Trading the UK FTSE 100 Index Contract-for-Difference (CFD)

I’ve been researching ways on how to trade London’s FTSE 100 Index.

What I like the most about the FTSE 100 is that the profits derived are in Great Britain Pound (that goes to losses as well!). Also, trading hours for the London market is also pretty convenient for me.

I managed to draw up a plan last week to make this venture a successful one.

This time, I shall be day trading the FTSE 100 through Contract-for-Difference (CFD). My trading hours will be from 6.00 PM till 2.30 AM. No positions will be held overnight.

By the way, day trading simply means your trades will strictly be carried out during the market hours on that particular day. Trades will be entered on that day and exited right before the market closes. As I’ve said above, no positions will be held overnight.

To day trade the FTSE 100, I’ll be utilising the 5-minute candlestick charts with one technical indicator. Entry and exit signals will be based upon that particular technical indicator only. Which technical indicator am I using? Haha, make me an offer and I might consider telling you!

Stop loss will also be placed as a safety net, just in case the index gaps in the wrong direction for no reason.

With my method, I’ll be holding positions throughout the trading hours. As such, the market needs to have some significant movements in the session to actually make me some dough. If the market moves sideways in a tight range, then I might have a bit of a problem 😛

Another potential problem that I face is the trading hours. Trading continuously from 6.00 PM till 2.30 AM might prove to be a tad difficult. My chosen method also requires me to monitor the tick charts pretty closely. It is important to be able to pull the trigger swiftly. Anyway, we’ll see how it goes.

I’ve had a look at 3 months worth of historical information (3 months worth of back-testing) and the results were pretty satisfactory.

For now, I’ll only be paper trading the FTSE 100 index based on my method for a little while. I’ll then proceed to trade small number of contracts. After I’m comfortable with the method, then only I’ll start trading using standard contracts.

I’ll be sharing my paper trading results with my readers.

P.S. The method that I use is not a BIG SECRET or anything. I’m just using a typical technical indicator available in most charting softwares. And nope, it’s not moving averages 😛


Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.

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Other related posts:

CFD Trading : An Introduction
CFD Trading/Share Trading : Setting Stop Loss
CFD Trading/Share Trading : Stop Loss in Perspective
CFD Trading/Share Trading : Being Long and Short (Concept of Short Selling)
CFD Trading/Share Trading : Short Selling in Perspective
CFD Trading/Share Trading : The 2% Rule
CFD Trading: What can be traded with CFD

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