I have decided to try a new strategy for trading CFDs (Contract for Difference). I’ve previously written about the pitfalls of trading with CFDs and gearing your trades. It is highly risky, and most traders end up losing money. First and foremost, if you are a rookie trader and have little funds: Please live your life like our 2nd lesson tells you: Never Lose Money. And secondly, make sure you join the 33% club and are able to pledge 33% of your monthly income to invest in safer assets (like index funds, bond funds, stocks, and so forth).

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If you have more money to play with on a monthly basis, and you are still able to be a part of the 33% club and live your life, then this new concept might be something for you.

I’ve played with multiple scenarios and schemes trading CFDs the past year. Lately, I’ve made quite a substantial sum of money shorting and buying different indexes, currencies and commodities using IG.com. When that is said, the past years I’ve lost A LOT of money on trading CFDs. This is not a game for someone with anxiety (or money) problems.

I’ve come to the conclusion that I will stop “hunting the perfect trade”, as the perfect trade simply does not exist. You will lose trades, you will win trades. The important part is that you win more than you lose, in total. Instead I will try to increase my portfolio on my trading account with 2% each day I’m in the market. I’m not going to trade every weekday, but the ones I do I’ll set a goal for 2% increase. To feel that I’m increasing my chances, I’ll double the trade if a trade is lost. This way, I might win back what I lost, and increase my holdings with 2%. I’ve decided that I’ll continue to double up a total of three times if I lose the first trade. If you believe you have a 50/50 chance of winning, then you will have a 6,25% chance of losing all four trades (which will hurt your pocket!). However, as I’m telling myself: If I cannot find a winning trade four times in a row, I should not trade.

The Math

If you start with 10 000 USD (or 10 000 NOK shown below), you will have earned 2 189,95 USD (or NOK) after the tenth day. This is not that much, but if you continue with the strategy and you are able to have 500 winning days with a 2% increase, you will have earned 195 642 638,58 USD (or NOK). That’s quite a substantial sum. And most likely, you won’t be able to have 500 consecutive winning days. This is an experiment, and I welcome you to join. Look below for a detailed explanation:

50% chance

25% chance

12,5% chance

6,25% chance

6,25% chance of losing:

Day

Amount

2% profit

Double

Double

Double

Loss

1

10 000,00 kr

200,00 kr

400,00 kr

800,00 kr

1 600,00 kr

3 000,00 kr

2

10 200,00 kr

204,00 kr

408,00 kr

816,00 kr

1 632,00 kr

3 060,00 kr

3

10 404,00 kr

208,08 kr

416,16 kr

832,32 kr

1 664,64 kr

3 121,20 kr

4

10 612,08 kr

212,24 kr

424,48 kr

848,97 kr

1 697,93 kr

3 183,62 kr

5

10 824,32 kr

216,49 kr

432,97 kr

865,95 kr

1 731,89 kr

3 247,30 kr

6

11 040,81 kr

220,82 kr

441,63 kr

883,26 kr

1 766,53 kr

3 312,24 kr

7

11 261,62 kr

225,23 kr

450,46 kr

900,93 kr

1 801,86 kr

3 378,49 kr

8

11 486,86 kr

229,74 kr

459,47 kr

918,95 kr

1 837,90 kr

3 446,06 kr

9

11 716,59 kr

234,33 kr

468,66 kr

937,33 kr

1 874,66 kr

3 514,98 kr

10

11 950,93 kr

239,02 kr

478,04 kr

956,07 kr

1 912,15 kr

3 585,28 kr

500

195 652 638,58

3 913 052,77

7 826 105,54

15 652 211,09

31 304 422,17

58 695 791,57

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I believe there will be some days I won’t open a single trade. Some days I won’t be able to. But I’ll record all my trading days and add them in this google document: https://docs.google.com/spreadsheets/d/15d5Z8m1ryawuxtOxyEJg1npGK_2BGammQaKHunWokUc/edit?usp=sharing

You are free to start on your own and add your numbers to the google doc above, or create your own sheet for your eyes only.

I also invite you to join our new 2% Club on Workplace: https://work-12050764.facebook.com/groups/368220986926982

What if I lose 4 Consecutive Times?

Well, you can either tell yourself that this wasn’t for you, you could try to double a few more times (VERY RISKY), or you could leave your trading chair for the day, come back tomorrow and start over with the capital you have left. I haven’t decided what I’ll do if I lose four times in a row, but I think I will stop trading for the day and take a decision the next day. Better to sleep on it and calm yourself down before taking any crucial decision.

Boring information

I’m using IG.com to trade with CFDs.

Disclaimer: I, nor Hacked.com, can be held responsible for losing trades. Do not trade with money you cannot afford to lose, and always do your own due diligence on any strategy proposed by us.

Dmitriy Lavrov is a professional trader, technical analyst and money manager with 10 years of trading experience. He covers Forex, Commodities and Cryptocurrencies. He is among the top 10 most Read More

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