For CFD traders:
How do you manage your risk?
For my standard share trading I use:
A fixed fractional risk management system where I don't risk more than 2% (risk per share) on each trade and 20% (Total Risk)of my total capital. So I decide where I want to set my stop loss and my system tells me how many shares I can buy (total shares) according to my risk per share.
(stated numbers are just an example)
How do you guys incorporate CFD margin and interest expenses into your risk management? Do you determine the total shares you can purchase from your risk appetite then use the CFD as margin to decrease your outlay for the purchase? So you would only have to put out 5% of the cost with a 95% margin. This leaves you with extra cash to buy other shares.
But hold on... Arn't you trying to increase the leverage for the shares you plan to purchase and not trying to purchase other equities? So it is defeating the point?
Do you assume you just have more capital in the first place? Assume you have $15000 for your trading account and your going to be using 95% leverage on every trade. That leaves you with a total capital with leverage of $300,000 ($15000*20).
How do you do it? Can you send me an excel spreadsheet that you use for managing CFDs? My email is email@example.com