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J200 trade ideas

How Bollinger Bands work and their best parametersJust a reminder... A Bollinger Band resembles a moving cylinder with three lines. A top, middle and bottom line. These three lines are plotted on any chart and you’ll see the price of the markets moving in-between these levels. When the price crossed above the middle line, the trend is up. When price moves and stays below the middle line, the trend is down. There are three parts to the Bollinger Bands. Upper, Middle and Lower Bollinger Band. Here are my parameters… The length (20) , shows you the Moving Average of the Middle Bollinger Band. Which in this case is 20 MA and is shown in the chart as the orange line… The Source tells us we are using closing prices in the chart… That means, when the JSE All Share Index closes for the day – that is the closing price that will be used for the BB. StdDev is 2… Bollinger Bands are envelopes that base a Standard Deviation above and below a simple moving average of the price. Because the distance of the bands is based on standard deviation, that’s why we are able to see a symmetrical envelope around the price… Most Bollinger Bands parameters are set to 20MA and 2 Standard Deviations on most charting platforms. But now you know what to set it to, to maximise your usage... If you have any questions about indicators feel free to ask. I've been in the markets since 2003 and enjoy sharing information... Trade well, live free. Timon MATI Trader
TVC:SA40Education
by Timonrosso
3
A Santa Claus Rally for the JSE in 2022? What is expected from a Santa Claus Rally? The Santa Claus rally, is essentially where we see stock prices locally and globally rise and close off positively by the end of December. And so, we can expect a rally in December which we can all profit from… Why December? We aren’t 100% sure but we have some speculations on why the market tends to rally… #1: Investment managers cut down on their taxes This is the time when you’ll see investors and investment managers, selling their stocks to lock in tax reductions before the end of the year. Once they sell their positions, they then buy other stocks and markets that they believe will rally in the next year. The buying of these stocks, leads to a rise in stock prices which pushes the stock market indices up. Theory #2: Investors enjoy their bonuses by buying into investments Investors also like to spend their bonuses on investments like stocks… And when they buy, demand picks up. And this leads to higher stock market prices. Speculation is one thing. But nothing confirms a Santa Claus Rally more than proof in the charts… The JSE has gone up 14 out of 19 Decembers! What you see, is the monthly JSE-ALSI stock market chart since 2003… Looking at the chart you can see how each December (Vertical blue line) performed from 2003 up ‘till 2021 Year Gain/Loss Year Gain/Loss 2003 : 7.39% 2004 : 1.28% 2005 : 6.84% 2006 : 3.90% 2007 : -4.99% 2008 : 0.51% 2009 : 2.62% 2010 : 6.69% 2011 : -3.26% 2012 : 2.72% 2013 : 3.27% 2014 : -0.53% 2015 : -1.15% 2016 : 0.48% 2017 : -1.33% 2018 : 4.63% 2019 : 3.51% 2020 : 3.83% 2021 : 4.66% So, there’ve been 14 out of 19 Decembers (74% win rate) that have shown positive gains. And in total, the JSE has accumulated 41.07% gains in all of those Decembers. This means, you have a higher chance of profiting from buying this Christmas than selling. And right now, this December the JSE ALSI 40 is already up an insane 14.48% gain. And I am seeing no signs of a slow down yet… I guess a Santa Claus rally is more likely than not, but we have had three to four winning years in a row... Things are looking good for now but the month is young... Do you think we will have a JSE Santa Claus Rally? Let me know. Trade well, live free. Timon MATI Trader
TVC:SA40Education
by Timonrosso
1
How much money in your account to bank your monthly income?“How much money would you like to bank a month?” $3,000 $5,000? $30,000? To answer this question and to get you on the path of achieving this income, you’ll need just one tool. Pull out your profitable trading plan You and I both know that to set a monthly income goal for trading, you’ll need a solid, proven and easy to follow game plan. If you do have a trading strategy that you’re happy with and works for you, then great. You should already have a strong indication on how your portfolio has performed during an array of different market environments. Obviously the more data you have on your trading, the higher the reliability that you’ll earn similar monthly returns in the future. Once you have gathered your historical trading data, you’ll then need to jot down four important stats namely: Four stats to create a desired income per month Stat 1: No. of expected winning trades per month. Stat 2: Average % gain in rands per trade. Stat 3: No. of expected losing trades per month. Stat 4: Average % loss in rands per trade. To choose the monthly income you’d like to pocket per month, you’ll need to know how much you’ll need in your trading account. Let’s say you want to bank an average $3,000 on average per month, with both winning and losing trades. For this article, let’s use the metrics of the MATI Trader System that I’ve back and forward tested for the past 20 years. Let’s plug the stats into the table to see. Expected return a month: $3,000 Stat 1: 3 Winning trades per month. Stat 2: 4% Average gain per winner. Stat 3: 2 Losing trades per month. Stat 4: 2% Average loss per loser. We now have all the information to calculate how much money you’ll need, in order to bank an average monthly $3,000. 1 Formula to calculate how much you need in your trading account Step 1: Find out the total percentage gain you can earn per month = (Winning trades X Gain % per winner) = (3 Winners X 4% Gain) = 12% gain. Step 2: Calculate the total percentage loss you can lose per month = (Losing trades X Loss % per loser) = (2 Losers X 2% Loss) = 4% loss Step 3: Finally calculate the amount of money you can net on average per month = (Total gain %) – (Total loss %) = (12% Gain – 4% Loss) = 8% Net gain Step 4: Know your trading account size to pocket a desired monthly income. = (Expected amount to earn ÷ Net % return per month) = ($3,000 ÷ 8% Return) = $37,500 So to bank around $3,000 on average per month, with 3 winners and 2 losers, you’ll need to have a trading account of $37,500. Don’t be fooled if you think you’ll bank $3,000 EVERY month! As you know, my goal through sharing this information is to show you how realistic successful trading works With pretty much every trading system, you can expect around three to four losing months a year. This year I had around 5 losing months - It's been a tough one. Some months you may be down $2,000 and other months you’ll be up $5,000, we never know for certain how the future will pan out. However, with a proven and a long back and forward tested trading system, with this formula will give you the edge of what the likelihood of your returns will be. The formula works on any size portfolio or desired income - I am just giving you an example with banking a $3,000 a month... If you enjoyed this article or would like to share feedback I'd love to hear it :) Trade well, live free.. Timon MATI Trader
JSE:J200Education
by Timonrosso
Why I LOVE Trading View - Best I've seen in 20 yearsWhether you're new to trading or you’re an advanced chartist – we all have the same expectations when it comes to choosing a charting platform. It must be online, fast, safe, customizable and user friendly. And you know what – it should be free! With the high competition of charting platforms available world-wide, each company must ensure they have free, live streaming, cutting edge, secure and easy to use platforms to offer their customers and clients at the very least – top-notch service. I’ve used many charting platforms since 2003. From London School of Investments, Amibroker, MetaStock, ProTrader, Cycle Trends, IG Markets, Oanda, MetaTrader, Sword Fish… You name it. But there is ONE free charting platform, which has become my absolute favourite over the years, Trading View... TradingView (est. 2012) is a world leading, cutting-edge FREE online visualisation financial charting platform for beginners up to the most advanced professional traders, with over 10 million subscribers. The platform has direct access to unlimited live streaming data from stocks, futures, bonds, indices, Forex, commodities, ETFs and even crypto-currencies. It allows you to customise your watch lists, back test your strategies, share, publish or enjoy live and active trading ideas, signals and tutorials through the platform or directly to your Twitter and Stock Twits feed. With TradingView you’ll be able to enjoy this free charting phenomena across either your web browser, Android or Apple iOS devices. It's incredible to have such a thorough and advanced charting platform. It's even more amazing for new traders under 5 years of experience to have this cutting-edge technology platform to learn how to trade and enjoy the trading process... Trade well, live free. Timon MATI Trader
TVC:SA40Education
by Timonrosso
My three favourite Moving Averages on any chartI have three Moving Averages that I plot on any market. 7 MA 21 MA 200 MA Here is the JSE ALSI 40 with the three moving averages. In the above daily chart of the JSE you can see I’ve plotted the 7MA (Red), 21MA (Blue) and 200MA (Black). Now I have two simple rules for when the market is in an uptrend or a downtrend. Downtrend with the three Moving Averages You know the market is in a downtrend when the price is below the 200 MA. Also, 200MA is above the 21 Moving Average. And the 21 MA is above the 7MA. In other words. 7MA < 21MA < 200MA. You can see on the left part of the chart where the trend is down (Red arrow). This tells me that the momentum is bearish and the market is more likely to fall than rise. I will then avoid buying the market and instead will only look to short (sell) and profit from a falling market. Then we have the Uptrend with the three Moving Averages What tells me the market is in an uptrend is when the price is above the 200 MA. Also the 7MA is above the 21MA. And the 21MA is above the 200MA. You can see on the right part of the chart where the trend turns up (Green arrow). This tells me that the momentum is bullish and the market is more likely to continue to rise. I will then only look for longs (buy) the market and avoid shorting or selling the market. Now you have my favourite 3 Moving Averages in a bag for you to plot on your chart and master the trends. Trade well, live free. Timon MATI Trader Connect below with the socials...
JSE:J200Education
by Timonrosso
3
Is YOUR Broker Regulated? Find out hereHere is a list of eight of the main financial regulatory agencies that are backed with strict regulatory enforcement in other countries… You’ll need to make sure the broker you choose is approved by one of the below. South Africa (FSCA) - The Financial Sector Conduct Authority USA (SEC) – Securities And Exchange Commission Eurozone (MiFID) – Markets In Financial Instruments Directive UK (FCA) – Financial Conduct Authority Australia (ASIC) – Australian Securities and Investments Commission India (SEBI) – Securities and Exchange Board of India Japan (JSDA) – Japan Securities Dealers Association Switzerland (FINMA) – Swiss Financial Market Supervisory Authority Am I missing any? Let me know in the comments :) Trade well, live free. Timon MATI Trader Financial trader since 2003
JSE:J200Education
by Timonrosso
How to Choose the Right Broker -10 pointsHere’s a list you may follow to help with your decision. My top 10 list to choose the best broker 1. Only choose reputable brokers that are regulated and recognised by the main financial regulatory bodies. (See answer to question two for the list of financial regulated authorities). 2. Find a broker who offer a list of trading instruments that you prefer i.e. shares, CFDs, Spread trading or futures. 3. Make sure their cost fees are low and their withdrawing and depositing structure takes place within three working days. 4. Make sure they are insured and deal with the top banks in the world and don’t run their own finance firm where they can take your money and run. 5. Go onto Google or ‘Hello Peter’ and read as many reviews from REAL people to see their experiences. 6. Browse through their website and read through everything before you decide whether they are for you or not. 7. Avoid any broker who promises any too-good-to-be true returns or are very marketing orientated – most times these are scams… 8. Analyse their portfolio growth they’ve achieved for their clients over the last five years. This will help you see their consistency or even the validity of what they have to offer. 9. Choose a broker who meets your trading needs i.e. trading platform, available markets, trading indicators, economic calendars and even copy-trading plug-ins. 10. Make sure the broker you choose is able to help in terms of customer service needs, trading education, live videos and even trading events for their clients. If you found this useful, let me know in the comments. Trade well, live free. Timon MATI Trader Financial Trader since 2003
JSE:J200Education
by Timonrosso
Losses are Just the Costs of TradingLosses are nothing! Come on. Don't you pay for food, electricity, taxes. Don't you run your company with expenses and costs? Don't you spend every now and then on a vacation, time away and even unpaid leave? This is life and it should be NO different with trading. Trading losses are nothing but costs that come with achieving future success. But... and it's a big but. Just like you can control whether to spend your ticket on Economy or First Class. Just like you can choose to go to a 3-star hotel or a 5 star. Just like you can choose between a chicken dish or a lobster. So to must you manage your risk with trading. The learning fees, and the losses you take with trading can all be controlled at a point with obviously your volume, the markets you choose and where you place your stop loss... Every trade needs to be taken into consideration with high risk management skills. Don't be scared of trading losses- it comes with the territory as with life. What do you think? Does this help? Trade well, live free. Timon MATI Trader Financial trader since 2003
JSE:J200Education
by Timonrosso
2
Choose your Ideal Broker with a 10 Step checklistAre you looking for the right broker in 2023 and beyond but unsure what to look for? With the high competition nowadays, each broker offers different features, instruments and advantages. That’s why choosing one not an easy task for a beginner or even an experienced trader. You’ll need to drill down exactly what suits your trading style, personality and risk profile. I say this because, in the last two decades, I’ve been through a fair share of brokers. So, I know how difficult this decision can be and how it can determine whether you make money or not as a trader. In this article, I’ll share with you an easy-to-follow checklist which you can use to help you choose the right online broker in 2020 and beyond. What is a broker or dealer? A broker is a company or institution that gives a trader access to a live trading account and trading platform which enables them to buy, sell and monitor different instruments and assets. Here’s my checklist to find your ideal broker… Checklist item #1: Make sure the broker or dealer is regulated! This is a must… Whenever you sign up with a broker, make sure they are authorised, regulated and recognised by leading regulation authorities. You will most likely find this stated on the company’s website, in the ‘About Us’ or in their ‘Disclaimer’, along with their license number they hold with that regulator. Countries with dedicated financial regulatory agencies include: South Africa (FSB) – Financial Services Board. USA (SEC) – Securities And Exchange Commission (FINRA) – Financial Industry Regulatory Authority Eurozone (MiFID) – Markets In Financial Instruments Directive UK (FCA) – Financial Conduct Authority Australia (ASIC) – Australian Securities and Investments Commission India (SEBI) – Securities and Exchange Board of India Japan (JSDA) – Japan Securities Dealers Association Switzerland (FINMA) – Swiss Financial Market Supervisory Authority When you sign up with a regulated broker, you’ll at least have the security and assurance that they have met certain standards approved by the regulatory body, such as: Having the right capital to protect the clients’ funds Ensure the firm won’t go bust Confirm they have met certain requirements from the financial service provider Checklist item #2: Check their reviews and testimonials Before you make any decisions, you’ll need to see what others have said and are saying about the broker or the dealer company. You can do this by searching on Google, ‘Hello Peter’, trading forums or go onto their social media pages to read what other unbiased REAL clients have written about them when it comes to reviews, testimonials and ratings. Checklist item #3: Broker minimum requirements There are two minimums to take into account: Minimum balance and minimum deposit per trade. Most brokers require you to start with a certain minimum balance to set up your trading account. Nowadays, with the high competition, you should easily be able to find brokers or dealers who require no more than R1,000 up to R5,000 to open a trading account. If they require any more to open your trading account, just know that there are other brokers out their where you can start with less. As with the minimum deposit to take a trade, you can easily find reputable brokers where the minimum is under R200 per trade. Checklist item #4: Availability: What they can offer you You should have a good idea on what you’d like to trade. This is why before you sign up with the broker, you’ll need to see the availability and range of trading instruments the company has to offer. What assets do you want to trade? Shares, CFDs, Options, Futures, Spread Betting etc… What markets do you want to trade? Stocks, currencies, commodities, indices, bonds, ETFs or crypto-currencies… Where do you want to trade? Via phone, mobile or computer. What times would you like to trade? Morning, noon or night? What gearing and leverage would you like to trade? Whether you’re a Forex trader or a stock trader you’ll need to find out what gearing the broker has to offer. Such as 5:1 – 20:1 (for stocks) and 50:1 up to 200:1 (for Forex). E.g. With gearing (or leverage) of 50:1 this means if you deposit R1,000 into a trade you can hold a position exposed and valued up to R50,000. REMEMBER: the higher the leverage offered, the higher the reward but also the potential risk. Do they offer a demo account or a trial period? You should never rush into trading with real money, before getting to know your broker and your trading platform. That’s why you should ask your broker if they have a demo trading platform or account that you can use to test out what they have to offer with your strategies Checklist item #5: Do they offer trading education and training? A good and genuine broker should want you to be successful as a trader. And to do this, they should offer you a whole range of free education, training sources and tools such as: Training guides Glossary Trading videos, podcasts, forums Written articles Step-by-step trading tutorials Support staff Opinion-based resources Live trading events and webinars Trading calculators, tools and calendars Checklist item #6: The trading platform itself Majority of your analyses, preparation and the execution of trades are going to take place on the trading platform itself. This is why you’ll need to try it out, test it and learn how to use it, to see if it will suit your trading. Here is a list of items to watch out for with your trading platform: Item #1: Chart types: E.g. Line chart and candle sticks Item #2: Time frame options of: E.g. 1 hour, 4 hour, daily, weekly & monthly Item #3: Trading indicators and oscillators: E.g. RSI, Stochastics, MACD, OBV, ADX, Bollinger Bands etc… Item #4: Real time charts: E.g. Not having to refresh your screen every 15 minutes or download anything unnecessarily. Item #5: Live streaming data: E.g. News feed, live speeches & announcements, and SENS (Stock Exchange News Service). Item #6: Customized watch lists: Make sure there is a functionality to create, modify and monitor a watchlist with the markets you’ll be trading. Item #7: Trading order variety: E.g. Market, buy, sell, limit, stops, trailing stop loss and guaranteed stop losses Item #8: Trading journal: E.g. Portfolio profit & loss summary of open, closed and historical trades. Item #9: Trading order box: Where you’ll place your entry, stop loss, take profit, margin requirements, order quantity, gain potential, risk potential and risk to reward. Item #10: Reliability: When you’re testing the trading platform, this is where you can ensure it’s reliable in a way that: It runs smoothly It saves your layout, charts and profile It doesn’t crash The speed is good The features all work as they should The web-based (java) or desktop application works great The mobile app is easy-to-use and handle NOTE: TradingView connects a amazing and reliable brokers. Checklist item #7: Customer support It’s important to find out where you can contact your broker, in case you need help due to some technical or trading reason. Which mediums can you contact them through? • Phone • Email • Online live chat • WhatsApp • Skype • Forums Also when you give the representative a call, make sure they sound knowledgeable and confident in what they tell you. Think about how they respond to your questions, how quickly do they solve your queries, are they friendly and approachable? The contact support will also confirm their quality, efficiency, reliability and credibility for what the company already portrays and offers. Checklist item #8: Costs and fees You will never be able to avoid costs and fees completely, but you can minimize them by choosing the right broker. You’ll need to do a bit of research to compare the costs of buying, selling and holding trades. Make sure you look at the following: Spreads (Fixed or variable) Note: The spreads should be low for high volume traded markets Commissions (When you enter and when you exit) Margin interest Service charges Minimum charge per trade e.g. R100 Checklist item #9: Ease of deposits and withdrawals This is an important one… Each broker or dealer has their own measures and policies when it comes to their clients depositing into their trading accounts or withdrawing back into their bank accounts. Ask your broker how you can make a deposit whether it be via: EFT Credit Card PayPal Wire transfer Then confirm with your broker to send you their policies and costs on how you can withdraw your money and how long it will take whether it be: Via email to ask for a withdraw which will take under 3 trading days. Via the trading platform where you can withdraw through an authentication process. Via the broker who can only proceed with a withdrawal on the phone which will take three working days. Note: A withdrawal and deposit with a reputable and regulated broker should NEVER take more than three working days or warning bells should ring. Checklist item #10: Safety, security and legitimacy There are a few ways to check if the broker is safe and secure including: Their website starts with HTTPS: and not HTTP: They are insured and deal with top banks around the world. They have secured encryption processes. They have proven to show growth for their clients over the last five years. They have won broker awards or are listed in the top brokers in the country you’re looking at. Final Words You now have an idea on how to find the most ideal broker for you. Take your time to do the research and go through each line item one by one. Never rush into choosing a broker as this can be a significant decision for your financial future. If you enjoyed this piece then follow more daily tips and lessons on TradingView. I've been in the markets since 2003 and happy to share what I've learnt along the way. Trade well, live free. Timon MATI Trader PS: Connect with my few socials below.
JSE:J200Education
by Timonrosso
The BEST Trading IndicatorWith the ever increasing number of indicators, it makes sense that beginner traders’ wish to cut the steep learning curve by trying to find which indicator is the best and the most profitable to choose from. It’s overwhelming to start trading with so many jargon terms like, the MACD, RSI, Stochastics, ADX, Bollinger Bands and so on… Luckily, you won’t ever have to worry about any of these indicators. Here’s why… The quest to find the perfect trading indicator There is a big misconception when it comes to learning how to trade. Most new people start by going onto Google to search for the ‘best trading strategy’ or the ‘best trading indicator’ to speed up their success. Everybody wants to find that perfect trading indicator that will help them profit 80% to 100% of the time. Yet, at most, there are only 5% of traders’ out there who are able to make a consistent income with trading. I have two main reasons on this matter, which I’ve gathered since 2003. Reason 1: All indicators are history With local and international markets such as the stock market, Forex and even with crypto-currencies, there are billions of rands traded every day. With the ongoing economic, socio and political events taking place, every transaction from either a company, private individual or even a bot is entirely unique and UNEXPECTED. So which indicator is the best to choose from? Well before you go and do research on each indicator there is to trade with, let me spare you the time and tell you this… Every technical indicator and oscillator out there, is based on one thing. HISTORICAL DATA. When you add an indicator onto a chart, it can only show one of three things which are either the: Current momentum. Current trend direction or the. Demand and supply based on buying and selling volume. Not one indicator has any form of predictive qualities. Even with the dawn of Artificial Intelligence and Quantum Computing, there will most likely never be that one indicator that will be able to predict the future with accuracy and certainty every time. However, let’s say there is that one Quantum Computer that is able to take every news event, internal and external factor into account. The information assembled and collected, will still be based on past data. By now you may be feeling like your life has been a lie with all the marketing fluff out there with the 100% win-rate and get rich quick scams, but I assure you there is one legit way to succeed from trading. Reason 2: Each element is essential It doesn’t take just one trading strategy to bank a consistent income. It doesn’t take just a few rules to follow and, It doesn’t take a whole lot of money to fund your account to make it as a trader. No, in actual fact it takes four equally important elements namely: MARKETS: You need to find the best markets that are out there to trade and when to trade them. METHOD: You need to create or adopt a proven trading strategy that will fit your personality. (Price action with a few patterns is all that's needed to spot probability trades). MONEY: You need to have just a couple of money management rules, to follow every time you take a trade. MIND: You need to find a way to develop trading self-confidence as well as a strong mindset throughout your career. This is where so many different trading companies, publications and even education institutions seem to miss the mark. They either specialise ONLY in psychology, trading analysis or just on money management. Unfortunately, this is one hobby or lifestyle where being an expert in ONE field will not guarantee your success.
JSE:J200Education
by Timonrosso
2
2% Rule with CFDs versus Spread TradingThe rule is very easy to understand. Whether you trade using CFDs or Spread Betting, the rule is the same. Never risk more than 2% of your portfolio on any one trade. It’s one rule that you can use whether you have a R1,000 account or a R10,000,000 account. You see, trading is a forever business. This means, as a trader you should risk as little of your portfolio as possible in order to stay in the game longer. We’ll now go straight into how you to enter your CFDs and Spread Betting trades using the 2% rule. How to enter your CFD trade using the 2% Rule Here are the specifics for the trade CFD of the underlying Company: TIM Ltd CFDs Portfolio value: R100,000 2% Max risk per CFD trade: R2,000 Entry price: R400.00 Stop loss price: R380.00 To calculate the no. of CFDs you’ll buy per trade, you’ll need the: ~ Max risk per trade ~ Entry Price and ~ Stop loss price Next, you’ll need to follow two steps: Step #1: Calculate the risk in trade The ‘risk in trade’ is the price difference between where you enter and where your stop loss is: Risk in trade = (Entry price – Stop loss price) = (R400 – R380) = R20 Step #2: Calculate the no. of CFDs to buy No. of CFDs to buy = (2% Risk ÷ Risk in trade) = (R2,000 ÷ R20) = 100 CFDs In your platform you’ll type in 100 TIM CFDs to buy, place your entry price at R400 and your stop loss price at R380 to risk only 2% of your portfolio. Note: 1 CFD = 1 Share exposure 100 CFDs = 100 Shares exposure How to enter your Spread Trade using the 2% Rule With spread trading you trade on a ‘value per 1 point’ basis. You’ll choose either: R0.01, R0.10, R1 or any other amount per 1 cent movement in the underlying market. If you choose R0.10 value per 1 cent movement, for every 10 cents the market moves against or for you, you’ll lose or gain 100 cents (10 cents value per point X 10 cents movement). Here are the specifics for the spread trade. Contract of the underlying Company: TIM Ltd Portfolio value: R100,000 2% Max risk per Spread trade: 200,000c (R2,000) Entry price: 40,000c (R400.00) Stop loss price: 38,000c (R380.00) To calculate the ‘Value Per Point’ to enter your long (buy) trade, you’ll need the: ~ Max risk per trade ~ Entry Price ~ Stop loss price Next, you’ll need to follow two steps: Step #1: Calculate the risk in trade Risk in trade = (Entry price – Stop loss price) = (40,000c – R38,000c) = 2,000c (R20.00) Step #2: Value per 1 cent movement Value per 1 cent movement = (2% Risk ÷ Risk in trade) = (200,000c ÷ 2,000c) = 100c (R1.00) This means, with a ‘Value per point of 100c’ every 1 cent the TIM Ltd share price moves, you’ll make or lose 100 cents. Every 2,000c the market moves, you’ll make or lose 200,000c or R2,000 of your portfolio (100c Value per 1 cent movement X 2,000c movement). Note: 1 Cent per 1 cent movement = 1 Share exposure 100 Cents per 1 cent movement = 100 Shares exposure
JSE:J200Education
by Timonrosso
EXPLAINED: How Gearing Works with CFDs and Spread TradingNot sure what happened but the image didn't show. Here it is again... This is the most important concept you’ll need to understand to accelerate your account. During your trading experience, with gearing, you’ll learn how to multiply your profits. But you can also multiply your losses, if you don’t know what you’re doing. So listen up. What Gearing is in a nutshell… Gearing also known as leverage or margin trading, is the function that allows you to pay a small amount of money, in order to gain control and be exposed to a larger sum of money. There is a very simple calculation you’ll use calculate the gearing for both CFDs and Spread Trading. Exposure Initial margin In order to understand this formula, let’s use three gearing examples with shares versus CFDs and Spread Trading. We’ll break it up into three steps for CFDs and Spread Trading: 1. Calculate the entry market exposure 2. Calculate the initial margin (Deposit) 3. Calculate the gearing We’ll also exclude costs to help simplify the gearing concept better. EXAMPLE 1: Buying AAS Ltd shares Portfolio value: R100,000 Company: AAS Ltd Share price: R109.00 No. shares to buy: 100 If you buy one share at R109 per share, you’ll be exposed to R109 worth of one share. If you buy 100 shares at R109 per share, you’ll be exposed to R10,900 worth of shares (100 shares X R109 per share). We know that to be exposed to the full R10,900 worth of shares, we needed to pay an initial margin (deposit) of R10,900. If we plug in values into the gearing formula, we get. Gearing = (Exposure ÷ Initial Margin) = (R10,900 ÷ R10,900) = 1:1 This means, there is NO gearing or a gearing of 1 times, with the share example as, what we paid is exactly as what we are exposed to. Easy enough? Let’s move onto CFDs. EXAMPLE 2: Buying AAS Ltd CFDs Portfolio value: R100,000 CFD of the underlying Company: AAS Ltd CFD Share price: R109.00 Margin % per CFD: 10% (NOTE: Find out on your trading platform or ask your broker for the margin % per CFD) No. CFDs to buy: 100 Step #1: Calculate the entry exposure of the CFD Entry exposure = (Share price X No. CFDs) = (R109.00 X 100 CFDs) = R10,900 NOTE: 1 CFD per trade, you’ll be exposed to the value of one share. 100 CFDs per trade, you’ll be exposed to the value of 100 shares. Step #2: Calculate the initial margin of the CFD trade Initial margin = (Exposure X Margin % per CFD) = (R10,900 X 0.10) = R1,090 This means to buy 100 CFDs, you’ll need to pay an initial margin (deposit) of R1,090. Step #3: Calculate the gearing of the CFD trade Gearing = (Exposure ÷ Initial margin) = (R10,900 ÷ R1,090) = 10 times With a gearing of 10 times, this means two things… #1: For every one CFD you buy for R10.90 per CFD, you’ll be exposed to 10 times more or the value of one AAS Ltd share. #2: For every one cent the share price rises or falls, you’ll gain or lose 10 cents. EXAMPLE 2: Buying AAS Ltd CFDs Portfolio value: R100,000 Underlying Company: AAS Ltd Share price: 10,900c Value per point: 100c (R1.00) Margin % per Spread Trading contract: 7.50% (NOTE: Find out on your trading platform or ask your broker for the margin % per share contract) Step #1: Calculate the entry exposure of the spread trade Entry exposure = (Share price X Value per point) = (10,900c X 100c) = 1,090,000 (R10,900) Note: 1c value per point per spread trade– you’ll be exposed to one AAS share 100c value per point per spread trade – you’ll be exposed to 100 AAS shares Step #2: Calculate the initial margin of the spread trade Initial margin = (Exposure X Initial margin) = (1,090,000c X 0.075) = 81,750c (R817.50) This means, you’ll need to pay an initial margin (deposit) of R817.50 to be exposed to R10,900 worth of AAS Ltd shares. Step #3: Calculate the gearing of the spread trade Gearing = (Exposure ÷ Initial margin) = (1,090,000 ÷ 81,750c) = 13.33 times This means, by depositing R817.50 you’ll be exposed to 13.33 times more or R10,900 (R817.50 X 13.33 times) worth of AAS Ltd shares. You now know how gearing works with CFDs and Spread Trading, in the next lesson we’ll cover how to never risk more than 2% of your portfolio for each CFD and Spread Trade you take. Did you enjoy this article? Trade well, live free. Timon Rossolimos Feel free to follow our socials below for more.
JSE:J200Education
by Timonrosso
How Gearing Works with CFDs and Spread TradingThis is the most important concept you’ll need to understand to accelerate your account. During your trading experience, with gearing, you’ll learn how to multiply your profits. But you can also multiply your losses, if you don’t know what you’re doing. So listen up. What Gearing is in a nutshell… Gearing also known as leverage or margin trading, is the function that allows you to pay a small amount of money, in order to gain control and be exposed to a larger sum of money. There is a very simple calculation you’ll use calculate the gearing for both CFDs and Spread Trading. Exposure Initial margin In order to understand this formula, let’s use three gearing examples with shares versus CFDs and Spread Trading. We’ll break it up into three steps for CFDs and Spread Trading: 1. Calculate the entry market exposure 2. Calculate the initial margin (Deposit) 3. Calculate the gearing We’ll also exclude costs to help simplify the gearing concept better. EXAMPLE 1: Buying AAS Ltd shares Portfolio value: R100,000 Company: AAS Ltd Share price: R109.00 No. shares to buy: 100 If you buy one share at R109 per share, you’ll be exposed to R109 worth of one share. If you buy 100 shares at R109 per share, you’ll be exposed to R10,900 worth of shares (100 shares X R109 per share). We know that to be exposed to the full R10,900 worth of shares, we needed to pay an initial margin (deposit) of R10,900. If we plug in values into the gearing formula, we get. Gearing = (Exposure ÷ Initial Margin) = (R10,900 ÷ R10,900) = 1:1 This means, there is NO gearing or a gearing of 1 times, with the share example as, what we paid is exactly as what we are exposed to. Easy enough? Let’s move onto CFDs. EXAMPLE 2: Buying AAS Ltd CFDs Portfolio value: R100,000 CFD of the underlying Company: AAS Ltd CFD Share price: R109.00 Margin % per CFD: 10% (NOTE: Find out on your trading platform or ask your broker for the margin % per CFD) No. CFDs to buy: 100 Step #1: Calculate the entry exposure of the CFD Entry exposure = (Share price X No. CFDs) = (R109.00 X 100 CFDs) = R10,900 NOTE: 1 CFD per trade, you’ll be exposed to the value of one share. 100 CFDs per trade, you’ll be exposed to the value of 100 shares. Step #2: Calculate the initial margin of the CFD trade Initial margin = (Exposure X Margin % per CFD) = (R10,900 X 0.10) = R1,090 This means to buy 100 CFDs, you’ll need to pay an initial margin (deposit) of R1,090. Step #3: Calculate the gearing of the CFD trade Gearing = (Exposure ÷ Initial margin) = (R10,900 ÷ R1,090) = 10 times With a gearing of 10 times, this means two things… #1: For every one CFD you buy for R10.90 per CFD, you’ll be exposed to 10 times more or the value of one AAS Ltd share. #2: For every one cent the share price rises or falls, you’ll gain or lose 10 cents. EXAMPLE 2: Buying AAS Ltd CFDs Portfolio value: R100,000 Underlying Company: AAS Ltd Share price: 10,900c Value per point: 100c (R1.00) Margin % per Spread Trading contract: 7.50% (NOTE: Find out on your trading platform or ask your broker for the margin % per share contract) Step #1: Calculate the entry exposure of the spread trade Entry exposure = (Share price X Value per point) = (10,900c X 100c) = 1,090,000 (R10,900) Note: 1c value per point per spread trade– you’ll be exposed to one AAS share 100c value per point per spread trade – you’ll be exposed to 100 AAS shares Step #2: Calculate the initial margin of the spread trade Initial margin = (Exposure X Initial margin) = (1,090,000c X 0.075) = 81,750c (R817.50) This means, you’ll need to pay an initial margin (deposit) of R817.50 to be exposed to R10,900 worth of AAS Ltd shares. Step #3: Calculate the gearing of the spread trade Gearing = (Exposure ÷ Initial margin) = (1,090,000 ÷ 81,750c) = 13.33 times This means, by depositing R817.50 you’ll be exposed to 13.33 times more or R10,900 (R817.50 X 13.33 times) worth of AAS Ltd shares. You now know how gearing works with CFDs and Spread Trading, in the next lesson we’ll cover how to never risk more than 2% of your portfolio for each CFD and Spread Trade you take.
JSE:J200Education
by Timonrosso
EXPLAINED: CFDs versus Spread Trading 101What are CFDs and Spread Trading? Spread Trading (betting) and CFDs are financial instruments that allow us to do one thing. To place a bet on whether a market will go up or down in price – without owning the underlying asset. If we are correct, we stand a chance to make magnified profits and vice versa if wrong. Both CFDs and Spread Trading, allow us to buy or sell a huge variety of markets including: • Stocks • Currencies • Commodities • Crypto-currencies and • Indices. When you have chosen a market to trade, there are two types of CFD or Spread Trading positions you can take. You can buy (go long) a market at a lower price as you expect the price to go up where you’ll sell your position at a higher price for a profit. You can sell (go short) a market at a higher price as you expect the price to go down where you’ll buy your position at a lower price for a profit. EXPLAINED: CFDs for Dummies DEFINITION: A CFD is an unlisted over-the-counter financial derivative contract between two parties to exchange the price difference between the opening and closing price of the underlying asset. Let’s break that down into an easy-to-understand definition. EASIER DEFINITION: A CFD (Contract For Difference) is an: • Unlisted (You don’t trade through an exchange) • Over The Counter (Via a private dealer or market maker) • Financial derivative contract (Value from the underlying market) • Between two parties (The buyer and seller) to • Exchange the • Price difference (Of the opening and closing price) of the • Underlying asset (Instrument the CFD price is based on) EASIEST DEFINITION Essentially, you’ll enter into a CONTRACT at one price, close it at another price FOR a profit or a loss depending on the price DIFFERENCE (between your entry and exit). Moving onto Spread Trading. EXPLAINED: Spread Trading for Dummies DEFINITION: Spread Trading is a derivative method to place a trade with a chosen bet size per point on the movement of a market’s price. EASIER DEFINITION: Spread Trading is a: Derivative method (Exposed to an underlying asset) to Place a trade (Buy or sell) with a chosen Bet size per point on where you expect a Market price will Move (Up or down) In value EASIEST DEFINITION: Spread Betting allows you to place a BET size on where you expect a market to move in price. Each point the market moves against or for you, you’ll win or lose money based on their chosen TRADING bet size (a.k.a Risk per point or cent movement). The higher the bet size (value per point), the higher your risk and reward. The costs you WILL pay with Spread Trading and CFDs Both Spread Trading and CFDs are geared-based derivative financial instruments. As their values derive from an underlying asset, when you trade using Spread Trading or CFDs, you never actually own any of the assets. You’re just making a simple bet on whether you expect a market price to rise or fall in the future. If you decide to go with the broker or market maker who offers CFDs or Spread Trading, there are certain costs you’ll need to pay. Costs with Spread Trading With Spread Trading, you’ll only have one cost to pay – which are all included in – the spread. The spread is the price difference between the bid (buying price) and the offer (selling price). EXAMPLE: Let’s say you enter a trade and the bid and offer prices is 5,550c – 5,610c. The spread, in this case, is 60c (5,610c – 5,550c). This means your trade has to move 60c to cross the spread in order for you to be in the money-making territory. Also, if the trade goes against you, the spread will also add to your losses. Why the spread you ask? The spread is where the brokers (market makers’) make their money. Costs with CFDs Brokerage With CFDs, it can be different. Depending on who you choose to trade CFDs with, you may need to cover both the spread as well as the brokerage fees – when you trade. These brokerage fees can range from 0.2% – 0.60% for when you enter (leg in) and exit (leg out) a trade. NOTE: If the minimum brokerage per trade is R100, you’ll have to pay R100 to enter your trade. Daily Interest Finance Charge The other (negligible) cost, you’ll need to cover is the daily financing charges. If you buy (go long) a trade, you’ll have to pay this negligible charge (0.02% per day) to hold a trade overnight. However, if you sell (go short) a CFD trade, you’ll then receive this negligible amount (0.009%) to hold a short trade overnight. The costs you WON’T pay as a Spread Trader With spread trading (betting), you don’t own anything physical. When you take a spread bet, you’re simply making a financial bet on where you expect the price to move and nothing else. This means, there will be no costs to pay as you would with shares including: NO Daily Interest Finance charges NO Stamp Duty costs NO Capital Gains Tax NO Securities Transfer Tax NO Strate NO VAT NO Brokerage (all wrapped in the spread). The costs you WON’T pay as a CFD trader With CFDs, you’ll notice that there are similar costs with Spread Trading that you won’t have to pay including: NO Stamp Duty costs NO Securities Transfer Tax NO Settlement and clearing fees NO VAT NO Strate 24-Hour Dealings The great thing about Spread Betting or CFD trading is that, you can trade markets trade 24/5. I’m talking about currencies, commodities and indices. And with Crypto-currencies you can trade them 24 hours a day seven days a week. I have left out a very important difference between CFDs and Spread Trading… Gearing and how it works in real life…
JSE:J200Education
by Timonrosso
1
Trading 101 - What is a Derivative & why are they revolutionary?Derivatives trading! What I believe has been the absolute market revolution since shares. Derivatives might sound complicated and something you would hear from a professor or a know-it-all businessman – but they’re really not. I am no academic or even remotely one of the smartest guy’s in the world. And if I can grasp the idea and understanding of derivatives, I pretty much guarantee you will too. Also, if you want to take trading seriously and really make a living with it, you’ll need to understand derivatives trading sometime in your career. Let’s start at the very beginning. What is a derivative? – Collins English Dictionary – ‘A derivative is an investment that depends on the value of something else’ When it comes to trading, a derivative is a financial contract between two parties whose value is ‘derived’ from another (underlying) asset. Let’s break that down more simply: A derivative is a financial contract (CFDs, Spread Trading, Futures, Forwards, Options &Warrants) Between two parties (the buyer and seller) Whose value (the market’s price) Is derived (depends on or comes from) Another underlying asset (Share, index, commodity, currency, bond, interest-rate, crypto-currency etc…) You’ll find that the derivative’s market price mirrors that of the underlying asset’s price. Why trade using derivatives? The absolute beauty about trading derivatives is that they are a cheaper and a more profitable way to speculate on the future price movements of a market without buying the asset itself. You don’t get all the benefits with derivatives What’s probably important to note with derivatives, is this. When you buy a derivative’s contract, you’re not actually buying the physical asset. You’re simply making a bet on where you expect the price to go. EXAMPLE: When you buy actual shares of a company, means you’ll be able to attend AGMs (Annual General Meetings), Vote and claim dividends from a company. When you trade derivatives on the underlying share, means you’ll be exposed to the value of the shares and the price movements – and that’s it! As a trader, when you buy or sell a derivative, you’re not actually investing in the underlying asset but rather just making a bet (speculation) on where you believe the market’s price will head. This gives you the advantage and opportunity to: Buy low (go long) a derivative of the underlying asset and sell it at a higher price for a profit or Sell high (go short) a derivative of the underlying asset and buy it back at a lower price for a profit Remember when I said it was cheaper and more profitable? You can thank margin With derivatives, you’ll normally pay a fraction of the price of the total sum and still be exposed to the full value of the asset (share, index, currency etc…) The fraction of the price paid is called ‘margin’. EXAMPLE: To buy and own 10 Anglo shares at R390 per share will cost you R3,900 (R390 per share X 10 shares). To buy and be exposed to 10 Anglo shares using derivatives, and the margin of the contract is 10% per share, means you’ll only pay R390 (R390 per share X 10% margin per derivative X 10 shares). I’m sure you can see that with derivatives, you’ll be exposed to more and pay less which will gear up your potential profits or losses versus when trading shares. This is why we call derivatives, geared financial instruments. Enjoyed the article comment below and follow for more... Trade well, Live free Timon MATI Trader Also my socials are below thanks to Trading View.
JSE:J200Education
by Timonrosso
BACK TO THE FUTURE VS TRADINGI watched the Oscars recently and saw Michael J. Fox receive his humanitarian award. This brought me back to my childhood with the legendary Back to the Futures movie... Also this year we saw The Back to the Future stars Doc Brown (Christopher Lloyd) and Marty McFly (Michael J. Fox) reunited and shared the stage at the New York Comicon 2022. This is where they reminisced over their iconic roles in the beloved film trilogy. There were a bunch of mixed emotions but mostly the feeling of nostalgia and childhood memories… And so, I watched the trilogy and I found it was super interesting to watch a movie when at the time, they were trying to predict the future by making a number of predictions about 2015… They certainly got a few spot ons such as: • Smart watches • Hover boards • Virtual reality headsets (which we use Quest, PlayStation and even HTC) • Talking from TV to TV (Instead we use tablets and smart phones, but close enough) • Donald Trump like figure as president They also made a few wrong predictions like: • People wearing their pockets inside out • Dogs having drones walk them (but we do have drones though) • Mechanical car fuel attendants • Pizza hydrators But overall, there is a very big lesson we can learn from this… If scientists, businessmen, producers, directors and actors can’t accurately predict the future, nobody can. And trading the financial markets are similar to “Back to the Future” movies. It’s unpredictable and normally plays out differently to what we think… Thing about the future is… When you know what is going to happen and you act according, the future changes… Let’s say you know what’s going to happen at a certain point in the future. If you act according to what will happen in the future, then your action will change the future. So, if the future is so unpredictable, how can anyone ever make money from trading? Simple. You don’t need to know the future when you trade When you take a trade, you should never try to predict where the market will go. Instead, we should base the future predictions and decisions on one word. Probability. If the market is moving up, there is a higher chance it will continue to move up. (It’s going up for a reason). If the market consolidates in a sideways formation and then the price breaks down, there is a higher chance the price will continue to move down. We say, go with the trend rather than against it… Our job is not to predict every turn and bank a profit from every point move. Our job is to anticipate a change in the market, wait for confirmation and then act accordingly to follow the MORE likely scenario… You might not get it right 30% to 40% of the time, but you can get it right 50% - 70% of the time during certain market environments… That’s all I do when I do trades and analyses… I base probabilities on where a market is more likely to go at a certain time… If I’m wrong, I adjust – rather than deny… This was a short reminder of why you don’t need to predict the markets to make it as a trader. Did you enjoy this short piece? Let me know in the comments. It's a passion to help share the knowledge I've gained over the last 20 years as a trader. Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
2
Is Trading Like Playing Poker? Is trading a form of gambling? With hesitance, I would say yes. However, I would rather call trading a form of strategic gambling as both require elements of risk, reward, strategy and decision making. In the next two weeks or so, I’m planning to publish a new online FREE book called “Poker Vs Trading”. Who knows, by the end of it all you may take up professional poker playing as well as trading… Let’s start with the similarities. SIMILARITY #1: We can choose when to play (Strategy) Traders and poker players don’t play every hand that is dealt to them. With poker, when a hand is dealt, we can choose to either play the hand, based on how strong it is, or we can choose to fold and wait for the next hand… With trading, we wait for a trading setup based on the criteria of our strategy i.e. MATI Trader System. You’ll then have the exact criteria and money management rules to follow in order to take a trade or wait for the next trade. SIMILARITY #2: Amateur poker players and traders tend to go the ‘tilt’ (Emotional roller-coaster) Emotions are a main driver which leads to traders losing their cash in their account or poker players losing their chips very quickly. With poker, you get players who let their emotions take over where they start betting high with an irrational frame of mind. These emotions lead them to losing their chips very quickly. This is when they enter the state of what is called ‘going the tilt’. With trading, amateur traders also tend to act on impulse and play on gut, instinct, fear and greed after they’ve undergone a losing streak or a winning streak. This often leads them to: ~ Taking a series of losses. ~ Losing huge portions of their portfolio. ~ Holding onto losing trades longer than they should. ~ Entering a mindset of revenge trading. SIMILARITY #3: We know when to hold ‘em and when to fold ‘em (Cut losses quick) We have the choice to reduce our losses when it comes to betting a hand or taking a trade. With poker, if the players start upping the stakes and you believe you have a weaker hand in the round, you can choose to ‘fold’ and lose only the cost of playing the ‘ante’. With trading, if you’ve taken a trade and it turns against you, you have a stop loss which will get you out at the amount of money you were willing to risk of your portfolio… SIMILARITY #4: We know the rake (Costs involved) There are always costs associated with each trade we take or each hand we play, which eats into our winnings. With poker, it’s the portion of the pot that is taken by the house i.e. the blinds and the antes. With trading, it’s the fees charged by your broker or market maker, in order to take your trade. These fees can be either the tax, spread and/or the brokerage. SIMILARITY #5: Aggressive trading and betting before the flop (High volatility) There will always be a time of strong market moves and high betting. With poker, you get times where players like to bet aggressively and blindly before the flop is revealed. It’s these times that lead to the amateur poker players losing their chips very quickly. With trading, you get economic data i.e. Non-Farm-Payrolls, black swan events and Interest Rate decisions when big investors and traders like to drive the market up or down before the news even comes out. NOTE: I ignore both forms of hype as it is can lead to a catastrophic situation. SIMILARITY #6: We bet and trade based on the unknown Every bet and trade we take and play is based on incomplete information of the future. With poker, we are dealt hands then bet on decisions based on not knowing what cards our opponents have and/or what is shown on the river. We then have the options to call, bet, raise or fold during the process.With trading, we take trades based on probability predictions without knowing where the price will end up at. This is due to new information which comes into the market including (demand, supply, news, economic indicators, micro and macro aspects). SIMILARITY #7: We lose A LOT! (Losses are inevitable) Taking small losses are part of the game with both poker and trading. With poker, it is important to wait patiently until you have a hand with a high probability of success. Some of the best poker players in the world, fold 90% of the starting hands, they receive. Some professional poker players can go through weeks and months without a win. With trading, we can lose over 40% to 50% of the time. In general, I expect around two losing quarters a year. I know that when there are better market conditions, it will make up for the small losses. SIMILARITY #8: You must learn to earn (Education is vital) You need to understand and gain as much knowledge as you can about poker and trading before you commit any money. With poker, you need to understand: • The rules of the game. • The risk per move. • The amount of money you should play per hand. Once you know these points, you’ll be able to develop some kind of game plan with each hand you play. With trading, you need to understand: • The MARKET (What, why, where are how?)NB* • The METHOD (What system to follow before taking a trade). • The MONEY (Risk management rules to follow with each trade) • The MIND (The frame of mind you must develop to succeed) SIMILARITY #9: Perseverance is the key ingredient to success You need to take the time and have the determination to become a successful trader and poker player. With poker, you’ll need to keep at it and apply strict money management rules with each hand played. With trading, you’ll need to know your trading personality, know which trading method best works you and understand your risk profile… I’ll leave you with a quote from Vince Lombardi (American football player, coach, and executive): “Practice does not make perfect. Only perfect practice makes perfect” Do you think trading is like poker? If you enjoyed this daily lesson follow fore more! Trade well, live free. Timon MATI Trader
Editors' picks
JSE:J200Education
by Timonrosso
24
Q. How do you work out CFD Interest Swaps with an example?Q. How do you work out CFD Interest Swaps with an example? Answer: CFDs is an instrument where you pay a small amount of money to be exposed to the full value of the share. With CFDs, there are daily charges when you buy and daily income interest that you receive when you sell (go short). The charge is known as a ‘daily swap’ or ‘daily interest charge’. You can ask your broker what the annual interest swap rate is or you’ll most likely be able to find it on your platform… With my broker for example, the long swap (for when you buy) is -9.47% per year. And the short swap (for when you sell) is 2.71%. With your Shoprite trade, because you’re buying CFDs (which is a geared instrument), you’re essentially borrowing the money from the bank. This means, you have to pay interest on the borrowed funds (in order to be exposed to the full value). Those are the ‘swaps’ we’re talking about. Let’s say the Shoprite share is trading at R223.19 and the margin (initial deposit) to buy 1 CFD is 9.7% (R21.70). This means, when you buy 1 CFD for R21.70, you’ll be exposed to the full R223.19 worth of the share. If you buy 100 CFDs and pay R2,170 (100 CFDs X R21.70) you’ll be exposed to the full R22,319 worth of shares (100 shares X 223.19). And if you sold the 100 CFDs at R236.00, you would have been exposed to R23,600. On that R22,319 exposure, you’ll pay 9.47% (R2,113.60) interest (swap) per year. But luckily as traders, you don’t need to worry about paying the full amount, as we like to hold only for a short period of time. This means, each day you hold the CFD with exposure of R22,319 – you’ll only pay R5.49. (Exposure of your trade X 9.47%) ÷ 365 days. If the exposure never changed and you held onto your trade at the same share price you would pay R54.90 (after 10 days). However, we know that share prices move up and down each day. The higher the market goes up, the higher your exposure where you’ll pay slightly more. If the market price drops, you will pay slightly less. However, as traders we don’t tend to hold for more than a couple of days or weeks to curb the daily interest charges. If you have any other questions please ask in the comments :) Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
When you should feel THRILL as a traderThrill is a dangerous emotion to have as a trader. Especially, when you bank a winning trade, when you lock in profits during a favourable environment and when you count your profits at the end of the week. You are only as good as your last trade. Which means, you need to forget about the past and focus on the future. However, this doesn't mean you can't enjoy the journey during the trading day. I've been in the markets since 2003 and yes I do get thrill and enjoyment but NOT when I bank a winning trade. Here are 6 elements I get thrill from... 1. When analysing the markets and seeing what opportunities lie up. 2. When optimising strategies and seeing how to improve by finding new markets, removing old markets that don't work and possibly tweaking the system according to the current market environment. 3. Searching for trades always feels like somewhat a treasure hunt. When X marks the spot, we know to take action. 4. Monitoring results. This isn't monitoring daily or weekly results but rather looking at your journal over an extended period of time. Look at your drawdowns, look at where you are in terms of having your portfolio at ATH and seeing what market environment your system is in. 5 Adapting new markets and instruments...There are always new high liquid and low volatile markets that will suit your system. It's our jobs to look, analyse and adapt into the new. 6. Reading new developments. Are there better trading platforms, new indicators to help with your current system and maybe even new calculations to manage your drawdowns better? What about the instruments. I've gone from trading shares, warrants, ETFs, Futures, Spread Trading to CFDs. You never know when the next instrument will come... I hope this helps give some enlightenment on when you should feel thrill as a trader. Cut the ego, cut the instant gratification of today's performance and focus on the marathon. Follow for more daily trading lessons :) Trade well, live free... Timon
JSE:J200Education
by Timonrosso
REVEALED: 14 Ways to Spot a Trading ScamIf you’re new to trading, listen up. There are serpent companies and individuals out there, with only one goal. To make profits and money for themselves and NO one else. They do this by exploiting the newbie trader’s optimism, greed and fear by tricking them into what I call “Easy-Money-Traps”. As a savvy trader, you need to know how to spot and avoid these scams, before you fall victim to one of them. I’m going to kick you off with 15 of the most common trading scams you may find nowadays. SCAM #1: Flaunting money and posing in flashy cars WARNING: When you see an advert with a fake ‘guru’ posing in a Lamborghini holding stacks of cash, this manipulates people into thinking they’re rich. REALITY: Most times the cash notes are fake and worthless, which is prop money that is usually used in movies. It’s also been proven that 90% of these companies or individuals usually rent the car, borrow it from their rich friend or they take selfies in front of a stranger’s car. WHAT TO DO: Don’t believe everything you see online. Scam #2: They chase after your contact number WARNING: When a fake “guru” begs for your contact number and persuades you to buy a trading course or ticket to their seminar. The more aggressive they are trying to get your money, means that their primary income is mostly likely from what they’re trying to sell rather than the money they make when trading. REALITY: A true trader with a product or service to offer, will not pester you, sound desperate and bully you with tons of marketing and promises. Their main goals are to offer you value, help and develop a relationship over time. WHAT TO DO: Never share your contact number just to “Learn More”, “Book A Free Consultation” or “Check Out” information on what the product is about. You will have marketers call you on a weekly basis trying to suck you into buying their products. Scam #3: There is NO background information WARNING: When a scam artist has little to no background or legal information. Whether it’s a trader, broker, money manager or an educator – Never work with anyone who doesn’t have the following: • A website • A proven track record (at least 5 years) • Valuable content • An “About Us” page (To learn more about them) • Contact information • Customer reviews and testimonials (Ask people!) • A company registration number • Tax registration details• Financial regulation • A website that isn’t secured (When it starts with HTTP and not HTTPS) REALITY: Most times these non-regulated individuals will try their luck to get you to deposit money into their account and then will disappear. WHAT TO DO: Always do a full check-up on the person or company through Google, Facebook, websites and reviews and take notes with the bullet points above to see if the person or company is licensed, legit and regulated by independent organisations. Scam #4: You can’t withdraw your money WARNING: Your broker or money maker, doesn’t allow you or limits your ability to withdraw funds or profits. Whenever there are delays to withdraw your money, chances are you’re dealing with illegitimate trading companies. It should never take more than a few days for your money to be returned… WHAT TO DO: Don’t invest a single cent more into the company, until you have received your funds. Use your rights and speak to a lawyer about your options, in order to find a way to get your money back. NOTE: This does not apply to fixed-term securities such as, hedge funds, bonds, retirement funds with periodic redemption rights and other constraints. Scam #5: Failure to prove their BOGUS trading results WARNING: When you see someone bragging about their winning trades or money they made for the day and how they can help you – but not willing to prove their results. Watch out with Facebook and Instagram posts on traders posting fake trading results on Telegram, MyFxBook, WhatsApp and other groups. REALITY: If they are not willing to prove their results, chances are they have been Photoshopped and are only trading with a demo account. Also you’ll see them posting their gains and winnings only and never their losses. This is a big red-flag for me which screams out – SCAM! WHAT TO DO: Avoid any person who is not willing to share their broker statements or trading results which have been verified by a reputable and licensed firm. Scam #6: When they urge you to buy immediately WARNING: When someone tries one of their high-pressure sales techniques to get you to invest or buy a product or service on the spot. If ever you get one of those sleazy salesperson’s try to intimidate you, make you feel stupid for not making a decision – warnings bells should ring. Many con artists, will pressure you with limited time offers or tell you to buy on the phone or you’ll lose the deal. REALITY: A legit and ethical company will never create such urgency. They will in fact, want you to do your own research, consider your options and take your time to see if their product or service offered will benefit you or not. They will NEVER force you to buy anything on the spot. WHAT TO DO: Do your own research before you make a decision, and make sure you leave those high-pressure salesmen charlatans. Scam #7: You hear bad investment advice or too-good-to-be-true deals WARNING: When you hear bogus advice or too-good-to-be-true statements from an individual or company that is contrary to anything you’ve ever been told. As soon as you hear any of these messages, they are most likely scams: • “You can put your life savings into our brokerage firm.” • “Follow our +80% win rate trading system.” • “Do you want GUARANTEED returns?” • “Take out a loan and invest with us.” • “You’ll bank over 10% a month.” • “We don’t use stop losses.” • “100% accurate signals.” • “Get rich quickly.” • “Easy money.” WHAT TO DO: Don’t run away just yet. Do the full check up on the company and with their track record and then decide for yourself. Most times it’s just the marketing agency, rather than the actual trader, who’s trying to hype up the copy through their copywriting, Click Funnels, Value Ladders etc… Scam #8: They ask for your personal information WARNING: When someone asks you for unnecessary personal information to make a transaction. There are salesperson’s out there that will ask you for a bunch of unnecessary personal information including: • Bank card details • Facebook account details • Phone number • Income per month • Trading account password • Home address REALITY: If you’re looking to invest in a trading product or service or open an account with an institution, then no trusted and legit company will ever ask for the above details. WHAT TO DO: Never give any details to an individual or company that you don’t trust. You can also ask for their Terms & Conditions and Privacy Policy statements, to read each detail of their security and privacy matters. Scam #9: You get a call from a stranger WARNING: You may get an unexpected and unsolicited local or international phone call “cold call”, email, letter or personal visit from a stranger offering you a deal. REALITY: These are most times marketers or customer services trying to sell you something, in order to make a sale. WHAT TO DO: Kindly tell them to remove your number off their data-base and that you will do your own research and will call them back if you are interested in what they have to offer. Scam #9: Watch out for bad wording WARNING: When the company or individual is packed with bad wording. Bad wording includes: • Misspellings • Incorrect dates (Look at the footer of a website where it says ©) • Badly written content • Unprofessional content i.e. emoticons, !!!, ??? and swearing • Typos everywhere • URL website has spelling mistakes e.g. (Foerxtrading.com) WHAT TO DO: This should be your judgement… NOTE: I personally am sceptical whenever I see any of the above, even though I may make a typo or grammar mistake with my own content every now and then. Scam #10: The never-ending Facebook scams WARNING: When you see posts that offer you free signals, tools, get rich quick messages or advertising ploys that direct you to deposit money. You’ll see countless scams on a daily basis in Facebook groups and pages that will direct you away from them by sending messages such as: • “Inbox me” • “Ask how” • “Join our Telegram” • “100% accurate signals” • “Reply add” • “Do you know you can make XXX amount of money” • “Click this link” • “Ask for more info” • “Daily free signals” • “Daily 200 – 500 pips” • “Guaranteed results” • “No scam” WHAT TO DO: Do your thorough research and follow the above #3 step before making your decision. EXTRA TRADING SCAMS TO WATCH OUT FOR: #11: Trading software, robot or EA that guarantees a +70% win rate system. #12: Fake Facebook profile name, picture with dodgy friends. #13: Any product or service that promises “Zero-Risk”. #14: Any notion that promises you riches quickly and tells you to trust them or take their word for it. If you enjoyed this trading lesson of the day let me know in the comments and follow me for more daily tips. Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
1 Rule to STOP a portfolio CRASH I guess my number one rule to prevent a portfolio going bust is my 20% Rule… The rule is simple. If my portfolio ever drops below 20%, due to a losing streak, I halt trading… Notice the word halt instead of STOP. When a portfolio is down 20%, this is where you’ll halt your trading but you’ll KEEP following your trading strategy. So, you’ll simply demo trade your system and continue journaling your entries and exits… And only once the equity curve (your portfolio) goes back to all-time highs (on paper of course) then you can resume trading live… Do you have a trading question? Ask in the comments and I'll fully answer it in one of these posts on TradingView... Trade well, live free Timon MATI Trader
JSE:J200Education
by Timonrosso