CFD trading and spread betting can seem like an impenetrable web of data, jargon and cliques. How do you know when and what to trade, let alone how?

The good news is there is a vast array of different sources of trading data to inform your trading strategy. The bad news is there is a vast array of data to wade through – filtering out the ‘noise’ can be tougher than anything.

Here’s a quick rundown of the most important sources of information on markets.

Five key things to follow for trading CFDs

Economic Data Releases

On the fundamental analysis front, there is no shortage of economic data releases every day to feed your trading engine. From inflation reports to manufacturing surveys, trade balance figures to GDP reports, we have lots of macroeconomic data to follow.

Of course it varies depending on what you’re trading. In forex trading, interest rate decisions by central banks are huge, but these have lately also been very important for major stock indices. For equities, earnings releases matter a lot, as do directors’ dealings. When Jamie Dimon, chairman and chief executive of JPMorgan, bought more than $26 million in the bank’s stock in February, everyone took note. It was little surprise to then see the shares pop.

Remember, however, that the data itself may be less relevant than the expectations for the figures. For example, see the surge in the US dollar in the febrile months leading up to the December 2015 interest rate rise. The old trader adage, ‘buy the rumour, sell the news’, is an important thing to keep in mind.

Technical Indicators

Lots of people don’t even bother with economic releases and prefer to trade with technical analysis only. More usually, technical indicators can be used as part of a broader CFD trading strategy that takes in the full range of data.

For example, basic technical indicators such as trend lines and channels are invaluable tools for trading CFDs. Moving forward, as you get more accustomed to technical analysis and charting tools, there are some very specialised studies that can be used.

CFTC Filings

Another reference point for trading are CFTC filings – data stored at the US Commodities Futures Trading Commission. These provide a great insight into hedge fund positions on many of the most traded commodities, such as oil, gold, copper and more.

Sentiment

Increasingly, traders can use sentiment indicators to see how other investors are positioned in the market. ETX Capital has recently launched its new sentiment mapper, enabling clients to see by way of an interactive tool how many bearish and bullish bets are being placed at any one time. This is certainly no guarantor success, but it’s another useful weapon in the trader’s arsenal.

Analysts

Banks, hedge funds and other financial institutions offer a wealth of commentary on markets and prices. Analyst insight needs to be taken with a pinch of salt, however, as they’re not always the best indicator of success.

For example, some of the incredibly bullish bets on the FTSE 100 last year from the top City banks (7,000+ was the standard) were way of the mark.

Meanwhile, active funds (when stocks are picked by experts) are no longer necessarily the best guide to investment – recent data from the US and Europe shows actively-managed funds are, in the vast majority of cases, underperforming their benchmarks.