Longer period trend trading (loosely based on the cross-overs of short and longer period price averages, but with attempts to "pick" the turning points before they are confirmed by the charts) doesn't require constant monitoring, and the results seem promising. However, it requires setting a stop and limit OCO order for each open position, and this month I had a few too many occasions where either the stop-loss closed out my position, only to see the trend continue after the brief dip, or else the trend reversed just short of my profit-taking limit price.
Setting the stops too close means getting closed out of positions that would have been profitable if left to run, while setting them too loose means taking a big hit on the positions that turn out to have been wrong. I need to be more consistent at using OCO orders to control my risk, and resetting my OCO orders to "lock in" profits - but this isn't possible where I have positions open overnight or during the day while I'm at work. It would be ideal if the trading platform allowed you to automatically reset the stops in an open OCO order based on movements in a moving average, and alert you (eg. via sms) when the price approached the limit of your OCO order. The CMC platform currently doesn't even let you edit the stop and limit prices in an open OCO order (you have to cancel the open order and create a new order with the new parameters), but an enhancement to add this feature may be coming with the new version 5.4 being rolled out this month.
Despite losing $153.58 this month, the average loss per trade was only $1.36. Since the 2-pip buy-sell spread means that each leg of a trade is costing a minimum of $2.50 (on the minimum $25,000 CFD), my trading might exhibit some modest level of skill - albeit not enough to overcome the drag of the trading costs. Overall I've made 867 trades since opening my account. This means that CMC Markets has made at least $2,167 revenue from the spread on my trades - which accounts for almost 80% of the amount I'm down in my trading account! They also make a small profit from the interest rate differential on long and short positions being rolled over.
Next week I'm going to attend a free CFD trading seminar presented by CityIndex. It will be interesting to see what features their trading platform offers.
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