CMC Markets Dealing With Risk

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Dealing with Risk

THE CMC MARKETS TRADING SMART SERIES


2/9CMC Markets | Dealing with Risk 2

It is natural for new CFD traders to

concentrate on strategies to selectprofitable positions but, while this is

essential, it is just as important to plan

how to deal with losses. The objective

of most traders is to make consistent

profits over the long term. However, it is

important to recognise that longer-termtrading inevitably involves losses too.

No one who trades for more than a short

period of time has 100% winning trades.

Proudly No. 1 for CFD education

Results from Investment Trends September 2010 SingaporeCFD Report, based on ratings given by 8,900 investors



Loss taken Gain necessary

10% 11%

15% 17%

25% 33%

30% 42%

50% 100%

75% 300%

90% 900%



Quick position size example

Total account size $10,000

Risk 2% of total account $200

The difference between

Australia 200 Index trading at 4500

stop loss placed at 4475

equals risk 25 points

$200.00 divided by 25

equals position size 8 units

ResistanceSupport

Moving average



1 1%

2 2%

3 3%

4 4%

5 5%

6 6%

7 7%

8 8%

9 9%

10 10%

11 10%

12 11%

13 12%

14 13%

15 14%

16 15%

17 16%

18 17%

19 17%

20 18%

21 19%

22 20%

1 2%

2 4%

3 6%

4 8%

5 10%

6 11%

7 13%

8 15%

9 17%

10 18%

11 20%

12 22%

13 23%

14 25%

15 26%

16 28%

17 29%

18 30%

19 32%

20 33%

21 35%

22 36%

1 2%

2 3%

3 4%

4 6%

5 7%

6 9%

7 10%

8 11%

9 13%

10 14%

11 15%

12 17%

13 18%

14 19%

15 20%

16 21%

17 23%

18 24%

19 25%

20 26%

21 27%

22 28%

1 3%

2 5%

3 7%

4 10%

5 12%

6 14%

7 16%

8 18%

9 20%

10 22%

11 24%

12 26%

13 28%

14 30%

15 32%

16 33%

17 35%

18 37%

19 38%

20 40%

21 41%

22 43%

CONSECUTIVELOSS

ES

1% 1.5% 2% 2.5%

CONSECUTIVELOSS

ES

CONSECUTIVELOSS

ES

CONSECUTIVELOSS

ES

Drawdo

wn

Drawdo

wn

Drawdo

wn

Drawdo

wn

What % of trading capital should I apply in position sizing?


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The information contained herein / presentation (the Information) is provided strictly for informational purposes only and must not be reproduced, distributed

or given to any person witho ut the express permission of CMC Markets Singapore Pte. Ltd. (CMC Markets).

The Information is not to be regarded as an offer, a solicitation or an invitation to deal in any investment product or an advice or a recommendation with respect

to any investment product, and does not have regard to the specific investment objectives, financial situation and particular needs of any specific person.

Contracts for Dif ference and leveraged foreign exchange trading involve the risk of sustaining substantial losses and are not suitable for all investors. You should

independently consider the Information in the light of your investment objectives, financial situation and particular needs and, where necessary, consult an inde-

pendent financial adviser before dealing in any investment product. Risk warning/disclosures and other impor tant information are available at our website: www.

cmcmarkets.com.sg or by contacting us at + (65) 6559 6000.

CMC Markets does not warrant the accuracy, completeness, suitability, currency or reliability of the Information. CMC Markets accepts no liabi lity for loss what-

soever arising from or in connection with the use of or reliance on the I nformation. It should not be assumed that any product evaluation or analysis techniques

presented herein, if relied upon, will g uarantee profits or gains or will not lead to losses. Any graph, chart or any device set out or referred to herein / presentation

possesses inherent limitations and practical difficulties with respect to its use, and cannot, in and of it self, be used to assist any person to determine and/or to

decide which investment product to buy or sell, or when to buy or sell them. Past performance is not necessarily indicative of future performance, result or trend.

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CMC Markets Dealing With Risk

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