What are Alerts? 

Trading alerts are a function that can be utilised for trading signals, news and reports that can help you to gather insights upon the market. Through this post, let’s explore what and which alerts can be used in various market and best alerts to help your trading journey!

What Kind of Alerts Are There? 

1. Economic Alerts

• An event-driven trader often utilises economic alert to enter or exit their positions.
• You can use alerts on the economic calendar to remind you of specific events.
• This is one way of using alerts to trade in the market.

2. Price Alerts

• Price alerts enable you to respond to price movements.
• It can be used to place buy and sell signals across all markets.
• You can choose between price level alerts and price change alerts which automatically resets once triggered.
• These alerts can be used as a tool for risk management, ensuring you keep losses to a minimum.

3. News Alerts

• If you are a day trader who aims to earn profit from small market movement, news alerts will help catch up with new updates.
• Instant updates upon important news will help you to catch the opportunity to gain profit.
• News alerts can also be useful for those event-driven traders.

4. Technical Alerts

• the most famous indicators like moving average, MACD, RSI and more can be set as an alert.
• This allows you to place order conditions that you wanted have appeared.
• Plus, you can set an alert to remind you when a combination of indicators has met your requirement for accuracy. 

What Are The Advantages of Using Alerts? 

1. Saving Time

• After setting the alarm, you do not have to watch the market 24/7.
• Once the alert rings when all the criteria meet.
• This enables you to save time and concentrate on developing new strategies!

2. Automation

• Alerts can also be used as an automated trading signal.
• This will reduce the consumption of emotion and mistakes.
• It would enhance the profit rate by avoiding human errors.

3. Easy to Use

• Alerts are very easy to set up.
• After choosing an instrument, you can set a certain price to buy or sell base on your strategy.
• When it reaches the point, you can take your phone of pc out and place the order.

4. Speed and accuracy

• The alert rings when the criteria have met immediately.
• It is set to base on math and code behind the scene.
• Thus, it is speedy and accurate compared to a human being.

What are the ways we can use the alerts?

1. Systematically enter and exit positions.

You can set an alarm base on your strategy. It will tell you exactly when to enter or exit your positions. Since the alarm is base on math and code, it is very accurately working. This will reduce the rate of human error and enhance your profit rate in the long run. 

2. Fully utilise the economic and news alerts.

If you are an event-driven trader, taking into account economic events and global news would be necessary. Using the alerts enables you to set up an alert upon specific events like unemployment or interest rate. This would prevent you from missing these events while trading.

3. Multitasking

Unless you are a full-time trader, it is tough to monitor the market and trade manually. Either it has to be a mid to long-term strategy or automated system trading to maintain the performance. But, an alert can be your alternative method to trade within the market. If you have a fully back-tested strategy and working but hard to automate, you can utilise an alert to ring when it is the right moment to enter or exit. Therefore, you can use your phone to execute orders within a minute!

What is a Trading Platform? 

A trading platform is a software that gives access traders to the global market instantly. Market participants can open and close positions through these intermediaries and seek to gain profit from the market. The trading platforms’ cost is frequently free or at a discounted price for sustaining a funded account or making a given number of trades per month.

There are two types of trading platforms prop platforms and commercial platforms. Prop platforms are customised for large brokers to suit their specific requirements and trading style. Commercial platforms target day traders and retail investors. Its focuses on ease of use and helpful features like news feed and chart. Hence, it offers sources of education and research are also given for the people.

Trading platforms have multiple functions that are packaged into one. These features are real-time quotes, charting tools, news feeds, and premium research and offers the infrastructure to trade at various markets like stocks, forex, crypto and more!

What are the features of a Trading Platform?

1. Demo Account

A demo account is a type of account that enables you to trade with a simulated fund with no real capital risk. It is a great way to learn the basics of the functions and your strategies with the trading platform. Every trading platforms offer free demo account for trial. For more detail, check on our information about demo accounts!

2. Live Prices

Trading platforms offer live prices from data providers. The accuracy of the price of an asset would be essential for trading. Therefore, making sure whether the platform is providing the correct price is needed. 

3. Charts

Base on the live price data, the chart is formed in the meantime. The chart is a visualised set of data that helps recognise the trend, support and resistance, and other factors necessary for trading. Plus, trading platforms offer several types of charts like a Line, Bar, Candlestick, Renko and more!

4. Economic Calendar

Trading platforms provide an economic calendar for entire users for free!  The economic calendar consists of several major important schedules such as employment rate, interest rate signalling, reports from Federal Reserve and other central banks with hundreds of other types of events. These events may affect the movement of assets as a whole. 

5. Alerts

Alerts on trading platforms are useful to remind a trader when to enter and exit the position. You can choose a ticker that you want to trade and set the alarm when it reaches a certain price to either buy or sell. It is implemented in every trading platforms! 

6. Copy Trading

Copy trading is a type of social trading where you can automatically copy the trades via eToro, Zulutrade and Metatrader. It is often time fully automated and enables you to prevent mistakes from human emotions. But, the strategy may not be permanently outperforming, and possible human mistakes can occur. 

 

How to pick a good trading platform? 

 

1. Fees and commission

Fees and commission is a primary element to consider when we are choosing a trading platform. The fees here are not a trading fee, but it could be a fee for transferring your fund, subscription, inactivity, annual and research and data. Ensuring a platform does not charge these fees, which could be challenging for the beginners.

2. Features available.

The features of the trading platforms are similar but also has different functions to appeal their own speciality. Considering factors such as your trading strategy, an instrument to trade and tools available are necessary to choose a suitable platform for you! 

3. Margin requirement

Some of the brokers may require a high amount of minimum deposit to start trading. The minimum amount of funds for margin requirements can range from $100 to $100,000. Therefore, ensuring the minimum margin requirement is needed!

4. Execution Speed

Speed of execution would be vital for trading. A lag in executing orders would be critical for traders as there is a probability that the order is executed at higher prices. This could directly influence the profit rate in the long-term.

5. Reputation

Reputation from users is also a great source to consider whether a trading platform is a good one or not. You can check on app stores and websites’ reviews to see how people think about the platform.

What are the popular trading platforms?

Metatrader4

MetaTrader 4 is a stand-alone online trading platform developed by MetaQuotes Software. It provides access to a range of markets and hundreds of different financial instruments, and you will have all the tools you need to manage your trades and analyse the markets while it is free to everyone. This trading platform enables you to access more than 30 technical indicators, which may help you identify market trends and signals for entry and exit points. 

Keynotes:

• Easy to read charts.
• Real-time monitoring of the market.
• Provides 30+ technical indicators.
• Nine different time-frames to choose from.
• Determine entry and exit points based on signals.
• Multi-device functionality and trustworthy security system.

Metatrader5

MetaTrader 5 is the newest and most advanced online trading platform in the industry, offering from MetaQuotes. It includes a multi-threaded strategy tester, fund transfer between accounts, and alerts to remind you of the latest events. Hence, Its diverse functionality, fundamental and technical analysis tools, copy trading, and automated trading equip you with the best tools and instruments available. MetaTrader 5 is also entirely free for download.

Keynotes:

• 44+ analytical objects with an unlimited number of charts.
• 38+ technical indicators are implemented.
• Economic calendar and email system.
• Multi-threaded strategy tester.
• Fund transfer process between accounts.
• Alerts to remind up-to-date market events.
• Embedded MQL5 community for traders to chat.

cTrader 

cTrader is a brand-new trading platform that was established in 2010 by Spotware. It offers complete solutions for traders packed up with various features to enhance every aspect of your investment. It provides excellent indicators, advanced order types, fast entry, and execution. The User Interface is stunningly impressive and easy to understand the components.

cTrader also offers copy training, algorithmic trading solution, Open API and FIX API. Together it is tuned for those people who are interested in system trading. If you don’t know how to make one, choose one to copy with a  simple click!

Keynotes:

• Mac, Windows, iOS, and Android supported.
• 9 charts are implemented ( Candle, Bar, OHLC, Line, Heikin, Dots, Renko, Range, and Tick chart).
• Over 70+ indicators are pre-installed for you! 
• Custom indicators built-in cTrader Automate from thousands of developers.
• 8 different formats to set-up chart view based on your trading style.
• Easy to create up to 50 templates with a variety of strategies and time-frames.

Tradingview

Tradingview is an easy and effective platform for technical analysis and automated trading. It is very convenient to implement ideas on the chart due to its flexibility. With the most active social network of millions of investors and traders within the trading view platform, you can gain brilliant ideas by communicating with them,

The price data is obtained by professional providers who have direct and extensive access to various markets. It offers real-time price data on more than 100,000 instruments from over 50 global exchanges 24/7.

Keynotes

• Tradingview has an advanced chart with over 10 types of chart.
• Direct access to stocks, futures, indices, forex, crypto and CFDs.
• Offers price analysis tools including indicators, strategies, drawing objects and more.
• One of the best alert systems which can be set precisely.
• Instant access to more than 100,000 instruments.

Conclusion

The trading platform is a fantastic technology where we do not have to visit an exchange offline to trade in the financial market. It is online and user-friendly to use. It is very cost-efficient and convenient to access the global market with an internet connection.

 

What is Automated Trading? 

Automated trading is also named system trading or expert advisors(EAs) that enable a trader to enter and exit positions with pre-setted rules automatically. A trader can concentrate on research and backtest strategies while the system does the trading.

As technology evolves, the barrier to enter the world of system trading is getting easier. Because of the internet, a lot of strategies are open and has all the necessary information to build your own system.

Even though you do not know to program, you can still do automated trading via copy trading or purchase an EA. Automated trading is just a tool that helps you to buy and sell as you wanted. The most important thing is the strategy and the inputs you are using.

Therefore, if you are aware of trading strategies, you can request a freelancer programmer to develop a trading system on behalf of you. Before you start trading with the system, you have to backtest the strategy and start with a demo account. Once, it has proven profitable with low MDD(Maximum Drawdown), you can start with a small amount of capital and increase gradually.

 

What are the Strengths and Weaknesses of Using Automated Trading? 

Strengths

1.Consistency

Trading system trades repeatedly based on strategy and inputs. It does not complain and much more cost-efficient than hiring a person. This will reduce the probability of making mistakes and enhance performance in the long-term.

2.Backtest

Backtest enables you to see how the strategy performed in the past. It provides statistics such as profit rate, MDD, hit ratio, sharp ratio and more to clearly see whether the strategy is working or not. Plus, it also allows you to change the variables to optimise the system.

3.Emotion-free

The trading system is a batch of code which works base on the commands in computer language. It does not have emotion like a human being and does not feel pain when you are losing trades. Plus, It can let you get rid of the pain to watch the market that operates 24/7.

4.Speed

The speed of executing trades can be as fast as milliseconds, depending on which strategy and algorithm you are using. In terms of HFT(High-Frequency Trading), it can be done only by the trading system. Since the speed of clicking the buy button would be slower than the HFT strategy.

5.Diversity

There are more than 1000+ financial instruments you can trade including forex and CFDs. As studies have found, 1 to 3 instruments are what humans can efficiently monitor simultaneously. With the trading system, it can trade various assets and instruments when the requirements to enter or exit position is fulfilled. It is able to handle more opportunity and diversify risks by trading multiple instruments.

 

Weaknesses

1.Need to update

The strategy that the system is utilising might not last forever. The fundamentals and patterns of the market change over time repeatedly. Therefore, a consistent effort to enhance and optimising the algorithm is necessary. Maintaining a system actually requires lots of effort.

2.Observing

People might think system trading is ‘sit-back and watch’ stuff. In reality, an algorithmic trader monitors and observe the market consistently to improve the algorithm and get new ideas to develop a new system. Diversifying among the algorithms is essential for risk management. 

3.System error

There are many variables that can cause an error. For example:

• If the server of the VPS goes off, no trades will be placed even though there is a signal to enter or exit.
• Price data of the broker might not be accurate instantly, resulting in a loss in trades.
• The code within the system clashes and give a wrong signal or none.

Therefore, building a system from scratch is very difficult to even for the algorithmic trader. You have to know not only to develop a system, but there are also several other factors to be aware of.

4.Over-Optimisation

Backtesting is done by past data. The statistics imply that since the strategy performed well in the past, there is a high ‘probability’ that it will perform well in the future as well. 

Often times, people backtest and change the variables too much to get ideal results like high profit and low MDD. This can lead to over-optimisation and might not perform well in forward trading. So, it is one of the most important things to consider when you are optimising a system.

 

How Can We Get Started?

1. Copy-Trading

Copy trading is a form of social trading which you can follow the trader’s strategy with a few clicks. eToro and Zulutrade are famous platforms for copy trading. They handle stocks, forex, CFDs and crypto which endows a wide range of options and reveals the performance of their strategy transparently. This is the simplest way to get started with automated trading! 

2. Find a Trading Software

Metatrader has a market place where algorithmic traders sell their own EA with an adequate price. All the statistics including trading history, performance and more are available for everyone. Using an EA in MQL4/5 enables you to start automated trading within the MetaTrader trading platform.

3.Develop on Your Own

If you are a developer and studied about trading, it would be great to develop your own system. The advantage of developing your own system is that, you know exactly how it works and the logic behind it. Therefore, the variables and inputs can be altered whenever you need to update it. 

4.Hire a Programmer

If you have your own strategy, you can hire a freelancer who can develop an automated system for you. After the development, please backtest the strategy. After the testing, you can start with a small amount of fund or demo account. When it performs good for a certain period of time, you can put your a larger sum of capital.

Conclusion

The most important thing in automated trading is the strategy. The trading system is basically repeating the same process base on the variables and inputs inserted. Thus, whether it is manual trading or system trading, a proper strategy is necessary.

The good news is that even though you do not know too much about trading or developing, you can also use copy-trading service or purchase an EA on the marketplace. These will give you an idea upon how traders think and trade. It is a good source to benchmark and to start a trading journey.

Frequently Asked Questions

1. Can I trust the traders who are selling an EA? 

The traders who are selling the EA might not reveal the code. This is also called black-box signal, which we do not really know the exact logic or inputs it is using. We would not say all the traders are fraud, but asking questions directly to the seller and check on the past performance as well as reviews may help to determine whether the system is reliable or not.

2. How much money will it cost to build a system?

Basically, you need a laptop and internet to begin. If you know how to develop a system, it will cost time to make one. If you do not know how to develop, it will cost the $30~50 for copy trading and $300+ for purchasing an EA. For hiring a freelancer, it may vary among the level of expertise and the strategy you are requesting.

3. Where can I learn about automated trading?

For retail investors, we would recommend you can begin by reading all kinds of books related to quantitative and technical analysis. Then get a strategy that works in the market you want to trade. Go deep-dive into 1~3 strategies that suits you and be an expert on them. Then learn how to code or request a freelancer to develop a system. It is much more flexible if you have your own system.

 

什麼是交易應用程式？ 

交易應用程式是一種軟件，讓您可以使用智慧型手機應用程式進行交易。您所需要的只是一隻帶有網路的手機就可以進行交易。如今，手機市場比桌機的市場還要大，公司有必要為客戶開發手機的應用程式。

實際上，許多經紀商都投資大量資金在開發手機應用程式，以方便用戶使用。許多Forex和CFD經紀商在安卓和iOS版本中皆提供功能強大且有用的手機應用程式。

這些一直在不斷改進和發展的應用程式，可以利用高級訂單類型和復雜的圖表分析。我們將為您比較各種因素並指導您選擇適合您的應用程式！

什麼是有用的手機應用程式？

對於交易應用程式，因為與您的投資資金相關，所以它必須可以安全並快速地下訂單。此外，它必須提供所需的功能和簡單操作。

以下是可以定義應用程式是否有用的標準：

1.簡單操作

• 交易本身已經很複雜和困難。
• 應用程式必須簡單操作，讓您知道所需的功能在哪。
• 請確保懂得如何應用此程式。

2.有用的功能

• 每個應用程式都有不同的功能。
• 這些功能可以是圖表，新聞，財經日曆等。
• 檢查應用程式是否提供您所需的功能。

3.性價比

• Forex和CFD經紀商為客戶提供免費的應用程式。
• 您不必額外的花費就可以進行交易。
• 如果此應用程式需要付費，請先與免費版本比較，它們提供了更多功能。

4.安全性

• 數百萬的用戶正在使用該此應用程式進行數十億美元的交易。
• 當黑客攻擊，此應用程式必須確認是否安全。
• 透過檢查評論獲取安全性訊息。

簡略地回顧之前介紹過的應用程式 

FXTM

 

FXTM手機應用程式擁有250種不同類型的金融工具，包括主要和次要的外匯對。 您可以通過MyFXTM使用ID /密碼進入所有的帳戶。 想要更快的登錄，您可以使用4位數字的個人識別碼或指紋。

模擬帳戶和真實帳戶都可以使用，並且能夠在一秒內開倉或平倉。非常方便在不同的時間範圍內設置圖表，並且可以使用所有執行工具輕鬆測試您的策略。

一鍵交易功能使您可以立即執行交易。 經紀商的點差低，入金金額最低，讓您可以開始交易的旅程。 您可以輕鬆存入和提取資金，並提供30多種語言的客戶服務。

FXPRO

FxPro Direct是FxPro集團內部開發的手機應用程式。它針對平台進行了優化，並提供以下4個主要功能。

帳戶管理：簡單容易操作的註冊應用程式和創建新的交易帳戶。點擊幾下即可完成改設密碼，並更新聯繫資訊和管理銀行的詳細資料。

資金管理：Fxpro錢包不收取傭金費用，並能夠立即在您的帳戶之間轉移資金並提款。

安全並可靠：此應用程式使用加密來保護個資，利用密碼和指紋兩步驟來進行身份驗證。用戶可以額外添加保護層以確保安全。

市場資訊：此應用程式通過最新的資料和事件來執行財經日曆。並設置通知的警示警鈴，使交易者可以迅速了解市場最新資訊。

除此之外，它還提供較小的點差和零傭金以及各種的差價合約。使用超快的NDD干預市場執行！

XM

XM應用程式有許多有用的功能，增加您交易的體驗。它簡單容易操作，同時具有模擬帳戶、圖表、深色主題和即時價格等功能。

模擬帳戶：XM提供一鍵註冊的服務，來建立一個模擬帳戶。不需要提供任何個人資料，只需要幾秒鐘即可完成。此模擬帳戶在使用X 30槓桿的情況下可以有美金100,000的創始資金。不需要冒險即可以開始您的策略測試！

圖表：有各式的圖表類型，例如蠟燭圖，條形圖和折線圖。圖表能即時反應出您想查詢的歷史價格長期或是短期的走勢。

即時價格：您可以在“報價”選項上查看即時價格，不需要刷新。它讓您能夠快速瀏覽貨幣對並查詢價格。您可以添加或刪除任何想要個人化的監視列表的貨幣對！

XM的應用程式著重於交易者需要的基本功能。它可能沒有提供花哨或其它各式的功能，但是它可以讓你容易上手進行操作。

FBS

FBS是業界公認最好和對用戶友好的應用程式之一。它不僅提供許多種類的功能，而且還允許用戶根據自己的喜好進行個人化設置，註冊迅速且易於驗證。

在FBS應用程式中，您可以建立模擬和真實帳戶。同時，您可以激活像是VPS之類的服務，並查看以歸檔帳戶的列表且可以輕鬆還原它們。它還有一個儀表板，您可以在其中監看不同帳戶上的交易並查看過去的交易歷史記錄。

此應用程式在用戶介面中提供全天24小時不分平假日以及多種語言的客戶服務，並且讓每個交易者可以快速簡單的管理每個交易帳戶的資金。此應用程式用擁有來自190多個地區1400萬活躍的交易者，為此經紀商增加了可靠度。

其他有用的應用程式

除了交易應用程式外，還有數百萬交易者更新市場最新事件並推薦下載的幾個應用程式。以下是幾個著名的應用程式列表！

Investing.com

Yahoo!Finance

Bloomberg

CNBC

總結

交易應用程式讓你可以在任何地方進行監看和交易。 通過網路連接，您只需點擊一下手機螢幕就可以進行1000多種金融工具交易。 毫無疑問這是一個很棒的技術禮物。

在選擇應用程式時可以考慮各種的標準，但是最好的應用程式是必須具有可靠代理的。 若您使用的應用程式代理的經紀商是不受監管或沒有信譽的，即使此應用程式很棒，那又有什麼意義呢？

What is a Chart? 

A trading chart is visual data of price movement in the various timeframe,  drawn in the vertical(X) and horizontal(Y) axis. The vertical axis represents the time, and the horizontal axis represents price volatility. It is a 2 dimension picture which depicts the past and current price of an asset or instruments.

Chart reflects the price movement, and the market participants determine it. Market participants make trading decision base on multiple reasons. It can be technical, fundamental, and sentimental reasons. 

Therefore, chartist believes that the price of an asset reflects all these information and psychology of the market participants. And it is the most important tool and data for technical analysts to predict short-term future and place orders to gain profit. 

Technical indicators like moving average and oscillator are the byproduct of the price movement on the chart. Plus, It also forms a certain pattern like Head and Shoulder and Ascending Triangle for traders to find an appropriate entry and exit point.

What are the types of Chart?

1.Line Chart

Line Chart is a type of chart which shows the price data in the form of straight-line segments. It is a basic and common form of chart which visualize a trend in data over time series. It is an amazing way to see the exact value but poor way to understand the underlying patterns that those values represent. This is a direct way to know the trend of the market but to know the exact pattern, other forms of charts are recommended.

2. Bar Chart

The bar chart shows the number of price bars which tracks how prices moved over time. It typically shows OHLC(Open, High, Low and Close) prices which helps trader to monitor and make trading decisions. It enables traders to analyze trends, reversals, volatility, price movement and patterns. Difference between bar chart and candlestick is how it looks. Candlestick has something called real body which represents the same information but visually different. 

3.CandleStick Chart

Candlestick chart was developed in the 1700s by a Japanese man named Homma, a rice trader. He realised the psychology of people influences the market, and candlestick visually depicts the size of price movement and emotion with different colours. Today, It is used by traders to determine possible price movement based on past patterns. The body and tail offer an insight into how market participants think and reflect supply & demand within the market.

4.Heikin-Ashi Chart

Heikin-Ashi is a form of chart which averages price data to create a Japanese candlestick to exclude the noise. Instead of using OHLC(Open-High-Low-Close), it uses a modified formula based on two-period averages which gives a smoother appearance. It is intended to make it easier to spot trends and reversals. But,  it also neglects gaps and some price data with averaging which may not reflect actual price and could affect risk. Daytraders who need responsive price data might not find Heikin-Ashi useful due to its drawbacks.

5.Renko Chart

Renko chart is designed to use price movement rather than both price and time. Renko means brick in Japanese and the chart looks like a series of bricks. New brock is formed when the price moves a specified price amount in 45-degree angles to one another. Renko chart does have a time axis, but the time scale is not fixed. Some bricks may take longer to form than others which depends on how long it takes to form another brick. So, Renko charts do not show much detail like a candlestick and could give false signals. It is useful to know the trend of the price movement, but not for short-trading.

6.Kagi Chart

Kagi chart uses a series of the vertical line to illustrate the level of supply and demand for certain assets. Thick lines are drawn when the price of the underlying asset breaks above the previous high prices and is interpreted as an increase in demand for the asset. Thin lines are used to represent increased supply when the price falls below the previous low. Kagi chart is independent to time and only change direction once a predefined reversal amount is reached. It is effective in signalising clear paths of price movements but hard to use in day-trading.

What are the Technical Indicators?

Technical indicators are indicators to predict future price movements by using historical data like price and volume. The active trader widely uses it as they are developed to analyze the short-term price movement. But, long term investors can also use technical indicators to identify entry and exit points.

The chart shows the price movement over time, and technical analysts have been developing indicators upon it. There are two major types of indicators, Overlay and Oscillator. Let’s see what those indicators are!

Overlay 

Overlays are the technical indicators that utilise the same scales as prices are plotted over the top of the prices on a stock chart. Examples of overlays are moving average and Bollinger bands.

Oscillator

Oscillators are indicators that oscillate between a local minimum and maximum are plotted above or below a price chart. Examples of overlays are stochastic and MACD.

Takeaways:

• Traders utilise different kinds of technical indicators that work best for them. A combination of indicators is often used for short-term trading.
• Traders also use chart patterns along with indicators to enhance performance.
• Indicators can also be used in the automated trading system due to its quantitative nature.

What are the Chart Patterns?

Chart patterns are patterns which occurs and repeats over a period of time by the market participants. These are commonly used as either continuation or reversal signals and play a huge role in technical analysis.

Continuation Patterns   

1. Cup with Handle

A cup and handle is a chart pattern that looks like a cup and handles. The cup is in the shape of “U” and the handle is slight downward drift. It is considered a bullish signal and an opportunity to buy.

2. Trading Channel

A trading channel is a parallel trendline with support and resistance levels. It is useful to identify the best price to buy or sell since It catches short term directional changes in the market. 

3. Flag and Pennant

A flag and pennant is a price pattern that moves like a flag. It is used to identify the possible continuation of a previous trend from a point at which price has drifted against that same trend. Traders look to enter long or short positions when a breakout occurs.

4. Triangle

A triangle is a chart pattern that depicts trendlines along with a converging price range. There are upper and lower trendline completes two corners to create the triangle. The upper trendline is formed by connecting highs and the lower trendline is formed by connecting the lows. 

Reversal Patterns

1. Head and Shoulders

Head and shoulders pattern is a pattern with three peaks, the two peaks outside are close in height and the middle one has the highest height. It is one of the most reliable trend reversal patterns with a high level of accuracy.

2. Double Top

A double top is a bearish pattern that is formed after the price reaches a high price two times with a decline between the two highs. It is very useful when identified correctly. Otherwise, we could misunderstand the pattern and resulting losses.

3. Double Bottom

A double top pattern describes the change in trend from the previous price. It is best to analyze mid to longer-term of a market for accuracy. It could be considered as a downtrend signal.

  

Conclusion

A chart is a tool which visualises the price data in the X&Y axis. The most widely known and used the shape of the chart is a bar and candle chart with OHLC(Open-High-Low-Close). The body and tail of the chart contain information like supply & demand and psychology of market participants.

The price moves up and down, forming the chart pattern over time. These chart patterns are classified into two major categories; Continuation and Reversal. Along with the body and tail shape, chart patterns also offer information and hint to enter or exit positions.

Overall, the chart is the most important tool for technical analysts. For the fundamental and quantitative analyst, this is still a very useful tool to analyze the market in the long-term. Studying the chart analysis will be helpful no matter which means of approach an investor is utilising.

 

 

What is social trading?

Social trading works just like social media but in trading perspective. Platforms like eToro, ZuluTrade and MetaTrader offer services to follow an experienced and verified trader. 

These platforms will show you transparent tracking record on the strategy that the traders are using. It gives us a hint in terms of choosing a trader to subscribe.

Copy-trading or mirror trading is a specific type of social trading where we copy all the trading action done by the trader we follow. It allows users to copy their trades automatically.

For beginners, it would be an excellent choice to start with copy trading. Since all the trading record is transparent, these data will give us a hint of how experienced traders operate their fund and which strategy they are using.

What are the benefits and drawbacks of copy trading?

Benefits

Emotion-Free

WIth copy-trading, it will take the emotion out of the trading. Investment decisions are made base on the system developed by the traders. The system can be manual and automated, but most of them are fully automatic.

Fully Automated

Since they are mostly automated, it can minimise the mistake from the trader itself. Plus, you do not have to watch the screen 24/7 when you are copy-trading!

Offers Transparent Data

Copy-trading is often time displayed on platforms like eToro, ZuluTrade and MetaTrader. They all provide transparent data such as trading history, performance, operating time and AUM(Asset Under Management).

A Good Start for Beginners.

If you have just entered the trading world, it would be challenging to understand what is going on with all these instruments and tools. For copy-trading, platforms have put massive work to make the service as straightforward as possible to get started.

Benchmark and Learn.

Once you start to copy-trade, you can see the live trading history and which forex pairs or other assets the trader is trading. It can give you an idea of how the trading strategy works and make your system in the long run.

Drawbacks

Too Dependent

However, If we depend on the trader only, we might not learn how to trade. It is an excellent way to get started, but on the other hand, you can practice with a demo account and understand how things work!

Potential Human Error

Even though it is an algorithmic trading system, the variables can be tweaked regularly by the developer/trader. They might have altered it for better performance, and backtest results might be fabulous. But, it could be over-optimised and too concentrated on the past, resulting in a bad performance for subscribers.

Sustainability

Some strategy might work for 3 years, even 5 years, but we do not know if it will sustain longer or not. The pattern and the fundamental of market changes in a cycle depending on the instruments. The trader has to continuously research and enhance the algorithm to maintain the alpha and strategy. This requires massively hard work.

How do we know which trader to follow?

By considering the past performance of the traders, we can consider it as an indicator to determine whether the trader is reliable or not. There are a few things you have to consider before you choose a trader.

1.Operating Period

• Some traders performed extraordinarily good in the short-term (like few months)
• But we do not know if this is pure luck or not.
• Considering at least 1 year of data would be necessary.

2. Performance

• Profit rate, Winning rate, MDD and more statistics are provided as statistics to consider.
• The excellent profit rate is essential. However, MDD(maximum drawdown) is also significantly important.
• Psychologically, we feel twice as more pain than joy when we lose/win the same amount of money.

3. Strategy

• Every trader who offers the service of copy trading has briefly explained what the logic and strategy that they are using is.
• It is crucial to go through all the details and determine whether it makes sense or not.
• For EA in MetaTrader, you can backtest the strategy for free before the copy trade or purchase.

How to do social trading?

1.Decide which platform you want to use.

• There are multiple platforms like eToro, Zulutrade and MetaTrader.
• You can study these platforms and choose the one that is more suitable for you.
• All of these platforms are user-friendly and easy-to-use.

2. Choose a trader you want to follow.

• You can choose a trader base on 3 primary criteria.
• Operating period, performance and strategy.
• Choosing the right trader would be the most critical thing in terms of copy trading.

3.Deposit your trading fund.

• After deciding which platform to use and which trader to follow,
• the next step would be depositing the fund you would like to trade.
• $300~$500 would be reasonable for starting. But, some strategies might require more deposit to operate the system thoroughly.

4. Sit back and watch.

• When all is set, you have to sit back and observe.
• The cost of copy trading might vary on the structure.
• Either it is $30~$50 per month or distribute a portion of profit the trader has earned.

5. Repeat and diversify.

• Once you realise how copy-trading works, it would be easier for you to choose the right traders.
• Using multiple strategies would give you an advantage of diversifying the risks of your fund.

How can I find a good copy-trading platform?

There are several criteria you have to consider in terms of choosing a copy-trading platform. Here are the things that can help you to select a suitable one for you! 

1. Trading Cost

a) Deposit and Withdrawl

• Most brokers and trading platforms offer services to deposit and withdraw with bank wire and e-wallets like Neteller, Skrill and Paypal. Some brokers support crypto and local bank transfer.
• Make sure there are suitable ways for you to deposit and withdraw! If you can not put in and out your fund, it would be not very sensible!

b) Minimum Deposit

• Every broker and trading platforms may ask the different amount of minimum deposit to start with.
• Some may ask a small amount of initial fund and others with greater demands but cheaper fee and leverage.
• Please check if the requirement of minimum deposit suits you! 

c) Spread and Commissions

• Spread is the primary source of income for brokers and trading platforms. It is essential to choose a broker with a less spread and cheaper commission.
• These fees will influence your profit rate significantly.
• Minimising the cost is the key to succeed in trading.

2. Trading Platform & Broker

a) Convenience

• Trading itself is complicated. The ease of using the platform for the users is a crucial factor to consider.
• A user interface, such as layout and bottoms, should be sensible and easy to read.
• Check if the UI is user-friendly and easy for you to comprehend.

b) Execution Speed

• The trading execution speed varies among the brokers and trading platforms.
• By comparing with other platforms and ensuring the trade is placed accurately, you can identify if it is reliable or not.

c) Trading Instrument

• For CFDs, there are Forex, Stocks, Crypto,  and so on.
• Some brokers may not offer the asset you seek to trade.
• Confirming the trading instrument you want to trade would also be necessary.

d) Margin and Leverage

• Base on the account type you have registered, margin rate and leverage may vary.
• Leverage can offer you the opportunity to maximise your profit with limited capital.

e) Reputation

• On many review websites and forums, we can easily check the comments of other people. 
• This may help you to know what other people think about the platform.
• For copy-trading, go through the comments on the trader would help you to decide which strategy to follow.

f) Regulation

• Be careful with unregulated trading platforms and brokers!
• There cases where brokers ran out with customers fund!
• Please ensure which legislative institution regulates the broker or platform!

3.Copy Trading

a) Tracking Period

• The longer the period of time being operated, the more credibility it has.
• At least 1 year of tracking record would be recommended.

b) Performance

• The profit rate is significant, but we would like to emphasize the MDD(maximum drawdown).
• If the drawdown goes below -20%, it could be hard for you to maintain the strategy.
• Other than these, checking the profit factor and winning rate would help you to determine which trader to follow.

c) Number of Subscribers and AUM

• AUM(Asset Under Management) and several people following can be an indicator upon deciding the legitimacy of a trader.
• Even though the performance is fabulous, if there is no operating fund and subscribers, you should be cautious.

d) Strategy

• Every trader has their own strategy, and it is briefly introduced in the caption section.
• If you don’ understand, feel free to ask the trader about their strategy.
• Once you think the strategy makes sense in terms of sustainability and performance, you can try with the smaller fund.

Conclusion

Social trading is one of the trading methods which you can follow an experienced trader with verified performance. This is a great way to participate in the trading world, especially for beginners. It offers an idea of how trading works and give hints upon strategies.

Copy trading is a type of social trading where you can copy the trades automatically via platforms like eToro, Zulutrade and Metatrader. It is often time fully automated and enables you to prevent mistakes from human emotions. But, the strategy may not be permanently outperforming and possible human mistakes can occur. 

Overall, for people who are interested in automated trading and want to learn about it, copy-trading will provide transparent trading history. This can be a good source to benchmark in terms of developing your own system. Even though you are not a developer, you can always learn new things from the experienced traders! For beginners who do not know anything about trading is strongly recommend to start with copy-trading.

 

 

What is a Demo Account?

Demo Account is an account which you can trade with simulating money. It is digital money that has no real value but offers an opportunity for you to trade with no risk. Trading with demo account in a trading platform like MT4 and MT5 will let you know how this trading platform works. Plus, you can try your trading strategy without risking your own precious fund.

How does a demo account work?

There are many kinds of account type that brokers provide. Among those accounts, demo account would be an option for you to choose. After creating a demo account, you will have simulated money in the trading platform like MT4 and MT5.

Within the trading platform, you can start trading with zero risks. First and foremost, you have to which financial instrument you want to trade. After choosing an instrument, you can either long or short the position.

The trade you executed with demo accounts does not deduct the spread and commission. Thus, the performance with a demo account and real account may vary. Plus, the orders placed by the demo account does not influence the real market.

What can demo account do? 

Demo accounts basically have the same function as a real account. The only difference is that the fund is not real money. Here are things what you can do with both demo and real accounts.

1.Experience

• If you are a beginner in trading, we strongly recommend you to first try with a demo account. You may start with opening and closing positions and try different order types like limit and market orders.
• Considering the margin rate of the broker and instrument, you can experiment how leverage works. This may give you an idea which accounts to open base on your fund size and margin.
• The experimenting in the different financial market will let you understand how they work and choose which one is appropriate for you.

2. Technical Analysis

• Charts are available for both demo and real account. All the indicators are implemented in the trading platform, and you are free to use them
• Try how the charts work and use the simple analytic tools like moving average and MACD. 
• You can practice and get an idea of which strategy you can use.

3. Backtesting and experiment your EA.

• Charts reflect the price of the market, and the past data are available in the trading platform for free.
• You can go through the price a week ago or even years ago and simulate your strategy.
• If you have purchased an EA(Expert Advisor) in the marketplace and backtest or operate it with the real fund, backtesting is necessary.
• All the past data is already implemented, or you can download the data within a few clicks. Demo accounts also enable you to backtest and data for free.

Why should we use the demo account?

There are several reasons why we should first try the demo account, especially if you are a beginner.

PRO

1. No Risk

• Since demo accounts are not real money, losing trades won’t let you lose the real fund. This allows you to practice multiple ideas and expert advisors with zero risks.

2. Familiarity

• Experience is the second-best teacher(or the best) when you are learning and knowledge. Practising various asset classes will give you an idea of how these work.

3. Choosing a Broker

• The brokers provide demo accounts. Trying the demo account of brokers would be the most cost-efficient method to choose which broker you would like to use.
• You can try the speed of placing an order, different kinds of charts and indicators. Then evaluate the overall quality of the account and the trading platform to determine which one is suitable for you.

4. Testing Strategy

• A demo account is an amazing place for you to tune your trading strategy with no costs. You are free to make mistakes, and it may enhance your trading skill.
• Backtesting would be a great option for you to try the strategy you have developed or an EA you bought in the marketplace. Within a short period of time, you can know the profit rate, winning rate, profit factor, maximum drawdown and more! If you think it is verified with a demo account, a real fund would be a great choice! 

CON

1. Trading Cost

• Trading with demo account does not take into account the trading cost. The trading cost can be spread or commission or slippage.
• These are the major factors that eat up all the profit rate we could have earned; Demo accounts do not reflect these elements and often perform better than real trading.

2. Psychology

• You may feel very comfortable trading with a demo account since you won’t lose any real money.
• But, once you start trading with the real fund, you can get nervous and anxious, which may influence your trading performance. Starting with a small amount of fund is recommended if this is the case for you.

3. Rejection

• There will be no deal rejection with demo accounts.
• But, with live trading, there are brokers which re-quotes or with trade against you. Be aware of which broker you are using!

4. Price Movements

• Demo accounts may not consider dividend adjustments and interest rate.
• Therefore, the price you are trading could be different from the real price.

How to open a Demo Account?

It is straightforward to open a demo account. Each Forex/CFD brokers offer demo accounts for all users. All you need to do is make an account with an email address and create a demo account in the brokers’ dashboard.

After creating a demo account, you have to download a trading platform that is offered by the broker. There are trading platforms like MetaTrader4, Metatrader5 and cTrader to choose. After deciding which trading platform to use, you can log-in with the demo account you have just registered.

You might not be familiar in the first place, but after you use to it, it would be super easy. 

Are MT4 and MT5 demo account good?

Metatrader 4 and 5 is the industry standard trading platform that millions of users are using worldwide. It is simple to use and offers a various number of functions that you may found useful.

These trading platforms offer the same function as the live account, So, trading with a demo account with mt4 and mt5 would be a good option for you to start the trading journey.

Demo Account to Live Account

If you have decided to trade with a live account, here are some steps you can do.

1.Prepare some fund you want to trade with.

• Starting with £300 to £500 would be reasonable.
• Since trading is risky, try with the smaller fund.

2.Open a live account within the broker.

• You can use the same or different broker as your demo account.
• Choose an account type which suits you and register to get started!

3.Decide which instrument you would like to try.

• There are many asset classes in the financial market like forex, CFDs on stocks, commodities and crypto.
• Starting with the instrument you are familiar with is a great choice.

4.Use the strategy and tactic you have decided.

• It is a MUST to prepare a strategy to tactic you want to use.
• Or else, you might not know what you are doing.

5.Now, enjoy your trading! 

• Lastly, you can place an order and start trading!
• Remember capital management like stop-loss and betting a small portion of the fund are necessary!

 

Conclusion

A demo account will help you to understand how trading forex and CFDs work.

Sometimes trying once is much better than reading 1000times.

You will save time and money for testing these platforms and your strategy,

This is useful for both beginner and advanced traders.

There are limitations with using demo accounts as well.

The performance, price and other factors might be different.

Overall, it is a great idea to use a demo account to decide which brokers or trading platforms to use.

Meanwhile, you can backtest and forward trading your trading strategy and EA.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is Crypto?

A cryptocurrency is a digital currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

It was first started in 2008 when the financial depression occurred. An anonymous developer Satoshi Nakamoto (we do not know whether it is an individual or a group of people) revealed the whitepaper of Bitcoin. The purpose of Bitcoin is to replace the fiat currency that is backed by nothing but the trust of people.

Bitcoin uses blockchain technology which is also widely known as trust-protocol. There is no central bank controlling the supply of the bitcoin, but the decentralised network and nodes spread all around the world.

Why Should We Trade Crypto?

PRO

Scarcity and Limited Supply.

Bitcoin is mined all around the world by graphic cards and specialized equipment using POW(Proof-of-Work) mechanism. It has a total of 21millon coins to be issued and until today around 16million are mined.

Due to its scarcity and more people believing that Bitcoin is digital gold, the value of the crypto is likely to increase continuously. It has properties like durability, divisibility, transferability and store of value just like the money we use today.

Means of Diversification

Crypto is an excellent asset to include in your portfolio. It is a very new asset class which tend to goes against the value of fiat currency. It can be an alternative way to avoid inflation.

In fact, countries with an unstable economic system like Venusuala prefer to trade goods and services with Bitcoin rather than local currencies due to hyperinflation.

Very volatile 

Volatility can be defined as a risk. But, for traders, it means opportunity. When a trader enters or exit position, the high volatility offers an opportunity to cover-up the trading cost and spread while making a profit.

Able to trade 24/7

You can trade cryptocurrency 24hours a day—365days a year. There is no centralised marketplace that opens and closes at a certain time. Therefore, you can trade whenever you want. This also implies there are more opportunities to enter positions and gain profit.

CON

Taxation

Developed countries have already started to levy taxation on the earnings on crypto. Taxation directly influence the profit you are taking.

KYC & AML Procedures

Due to website like silk way (a dark-web drug-dealing website), it has been a hot issue that crypto can be used in the dark market. Therefore, many exchanges compulsorily ask traders to do KYC(Know Your Customer) and AML(Anti Money Laundry).

Too many SCAM Coins

There have been so many coins that have been doing ICO (initial coin offering) a runaway with billions of dollars like Bitconnect and PlusToken. Therefore, the alt(alternative) coin could be risky in terms of investment. We recommend you to trade top 10 coins with enough liquidity and fundamentals.

What to Trade in Crypto?

There are thousands of coins you can trade. Coins other than bitcoin is called an altcoin. We recommend you to trade top 10 coins with enough liquidity and fundamentals. Nowadays, Bitcoin and Ethereum dominate almost 70% of the entire market.

When Can We Trade Crypto?

You can trade cryptocurrency 24/7.

Cryptocurrency operates on a blockchain network. It never stops unless there are no nodes of the network worldwide or got hacked by 51% attack, cryptocurrency is always available.

This offers traders more trading opportunity. However, you may not be able to sleep well because of this characteristic. Therefore, we recommend you to use a trading bot for your healthcare.

Who is Trading in the Crypto market?

Most of the market participants of the cryptocurrency market are retail investors. This is the only market that the retail investors occupied earlier than institutions. 

In the early days, those people who were tech-savvy and aware of this technology mined Bitcoin using their private computer. Today, mining is tough unless you have the proper equipment with powerful graphic cards.

Nowadays, institutional money is coming into the market. CME Bitcoin futures was approved in December 2017. It was when the Bitcoin was all-time-high, almost $20,000 each. And the price dropped almost -85% until mid-2019. By 2020, institutions and corporations are interested in crypto and commenced to participate in the market.

More people are believing that Bitcoin is digital gold. It has shown the capability to hedge inflation and avoid depreciation of fiat currency due to the monetary policy of the Federal Reserve. FED has been printing a flood of money since the financial crisis in 2009 and pandemic in 2020. This provoked the value of the dollar to decrease contiunosly.

How to Trade Crypto?

1.Choose a broker you want to use.

• Centralised Exchange
• Decentralised Exchange
• CFD Brokers

are the option you can choose.

2. Create a trading account

• For a cryptocurrency exchange, all you need is to use your email to register an account.
• If you want to increase the amount of fund to withdraw, KYC(Know-Your-Customer) is necessary.
• In terms of CFD brokers, you can determine which account type you would like to use base on the size of your fund.

3. Choose a cryptocurrency you want to trade.

• There are thousands of cryptocurrency on the market.
• At most, 1,000 or more kinds of coins can trade on exchanges.
• Bitcoin and Ethereum are the two major cryptos that take almost 70% of the market capitalization.
• We recommend you to trade Top5 coins like Bitcoin, Ethereum, Ripple Litecoin and Dash with enough liquidity and validity.

4. Start your crypto trading journey! 

• After choosing crypto, you can start trading in various method.
• You can choose a Spot(No Leverage), Futures(Has Leverage) and CFDs(For CFD Brokers) 
• Make sure you understand the characteristic of the market and prepare a strategy before opening a position! 

How is Crypto Traded?

Centralised Exchange 

If you are trading in cryptocurrencies like Binance, the counterparty is other market participants. Buying crypto at a certain price means somebody has placed an order to sell at the given price. Selling crypto means somebody has put order to buy the crypto that you sold! Pretty simple right? 

Decentralised Exchange

Decentralised Exchange is the exchanges where you have to connect a cryptocurrency wallet like Metamask to the platform. It is also named DEX (Decentralised Exchange), and the examples are like Banco and Kyber Network.

The difference between centralised and decentralised exchange is that DEX does not have the authority to control your fund as it is in your own wallet. Instead, it offers an escrow service, a wallet to wallet transaction, that helps you to find another person exchange.

OTC (Over-the-Counter) 

OTC is a way to get cryptocurrency directly from fiat currency to cryptocurrency. Big centralised exchanges like Huobi and Binance do offer OTC service for those people with the larger fund.

The purpose of the OTC is that if a person wants to buy 1million dollar worth of BItcoin, the probability that the person will not be able to buy at the price he or she wants due to limited liquidity.

Therefore, the person can request these middle man to say I want 1 million USD worth of Bitcoin at the price of 20,000 USD with a fee of 0.2% fixed. 

P2P (Peer to Peer) 

P2P is a peer to peer transaction which you exchange crypto to fiat currency from another person directly.

Again, Binance, Huobi and other large centralised exchanges offer P2P service to exchange with other users. The major reason why P2P is popular is that the Chinese government has banned CNY (Chinese Yuan) to purchase crypto through a crypto exchange in September 2017.

Thus, Chinese people use CNY to exchange USDT through P2P exchange and use USDT to trade cryptocurrency.

CFD Brokers

CFD brokers also offer cryptocurrency as a trading instrument. Since CFD(Contract for Difference) is a derivative financial product, it is only tracking the underlying asset.

Therefore, you are not owning a cryptocurrency but trading only with the price. Often time the counterparty is the CFD broker which offers you the liquidity.

Where Can I Learn About Crypto Trading?

Books: There are not much of books for crypto compare to other traditional financial assets since it is very new. But, many books are handling the basics of blockchain technology and visions of cryptocurrency,

Youtube: There are many fake gurus on Youtube. Choosing the right youtube will be important. 

Whitepapers: If you want to invest crypto in a fundamental approach, go through the whitepaper of each coin. It will give you a better understanding of the coin you want to trade or invest. This may require you to have a base knowledge of blockchain technology.

Twitter: Twitter is a great way to track the movement of the market. The founder of Ethereum Vitalik Buterin, Charlee Lee of Litecoin and others upload a Twitter message regularly to keep in touch with people.

Trading Strategies

Volatility Breakthrough Strategy

Volatility Break-out Strategy was developed by Larry Williams, who is a legendary trader and author of many trading books. This strategy is suitable for trading indices, commodities and crypto. The formula of the strategy is 

Buy = (Previous High-Previous Low)*K + Open Price

• When the price breaks through the level of buying condition, enter the position.
• K can vary from 0.5 ~ 1.0.
• It is based on short-term momentum.

Sell = When a candle closes (Time-cut)

• This strategy uses a special means of pending order method named Time-Cut.
• You are selling when a certain time arrives.
• This is based on intraday anomaly and means regression.

This is the strategy that we use for trading Bitcoin. Over the 3 years, it recorded 530% of total profit with Maximum Draw Down of -15%! 

Arbitrage

As cryptocurrency does not have a centralised exchange, we can see the price difference among exchanges frequently. During the end of 2017 and early 2018, we were able to see a 25%~30% price difference from Korean crypto exchange to the other exchanges. This is called Kimchi-Premium, and people were able to make lots of money with the price gap.

Today, the gap between the exchanges are not the big as previous years as more market participants are using an algorithm to arbitrage them. This enabled exchanges to have almost the same market price. But, there are still chances you can gain profit from the price difference if we observe them.

Frequently Asked Questions

Can I become rich trading Bitcoin? 

Yes, you can. 

But, you have to stay really focused! The market runs 24/7, so it would be better to use trading bot. Or you can buy and hold until it goes $100,000 and HODL the volatile market! 

Should I trade cryptocurrency?

It is your choice, but cryptocurrency is definitely a brand-new asset class with volatility and momentum that operates 24/7. It might be too volatile to buy and hold, but an opportunity for trading perspective. You can also choose to invest 1~5% of your portfolio to increase the profit rate while managing the risk.

Can I trust Bitcoin? 

You do not have to trust Bitcoin. It is just an asset for you to trade as a trader. The more important thing is to choose the right crypto exchange or CFD brokers!

 

What are Stocks?

Stocks are securities that represent partial ownership of a company.  People who own a company’s stock are called shareholders. They are entitled to acquire part of the earnings of a corporation. Shareholders have limited liability, so if a corporation goes bankrupt, the value of their shares is the only asset to lose. 

Corporations issue stocks for fundraising to develop and operate their businesses. The fund can be utilised for the research and development, hiring new workers, marketing and so on.

Stocks are one of the most profitable asset classes in the long-run compare to bonds and cash. It is also a principal instrument to trade and include in a portfolio for asset allocation.

Why Should We Trade Stocks?

Trading and investing stocks offer multiple benefits for people.

PRO

Benefit from a growing economy

As the economy grows, businesses can earn more revenue. It means they can hire more people and create more sales. The income a company makes reflects the price of the stock, and shareholders can take advantage of it.

Hedging Inflation

Goods and services that people consume price increases gradually due to inflation. Since the revenue that corporations make has already included the inflation rate, the stocks are one of the best ways to avoid the risk of inflation. In the long-term, stocks as an asset class earned 10% per year, and it is better than just holding cash which devalues every single year.

Multiple ways to earn money

Other than gain profit from the increment of the stock prices, we can also earn a dividend. Dividend yield may vary among the sectors and corporations, and dividend investment is a famous way to invest in stocks.

Easy to access

Opening an online broker is super easy nowadays. Numerous brokers are user-friendly and 100% digital to register an account. Plus, there are even brokers with zero commission! 

Abundant Liquidity

Stocks traded on stock exchanges are usually has enough liquidity for retail traders to buy and sell whenever you want. Except for penny stocks with little volume, it is easy to enter and exit at the favourable price.

CON

High Competition

The market participants of the stock markets are not only retail investors, but also investment banks and financial institutions with lots of resources like experts, equipment and capital.

Nowadays, hedge funds utilise their in-house developed algorithm to trade without emotions and data. It is engineered by top-class quants and risk managers. 

Requires lots of knowledge

You must research each company that you want to trade or invest in. It requires you to have the ability to read through financial statements and annual reports as well as the company’s up-to-date news.

Other than these, you should know what your strategy and tactic you want to approach the market with evident data showing that it is valid.

Risks

Same as any financial instruments, the stocks can be very, very volatile. If the company goes bankrupt, the shares can worth nothing. It is the reason why money management is crucial to surviving.

What to trade in Stocks?

We can invest or trade multinational companies’ stock like Apple, Amazon, Facebook, Netflix and Tesla. Isn’t it cool to own a portion of these companies with just a few clicks?

Or you can trade other stocks that you are familiar with! There are mainly 12 sectors in the stock market. We can classify a company in multiple sectors base on its business model and income stream.

For example, McDonald can be classified as consumer discretionary but also real estate company as they own all of those stores that they operate!

Here are representative companies in each sector : 

When Can We Trade Stocks?

The trading hours differ from the region of the stock market. This is the list of locations, local time and GMT standard table to check which area do you belong.

Who is Trading in the Stocks market?

Market participants are retail investors, institutional investors, corporations (own shares) and Robo-Advisors. Major players are institutional investors which include pension funds, insurance companies, mutual funds, index funds, ETFs, hedge funds, banks and more.

How to Trade Stocks?

1.Find a broker that is suitable for you!

2.Deposit your the fund.

3.Analyse the market and the company.

4.Set-up your strategy and tactic.

5.Place an order at the price you want to buy.

6.Sell the stocks to take profit!

DONE!

What are the ways to analyse the market?

Technical Analysis

Chartists are people who believe that the price of a stock reflects all the value and news. Therefore, analysing the price movement using technical analysis would increase the probability for you to gain profit.

Fundamental analaysis

Fundamental analysis is a method to measure a company’s intrinsic value by considering economic and financial factors. Analysts study the factors that can affect the securities value like economic status and industrial conditions to microeconomic factors like the trade war and pandemic.

Quantitative analysis

Quantitative analysis is a method to approach a stock with the combination of technical and fundamental analysis but with numbers. For example, we can filter the momentum of recent 1,3,6,12 months of a company that performed well. Then filter out using PER, PBR, PCR, PSR and G/PA. Rank them from top 1 to top 20 and enter position 5% each. And rebalance once a month or once a year depending on your logic and strategy.

How are Stocks Traded?

In stocks exchange at a given amount of time. When you buy a stock in the market, there is someone who is selling the shares. This process is called ‘Changing Hands’.The counterparty can be other retail investors or institutions. 

Regulators like SEC (security exchange commission) act as a regulator to prevent any market manipulation and fraudulent within the market. There is cleaning house like ICE, CME, NASDAQ Exchanges. They make sure things are operating safe and sound.

Moreover, custodians and brokers help you to open an account and start trading. The very first step to trade stocks is to find a reliable broker!

Where Can I Learn About Stocks Trading?

Books

Choose the way you want to approach and start with the best selling books that are verified by multiple readers!=.

Videos

GO through youtube videos which have transparent tracking record of investment with a sustainable strategy.

News

Watch CNBC, Bloomberg and another broadcast that offers up to date news.

Reports

Read through the reports from the reliable analysts! These reports often time offer meaningful insights.

Financial Statements

Study the balance sheet of the companies and go through the webpages of the company you would like to trade.

Websites

There are websites(smart allocate and seek alpha) that offer an incredible and data-driven portfolio with a transparent database. All you need to do is go through and learn them step by step.

Trading Strategies

Overnight Strategy

Many studies have shown that the price of stocks increases in the bigginning of the market, quite in the noon and drops in the afternoon. This is also named intraday anomaly.

The overnight strategy is a strategy where you enter a position before the market ends and sell at tomorrow’s opening price. Since you are holding a stock for one night, it is named overnight strategy. It is been performing quite well for many indexes.

Trend-following strategy

The trend-following strategy is a strategy that trades according to the momentum and trend of the market. Trend traders enter a long position when the market trends upward and sells when it trends downward. This way of the method is designed to take advantage of uptrends where the price tends to make new highs. It can be done by using technical indicators like moving averages, momentum indicators like RSI and trendlines with chart patterns.

Frequently Asked Questions

Can we be rich trading stocks? 

The most important thing is the strategy and approach to the market. Market-timing is one of the hardest things you can do. Frankly speaking, asset allocation would be suitable for 90% of retail investors. So that you are not trying to beat the market, but follow the market. 

Do you prefer forex or crypto or stocks?

We invest all of those asset classes using different approaches. For forex trading, we use EA that is using intraday anomaly and overnight strategy. For crypto, we use automated bot via volatility breakthrough strategy, and for stocks, we use factors to diversify our portfolio. The most important thing is to know how each asset behaves and know the exact method and risks.

Are stocks safe to trade? 

Yes, it is well regulated and managed by various institutions. However, it is still volatile, and there is a possibility of fraudulent and manipulation of stock prices from corporations.

What is CFD?

A CFD(Contract for Difference) is a derivative financial instrument which follows the price of the underlying asset. The profit or loss depends on the price movement of the asset.

The mechanism of this instrument is that two parties are agreeing to pay the difference between opening price and closing price instead of transacting the entire balance. 

The underlying assets can be Forex, Indices, Stocks, Crypto, Precious Metals, Natual Gases and more! It enables a trader to trade and diversify risk among various asset classes. Hence, CFD brokers empower traders to both long and short the position while using leverage.

Why Should We Trade CFD?

1.Variety

• You can trade whichever asset classes you want. CFD products track multiple assets classes like Forex, Indices, Stocks, Crypto, Precious Metals, and Natual Gases.
• It offers you an opportunity to switch positions and execute event-driven trading. 

2.Position Management

• In the traditional market, it is hard for retail investors to place a shorting position due to the possibility of influencing market prices.
• Luckily, for CFDs, you can freely not only to long but also short the positions as it is simply tracking the price of the underlying asset.

3.Trading Cost

• CFD brokers charge no fee or small fees to enter or exit orders.
• They generate revenue from the spread of the underlying asset.
• It may vary on the market condition but remains reasonable.

4.Leverage

• It is challenging to use leverage in the traditional market. In contrast, CFD requires a margin rate as little as 2%, which depends on the underlying asset.
• Low margin requirement allows you to leverage your fund with less capital to maximise your profit. But, always be cautious when using leverage.

5.Convenience

• CFDs operate 24hours a day, enabling traders to trade whenever they want.
• Big brokers offer thousands of CFD products to trade which allows you to catch more chances to gain profits.

What to Trade in CFD?

Large brokers offer several asset classes with plenty amount of financial instruments to trade. They are majorly Indices, Stocks, Crypto, Precious Metals, and Natual Gases.

Takeaways

• CFD enables you to get immediate access to the global market.
• CFD offers a means for portfolio diversification and risk management. 
• You can both long and short with leverages.
• You will get a dividend yield by holding stocks CFDs!
• It has transparent fees and commissions with tight spreads.

How is CFD working?

If a Indices has an ask-price of  $100 and the trader buys 10 of them, you may need at least $1000 in a margin account of 50% at a traditional broker. For CFD broker, it offers a margin rate of 5%, which means you only need $50 to place a $1000 order.

CFD trade shows a loss after your place an order. The loss is the spread of the transaction, and you need to earn that spread to break-even. The trading fee is often already levied on the spread.

CFD is a derivative financial instrument tracking the price of underlying assets. And there could be price difference from the traditional market and the CFD market. Therefore, you can either have a better or worse bid price when you close your position.

What are the costs to trade CFDs?

Spread: Spread is the price difference between ask and bids price. It is compulsory to pay the spread for trading CFDs as it is the source of revenue for the CFD brokers. Thus, choosing the right broker with tight spread can help you to minimise the costs.

An ECN(Electronic Communication Network) Account has no spread but levy commission instead. People who use EA(Expert Advisor) prefer to use ECN account.

Commission (only for Stocks): Trading stocks CFDs charge you trading fees for exposing your position. The costs are usually 0.1% with a minimum of $5~$10 per transaction.

How to Trade CFDs?

1. Decide which Market to Trade.

• Choose the market you are familiar with.
• Indices, Stocks, Crypto, Precious Metals, or Natual Gases.
• And then look for specific instruments that you want to trade like Brent oil or Silver.

2. Long or Short

• Determine which direction of position you want to trade on. 
• Would you like to Long(Buy) or Short(Sell)?

3. Size of Investment.

• Decide how much of your fund to invest.
• Brokers may have minimum margin requirements before you execute your orders.

4. Place an Order

• You can place an order with limit or market orders.
• Stop-loss or profit taking is also a great way to manage your risks.

5. Close the Deal

• After you placed your order, you can close the deal to take profits.
• Or if the market is moving unfavourably, you can close the deal to limit the losses.

Where Can I Learn About CFD Trading?

Websites 

There are many websites that offer basic information about CFDs. Brokers usually have a good source of education to learn about them. It would be a great place to start with!

Books

Studying technical analysis will save more time compared to studying all the fundamentals of different asset classes. After knowing which strategy you want to approach, you can look for books that suit you! 

Online Courses

There are beneficial videos in online education platforms. They might charge fees to take the online courses but consider it as an investment. But, make sure the person has a transparent tracking record and reliable, not selling useless courses for fast bucks.

Offline Courses

You can look for offline courses in your region. This is of the best way to ask questions directly and if lucky enough, you can find a mentor! 

 

CFD Trading Platforms

MetaTrader4 

MetaTrader 4 is a stand-alone online trading platform developed by MetaQuotes Software. It provides access to a range of markets and hundreds of different financial instruments, and you will have all the tools you need to manage your trades and analyse the markets.

MetaTrader5

MetaTrader 5 is the newest and most advanced online trading platform in the industry. It includes a multi-threaded strategy tester, fund transfer between accounts, and alerts to remind you of the latest events.

cTrader

cTrader is a brand-new trading platform that was established in 2010 by Spotware. It offers complete solutions for traders packed up with various features to enhance every aspect of your investment. It provides excellent indicators, advanced order types, fast entry, and execution. The User Interface is stunningly impressive and easy to understand the components.

Trading Strategies for CFDs

CFDs are a wide range of various asset classes. Therefore, every instrument has a different mechanism and price patterns in terms of how the price respond or move to specific events. It is hard to study every characteristic of all the asset classes.

Approaching various asset classes using technical analysis would be an excellent alternative way to analyse the market. Technical analysis is analysing the pattern of the price movement of an instrument. And chartist is the people who believe that the price reflects all the information such as events, policies, human psychology and more!

So, we think you should pick specific asset classes and instruments you would like to trade. Then study the history and characteristic of the instrument as well as chart patterns. After all, you can either use a demo account or a small amount of testing fund to get the feeling of live trading. When all is good, you can start generating profits!

 

Here are the ideas of trading strategies!

 

1.Breakout Strategy

• The breakout means an asset’s price moves above a resistance level or below a support level.
• A trader enters a long position when the price breaks the previous high and enters a short position when it breaks the previous low.
• A breakout occurs in a pattern of flags, triangles or head and shoulders patterns. Regardless of the timeframe, the breakout strategy works well in different CFDs.

2.Range Trading

• Range trading is to set the support and resistance price level to place orders around these prices.
• This strategy works when there are no large volatility and trend within the market.
• The length varies on the timeframe a trader is in favour of.

3.Trend Trading

• Trend trading is a widely used forex trading strategy by lots of traders worldwide.
• It is a strategy to gain profits based on the market directional momentum.
• The length of trading may vary depending on the indicator and timeframe analysis. 

4.Scalp Trading

• Scalping is a strategy to trade within seconds to minutes, trading frequently to accumulate small profits which can be done manually or by the automated trading bot.
• Scalpers make an enormous amount of trades to take advantage of small price movements of a currency pair.

5.Day Trading

• Day trading is a strategy to trade a CFD within a day.
• As the positions are closed before the market close, it enables a trader to control its risk.
• It can be a matter of hours or even minutes, enabling a trader to execute multiple trades using technical analysis.

6.Swing Trading

• Swing trading refers to a trading style to hold a trade for several days to weeks.
• It is best suitable for the patient trader who does not mind the volatility of the market.
• Swing trading enables a trader to earn a big chunk of profits if the price moves in the trader’s favour.

Frequently Asked Questions

How does CFD (Contract for difference) work? 

Unlike traditional financial instruments, traders do not have to own the securities physically. It is simply a contract engineered to gain profit from the difference in the price of security between the opening and closing of the contract. It offers the trader the opportunity to access global market with numerous asset classes conveniently.

Is CFD safe to trade or invest? 

CFD (Contract for difference) is a derivative product that only tracks the price of an underlying asset. So, you do not own the instrument you trade. Therefore, the most important thing to consider is to choose the right counter-party, the CFD broker.

Can CFD trading make me rich? 

It will depend on how you handle your fund. Since most CFD brokers offer low margin rate and high leverage, it can help you to maximise your profit. But in the meantime, it can be dangerous as well. Trading with a solid strategy and tactic would be vital to success.