CONDITIONS AT THE REAL MARKETS



Fundamental Differences between the Demo and Live Trading of the Particular Assets (Stocks, Commodities, Forex)

For the stocks and commodities (particularly those less liquid and more volatile) is necessary to know conditions of real market functioning. Financial instruments CFD are issued on the value of the concrete contracts of the electronic or floor markets. With their issue the dealer of the CFD exchange must respect not only current quotations but the liquidity too and current exchange asks and bid. CFD copy accurately what happens at the stock and commodity exchange. CFDs trader should be aware of the fact, that live trading conditions at the particular stock and commodity exchanges are in many parameters different.

In the frame of one trading platform can the trader online daily open CFDs trading positions on stocks, commodities and cross-rates at the Forex currency exchange. CFDs are there traded on the basis of the same formulas and mechanisms as Forex. It enables very effective and easy access to trading with selected assets in order to hedging of the price or realization of the profits, which are generated as the price difference with the price movements of the selected asset. Particular stock, commodity and currency exchanges very differs in the conditions of the market orders executions and in many other parameters as is the volatility, liquidity, the guarantee of the execution, the asset behavior from the liquidity and price development view depending on trading hours and real asks and bid. It is necessary to understand these differences! While the market orders execution in trading cross-rates from Forex is guaranteed in the sense of set parameters without slippage, execution of CFDs contracts on stocks and commodities can be different.

Forex exchange guarantee the null slippage for all ForexStop, Limit, Entry Stop and Entry Limit orders, which are placed at least one minute before the market achieve your specified price. It is allowed by the great liquidity of the world currency exchange Forex. Against it the execution of the trading orders for CFDs of stocks and commodities must respect concrete trading conditions of the particular exchanges. Nevertheless the provider of the CFDs exchange will make the execution of your trading order always, when the real market conditions allows it, respectively with the nearest price settlement in the relation to the liquidity of the given asset. According to the characteristics of particular assets you have to learn to work with the possibility of some price slippages during the realization of your orders. 

In the platform of the electronic exchange CFDs are data from many exchanges constantly updated how you can see in the list of assets (stocks, commodities). Whatever exchange has got the right to stop or to cease trading with any asset. It will take effect so that it is impossible to trade the given asset, the exchange dealer can not influence it. The reasons to stop trading can be various (negative events, technical problems of the exchanges or just trading processes). The typical effect for the stock exchange and some commodities is, that trading stops or ceases, or the liquidity significantly decreases, in the minute at the exchange appears current significant ask overlap or the other way round. In this case only price quotations are changed (Sell, Buy respectively Ask, Bid) but it is impossible to trade. If the overlaps are enormous, the exchange can cease trading, and will start again if the ask and bid are in the equilibrium.     
      
These situations can lead into significant price movements, where the price during short time strongly moves, but you can not trade the asset. Otherwise this is being described in the connection with the commodity and stock exchanges; on the charts arise so called Limit movements and price gaps (price advancements). This situation surely arose on the 2.3. When Silver in the time between 12, 30 and 12, 50 got significant ask overlap and the exchange responded by very volatile movement of price quotations. And the exchange could cease trading. The dealer of the exchange can not influence it. The Live accounts´ dealers do not think out whether the clients understand or not the real market conditions, they simply execute the client’s orders on the basis of the real market conditions.  

Look at he 15 minutes chart of Silver price 2.3. At 12:40 you can see strongly volatile price movement from the 9, 90 level to 10, 15 USD. This is typical example of high actual ask overlap. In this time exchanged ceased trading, which will in the practice appear in the lower or almost null liquidity and subsequent drastic price movement. 


In the frame of Demo Trading it is possible to trade this price difference, Stop and Limit orders are functioning. But it is necessary to be aware of the fact, that in the real trading the trader´s orders are executed by the CFD exchange dealer. He has to take into account price movement, lower or null liquidity. Live accounts´ orders if they are entered, can make, if the price movements stop, it means prices steady and the exchange is again functioning in the current ask and bid mode. That’s why we are convinced that Demo is indeed great thing, to learn this online trading in the real market price conditions, but, in the frame of trader’s behavior on the Live account is simply necessary to know individual assets´ specifications, how the trading sessions are made, what influence have the concepts like is the time process of trading, price fixing – price quotations, liquidity, volatility, slippage, slippage of trading orders Stop, Limit, Order Stop, Order Limit, Trailing Stop on the trading orders executions.    

It is unwise to play at the exchange with real money without knowing the functioning of these concepts in the real market conditions with different assets. Do not risk at these markets your money, without understanding these concepts. According to the experience of professional traders is possible by well selected strategies close more than 90% of your trading positions in the profit. You must work with the knowledge of real market functioning. Do not forget that these markets give the professionals fantastic money. Unknowing and childish people the market can bestow losses. 

You Should Know about Real Market Functioning and Profitable Trading CFDs and Forex Instruments Other Things: 

Limit price movements – can appear only for some commodities. Concrete conditions depending on ask and bid development and real trading conditions are settled by the providers of particular exchanges, you should inform in this matter in your own interest.    

Price gaps – price gaps (price level movements) happen because of enormous ask overlap and the other way round. You can see the price movement on the chart  as a gap or price advancement in the short time or as a stop of the trading, where is impossible to enter into real trading and all the executions of entered trading orders are done after the price movement end, it means in the time of normal liquidity and trading mode.

According to the experience more than 90% of arisen price gaps are with time balanced. Different assets in the different times on the basis of various events can move the price in the way that influences more or less significantly your account balance. It is necessary to understand the financial effectiveness and behavior of the particular assets in the real market conditions.

Limit price movements and gaps can disvalue the accounts of the inexperienced traders, as well as they can bestow fantastic profits to the far-thinking and informed professionals.    

Limit price movements and gaps arise solely at some specific assets in less than 1 % of trading time.

90% of limit price movements and gaps arise in the direction of the main price trends. There exist some assets, which aren’t almost concerned by the issue of price gaps, because they are very liquid.

Higher price volatility and lower liquidity of the assets is almost always caused by the unbalance between ask and bid. There appears for traders the problem of successful entrance into trade, the advancement of the orders, orders Stop, Limit, Entry Stop Order, Entry Limit Order.

Whatever stock, commodity or currency exchange can cease or stop trading from any reasons, out of others even because of the enormous ask or bid overlap.
Do you know the issue of Open Range? First minutes of trading whatever asset at the exchange are the most problematic. Particular exchanges are analyzing ask and bid, actualizing quotations, traders are not trading a lot or on the whole, analyzing fundamental reports and circumstances for their orders. In the frame of Open Range oftentimes arise price gaps, in the Live trading it is not possible to trade them, on the Demo accounts it is possible. You should always wait until the market steady.   

Do you know how and where to place to the exchange your orders Market Order, Trailing Stop, Limit, Entry Stop Order, Entry Limit Order, Hedge Position, Close Position and when and how they can be executed?  

Do you know how particular assets are effective, volatile, liquid, risky or safe for your trading? It is wise to know it!

Do you know how big the account should be for safe trading with particular assets?

Do you know how to identify your risk opportunities for the realization of more than 90% successful trades?

Do you know how to make profitable money management; it means how to gain from the market profits and no losses?

Never underestimate real functioning of stock, commodity and financial markets!

Do not forget, that Demo is more or less only training and game. In the live Trading you have to deal with real market conditions and particularly with your emotions, you make decisions with the knowledge of markets in relation to the account size and acceptance of your losses.   


   

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