Market Analysis – Technical Analysis
This type of market analysis involves researching past underlying asset prices and the reasons for their changing. This approach may help identify market trends and use them while trading.
77,7% of retail investor accounts lose money when trading CFDs with this provider
For example, if an underlying asset’s price had been rising for a month, then slightly fell, and then continued to go up, you may suppose that the price will keep growing for another month, as it did before under similar circumstances. However, past performance is no guarantee of future results.
This is a convenient way to visualize the underlying asset price movement. Traders use candlestick charts to obtain more detailed information on prices they cannot get from line charts.
A candlestick chart consists of red and green candles. A green candle signals that a price has been rising, while a red candle signals the price has been falling.
Every candle has four important components: open price, close price, high, and low.
The area between the open price and the close price is referred to as ‘the body’ and is shaped as a green or a red rectangle.
The thin vertical lines between the open/ close price and the high or low are called ‘shadows’.
Open a Buy Trade
A buy trade is the same as a Bullish Trade. This means you open a trade based on technical analysisthat the underlying asset’s market price will be rising.
Let’s assume you’ve just read an analyst’s report predicting that the price of gold will be going up, and you may agree with it. You then open a buy trade and see if you may earnif the price keeps rising.
Open a Sell Trade
A sell trade is the same as a Bearish Trade. This means you open a trade based on the technical analysisn that the underlying asset’s market price will be falling.
Let’s assume you’ve just read an analyst’s report predicting that the oil price will be going down, and you may agree with it. You then open a sell trade and see if you may earn if the price keeps falling.
This type of trading involves placing orders based on a long-term price direction. A trend may be ascending or descending.
An ascending trend takes place when the price keeps going up for a certain period of time. When the price keeps going down for some time, it’s a descending trend.
This is an order to open a trade as soon as the price has reached a predefined level.
CFDs –a Financial Instrument which is a Contract for Difference by reference to variations in the price of an Underlying Asset such as Currencies (FOREX pairs), Commodities, Futures, Options, etc.the underlying assets that you can use to trade on Libertex are:CFDs on stocks (such as Google, Apple, Tesla), CFD on commodities (crude oil), CFD on metals (gold, silver), CFD on currency pairs (EUR/USD, GBP/USD), and CFD on indices (Dow Jones, DAX).
This is a type of order which allows you to close a profitable trade when a pre-set level has been reached. Thus, you automatically lock your potential profit and don’t miss a chance to get a favorable market price.
Let’s assume you buy CFD EUR/USD, your trading amount is 2,000€, and your Take Profit is 600€. If the underlying asset price reaches the desired level, the trade will close automatically, and you will lock 600€ as your profit. If you don’t set a Take Profit, and the trend reverses, you may lose all your potential profit.
Setting your loss limit in a particular trade is the same as placing a stop loss order. When the price reaches the limit, your trade will close automatically. By placing a stop loss, you limit your losses significantly in the event of the underlying asset price moving against your expectations.
Let’s assume you buy CFD EUR/USD, your trading amount is 2,000€, and your Stop Loss is 600€. If the EUR/USD price unexpectedly goes down, and your loss from the trade reaches 600€, the trade will close automatically, saving the better part of your trading amount.
A multiplier is a factor that increases both your potential profit and risks.
Let’s assume you buy CFD EUR/USD, your trading amount is 50€, and your multiplier is 30. In this case, your trading amount will go up 30 times, and so will the profit or loss. (50€ x 30 = 1500€).
With a multiplier, you can trade big, even with a modest account balance.
Important Note: Both your potential profit and loss change proportionally to the applicablemultiplier. This is why, for novice traders, we recommend not to use high multiplier, in order to avoid additional risks in an unfavorable market situation.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79,1% 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 your money.