Ebook

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Ebook

ACFX eBook Guide
A Newbie Guide to Forex
Table of Contents
Risk Disclaimer..................................................................................................................................................................................................3
Introduction ........................................................................................................................................................................................................4
1. Shop around before choosing your broker ....................................................................................................................5
2. Match your risk with your account size ...........................................................................................................................7
3. Don’t get married with your losses ....................................................................................................................................8
4. Treat your losses as a price of learning how to trade ................................................................................................9
5. Always use hard stops and honor them when touched ......................................................................................... 10
6. Have a Trading Plan ............................................................................................................................................................... 12
7. Perfection through repetition ........................................................................................................................................... 13
8. Don’t get emotional ................................................................................................................................................................ 14
Conclusion ........................................................................................................................................................................................................ 15
About AtlasCapital ........................................................................................................................................................................................ 16
What’s Next? .................................................................................................................................................................................................... 17
www.ACFX.com
AtlasCapital Financial Services
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ACFX eBook Guide
Risk Disclaimer
Users of ACFX.COM website and BLOG and any affiliated website note the content of the above
analysis or any other information within the website do not at any time provide financial advice.
The information is based on historical analysis and for educational purposes only.
We recommend readers not to make any investment decision of any sort on the basis of the
information above unless prior professional consultation is sought.
Trading may not be suitable for all users of this website. Trading CFDs and Forex (foreign
exchange) on margin carries a high level of risk, and may not be suitable for all investors.
The high degree of leverage can work against you as well as for you. Investors should ensure they
fully understand the risks associated with leveraged CFD and FX trading before deciding to trade.
Investors should carefully evaluate whether their financial situation is appropriate for such
transactions.
www.ACFX.com
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ACFX eBook Guide
Introduction
For many, the financial markets are a complete mystery and trying to understand how they
function is made even more confusing by the plethora of different opinions and in the majority of
cases made by so called misinformed experts that one will find in the financial media and internet.
This e-book has been written for those who are interested in participating in the financial markets
but do not know how to go about it.
We are not going to sugar coat it for you. Trading is not easy and even experienced trader has bad
days. Beginners through a combination of lack of discipline, inexperience and insufficient
knowledge of the product they are trading get beaten up by the markets to the point where they are
spent financially and psychologically.
The newbie will blame the market, for their woes and become a statistic of another failed trader.
With patience and by applying lots of discipline and through practice, trading can be a rewarding
and enjoyable experience.
This e-book will not tell you how to make millions but we hope will help you stay in the game long
enough to make trading a success for you.
www.ACFX.com
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ACFX eBook Guide
Shop around before choosing your broker
As a retail investor, the choice of which
Forex Broker to use has never been better.
As with financial markets, over supply can
cause a decline in prices, the sheer volume of
Forex Brokers offering their service has
driven down the spreads available. The
spread is a cost to the retail investor as it is
the difference between the cost of purchase
and cost of sale of a given product or
currency pair.
All the information you need is at your finger tips
Fortunately, ACFX offers our clients some of the most competitive fixed spreads on the market and
our clients take advantage of this by being able to profit much easier and quicker when compared
to investors who use Forex Brokers who offer much wider spreads.
ACFX offers tight and competitive fixed spreads. There are three account types designed to suit
every kind of investor or trader. In order to make it simple and easy, ACFX provides 5 decimal
places fixed spreads on the Classic and VIP accounts. In order to cater for professional and
institutional investors, ACFX also provides an STP account with variable 5 decimal places spread.
The table below illustrates the spreads on each account type:
For Classic & VIP Accounts
Classic
VIP
EURUSD
2.2
1.5
GBPUSD
2.5
1.8
USDJPY
2.2
1.5
USDCHF
2.2
1.5
AUDUSD
2.7
2
USDCAD
2.7
2
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ACFX eBook Guide
For STP Accounts
Product
Spreads
Spot Forex
Variable from 0.7 pip
Crude and Brent
Variable from 5 cents
Gold
Silver
The competitive pricing has not only forced down the spreads but has also forced down the level of
overnight financing.
Intraday traders who do not hold positions overnight need not worry about overnight financing.
However, for those traders who hold positions overnight, the cost of financing has to be considered.
What exactly is overnight financing?
To put it simply, it is a minor interest payment charged to your account when for instance you
decide not to close a position opened today.
So why are you charged for holding a position overnight?
It is to do with something called Currency Swaps and the time value of money.
The borrowing of money has a cost which is called interest.
You also probably know the rates of interest for each currency can vary. For instance the cost at the
moment for borrowing Euros is more expensive then borrowing US$.
So how does all this I hear you say “affect me”?
To put it simply the cost of holding position in certain currencies could benefit you while holding
others could mean you incur a cost. For this reason, Forex Brokers can charge you for holding
positions overnight.
So what is the mechanics of all this? How does it work?
For example, you are an intraday trader who is holding a position where you have sold USD and
bought JPY.
Your position is going well and you decide to hold it overnight. You hold account in Euros and for
this reason your Forex Broker has to borrow the JPY from somewhere.
The swap is the difference the interest you receive for holding JPY and being short USD.
Sometimes the swap is in your favor and sometimes it is not.
www.ACFX.com
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ACFX eBook Guide
Match your risk with your account size
Many newbie’s to trading approach the
business as a quick get rich scheme
believing that a relatively small account
size can be grown rapidly and with ease.
Furthermore, leverage is a double edge
sword which invariable destroys
undercapitalized accounts.
So how much do you need to start with
as a newbie trader? This is actually a
tricky question but the generally
accepted answer is enough funding
allocated to your account which will
allow you to obtain your goals.
Before you right click, consider the risk you are taking
These goals should be both financial and educational. These being not only enough funds for you to
survive losses that you will suffer which are referred to as drawdown’s but also enough funds for
you to stay in the game during the steep learning curve.
Back to the question, the account size should reflect the risk you take on when you take a trade. The
accepted level of risk is between 1 to 2% per trade. This may sound very low to many new to
trading but if you marry the low levels of risk with a risk to reward ratio of at least 1 to 2, a
disciplined trader can quickly grow an account. With a small account size of say euro 1,000.00 your
stop level and leverage used may simple mean it is difficult to trade due to the level of risk.
For example
A 50 pip stop on a EUR 1,000.00 account where 1 lot is traded you will risk you around EUR 385.00
or 39% of your account. The same position taken on a EUR 20,000.00 account risk will drop to less
than 2%. This does not mean you need to wait until you have EUR 20,000 to trade as ACFX offers
our clients the ability to trade micro lots.
Traders who fail to be sufficiently capitalized risk ruin by trading with excessive risk. ACFX
understands this and is proud to announce our new micro lot campaign specifically launched for
both newbie’s and small account size traders. We will explain the campaign at the end of the
educational section of this webinar.
www.ACFX.com
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ACFX eBook Guide
Don’t get married to your losses
Isn’t easy to look at a chart and say, I would have bought here and sold there. It is a little harder
when one is asked, what you would do next without knowing what is to the left of the right edge of
your monitor.
So why is it that when you are in a position and the market is pointing in your direction for a large
home run trade, you close the trade at first base for a tiny profit? Also why is it when you buy the
euro because you know for sure that the market will go higher that the market crashes against you
and the trade turns into a buy and hope position?
You are not tied to your trade
It is probably fairly obvious that cutting profits early and running your losses will have a bad effect
on your account but unfortunately ones ego gets in the way of too many newbie’s who think they
know more than the market does.
In the previous chapter we talked about the level of risk one should take on when trading and the
risk to reward ratio.
Applying a 1 to 2% risk profile with at least a 1 to 2 risk to reward ratio will ensure that bad
psychology does not take over your trading.
Trading is not about being right all the time but managing your risk in a way that you lose small and
win larger.
www.ACFX.com
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ACFX eBook Guide
Treat your losses as a price of learning how to
trade
However hard you have worked to perfect your strategy or worked on your discipline and trade
management, every trader is going to lose occasionally on individual trades.
For many newbie and experienced traders who have suffered a loss, bad psychology tells them to
double up with a with an aim to recoup their losses or alternatively are left so fatigued by their last
trading experience that they either reduce their size or stop clicking the mouse when the next good
trade comes along.
It is important that traders work hard on their strategy and know it inside out. By knowing your
strategy intimately you are able with clarity and impartiality to assess if a loss is to be expected as
part of the process or if the strategy you have chosen to trade needs further work.
Every trade needs to be taken on its own merits but at the same time be considered as part of the
bigger picture. This bigger picture is the strategy and it’s expected forward looking performance.
They say we learn from our mistakes.
That’s why I’m deliberately making as many as possible. Soon I will be a genius.
www.ACFX.com
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ACFX eBook Guide
Always use hard stops and honor them when
touched
The use of stops is not only essential if
a trader wants to maintain their
financial well being but when
incorporated within an all
encompassing trading strategy will
give a trader an edge over traders who
use little or no money management
strategies.
If the reason you entered a trade is no longer valid then cut it
All professional traders must consider four factors before placing a position.
1. Through a logical and detailed market analysis gauge a market bias where a trader will wish
to participate.
2. Identify a point of entry where a position will be placed.
3. Have an exit strategy where profits will be taken and ideally when markets trend strongly in
your favor.
4. Identify a price level where when breached or touched the trader must close a losing
position.
Losses do and will occur. A trader’s analysis will never be 100% correct all the time. Therefore the
ability to cut losses at appropriate levels is essential if any strategy is to have an edge. However,
more often than not, the very act of taking a position will put you in a loss before the market turns
in your direction. A trader needs to allow for this noise around the entry. Stops placed too close to
the entry or at price level that is likely to be breached will most likely take a trader out of the
position before it has time to turn profitable.
As a guide a trader should risk no more than 2% of their account on any one trade. This percentage
must of course have some relevance to the product they are trading and volatility at the time you
place the order.
If for instance you are a swing trader, your strategy may be that you are a buyer of weakness during
periods of strong uptrends. The rule of thumb when swing trading is that you place your stop
beneath the previous support level. Therefore a 2% stop strategy needs to allow for this as part of a
traders overall strategy.
Alternatively, during times of market news, increased volatility may mean that a 2% stop is
impractical. A trader has to take a decision of decreasing their lot size or decide not to trade during
these periods.
www.ACFX.com
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ACFX eBook Guide
Placing stops does not only relate to protecting a traders capital base but can be used as part of an
exit strategy which allows a trader to protect their profits. Planning ones exit prior to trading is
always easier than trying to decide if you should hold on for more profits or close now.
We have emphasized that placing stops is an important part of trading. Therefore understanding
the mechanics of how they are actually placed on the platform is a must. The MetaTrader4 platform
is simple to use and stop placement is relatively easy. The ACFX Dealing Department is available to
walk through this with clients if they so require.
www.ACFX.com
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ACFX eBook Guide
Have a trading plan
Trading should be treated as a business and as such should be approached in a serious and
disciplined manner. Therefore to achieve your trading business goals, you need to have a well
thought out and clear trading business plan.
Your trading business plan should be short as a long trading plan although very precise and
detailed may become unusable when applied to the real market.
Plan your next move
A trading plan can be based on technical and fundamental analysis or a combination of both.
Although some traders are successful when trading with gut feelings, it is still important to try to
quantify how one comes to that decision.
In my view, the best trading plans should lend themselves to mechanical back testing with a goal to
turn them into a simple step by step strategy or a well tested and robust grey or black box.
Trading does require discipline but that this does not mean that you do not test out new ideas or
lose your creative edge. ACFX encourages traders to try out their new ideas on the demo platform
where positions can be taken with no risk.
www.ACFX.com
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ACFX eBook Guide
Perfection through repetition
Trading has been described by many as a financial art form and
as such lends itself to those with a natural ability to excel. Maybe
this is true and some persons are by their personality, intellect
or conditioning through their upbringing has a natural ability to
be successful in trading.
Natural ability may play a factor but was much more important
is the discipline to study charts for hours on end and through
study, research and hard work find strategies that work for you
and again through self discipline and dedication perfect the
strategy. The research and hard work in itself will stir ones
creative juices and expand your mind and problem solving
ability.
Furthermore, you can test to destruction your creative ideas on a
demo account until you have perfected the set up or trade it as a
live micro lot with minimal exposure but with a good emotional
edge to the entry.
Even Messi practices
www.ACFX.com
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ACFX eBook Guide
Don’t get emotional
We have mentioned bad psychology earlier in this e-book. Bad psychology and your emotions are
the two main reasons why you may fail as a trader. If you are trading funds that you cannot afford
to lose be it life savings or money you have borrowed, you are instantly at a disadvantage as every
tick or pip that goes against you will make you worry and second guess your trading decision.
Making money is a serious business
Furthermore, although trading on a demo account and trading with real funds should mechanically
be no different, however actually making the transition emotionally can be a huge barrier for a
newbie trader. This again is down to the emotions.
The very action of clicking the button on a live account and watching your balance rise and fall can
play havoc with your emotions. Only by mastering your emotions do you stand a chance of sticking
to your trading plan.
www.ACFX.com
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ACFX eBook Guide
In conclusion
So you have read the e-book but you are probably not ready to take the market by the scruff of the
neck just yet. However, what you have read should have given you a different view of how to tackle
the exciting space that is trading.
The e-book has covered areas such as being a disciplined and professional, what approach you need
to have to be profitable and the best ways to reduce risk. Furthermore, we have discussed the
benefits of low spreads, sufficient account capitalization, good practice in risk management and the
use of stops and trade management.
What is probably one of the key points to take away from this is that trading is a personal challenge.
You too can be successful but this will only be from your own efforts. One should not rely on punts
and tip sheets from other commentators.
This e-book is a toe in the water for a newbie trader. ACFX is happy to announce that it will launch a
comprehensive education offering to all our clients. We want our clients to be successful and will
therefore offer them the tools to do this such as MetaTrader 4 platform and a too the point
education Knowledge Base.
Furthermore, our inexperienced clients can practice their technique and strategies by registering
for a demo account and down loading our free to use MetaTrader 4 software. Our clients can also
take advantage of our generous cash bonuses and opt to trade with micro lots as trading with real
funds will give you an edge simulated trading cannot give you.
www.ACFX.com
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ACFX eBook Guide
About Atlas Capital
AtlasCapital was incorporated in October 2007 and is headquartered in the centre of Limassol,
Cyprus. The Company is a member of AtlasGroup, one of the most renowned business
conglomerates in southeast Europe. AtlasGroup has twenty years of experience in investments and
commercial banking, as well as real estate investments.
Based in Cyprus and regulated by the Cyprus Securities and Exchange Commission we are fully
compliant with the EU - MiFID Directive (Markets in Financial Instruments Directive).
In AtlasCapital we aspire to fulfill our commitment to excellence offering our clients an array of
services and innovative investment opportunities. We are pioneers in the field of GHG emissions
trading in southeast Europe. AtlasCapital is the only investment firm in Greece and Cyprus that has
full membership on BlueNext, the Paris-based Environmental Exchange that currently serves as the
biggest platform for trading spot EUAs worldwide.
In addition, AtlasCapital provides traditional services like global custodianship to investment
banks, brokers-dealers, institutional investors, mutual funds, corporate entities and private
investors.
In January 2010, Atlas Capital FX (ACFX) - a trade name of Atlas Capital Financial services (ACFS) was formed in order to provide retail investors access to the currency, commodities, energies and
equities markets.
www.ACFX.com
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ACFX eBook Guide
Now you want to trade. What do you do next?
Opening an account has never been easier. Just follow the simple steps listed below.
1. Go to ACFX.com and click on “Start Trading”, Register for live account or simply just click on
the below tab.
2.
3.
4.
5.
Fill in the Live Registration form.
Carefully read the terms and conditions and click on the tabs agreeing your acceptance.
Finally press the “Submit Details” tab.
You will be contacted promptly by one of our dedicated Sales Managers.
www.ACFX.com
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Ebook

Transcription

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