Free Forex Trading Manual

39
Free Forex Trading Manual Author: ADE ADEWOLU, Entrepreneur & Investor BSc (Hons); MSc (Arch); MSc (Lond); MNIA; CTFL eMail Us Profitable Forex Trading A Free Gift (Market Value = £97 ) You have my permission to forward it to your friends or family who may desire to increase their Forex awareness Learn from the expert traders nothing beats the experience of successful traders A step-by-step guide to making money how you can start from £0.1/day - £100/day and be making much more income from day trading Start small: Rome was not built in a day Study the commodity or financial instrument you wish to trade carefully The manual is divided into small chapters. Each chapter is made up of an article and some self-assessment questions and answers (Q & A). There is the Glossary section dedicated to the most commonly used terminologies in Forex trading environment There is the Helpful Resources section after every section/part of the eBook

description

A step-by-step guide to making money – how you can start from £0.1/day - £100/day – and be making much more income from day trading Start small: Rome was not built in a day Study the commodity or financial instrument you wish to trade carefully The manual is divided into small chapters. Each chapter is made up of an article and some self-assessment questions and answers (Q & A). Author: ADE ADEWOLU , Entrepreneur & Investor BSc (Hons); MSc (Arch); MSc (Lond); MNIA; CTFL eMail Us

Transcript of Free Forex Trading Manual

Page 1: Free Forex Trading Manual

Free Forex Trading Manual

Author: ADE ADEWOLU,

Entrepreneur & Investor

BSc (Hons); MSc (Arch); MSc (Lond); MNIA; CTFL

eMail Us

Profitable Forex Trading – A Free Gift (Market Value = £97)

– You have my permission to forward it to your friends or

family who may desire to increase their Forex awareness

Learn from the expert traders – nothing beats the experience of successful traders

A step-by-step guide to making money – how you can start from £0.1/day -

£100/day – and be making much more income from day trading

Start small: Rome was not built in a day

Study the commodity or financial instrument you wish to trade carefully

The manual is divided into small chapters. Each chapter is made up of an

article and some self-assessment questions and answers (Q & A).

There is the Glossary section dedicated to the most commonly used terminologies

in Forex trading environment

There is the Helpful Resources section after every section/part of the eBook

Page 2: Free Forex Trading Manual

Table of Contents

Part Contents Page

Part I: CFD Explained: Forex Trading Systems And Methods ------------- 3

Part II: CFD Forex: Leveraged Trading For Huge Profits --------------------- 6

Part III: CFD Forex: Trading Systems And Methods Explained ------------ 8

Part IV: CFD Forex Trading: Leveraging For Huge Profits ------------------ 12

Part V: CFD Forex: Trading Systems And Methods Explained -------------15

Part VI: CFD Simplified: 10 Tips And Hints For Successful Forex -------- 18

Part VII: CFD Trading: Principles And Methods Of Leveraged Income -- 21

Part VIII: CFD Trading Platform: Basic Investment Principles For Beginners - 24

Part IX: CFD Trading Strategies: 3 Critical Factors To Profitable Forex - 26

Part X: CFD Trading System: 5 Tips, Hints And Methods For Success -- 29

Glossary Of Selected Terminologies: -------------------------------------------------- 32

Helpful Resources: ------------------------------------------------------------------------- 39

NOTE: Get a personalised support to start trading in Forex today. Contact Us for

helpful hints on how best you can start earning some money in the quiet of your own

bedroom.

Start Today: Procrastination is the reason for failure. Take action now. The future

starts today. You too can do it!

Page 3: Free Forex Trading Manual

Part 1: CFD Explained: Forex Trading Systems And Methods

By Ade Adewolu

http://ezinearticles.com/?CFD-Explained:-Forex-Trading-Systems-And-

Methods&id=5298034

Contract For Difference (CFD) is a versatile trading vehicle that gives you access to share price movements without having to own the underlying shares. In other words, it is a leveraging instrument that empowers traders to trade with values that far exceed their own cash outlay. When successfully done, CFD is an amazing instrument giving a huge financial profit to the trader. In the same vein, if wrongly traded, it can also bring devastating loss to the trader when the market goes against the intended trade direction.

One key benefit of trading CFDs is that you do not incur any stamp duty as you are not making a physical purchase.

In general, Forex trading is a skill any committed trader should endeavour to learn. Consistent practice and persistence would enable any new trader to build and accumulate good experience with time.

Avoid methods that use cycles instead of indicators or trends. Cycles are too realistic for trading nature and no one can predict what would happen in the market place based purely on what happened in the past trading situation. Trends and indicators, on the other hand can be used to speculate the market performance based on the multi-dimensional factors determining successful trading.

Contract for Difference (CFD) trading essentially allows you to trade on a huge range of markets without physically purchasing the underlying instrument. There is potential for huge profit whether the market goes up or down - depending on your trading choice. For instance, you may choose to trade on the price of a commodity - e.g. crude oil without actually purchasing barrels of oil, or on the price of a stock without actually buying or selling the share.

Online Forex Trading Strategy - How to make Currency trading systems work for you: Make sure you work on very simple principles. The more complex a Forex trading system is, the greater the chances of trading failure and losses.

Learn The Skills of Trading: Take time to learn the product you wish to trade thoroughly. Besides, start small. It is easier to accommodate any losses when they are small than when your whole financial portfolio is in the ruins. Use common sense and study the trends carefully.

Common Mistakes of Beginners in Forex Trading: In the light of seemingly irresistible temptation to make a lot of money from 'day-one,' beginners are easily tempted to make some fundamental mistakes in trading. The tendency is to want to trade all your reserves at once. Avoid it: Start small. Don't follow some self-appointed

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'gurus' blindly. Do your due diligence. Experience acquired with proven and successful portfolio building can never be purchased at any price. Avoid losses that can ruin your business and set you up for bankruptcy. Leveraged instruments like CFD are easy to profit from, and can also easily lead an undisciplined mind to their peril with ease. Be patience and develop an attitude of learning and contentment. Besides all the above, learn to prevent losses in trading. In no time, you would easily understand the art of making big money. Self discipline is the key. Be patient.

Summary: CFD - Contracts for Difference - is an exciting leveraging instrument for trading. While it is exciting to imagine the profitable potential it presents to traders, it is equally important to constantly remind oneself of the ease with which losses can be made. The system is designed to benefit and profit a trader who has positioned the trading instrument properly, hence, if you mistakenly or ignorantly act otherwise, so shall be the loss - in the same proportion. It cannot be over-emphasized that any aspiring savvy trader should arm him/herself with sufficient trading awareness, strategies and system that would easily minimize any losses in the event of the trading tide running against his/her chosen trading position.

ADE ADEWOLU - Investor & Entrepreneur For more helpful information, log onto: http://www.forexbulletproof01.info Article Source: http://EzineArticles.com/?expert=Ade_Adewolu

Self-Assessment Quiz: Part One – Trading Decision Making

I. In the Financial Trading Environment, what do we mean by CFD?

II. Match the statements on the decision-making process with the type of trader

1. A person hears a tip at a party and buys that stock in the morning

2. A person hears a tip at a party and spends the next morning researching that

stock and the industry group

3. A person hears several people gossiping about a stock at a party and pulls it

up on his computer with a view to selling it short

4. A person sees a TV show about a famous investor and buys the stocks that

he mentions

5. A person reads a news release regarding disappointing earnings from a high-

tech company and pulls up its chart the next day to see how it reacts to the

report

6. A person buys a stock after receiving a call from a relative working for a

penny stock company who tells him of that firm’s technological breakthrough

that has not yet been disclosed to the public

A. Investor

B. Trader

Page 5: Free Forex Trading Manual

C. Gambler

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Answers to Financial Trading Quiz One:

CFD - Contracts for Difference - is an exciting leveraging instrument for

trading. The system is designed to benefit and profit a trader who has

positioned the trading instrument properly. If, for any reason or oversight,

the trade goes against you, so shall be the loss - in the same leveraged

proportion. It cannot be over-emphasized that any aspiring savvy trader

should arm him/herself with sufficient trading awareness, strategies and

system that would easily minimize any losses should the trading tide run

against his/her chosen trading position.

Other answer:

A. 2, 6

B. 3, 5

C. 1,4

Page 6: Free Forex Trading Manual

Part 2: CFD Forex: Leveraged Trading For Huge Profits

By Ade Adewolu

http://ezinearticles.com/?CFD-Forex:-Leveraged-Trading-For-Huge-Profits&id=5293473

CFD or Contract For Difference is a very powerful leveraging tool in the financial and commodity trading environment. This article looks at how the leveraging power of the CFD is used in the marketplace to provide huge profits for traders. In this respect, we shall be looking at understanding CFD trading, risks associated with trading using CFD and major steps to choosing CFD trading platform.

Understanding CFD Trading: Trading Critic, Forex, Stocks - When you trade CFDs, your position is leveraged. In other words, you are controlling a much bigger underlying amount of value. As a consequence, you either have to pay interest to maintain the position or be paid interest as a result of your position. Interests are charged daily to maintain your position if you have a long position. Similarly, if you sold to enter your position, you are paid a similar interest. The interest you pay or receive is calculated to include a margin above or below the going interest rate.

CFD Trading Risks - Learn CFDs while there are many positive attributes to CFD trading, it is important to highlight the not-so-obvious or hidden risks in CFDs. Being aware of possible risks would help you better arm yourself to enable you trade with appropriate trading strategies. Such trading strategies when implemented would help you avoid or minimize risks. Below are the most common CFD risks:

· Trading instruments or stocks the trader is not very familiar with

· Overtrading

· Inadequate knowledge of CFD leverage and the safe use of your account

· Short selling stocks against the trend

· Trading too large after series of wins

· Wiping out your CFD trading account

Major Steps To Choosing A CFD Trading Platform - The following are the major steps that can aid an investor in making a profitable choice for a successful trading platform in CFD:

· The trading platform should enable the investor to trade on the world's trade markets 24 hours a day

· The trading platform should have customisable interface that should be able to provide simple access to a wide range of markets dealing in Forex, shares, indices, and commodities

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· The CFD software should have features like back-up and support that will enable the investor to maximise his profits with ease

· The trading platform should provide complete functionality and ease of use while enabling the investor to have easy and effective access to the market of his/her choice

· The trader needs to ensure that the CFD platform is such that the evening order for a stop loss or a limit order can be placed in the evening itself.

Summary: Contract For Difference (CFD) is a unique innovation that has brought unparalleled leveraging to the trading instruments market. Any trader in Forex or any other instrument needs to consider the usefulness and opportunities offered by CFD leveraging factors for making huge financial profits. It is an obvious fact that when there is the leveraging factor in place, opportunities for making losses are equally possible. The wisdom is in understanding the dynamics and making informed choices based on sound logic.

Self-Assessment Quiz Two: Efficient Market

What is the main feature of CFD Trading?

Which of the following statements regarding the efficient market theory are true and which

are false?

1. All traders focus on maximizing profits and minimizing losses?

2. The outcome of any single trade is largely a matter of luck

3. A trader whose account has increased after a year of trading is very lucky

4. Trading in a room with a group of people leads to more objective decisions

5. Markets become more efficient when they become less volatile

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ADE ADEWOLU - Investor & Entrepreneur For more detailed analysis of the subject, log onto: http://www.forexbulletproof01.info. Article Source: http://EzineArticles.com/?expert=Ade_Adewolu

Page 8: Free Forex Trading Manual

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Answers to financial trading Quiz Two:

When you trade CFDs, your position is leveraged. In other words, you are controlling

a much bigger underlying amount of value. As a consequence, you either have to

pay interest to maintain the position or be paid interest as a result of your position

True: 2, 5

False: 1, 3, 4

Page 9: Free Forex Trading Manual

Part 3: CFD Forex: Trading Systems And Methods Explained

By Ade Adewolu

CFD Forex, a system of trading in foreign exchange speculative market, whereby traders employ the leveraging power of Contracts For Difference (CFD) is the subject of this article. CFD is a transaction to exchange the difference in value of a particular share between the times at which the contract is opened and the time at which it is closed. Essentially, you are allowed to trade on a huge range of markets, without physically purchasing the underlying instrument. When properly implemented, you can make a huge profit whether the market goes down or up - depending on your trading setup.

There are no secrets about Forex Trading: only experience and dedication. The internet has enabled a wide selection of sellers who offer their strategies and systems for traders in exchange for money.

Range Bound Forex Markets: Detecting and Trading - During highly fluctuating market situations, transactions are said to be range bound. In other words, they manifest a high level of unpredictability - moving from one extreme to the other: some traders describe this phenomenon as 'highly volatile.' Since CFD is a highly leveraged instrument in Forex transaction, the impact of any range bound market scenario can either result in a handsome financial reward, or it can lead to a devastating and terrible financial loss - if care is not taken.

Optional Strategies: There are various strategies that tell how to trade during range bound markets, but there are few that teach how to spot range bound markets at their earliest stages of manifestation. Once the phenomenon has been identified, a CFD or Forex trader can choose whether to trade or to avoid it completely.

General Guidelines To Range-Bound Forex Trading: In spite of its volatile nature, Range-bound Forex trading can still be studied, analysed, and profitably traded. Below are some general rules for a successful trading:

· Focus on methods and ideas for detecting and trading during range bound markets - these do not shield traders from the ever-shifting market weather, but will inevitably enable you to make accurate weather forecasts.

· Keep It Simple: Once the market is not trending, treat such as a ranging market.

· Very few systems exist that can trade well in both ranging and trending markets. If you're losing during ranging markets, two options are open: either you stop trading or make an additional system/software to minimize loss and maximise profits.

· Trading systems and methods often help to control losses evaluate and limit risks, improve win-loss ratio, etc. They offer the best method to exit a trade and to filter trading signal. They also provide - among others - a favourable method to identify ranging markets, favourable entry methods, just to mention a few.

Page 10: Free Forex Trading Manual

Summary: In a nutshell, CFD is an excellent leveraging tool for trading in various commodities. A savvy trader must be aware that as a leveraging tool, there are tremendous chances of huge financial gains as well as corresponding chances of huge financial losses if things go against the speculated trends. Be watchful that emotions do not override your judgement and you'd always be a winner.

ADE ADEWOLU - Entrepreneur, Investor For more helpful information, log onto: http://www.forexbulletproof01.info

Article Source: http://EzineArticles.com/?expert=Ade_Adewolu

Self-Assessment Quiz Three: Trading Choices

What is the significance of Range Bound Forex Market?

Match the following statements with the trading terms:

1. Finding these points is the hardest aspect of trading

2. Buy when a rally accelerates, and sell when it starts losing speed

3. These must be planned in advance, do not chase the markets

4. This is the most often ignored aspect of trading

5. Buy when a downside breakout starts pulling back up into range, and liquidate within

the range

A. Countertrend Trading

B. Entries

C. Money Management

D. Momentum Trading

E. Exits

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Page 11: Free Forex Trading Manual

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Answers to financial trading Quiz Three:

During highly fluctuating market situations, transactions are said to be range bound. In other words, they manifest a high level of unpredictability - moving from one extreme to the other: some traders describe this phenomenon as 'highly volatile.' Since CFD is a highly leveraged instrument in Forex transaction, the impact of any range bound market scenario can either result in a handsome financial reward, or it can lead to a devastating and terrible financial loss - if care is not taken.

1. E

2. D

3. B

4. C

5. A

Page 12: Free Forex Trading Manual

Part 4: CFD Forex Trading: Leveraging For Huge Profits

By Ade Adewolu

http://ezinearticles.com/?CFD-Forex-Trading-Leveraging-For-Huge-Profits&id=5304238

Trading multiple currencies using Contract for Difference (CFD) is a highly leveraged system that can bring unimaginable profits to the trader as a result of the leveraged factor in trading. If, for any reason the trade goes against the investor, the leveraging power is also there to swallow the investor's funds. It is popularly referred to as a double-edged sword that must be carefully handled.

Having a good understanding of the CFD risks and opportunities give you - the trader - a better frame of mind. In understanding the risks, it is easier to mitigate them by arming yourself with appropriate trading strategies trading strategies -

· To minimize the risks

· Fear and greed are the most common factors that lead new and inexperienced traders to losses in share-trading, Forex, futures or any other trading instruments.

· The best financial education you can have is to know how to overcome your emotion. This would bring out of you, a more successful CFD trader who avoids most CFD risks and trades for huge profits daily.

Top risks to know and plan to mitigate are:

- Trading stocks or instruments you have not fully studied or not familiar with - Short-selling stocks against the trend - Inadequate education about CFD leverage and how to safely and profitably use your account - Trading too large after successive wins - Wiping out your CFD trading account

Get your head around CFD Leverage: Any savvy investor/trader knows that you - the trader - control the amount of leverage that you have in your account. For mathematical simplicity:

CFD Leverage = Total Exposure/Account Size

Hint: If you are a beginner trader, it is highly recommended that you start small: eliminate or suspend leverage altogether - if you can - till you are very confident in the instrument you wish to trade in.

Education: The Power of Leverage - the capacity to make a gain from small percentage transaction on a share, Forex pair or index is because of the power of leverage. It must be noted, however, that the leveraging power of the CFD magnifies the underlying movement of the share, which can be both positive and negative.

Page 13: Free Forex Trading Manual

Many CFD traders look only at the additional purchasing ability that leverage makes available to them. Such traders often make the mistake of ignoring the fact that leverage is a double-edged sword.

It must be reiterated that there is nothing wrong with CFDs as a trading instrument. The problem is often with the way the investors/traders use them. In view of the fact that it is a turbo-charged product in trading CFD, the trader must know his/her stuff.

Summary: Contract for Difference (CFD) Forex trading is an extra-ordinary leverage trading phenomenon. This is because of the profit potentials of CFD and Forex trading. Traders must equip themselves with persistence, patience, and endurance. Success is sure.

ADE ADEWOLU - Investor & Entrepreneur More helpful hints and tips at - http://www.forexbulletproof01.info

Article Source: http://EzineArticles.com/?expert=Ade_Adewolu

Self-Assessment Quiz Four: Stocks, Futures, Etc

What are the ingredients of successful trading as highlighted in the article?

Match of the following statements with one or more of the trading vehicles

1. The buyer must be right on the vehicle, price, and time

2. This is a certificate of business ownership

3. Money management skills are essential for success

4. This is a contract for future delivery

5. It’s OK to buy cheap, but not OK to buy down

A. Stocks

B. Futures

C. Options

Resources to Help Anyone in Forex Trading or Stock-Market

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Page 14: Free Forex Trading Manual

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Answers to financial trading Quiz Four

Persistence, Patience and Endurance are the key ingredients to successful CFD

trading

Answers to 2nd part of financial trading Quiz Four:

i. C

ii. A

iii. A, B, C

iv. B, C

v. A, B, C

Page 15: Free Forex Trading Manual

Part 5: CFD Forex: Trading Systems

And Methods Explained

By Ade Adewolu

http://ezinearticles.com/?CFD-Forex:-Trading-Systems-And-Methods-Explained&id=5287862

CFD Forex, a system of trading in foreign exchange speculative market, whereby traders

employ the leveraging power of Contracts For Difference (CFD) is the subject of this

article. CFD is a transaction to exchange the difference in value of a particular share

between the times at which the contract is opened and the time at which it is closed.

Essentially, you are allowed to trade on a huge range of markets, without physically

purchasing the underlying instrument. When properly implemented, you can make a huge profit whether the market goes down or up - depending on your trading setup.

There are no secrets about Forex Trading: only experience and dedication. The internet

has enabled a wide selection of sellers who offer their strategies and systems for traders in exchange for money.

Range Bound Forex Markets: Detecting and Trading - During highly fluctuating

market situations, transactions are said to be range bound. In other words, they

manifest a high level of unpredictability - moving from one extreme to the other: some

traders describe this phenomenon as 'highly volatile.' Since CFD is a highly leveraged

instrument in Forex transaction, the impact of any range bound market scenario can

either result in a handsome financial reward, or it can lead to a devastating and terrible financial loss - if care is not taken.

Optional Strategies: There are various strategies that tell how to trade during range

bound markets, but there are few that teach how to spot range bound markets at their

earliest stages of manifestation. Once the phenomenon has been identified, a CFD or Forex trader can choose whether to trade or to avoid it completely.

General Guidelines To Range-Bound Forex Trading: In spite of its volatile nature,

Range-bound Forex trading can still be studied, analysed, and profitably traded. Below are some general rules for a successful trading:

· Focus on methods and ideas for detecting and trading during range bound markets -

these do not shield traders from the ever-shifting market weather, but will inevitably enable you to make accurate weather forecasts.

· Keep It Simple: Once the market is not trending, treat such as a ranging market.

· Very few systems exist that can trade well in both ranging and trending markets. If

you're losing during ranging markets, two options are open: either you stop trading or make an additional system/software to minimize loss and maximise profits.

· Trading systems and methods often help to control losses evaluate and limit risks,

improve win-loss ratio, etc. They offer the best method to exit a trade and to filter

trading signal. They also provide - among others - a favourable method to identify ranging markets, favourable entry methods, just to mention a few.

Page 16: Free Forex Trading Manual

Summary: In a nutshell, CFD is an excellent leveraging tool for trading in various

commodities. A savvy trader must be aware that as a leveraging tool, there are

tremendous chances of huge financial gains as well as corresponding chances of huge

financial losses if things go against the speculated trends. Be watchful that emotions do not override your judgement and you'd always be a winner.

ADE ADEWOLU - Entrepreneur, Investor

For more helpful information, log

onto: http://www.forexbulletproof01.info

Article Source: http://EzineArticles.com/?expert=Ade_Adewolu

Self-Assessment Quiz Five: Barriers to Winning

I. When using CFD as a Trading instrument, what should you be aware of?

II. Match each statement with one or more of the external barriers to winning in

Forex trading:

1. They impact your account more than market trends

2. They must be monitored so as not to exceed a small percentage of your account

3. This is the distance between the price at which you place a market order and at

which it is executed

4. This is a meaningless percentage of your account

5. This is an inevitable cost of entering markets

A. Commissions

B. Slippage

C. Expenses

D. None

Resources to Help Anyone in Forex Trading or Stock-Market

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http://bit.ly/9CukLp

http://bit.ly/bAKDK3

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Page 17: Free Forex Trading Manual

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Answers to Financial Trading Quiz Five::

Be aware it (CFD) is a leveraging instrument. Profits or losses can be very high

Other answers:

i. A, B, C

ii. C

iii. B

iv. D

v. A

Page 18: Free Forex Trading Manual

Part 6: CFD Simplified: 10 Tips And Hints For Successful Forex

By Ade Adewolu

http://ezinearticles.com/?CFD-Simplified:-10-Tips-And-Hints-For-Successful-Forex&id=5287898

Contract For Difference (CFD) simplified is an attempt at spelling out some important tips and hints for successful Forex. CFD as a system is simply an agreement to exchange the difference in value of a particular share between the times at which the contract is opened and when it is closed. The tips and hints are as shown below:

· Preserve Precious Capital (PPC): Also known as high probability trading - The attitude is to forget about making money - just try as hard as possible not to lose any money. If you concentrate your efforts on minimizing financial losses during trading, you would naturally end up making enormous amount of money.

· Ensure You Have An Edge: A positive expectancy trading mindset. Have a positive attitude and expect positive results. Your attitude largely determines the results you get.

· Control Your CFD Leverage - Do everything to optimise your earning results positively

· Use CFD Stops Religiously: Employ the technical possibilities and advantages of CFD stop loss to your advantage when trading. Stop losses stick - so the saying goes.

· Establish clearly defined, realistic trading goals:

- Identify What you want

- Focus on it daily

- Kill all Distractions

- Gently return to point (iii) above

· Keep a CFD Trading Or Share Trading Journal Diary: The journal diary is an opportunity to keep account of records of important trading landmarks. It should be made to keep records of profitable trading events as well as causes of losses - where known.

· Develop a well-defined trading plan

· Be disciplined - This cannot be over-emphasized. Keep to your commitments religiously.

· Scale in and out of CFD Trades

Page 19: Free Forex Trading Manual

· Keep A Positive Attitude: Have some fun

With the right education, trading Forex becomes faster and simpler. Whether it's learning the basics of trading, foreign exchange, stocks, options, futures, or commodities, right foundation makes for success.

Profitable Forex trading is based on the fundamental principles of trading. These include, but are not limited to:

- Getting familiar with trading platform

- Develop a solid strategy that is relevant to your life situation, and a toolbox of good Forex

- Trading systems to execute your chosen strategy

- Proven strategy and approach leads to success - as a Forex Trader

- Success as entry strategy

- Money Management Strategy

- Risk Management strategy

- Record Keeping Strategy, and

- 2 - 4 Months of Windfall

Summary: Successful Forex, like any business or any other human endeavour, requires a set of observable principles. This article is an insight into proven and tested principles that can easily be overlooked, but would always work. Any vocation has a set of rules or ethos: follow them and achieve good success, or ignore them at a huge cost of possible business failure and financial losses. My desire for you is to succeed. Take a positive step today for good business success and huge, profitable trading.

ADE ADEWOLU - Entrepreneur & Investor

For more helpful information, log onto: http://www.forexbulletproof01.info

Article Source: http://EzineArticles.com/?expert=Ade_Adewolu

Self-Assessment Quiz Six Account Size

I. What does PPC stand for in trading and financial circles?

Page 20: Free Forex Trading Manual

II. Five traders with similar levels of skill and all using stops enter the stock market.

Which is likely to generate the highest percentage return?

1. £5,000 account; £500 maximum stop on any trade

2. £1,500 account; £150 maximum stop on any trade

3. £25,000 account; £5,000 stop on any trade

4. £5,000 account; £100 maximum stop on any trade

5. £25,000 account; £500 maximum stop on any trade

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Answers to Financial Trading Quiz Six::

PPC – fully called - Preserve Precious Capital (PPC): Also known as

high probability trading - The attitude is to forget about making money -

just try as hard as possible not to lose any money. If you concentrate your

efforts on minimizing financial losses during trading, you would naturally

end up making enormous amount of money

Other answers:

It would take 50 losses to knock traders 4 and 5 out of the game, but a mere 5

losses can destabilize trader 3. The bigger the account, the better: Commissions

and related costs are easier to accommodate and are smaller in proportion.

Page 21: Free Forex Trading Manual

Part 7: CFD Trading: Principles And Methods Of Leveraged Income

By Ade Adewolu

http://ezinearticles.com/?CFD-Trading:-Principles-And-Methods-Of-Leveraged-

Income&id=5298084

CFDs - or Contracts For Difference - provide the investor with unparalleled trading leveraging opportunities in today's volatile financial markets.

As derivable products, CFD trading is designed with the potential and it essentially allows you to trade on a wide array of markets. It allows you to trade on the price movements of securities and indices, without you the trader ever owning the underlying asset. There is an unprecedented potential for profit if the market goes down, as well as if it goes up - in the direction of the trade.

It must be noted, however, that as geared products, CFDs can help you make enormous use of your investment capital. Having stated that, the trader must also appreciate that the amount that can be lost relative to initial investment could be greater - as a geared product relative to non-geared products.

Basic Investment Principles For Beginners - CFD trading is an aspect of income generation where the time horizon is much. Beginner CFD traders need to consider, among several other factors:

· Capital Preservation Objectives - What does the investor know about how to control or minimise losses? How does the system reduce the incidence of financial losses by design?

· Income Generation Objectives - What strategy or method has the system to generate income?

· Growth Objectives - Is there any clearly defined strategy for growth in place? and

· Familiarize yourself with the various types of investment instruments in making any choice(s). Below are the common factors that investors need to consider in choosing the various instruments:

- Time horizon of the investment

- Risk Tolerance and Management

- Rate of Return or Yield

- Diversification to Spread The Risk

- Taxation Concern

Page 22: Free Forex Trading Manual

- The Size of Investment Units

- The Liquidity and Marketability of The Stocks Concerned; and,

- The Security of The Principal Sum Invested And The Needed Income That One Would Expect

Summary: Contract for Difference (CFD) trading is here to stay. They can be used to trade a very wide spectrum of financial products. This implies that they offer a way to easily enable dealing across a large cross-section of the market. The principles and methods used to achieve leveraging in trading can be learned. Any investor who is committed to seeing his/her financial fortunes improve must take the initiative to develop and prepare him/herself for the accompanying lifestyle of fortune. The ideas in this article would be helpful for both the new trader and the experienced investor alike. Take action today. Time is of the essence.

ADE ADEWOLU - Investor & Entrepreneur

For more helpful hints and tips, log onto: http://www.forexbulletproof01.info Article Source: http://EzineArticles.com/?expert=Ade_Adewolu

Self-Assessment Quiz Seven: Account Size

1. What is the principal advantage of Contract For Difference (CFD) to a trader?

2. Which of the following statements are true?

1. Real-time data is essential for timing entries and exits

2. The more markets you follow, the more money you will make trading

3. You must keep abreast of earnings reports for the stocks you follow

4. Futures can sell for less than the cost of production

5. Having 12 months’ worth of daily charts makes weekly charts unnecessary

6. Good software makes up for traders’ inexperience

A. 1 and 2

B. 2 and 3

Page 23: Free Forex Trading Manual

C. 3 and 4

D. 4 and 5

E. 5 and 6

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Answers to Financial Trading: Quiz Seven::

The principal advantage of CFD is that it is a derivable product. CFD

trading is designed with the potential to enable you to trade on a wide

array of markets. It allows you to trade on the price movements of

securities and indices, without you the trader ever owning the underlying

asset

Other answer:

C. 3 and 4

Page 24: Free Forex Trading Manual

Part 8: CFD Trading Platform: Basic Investment Principles For Beginners

By Ade Adewolu

http://ezinearticles.com/?CFD-Trading-Platform:-Basic-Investment-Principles-For-

Beginners&id=5304175

A Contract For Difference (CFD) Trading Platform is the enabling facility to operate different instruments of trading transactions. It is a scenario that enables traders to hedge against an existing portfolio without having to sell the portfolio. This transaction does not trigger any tax charges or other complications. It is fast gaining grounds globally. A typical CFD and spread trading platform offers:

· The ability to instantly trade a wide variety of instruments like UK, European and US shares, indices, commodities and currencies.

· A variety of order types: The trader should be able to place stops, limits and guaranteed stops, but also link orders together for even more control

· A java trading platform - that provides a reliable and competent trading without any downloads. More than any theoretical requirements, a strong mindset and metal frame of mind for success are fundamental requirements for profitable CFD trading.

· New Trader's Income Generation Objectives: What are the new trader's income generation objectives? Since there may not be too much flexibility for a beginner trader, the time horizon is of the essence. Current income potential becomes more crucial than long-term capital appreciation.

· Capital Preservation Objectives: Whatever the age or stage of the trader, it is important to distribute the investment money wisely. It is most advisable to not allocate more than 25% of investment funds on trading. Whether the trader is young or nearing retirement age, a diversified portfolio is the key to ultimate financial success

· Trader's Growth Objectives: What are the primary objectives for Investor's capital appreciation? This has to be viewed in the context of both long-term and short-term needs.

Summary: CFD trading platform provides a new dimension to trading which any new trader can easily grasp for maximum efforts. It must be noted that the leveraging power of Contracts For Difference (CFD) makes it a double-edged sword that must be carefully understood. Taking time to diligently study it cannot be over-emphasized. The time for profitable trading is now. Go for it.

ADE ADEWOLU - Investor & Entrepreneur

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Page 25: Free Forex Trading Manual

Self-Assessment Quiz Eight: Types of Analysis

I. What does the author prescribe for a successful trading using CFD?

II. Match each phrase with the types of analysis

1. Studies economic supply and demand

2. Forecasts future prices

3. Studies crowd behaviour

4. Can be fully automated

5. Serves as a basis of trading decisions

A. Fundamental analysis

B. Technical analysis

C. Both

D. Neither

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Answers to Financial Trading Quiz Eight:

Taking time to diligently study CFDs – diligent study of the leveraging

product cannot be over-emphasized

Other answers:

A. 1

B. 3

C. 5

D. 2, 4

Page 26: Free Forex Trading Manual

Part 9: CFD Trading Strategies: 3 Critical Factors To Profitable Forex

By Ade Adewolu

Forex, understandably a trading of two international or two foreign currency exchange speculative market, is as old as the existence of money as a means of exchange for goods or services. The difference in their accessibility to the ordinary man is the availability of enabling technology with time. In other words, when the transaction was exclusively between countries and major banks, trade was so limited. Nowadays, with internet technology and advancement in modern trading tools, almost anybody can now trade. The situation has been further enhanced with the leveraging power of Contracts For Difference (CFD). Specifically, this article is a focus on CFD trading strategies. The critical factors being discussed here would lead to profitable Forex trading if implemented.

· CFD Trading Leverage: A leveraged stock market opportunity that gives you access to greater funds than trading actual stock market. With CFD trading, you do not have to pay for the full value of the trading position you have chosen. Rather, you put up a deposit or margin, from as little as 5%. In other words, a trader can leverage his/her trade up to 20 times the initial capital.

· Develop a Trading Pattern That Suits Your Personal Profile: Educate yourself properly. A good CFD trading plan is critical to your success on a long term.

Identify what you are good at and keep it

CFDs can be used to trade an extremely wide array of financial products and this means they offer a way to easily start dealing across a large cross-section of the market. For example, a trader that has interest in shares, the level of the price of oil, or the exchange rate of the British Pound against the US Dollar, can deal in all these markets from one account of a single CFD provider.

· Use Stops Religiously: Stops enable you to protect your worse-case scenario by limiting your downside (unless the stock caps considerably).

Stop loss that limits the downside - A stop loss order is an automated instruction given by the trader to deal if the price runs counter to speculation. A stop order can either be attached to an existing position, or it can be used to initiate or start a new position.

Summary: As a leveraged (instrument) system of trading, CFD is arguably the most powerful. The benefits are enormous if well planned, and losses could be overwhelming if trading position is not well articulated. CFD trading strategies as discussed in this article is an analysis of 3 critical factors to profitable Forex. These strategies work and would always work if well implemented. Give them a try.

Page 27: Free Forex Trading Manual

ADE ADEWOLU - Investor & Entrepreneur For more helpful information, log onto: http://www.forexbulletproof01.info

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Self-Assessment Quiz Nine Why Should Anyone Trade?

I. What is the principal factor that has enabled financial trading for everyone?

II. What are the two most logical reasons why people trade?

1. They need a challenge and adventure

2. They want to make more money than is available from riskless investments

3. Most people do it because they are fed up with their day jobs

4. You are more intelligent than most people you meet

5. They simply want to make money

D. 1 and 3

E. 4 and 5

F. 2 and 5

G. 2 and 3

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Answers to Financial Trading Quiz Nine:

The principal factor that has made a difference in the CFD Forex

accessibility to the ordinary man is the availability of enabling technology

Page 28: Free Forex Trading Manual

with time. In other words, in those days when the transaction was only

possible and was exclusively between countries and major banks, trade

was so limited and restricted. Nowadays, with internet technology and

advancement in modern trading tools, almost anybody can now trade. The

situation has been further enhanced with the leveraging power of

Contracts For Difference (CFD). Technology has given a huge boost to the

possibility of most people participating in financial trading that hitherto had

never been considered in the past.

Other answer:

D. 2 and 5

Page 29: Free Forex Trading Manual

Part 10: CFD Trading System: 5 Tips, Hints And Methods For Success

By Ade Adewolu

http://ezinearticles.com/?CFD-Trading-System:-5-Tips,-Hints-And-Methods-For-

Success&id=5240675

Contract for Difference - CFD Trading System - is simply an agreement to exchange the difference in value of a particular share (or any monetary instrument/commodity) between the time at which the contract is opened and the time at which it is closed. In this article, we shall highlight 5 tips, hints and methods for success using this method of trading.

Develop A Winning CFD Trading Strategy: Simply put, anyone and everyone can engage in gainful CFD for profitable income. Whether you are employed, unemployed, or a student, you can still trade successfully using CFD. It takes less than 5 minutes per day to implement gainful trading. This allows and is a bonus for people with busy schedules to trade. Moreover, you don't have to trade every day, as you can take a new trading position every 4 - 8 times a month. In order to get the best out of the system, it is most advisable to take only one contract at any one time, do a proper study - or due diligence as they say - and make good money.

Steps To Choosing A CFD Trading Platform: As a CFD investor, the following are important factors to consider in choosing your desired trading platform:

· A good platform should enable trade on world's trade markets 24 hours of every trading day;

· A platform should have a customisable interface that can provide interface for a wide spectrum of markets - shares, indices, Forex, and commodities.

· Free trading tools should also be provided;

· Trading platform should provide complete functionality, ease of use, and it should enable the investor easy access to any market of his/her choice.

Contract for Difference Trading Strategies: As obtained in any business or human activity, profitability in CFD trading depends on carefully worked out strategies. The key strategies to be included are discussed below:

· Create a fulfilled dream - by investing in your financial education

· Take time to learn every basic thing about the business

· Use CFD to generate good wealth by trading in any market - up or down

· Avoid jumping from one seminar to another: there is no better way to success than self education

Page 30: Free Forex Trading Manual

Top Tips On Trading Systems And Methods: The easiest and best way to start is to identify an expert - someone who is successful in CFD - follow his/her footsteps:

· You can also identify an existing plan and tweak it. This, in other words mean adapting the existing working plan to suit your own. It's like following a pattern that is proven to work

· Use only back tested plans. Black testing is a process of running a system through a set of historical trade data: this process relies on repeatability of performance and would usually confirm your plan's success

· Match a plan with tools: CFD tools include but are not limited to - back testing facility, charting package and stock broken firm

Day Trading Education: In a highly competitive financial market, it is most desirable that anyone intending to profit to profit must make trading education a personal priority. These include:

· Training programs and online courses: To trade and invest in stocks, Forex and futures

· Acquire some useful books and eBooks on the subject: Study them to enhance a sound and balanced education

· Privately review of the periodic activities of brokers and subscribe to weekly and monthly journals

Summary: Financial markets are known for their leveraging factors and ease of leading committed traders to attaining financial success. In times past, it was only the mega-rich and financial institutions that had the resources to attain to and participate in the financial markets as we now know them. The online resources of today's world make it a lot easier for almost anybody to trade with the benefits already mentioned. How do you integrate yourself among those who know what steps to take to make the best use of CFD and other financial marketing instruments? This article prepares readers for the steps to take to achieve the new lifestyle that accompanies a world of immense financial opportunities in successful CFD Trading System

ADE ADEWOLU For more helpful hints and useful information, log onto: http://www.forexbulletproof01.info

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Page 31: Free Forex Trading Manual

Self-Assessment Quiz Ten Trading Psychology

I. In Day Trading Education, what are the principal steps to self-help?

II. M the type of trader who makes it:

1. My broker said this stock always goes up 3 or 4 points before a split

2. My advisor’s model portfolio was up 45% last year – how high did yours go?

3. Who knew the Feds would hit the market with a rate hike?

4. This stock is the lowest it’s been in two years; it can’t go any lower

A. Practicing wishful thinking

B. Getting ready to blame the guru

C. Sideswiped by the news

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Day Trading Education must be pursued in the light of the following:

A. Training programs and online courses: To trade and invest in stocks,

Forex and futures

B. Acquire some useful books and eBooks on the subject: Study them to

enhance a sound and balanced education

C. Privately review of the periodic activities of brokers and subscribe to

weekly and monthly journals

Other answer:

C. 4

D. 1, 2

E. 3

Page 32: Free Forex Trading Manual

CFD Forex Glossary Of Common Terms

CFD Trading Simplified is a collection of selected terms in CFD and other Forex trading environments. The terms are those which would impact positively on the knowledge-base of beginners and traders in the money market. While the terms may not be exhaustive, it is necessary to keep abreast of the trends and regularly update relevant knowledge to be able to trade successfully.

Base Currency: The currency denomination of the profit and loss of a position.

Basis Point: Typically one hundredth of 1%. e.g. an interest rate cut of 50 basis points is equal to 0.5%.

Bear Market:A market distinguished by declining prices.

Bid: A current market price is made up of a level at which you can sell and a level at which you can buy. The level at which you can sell is always the lower of the two prices and is called the bid.

Binary Option:A special form of option with only two outcomes at expiry - if a specific result is achieved (for example, the FTSE to finish up at the end of the trading day) the binary is closed at a level of 100. If the result is not achieved, the binary closes at 0.

Bull Market: A market distinguished by rising prices.

Cable: A term referring to the sterling/US dollar exchange rate. This is so called because the rate was originally transmitted between the London and New York exchanges via the transatlantic telegraph cable beginning in the mid 1800s.

Call Option: A financial instrument which bestows upon the holder the right to purchase some underlying instrument at a specified price (known as the strike price).

Cash Price (also known as Spot Rate): The price of an asset for immediate delivery. In other words, the actual price of an instrument right now; this term is often used for stock indices, whereas the synonymous term of spot is more often applied to Forex and commodity prices.

Central Bank: A government or quasi-governmental organisation that manages a country's monetary policy. For example, the US central bank is the Federal Reserve, and the UK central bank is the Bank of England.

Closing: The process of ending an existing trade. Closing a trade results in a profit or loss being realised.

Commission: The fee that is charged for buying/selling of securities.

Commodity: Financial instruments relating to the exchange of real physical substances, for example gold, crude oil or cotton.

Page 33: Free Forex Trading Manual

Contract Size: In the case of share CFD's, the notional number of shares controlled by the CFD position. For stock index positions the amount of base currency profit or loss per point movement in the market. Similarly for forex, option and commodity trades.

Controlled Risk: A position which has a strictly limited maximum loss by virtue of a Guaranteed Stop. See also Limited Risk.

Corporate Action: A change in the equity structure of a stock. For example rights issues, share consolidations and share splits.

Currency Pair: The two currencies that comprise a forex rate. A forex rate is the amount that the first currency in the pair is worth expressed in terms of the second currency.

Dark Pools: A non-visible order book for orders that will execute inside the spread of the lit order book.

Dealing Spread: Difference between the two ends of our quoted price. You take a long position ('buy') at the higher end of the spread and take a short position ('sell') at the lower end of the spread.

Delta: The ratio of the change in price of an option against a change in price of its underlying.

Deposit: The funds required to initiate and maintain an open position. It is not the total amount that can be lost on the trade.

Depreciation: A fall in the value of an asset.

Dividend: The part of a company's profits distributed to shareholders, usually on a regular basis. Dividends are reflected for share CFD as a cash adjustment to the account. Holders of long positions are credited the dividend while holders of short positions are debited the dividend.

Downtrend: A price trend characterised by a series of lower highs and lower lows.

Economic Indicator: A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.

European Style (Options): A style of option which can only be exercised on the expiry date.

Ex-Dividend: A share bought without the right to receive the next dividend which is retained by the seller.

Execute and Eliminate Order: A limit order to execute at the current market price or worse. If the order is not filled in its entirety down to your specified order level any balance remaining will be cancelled.

Page 34: Free Forex Trading Manual

Expiration or Expiry: Some CFD markets have a fixed duration. For example forward contracts will expire at a pre-specified date and time in the future. At this point a forward CFD contract is said to have expired and is awaiting settlement. Settlement is when the expired contract is closed at a level normally relating to the market at the time of expiry.

Fairy Value: The premium (or discount) of a futures contract against its underlying spot/cash instrument that normally comprises of an interest and dividend component. The fair value represents the rational pricing of a futures contract such that no arbitrage opportunity exists between the futures and the cash.

Foreign Exchange (FX, Forex, Currency): The simultaneous buying of one currency and selling of another.

Fill: The execution of an order.

Fill or Kill Order: A limit order that will only be executed if it can be filled entirely to your specified order level, otherwise it will be cancelled.

Future or Forwards: A future or forwards rate is notionally an agreement to conduct a transaction at some specified time in the future where the price is agreed now. A futures or forward CFD will automatically expire at a specified time in the future, whereas a spot or cash CFD has no such expiry time. Often, the price of a future or forwards contract will differ from the cash price.

The phenomenon of a market trading at a price away from the previous traded price without trades occurring at intervening prices: more usually, but not necessarily, relates to when a market resumes trading after a period of closure.

Gearing (also Leverage): The relationship between potential profit or loss and the initial outlay. A position with high gearing or leverage stands to make or lose a large amount from a small initial outlay. With IG Markets, the initial outlay is normally the deposit for the trade.

Good-for-Day (Day Order): An order type that will expire if not filled at the end of the day. See - Order to Open, Good-till-Cancelled, and Fill.

Good-till-Cancelled (GTC): Unlike Good-for-Day orders, GTC orders remain active on the account waiting for a fill unless cancelled before being filled. See also Order to Open, Good-for-Day, Fill.

Gross Domestic Product (GDP): One of the measures of national income and output for a country's economy; the total value of all final goods and services produced by the economy.

Guaranteed Stop: A Stop-loss order that puts an absolute limit on your liability, eliminating the chance of slippage and guaranteeing an exit price for your trade.

Hedge: A trade or position that reduces or eliminates the risk of loss from an adverse price movement in a position already held.

Page 35: Free Forex Trading Manual

Interest: Cash adjustments made to reflect the economic effect of owing or receiving the notional amount of equity controlled by a CFD position.

Intrinsic Value: Difference between the current market price of the underlying asset and the exercise price of the option, but not less than zero.

In The Money (Options): When the exercise price of a call (put) is below (or above) the current market price of the underlying.

Illiquid Market: A market with relatively less aggregate volume in the order book. In an illiquid market, a small amount of business often moves prices by a disproportionate amount, and bid and offer prices can be far apart.

Last Dealing Day: The last day on which you may trade in a particular market This may or may not coincide with the settlement date for that market.

Last Dealing Time: The last time (on the last dealing day) you may trade in a particular market.

Leverage (or Gearing): Leverage or gearing allows traders to gain a large exposure with a relatively small outlay.

LIBOR: London Inter-Bank Offered Rate. The interest rate charged between banks in London for short term loans - which is a key benchmark that influences many other interest rate charges/products. Individual currency denominations have an associated LIBOR.

Limit Order: An instruction to deal if the price moves to a more favourable level (e.g. to 'buy' if the price goes down to a specified level). A limit order can be attached to an existing position or can be used to initiate a new position (see Order to Open).

Limited Risk: A trade which has a strictly limited maximum loss. See also Controlled Risk.

Liquid Market: A liquid market has sufficient volume of two-way business for a trade to occur without moving prices unduly. Such a market will normally exhibit narrow bid-offer spreads.

Lit Order Books: A view of all visible orders that are queued on a trading venue (primary exchange or MTF) that are currently waiting to be executed.

Long Position: A position taken in anticipation of a rising market. To go long means to buy.

Margin: The amount required from a client - in addition to any deposit due - to cover losses when a price moves adversely. It is also sometimes called 'variation margin'.

Margin Call: When an account is failing to meet margin requirements. This could require more funds to be deposited into the account or for the margin required in the account to be reduced.

Page 36: Free Forex Trading Manual

Market Order: An order to buy or sell at the current market price.

Mark-to-Market: Valuing the profit/loss of an open position to the current market price.

Market Capitalisation: The market value of a company as determined by the prevailing price of its shares multiplied by the number of shares in issue.

Multilateral Trading Facilities (MTF): A venue on which you can trade financial instruments as an alternative to trading on the primary exchange.

Offer: A current market price is made up of a level at which you can sell and a level at which you can buy. The level at which you can buy is always the higher of the two prices and is called the offer.

Orders to Open: An instruction to open a position should a specified price be reached.

Option: A type of derivative which confers the right but not the obligation to buy or sell some underlying asset at a specified price before a specified date.

Out-of-Hours: Refers to trading outside of the main hours of the market.

Out of The Money (Options): When the exercise price of the call(put) is above(or below) the current market price of the underlying.

Pip: Normally used in reference to Forex rates, a 'Percentage In Point' is generally, though not always, the fourth decimal place, i.e. 0.0001. Traditionally, a pip was the smallest point by which a Forex rate could move; with modern advances in precision, this is no longer the case.

P&L: Abbreviation of Profit and Loss: how much you have made or lost.

Position: An open trade that you have running.

Put Option: A financial instrument which bestows upon the holder the right to sell some underlying instrument at a specified price (known as the strike price).

Quote: The two-way market price for a given instrument; because it is two-way, you can buy or sell, according to whether you think the price will rise or fall.

Quarterly CFD: A type of future with periodic expires spaced three months apart. Prices are normally quoted for the next two or three, quarter months. Similar in definition to Rollover.

Realised Profit/Loss: The amount of money you have made or lost on a position once it has been closed. Realised profit or loss will add to or subtract from your cash balance.

Page 37: Free Forex Trading Manual

Resistance Level: A term used in technical analysis indicating a price level at which analysis suggests a predominance of selling - and hence a greater likelihood that the price will fail to break through the level.

Rights Issue: A corporate action where each shareholder is allotted, normally pro-rata their existing share-holding rights to purchase more stock at a pre-specified price. Normally issued by companies in an attempt to raise capital, these rights are on occasion tradable instruments themselves and usually have a fixed expiry date.

Rollover: The procedure whereby a trade approaching expiry is closed and a position of the same size and direction is opened for the next period, thereby prolonging the exposure to a particular market. See also Quarterly CFD.

Running Profit/Loss: How your open positions are doing: the unrealised money that you would gain or lose on your open positions if they were closed at prevailing market prices.

Sector: A selection of stocks in a market normally associated with a specific industry group. Often, this group of stocks can be tracked by a published index. See also Stock Index.

Settlement: The process of a position closing against a specified market level once the position has gone beyond its last dealing time.

Short Position: A position taken in anticipation of a falling market. To go short means to sell.

Slippage: The difference between the level of a Stop order and the actual price at which it was executed (as in Fill). Slippage can occur during periods of higher volatility when market prices move rapidly or gap.

Smart Order Routing: A method of routing an order to multiple venues instead of directly to one venue (conventionally the primary exchange). A Smart Order Router (SOR) can continue searching for the best venue to execute against after the order has been routed.

Spot: The price for a currency, index, commodity or share for immediate settlement or delivery. See also Cash Price

Spread (Bid/Offer Spread): The difference between the buying and selling price for a particular market.

Stock Exchange: A market on which securities are traded.

Stock Index: A compilation of a number of stocks into one total price, expressed against some base value from a specific date, thus allowing investors to easily follow the performance of certain groups of stocks.

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Stop Order: An instruction to deal if the price becomes less favourable. A stop order can be attached to an existing position (known as a Stop Loss) or can be used to initiate a new position (as in Order to Open).

Strike Price (Options): The fixed price at which the holder of an option is entitled to buy or sell.

Support Level: A technique used in technical analysis to indicate a price floor at which you would expect the price to 'bounce' off. Opposite of this is resistance.

Technical Analysis: An effort to forecast prices by analysing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Time Value (Options): The difference between the options premium less the intrinsic value.

Tom-Next Charges: In foreign exchange, this is the cost of holding a position overnight. This normally incorporates the interest considerations in simultaneously holding and owing the notional and base currencies as well as being influenced by the relative availability of the associated currencies.

Trade Size: Governs how much you make or lose on a trade for every point of movement in the price of the market.

Trading Halt: Defined in the Listing Rules as an interruption to trading at the request of an entity that is not a suspension from quotation.

Trailing Stops: A special type of stop order that trails behind the market when the market moves in your favour.

Underlying: The actual traded market or markets from which the price of a futures or option is derived.

Volatility: A statistical measure of the variation in a market's price movements over time.

Working an Order: The process of having an order that has not yet been executed.

Yield: Percentage return on an investment.

Summary: While these terms are eye-openers for entry-level traders, they are also avenues for refresher education for those who have been trading in Forex and CFD for some time. It is helpful for every trader to keep abreast of the current trends and the different concepts that would help in enabling them achieve good success in the trading activities

ADE ADEWOLU - Investor and Entrepreneur - For more helpful hints, log onto:

http://www.forexbulletproof01.info

Article Source: http://www.igmarkets.co.uk/

Page 39: Free Forex Trading Manual

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Your friend,

ADE ADEWOLU - Entrepreneur & Investor

BSc (Hons); MSc (Arch); MSc (Lond); MNIA; CTFL

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