CFD trading platform in India
CFDs are a relatively new financial instrument. The first such contract was created just two decades ago in London by Smith New Court, a derivatives company. Since then, CFDs have progressed considerably.
How did the CFD contract come about?
There are several reasons for the emergence of this financial instrument: the first is the laws that have significantly limited the amount of leverage. The second factor was the introduction of stamp duty (securities trading tax).
The search for leverage for those clients who did not have adequate funds for normal securities trading and were interested in short-term trading options, as well as for large clients who were looking for a way to avoid the tax, led Smith New Court to use CFDs. This trading option allowed securities to be traded on any leveraged margin without paying stamp duty, due to the fact that this contract does not involve the holding of assets.
Trading platform capabilities for trade CFDs in India?
The trader on the CFD trading platform can apply his knowledge of technical and fundamental analysis, his abilities and strategic techniques. There are many different strategies and systems that traders use to trade on the exchange.
At its core, working on a CFD trading platform in India is purely speculative in nature. It is a derivative financial instrument based on changes in the price of the underlying asset. At the same time it does not provide any rights to this asset.
In general, traders do not use sophisticated trading techniques and rely primarily on basic data in the form of price charts and a few supporting indicators. Trading on a CFD platform using fundamental knowledge is a method that involves trading based on information and news from the world of the stock market and economy.
Fundamental knowledge and financial news triggers exchange rate movements, but often these movements have the opposite direction to what the information suggests, as traders often outsource transactions by anticipating future events that have not yet occurred. This is another reason why many CFD traders rely more on technical analysis. However, some traders combine both techniques and master them.
Trading on a CFD platform using technical analysis is all about making decisions based on the analysis of the exchange rate charts. CFD traders use indicators and signals. There is a widespread belief among supporters of technical analysis that all economic factors are reflected in the movement of prices and the values of suitable indicators.
By definition, technical analysis indicators are calculated from prices and transaction volumes. Indicators exist in order to give a trader a simple signal to buy or sell, by making calculations with many variables.
Basically, all indicators are divided into three main groups:
Trend indicators. This type of indicator is relevant in those time periods when the market is in a trend. A trend is a directed price movement with a characteristic cyclical price change, when every new cycle is slightly above (up-trend) or below (down-trend) the previous one. This means that at some moments in time, when the price does not have a clear upward or downward trend, the use of this type of indicator makes no practical sense.
The most famous trend indicator - Moving Average (MA). It is used by itself as well as in different other tools of technical analysis. Many other technical indicators are based on MA, such as Zig Zag, Parabolic SAR, Andrews Pitchfork, Ichimoku Kinko Hyo (Ichimoku Cloud), ADX, Bollinger Bands and others.
Oscillators. Values of these indicators vary strictly within a certain range (for example from -1 to 1 or from 0 to 100%). As a rule, they do not overlay on the price chart, but are displayed in a separate window below the chart.
Oscillator indicators are designed for use on a flat market. A flat is a market condition, when there is no pronounced price trend (either upward or downward). Their basic signals are the definition of the overbought and oversold zones, and also the divergence (divergence) with the price chart.
Indicators based on the volume indicators. Indicators based on the volumes of deals in the financial instrument, to the chart which they are attached to.
Classic indicator of volumes - Volume's show how many deals are performed in each specific period of time. Under the time interval is meant one bar or one candlestick on the chart. In practice, these indicators are used mainly to confirm the veracity of a trend.
No matter what kind of instrument is displayed on a chart, the principle of reading it is always the same. If you learn to read a chart, you can understand the movement of any instrument in the financial markets!
There are three types of price movement charts in the CFD trading platform in India:
- Line Chart. The simplest one you can think of. It only shows the price movement of the selected asset over a specific period of time, and no more detailed information.
- Candlestick Chart. This method of displaying price dynamics was invented in Japan, which is why the candles on this chart are called Japanese. It became widely known in the 17th century, and since then it is the most popular and in demand in the world. All that is important to understand is that each candlestick in this chart has 4 components - maximum, minimum, opening price and closing price.
- The bar chart is a bar chart which shows exactly the same information as the candlestick chart. The only difference is in the display: the body of the bar is marked with horizontal bars, which, in most people's opinions, looks less clear.
Your success in trading depends on reading a chart correctly. Study the charts, make friends with them, and they will not be in your debt. Good luck trading, friends!
How to make money trading CFDs in India?
The key to successful trading on a CFD trading platform is choosing the right strategy. Only after you have mastered the theory and practice of trading, it makes sense to start choosing one of the existing strategies, and then, as you gain experience, you can develop your own.
An obligatory requirement for successful trading is the ability to analyze financial markets, theoretical and practical knowledge.
Trading is a vast subject and there is a lot to talk about. Let's break down the main types of trading on the best CFD trading platform in India that have stood the test of time.
- Day trading - CFD traders, who are called day traders, most often buy and sell (open and close positions) on the same day. This means that they hold an asset for a short period of time and make such transactions several times a day.
- Scalping is a technique similar to day trading but involves a much shorter position holding period. This strategy involves the rapid buying and selling of a CFD contract, with profits expected in a few pips. Logically set stop losses can also be used.
- Swing trading / short to medium term trading - this type of trading involves taking positions over a short (or medium) period of time. A CFD trader opens a position and holds it for a period ranging from a few hours to a few days or even weeks. A swing trader follows daily charts and makes 2 to 10 transactions a month (on average).
- Position trading (long term investors). Position traders closely examine a company's financials, they benchmark to find an interesting asset and invest in it for years. They do not pay attention to insignificant price movements and market noise. At the same time, position traders do not shy away from technical analysis. It helps them to identify trends and find entry and exit points.
A trading strategy on the best CFD trading platform should suit your personality, experience, etc. For example, if you find it difficult to find time to trade, it is best to opt for position or swing trading. You can check the market several times a week or a month to manage your positions according to medium and long term actions. However, if you prefer immediate results, then day trading is a great option. You can use it to keep track of your daily profits and losses without the stress of an overnight position.
How to start CFD trading in India?
CFD trading is of interest to beginners and experienced traders alike. Key CFD trading strategies allow you to profit from asset price movements with a small starting capital.
The key to success in CFD trading is preparation, planning and discipline. Take the time to educate yourself and gain relevant knowledge. Have a trading plan, strategy and focus. Be patient, take things slowly.
To get started on a CFD trading platform in India, you need to register on an online platform. You don't have to leave your home to do this. Everything happens online - you register on the website, fund your account with VISA, MasterCard, etc. and start trading. Depending on the deposit method you choose, it will take anywhere from 5 minutes to 24 hours to get your funds. Try it, and you will be successful for sure!
On the best CFD trading platform in India, you have an excellent prospect of trying to trade assets without worrying about your own funds. You can do it by opening a demo account. A demo account works like a real account, only the difference is that all profits and losses are virtual. You do not need to make a real deposit to open a demo account, so there are no risks.
Once you are familiar with how the system works, you can move to a real trading account. With a real account you will have 24/7 access to all the services offered by the platform, which can be very varied and very useful, such as video lessons, market analysis news, asset quotes and your trading history.
To open a deposit according to your preferences and needs, you can use leverage. Leverage is the ratio of a trader's or investor's capital to the leverage they receive for trading on the exchange (1:100, 1:1000). Using leverage in trading multiplies your profit. But you should not forget about risks of deposit loss, if leverage is too high. We recommend using the maximum leverage of 1:10. Control your risk and take your time.
Proper preparation is the key to a good start. Take control of your financial future now!