Learning To Trade

By Author: Vickey Nhep
Total Articles: 6
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If you''re considering taking up spread betting or CFD trading the first thing that you should do is try to work out what type of investor you want to be. Are you looking for quick gains or happy to go for steadier, longer term investments? Are you looking to spread bet or CFD trade? Do you know which market you would like to trade in?

The answer to these questions will have a serious impact on the kind of skills you will need to learn, particularly the decision as to whether you''re looking for short or long term returns.

All traders (that is to say, all traders who actually make money) use a mixture of fundamental and technical analysis to inform their trades. In addition they generally stay in one market and learn which events have an impact on the movement of that market.

Fundamental analysis is, in brief, all the fundamentals details of a company. Consideration of things like balance sheets, outstanding debts, the strength of competitors and even the skill of the directors can be involved in fundamental analysis.

Once this information has been gathered, a fundamental analyst will consider it ...
... carefully with the overall aim of working out what the value of the company should be. This then means they can decide whether the company is over or undervalued and allow them to trade accordingly.

Technical analysis generally ignores the company''s details and looks instead at the historical share movements in order to work out what will happen next. Technical analysts use a wide range of tools designed to help them spot trends in the market that might be on the verge of overturning. Finding the point of turning is vital as it allows a trader to maximise his or her investments.

Technical analysis is generally better suited to short term traders but in times of extreme volatility it can be difficult to use, hence the departure of many day traders from the markets during the recent financial crisis. There is no golden rule for how to use technical and fundamental analysis, either separately or in combination, it all depends on what type of investor you are and which method of analysis you prefer.

Contrary to the beliefs of some, spread betting companies do not want their traders to lose money and offer a wide range of resources that traders can use to become familiar with the markets and learn some of the basics of trading. If you''re just starting out it''s important that you make the most of these resources if you are to make the most of your investments. Vickey Nhep is an expert in personal finance. This article was inspired by CMC Markets, a company that offer innovative cfd and spread betting solutions.