CFD Trading Guide to Going Short on a Falling Market

SYDNEY, June 10, 2012 /PRNewswire/ --

Our CFD trading guide aims to show you how you can potentially profit from a falling market by going short and selling.

Riding the Trend

There is a saying among traders that goes something like, "You should go (and trade) with the trend."

The thinking behind this could be that it is easier to make money by riding the trend than by going against it. It is similar to swimming with the current compared to swimming against it.

After the big falls in global markets on the 1 June, there were talks about the 200-Day Moving Average (200 DMA), which is seen as an indication of a market's long-term trend.  

The common view is that if the market closes above the 200 DMA line, then the market is bullish or is in an upward trend. If it falls below the line, then it is a bearish market or one that is on a downward direction.

Going Short on a CFD

With City Index Australia, you can easily monitor market movements using the charting package which is built into the trading platform.

If you go by the adage of following the (market) trend, you could use the different trading platforms from City Index to go short the market of your choice.

Whether you want to trade share CFDs, index CFDs or currencies; if your chosen market is falling, you could go short on your trade with the potential to profit from any fall in that market.

Going short (selling) means you are anticipating the price of whatever you are trading to fall, with the view of buying it (going long) later on at a lower price (than when you sold it).

While many investors and traders alike are only used to trading by going long (buying first and then selling), it may be worthwhile investigating and learning more about going short (selling first and then buying) when the signs are pointing to a downward market.

Why trade CFDs with City Index Australia?

With City Index Australia, you can trade all the major indices as well as monitor global and domestic news through their market commentaries and market analysis provided by their team of analysts and dealers.

These useful tools could also be helpful in giving you the overall and long-term direction of the markets - whether you want to go short or long.

Trading CFDs is a higher risk strategy and is not suitable for all investors as you may not own the underlying asset.

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.

City Index is a leading global provider of margined foreign exchange and CFD trading. As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. To learn more visit: http://www.cityindex.com.au/