Dummies’ Trading Encyclopedia! Must Read!
Hey, friends, it’s John Foster. This article will be dedicated to those people who are completely new with trading and exchanges, having no knowledge. Most experienced traders are to consider this material unnecessary, but I can’t say so. I receive more and more letters with requests to simply explain how all that stuff actually works, because one doesn’t even know anything about the trend, brokers, timeframes and so forth. There are myriads of articles about trading on the net, but almost none of them can help a newbie, sort everything out and start practicing gotten known how to trade. So, I’ve created the “Dummies’ Trading Encyclopedia”!
Basic Options Terms
- An option – is the financial tool used by traders. Traditionally, an option lets one buy an asset by fixed price and time, insuring them from the risk of rate’s abrupt jump. For a trader, and option is the bet. Having bought one, a trader places a bet for rise or fall of the price. If right – gains, wrong – loses for a broker. Read in the article "Who Gains from the Statement Binary Options Scam? Professional Opinion of Financiers!” about what an option truly stands for.
- A trader is one who speculates at the exchange. Either those who work with options or those working at forex or stock exchange – they are all traders.
- Acurrency rate is the ratio of two currencies, for instance, euro/dollar (EUR/USD). These are currencies what most traders work with. The currency chart shows how this ratio changes. Rates are used in different fields, not only at forex.
- An asset is the thing we are betting on. Its value always changes. Some time ago, traders used only stocks and currencies, but today metals, raw materials and indices (GDP, unemployment rate, etc.) are also used. You can bet on all of that and try to earn, if you know hot to trade, of course.
- A candlestick is an element of any chart. Usually, they are used by forex traders, but you can also see them at option brokers’ charts. It looks like a vertical rectangle with two segments at the top and bottom. A candlestick shows how the price was changing during some period. It can help you to estimate the opening price, closing price, minimum and maximum price.
- A timeframe is a time period of a chart. They can be minute-, half-hour-, hour-, 4-hour-, day-long, etc. the timeframe shows where the next step of the chart comes. In other words, it shows where values change. The bigger is the timeframe - the larger is chart's scale.
- The trend is the direction of the chart. There are three of them: uptrend, downtrend and sideways-trend, or flat. Uptrend is when the chart goes up, downtrend - down, sideways - the chart goes horizontally. The trend is one of key tools of trading. And trends can appear at different timeframes. For instance, a minute timeframe shows the uptrend, while a hour-frame shows the downtrend. Look at the trend of the chart you work with (buying 60-second options - forget about the hour-frame).
- Call - a bet to the rise of price
- Put - a bet to the fall of price
- A Bear is a Russian trader....just kidding:). Actually bears are those who put. Moreover, a bear trend is a downtrend; bear moods - most traders put;
- A Bull is the opposite to a Bear. Bulls are those who call.
- A broker is a middleman. You invest in them, trading on their conditions.
- PAMM is the investment system, where you don't trade personally but trust your money to another trader and earn when they gain. It's common at forex, not at option exchange. Maybe, the situation will change.
- An analyst (an expert) is a person, forecasting rates. Most traders read best experts' analytics and work only with them.
- Trading strategy is the algorithm you use while trading. In fact, it's a set of rules, letting you gain.
- Entrance is your any order.
- Closing - is when trading is stopped.
- A demo-account is a trading deposit with virtual funds. You can trade, but not lose or gain really. These accounts are need for testing and practice.
- A real account is what you use to deposit real money, lose it or grain profits.
- A broker's bonus can be given for the registration, top-up, etc.
- The crowd stands for the majority of traders, usually, newbies.
- Macroeconomic factors - are reasons of rate changing. They are GDP, interest rates, inflation, etc.
- A speculator is an outdated term for a trader. They buy and sell with spreads.
- The terminal is your working place.
- Minimum deposit is the minimal account at broker's company, needed for the start.
How to Start Trading?
Firstly, choose a broker and open your account there. Lots of information about brokers can be found on our site, after that - just register! Most companies require your name, e-mail, phone number and password. The number is needed for a manager to call you, explain everything and answer your questions.
I recommend opening 200$+ start accounts - your trading will be more comfortable this way. You'll be able to to double your bet and never lose all your money with several fails in a row.
How to Estimate the Trend?
Usually, more or less experienced traders define the trend visually. If you can't, build a trend line, as it is in the image below. If it goes down - it's the downtrend, up - the uptrend, and if it goes horizontally - it is flat.
When a trend is estimated, the trend line is still needed. If the chart goes up, build the line at minimums, down - at maximums.
How to Choose a Strategy?
If you are a novice and can't create your own strategy, or don't understand those for pros, then here you are! The list of the simplest and most profitable strategies:
- Trading against the trade;
- Martingale trading;
- Trading with the scale of choice;
- Signals trading;
- News trading;
- "Secret Ally".
Even more strategies you can get when subscribed - just fill out the form to the right.
What Affects the Asset Rate?
There are lots of factors, but here are the essentials:
- Macroeconomics indices, described in the first section;
- Traders' feelings. Actually, those who trade, have an impact on change of the rate. So, most strategies are base at crowds' psychology. The simplest is "Trading With The Scale Of Choice";
- Major banks' policies, emission, interventions, etc. regulating national currencies rates;
- Governmental policies, programs, etc.;
- Social conflicts, natural disasters, wars, etc.;
- Major bank and state chiefs speeches;
- More and more...
Be advised: never a one strategy can concern all factors, so you can't be 100%-sure than a signal will work. It's a myth that any professional trader know where a price will go. There are some points of entrance - only that moments are for trading.
I am John Foster, trading since my 35, working with forex and option exchange. You can read my story on this website. Now, my main goal is let you know how to trade, tell you about advantages of the exchange, and thus, create several more stories of success.
Why Do You Need Our PAMM Trade Site?
This website tells you how to trade at forex and the option exchange. Here, you'll find trading strategies, best brokers reviews, and much new and exciting about trading. Furthermore, we periodically publish stories of my apprentices' and friends' success, whose main objective is to motivate you. A motivated person is mighty, right?
What Are Differences Between Option and Stock Exchange?
Options have appeared relatively recently, in contrast to forex and stock exchange. At latter ones, you trade with real assets, buying and selling them, and at the former one - you just call or put. It's a lot easier and clearer. You don't need to drill analytical info, combine indicators, think about where to set StopLosses and TakeProfits. Just buy an option and wait for profits. That's why more people start trading with options, not with forex.
Kinds of Options
There are many kinds, though, the most comprehensive is the one called binary options. We buy Call or Put, if right, taking profits, wrong - losing. Binary options are differed in timeframes. This timeframe defines how long does an order last and when it's closed. There are turbo-options of 15, 30 or 60 seconds; middle-term (5 mins to 1 hour); long-term (more than 1 hour). I haven't seen any 1-day-long options, or longer, because traders don't use this timeframe usually. But if you like such kind of trading, pay attention to forex.
Actually, that's it. If you're interested in option exchange, forex, and want to learn how to trade, study materials of this website and subscribe!
Best Regards, John Foster.
P.S.: This article is not full and cannot give all info about trading. Feel free to ask questions in comments below, if something is unclear.