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TRADE FINANCIAL INSTRUMENTS SUCCESSFULLY USING TECHNICAL ANALYSIS

 

There are different types of financial instruments. In order to be able to trade these successfully, you first have to know what the term “financial instrument” means.

 

What are financial instruments?

 

A financial contract is referred to as a financial instrument. This contract is concluded between two parties. For one party (buyer) this contract is an asset and for the second party (seller) this contract is a financial liability.

 

What financial instruments are there?

The financial instruments are traded in different asset classes. The asset class describes the form of the financial instrument. Within the asset class, the financial instruments are also subdivided according to the degree of complexity. Typical financial instruments are, for example, commodities, bonds, forex, derivatives, or stocks.

INDICES

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CURRENCIES

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RAW MATERIALS

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SHARES

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TRADE FINANCIAL INSTRUMENTS SUCCESSFULLY USING TECHNICAL ANALYSIS

As already mentioned, financial instruments can be classified according to their level of complexity. There are complex and non-complex financial instruments.

 

Non-complex financial instruments are characterized by the fact that they can be traded without specialist knowledge. Here, the buyer typically makes an investment, and someone else, such as a fund manager, then converts that initial investment made by the buyer into non-complex financial instruments such as stocks or mutual funds.

For trading with complex funds, on the other hand, the trader needs sufficient knowledge to be successful. Complex finance usually promises a higher return than non-complex finance.

 

An example of complex finance is derivatives. Before you start trading derivatives, you as a trader must first find out about the opportunities and risks as well as the advantages and disadvantages of the respective investment. Examples of derivatives are CFDs, options, or futures contracts.

TECHNICAL ANALYSIS AS THE BASIS FOR SUCCESSFUL TRADING

In order to be successful on the stock exchange, experienced traders use technical analysis, which is also known as chart analysis. This is an analysis of financial stocks in which an underlying asset is examined in terms of price development and sales history. In technical analysis, the base value and its previous development are assessed in order to draw conclusions about the further course of the price. In the technical analysis of the Dax, for example, the current and previous course since its existence and other time intervals are evaluated.

 

The aim of technical analysis of the Dax or other financial markets is a realistic assessment of the likely price development using various indicators such as trading volume in order to find the perfect entry or exit point. In technical analysis, the fundamental analysis of a value plays no role, only the probable behavior of the financial market is determined. In order to be able to trade successfully, it is indispensable to master the means of technical analysis, because it represents the basis for effective trading with all financial instruments.