When it comes to trading, the UK is a hotbed of activity. CFD traders in the UK have access to a wide range of analytical tools to help them make informed decisions about their investments. In this article, we’ll look at some of the most popular analytical tools CFD traders use in the UK. We’ll also explore how these tools can be used to improve your trading results. So if you’re looking for an edge in the competitive world of CFD trading, read on.
Benefits of using analytical tools to trade CFDs successfully in the UK market
CFD stands for ”contract for difference”. It is a type of derivative trading that lets you speculate on the rising or falling prices of fast-moving global financial markets (such as indices, commodities, shares, and currencies) without owning the underlying asset.
CFD trading offers numerous benefits, including:
- The ability to go long or short- When trading CFDs, you can take advantage of both rising and falling markets. If you think a market will fall in value, you can open a ”short” position and make profits as the price falls. Conversely, if you think a market will rise in value, you can open a ”long” position and profit from the increase.
- Leverage- CFD trading allows you to trade with leverage. It means that you can control a more prominent position than possible with your invested amount, magnifying your potential profits and losses.
- 24-hour trading- The markets for CFDs are open 24 hours a day, from Sunday evening until Friday night, giving you greater flexibility when it comes to trading.
- No stamp duty- When you buy shares in the UK, you are subject to a stamp duty of 0.5%. However, when you trade CFDs, there is no stamp duty payable.
These are just some reasons why CFD trading has become so popular in recent years. And with the advent of online brokerages, it has never been easier or more convenient to trade CFDs.
How do traders use technical analysis to predict price movements and make informed decisions when trading CFDs on UK markets?
Technical analysis is a method of analysing financial markets that uses historic price data to identify trends and predict future price movements. When it comes to CFD trading, technical analysis can be used to identify potential entry and exit points, as well as to setting stop-loss and take-profit orders.
Many different technical indicators can be used for CFD trading, but some of the most popular include:
- Moving averages- A moving average calculates the average price of an asset over a set period. The most common periods are 20 days, 50 days, and 200 days. Moving averages can be used to identify trends and support and resistance levels.
- Bollinger bands- Bollinger bands are a type of technical indicator that is used to measure market volatility. They are created by adding and subtracting the standard deviation from a simple moving average. Bollinger bands can be used to identify overbought and oversold conditions and set stop-loss orders.
- Relative strength index (RSI)- The RSI is a momentum indicator that measures the speed and change of price movements. It is used to identify overbought and oversold conditions and trend reversals.
These are just some of the most commonly used technical indicators for CFD trading. By using technical analysis, you can understand market trends and make more informed decisions about your trades.
What are some of the most popular analytical tools used by CFD traders in the UK, and how do they work?
There are many different analytical tools that CFD traders can use in the UK. Some of the most popular include:
- Tradingview- Tradingview is a web-based charting platform that provides real-time market data and analysis. It offers a range of features, including technical indicators, drawing tools, and social trading.
- MetaTrader 4 (MT4)- MT4 is a widely used electronic trading platform that enables you to trade various financial instruments, including CFDs in England. It offers a range of features, including advanced charting tools, Expert Advisors (automated trading systems), and customisable indicators.
- NinjaTrader- NinjaTrader is a powerful trading platform that enables you to trade various financial instruments, including CFDs. It offers advanced charting and market analysis tools, as well as the ability to build custom indicators and automated trading strategies.
These are just some of the most popular analytical tools CFD traders use in the UK. Using these tools, you can better understand the markets and make more informed decisions about your trades. To get started with CFDs in the UK, check out Saxo Capital Markets.