Rio Tinto CFD Trading Strategy

Rio Tinto is a global company listed in the Autralian Stock Exchange ASX as part of the S&P/ASX 200 index, in the  London Stock Exchange  as a component of  FTSE 100 Index and listed in Wall Street, in the NYSE.

Their respective chart are nearly an exact copy of each other. Besides been listed in different parts of the world, it  is just one global company, reflecting in its charts similar reaction to global economic events.

Here is the Rio Tinto ASX YTD chart.

rio tinto ytd chart

Rarely, local news have a different impact on Rio Tinto charts which are seen as an opportunity to trade.

Take advantage of a global company listed in different stock exchange markets

The idea behind this trading strategy is to take advantage of a global company listed in different stock exchange markets. The strategy involves compering the chart of the same security(company) listed in two different exchanges in two different countries, and find moments when their chart diverge. See chart.

The difference between the two exchange rate, between the two different countries, could be an opportunity to trade the two securities and trade with the hope that that relationship will return a good profit difference.

One of the main things to know technically for this CFD trading strategy, is that  for instance, 100 CFD of Rio Tinto US move at USD $1.00  per point and 100 CFD of Rio Tinto UK move at  GBP 1.00 British Pounds per point, which equals around USD $1.60262. But this could change from CFD Broker to CFD Broker, so it is important to investigate how this work with you CFD provider.

Another important factor involved in this strategy, is that the transactions must occur simultaneously to avoid exposure to market risk and preferably, because of time constrain, the trade should be done within the overlapping time. When both markets are open. It doesn’t mean that the position can’t be hold for a longer period of time, but this type of strategy, is typically done by day traders risking a larger amount of capital.

In the chart bellow there is an example of when Rio Tinto US (Blue) and Rio Tinto UK (Red) diverge in price, creating like this, an opportunity to buy one sell the another.

Source: Google Finance

This strategy can also be applied to different financial products and it is usually related to such financial products like bonds, commodities and currencies.

Strategy Overview

The secret of making it big in Contract for Difference trading is using the right strategies and methods in your trading, and at the right time. One company seems to have realized this fact, Rio Tinto. This is an international company listed and very active in several world leading stock exchange markets. They include the London Stock Exchange and Australia Stock Exchange. It is also listed in the New York Stock Exchange and in the Wall Street. Apart from being just listed in these markets, Rio Tinto is doing great.

The chart shown below represents Rio Tinto activities in various markets around the world.

rio tinto ytd chart

The Rio Tinto trading strategies and methods are all designed to aid traders, both new and seasoned, to make money within their set time frame. The strategies presents to the traders several options and platforms to do their trades. All of the Rio Tinto strategies and methods are usually based on broad studies done by experts in the CFD trading industry. That is done to make sure that once implemented, the strategies will, beyond any reasonable doubt, help the traders in hitting their set targets and goals with very minimum risks. A big number of traders who have used the Rio Tinto trading strategies and methods have attested to the fact that they are among the best strategies in the market today.

On the other h and, the Rio Tinto trading strategies and methods are best used in stock markets and allows traders to take advantage of leverages in order to make profits. The strategies also come in handy when traders are looking forward to sell or buy assets.

Objectives

The main objective of Rio Tinto trading strategies and methods is t offer traders the best solutions ion trading in the various financial products such as currencies, bonds and commodities. This is one area of trade that normally requires traders to have not only strategies and methods but skills as well in order to know how you can minimize the risks associated with various trades while at the same time increase the chances of making good returns. That is exactly what the Rio Tinto trading strategies and methods seeks to provide traders with.

Goals

Just like most trading strategies, Rio Tinto trading strategies and methods are tailored to be the safest methods that any trader can use with a lot of confidence. That is without the fear of losing his investments. These strategies are also meant to give furnish traders with well researched technical analysis of the various markets in order to tell the perfect time to sell or buy. For instance, the chart below represents such times when Rio Tinto indicates the times when a trader can choose to buy an asset while at the same time buy another one.

The main goal of this strategy is allowing traders make use of the opportunity of trading in a world known company and one which is listed in several leading stock markets in the world.

Markets and Instruments

The Rio Tinto trading strategies can be used in various financial markets. However, they are mostly used in the commodities, bonds and currencies markets and particularly in precious metals. These are the main markets where traders are known to make millions of dollars each passing day provided that they too employ excellent and well researched strategies such as Rio Tinto’s.

Therefore, if in any case, you are looking forward to trade in any of the above mentioned markets, it would be wise that you take some time and study this strategy before you start trading. That is for the reason that it is essential to at least understand the basics of this strategy and how it can be best employed in different scenarios.

Other markets where the Rio Tinto trading strategies can be used include indices, equity and crude oils. Apart from choosing the markets that you will take part in, it is important that you too understand the need and importance as well of selecting the most effective tools to use in your trade. That will, in a very big way, boost your chances of making handsome returns.

However, you ought to be extremely careful when choosing the tool that you will use thanks to the fact that there are many market tools today, some of which are not that effective and can only be your way to making unimaginable losses. Plus500 tools are known to be the best in the financial market today and can, without any doubt, be recommended to both beginners and seasoned traders.

Time Frame

There is no certain time that a trader cannot use the Rio Tinto trading strategies and methods. It all depends on the time frame that a trader prefers over the other keeping in mind whether he is in the long term or short term trading. There are several time frames that a trader can use when trading. Nonetheless, expert traders are usually of the opinion that it is important to know the best time to trade CFDs in spite of the fact that this strategy can be used at any given time.

Some CFD trading strategies allows the traders to do their trades in one day, weeks and some even months. But in most cases, CFD trading strategies such as Rio Tinto provides a trader with three main time frames in which he can trade and end up with huge profits. They include the signal chart which helps a trader in telling when he should buy or sell his stocks, trend chart that a trader used in long term investments and guide the trader in knowing the best time to buy stock and lastly the timing chart which give the trader a signal of either entering or exiting a certain market.

The Rio Tinto strategy is best used by the traders who are majorly involved in day trading and normally risks huge amounts of capitals.

Tools

In CFD trading, the tools that a trader uses are extremely important and can in a very big way determine whether he will either run into losses or make some really good returns out of the trade he is involved in. therefore, it is always advisable to settle for nothing short of excellent tool when preparing to enter CFD trading.

cfd trading tools

CFD trader shown below is one of the best CFD trading tools. It is known for its amazing features as well as ease of use. It does also come with charting tools, news feeds and indicators. Many traders consider CFD trader as the most powerful tools in CFD trading today. It has more than eighty five technical indicators, several time frames and 8 chart types.

CFD trader is also a favorite among many traders thanks to the fact that it is easy to install this tool. You will only need to follow a few step by step instructions.

Before you start

There are many things that you will need to understand before you start CFD trading. That will help you trade without much worries of running into unnecessary losses. First, you must fully understand what CFD trading is all about. Contract for Difference or CFD as it is commonly known, gives traders an opportunity of trading in stock markets without having to buy shares. It is one of the best and fast ways of making ‘quick money’ just by predicting how certain shares will fair within a certain period of time.

Any trader is, however, required to sign an agreement with a broker before starting trading. The contract binds and the broker during the CFD trading.
On the other hand, it is essential to be certain of the market that you want to invest in.

Step by step guide

The step by step guide is absolutely crucial particularly to new traders. These steps will guide you on how to get prepared and eventually start to trade. The most important steps are listed below.

  1. Set yourself targets. Set yourself targets that you will be able to accomplish in a certain period of time. Don’t set them too low or too high where you will not be able to reach. Be moderate.
  2. Open a demo account. The demo account will help you familiarize yourself with how things are done when doing the real trade.
  3. Apply for a trading account from your preferred broker. Make sure this is based on extensive research and choose to work with the best and licensed brokers only. Most applications are nowadays done through online platforms. Once you have opened your trading account, the next step is to fund your account. Here you will need to do some deposits into your account before you can finally start CFD trading.
  4. Start trading

Once your account is confirmed and approved, you will be good to go.

Your position

In CFD trading, a trader will need to define his position at any given moment. That is very essential. Here, you will have to make your minds on whether to make a long term or short term investment in the market of your choice.

Risks and money management

Risks and money management is absolutely important in any trade, not only CFD trading. Therefore, before you take it to CFD trading; you got understand how you will manage these two important things. That is, money and risks associated with CFDs trading. It is advisable not to invest or rather risk 100% of your capital. Risk just a small percentage.

On the other employ risk management mechanisms, for instance, stop loss orders. These mechanisms are known to minimize the risks in CFD trading. However, the broker will obviously charge you more for these mechanisms but seasoned traders usually say it is worth it.

Exit strategy

Just like it is the case when you enter into any trade, you ought to have in mind the strategy that you will use to exit the CFD trading if you think and strongly feel that it is time to do exactly that. As a trader, you ought to know when to exit a trade. This will help you minimize the risks of continuing to trade if things are not that good with your trading.

One commonly used exit strategy is the use of trailing stops. This will allow you to exit the market with some profits.

exit strategy stop loss

Technical analysis tools are also used as good exit strategies.

Recommended broker, software and platform

Nowadays there are a lot of brokers in the CFD trading offering various software and platforms. It is definitely a good idea but it also poses a challenge to traders when it comes to choosing the best broker, software and platform. That is why we took the initiative to thoroughly review the many brokers in the market.

Based on our extensive and professional review, we highly recommend Plus500. This broker offers traders several benefits. They include zero monthly fees and zero commissions. It also does give traders a wide range of markets to choose from. CFD trading is the most preferred as far as CFD trading platforms and tools are concerned.

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