Analysis tools used by CFD traders in Germany
Germany is one of the top five markets for online trading accounts in Europe, with over 2.5 million active online traders, accounting for 11% of all Europeans who are investing through any online brokerage account.
Many of these Germans are interested in standard retail trading products such as stocks, commodities, forex and options, but they also tend to be very involved with contracts for difference (CFDs).
Many German traders enjoy the leverage that CFDs provide. It has helped create a mixed environment where traditional retail investors coexist alongside more high volume and experienced ‘pro’ traders. While it’s common to find some banks and brokers offering their proprietary software to their clients, typically aimed at beginning investors, most CFD trading in Germany will use third party software to support their trading activities.
What are the benefits of free analysis tools?
Retail investors typically enjoy the ability to synchronise their desktop and mobile devices with their preferred trading platform always to have access to information at hand. Pro traders understand that they must use many additional tools within their strategies before any buy or sell orders.
Professional-grade software requires real-time price feeds and news feeds, economic calendars and analyst commentary, all of which provide valuable insight into future price movements. They also provide the trader with much more detailed analytics than what is available through standard charting platforms offered by online brokers. This software supports complete market research, including sentiment amongst other traders, volatility and volume calculations.
Free analysis tools can be more powerful than those offered by brokers because they allow traders to access third party information and use their computing power for dynamic charting and data scraping functions.
Most of these free software products are available online, so German traders do not have the additional cost of installing anything on their computers. It makes it possible to either have a dedicated platform or open multiple web browser windows with the desired research tool inside.
Is it possible to use free internet resources for trading?
The main benefit of using advanced analytics is that it allows traders to keep track of both long-term trends and short-term movements, so they always have an advantage over other market participants who are following one or the other. Pro traders use this information to keep position sizes small to invest in long-term growth and short-term recovery opportunities, which is very important because most investors are strongly influenced by their current emotions.
For example, a trader who has set a buy order for ten contracts at a specific price level would prefer not to see the market move lower and wipe out his investment. But instead, watch it pause and recover before he starts buying again, even if he has to pay more per contract.
Watching volatility rise or fall allows traders to apply hedging techniques by setting stop-loss orders that automatically close positions when prices start moving quickly in either direction. However, many retail investors struggle with properly defining exit points because they often focus on price targets rather than relying on a technical indicator or specific price motion to trigger their decision making.
Increase/decrease in value
Free analysis tools typically focus on future market movement, and most retail investors only make trades when they believe a specific asset will increase or decrease in value. So it’s common for many of them to base their decisions on personal experience with the historical data contained within the trading platform.
While this may seem like a good idea, pro traders prefer advanced analytics, which looks at volatilities and short-term trends and considers entry points for new investments and exit points for current ones. In addition, dynamic charting allows traders to add additional price levels, so they have support and resistance in one tool instead of going back and forth between multiple platforms.
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