An Introduction to Trading: Online CFD Analysis

Contracts for Difference, for short CFD's, are financial derivative products. This means that the trader can trade on the fluctuations in the value of an underlying asset, without having to purchase the actual financial product. Popular CFD's include commodity futures, index futures, shares, cryptocurrencies and Exchange Traded Funds (ETF's).

An Introduction to Trading: Online CFD Analysis

CFD Basics

Let's start with the fundamentals. What are CFD's and what are the tools required for online CFD analysis?

Contracts for Difference, for short CFD's, are financial derivative products. This means that the trader can trade on the fluctuations in the value of an underlying asset, without having to purchase the actual financial product. Popular CFD's include commodity futures, index futures, shares, cryptocurrencies and Exchange Traded Funds (ETF's).

The primary advantage of CFD trading is its versatility. Since the price is derived from the underlying asset, you are trading on a virtual financial product and don't need to buy an actual asset. So, whether you believe the price of your chosen CFD will rise or fall, you can make a trade and profit from price volatility in either direction.

Analysis Tools

To effectively anticipate market movements and identify trends in the global forex and CFD markets, you have to choose a platform that provides the essential online CFD analysis tools you need to succeed. These include live quotes, dynamic candlestick charts, technical indicators, trading signals, an economic calendar and the latest financial updates.

Long and Short Positions

When trading CFD's almost every successful strategy is founded on an understanding of the basic methodologies behind going long and short.

A long position is when the trader buys a given CFD because they believe that the value of the financial product will rise over the time frame of the contract.

Long-term traders who go long can take advantage of the greater forecasting capability afforded by the extended investment period to profit from lower price changes in trades spanning a month or more.

Conversely, a short position is when the trader sells their chosen CFD because they believe that the value of the underlying asset is set to drop over the lifetime of the contract.

Scalpers and day traders traders who go short or long can benefit from the limited financial costs of rapid-fire trading, profit from the volatility in trades spanning hours or even minutes.

The Benefits of CFD's Trading

There are numerous advantages to trading CFD's. One primary benefit is that there are no exchange fees. Since the trader does not own the actual financial product they have no rights or obligations with regard to the real underlying asset.

Investors trading CFD's can also benefit from leverage, which enables the trader to hold a substantial position on the market, with a minimal investment.  While this allows the trader to make a sizable trade, sometimes hundreds of times the size of their original investment, with very little capital, it can also be dangerous if used heedlessly. Just as leverage enables you to increase your returns, it can also lead to greater losses, so a degree of caution is advised.

Any effective online CFD analysis should be a juggling act. One of the greatest benefits of CFD's is that you can trade multiple instruments simultaneously. You should be taking advantage of the opportunity to diversify your investment portfolio. Trade an array of indices futures, shares, cryptocurrencies, and commodities futures, spreading your exposure across multiple markets and exploiting developing opportunities from a variety of financial products.

Taking That First Step

When you decide to start trading seriously you need to make sure you are fully prepared. This entails comparing brokers until you find the platform that best meets your needs and offers the most competitive trading terms, the most advanced tools and the most comprehensive training library.

Prestige.fm offers all the online CFD analysis tools traders require to successfully navigate the online financial markets. The prestige.fm platform offers a wide array of CFD commodities, cryptocurrencies stocks and indices, as well as multiple traditional currencies, all of which can be traded with flexible leverage, tight spreads and low margins. Traders can also take advantage of advanced trading charts and technical indicators, news updates and analysis, an economic calendar, live streaming quotes as well as a powerful, stable platform that offers instant execution and a range of risk management tools.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing you money.