner, you should probably look for a platform that has very low fees.

Obviously, it can be a bit difficult to find the perfect trading platform, but if you do a little research and check this or other similar websites, you might be able to find reliable CFD brokers in your area.

Always be ready to take action

As I already mentioned previously, the stock market can be very volatile sometimes and you always need to be ready for those spikes or drops in the prices. You cannot exactly know when they will happen, but you need to be ready.

That is why I believe it is best that you find a CFD trading website that has proper mobile device support or at least has an application for both android and ios.

With direct access to the market through your phone, you can always be ready to take action whenever it is needed. Obviously, I am not telling you to be paranoid and check how your account is doing every 15 minutes, but you should check it at least once a day. You should do that to ensure that everything is stable or whether you need to make some changes with the assets you already have.

Never go all in

There will be situations when you will feel tempted to put all of your money into a single stock or into a single company. No matter how lucrative it seems at that moment, I suggest that you never go all in. The reward that you might get out of that might seem quite good, but it is simply not worth it. With this kind of move, you could lose your entire capital, leaving you with nothing to trade with in the future. That is not how all those experienced players on the market have made their millions.

With patience, focus, and dedication, you can get very far with CFD trading as a beginner. Play it smart, always stick to your strategy, and be very careful with your capital.

There are probably hundreds of other tips or strategies I can share with you regarding this topic, but right now, I think these tips I shared are more than enough. You are still a beginner and you should not overwhelm yourself with too much information. I hope that this guide will be helpful to you.

10 golden rules for CFD trading

Cfds have gained popularity in recent years due to the benefits that they offer traders. But CFD trading has certain risks too. We’ve compiled 10 golden rules of CFD trading that can help you to understand the product better.

Publication date : 2018-11-01T13:39:00+0000

1. Develop your knowledge of cfds

Before you start trading it is vital that you understand what cfds are and how they work.

CFD stands for contracts for difference – a derivative product that enables you to speculate on a range of global markets such as forex, commodities, indices and shares, without having to own the underlying asset. This means that you can take a position on rising and falling markets – you would go short (sell) if you predict the price will fall or go long (buy) if you predict the price will rise.

Cfds are a leveraged product, which means that you can gain access to a position by putting down a small deposit, known as a margin. Your profit and loss are calculated on the full size of your position – so it’s important to remember that while leverage can magnify profits, it can also lead to magnified losses, including losses that exceed deposits for individual positions.

2. Build a trading plan

Continuing to develop knowledge is an essential component of successful trading, which includes knowledge about yourself and your trading goals.

A trading plan provides you with a clear path on how, what, when and why you should trade. It will help to shape your behaviour and avoid the pitfall of making decisions based on emotions. These are the most important aspects that should be covered in your trading plan:

Motivation

Time commitment

Trading goals

Attitude to risk

Available capital

Risk management strategies

Markets to trade

Trading strategy

Record keeping

Each trading plan should be unique to the individual. Although your plan can be based on someone else’s, you should always adapt it to your own aims and risk appetite.

3. Stick to your CFD trading strategy

A trading strategy outlines the style of trading you intend to use, including a methodology for entering and exiting trades, as well as the tools and indicators that you might use. Your strategy will depend on how much time you want to spend monitoring the markets. There are a range of different trading styles that you can use depending on which strategy appeals to you – including day trading, swing trading and scalping.

Discover these trading strategies and learn how to become a trader

It is absolutely crucial to stick to your CFD trading strategy, as trading based on the parameters you have set will minimise the impulse to trade out of fear or greed. It is equally important to know when your trading strategy is not working. This can be achieved by keeping a record of your winning and losing trades, and back-testing your trading strategy.

4. Analyse the markets to time your trades

When you are building your CFD trading strategy, you need to decide what type of analysis you will use to identify entry and exit points in the market. There are two types of analysis that traders use: technical and fundamental. Fundamental analysis focuses on external events and influences such as macroeconomic data, company announcements and breaking news. While technical analysis attempts to predict the future direction of a market by analysing historical price charts.

Although you can use each form of analysis individually, it is common to use a combination of the two.

5. Make sure you understand your total position size

Your position size is the total market exposure of your trade. When opening a new position, you should take into consideration your available capital and the amount of risk you are willing to take.

Every CFD trader should outline exactly how much capital they are willing to risk on each trade in their trading plan – and remember this is how much money you can stand to lose.

Remember, CFD trading is leveraged, so your total position size will always be significantly more than your initial deposit, and you could lose more than you commit to a single trade. As a result, a common approach is to only risk a small percentage of your capital on a single trade, and to manage your risk with stops and limits.

6. Manage your risk with stops and limits

A common method of managing risk is attaching stops and limits to a position. These pre-define the exit levels for your trade and can help protect your capital. A stop-loss order is an instruction to your broker to close your trade at a price that is less favourable than the current market price. You need to ask yourself: ‘how much money am I prepared to lose before I close my trade?’ and set your stop-loss accordingly.

You can also place a limit close order, which closes at a level that is more favourable than the current market price. This closes your trade after you have achieved a certain amount of profit, with the intention of protecting your capital from adverse market movements.

7. Start small and diversify your trading over time

As you embark on your CFD trading journey, start small. There are thousands of markets to choose from, so it is important to focus on markets that you are already familiar with or have an interest in. Once you have more confidence in your strategy you can begin to diversify your exposure across a range of asset classes.

Cfds are a great tool for expanding your trading horizons, as they enable you to gain access to declining markets as well as rising ones.

Ready to start trading? Open an account with IG.

8. Monitor your open positions

Even though you may have stops and limits in place, it is important to frequently review your positions. This will help you to identify any issues or opportunities quickly and prompt you to act when necessary.

It is also important to make sure that you have sufficient capital in your account to cover the total maintenance margin required to keep your position open. If your account falls below the minimum level of funds, you will be placed on margin call – which could result in your position being closed if you do not top up your account.

A great way of monitoring your positions on the go is to download a trading app . With IG, you can access a range of trading apps specifically designed for mobile and tablet devices, and get price alerts sent directly to you whenever there is a significant market movement.

9. Never add to a losing trade

A successful CFD trader will know that no matter how experienced you may be, you will always experience losses. What makes a trader successful is how they respond to these losses. The rule here is to remain focused and in alignment with your trading strategy by not acting on greed. You will learn over time when it is time to cut your losses, and get out of a losing trade.

10. Practise trading with a demo account

If you don’t feel ready to trade on live markets, a great way of testing your trading plan is to open a demo account and practise executing trades with virtual funds. A demo account gives you the opportunity to experience live markets in a risk-free environment, at no cost.

During your time exploring the demo account, make sure that you gain an understanding of the financial terms used and the markets that you have access to. If there is anything you do not understand, you can use trading courses – like those offered through IG academy – to build a stronger foundation of knowledge on cfds.

Then, once you’ve built up your confidence, you can open a live account and put your knowledge into action.

Using the golden rules of CFD trading

While there are risks associated with trading cfds, committing time to building your knowledge can give you a significant advantage and reduce your risk.

As we have discovered, finding your perfect trading strategy is an ongoing process that should be tailor made to fit your personality and trading goals. There is no end to your development, as even the most experienced traders can learn more. But if you follow these golden rules and stick to your CFD trading strategy, you will be well on you way to becoming a successful CFD trader.

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This information has been prepared by IG, a trading name of IG markets limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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Spread bets and cfds are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and cfds with this provider. You should consider whether you understand how spread bets and cfds work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.

The value of shares, etfs and etcs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.

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10 point CFD meshing strategy (tips and tricks)

Lokesh baviskar

Sep 24, 2020 · 3 min read

Creating a high-quality mesh is one of the most critical factors that must be considered to ensure simulation accuracy. Many would argue that your CFD solution is as good as the mesh behind it. Ensuring a well-defined, simplified, clean and critically watertight geometry will often be the difference between a successful high-quality mesh or a poor, illegal, cell-filled one.

We first note that mesh quality depends on the particular simulation which is undertaken. It is decisively not obvious that there is a single best high quality mesh we should strive for.Nevertheless, a mesh methodology should be such that for the least it does not create difficulties in the calculation.

Firstly, decide what mesh connectivity your problem requires (conformal / non-conformal) and how this will affect the setup of your geometry — single part, multi-body parts or separate bodies.

Utilize the tools available for geometry clean-up — using designmodeler or spaceclaim direct modeler — to quickly address any small surfaces, split edges, hard edges that are present in your CAD.

Decide whether you can use a patch-conforming meshing approach (preferred for most CFD cases), or need to use a patch-independent approach to tackle dirty CAD geometry.

Make use of the preview tools for previewing the surface mesh and inflation layers. This can be a great time saver for large, complex models!

Use the show tool to indicate if there are bodies that are automatically sweepable, and/or faces that can be easily map meshed.

Make sure you are using the correct meshing preference — talk to us if you need more information on different meshing requirements for mechanical, CFD, explicit dynamics problems

Understand when it is helpful to use assembly meshing. If assembly meshing is part of your strategy, remember that fluent should be selected as solver type which gives you access to the cut-cell and cut-tet methods. CFX users can use this same approach to generate cut-tet meshes.

If you are hex meshing, it is useful to understand how to use sweep meshing controls most efficiently. The ability to display nodes and edge parametric directions are very handy!

Don’t forget you have the ability to use virtual topology and pinch commands to cleanup geometry in ANSYS meshing.

If you are dealing with large assemblies and/or non-conformal meshes, the automatic contact detection is a tool you cannot live without. Use it to check connectivity of bodies with the new body view tool. Don’t forget the importance of ‘group by none’ for CFX users.

“if I want a better mesh quality, can’t I just increase the fineness level to as high as possible?” while increasing the fineness will typically yield a higher quality mesh, the computational cost will significantly increase as well. A high-quality mesh also means that there is an optimal balance between the computational cost and the level of fineness achieved.

Remember balance of accuracy and computational cost is of course far and foremost the most important issue for most practical problems.

CFD trading UK guide 2021

Michael graw PRO INVESTOR

Although many beginner investors initially learn to buy shares of companies, contracts for difference (cfds) are an increasingly popular type of investment. With cfds, you don’t own shares outright. Rather, you own a contract with your brokerage that lets you speculate on changes in the price of a company just like you would with shares.

There are several key advantages to CFD trading in the UK as opposed to buying shares outright. In this guide, we’ll cover everything you need to know about online CFD trading in the UK and reveal the best CFD trading platform of 2021.

What is CFD trading?

CFD trading is a form of derivatives trading. That means that instead of trading an asset directly, you trade a contract that is based on the value of that asset. For example, instead of buying and selling shares outright, you instead buy and sell a contract whose value depends on the price of the underlying shares.

CFD trading for beginners might sound complicated, but it’s actually pretty straightforward. In most cases, trading cfds works just like trading shares directly. If the value of the shares goes up by 5%, the value of your CFD contract also rises by 5%.

However, there are some key advantages to trading cfds. We’ll dive into these more later, but an important one is that you can trade almost any financial instruments with cfds. You can trade shares, for example, but you can also trade forex, commodities, cryptocurrencies, exchange-traded funds (etfs), bonds, and more.

CFD trading example

Let’s look at an example of how CFD trading works in the UK. Say you want to buy royal mail shares, which are trading at 181p per share. You can go to your online CFD broker and purchase cfds for royal mail shares for 181p per contract.

If the price of royal mail shares rises to 190p, the price of your CFD contracts will also rise to 190p. If you sell them at that price, you’d realize a tidy 9.5% profit – the same as if you had bought royal mail shares outright.

What can you trade with cfds?

As we mentioned, you can trade a lot more than just stock cfds. Cfds are extremely flexible, so they can be used to trade almost any type of financial instrument. Some popular CFD types in the UK include:

Stock cfds

Forex cfds

Commodity cfds (for example, gold, silver, and oil)

Cryptocurrency cfds

ETF cfds

Bond cfds

While those are the most common types of cfds that most top UK brokers offer, you could potentially trade cfds for less common types of assets. For example, cfds that track the price of real estate or even a piece of artwork are possible.

For any of these assets, the price of the CFD directly tracks the price of the underlying asset. For example, imagine you’re CFD trading bitcoin. If the value of bitcoin rises by 2%, the value of bitcoin cfds will also rise by 2%. The same goes for forex, commodities, indices, and anything else you trade using cfds.

Why trade cfds?

Since it’s possible to buy shares and other assets directly, why use cfds? There are several key advantages that make online CFD trading so popular.

Indirect ownership

The key benefit to cfds is that you don’t have to take ownership of the underlying asset. That might not sound like a big deal if you’re only trading shares – in most cases, share certificates are held digitally in a share dealing account, so there’s no effort required on your end to buy and sell them.

But what if you want to trade forex pairs or a commodity like oil? To buy oil directly, you have to arrange for the transport of physical barrels of crude and then store them somewhere. Trading forex requires you to convert pounds to another currency, which often involves navigating complex legal and tax regulations around foreign currencies.

When you trade cfds, you don’t have to worry about any of these problems. You own a contract, not a barrel of oil or a foreign currency – and you’re still equally poised to profit from changes in the price of that asset.

Leverage

Perhaps the main reason that cfds are so popular among share traders is that you can establish positions with leverage. With leverage, you essentially borrow money from your broker to increase the size of your position.

Let’s say that you want to buy astrazeneca shares, which are currently trading at £8.60. If you have £100 pounds in your trading account, you would only be able to buy 11 CFD contracts. But with leverage, you can invest more than is available in your CFD trading account. For example, if you use 10:1 leverage for your trade, you could buy 110 contracts for astrazeneca (a total cost of £946) with just £100 in your account.

The benefit of using leverage is that it increases your potential profit if the price of astra zeneca shares rise. For every 1% change in the price of the underlying share, the price of your CFD position – leveraged at 10:1 – will change by 10%. So with leverage, you can potentially multiply your returns from successful trades. Even better, since you need less money for every trade, you can diversify your trades without adding more money to your account.

Profit in either direction

Another major advantage to UK CFD trading is that you can profit even when the price of an asset drops. To do this, you can short sell CFD contracts rather than buy them. If the price of, say, facebook shares drops by 5%, the value of your short CFD position will rise by 5%.

Fractional investing

There’s another benefit to stock trading cfds, especially if you’re buying expensive shares like amazon. With stock cfds, you can invest as much or as little money as you want – you’re not forced to buy whole shares. So, while a single amazon share costs more than $3,400, most CFD brokers will let you invest as little as £50 at a time.

CFD trading UK fees

Whereas commissions are common among share brokers, many of the top UK CFD brokers are completely commission-free. That means that when CFD trading in the UK, you won’t pay a flat fee of several pounds per trade.

However, trading cfds isn’t completely free. Commission-free CFD trading platforms typically charge a spread that can range anywhere from less than 0.1% to more than 0.5%. The spread is the difference between the buy and sell price for a CFD contract, so it’s baked into your trades. The good news is that for most traders, spreads of around 0.1% for share CFD trading are much cheaper than commissions.

Risks of CFD trading

CFD trading carries many of the same risks as any other types of trading. There is always the chance that the underlying asset you are trading will lose value, in which case your CFD contracts will lost value as well. At that point, you can either sell them for a loss or continue to hold them to see if the price will rise again.

If you trade without leverage, CFD trading isn’t any riskier than trading assets directly. However, once you start trading with leverage, the risks of CFD trading in the UK increase significantly.

Most critically, leverage multiplies your losses. If you’re trading cfds with 10:1 leverage and the underlying asset drops by 1%, the value of your CFD position drops by 10%. Most brokers require you to keep a minimum account balance relative to the value of your positions, so you could be forced to add more money to your CFD trading account to keep your leveraged trade open. The alternative is that your broker will automatically sell your position for a loss.

Another thing to keep in mind is that since leverage requires borrowing money from your broker, it usually comes with interest fees. You’ll pay your broker for every day that your leveraged CFD position is open. If a price rise doesn’t happen as quickly as you expected, you could end up paying more in fees than you make in profit from your trade.

Best CFD trading strategies

There are many different ways to approach CFD trading. But no matter what your goals or trading style, it’s important to approach every trade with a clear plan.

To help you get started, let’s explore some popular CFD day trading strategies:

Momentum trading

Momentum trading is one of the simplest CFD trading strategies for beginners. You simply have to identify a stock or another asset that’s quickly gaining in value on strong volume. As more traders pile into the asset, it will briefly push its price up. As soon as the momentum starts to falter, sell your position to realize a profit. Remember, it’s better to sell too early and realize a profit than to sell too late and end up losing everything you gained.

Momentum is often triggered by news and company announcements, so you can figure out what share cfds to watch by keeping an eye on market news.

Breakout trading

Breakouts are another popular target for CFD traders. To find breakouts, you need to first identify areas of resistance that a share has been so far unable to break above. When the share finally breaks above that resistance level, it often keeps pushing higher.

The key to breakout trading is to avoid being fooled by false breaks. A true breakout should move above the resistance band on strong trading volume. You can also use technical analysis to identify other factors, like momentum, that signal an asset is truly going to make a big move higher.

Scalping

Scalping is a CFD trading strategy that involves a lot of focus and patience. With scalping, the goal is to profit on small, brief movements in the price of an asset that routinely happen throughout the day. You can look for small bouts of momentum or increased trading volume. Typically, scalping trades are opened and closed within just a few minutes.

Scalping is particularly suitable for CFD traders because you can apply leverage to your trades. The price movements involved are usually just a fraction of a percent. But with 10:1 leverage, that same price move can lead to a profit of several percentage points.

CFD trading tax UK

CFD trading is subject to capital gains taxes in the UK, just like if you bought and sold assets directly. The capital gains tax that you’ll pay depends on your individual tax situation. However, it’s worth noting that the tax rate is the same regardless of whether you’re trading stock cfds, forex cfds, commodity cfds, or any other type of CFD.

One big tax advantage to trading share cfds, though, is that you don’t pay a stamp tax. This is typically 0.5% of the value of your trade when you buy shares outright. So, it’s another important way that CFD trading in the UK can help save you money.

CFD trading tips

Trading cfds successfully can be profitable, but it’s important to keep in mind that this type of trading carries risk. Let’s explore five CFD trading tips that you can use to help you get the most out of your trading.

Start with a CFD trading demo account

One of the best things you can do when starting out with UK CFD trading is to sign up for a demo trading account. Most UK brokers offer these demo CFD trading platforms, which let you buy and sell cfds just like you would in a real CFD trading account – but without committing real money to your trades.

A demo account is a great place to get a feel for how CFD trading works and to develop a CFD trading strategy. Make sure to treat the demo as if you’re trading real money to practice good risk management.

Ease in and out of positions

Since most CFD brokers don’t charge commissions on your trades, there’s no downside to placing multiple buy and sell orders. Instead of executing a trade in one big order, you can mitigate risk by buying and selling over multiple orders.

The advantage of easing in and out of trades is that if the price drops slightly after your first purchase, you can buy more at the lower price. When selling, you can lock in some profits while also holding onto some CFD contracts to get a higher return if the price keeps rising.

Use stop loss orders

A stop loss is a price below the current market price of a CFD at which your broker will sell your position. Stop loss orders are key to good risk management. When you set a stop loss, nothing happens immediately. But if the value of your position drops significantly, your broker will automatically sell on your behalf to limit your losses.

Helpfully, you can also use stop loss orders to lock in some profit. Just set your stop loss higher than what you paid for a CFD.

Make use of technical analysis

Technical analysis is an important toolbox for analyzing stocks, forex, and other assets. This type of analysis looks at the past price activity of an asset to predict where it’s going in the future. While you should never rely solely on a single technical indicator, using multiple indicators and price charts together can help you build a trading strategy and identify potential CFD trades.

Diversify your portfolio

One of the benefits of trading cfds is that you can establish more positions without adding more money to your account. Whether you trade fractional shares or use leverage, it doesn’t cost much to trade with cfds.

You can use this to your advantage by diversifying your portfolio. You could trade stock cfds for companies in different market sectors – for example, buy oil shares, blue chip stocks, and pharmaceutical shares. Or trade share cfds and forex cfds to diversify across financial instruments. The more diversified your portfolio, the more you’re insulated if one company or one market sector drops in value.

Best CFD trading platforms in the UK

In order to start trading cfds in the UK, you’ll need to open an account with a CFD trading platform. There are tons of brokers to choose from and they vary widely in pricing, what cfds they offer, and what stock trading tools they include. So to help you pick, we’ll highlight three of our favorite UK CFD brokers.

1. Etoro – UK’s overall best CFD trading platform

Etoro is our favourite CFD broker in the UK. This broker offers trading on more than 800 shares from around the globe as well as more than 450 etfs, and you can choose between buying shares outright or trading cfds. You can also trade cfds for forex, commodities, cryptocurrencies, indices, and bonds. All trading at etoro is 100% commission-free, and this broker charges spreads that are well below the industry average.

What really sets etoro apart, though, is its CFD trading platform. Etoro has its own social trading network where you can interact with other CFD traders, ask questions, and gauge market sentiment. You can also take advantage of copy trading, which uses part of your portfolio to automatically copy the positions of expert traders.

On top of that, etoro offers a built-in charting platform with dozens of technical studies. It misses out on some advanced features like forex signals, but it’s more than capable enough for most intermediate traders. Etoro also has a mobile CFD trading app to help you monitor the market on the go.

A CFD strategy to retrofit an anaerobic digester to improve mixing performance in wastewater treatment

D. Dapelo, J. Bridgeman; A CFD strategy to retrofit an anaerobic digester to improve mixing performance in wastewater treatment. Water sci technol 15 april 2020; 81 (8): 1646–1657. Doi: https://doi.Org/10.2166/wst.2020.086

Abstract

To date, mixing design practice in anaerobic digestion has focussed on biogas production, but no adequate consideration has been given to energy efficiency. A coherent, comprehensive and generalized strategy based on computational fluid dynamics (CFD) modelling is proposed to improve mixing efficiency of a full-scale, unconfined gas-mixed digester for wastewater treatment. The model consists of an euler–lagrange (EL) model where biogas bubbles are modelled as the eulerian dispersed phase, and non-newtonian sludge as the lagrangian continuous phase. Robustness tests show that mixing predictions are independent of bubble size. The CFD strategy comprises the assessment of different mixing geometries and a range of input gas flow rates. Quantitative results show that simple retrofitting measures are able to achieve a significant improvement in the degree of mixing with reduced mixing times, and consequently recommendations for best mixing geometry and gas flow rate are given. A generalization to a generic digester is discussed in a form that is readily usable by professionals and consultants.

INTRODUCTION

The wastewater industry is expected to face unprecedented challenges over future decades, with worldwide demand for clean water increasing by 50% and food demand by 30% by 2030 (WWAP 2012). The need to mitigate and adapt to climate change means that the link between wastewater and energy must be addressed (dapelo et al. 2019). The role of anaerobic digestion of sludge from wastewater treatment is relevant here as, whilst methane-rich biogas is produced, mixing is necessary for the digestion process and is responsible for 17–73% of digester energy consumption (owen 1982). However, recent experimental data (kress et al. 2018) show that it is possible to reduce input mixing power without compromising nutrient distribution and process performance.

Over recent years, computational fluid dynamics (CFD) has established itself as a powerful tool to investigate mixing in anaerobic digestion. However, limitations persist. For example, the volume of published research relating to gas mixing (vesvikar & al-dahhan 2005; zhang et al. 2008; wu 2010; dapelo et al. 2015; dapelo & bridgeman 2018a, 2018b) is limited when compared to work on other types of mixing (viz., recirculated and impeller-driven), despite gas mixing being widely used. Furthermore, there is no consensus on a method to assess mixing quantitatively. A classical method based on evaluation of the average shear rate (tchobanoglous et al. 2010) has been considered as inappropriate due to the likely coexistence of local shear rates of different orders of magnitude inside the same digester (bridgeman 2012; dapelo et al. 2015). Instead, dapelo et al. (2015) proposed splitting the computational domain into zones where local shear rate values are expected to exhibit only modest variations. Vesvikar & al-dahhan (2005) and hurtado et al. (2015) used the dead volume criterion based on the relative magnitude of the velocity field. Terashima et al. (2009) defined the uniformity index from the distribution of a passive scalar tracer. Finally, dapelo & bridgeman (2018a) introduced the concept of relative occupancy, a qualitative criterion based on the comparison of the range of values of a passive scalar tracer throughout the domain.

There is no universal model for multiphase flow. The euler–lagrange modelling technique is a natural choice for flows involving a dispersed phase, and has the advantage of needing a relatively small quantity of empirical data to close the momentum equations (andersson et al. 2012). However, single particles being simulated separately means that computational expense may become prohibitively high when the number of particles grows (i.E., >10 6 , depending on the hardware). The euler–euler approach can reproduce a wide range of flows, but needs a quantity of empirical information to close the momentum equations. For this reason, the euler–euler technique should be considered when no other more specific models are available (andersson et al. 2012). There has been a resistance from the scientific community towards adopting the euler–lagrange approach because of the perceived high number of particles potentially making the computational expense too high (liu et al. 2017). Whilst this can be true for generic agitated vessels, which are the topic of the cited articles, it is not the case for the specific problem of gas-mixed anaerobic digesters, where the number of bubbles inside the digester at any timestep was shown to be below 10 4 (dapelo & bridgeman 2018b).

No systematic comparison work between euler–lagrangian and euler–euler models for gas mixing in anaerobic digestion has been reported in literature. Only wang et al. (2017) compared the results of dapelo et al. (2015) to their own euler–euler population balance model (PBM) through a limited number of plots. The scope of the comparison was to demonstrate the applicability of the authors' model to a non-newtonian liquid phase within a wider study on activated sludge/water, rather than comparing two different modelling approaches, which explains the limited range of the comparison. The euler–euler PBM work was reported to be no more accurate than the euler–lagrange. A possible reason for the gap in numerical accuracy may lie in an issue, which was present in the laboratory-scale simulation work reported by dapelo et al. (2015), but not in wang et al. (2017): as described below, the cells along the central axis had to be constructed with a much larger size than away from the centre. However, no comparison of the two models' numerical expense was reported. Despite the advantage of a possibly improved accuracy, wang et al. (2017) proposed a steady-state only model, which precluded transient analysis and investigations on time-dependent mixing.

Wei et al. (2019) applied an euler–euler model to a full-scale digester mixed through vertical-hanging gas lances, and suggested that the reactor presented in dapelo & bridgeman (2018a, 2018b) was ‘essentially a bubble column with a bottom-mounted nozzle’, and hence ‘different’. The computational domain comprised up to 76,000 cells. The numerical work was undertaken in parallel by a two-core intel i5-2740 for up to 10 days. Wei et al. (2019) concluded that their numerical results were consistent with dapelo & bridgeman (2018a, 2018b).

A further problem of the computational work undertaken so far is the lack of full-scale validations due to the technical problems arising from taking measurements on opaque and biochemically hazardous sludge on operating industrial plants. A compromise solution has been to perform validation at laboratory-scale, and then apply the validated model at full-scale.

CFD modelling of full-scale, gas-mixed digesters has unequivocally demonstrated that there is consistent space for mixing design improvement (dapelo & bridgeman 2018a, 2018b). However, previous work reported in the literature has been mainly limited to demonstrating the bare feasibility of such improvement, giving only sparse and fragmented indications on how to practically perform mixing improvement. Consequently, such work cannot directly help CFD consultants or professionals in the task of producing recommendations for water companies – at least, not beyond the simple indication that such work is possible.

This limitation has been addressed in the work reported in this paper. First, the model development and validation of dapelo et al. (2015) is reviewed. Then, it is used to build a thorough CFD strategy to assess the mixing quality of a full-scale, gas-mixed anaerobic digester and produce retrofitting recommendations for mixing improvement: in particular, disparate considerations coming from literature (dapelo & bridgeman 2018a, 2018b) are integrated together into a coherent, structured and generalized protocol. The dependence of the results on different choices of parameters is assessed (dapelo & bridgeman 2018b). Quantitative and qualitative criteria to assess mixing are evaluated (dapelo & bridgeman 2018a). This analysis shows that the outcome of the CFD strategy is unaffected by difficult-to-measure parameters, and that more classical criteria for mixing assessment and sludge modelling should be reconsidered. Finally, this work is generalized to produce a flowchart to improve mixing in a generic anaerobic digester for wastewater treatment as a practical guidance tool for consultancy work.

MATERIAL AND METHODS

Multiphase model

A multiphase model for gas mixing in anaerobic digestion was introduced in dapelo et al. (2015) and later applied in dapelo & bridgeman (2018a, 2018b). Flocculation and sedimentation were ignored as these processes occur over days if not years, whilst the time span of the modelled mixing was 20 min. Consequently, sludge was modelled as a single liquid phase obeying the incompressible navier–stokes equations, with non-newtonian rheology dependent on total solid content (TS).

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