Secrets-FX-Product 2979 PDF Link

7/27/2019 Secrets-FX-Product 2979 PDF Link

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CFDs Spread Betting Shares FX

Day Trade Forex:Professional Secrets


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Accendo Markets Ltd is Authorised and Regulated by the Financial Services Authority (FSA) No. 475285. We offer CFD, SpreadBetand FX Trading Services Accendo Markets Ltd, Registered in England and Wales No. 6417051. Registered Office: 64 London Wall,London, EC2M 5TP, +44 (0) 20 3051 7461

020 3051 7461 | info accendomarkets.com

Leveraged products involve a high level of risk and you can lose more than your original investment. They are not suitable for everyone so please ensureyou understand the risks involved and if necessary please obtain investment advice from a financial adviser before investing.This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

EducationTrading Forex: Professional Secrets

Trading with a PersonalTouch

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About This Report

The basics of financial trading can take just a few hours to master, but it is time well spent - potentially serving youfor a lifetime. Thats not to say that the work stops there. There is more to learn every day. Private individuals canmake an excellent living trading the financial markets, and with time and patience most novices can become self-sufficient. Some find it intuitive - born traders. Others take longer to find their niche and forte. Whatever yourexperience, there is a mountain of excellent material from which to draw upon to help you develop and perfectyour trading strategy and attain your goals.

This report is designed to provide you with a broad introduction to some of the methods you could employ toidentify trading opportunities, and to develop your trading strategy. There is no right or wrong way to trade thefinancial markets. It is differences in opinion which make the market so dynamic. This report, we hope, will giveyou a foundation from which to decide on what you want to trade and how you want to trade it.

Choosing your trading strategy

Strategic planning is important preparation for every successful trader. You need to know what youre aiming toachieve. Formulating a strategy is key to help you know what you want to achieve, help you stick to your plan andallow you to evaluate your performance. Perseverance and discipline are also required.

There is an array of trading strategies that work. Testament to this is the range of successful hedge funds involvedin the financial markets, all trading different assets and using different strategies. There is no right or wrong way totrade, different strategies work for different traders - some find themselves particularly talented at anticipatingmarket moves using certain methods.

Technical analysis

Technical analysis, otherwise known as charting, is widely used by professional and amateur traders alike. Itinvolves forecasting the movement of asset prices by studying past data, which typically includes price andvolume plotted on the graph/chart. Technical analysis is essentially concerned with the anticipation of crowdbehaviour (herd mentality) and market sentiment. This contrasts with fundamental analysis, which is concernedwith an assets fair value.

The basic principle of technical analysis is that an assets price reflects all relevant available information.Therefore, the assets trading pattern, rather than external drivers such as economic, fundamental and newsevents, should tell the trader all they need to know. Price action tends to repeat, because crowds tend towardpredictable, patterned behaviourhence the technical analysts focus on conditions and trends.

Back-testing

Back-testing is the evaluation of a trading strategys performance, assuming it had been employed historically.Results do not tell you whether the system will work in the future (future market conditions will always bedifferent), but give an idea of the success rate the strategy would have had. The longer the time-frame used, thebetter idea you can get. It also allows analysis without having to incur the costs of the losses likely incurred alongthe way. While it can work well for one thing (a particular share, FX pair, commodity or index), it does not mean itwill work for all. Often, different systems are needed and used for each.

While back-testing used to be a very laborious and expensive process, this is no longer the case. Advances intechnology mean the tool is now accessible on many trading software programmes and charting packages usedby retail investors. Back tests can range from being extremely simple, based on a single criteria, to extremelyelaborate tests involving multiple conditions.

Our research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independentresearch, and is therefore a marketing communication. Accendo Markets research has not been prepared in accordance with legal requirements designed topromote its independence and may not comply with FSA guidelines to prevent conflicts of interest and is not subject to any prohibition on dealing ahead ofthe dissemination of research. As such, this research does not constitute a personal recommendation or offer to enter into a transaction or an investment,and is produced and distributed for information purposes only. Accendo Markets considers information contained within the research to be valid whenpublished, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up,and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.Prepared by Michael van Dulken, Analyst


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If, for example, you notice that the last few times Barclays share price has moved up through its 50-day movingaverage that the shares continued to move higher, you might want to back-test a Buy strategy. You could set up totest over the last five years, evaluating the performance of a strategy buying each time the shares moved abovethe 50-day moving average, and closing when the shares fall back below. The strategy could be expanded to goshort on every move below, and closed every time the shares moved back above. Should you see that thestrategy would have returned an interesting return over the 5 years, you might decide it worth following the signal.

One thing to consider through is the maximum loss the strategy would have incurred during the time-frame. Fiveyears is a long time. There may have been several bad signals and a run of losing trades. Could your capital basehave managed this? If not, the system may not be appropriate and require refining.

You can back test your strategy with Accendo Markets trading platforms and charting software. To receive your

trading platform login, you need to open an account. There is no extra charge for you to back-test your ideas, andit costs nothing to open an account.

To open your account now and start back-testing your ideas at no risk, visit ouraccount applicationpage.

Pairs Trading

Pairs Trading is designed as a market neutral way of trading, whether the market is rallying or falling. The strategyinvolves trading two historically highly correlated securities (eg. shares, commodities, indices) when therelationship has broken down. The strategy involves going long on the underperformer and short of theoutperformer with the hope that the spread/relationship between the two returns to its historical average.

The idea in trading correlated stocks is that the two should move in a similar (if not the same) manner whateverway the market moves; any losses on one being offset by gains on the other. As long as the long rises more than

the short rises, or the short falls more than the long falls, the strategy will be profitable.

The most popular way of trading is with two highly correlated equities likely from the same sector which removesboth sector and market risk. Two miners (for example, Rio Tinto and Anglo American) or banks (for exampleLloyds and RBS) might be good examples.

Interesting pairs can be back-tested to evaluate the success rate of the spread returning to the mean.

You can trade a very huge range of markets with an Accendo Markets trading account, including many pairstrading opportunities.

To open your account now and start practising your pairs trading strategy, visit ouraccount applicationpage.

ArbitrageArbitrage is similar to pairs trading. It involves looking at the historical relationship between two securities andtrading with the hope the relationship returns. Examples include looking at the shares of a company which is listedon two different exchanges in two different countries. If the difference between the two share prices is more thanthe exchange rate between the two different countries, there may be a trade opportunity.

Other options include the difference in the price of oil in two different locations. With oil traded in US dollars,exchange rate risk is negated, meaning you could buy oil in the cheaper location and sell the same oil in the moreexpensive location, profiting from the difference.

In many cases arbitrage requires trading in large size to allow profiting from the usually small differences in price.

As with Pairs trading, back-testing can be used to analyse the theoretical historical success rate of the pricedifferential correcting from a given level.
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Using orders (stops and limits)

Stop orders can be used to put you into a trade when it starts moving in the direction you are hoping. They areused to jump on the back of existing momentum, allowing you to wait for confirmation of momentum and allowingthe trade platform to take care of executing the order when the price meets your criteria.

Limit orders put you into a trade when the price falls back, to give you a better entry point. If you believe a pricemay move higher you might place a limit order below the current price to give you a better entry point. To be sureyou dont miss out on any up move, you could also use a Stop order above the share price to ensure execution i fthe price starts immediately moving the way you were expecting and fails to trigger you limit order.

Stops and limits are important tools for ensuring execution at the desired level. They are also significant inallowing emotion to be removed from the equation leaving the trading platform to execute the trade automatically.

Accendo Markets platforms will allow you to utilise a range of automatic orders, including stops and limits.

Fundamentals

Trading on fundamentals involves focusing on company specific events to decide what to buy/sell and when to doso. It is more associated with the traditional long-term buy-and-hold strategy than short-term trading, but can beused for both. Trading around scheduled, anticipated or unscheduled events (such as company financial resultspublications, drilling announcements, product launches, take-overs, broker upgrade/downgrades, profit warnings,macroeconomic data) often result in big moves.

Trading on fundamentals contrasts with trading technicals which, as discussed earlier, involves using price chartsto identify support, resistance and patterns etc. to try and help you decide where the price might go next.

Ahead of scheduled or much anticipated events (such as company results, drilling reports) if you believe theymight be better/worse than expectations, you might trade the shares hoping that the build-up to the results mightsee others move in and force the price in your favour. You could then close out before results or, if convinced theshares still had potential to react to the event, hold on until after.

The same applies for unexpected events (broker upgrade/downgrades, take-overs, profit warnings, macro data).When they occur, you can trade the shares in anticipation that the existing move has legs as more and morepeople try to profit from the move.

Accendo Markets research can tell you what will be announced and when. Our exclusive research, produced in-house by our analysts, is available to all active CFD clients at no extra charge. If youd like to receive a free 14 -day trial of our research, please visit ourresearch trial application.

Day Trading

Day Trading (or intra-day trading as it should really be known) refers to the buying and selling shares, FX, Indicesand commodities within the same trading day, never holding a position overnight. The idea is that you are notsitting on any risk overnight. You may miss out on interesting overnight moves by not keeping positions open, butyou cant lose any money based on world events or macro-economic data which may materialise in the weehours.

Day traders spend their time looking for set-ups - situations where the price (of a currency, commodity, index ofshare) is set to move. Positions can then be held for anything from a few seconds (see Scalping below) thoroughto several hours. They may trade just once in the day, they may trade tens of times. Discipline and risk-management are key with day-trading.

Day traders usually identify opportunities via breakouts from support/resistance or patterns on price charts. Othertechnical indicators used include momentum (see later), volume, and Fibonacci levels (% retracement of priormoves).
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The practice used to be limited to firms and professionals, however, advances in technology now mean thatanyone can now trade almost anything from anywhere in the world as long as they have a trading account andaccess to the internet.

Note that Day Trading can sometimes be a misnomer, with some traders holding positions overnight if they have astrong conviction that they should let an existing position run, or look to profit from an overnight move.

To open your account now and start practising your day trading strategy, visit ouraccount application page.

Scalping

A derivative of Day Trading, Scalping involves trading big positions for very short lengths of time with the aim ofcapitalising on small moves. The idea is to do this several times a day. When positions start going sour, they are

closed very quickly, limiting losses and preserving capital for use with later opportunities. The hope is that the fewsuccessful trades can offset the several unsuccessful trades. Stop orders can be used to enter on momentum andLimits placed a short distance further to capture a profit. Risk can be limited by using closely set Stop Losses.

Reading List

This report is a broad introduction to just some of the trading methods you could employ in your trading activity.Our daily research and charting software (both of which are provided to all active clients) should give you the toolsyou need to reach your trading goals.

Accendos Head of Research has worked in the city for a decade and studied for several exams focused onsecurities, derivatives and technical analysis (charting). Some of the reading material he has devoured over theyears includes the below list. His top ten is below comes highly recommended for everyone from the beginnerthrough to the seasoned trader.

All provide excellent material to help further comprehension of the worlds financial markets and development oftrading techniques and strategy.

1. Technical Analysis of Stock Trends (R. Edwards & J. Magee)2. Technical Analysis of the Financial Markets (J. Murphy)3. Technical Analysis Explained (M. Pring)4. Candlestick Charts (C. Lambert)5. Cloud Charts, trading Success with Ichimoku technique (D. Linton)6. Trader Vic: Methods of a Wall Street Master (V. Sperandeo)7. Market Wizards: Interviews with Americas top traders (J. Schwager)8. New Market Wizards: Conversations with Americas Top Traders (J. Schwager)

9. The Way of the Turtle (C. M. Faith)10. The Naked Trader (R. Burns)
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Why should you trade Forex?

The foreign exchange or currency/FX market is the biggest in the world with in excess of $4 trillion (million million)traded every day. It is attractive thanks to its extreme liquidity (in the major pairs, others may not be so easilytradable) and in most cases it is as easy for the private individual to trade as equities, indices and commodities.The most traded pairs are GBP/USD, EUR/USD, AUD/USD, USD/JPY, EUR/CHF, USD/CHF. These are themajors. Other pairs exist, however, they are referred to as crosses or exotics which are generally more volatileand less easily tradable.

Forex trading is all about the relative strength of one currency versus another. Both currencies can be deemedgood, but one has to be better than the other. Both can be seen as bad, but one must be relatively worse. Forexample, you might not like both the US Dollar or the Euro (the first at risk of money printing by the US Fed, theother at risk of a Greek exit and Eurozone collapse), however, you think the US is the relatively stronger currency

of the pair so you sell the EUR/USD. Other drivers of currencies are interest rates. Higher interest rates attractbuyers who want the currency to buy the countrys bonds which should be paying good coupons (interest).

Additional benefits of trading Forex (like commodities and indices) include it being tradable 24hrs a day, five daysa week, the market being open Sunday night to Friday night. Trading contracts benefit from low marginrequirements and the option to trade in both directions up or down.

Why should you trade with Accendo Markets?

Accendo Markets exists to help you trade Forex the way you want to, and with confidence. We do this byproviding you not only with someone to speak to for market insight and help with placing trades, but also viaaccess to our exclusive in-house research - a host of daily and weekly publications, to help you navigate themarkets, and further your education.

Our morning report lets you know how the major FX pairs have traded overnight and why (example). Our WeekAhead lets you know what major macro-economic data could impact your Forex positions the following week(example). Our daily calendar takes this a step further, with a more detailed breakdown of potentially market-moving events scheduled for the following day. This is updated live throughout the trading day, letting you knowwhere data was better/worse than expected (example). Our FTSE Focus publication looks at the UK flagshipindex over 4 different time horizons identifying potential support and resistance for both long-term, short-term andday-traders, giving you an idea of how the major world indices are moving based on current sentiment (example).

How to trade Forex using CFDs

Placing a trade in Forex is a simple affair, carried out on a pound per-pip basis (a pip is a tenth of a point). If youbelieve GBP will strengthen relative to USD over the course of the next hour/day/week because the chart is givingyou signals or you expect events which could have a positive bearing on the pair, you could take a Long position

for as little as $1 per pip. If the pair moves higher by 500pips you stand to make $500. If, however, it falls by500pips you would stand to lose the same amount. Your risk could, however, be limited to $200 by placing aprotective stop 200pips below your entry level. If the trade moved into profit, your stop can always be moved tolock in any profits. If you expect the price to fall, the setup of a Short trade position works the same way, just inreverse. In summary, CFDs offer you a simple way to trade Forex pairs up or down whilst maximising your profitpotential.

For a worked example of setting up a CFD Forex trade, see over

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Should you have any qu est ions on h ow to trade Forex with CFDs or Spread Bett ing,

including the var ious ways in which yo ur r isk can be managed,

call us to disc uss on 0203 051 7461

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Open a Demo account Click Here

Subscribe to a Free Research trial Click HereApply for a Live Account Click Here
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The below chart identifies the 5 stages of a Forex trade in GBP/USD pair

1. GBP/USD pair gets to the level you wish to trade at; for example, breaking above key level 1.595.2. Long position opened at 1.596.3. Trailing stop-loss placed at 1.586, limiting risk to 90 pips4. The pair then rises by 340 pips to new high of 1.63. Trailing stop remains 90pips behind, moving up to 1.621.5. The pair falls by 100 pips from high, trailing stop triggered at 1.621. Trade closed with gains of 250 pips.

Had the above trade been placed on a $10 per-pip basis, your position would have initially been risking $900(90pips loss x $10/pip). When the trade moved in your favour the trailing stop would have moved up in-line, first tobreakeven (stop in-line with entry point) then to protect profits (stop above entry point). When the pair hit its newhigh, the position would have shown a profit of $3,400. With the tailing stop still 90pips below, you would have

been locking in profits of $2,500.

Please note, however, that had you not had a protective stop in place and the Forex pair fell rather than rose, youwould be liable for any declines.

Other ways of helping yourself in trade set up include the use of technical indicators. For more, see over

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Support and Resistance Identifying Entry and Exit Levels

If the below chart applied to an FX pair, you would be in a position to identify levels of Support and Resistance.So long as these levels remain unbroken, you could assume that the metal will continue to trade within this range,or channel, as the below example has done since mid-2010 when two highs and two lows would have allowedyou to draw and extend trendlines.

If one of these levels is broken, you would then be in a position to look to the next higher/lower level as the nextlevel of potential resistance/support. The breakout level would likely reverse its prior role (support becomesresistance, resistance becomes support) for any subsequent rally/declines.

Monitoring support and resistance in Forex pairs could help you identify optimal entry and exit points. Of course,support and resistance levels reflect sentiment based on all publicly available information and speculation about

world events and macro-economic data. Be aware that newsflow is what drives Forex pairs. If investors expect aworld crisis they may seek shelter in the USD. If they expect the US to start printing more money to kickstart itseconomy (Quantitative Easing, QE) the relative strength of the US Dollar versus its peers is also likely to beimpacted.

Alongside the observation of highs/lows and support/resistance, Accendo Markets charting packages allow you touse of some of the technical indicators most widely used by market professionals to help support their analysis ofsupport and resistance. These include moving averages and volume, which are discussed on the following page.

You can draw trendlinesacross highs and extendthem forwards to indicatepotential futurelevels/areas of resistance

You can draw trendlinesbelow lows and extendthem forwards to indicatepotential futurelevels/areas of support

When support andresistance trendlines areparallel, you can identifychannels


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Moving Averages

Youll notice that the below graph is more detailed than the prior one you looked at. Additions include smoothedlines through the price which relate to moving averages of the price. These take an average of the closing pricesover a certain period. In our case we have used two of the most popular (50-day (red) and 200-day (green)).These allow you to identify the underlying trend of the price.

The longer term 200-day moving average in Green moves quite smoothly, given that it averages a large quantityof data. Its shorter term counterpart follows the share price more closely as it is averaging less data. When theprice moves through a moving average, this can be used as a trading signal of a change in trend. When movingaverages cross each other, these signals known as Golden and Dead crosses can also be used by traders.

Average price over the last 50-days.

Average price over the last 200-days


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Momentum

The below chart takes what you have looked at thus far one step further, adding the technical indicator known asMomentum. The indicator measures the difference between the price on day X and the price 12 days prior,showing when the underlying power behind an up/down move is accelerating or slowing. This can help warn youof potential turning points. You will note that in the below graph (see blue arrows) the price kept rising (higherhighs) but the momentum indicator was registering lower lows. The price subsequently fell quite significantly.When the two are diverging this is known as negative divergen ce. When they move towards each other, this iscalled posi t ive divergence. Both can lead to reversals.

Momentum measures difference in price on day X and the price 12 days prior.Helps indicate gain/loss in underlying momentum before changes in price direction.

What you have looked at so far is merely an introduction to the trading tools at you r disposal via Accendo marketsaward winning trading platform. Many other indicators and education are available to help you make your tradingdecisions; Relative strength Indicator (RSI), ADX (trend strength), Moving Average Convergence Divergence(MACD), Directional Indicators (strength of up and down moves), Bollinger Bands (movement away fromaverage), Stochastics and many more. Used in conjunction with each other these can help you build up a pictureof whether you believe something is worth buying or selling. To test drive our demo trading platform, use the linkson the last page of this report.


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Trading OnlineAccendo Markets offers you access to some of the best trading platform technology available. Web access allowstrading anytime from any desktop computer. Whats more, you can test a fully functioning demo version (seebelow), before you begin trading with your own money to ensure you are fully comfortable and ready to hit theground running with a live account. This demo offers full charting ability and access to major RSS news feedssuch as Reuters, Dow Jones and Bloomberg, ensuring you remain in touch with company news and world eventsas the news breaks.

Research & Information

What makes us different? Our service, a key part of which is our in-house research and Trade Ideas. Ourresearch team aims to provide you with the education and information you need to improve your trading returnsby drawing upon a wide range of resources and methodologies, but which is normally reserved for cityprofessionals. To experience why clients choose Accendo as its information provider of choice, sign up for aresearch Trial (see below).

Open a Demo account Click Here

Subscribe to a Free Research trial Click HereApply for a Live Account Click Here
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