Introduction

Have you wondered why ‘Professionals’ achieve greater success than amateurs in any trade? There are 2 simple reasons; mindset and practice. Practice makes perfect. A ‘Professional’ is able to learn any art through practice.

It is human nature to want happiness and motto of all mankind. To achieve happiness, we need money. Making money is easy provided you know how to work efficiently. There is a phrase that goes, “It doesn’t matter how hard you work but  how much of work has been done”. What this means is you must learn to work smart.

Our workshop teaches you how to plan for an early retirement so that you can spend more time enjoying life with your family and friends. Life is short, so let’s make it sweet.

Do you know how money is made in Stocks, Futures, Forex, Commodities, Options, Mutual funds, Unit Trusts etc? You have an account with a broker or financial institution and your money is deposited with them as an investment. For Mutual funds and Unit trusts, the investment decisions are decided by the financial institution. You do not have a say on their trading decisions. Where else in stocks, futures and forex, the decision is up to you, i.e. you decide which instrument you want to invest in. You get to manage your own risk and reward.

Stocks are the most common in trading. You can buy a company stock if it is publicly traded and your investment depends on the value of the company. If the company earnings are good, then the value of that company appreciates but if the earnings are bad then the value depreciates. This may sound easy but in real life, it is not that easy. You need to know about the company’s financial performance if you are a long term investor. You have to analyze the company’s prospective and future projects based the Country’s economic growth and political policies. Trading in stocks has a disadvantage where you have a lower leverage for the money you have invested; usually it is the double the size of your investment. E.g., if you invest hundred thousand, you can trade for two hundred thousand worth of stocks. Are you aware that you have to pay an interest on the other hundred thousand to the financial institution you are trading with? If not, you might want to find out more.

In stocks, the volatility is not that much too. Sometimes, the company stocks might be moving like a ‘turtle’ and you may get caught. On rare occasions, the company might even go bust and your investment becomes zero. Just like in ENRON and WORLDCOM. Another difficulty in trading stocks is once you miss an opportunity, you have to wait for the next. In the US markets where the volatility is very high and the investment is also very high, you can also do short selling meaning you can sell before you buy. This is very critical to some Traders. Sometimes when you feel that the market has risen too high and too fast, that’s the time you will want this facility (short selling).

Futures are traded in an exchange and they are mostly contract basis and each contract has a contract value. The contract value is calculated multiplying the current market value with the value of one pip of the instrument you are trading. Usually, they have an expiry date and you need to liquidate your position before the expiry date. In futures, there are a number of instruments available like Currency Futures, Commodities, and Index futures. Some are monthly contracts while others are quarterly contracts.

The advantage of trading futures with stocks is it has a very high leverage. Meaning, you can trade a larger value with a smaller amount of money. This is often called margin trading. You can make a lot of money with less investment but also you can lose all your investment if you are not careful. Firstly, you need to know about the instrument you are trading in. The instrument which we specialize is INDEX FUTURES; E.g. of indices are Japan -Nikkei 225, German Dax, London Footsie 100, US - E mini Russell 2000, E mini S&P 500, E mini Nasdaq etc.

All these are traded on the relevant exchanges in their countries specified. The difference between these instruments and the stocks are these instruments represent a basket of stocks. They are traded separately on the exchange have to be valued by spot prices on expiry of the contract. When you trade stocks, you are only concerned about the performance of that company you are buying but when you trade Futures you look at the indices. If the economy is doing well then the indices will also be doing well and vice versa. Therefore, when you trade futures your risk is spread compared to stocks.

Foreign exchange (FOREX) is trading in currencies. When you go on holidays I am sure you want to bring with you the currency of the visiting country. To change a currency, you will usually sell your local currency and buy the visiting country’s currency. In Forex you will do the same thing, but you do not exchange physical money. In turn, you will be trading on contract basis. Forex trading, which is called Margin trading, is a very high volatile instrument. It is a highly risky instrument at the same time highly rewardable provided you understand the market. It is in fact one of the highest leverage instrument and highest liquidity in the market. An average of 3 trillion worth of transaction takes place daily.

United States Dollar (USD) is the leading player in the market. European Currency (EURO), Britain Pound (GBP), Japanese Yen (JPY), Switzerland Franc (CHF) are the other four main currencies that hit the highest volumes daily. When we say EURUSD that means EUR is the base currency and USD is the counter currency. Meaning, when you buy or sell you is referring to the EURO. Major crosses are EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD and there are also crosses like EURJPY, GBPJPY, EURCHF, GBPEUR etc.

The trading business is managed by people and we can actually predict people behaviour. Everyone coming in to this business aims to make money and not a single person wants to lose money. If you think carefully, you can actually be a winner, especially if you have enough resources and have the right timing. These are the two main factors in trading. We will teach you when to enter and when to stay away from the market. Sometimes it is profitable to stay away from the market too.

The foundation in technical trading is reading of charts. If you are not able to understand the charts you will not be able to appreciate the language of the market. Any language you speak if you don’t have a good vocabulary you will not be able to understand the content. The same thing is in trading. You have to learn the basics of the language before you enter trading. In any market you trade, charts are the pictorial representation of what has happened. The time frames available are 30 minute chart, 60 minute chart, daily chart, weekly chart or even a monthly chart. Depending on your holding power and the patience you have, you can be your own investor and trade at your own pace. That is the beauty of this business.

In a basic chart, the horizontal axis is the time and the vertical axis is the price of the market. There are many types of charts available in the market depending on the software you are using. They are BAR chart, Candlestick chart, Line chart, Point and Figure chart, Constant Volume Bar chart etc. The most common are BAR chart, Line chart and Candlestick chart. 

The Line chart or the close only chart is the simplest of all the charts. Whatever time frame you are looking at, only the closing price is represented on the graph. Those days when computer was not invented, this chart was the easiest and the most efficient to use. Most traders especially Fund Managers believe that closing price is most important in trading and they usually closely watch this chart only.

The Bar chart was invented by the westerners and has been practised since trading commenced. It has two horizontal lines and a vertical line. The left horizontal line is the opening price and the right horizontal line is the closing price. The vertical line is the trading range. The high of the vertical line is the highest price traded and the low of the vertical line is the lowest price of the time frame you are looking at. This is the basics in Bar chart.

The Candlestick chart, which is our favourite, is now getting very popular. It was invented by the Japanese but now also popular among the westerners. In the candlestick there are two types; the positive candle (Green) and the negative candle (Red). The positive candle is when the price closed above the opening price and the negative candle is the price closed below the opening price. The coloured part is called the body and a thin line above and below the candle is called shadows, the tip is the highest price traded when it is above the body and the lowest price traded when it is below the body. Off course candlestick comes in different shapes and sizes, and each candle has got its meaning. As you know picture speaks a thousand words.