How to Trade CFD in Singapore
Financial trading in Singapore is quite advanced these days, with traders being among the best in the world. This is because they do have some education in finance or some kind of background in the investment banking business. And almost every Singaporean trader knows some professional trader. So there’s no lack of motivation to learn more and more about the markets, even if one is not formally educated on the subject. What really makes top traders profitable is their willingness to learn, and to surpass their educators. This is why CFD trading is so popular now in Singapore, because CFDs offer the best liquidity for retail traders and even for large traders who make small hedging trades. Profitable CFD trading is about:
- Being small and more liquid (CFDs are for small retail traders)
- Being more efficient
- Hedging risk much faster than large investors do
Compare CFD Brokers in Singapore
There are many CFD brokers operating in Singapore today, some of the best are also well known, few others are less known. But CFD brokers such as eToro or AvaTrade do offer all the good things that new and advanced traders may want. On a CFD trading platform comparison basis, some brokers offer more tools for beginners, easier to use platforms and tools. While other brokers offer more advanced tools, aimed at the advanced trader. These more advanced brokers usually require higher deposits to open accounts, and they also offer the MetaTrader4 platform. Which is a platform for medium to advanced traders.
24option is a broker that offers both CFD trading as well as binary options. This makes it a very good broker for short term trading in commodities and currencies, during news trading times. Because of the volatility that news brings to the market, it makes it possible to catch both sides of price action. Or at the very least trade one side through CFDs and hedge news risk through a binary option. When carefully implemented, it’s a win-win game. News is a proven volatility causing event, and it’s a volatility trade. I strongly advise you to look at volatility itself, and not market price direction.
eToro is a top CFD broker for beginners, because it’s very user friendly, and has been around for over 10 years now. I believe the best way for you to use eToro is to make use of its social trading platform, where you can choose few profitable traders and copy their trades. The key here is to see what they are trading, and pick one trader for one commodity, one for one currency, one for a cryptocurrency etc. Following 3-5 good specialist traders is bound to make you good money. But make sure you only follow active traders, who place at least 3 trades per week.
AvaTrade is a broker for more advanced traders, it offers a wide range of markets where you can find just about anything to trade. It’s good if you want to trade specific ETFs or stocks, and it also offers a unique web-based MetaTrader4 platform. On this platform you can run very specific indicators, and tools. The idea here is to modify classic indicators, to use dynamic tools, it’s even possible to automate stop loss orders, so that you take both price action and time into account. Such advanced trading is not very complicated, and does require the MetaTrader4 platform.
UFX is a great CFD broker, also for advanced traders. Most traders at UFX trade commodities and commodity related currencies. It’s a very good broker for specific market analysis, as it offers sentiment analysis tools, where you can see how other traders feel about the market in question. I believe this broker is good for specific commodity and forex trading, so instead of using generic chart analysis and fundamentals, you should focus on one or two markets only, and trade those. Such as USDCAD and crude oil, nothing else, but trade those intensively using the broker’s tools, and through their MetaTrader4 platform where you can seriously enhance money management.
How to Get Started in CFD Trading in Singapore
All you need to get started is find you comfort zone, and few suitable markets to trade. Remember that each market is at least slightly different from the other. And be sure to take into account social trading tools, cryptocurrency investing and other opportunities offered by today’s CFD brokers. I believe that is best to use one dedicated CFD broker, at low or no leverage, for cryptocurrency investing. It’s very safe, and much more efficient than any other way of investing in Cryptomarkets. Then you can use one CFD broker for social trading, this has to be a leveraged account, but it doesn’t have to have more than 100:1 leverage. Finally there those other brokers that offer the MetaTrader4 platform, this is a great tool if you consider advanced money management, stops in the time domain, and other possibilities. All these can be automated through the coding that MetaTrader4 provides. For example, I want my trade to be closed if after X minutes it has failed to make progress. Or I want my stop loss to be dynamically placed, based on volatility. Or I may want to hedge some short term risk during the news release times, all these can be coded even by you, in MetaTrader4. So why not use this great tool?
CFD Trading Strategies and Tips
There are many trading strategies and few basic tips, that all traders can consider before they decide how to trade. These are important because they can help you avoid main mistakes and get ahead in the learning curve. In any case, do consider your options carefully and remember that profitable traders are:
- Original thinkers
- Critical thinkers
- Risk takers
The Big Picture
All in all, traders in Singapore are advanced, because they speak English well, and because they have access to many resources and great tools. And because they already have a good understanding of the markets and few basic mathematical facts. I believe that some of the top professional traders in Singapore are among the best in the world. Also some great investors from the US have moved to Singapore, for their own reasons, and they share ideas and market analysis opinion with other traders there. So there’s no doubt in my mind that Singapore has some of the best traders today. Singaporean Traders are focused on the following things:
- Currencies of bigger neighboring countries
- Geopolitics and commodity prices such as gold’s
For the average small trader in Singapore, trading is a very serious business and not a game. Living costs are quite high, and nobody can really afford big trading mistakes. Nobody can really afford losing money month after month. It is important to take into account the high living costs in the country, and to take advantage of the local trading community, and the tips they can offer.
I don’t believe in fully automated trading and algorithmic trading. Yes it can work, but just like social trading it should be used on a small portion of your trading. Overreliance on social trading and automation will deskill you as a trader in the longer term, and you won’t be able to become a competent independent trader. That’s why I believe in selective social trading. And I also believe more in automated trading tools, where you can make your own adjustments ad you can understand what’s going on under the hood, that’s why I prefer the MetaTrader4 platform as a base for running small automated trading programs.