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J200 trade ideas

Future of Customer Services with Trading the marketsThe Future of Customer Services with Trading The new era of trading all depends on two things… The experience for trading and the superior customer service, that comes along with it… Consumers depend on it and companies reap the rewards by adapting to excellent customer service to prevent them from failing. In this article, we’ll focus on 7 trends that will shape customer service in the future. This applies for not only trading but with most businesses. Let’s get to them… Trend #1: Social Media Live Chat Human assistants will help answer their customer questions, with a live online chat software or by downloading an application. Think of Skype, Zoom, Facebook or via their personal website. As more people adapt to online communication, the more companies will utilise these opportunities. After all, it’s all about meeting the customers where they are most likely to be. WITH TRADING – There are already live online communication options where human operators can help with trading platform, charting, business features and offers. Trend #2: Virtual Chatbot A virtual chatbot is a pre-programmed response with an artificial intelligence software. You most likely know them as virtual assistants. This way is a cheaper, faster and more consistent approach to help answer customers questions without the need of a human operator. With virtual chatbots there’ll be no restricted or waiting times. Also with machine learning, means the bots will get better, they’ll be more researched and will provide better answers over time. WITH TRADING – You’ll be able to ask for financial markets information, prices, charts, how to guides and trading platform queries. Trend #3: RIP Phone Calls & Faxes Companies will strive to cut costs and cut out old fashion ways. This includes mobile-data related phone calls taking a back seat as well fax machines. WITH TRADING – You’ll notice that with most global Forex and trading companies, they have taken out the options of phoning and faxing them. This shouldn’t worry you as they are adapting to the new ways of trading. Trend #4: 24-Hour Support With Apps Instead of calling or messaging companies via mobile communication, companies are adapting to more text and voice messaging apps. I’m talking about WhatsApp and Facetime. It’s cheaper, faster and more accessible from anywhere in the world. This will bring about 24 hour support, for their customers. WITH TRADING – I’m sure you’ll be able to send a quick message to your broker via WhatsApp or another app to place or close a trade or facilitate other transactions. Trend #5: Video Email Email has been the most widely used tool for customer service. In the future, we’ll be taken to the next level where email will allow for video emails. This way we’ll have a higher level of engagement and with a more personal and natural touch. WITH TRADING – You’ll be able to ask your trading related query with an illustration rather than explaining via text. And when you receive your answer, it will be shown with an easy to understand and visualise demo explanation. Trend #6: Remote Working & Flexible Times COVID-19 was the catalyst that helped push the remote working environment for employees. As customer service and contact agents are confined more to their homes, they will be working with more flexible times. WITH TRADING – Instead of an employee having to work in an office setting, they will be more flexible with their times. Eventually, we’ll see questions answered by them at all hours of the day. Trend #7: Multi-language Support Customers are connecting with more companies, located all over the world. It is critical to offer customer service support in multiple languages. The more languages are offered, the bigger the reach for potential customers. WITH TRADING – Forex and crypto-currency is a global phenomenon, taking over the world. It is inevitable for these kinds of companies to offer their services in different languages. Final words With us being able to expose, report and send our reviews about our experiences, means one thing… Businesses will continue to strive to serve and improve their customer support and services. And that’s why, it is and should always be a priority for companies to improve. Is customer services improving with trading? Let me know in the comments... Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
What a Leopard can teach you about Successful trading I’m from South Africa. I’ve observed the movements and ways of life of wildlife at different game reserves, resorts and zoos. Penwarm, Kruger National Park, Londolozi and Sabi Sand Game Reserve to name a few. And I’ve seen how leopards work when they catch their prey. This methodology is very similar to how we as trader should act in the financial markets. They lurk behind the bushes in a crouch position. They can wait all day for just the right moment to pounce on its prey and bring the hunt back to its family. Even though they know they can outrun their prey, they still wait for the perfect moment to pounce. Either they’ll wait for the animal in a vulnerable position, injured or the perfect time where they will have a higher probability of catching it.. Patience my friend. That’s the most important element to grow your portfolio. You don’t make money taking a trade. You make profits while holding, waiting and letting the market play out. Here are five reasons why Patience is key for your trading success. #1: Stops you from making impulsive decisions Once you’re in your trade, holding and leaving it alone can help you avoid making impulsive decisions that are based on emotions rather than careful analysis. #2: Helps you spot high probability trades You need to have the patience to wait for the right opportunities to arise, rather than jumping into a trade just because you're feeling anxious. #3: Hold onto winners Trading is NOT about banking small profits. Because you do that and your losses will outweigh your winners. Your Risk to Reward should ALWAYS be above 1.5 at the minimum. This way you’ll hold onto your positions for longer periods of time, which can increase the potential for profits. #4: Takes away fixation When you enter into a trade, you may feel the instinct to watch it and observe ALL day. This will spark up your cortisol levels and will distract you from your higher priorities you have in a day. Once you’ve taken the trade, leave it alone to do its thing. You have your winning trading strategy in place. #5: Wait for the prey Like a leopard, successful traders need to be patient and wait for the right opportunities to arise, rather than acting impulsively or making rash decisions. This is why having a clear and proven plan can also teach us the importance of running it which is essential for success in the financial markets… If you enjoyed this article follow for more Daily tips. I enjoy sharing information I've gained since 2003. Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
1
9 Top Trading Movies of All time!If one of your goals is to learn how to trade well and profitably during the festive season... Then you’ve definitely seen the opportunity within the calm. Why not enjoy a trading movie marathon within the next couple of weeks? In this TradingView article I’m going to recommend 9 of the top trading movies of all time, which you can enjoy… Movie #1: Wolf of Wall Street In this thrilling and erotic movie you’ll learn how Jordan Belfort went from being an entry-job broker into a man who made a fortune of over $200 million dollars. He achieved this through a widespread of corruption on Wall Street and in the corporate banking world. Movie #2: Rogue Trader Find out how Nick Leeson thrived from the Asian market to make risky trades and break the oldest bank in England. Movie #3: Margin call Another movie which shows the falling of a Lehman Brothers-like bank during the financial crash and how they do everything they can to avoid becoming bankrupt… The movie is filled with capitalism, greed and financial fraud. Movie #4: Boiler Room In this action packed movie you’ll see how 20 millionaires were made overnight through illegal, greed & corruption stock market practices. Movie #5: Wall Street 1987 In this movie you’ll see a money and greed driven stock broker who will do anything to get rich, including practising insider trading with the help of his hero (Gordan Gekko). Movie #6: The Big Short Another movie with smart but arrogant pricks who were able to make millions of dollars by betting against the entire housing market… Movie #7: Arbitrage In this movie you’ll see one crisis after another as a troubled hedge fund giant is desperate to sell his trading empire who eventually turns to an unlikely person for help. Movie #8: Inside Job In this movie you’ll see how unaccounted and reckless actions of Wall Street lead to the global financial crash of 2008. Movie #9: Wallstreet 2: Money Never Sleeps In this movie you’ll see how unaccounted and reckless actions of Wall Street lead to the global financial crash of 2008. Which one is your favourite and can you think of anymore you'd add to the list? Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
25 METRICS and 10 BENEFITS of a Trading JournalTrading Journals are essential. It's your game plan to what you could potentially see in the future as a trader. In the above image are the 25 metrics every Trading Journal should have... And below are 10 benefits for having a trading journal... 1. KEEP TRACK A trading journal helps to keep track of your trades, including the reasons for making the trade, the results of the trade, and any lessons learned. 2. CUT OUR BAD HABITS It can help to identify and eliminate bad habits and biases in your trading. 3. POWERS DISCIPLINE A trading journal can help to improve your discipline, which is essential for long-term success in trading. 4. CONSISTENCY It can help you to develop a consistent and effective trading strategy. 5. FEEDBACK FOR REFINEMENT A trading journal can provide valuable feedback that can be used to refine and improve your trading. 6. FOCUS ATTAINED It can help you to stay focused and avoid making impulsive decisions. 7. TRACKS SUCCESS A trading journal can provide a valuable record of your progress as a trader, which can be useful for reviewing and analyzing your performance. 8. CONFIDENCE BOOSTER It can help to increase your confidence and reduce stress by providing a clear and objective record of your trading activities. 9. STAY ORGANISED A trading journal can help you to stay organized and avoid missing important details or opportunities. 10. LEARN AND IDENTIFY NEW POSSIBILITIES It can be a valuable tool for identifying and learning from your mistakes, which is essential for long-term success in trading. Why else do you think a trading journal is essential? Let me know and follow for more daily trading tips from information I've gathered over the last 20 years as a financial trader. Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
5 Questions to Ask before you take your next TradeThis is a reference guide with five questions you need to ask, the next time a trade lines up and you need to take a trade. Ask and answer these questions out loudly to help you execute your trade easily the next time. Question 1: Do I have a strategy or plan? First, you need make sure you have a proven and profitable strategy. Or else how else will you take a trade? Whether you’re following: • Your own proven trading strategy • My 20 year highly successful MATI Trader System • The 9 year popular Red Hot Storm Trader service You first need to establish you have a strategy and system to follow each time. Once you have one of the above, move onto the next question. Question 2: Has a trade lined up? Next, you’ll need to know if a trade has lined up according to a proven and tested trading strategy. Whether your trading system is a swing, indicator, mean reversion, Gartley, moving average, volume or a price action system like the MATI Trader System. you'll need to have the green light to know when a trade has lined up and whether it’s ready for the go. Question 3: Do I know where to place my trading levels? Once a trade has lined up, you'll need to know or calculate exactly where to enter, place your entry, stop loss (for risk) and take profit (for reward) levels. These three levels are essential for entering your trade. This way you'll have a systematic approach with every trading position you take. Question 4: Do I know how much to put into my trade? Next is position sizing. Trading is one big risk to reward game. You'll need to choose an exact percentage of your portfolio that you're willing to risk to gain with each trade. With high probability trades, I never risk more than 2% of my portfolio. With medium probability trades, I drop that risk to 1.5% of my portfolio per trade. At this point, you also need to know how many CFDs you’ll need to buy/sell to make sure your risk is low. Question 5: Am I ready to press the button? Finally, you'll need to do final checks. This is where you’ll confirm with the strategy, check all your trading price levels and position sizes to confirm the that you’re ready to push the button to get you into your trade. Once all is ready, you just need to do just one more thing. Push that BUY or SELL button. Those are the only questions you'll ever need to enter a trade. Unless I'm wrong, let me know what other question is missing from the list. Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
1
3 Trading Lessons from the Wolf Of WallstreetIn short, we learn how Jordan Belfort made a fortune selling Penny Stocks and top blue-chip stocks. He was also able to turn from an entry-job broker into a man who made over $200 million dollars through widespread corruption on Wall Street and in the corporate banking world. Spoiler Alert – It ended with Jordan showing his path to redemption through motivational speaking and teaching people how to sell through his programme called “The Straight Line System”. And now Jordan charges over $100,000, to give advice to top companies and high net worth individuals. While I was watching this legend of a movie, it reminded me of a live event of his I attended. It was on 2 March 2014, where he taught us marketing, entrepreneurship and how to attract & sell products to an audience from A to B. As he was explaining his approach, it caught my attention and taught me a few timeless principles with trading on the financial markets. Here are the three top trading lessons I learnt from the ‘Wolf Of Wall Street’. Lesson #1: MUST Jordan Belfort says… “Winners use words that say “Must” and “Will”. His three common tenets to his ‘Straight Line system’ are: 1. We MUST control the sale and stay within the boundaries of the ‘Straight Line System’. 2. We MUST establish an instant rapport. 3. We MUST use that rapport to gather intelligence. It’s all about commitment… And that’s the big mistake I see most traders make. They have the strategy, the plan and the steps to enter their trades and yet, when all is lined up, they procrastinate. They use words like “should”, “could” and “would”. “I SHOULD get into the trade, but I think the news is going to come out with worse than expected results.” “I COULD get into the trade, but it’s my birthday and I don’t want to lose money today.” “I WOULD get into the trade, but I feel it’s not going to work out.” They continue to hesitate and make excuses to delay the most important actions at the right time. If you want to make it in this game and become a winning trader, you got to follow your strategy and do what needs to be done when you’re supposed to. If you don’t COMMIT, you’ll never show your full potential. Throw out the word “should” and day the following: “I MUST do what needs to be done and I WILL do it as soon as I need to.” Lesson #2: Figure of authority When Jordan Belfort started the company Stratton Oakmont, he became successful in a short amount of time. It wasn’t just the name. It wasn’t just the skills. And it wasn’t just his team… No, this is because he used his winning formula and executed his plan with pure confidence… When I attended Jordan’s event, he pretty much summed up three points that helped him follow through with his ideas and strategies every time. 1. Be enthusiastic as hell 2. Sharp as a tack 3. Be an expert Trading is all about execution with confidence. Whether you’re following your own strategy – You run the show. You have to show your ‘enthusiasm’ with passion and commitment. You have to be ‘sharp as a tack’ as you are the one who needs to be unbiased and find the trades that line up accordingly. You have to show ‘figure of authority’ because you’re the boss and the one who makes the calls… Lesson #3: The first four seconds Jordan says, you get a mere four seconds to influence your prospects decision about you and your product or service. If you possess the qualities where you’re ‘sharp’, ‘enthusiastic’ and an ‘expert’ – next is the execution. You only have four seconds to execute your plan. Any longer and the excuses and procrastination will start to creep up again… When I see one of my five patterns line up and establish on a financial market, I start setting up the trade IMMEDIATELY. I don’t look at the news, I don’t ask for a second opinion and I certainly don’t find reasons to not take the trade. I give it four seconds, and go straight to the risk tool to calculate my stop loss and take profit levels. AND I EXECUTE! If you enjoyed this article and would like to see more follow and LIKE the article, so I know I'm in the right direction to what you wish to learn. Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
1
5 Laws of Trading SuccessTo trade successfully in the financial markets, it's important to consider five key factors: The markets you choose to trade in. The method you use to enter and exit trades The money you use for risk management The mind-set you bring to the process. The miscellaneous rules and tools you use to increase your win rate and manage your drawdowns. MARKETS First, when it comes to the markets you choose to trade in, it's important to select ones that align with your knowledge, skills, and interests. This will help you make informed decisions and trade with confidence. METHODS Second, when it comes to methods, it's important to have a well-defined strategy in place for when to enter and exit trades. This can include using technical analysis to identify trends and patterns, or fundamental analysis to assess the underlying health of a company or economy. MONEY Third, when it comes to money, it's important to have a risk management strategy in place to protect your capital. This can include setting stop-loss orders to limit potential losses, or using position sizing to manage the amount of risk you take on per trade. MIND Finally, when it comes to the mind-set you bring to trading, it's important to maintain a sense of confidence and discipline. This can help you stay focused and make sound decisions, even when faced with volatility or uncertainty in the markets. Overall, trading successfully in the financial markets requires a combination of selecting the right markets, using effective methods, managing money wisely, and maintaining the right mind-set. MISCELLANEOUS These are the extra tips, rules and tools you use to improve your trading strategy’s win rate, lower the drawdown and find way to optimise your system’s success. From having a time stop loss, ideas to adjust your stop loss, when NOT to trade, when trades are low, medium and high probability. This is what gives you the extra edge in the markets… If there another Law I’m missing? These are just the 5 I’ve gathered over the last 20 years as a financial trader and strategist. Trade well, live free. Timon Rossolimos MATI Trader
JSE:J200Education
by Timonrosso
4 Sacrifices every trader makesFirst of all, trading is not a short-term proposition to get rich. Anyone who says otherwise, needs to spend some time thinking about doing before speaking inside a jail cell. No… Trading is a lifestyle that you’ll need to adapt and integrate into yours and your family’s financial future. Whenever you start something new, especially for a financial gain, you’ll need to make some form of sacrifices. In today’s article we’ll discuss the four sacrifices every successful trader will make. SACRIFICE #1: Time The money is not going to just fall into your lap. You’re going to need to put in the time to work through the process of successful trading. As a new trader you’ll need to read as many books, websites and forums on how to trade. This will prepare you for what trading is all about. Then you’ll need to take time to learn which: • Markets you wish to trade • Method you’ll use to get in and out of your trade. • Money you’ll risk to grow your portfolio • Mind you’ll need to adapt to avoid any unnecessary emotions from taking over and interfering with the process. Then finally you’ll need the time to back-test, forward-test and actually trade on a daily or a weekly basis. This time can range from 5 minutes a week, which is what I follow with the MATI Trader System, to 5 hours a day if you’re more of an aggressive intraday based trader. No matter what career you pursue, you’ll need to sacrifice the necessary time to learn the ins and outs of it. SACRIFICE #2: Money Another inevitable sacrifice you’ll need to make is to take money out of your savings to trade. I say savings because you should never risk any money you can’t afford to risk or any money that you use on a monthly basis to finance your life. Once a month as you get paid, deposit just 5% of your savings into your trading account. This way you’ll be able to grow your portfolio at a faster and a more sustainable. The other side of money you’ll risk is of course, with every trade you take. Most successful traders out there risk around 1%, 2% to 3% per trade, in order to make a 2%, 4% or even a 6% gain on your portfolio. SACRIFICE #3: Thrill You’ll need to sacrifice the THRILL of trading and exchange it for FOCUS. Trading should be seen as a business rather than playing the lottery once a week. As much as I have loved trading the MATI Trader System for the last 18 years, I’ve also taken it very seriously. Before you commit any money into the markets, you’ll need to have a solid watch list, trading system and money management rules to follow methodically. This way you’ll have a mechanical approach to trading without the thrill, when you bank a profit or without the devastation, anger and disappointment. Remember that a winning portfolio is not about taking a few trades but the 100s of trades over time. Make sure you have the focus for when you trade in the week and sacrifice the thrill for on the weekends when the markets are closed. SACRIFICE #4: Space The final sacrifice you’ll need to make is to make space. Make sure your trading desk is clear of any distracting books, devices and objects that have no aid to your trading. A cleaner and clearer trading desk will prevent a number of distractions for when you trade which could result in unnecessary stress, anxiety and worry. Also you’ll most likely need to make space for just one more monitor. By having two monitors, you can use one for your trading platform to buy, sell and modify trades. The other monitor will then be used for your charting platform to analyse, assess and seek more trading opportunities. Are they actually sacrifices? Coming to the end of the article, I’ve just realised something. These four ‘sacrifices’ you’ll make as a professional trader – Are they sacrifices or are they just opportunities you can take for trading to be smooth sailing?
JSE:J200Education
by Timonrosso
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