Exploring-the-CFD-Market-GF-Markets-1500X1000-new

Exploring the CFD Market: Understanding the Opportunities and Risks

Introduction:

The Contract for Difference (CFD) market has notably emerged as a popular avenue for traders, especially in Europe, allowing them to capitalize on price movements without the necessity of owning the underlying assets. This sophisticated financial instrument reflects the price movements of commodities, indices, shares, or any tradable instrument, presenting a unique set of advantages and certain drawbacks. This article aims to provide an in-depth understanding of CFDs, highlighting their benefits and potential risks involved.

Introduction to CFDs:

CFDs are derivative trading instruments, offering investors an opportunity to benefit from price fluctuation without the actual ownership of the asset involved. Essentially, it is a contract between the trader and the broker. Trading CFDs involves speculating on the rising or falling prices of fast-moving global financial markets or instruments, including shares, indices, commodities, currencies, and treasuries. The profit or loss is realized based on the difference in price between the opening and closing trades.

The Advantages of Trading CFDs:

a. Cost-Efficient and No Fees: CFD brokers typically profit from the trader paying the spread. In essence, a trader must pay the ask price to buy an order and the bid price to sell or short, which can vary based on the asset’s underlying volatility. The allure here is the absence of traditional fees or commissions, with many brokers offering competitive spreads.

b. Global Market Access: One of the significant benefits of CFD trading is that it’s not limited to one specific region. Many CFD brokers offer global market products, permitting trading access 24 hours a day.

c. Higher Leverage: CFDs provide higher leverage than traditional trading, which means lower margin requirements and potentially higher returns. However, while this can result in increased earnings, the losses can be equally magnified.

d. No Shorting Rules or Borrowing Stocks: CFD markets often don’t subject traders to borrowing costs or rules against shorting, attributed to the fact that no physical asset is owned during the process.

e. No Day Trading Requirements: CFD trading does not bind traders with day trading limitations or demand minimum amounts of capital for the number of trades executed, which is especially advantageous for traders with smaller capital.

The Disadvantages of Trading CFDs:

a. Weak Industry Regulation: The CFD industry lacks stringent regulation, putting emphasis on the trader to conduct thorough due diligence. The broker’s credibility heavily depends on its reputation, financial standing, and history rather than on strong regulatory frameworks.

b. Spread Payments: Traders need to pay the spread on entries and exits, which can diminish the profitability from small moves. This cost is an addition to the losses and a subtraction from the profits made from the underlying security.

c. Associated Risks: CFD trading is fast-paced and requires constant vigilance due to liquidity risks and margin maintenance. High leverage, while advantageous, can also lead to significant losses. Furthermore, while many CFD providers offer stop-loss limits, they cannot guarantee immunity against losses, especially in markets susceptible to abrupt movements. Delays in trades, known as execution risks, are also potential pitfalls.

Conclusion:

CFD trading offers a flexible alternative to traditional trading, providing diverse market access and opportunities for profit with a relatively lower capital requirement. However, the potential for high returns comes with comparable risks. Traders interested in entering the CFD market must weigh these considerations, meticulously research brokers, and approach trades with a comprehensive understanding of market dynamics and potential pitfalls.

Thank you.

Swing-Trading-Strategies-Your-Deep-Dive-Guide-with-GF-Markets

Price Action Trading Analysis: A Deep Dive

In the vast world of trading, where myriad strategies and techniques float around, Price Action Trading Analysis stands out for its simplicity and effectiveness. At its core, it focuses on the “raw” price data of a financial market. This article seeks to explore the definition, applications, and some examples of Price Action Analysis.
What is Price Action Trading Analysis?

Definition of Price Action Analysis

Price Action Analysis refers to the study and interpretation of a market’s price movement over time. Instead of relying on external indicators or tools, traders focus solely on price charts to make trading decisions. This direct approach allows traders to:

  • Understand and determine the market’s directional bias.
  • Recognize patterns or structures within price movements.
  • Identify potential changes or continuations in market sentiment, aiding in informed decision-making.
Application of Price Action Analysis

Price Action Analysis is versatile. Its principles can be applied across various financial markets, thanks to its reliance on pure price data. However, some markets may offer a more conducive environment for Price Action Analysis than others.

The Forex Advantage

The Foreign Exchange (Forex) market, in particular, stands out when it comes to applying Price Action Analysis. Here’s why:

Deep Liquidity: The Forex market, being the largest financial market globally, provides deep liquidity, ensuring smooth trading and minimal price manipulation.

Trend Performance: Historically, the Forex market has shown a propensity to trend more than other markets. This characteristic is favorable for Price Action Analysis as the strategy thrives on identifying and capitalizing on these trend

Examples of Price Action Analysis

Bullish and Bearish Engulfing Patterns:
These are reversal patterns that can signal a change in trend direction. A bullish engulfing pattern forms when a smaller red candle (indicative of a decline) is followed by a larger green candle (indicative of a rise) that “engulfs” the previous candle. Conversely, a bearish engulfing pattern is when a green candle is overtaken by a subsequent larger red candle.

Support and Resistance:
Two fundamental concepts in Price Action Analysis are support and resistance levels. Support is a price level where a downtrend can pause due to a concentration of demand. Resistance, on the other hand, is where a trend can pause temporarily, given a concentration of supply.

Pin Bars:
A pin bar is a candle with a long tail (or shadow) and a small body. The direction the tail points indicates rejected prices, implying a potential reversal in that direction.

Wrapping Up

Price Action Trading Analysis offers traders an unfiltered view of market sentiment. By honing the ability to read and interpret price charts, traders can often position themselves more advantageously in the market, sidestepping the potential clutter and delay of external indicators.

However, like all trading strategies, Price Action Analysis requires practice, patience, and continuous learning. Remember, the market is ever-evolving, and so should your strategies be.

Disclaimer: Trading involves risks. This article is for informational purposes only and should not be construed as financial advice.

Ready with your daily strategy?

Blog-1500x1000-bitcoin

The 2 key assets that require your attention. Let’s dive into the insights

1.Bitcoin: Potential Buying Opportunity

Bitcoin has experienced a decline of approximately $2,300 over the past two weeks, currently trading at $26,030 at the time of writing. This price level was last observed seven days ago, following a significant upside move. Analysts believe that another upward move may restore confidence among long-term buyers. It is important to closely monitor Bitcoin’s price action for potential buying opportunities in the market.

 

2. Gold: Challenging Support Levels

Yesterday, gold closed below the $1,950 mark and is currently trading sideways. It is currently challenging a support level at $1,959. Traders are closely observing the $1,945 level, which was last observed on the 8th of June. If gold continues to weaken, it may present a selling opportunity. Keep a close eye on gold’s price movements to make informed trading decisions.

As always, it is crucial to conduct your own analysis and utilize appropriate risk management strategies while trading these assets. Market conditions can change rapidly, and staying informed is key to successful trading.

Ready with your daily strategy?

Blog-1500x1000-Binance-kai-US

5 key points to help you navigate the markets these days efficiently

1. Binance Crisis

The Giant Binance is facing massive withdrawal from traders, it is reported $503M outflow so far this week, this may affect the rise of the major coins Bitcoin, Ethereum, Ripple. According to the lawsuit filed by the SEC, Binance, which holds the title of the world’s largest cryptocurrency exchange based on trading volume, has been accused of violating multiple federal securities laws. As a result, there have been significant outflows from the platform. The lawsuit specifically alleges that Binance offered unregistered cryptocurrency securities.

2. Alibaba 

Shares rose 2.79% after the e-commerce icon split its company into six separate business groups. Each will have the potential to raise outside funding and go public. Financial analysts are predicted the stock value to double by the end of the year. Buy and Hold traders are positioning themselves on the markets.

3. WTI Oil is climbing

The crude Oil Price is rising and has reached $72 per barrel from $67 in less than 2 week. Economists advise that demand may rise now because the price is trading at a discount compared to previous months.   Investors will specifically be cautious of the $75 level, which has recently caused a collapse in demand. 

4. US Dollar continues to take profits

The US Dollar has gained points for 4 consecutive weeks against the Japanese Yen, is shows one of the steadiest and clearest uptrends experienced in the currency market this month. This has largely been due to the liquidity control in US Banks after the last FED decision to skip the interest Hike this month, and the Japanese Yen’s “safe haven status”.  

5. GF Markets is introducing CFD on Stocks on its PRO Platform and here are a few tips on what causes the Stocks prices to change

– The Profits that a company make affects its stock value. Earnings create trust sentiment around any company’s market value.

– The power of supply vs demand, the more investors are buying a stock, the more likely its price will increase.

– The company’s reputation. It is directly correlated with the number of customer that the company attracts so also explaining the company’s profit.

Stay updated with these market trends and leverage this information to make informed trading decisions. If you have any questions or require further assistance, feel free to reach out to our dedicated support team. Happy trading!

Ready with your daily strategy?

Blog-1500x1000-Non-Farm-Payroll-(NFP)-release

Insights into the upcoming Non Farm Payroll (NFP) release, a major economic indicator that can significantly impact the forex market.

Understanding the Non Farm Payroll Release:

The NFP report, released by the U.S. Bureau of Labor Statistics, provides crucial information about employment numbers in the United States. It plays a significant role in shaping market sentiment and is closely monitored by traders and investors worldwide.

Confidence in the US economy as other countries is built around a few factors:
  • Good politics: Favorable political conditions can lead to increased orders in factories.
  • Increasing orders: A rise in orders stimulates industrial production.
  • Industrial production growth: Increased production often results in hiring more workers.

These factors lead to higher income levels and increased consumption, ultimately driving higher economic growth.

Past Impact of the Non Farm Payroll Report:

In previous instances, the Non Farm Payroll report revealed an increase of 23,000 jobs in the previous month, resulting in a significant 2% surge in the Nasdaq-100 index, the largest index listed in the US.

Today’s Non Farm Payroll Forecast:

At 3:30 PM GF Markets trading time, the upcoming Non Farm Payroll release is predicted to show an addition of 193,000 jobs compared to the previous figure of 253,000 jobs.

Market participants are strategically positioning themselves ahead of the news, ready to capitalize on potential market movements resulting from the release, especially if it aligns with the forecasted figures. These sellers are seeking to take advantage of the opportunities that may arise based on the market’s reaction to the Non Farm Payroll report.

Ready with your daily strategy?

GF-Markets-Europe-Central-Bank-expected-to-increase-the-interest-rate-today-News

Europe Central Bank expected to increase the interest rate today

Europe Central Bank expected to increase the interest rate today.

 

Forex 

In the aftermath of the Federal Reserve announcements yesterday to increase the rate by 25points, Pepperstone analyst believes that “we can look forward and see nothing priced for the June FOMC meeting, with cuts starting to be priced in July. Looking forward and Fed funds futures price 45bp of cut into December “.
Today the traders will be watching the EUR at 3:45PM GFMarkets trading time . ECB is predicted to announce an interest hike. At the moment EURUSD pair has started moving downside ahead of the press conference. 

 

World Indices

Wall Street had another weak session on Wednesday (Dow-Jones -0.80%) .The US Federal reserve Bank forecasted a rapid economic growth in the U.S. for the rest of this year, thanks to massive fiscal spending and optimism around interest rate hike. “It’s shocking that the U.S. government believes it will grow faster than China this year,” according to strategists at Barings Investment Institute. 

 

Commodities

In commodities, gold jumped to $2077 and dropped by $50 per ounce as result of the US interest rise, The announcement pushed up the precious metal. Oil extended its latest price decline trading now at 68.9/barrel, weighed down by recession fear after 25 points interest raise.

Today’s Calendar

The highlights of today’s economic calendar
– 3:15 PM EU Monetary statement
– 3:30 PM US Unemployment Claims
– 3:45 PM EU ECB press conference

Ready with your daily strategy?

fed-blog-image-

All eyes on FED today as US Interest Rate predicted to increase again

All eyes on FED today as US Interest Rate predicted to increase again.
The Question of the day is “will there be another rate hike”?

Today at 9:00 pm GFMarkets trading time, there will be a major release that may decide of the direction of the markets in the next days . If the Fed decides to raise interest rates by 25 bps later today, it could lead to banks suffering once again. But at the same time, if they decide not to raise interest rates at all, it could leave the inflation uncontrolled. Would you take advantage of the coming volatility ?
The USD has strengthened against a basket of currencies, USDCAD is making a corrective move from its recent multi-days low.

Cryptos 

Bitcoin came closer to $29000 on high demand from institutional and retail investors. In commodity markets, Brent oil touched the lowest price since last week. Oil traders continue to focus on Saudi Arabia’s pledge to deepen production cuts.

Ready with your daily strategy?

Australia-Dollar-is-the-star-of-the-day

Australia Dollar is the star of the day

Australia Dollar is the star of the day.
Forex

The Aussie just jumped by over 85 pips after the Reserve Bank of Australia increased the interest rate by 0.25% this morning. All traders are trying to take profits from this aggressive movement of the AUDUSD pair.

US Indices 

Big Wall Street names such as Apple, Amazon and Microsoft are volatile due to profit-taking last Friday (Nasdaq -0.13%) following FOMC meeting minutes and the FED officials showing a need for more interest rate hikes in order to stop American economy from overheating. If we read the past markets reaction to hike, markets are likely to be bearish in the short-term meaning we can expect strong selling volume on US related assets.

Commodities

In commodities, palladium is till around the one year low on worries over short physical supply of the metal, good time for buyers to step in. Brent Crude OIL lost 0.16% trading now at $79.14/ barrel. WTI oil dropped by $0.15 and now sitting around $75.5/ barrel.

Major news of the day

This Tuesday economic calendar may provide the opportunity for market-movements as one of major release from US, JOLTS job openings at 5:00PM GF Markets trading time.

Ready with your daily strategy?

Low Volatility

Another slow week for markets, how to trade on quiet markets?

Low Volatility

Another slow week for markets, how to trade on quiet markets?


Here are some tips.

Low volatility is perceived as a markets condition that happens when prices are not moving fast, and risks are very low. It is the contrary of a volatile market where prices are changing rapidly in one direction or another.
Due to lack of activity, quiet markets are less attractive for traders, especially for day traders . As a market participant, you will inevitably face a quiet period.
– Nowadays traders measure the market volatility using the VIX (volatility index). VIX tracks the prices and the market volume on the main traded Index S&P500. The faster the prices are moving the higher the VIX value.

How do you understand the VIX ?

• VIX price below 12 => low volatility
• Between price between 12 and 20 => normal volatility
• VIX price above 20 => high volatility

Other more important skills to develop and take advantage of slow markets are:

– Patience

Being profitable can mean collecting profits from small gains with slow price movements. You will learn that it is better to watch the markets wait for one good trade than closing your trading platform due to markets inactivity.

– Adaptability 

Buy Low, sell High makes senses when a trader combines both sentiments and technical analysis , then volatility doesn’t matter anymore since there will be always a support + resistance level to target supported by constant news release affecting the currency or the stock traded.

Develop your low volatility strategy on our demo account risk free.

Ready with your daily strategy?

GF-MARKETS-Blog-pairs

Inflation fears are still imposing some control on the markets

Forex

– EURUSD is around the weekly resistance level around 1.1033, technically the pair tends to go back below 1.1000, is it a good time to buy more?
– USD/CAD made three weeks high, helped by recent strong oil prices. It may not hang long at that level, the market sentiment is bullish.
– EURJPY just reversed after hitting its 5-months highs at 148.40 . Technical traders are expecting the price to retreat and pass 150.00 because EUR data are favorable to a short-term uptrend.

US Indices

New York Stock Exchange indices lost some ground today with technology shares being the weakest (Nasdaq -1.98%) as inflation fears remain, Traders are bullish in general since some FED members are calling for 0.5 BPS rate hike in May. It might be a good opportunity to follow the crowd and start buying.

Commodities

Crude Oil opened at +0.78 today while Brent Oil followed with +0.65%. The lack of government subvention on OIL decreased expectations for crude oil demand in some countries, thus leading the oil price to levels below the one year low recorded a few days ago. The general market sentiment is 76% bullish.

Gold

Gold prices have been in ranges since the beginning of the month and hanging now around $2000. Daily support is set at $1981 so there is technically a possibly to sell and win some a few points until that support level.
Today’s economic calendar has Credit Suisse economic expectations at 11:00 am GF Markets trading time.


Ready with your daily strategy?