Learn CFD Courses
CFD Trading is one of the largest financial market in the world. CFD traders invest in the cfd market popularly known as CFD Trading for speculation purposes. CFD traders are attracted to cfd because of the following reasons:
CFD Leverage - cfd leverage means that traders can make more money in cfd by investing little of their own capital. This is because traders can borrow money to trade with from their cfd broker using cfd leverage.
Liquidity - The fact that cfd is one of the largest financial market in the world means that there are very many traders trading the cfd market at any time of the day or night during the cfd market week. The fact that there are many traders investing in this market make the cfd market a very liquid market meaning trader can open and close trade in a matter of seconds.
Low Transaction Cost - Because in cfd there are many traders trading at any one given time means that trade costs are lower because of this big volume of trade transactions taking place in cfds market. The only transaction cost paid by the trader is the spreads; no other cost is paid by the traders. The spread is also only when a trader opens a trade: therefore if a trader does not trade then they do not pay any cost.
This learn cfd tutorial presents the various cfd education courses that technical traders or traders who want to learn technical analysis can learn from. After traders have learnt the basics of cfd it is then time to learn more about technical analysis topics that they can use to trade with.
The cfd technical analysis lessons can guide beginners on how to study the various technical analysis concepts.
Basics of CFD Technical Analysis
Candlestick Charts
For technical traders the basic technical analysis tool that they use is the cfds chart. There are 3 types of cfd charts: line charts, bar charts and candlestick charts. The type of cfd chart most commonly used by traders is the candlestick chart. This is because the candlestick chart has a visually appealing format that clearly represents the movement of cfd prices, by displaying different colors for different movements; that blue color when prices close higher than they opened or red color that represents when prices close lower than they open. In addition these candlesticks show the distance between the open and close cfd price and this forms the body of the candlestick. This body of the candlestick is looks similar to the wax part of a real candle. The highest point of the cfd price will be drawn with what is known as a shadow, the shadow is a thin poking line that is drawn above the candlestick and it looks similar to the wick of a real candle. There is also another shadow drawn below the candlesticks and this one represents the lowest point of the cfd price.
The information drawn by the candlesticks is known as OHCL –which represents Opening cfd price, High, Low and Closing cfd price.
Japanese candlesticks were created in Japan by a traditional rice trader who used to trade futures, his name was Homma Munehisa, he later moved to trading the Tokyo cfd market that was in the 18th Century and he made a fortune trading the Tokyo cfd market using these candles: He is said to have made over 100 consecutive winning trades.
In addition to showing the graphical representations of cfd price traders also use candlestick patterns to gauge and determine the strength of the cfd price movement. CFD traders also study these candlestick patterns so as to learn how to interpret and trade signals from the various candlestick patterns. CFD traders wanting to about the various candlesticks patterns can learn from our cfd section under the technical analysis topics, the various candlestick patterns used to trade CFD Trading are:
1.Long and short Candlesticks
2.Spinning Tops & Doji Candlesticks
3.Hammer Candle Pattern and Hanging Man Candle Pattern
4.Inverted Hammer Candlestick Pattern & Shooting Star Candlestick Pattern
5.Piercing Line CFD Candlestick Pattern & Dark Cloud Cover Candle Pattern
6.Morning Star Candles, Evening Star Candlesticks & Engulfing Candlesticks Patterns
Support & Resistance Levels
Some traders also refer to these levels as support & resistance lines. The concepts of support & resistance levels refers to cfd price zones where it is difficult for the cfd price break through & move beyond these levels.
At these levels traders are likely to perceive the cfd price of the cfds as being cheap or being expensive.
Support
Support prevents the cfd price of an asset from getting pushed downwards. Support levels are therefore regarded as the floor because these cfd price levels prevent the cfd market from moving cfd prices downwards past a certain point.
Resistance
Resistance prevents the cfd price of an asset from getting pushed upward. Resistance levels are therefore regarded as the ceiling because these cfd price levels prevent the cfd market from moving cfd prices upward.
Therefore, these levels may be used by trader to determine where to open trades at the points where there is a high risk: reward ratio. For example a trader may open a buy cfd trade at a support level and place a stop loss a few pips below that level. The trader buys at this point because they perceive the cfd price to be cheap. A trader may open a sell cfd trade at a resistance level and place a stop loss a few pips above the resistance level. The trader sells at this point because they perceive that at that point the cfd price is very expensive and therefore there will be less people willing to buy that cfd trading instrument because the cfd price is very expensive and therefore the cfd price is likely to start moving down soon rather than continue to move upwards.
CFD Trend Lines
CFD Trading Trend lines are used to determine the general direction of the market.
Sometimes support and resistances are formed diagonally in a similar way like a staircase. This forms a trend, a cfd trend is a sustained movement in one direction either upwards or downward.
A cfd trend line depicts these points of support & resistance for the cfd price.
CFD Trading Trend line is an aspect of technical analysis that uses line studies to try and predict where cfd price will move next.
A cfd trend line is a straight diagonal line that connects two or more price points and then extends into the future to act as line of support or resistance.
CFD Trading Trend-lines are based upon the idea that markets move in trends. CFD Trading Trendlines are used to show 3 things.
- The general direction of the cfd trading movement up or down.
- The strength of the current cfd price movement and
- Where future support and resistance of the current cfd price movement are likely to be located.
If a cfd trend-line forms in a certain direction then cfd price usually move in that direction for a period of time until a time when the trend line breaks-out.
Upward cfd trend line - If cfd price is moving up then a line is formed that is also moving up. This line is called an upward cfd trend line.
Downward cfd trend line - If cfd price is moving down then a line is formed that also moves down. This line is called a downward cfd trend line.
Moving Averages CFD Trading Technical Indicator
Moving averages are also used in cfd to determine the general direction of the market. Moving average is a cfd trend following technical indicators that is used to show the direction of the market.
The most common trading method of determine the direction of the trend is by using two moving averages to form the moving average crossover cfd system. The moving average crossover cfd system is covered in our cfd strategies section. The moving average crossover system is made up of two moving averages one with a lower period and the other with a higher period, for example a trader may use the 5 period moving average and the 7 period moving average, when price is moving up the two moving averages will also be moving up and when prices are moving down the two moving averages will also be moving down. CFD traders can also identify when a cfd trend changes its direction because the two moving averages will cross over each other once there is a change in the direction of the cfd price movement. This crossover signal is used by traders to determine when to open a new trade after the crossover signal has been generated and the two moving average start to move in the same direction. This crossover signal is also used to determine when to close a trade and take profit after there is a crossover in opposite direction.
Bollinger Bands Technical Indicator
Bollinger bands is a very popular cfd indicator, it is also a cfd trend following indicator and it is used to show the general cfd trend of the cfds market. The Bollinger band is made up of three lines, these are:
·Middle band - this is a moving average of 20 cfd price periods
·Upper Band -shows upper limit of cfd price
·Lower Band - shows lower limit of cfd price
Middle band will show the general direction of the trend whether up or down.
The upper band is where a trader will open a sell cfd trade if the cfd market cfd trend is down or close their buy cfd trade & take profit at this level if the cfd market is trending upwards.
The lower band is where a trader will open a buy cfd trade if the cfd market cfd trend is up or close their sell cfd trade & take profit at this level if the cfd market is trending downwards.
CFDs Fib Retracement Areas
Fibonacci retracement levels are popularly used to determine the levels where cfd price retracements are likely to go up to. CFD traders use these retracement levels to determine where to open trades after a cfd price retracement.
Fibonacci retracement levels are covered in the learn cfd tutorials section of this web site under the technical analysis topics. Trader can learn how to use the Fibonacci retracement levels, which levels are commonly used to open trades and how to draw these retracement levels using Fibonacci retracement indicator.
All these technical analysis methods are also covered on the cfd strategies section of this learn cfd course website and trader can learn more about these concepts and get example of these concepts are used in trading from this cfd strategies section that has numerous screenshots illustrations of these technical tools and how they are drawn on cfds charts along with explanation of they are used to generate trade signals.
