Using Charts to Trade the Financial Markets

Sep 29, 2011, 06:05 ET from City Index

LONDON, September 29, 2011 /PRNewswire/ --

In modern financial trading, charting is a widely-used form of market analysis. But is the technical assessment of past data a reliable way to make future trading decisions?

Sandy Jadeja, Chief Technical Analyst of financial trading provider City Index (http://www.cityindex.co.uk/), believes so - provided sound risk management techniques are applied: "As an example, did you know that the Dow Jones has declined from 28 December to 22 January in the last 12 years? This type of analysis can be useful because it can help a trader prepare for a potential opportunity in advance. We can then look for a trigger to enter the trade.

"In this example, a simple trigger would be a break below a weekly low after 28 December. Of course, trade management is of high importance to prevent large losses."

Mr. Jadeja hosts free spread betting seminars on technical analysis and charting from City Index's London offices. For traders new to technical analysis, he particularly recommends charting the forex and commodities markets, as their volatility means large price moves and increased activity are likely, making patterns easier to spot.

"I would suggest picking a few markets and practise observing simple patterns," adds the technical analyst. "Then once you gain some experience you will start to see that the markets do trade in very specific patterns. It is at this stage that trading can become very interesting."

To find out more about market analysis at City Index, visit:

http://www.cityindex.co.uk/market-analysis/

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About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, spread betting.

We constantly look to improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Sign up for a free spread betting demo account at http://www.cityindex.co.uk/learn-to-trade/demo-account.aspx

SOURCE City Index