Trends
Technical analysis is based on the premise that future prices can be predicted.Sometimes, prices indeed seem to move predictably upwards or downwards. Traders say the prices trend, and speak of uptrends and downtrends as well as horizontal trends.Trends can apply to various time frames. Some day traders speak of trends in minutes, while other traders think of trends in months…or even years.Traders often identify trends by adding moving average lines to their charts. A moving average simply means that the calculation changes with time.
Support & Resistance
Technical traders often base trades on Support and Resistance levels. These are price points that a given asset, for example a currency pair or CFD, seems to have difficulty in breaking through. A price may have only one Support level, and only one Resistance level. Indeed, a financial instrument can trade in a so-called channel between both! Support and resistance levels are often round numbers that act as psychological barriers. Pay extra attention as the price nears the support or resistance level.
Trading with Charts
Most traders use price charts to some extent. Three commonly used charts are the line chart, the bar chart and the candlestick chart. A line chart consists of price points connected by a line. A bar chart shows the opening price of the instrument, in other words, the price that the product opened trading at that morning. The bar also shows the closing price. The additional length of the bar beyond the opening and closing price are the day’s highest and lowest prices. A candlestick chart is the same as a bar chart, but many traders find it easier to read.
Introduction to Technical Analysis
Technical analysis is the use of historical pricing to identify opportunities to trade. You can use technical analysis when trading stocks, forex, CFDs and commodities et cetera. Often, traders combine trading opportunities found through technical analysis with information from fundamental analysis. Some traders use fundamental analysis for long-term analysis, and technical analysis to decide the timing of trades. Others use technical analysis alone. Analyzing prices to predict future price developments is an art with many variables, and each trader has their preferences.
CFD Pricing & Funding
Contracts for Difference exist for various asset classes. If you are comfortable with, for example, stock indices or commodities, CFDs can be a profitable addition to your portfolio. Contracts for Difference are quoted in the same currency as the underlying asset, and dealing hours are generally the same, sometimes even better. Since they derive from underlying assets, they are often more convenient to trade. For example, they carry no stamp duty.
CFD Trading
Contracts for Difference, or “CFDs”, exist for many different underlying assets. When you trade Contracts for Difference, you open a position, and if the market moves in the expected direction, you close the position and pocket the difference. If the market price does not move in the expected direction, you can close the position or hold it and hope the market turns in your favor. One of the advantages of CFDs is that you can profit in both rising and falling markets. Say, for example, that you believe the price of the S&P 500 stock index will fall in value.
What is a CFD
Contracts for Difference, or CFDs, are a way to participate in the market based on the price movements of so-called underlying assets such as commodities and stock indices. Simply stated, you open a position and close it again when the price has moved, making a profit or loss compared to the opening price. For example, imagine that you believe that the Standard and Poor’s stock index, called the S and P 500, will soon rise. so you purchase contracts at 2,000 US dollars each. An American company then publishes strong results, and the price of the index rises.