Three fundamental signals to observe in short term CFD trading

When making decisions on trading positions, most short term CFD traders are likely to rely on technical analysis. However, for the experienced traders, the basic fundamental analysis is as necessary as the technical indicators. Market news has a greater influence on the price behaviour of the underlying asset.

When a company makes positive announcements, its share prices are likely to rise with the increase in investor confidence. On the other hand, when the news is negative, stock prices are likely to plummet with the falling investor confidence. For a CFD trader, a rise or a fall in the value of the underlying asset determines whether they gain or lose on their position.

Being aware of the effects of market news on the share prices will help you increase the chances of taking a winning position. Below are some of the fundamental signals to keep an eye on in share CFD trading.

Dividend announcements 

For short term CFD traders, the dividend capture strategy is the best technique to leverage on dividend declarations. In this strategy, the trader takes advantage of the announcements to take profitable trading positions. The four most important dates to be understood in this strategy are the declaration date, ex-dividend date, date of record and pay date.

One of the CFD trading approaches in this strategy involves buying before the ex-dividend date and selling on the day before dividend payment. This approach allows the trader to benefit from the fall in prices after dividends issue. CMC markets enable you to take advantage of the dividend stripping strategy by offering up to date information on over 9000 global shares.

Nonfarm Payroll announcements

The NFP report is released monthly by the U.S department of labor and statistics to indicate the total number of paid workers, excluding those working in farms, nonprofit organizations, private household, and government. The NFP announcement is one of the most anticipated news by traders and usually causes a lot of volatility and opportunity in the global stock and currency markets.

A CFD trader should be aware of the dates of NFP announcements and keep tabs on analysts’ predictions on the direction the announcements will take. This will help them take informed positions to benefit in the event. During NFP announcements, you can get more insights into CFD trading positions at CMC Markets news and analysis page.

Interest rate announcements

When the FED or the ECB are making interest rate announcements, the stock market volatility intensifies. This provides an opportunity for CFD traders to leverage on the price movements to take winning positions. Having prior information on the direction the interest rates are likely to take will help you take the best position on your CFD.

Given that interest rates are more stable and less volatile, trading CFD on them is less risky. When trading CFD on shares, one can leverage on interest rate announcements to make profitable trading positions. With a CMC Markets CFD trading account, you can access over 10,000 global markets to trade shares, indices, commodities, forex and treasuries.