2. Candle sticks
===========================================================
===========================================================
How to trading forex Fortfs page 2
PART 2. GETTING TO KNOW THE TRADING TERMINAL
What is the leverage?
You probably already noticed while opening your demo account that the leverage ratio can be set to a number of different sizes: 1:20, 1:50, 1: 100, 1: 500 and 1: 1000. Leverage allows you to make transactions in amounts significantly larger than you have in your account. It reduces the margin, or the amount of funds that are “frozen” as a requirement for completing each trade. It is important to understand that the international financial market was not originally designed to serve individual traders who are sitting in front of personal computers. Major banks, trusts and investment companies are the ones that really control movement in the market. They exchange currency, buy and sell huge "lots" of goods, and of course, the daily volume of these transactions is impressively large. For the convenience of these big players in the market, there is a minimum transaction size of one lot. And one lot is usually equal to a rather large amount of money. For example, on the currency exchange market (Forex), one lot is equal to 100,000 units of a given currency, such as dollars. Of course, do not have access to such amount of money. That is when brokerage companies support traders by offering margin trading. Although margins are form of credit, they, like most things in the trading world, are conditional – they are only available while your transaction is active. During this time, the broker loans you the amount of money you need to make up the difference to 100,000 so you can purchase one lot. It gives you the opportunity to earn significantly more money trading on the market than if you only used the money you have in your account.
How do you choose the right margin ratio?
Let's say that you chose a margin of 1:20. When you make a purchase of one lot, only 1/20 part of the 100,000, or 5,000, comes from your account. The remaining amount is "lent" to you by your broker, but, again, only for the duration of the transaction. So, if the margin is 1:50, then your part of the transaction is $2,000. If the margin is 1: 100, it’s only $1000. A margin of 1:500 allows you to do a lot of trading with only $200. And, a margin of 1:1000, which is the default, gives you the opportunity to enter the market with tremendous volume, all with only $100! Now you can see how convenient and attractive trading is! Of course you must keep in mind that your profit is proportional to the amount of your contribution to the transaction, i.e., $100, not the whole $100,000. And don’t worry if $100 is too large a sum for you to invest right away. The market does not require you to purchase an entire lot at once. It’s actually recommended to purchase only a fraction of a lot (0.1 or 0.3). We’ll explain this in more detail a little bit later.
What volume is the best to start?
Of course if you start out with a huge volume transaction right away, you can count on substantial profits, but also substantial losses, which in this case could be devastating. That’s why most investors consider one lot to be big enough and prefer to trade in fractions of a lot. You can find more details in the Trading Terminal. For example, if you want to start a new transaction, you need to click on the large “New Order” button in the middle of the second panel on top. By clicking this button, you create a request to open a new transaction and your order must be fulfilled by your brokerage, i.e., FFS.
The “Order” Window
Note the "volume" field, where the default transaction amount is 1.00 lots. If you click on the arrow on the right side of it, you'll see that you can select any fraction of a lot, beginning with 0.01! Thanks to this feature, you can choose a smaller margin, like 1:20, and get a larger share of the profit from the trade, because more of your own funds will be used in the transaction. By the way, you can also manually enter the amount, let’s say 0.5 (half a lot) or 1.75, and FFS will add the remaining funds needed to enter the market according to the chosen margin. Now let's get to the most important point.
Which market should you choose to trade on?
The first market that we will teach you to trade on is the international currency market, or Forex. This is the most popular, and of course, the largest trading market. It’s also the easiest to understand. It is called the currency market because it coordinates the buying and selling of the world’s most popular product - money. You’ve probably already bought money, even if not through the Trading Terminal. If you’ve visited a currency exchange, you were likely conducting a simple transaction like trading dollars for euros. In fact, you were dealing with a pair of currencies – a euro-dollar currency pair (EUR/USD). On the electronic sign above the teller you saw how many dollars (USD) were equal to one euro (EUR) on that day. If, for example, it is said that one euro is equal to 1.238 dollars, then this number is called the quotation. In this case, the euro is the base currency, because it’s what you bought for your dollars. And the dollar is the quote currency because the euro is quoted in dollars at the rate of 1.238. Here we have the most popular currency pairs in the Forex market, ones that are in constant demand by traders all over the world. Let's find the EUR/USD currency pair in the Terminal.
Next you will see eight windows with charts and the first one is the euro-dollar chart. For convenience and clarity, let’s first close the remaining windows. To do this, click on the "X" in each window.
How do you set up a chart?
After closing the unnecessary windows, maximize the EUR/USD chart and take a look at information our Terminal provides. The most important and notable thing is undoubtedly the window itself. This is what you will be paying attention to when preparing for your transaction, while starting your transaction, and during your transaction – all the way until it’s closed. By the way, that quote that you saw on the sign of the exchange office is the end result of the previous day’s trading on the Forex market, i.e., at the end of the trading session. But during the day the currency pair experienced countless variations and changes, and traders had time to earn and lose huge sums of money. This graph shows us how the quotation of the currency pair changes every second. This change is displayed on the right:
And on the scale below the chart you can see the date and exact time when the change occurred. Using these scales, you can connect the vertical and horizontal dotted lines and easily determine the quotation (put simply, the price) of the currency pair at any given moment in time.
Not everyone likes the black background and green graphics, but don’t worry, you can stretch, rearrange and repaint everything in your Terminal.
Right-click anywhere in the chart window. A menu which contains all the basic options of the Terminal is displayed by clicking right mouse button in the chart window. Here you will find the most used options from all of the other menus. So, now we need to click on the Properties tab at the bottom.
Let’s take a look at our options.
You can choose one of three color schemes: green on black (the current setting), yellow on black, or black on a white background. The white background is probably the most pleasant. If you don’t like one of the standard color schemes, you can choose any colors you like - for the background, the text (quotes, date, name of currency pair), the dotted grid and for the graphics. You can also change the colors of several unfamiliar words: bar up, bar down, bullish candlestick, bearish candlestick and line. We’ll deal with them right away.
How the chart may look like?
Price movements can be represented by different symbols. Initially, your schedule is made up of separate small rectangles known as Japanese candlesticks.
They are called like that because they actually resemble candlesticks: they have a body, sometimes shaded, and there are two wicks – a top and bottom one. This system was invented by Japanese traders who had nothing to do with trading terminals. They used to make these marks as a matter of convenience in their notebooks where they recorded financial transactions. Even today, this system is the most convenient, informative and often used to monitor the movement of prices. Let's take a break from all that for a moment and click "OK" in the Properties window. Now let’s take a look at the top bar above the chart.
There you can see the buttons M1, M5,... MN, which indicate time intervals (time-frames). Right now we are viewing this chart at a time-frame of M5, in other words, we are seeing the price on a scale of five minutes. Note that this does not mean that the quote will change every 5 minutes. This time-frame only shows whether it is now predominantly up or down. In the five-minute view the price may be up, but if we look at, say, the monthly time-frame, MN, we can see that the price has been dropping steadily for several months and small, Properties tab at the bottom.
Let’s take a look at our options.
You can choose one of three color schemes: green on black (the current setting), yellow on black, or black on a white background. The white background is probably the most pleasant. If you don’t like one of the standard color schemes, you can choose any colors you like - for the background, the text (quotes, date, name of currency pair), the dotted grid and for the graphics. You can also change the colors of several unfamiliar words: bar up, bar down, bullish candlestick, bearish candlestick and line. We’ll deal with them right away.
How the chart may look like?
Price movements can be represented by different symbols. Initially, your schedule is made up of separate small rectangles known as Japanese candlesticks.
They are called like that because they actually resemble candlesticks: they have a body, sometimes shaded, and there are two wicks – a top and bottom one. This system was invented by Japanese traders who had nothing to do with trading terminals. They used to make these marks as a matter of convenience in their notebooks where they recorded financial transactions. Even today, this system is the most convenient, informative and often used to monitor the movement of prices. Let's take a break from all that for a moment and click "OK" in the Properties window. Now let’s take a look at the top bar above the chart.
There you can see the buttons M1, M5,... MN, which indicate time intervals (time-frames). Right now we are viewing this chart at a time-frame of M5, in other words, we are seeing the price on a scale of five minutes. Note that this does not mean that the quote will change every 5 minutes. This time-frame only shows whether it is now predominantly up or down. In the five-minute view the price may be up, but if we look at, say, the monthly time-frame, MN, we can see that the price has been dropping steadily for several months and small, minute-to-minute fluctuations in price may not influence the overall picture at all.
But back to the M5 time-frame. During each five minute interval, the candlestick changes – it goes up, down, turns black, turns white; but once the 5 minutes is up, it is locked in and a new candlestick begins to form. In the half-hour time-frame (M30), each candlestick represents 30 minutes and in the weekly time-frame (W1), the candlestick will continue to change until the end of the week.
Black (shaded) candlesticks indicate that the quote of the EUR/USD pair has been dropping, and the white (unshaded) candlesticks indicate a rising quote. The "wick" on each candlestick (the small vertical dash on top) shows the highest price achieved; and the dash’s shadow under the candlestick shows the lowest price. The "body" of the candlestick also stops volumes. The top border in our five-minute time-frame view shows the opening quote of our EUR/USD pair, and the lower border indicates the price at the end of the five minute time-frame. Try to change time frames: if you click on the M1 (1 minute) time-frame you will see a price chart consisting of the "one minute" candlesticks; the M15 and M30 views show candlesticks for every 15 minutes and every half an hour. The H1 and H4 (1 hour and 4 hour) views will show them hourly and in 4-hour intervals. The W1 (1 week) view shows candlesticks for every week and the MN (month) view shows them month-to-month. This is the largest-scale view and is the easiest to use in order to find out how the price behaved a year or even a few years ago. The dates are located on the scale below the graph.
What time frame is best?
This will become clearer in the course of trade. If your goal is to open a trade in order to earn quick profits within a few minutes, then you can use any of the minute views. If you want to complete the sale within an hour and watch the movement on your computer monitor, you could use the M30 view. If you are willing to wait till the evening, then a clearer direction of the price movement, or trend, can be observed by using the H1 and H4 views. Despite the fact that waiting all day for your transaction to close may seem like an eternity, traders consider this to be a short period of time and actually call it "day trading." If you have nerves of steel and are willing to wait an entire week for a transaction to close (this is called medium-term trading), then choose the D1 time-frame view. If you decided to wait until the price will reach a long-term perspective, you can wait a month or more. In that case you need to use the weekly time-frame, W1.
What are bullish and bearish candlesticks?
First of all, let's get acquainted with the bulls and the bears. The first type is called bulls, because they «grab the bull by its horns” when they trade and their purchases raise the prices of goods, or in other words, currencies go up. And the second type is called bears because, like a bear paw, they lower prices with their selling. Every transaction on the financial market affects the movement of prices on the market, albeit a little bit. And if the bulls or the bears join together with other bulls and bears, the overall picture can change dramatically. When, for example, most of the bulls close their deals, and take their profits from the market, their power is weakened, leaving the market, and prices, under the influence of the bears, and prices start to fall.
So, the greater the bulls’ power, the higher the price rises, and the stronger the bears, the lower they are able to push the price. If, for example, encouraged by good news from the US economy, the market becomes "bullish" towards it, attracting those who want to buy United States dollars with other currencies due the fact that with optimistic news it will likely go up in value. During times like this, the vast majority of candlesticks will be white (not shaded), which indicates that the price increased during this period. Therefore, they are called "bullish.” It happens the same way in reverse. The same upbeat news from America, which causes the dollar’s value to increase, will cause the prices of gold and oil to drop. When the charts are dominated by black (shaded) candlesticks and the price goes down, it will be reported, for example, that "the gold market today was bearish."
How do you choose what to trade?
Actually, there is no correct answer to this question - you can earn money on any instrument. It really just a question of your experience, your level of sophistication with choosing beneficial market entry points, and lastly, just plain luck. As it was said, the most popular trading pairs are the euro-dollar (EURUSD) and gold-dollar (XAUUSD) pairs. Let's start with the inseparable euro-dollar pair and locate it in our Terminal. To the left of chart window, you will see the “Market Summary” panel – let’s have a look at it.
There you will see a clock showing the Terminal time - GMT +2. This is a unified time and it is the same for all traders within Fort Financial Services, regardless the time zone they are located. So, in the “Market Watch” window you will see a set of symbols - the tools which you will use to open transactions. To make sure you can see the complete list, click the right mouse button and select "Show All Symbols."
Of course, it will be very difficult to find pairs in this list at first, so in order to avoid confusion most traders study the descriptions of the various trading instruments that can be found on our website. Here you will find a table listing the meanings of each symbol, the commission amount taken by the market for each type of transaction (spread) and the broker’s fee for carrying your transaction through the night (swap). We’ll tell you more about that a little later, but for now let's find the EURUSD in the list. In order to quickly find this or any other tool, start by clicking anywhere in the “Market Watch” window. Then, start typing the first letters of the pair’s trading symbol. For example, to search for the euro-dollar symbol, type: "EUR..." and you will immediately find the EURUSD selection. Please note that the most popular currency pairs are at the top of the list: EURUSD (buy euros for dollars), GBPUSD (pounds for dollars), USDCAD (US dollar - Canadian dollar), USDJPY (dollar-yen), NZDUSD (New Zealand dollar - United States dollar), AUDUSD (Australian dollar - United States dollar), USDCHF (USD-Swiss franc), and then the list continues alphabetically. This is done to ensure that you do not have to search every time for these popular symbols. Once you have chosen the EURUSD symbol, you need to drag it to your chart window.
How do you open a deal?
Look at the EURUSD chart. It’s best to start out in the 15-minute time-frame (M15) view. Suppose that the price starts to drop and using your demo account you decide to open a selling deal, so that when the price falls even lower, you can close the deal and take your profit
And using your demo account you decide to open a selling deal, so that when the price falls even lower, you can close the deal and take your profit. To do this, click the "New Order" button on the top panel above the chart.
In this window, you first confirm the instrument you want to transact in the "Symbol" field. Then, in the "Volume" field, choose the amount of the transaction, i.e., a whole lot or a fraction of one (by the way, you can also type in the amount yourself). Next, in the "Comment" field you can attach a note to the transaction, for example: "Transaction Based on Election News from America." This is useful for analysis of your trading activity and eventually you’ll start to feel what news work for you and what news work against you. This is when you begin to develop your trading strategy. In addition, if you want to use trading robot, which will open the deal for you, you can use the "Comment" field to serve a useful purpose. You can enter a combination of different indicators upon which your trading strategy will be built. We'll talk about that in a future section, but for now just make note of this. Also in "New Order" window you need to choose the execution type: “market execution” (the deal opens immediately at the specified price) or "pending order" (you can specify at what level you would like the deal to open, and once the price reaches that mark, you will enter the market). For now, we’ll choose "market execution."
What do bid, ask and floating spread mean?
You may have noticed that in the “market watch” window there are two columns: "Bid" and "Ask." The best way to understand this is by looking at the "new order" window that we just opened. You see two buttons in the middle: "Sell" (red) and "Buy" (blue). Accordingly, the red chart on the left (bid) shows at what price you can open a sell transaction for the EURUSD instrument and the blue (Ask) chart - at what price you can open a buy transaction. These two rates differ slightly from each other, as well as from the price you see on the main chart in the Terminal. The difference between these quotations is the market commission, or spread. Let's click on “Sell” and open a transaction for the sale of our pair at the bid price.
The Bid price is always a little lower than the current price (and, of course, than the Ask price). At the bottom of your screen, below the chart, you will see all the information related to your open transaction and the changing size of your profit.
Once you open any transaction you will initially start out with slight minus until the price chart move for a few points and until you cover the spread. Only after that will you start earning money. If you click on “Buy,” transaction to Buy will be opened at the risk price and, as we previously mentioned, it will be “above market prices” meaning that it is a bit higher than on the chart." By the way, you may be wondering what the letter “f” means after the symbol in some currency pairs. This indicates a floating spread (flex), that is, a fluctuating commission spread. Depending on the market situation and the current news, the commission amount may go up or down, while the commission on pairs with fixed spreads remains the same no matter the conditions. In other words, the difference between the Bid and Ask prices in pairs with “f” at the end of the symbol are always changing, while the others remained unchanged.
How do you monitor an open position?
If you view your transaction in the "Trade" tab below the chart, you will see the following: "order" (the transaction ID of your deal, or ticker), time (the exact Terminal time when the was opened), type (Buy/Sell or pending order), volume (how many lots or fractions are involved in the deal), "symbol" (instrument used in trading), price (the market quote at which you carried out the transaction), "S/L" (the level at which you set your stop loss), and "T/P" (where you set your profit line, or take profit). Then there are the charts: “Price,” which shows the current price and is constantly changing, "Commission" (this is an additional fee for trading stocks and futures contracts; in our case this chart shows zero), the "Swap" chart (this is the amount of the Commission that will be paid in order to carry your transaction through the night to the next trading session) and "Profit" (how much you currently have earned or lost). Such gain or loss is called "paper" or "floating" because you have not yet received it (after all, the deal is not closed) and they are constantly changing, or “floating.” Click right mouse button anywhere in the window, and you will see another tab called “Profit.” There you can choose displaying mode: in points of price movement, in currency of your account (it can be dollars, euros, as well as rubles) or in currency of the transaction.
It is most convenient, of course, to see your income in the currency used for your deposit. When your transaction is closed, you are able to find it here, but you need to access it through the “Account History” tab. The second line, or “Take Profit” line, will be highlighted in green if the position is closed with a profit.
And those that will be closed with a loss by stop loss order will turn red.
If you decide to close the transaction manually, they will not be highlighted.
You will receive a “Daily Statement” of your completed transactions via email to the address you listed when you set up your account. Also, this information is available to you at any time in your account in "History" and "Records" sections.
How do you limit your losses?
So, since we have opened a deal, over time we will either start earning or lose funds, if we did not accurately predict the direction of prices. In both cases, we need two types of safeties. The first limits our possible loss (stop loss), and the second helps us to take our profits at the right time (take profit). Since we chose to open a Sell transaction, the higher the price goes, the more we lose. So our stop loss should be set at a level higher than the opening price of the transaction. For example, let’s suppose its 10-15 points to start out. Have a look at the quote and set the limit. To do this, go back to the panel below the chart where the line with your transaction is located. Click right mouse button and select "modify or delete order.”
In the new window, you will see that you can use the default stop-loss or manually enter your own quote.
You will also see the “take profit” field nearby. Here you can also choose to keep the default quote or enter your own.
For a sell transaction, the stop loss should be set above the opening price and while take profit should be set below the price. For buy transactions it’s vice versa. Professional traders recommend to set the take profit three times higher than the stop loss. Let’s do the same now. It turns out that it should be 30 points above the current price. You can increase the value of take profit and stop loss manually as well as by using the up-down arrows. One arrow step is equal to one price point. There are some traders who like to set the take profit the same as the stop loss, preferring a difference of 10-15 points. This is called "market noise." They believe that this way the transaction will almost certainly be completed the same day, as the price fluctuates up and down. But, this is not always the case. So, the option that works best for you will be found after a few training trades on your demo account. Of course, there is no 100% guarantee of earnings using one method or many different trading strategies have been developed over time using market indicators and trading robots, which traders call "advisers." In the third section of our training we will talk more about not just opening transactions, but doing so intelligently. Since our deal hasn’t closed yet, let's get acquainted with the Terminal.
What other important functions does the Terminal offer?
We already mentioned that you can change and move almost everything in the Terminal. So, the size and location of all the windows and panels in your terminal can be changed by dragging and stretching the charts. Try to adjust your trading desktop in a way that is the most convenient to you. You can close any windows you don't need by clicking on the X in the upper right-hand corner. If you want to increase the size of your charts, you can click on the magnifying glass with the plus or minus on the top panel.
Nearby you will find the "auto scroll" button.
If you click it, then every time the price changes even one point, the chart will shift to show you the current price at that moment, even if you have scrolled back to see what happened yesterday. This makes it difficult to view historical data. It’s better to deactivate this function first before scrolling back through historical data.
You will also see an "indicators" button, which is duplicated in the "Navigator" window. A lot of things are duplicated in the Terminal in order to give you the option of creating the view that suits you best.
In the "Navigator" window, which is located to the left of the chart, you will find information about the account which is is currently open (you can change it). Here, you will also see the list of technical indicators that can be used to examine the movement of prices and make predictions about where they will go next.
In the same terminal window, you will also find some pre-loaded trading robots that can conduct transactions on their own according to their programmed algorithms, indicators that have been uploaded by other traders, as well as scripts – trading scenarios that you can program yourself.
To do it, click the right mouse button on a script and choose "Edit" or "Create" if you want to re-write the entire script.
In addition, you can click right button on any indicator or script and select "Add to Favorites." In the nearby “Navigator” tab, you will see only those scripts or indicators that you have added to your favorites.
Also, any indicator can be dragged to a chart to see how it looks and how it can help you in your trading.
What is the volumes chart?
This is a helper chart which, if you drag it to the main chart, will place itself at the bottom right corner of the window and will indicate how many lots participated in your various transactions during the chosen period of time. The more lots are opened in the market at that time, the higher the columns will be. So, how do you build a volumes chart? Upon opening the Terminal, press Ctrl + L or choose “Volume” from the drop-down menu at the top of the “Charts” tab.
Another chart with columns of varying sizes will appear under your main chart. Let's open the 1-minute view of the EURUSD instrument. Now, each candlestick shows the range in which the price fluctuated during the last minute and under each candlestick you see a volume column that indicates the volume of transactions opened by traders (i.e., did they take a risk, invest, or did they just wait and watch).
It is important to know that if the small columns are getting shorter and shorter, that means that the trading volume is going down, signaling a reduced interest among traders in the current pricing dynamics (future growth expectation may be waning). Consequently, you can expect the current trend to reverse itself (possibly a sharp decrease) or simply a temporary stabilization of prices (flat). Columns that are increasing in height signal an increasing trading volume and increasing interest among traders in the current price. Most likely this trend will be strengthening.
What is on the top panel?
Just like in a web browser, the upper panel of the Terminal is the most important and will never go away, even if you close all the other windows. You can customize the toolbar by right-clicking on it with your mouse. The default menus are:
File - this button is useful if you want to open anything (new account, new schedule), change users, save anything or exit the Terminal.
View - this menu is used to configure the way your terminal looks. Here you can change the menu language, customize the toolbar, as well as remove or add any window. So if a window suddenly disappears, now you know where to go to get it back.
Insert – by clicking on this button, you can choose additional lines for your chart. These indicators can help you to predict the direction of price in the near future: will they rise or fall. There is also an option to add text to your chart. This can be handy if you want to create a reminder for yourself.
Charts – here you will find a list of all the objects that you have dragged onto your chart during your experimenting. You can remove some of them or all at once. There are also duplicated functions such as time-frames, bars or candlesticks, zoom-in or zoom-out, etc.
Tools – you can start a new transaction from this menu, launch the MetaTrader editor to write a script, access advisers or view an archive of prices in the form of a table for a specific instrument over any period of time.
Window - click on this menu to change your settings, for example, to display several charts for different instruments. To get started, click "new window" and select instrument that appears. Then, when you have a lot of windows opened, you can cascade them horizontally or vertically.
Help – this is a very important one. Here you will find links to technical analysis training: you can participate in automated strategy competitions and learn all about mobile trading. If you want to learn how to write successful scripts and create trading robots that will make your market trading more successful, you can visit the MQL4 or MQL5 communities. Here you will find a tutorial, various documents, articles, codes list, and even access to the MQL Developers Forum.
Explore the Terminal a little bit on your own - open and close menus and windows – and try to get used to the way everything works. The Terminal interface is very user-friendly and, as we mentioned before, much of it is duplicated in several locations. Then, after your experimenting, the answer to the following question will definitely come in handy:
What do you do if you have deleted something and don't know how to recover it?
If you accidentally delete…
…the main trading window (the “Terminal” window), press Ctrl + T
…the panel with all of the trading symbols (“Market Watch”), press Ctrl + M
…the “Navigator” panel, press Ctrl + N
…the dotted grid on a chart, press Ctrl + G
…the volume chart, press Ctrl + L
…the chart window: just drag and drop any instrument or currency pair into the empty space and a new window will appear.
If you accidentally drag one of the windows somewhere and don’t know how to get it back, click on the window’s header-tab and drag it where you want. Note: the "Terminal" window’s header-tab is on the left side, not on the top.
You probably already noticed while opening your demo account that the leverage ratio can be set to a number of different sizes: 1:20, 1:50, 1: 100, 1: 500 and 1: 1000. Leverage allows you to make transactions in amounts significantly larger than you have in your account. It reduces the margin, or the amount of funds that are “frozen” as a requirement for completing each trade. It is important to understand that the international financial market was not originally designed to serve individual traders who are sitting in front of personal computers. Major banks, trusts and investment companies are the ones that really control movement in the market. They exchange currency, buy and sell huge "lots" of goods, and of course, the daily volume of these transactions is impressively large. For the convenience of these big players in the market, there is a minimum transaction size of one lot. And one lot is usually equal to a rather large amount of money. For example, on the currency exchange market (Forex), one lot is equal to 100,000 units of a given currency, such as dollars. Of course, do not have access to such amount of money. That is when brokerage companies support traders by offering margin trading. Although margins are form of credit, they, like most things in the trading world, are conditional – they are only available while your transaction is active. During this time, the broker loans you the amount of money you need to make up the difference to 100,000 so you can purchase one lot. It gives you the opportunity to earn significantly more money trading on the market than if you only used the money you have in your account.
How do you choose the right margin ratio?
Let's say that you chose a margin of 1:20. When you make a purchase of one lot, only 1/20 part of the 100,000, or 5,000, comes from your account. The remaining amount is "lent" to you by your broker, but, again, only for the duration of the transaction. So, if the margin is 1:50, then your part of the transaction is $2,000. If the margin is 1: 100, it’s only $1000. A margin of 1:500 allows you to do a lot of trading with only $200. And, a margin of 1:1000, which is the default, gives you the opportunity to enter the market with tremendous volume, all with only $100! Now you can see how convenient and attractive trading is! Of course you must keep in mind that your profit is proportional to the amount of your contribution to the transaction, i.e., $100, not the whole $100,000. And don’t worry if $100 is too large a sum for you to invest right away. The market does not require you to purchase an entire lot at once. It’s actually recommended to purchase only a fraction of a lot (0.1 or 0.3). We’ll explain this in more detail a little bit later.
What volume is the best to start?
Of course if you start out with a huge volume transaction right away, you can count on substantial profits, but also substantial losses, which in this case could be devastating. That’s why most investors consider one lot to be big enough and prefer to trade in fractions of a lot. You can find more details in the Trading Terminal. For example, if you want to start a new transaction, you need to click on the large “New Order” button in the middle of the second panel on top. By clicking this button, you create a request to open a new transaction and your order must be fulfilled by your brokerage, i.e., FFS.
The “Order” Window
Note the "volume" field, where the default transaction amount is 1.00 lots. If you click on the arrow on the right side of it, you'll see that you can select any fraction of a lot, beginning with 0.01! Thanks to this feature, you can choose a smaller margin, like 1:20, and get a larger share of the profit from the trade, because more of your own funds will be used in the transaction. By the way, you can also manually enter the amount, let’s say 0.5 (half a lot) or 1.75, and FFS will add the remaining funds needed to enter the market according to the chosen margin. Now let's get to the most important point.
Which market should you choose to trade on?
The first market that we will teach you to trade on is the international currency market, or Forex. This is the most popular, and of course, the largest trading market. It’s also the easiest to understand. It is called the currency market because it coordinates the buying and selling of the world’s most popular product - money. You’ve probably already bought money, even if not through the Trading Terminal. If you’ve visited a currency exchange, you were likely conducting a simple transaction like trading dollars for euros. In fact, you were dealing with a pair of currencies – a euro-dollar currency pair (EUR/USD). On the electronic sign above the teller you saw how many dollars (USD) were equal to one euro (EUR) on that day. If, for example, it is said that one euro is equal to 1.238 dollars, then this number is called the quotation. In this case, the euro is the base currency, because it’s what you bought for your dollars. And the dollar is the quote currency because the euro is quoted in dollars at the rate of 1.238. Here we have the most popular currency pairs in the Forex market, ones that are in constant demand by traders all over the world. Let's find the EUR/USD currency pair in the Terminal.
Next you will see eight windows with charts and the first one is the euro-dollar chart. For convenience and clarity, let’s first close the remaining windows. To do this, click on the "X" in each window.
How do you set up a chart?
After closing the unnecessary windows, maximize the EUR/USD chart and take a look at information our Terminal provides. The most important and notable thing is undoubtedly the window itself. This is what you will be paying attention to when preparing for your transaction, while starting your transaction, and during your transaction – all the way until it’s closed. By the way, that quote that you saw on the sign of the exchange office is the end result of the previous day’s trading on the Forex market, i.e., at the end of the trading session. But during the day the currency pair experienced countless variations and changes, and traders had time to earn and lose huge sums of money. This graph shows us how the quotation of the currency pair changes every second. This change is displayed on the right:
And on the scale below the chart you can see the date and exact time when the change occurred. Using these scales, you can connect the vertical and horizontal dotted lines and easily determine the quotation (put simply, the price) of the currency pair at any given moment in time.
Not everyone likes the black background and green graphics, but don’t worry, you can stretch, rearrange and repaint everything in your Terminal.
Right-click anywhere in the chart window. A menu which contains all the basic options of the Terminal is displayed by clicking right mouse button in the chart window. Here you will find the most used options from all of the other menus. So, now we need to click on the Properties tab at the bottom.
Let’s take a look at our options.
You can choose one of three color schemes: green on black (the current setting), yellow on black, or black on a white background. The white background is probably the most pleasant. If you don’t like one of the standard color schemes, you can choose any colors you like - for the background, the text (quotes, date, name of currency pair), the dotted grid and for the graphics. You can also change the colors of several unfamiliar words: bar up, bar down, bullish candlestick, bearish candlestick and line. We’ll deal with them right away.
How the chart may look like?
Price movements can be represented by different symbols. Initially, your schedule is made up of separate small rectangles known as Japanese candlesticks.
They are called like that because they actually resemble candlesticks: they have a body, sometimes shaded, and there are two wicks – a top and bottom one. This system was invented by Japanese traders who had nothing to do with trading terminals. They used to make these marks as a matter of convenience in their notebooks where they recorded financial transactions. Even today, this system is the most convenient, informative and often used to monitor the movement of prices. Let's take a break from all that for a moment and click "OK" in the Properties window. Now let’s take a look at the top bar above the chart.
There you can see the buttons M1, M5,... MN, which indicate time intervals (time-frames). Right now we are viewing this chart at a time-frame of M5, in other words, we are seeing the price on a scale of five minutes. Note that this does not mean that the quote will change every 5 minutes. This time-frame only shows whether it is now predominantly up or down. In the five-minute view the price may be up, but if we look at, say, the monthly time-frame, MN, we can see that the price has been dropping steadily for several months and small, Properties tab at the bottom.
Let’s take a look at our options.
You can choose one of three color schemes: green on black (the current setting), yellow on black, or black on a white background. The white background is probably the most pleasant. If you don’t like one of the standard color schemes, you can choose any colors you like - for the background, the text (quotes, date, name of currency pair), the dotted grid and for the graphics. You can also change the colors of several unfamiliar words: bar up, bar down, bullish candlestick, bearish candlestick and line. We’ll deal with them right away.
How the chart may look like?
Price movements can be represented by different symbols. Initially, your schedule is made up of separate small rectangles known as Japanese candlesticks.
They are called like that because they actually resemble candlesticks: they have a body, sometimes shaded, and there are two wicks – a top and bottom one. This system was invented by Japanese traders who had nothing to do with trading terminals. They used to make these marks as a matter of convenience in their notebooks where they recorded financial transactions. Even today, this system is the most convenient, informative and often used to monitor the movement of prices. Let's take a break from all that for a moment and click "OK" in the Properties window. Now let’s take a look at the top bar above the chart.
There you can see the buttons M1, M5,... MN, which indicate time intervals (time-frames). Right now we are viewing this chart at a time-frame of M5, in other words, we are seeing the price on a scale of five minutes. Note that this does not mean that the quote will change every 5 minutes. This time-frame only shows whether it is now predominantly up or down. In the five-minute view the price may be up, but if we look at, say, the monthly time-frame, MN, we can see that the price has been dropping steadily for several months and small, minute-to-minute fluctuations in price may not influence the overall picture at all.
But back to the M5 time-frame. During each five minute interval, the candlestick changes – it goes up, down, turns black, turns white; but once the 5 minutes is up, it is locked in and a new candlestick begins to form. In the half-hour time-frame (M30), each candlestick represents 30 minutes and in the weekly time-frame (W1), the candlestick will continue to change until the end of the week.
Black (shaded) candlesticks indicate that the quote of the EUR/USD pair has been dropping, and the white (unshaded) candlesticks indicate a rising quote. The "wick" on each candlestick (the small vertical dash on top) shows the highest price achieved; and the dash’s shadow under the candlestick shows the lowest price. The "body" of the candlestick also stops volumes. The top border in our five-minute time-frame view shows the opening quote of our EUR/USD pair, and the lower border indicates the price at the end of the five minute time-frame. Try to change time frames: if you click on the M1 (1 minute) time-frame you will see a price chart consisting of the "one minute" candlesticks; the M15 and M30 views show candlesticks for every 15 minutes and every half an hour. The H1 and H4 (1 hour and 4 hour) views will show them hourly and in 4-hour intervals. The W1 (1 week) view shows candlesticks for every week and the MN (month) view shows them month-to-month. This is the largest-scale view and is the easiest to use in order to find out how the price behaved a year or even a few years ago. The dates are located on the scale below the graph.
What time frame is best?
This will become clearer in the course of trade. If your goal is to open a trade in order to earn quick profits within a few minutes, then you can use any of the minute views. If you want to complete the sale within an hour and watch the movement on your computer monitor, you could use the M30 view. If you are willing to wait till the evening, then a clearer direction of the price movement, or trend, can be observed by using the H1 and H4 views. Despite the fact that waiting all day for your transaction to close may seem like an eternity, traders consider this to be a short period of time and actually call it "day trading." If you have nerves of steel and are willing to wait an entire week for a transaction to close (this is called medium-term trading), then choose the D1 time-frame view. If you decided to wait until the price will reach a long-term perspective, you can wait a month or more. In that case you need to use the weekly time-frame, W1.
What are bullish and bearish candlesticks?
First of all, let's get acquainted with the bulls and the bears. The first type is called bulls, because they «grab the bull by its horns” when they trade and their purchases raise the prices of goods, or in other words, currencies go up. And the second type is called bears because, like a bear paw, they lower prices with their selling. Every transaction on the financial market affects the movement of prices on the market, albeit a little bit. And if the bulls or the bears join together with other bulls and bears, the overall picture can change dramatically. When, for example, most of the bulls close their deals, and take their profits from the market, their power is weakened, leaving the market, and prices, under the influence of the bears, and prices start to fall.
So, the greater the bulls’ power, the higher the price rises, and the stronger the bears, the lower they are able to push the price. If, for example, encouraged by good news from the US economy, the market becomes "bullish" towards it, attracting those who want to buy United States dollars with other currencies due the fact that with optimistic news it will likely go up in value. During times like this, the vast majority of candlesticks will be white (not shaded), which indicates that the price increased during this period. Therefore, they are called "bullish.” It happens the same way in reverse. The same upbeat news from America, which causes the dollar’s value to increase, will cause the prices of gold and oil to drop. When the charts are dominated by black (shaded) candlesticks and the price goes down, it will be reported, for example, that "the gold market today was bearish."
How do you choose what to trade?
Actually, there is no correct answer to this question - you can earn money on any instrument. It really just a question of your experience, your level of sophistication with choosing beneficial market entry points, and lastly, just plain luck. As it was said, the most popular trading pairs are the euro-dollar (EURUSD) and gold-dollar (XAUUSD) pairs. Let's start with the inseparable euro-dollar pair and locate it in our Terminal. To the left of chart window, you will see the “Market Summary” panel – let’s have a look at it.
There you will see a clock showing the Terminal time - GMT +2. This is a unified time and it is the same for all traders within Fort Financial Services, regardless the time zone they are located. So, in the “Market Watch” window you will see a set of symbols - the tools which you will use to open transactions. To make sure you can see the complete list, click the right mouse button and select "Show All Symbols."
Of course, it will be very difficult to find pairs in this list at first, so in order to avoid confusion most traders study the descriptions of the various trading instruments that can be found on our website. Here you will find a table listing the meanings of each symbol, the commission amount taken by the market for each type of transaction (spread) and the broker’s fee for carrying your transaction through the night (swap). We’ll tell you more about that a little later, but for now let's find the EURUSD in the list. In order to quickly find this or any other tool, start by clicking anywhere in the “Market Watch” window. Then, start typing the first letters of the pair’s trading symbol. For example, to search for the euro-dollar symbol, type: "EUR..." and you will immediately find the EURUSD selection. Please note that the most popular currency pairs are at the top of the list: EURUSD (buy euros for dollars), GBPUSD (pounds for dollars), USDCAD (US dollar - Canadian dollar), USDJPY (dollar-yen), NZDUSD (New Zealand dollar - United States dollar), AUDUSD (Australian dollar - United States dollar), USDCHF (USD-Swiss franc), and then the list continues alphabetically. This is done to ensure that you do not have to search every time for these popular symbols. Once you have chosen the EURUSD symbol, you need to drag it to your chart window.
How do you open a deal?
Look at the EURUSD chart. It’s best to start out in the 15-minute time-frame (M15) view. Suppose that the price starts to drop and using your demo account you decide to open a selling deal, so that when the price falls even lower, you can close the deal and take your profit
And using your demo account you decide to open a selling deal, so that when the price falls even lower, you can close the deal and take your profit. To do this, click the "New Order" button on the top panel above the chart.
In this window, you first confirm the instrument you want to transact in the "Symbol" field. Then, in the "Volume" field, choose the amount of the transaction, i.e., a whole lot or a fraction of one (by the way, you can also type in the amount yourself). Next, in the "Comment" field you can attach a note to the transaction, for example: "Transaction Based on Election News from America." This is useful for analysis of your trading activity and eventually you’ll start to feel what news work for you and what news work against you. This is when you begin to develop your trading strategy. In addition, if you want to use trading robot, which will open the deal for you, you can use the "Comment" field to serve a useful purpose. You can enter a combination of different indicators upon which your trading strategy will be built. We'll talk about that in a future section, but for now just make note of this. Also in "New Order" window you need to choose the execution type: “market execution” (the deal opens immediately at the specified price) or "pending order" (you can specify at what level you would like the deal to open, and once the price reaches that mark, you will enter the market). For now, we’ll choose "market execution."
What do bid, ask and floating spread mean?
You may have noticed that in the “market watch” window there are two columns: "Bid" and "Ask." The best way to understand this is by looking at the "new order" window that we just opened. You see two buttons in the middle: "Sell" (red) and "Buy" (blue). Accordingly, the red chart on the left (bid) shows at what price you can open a sell transaction for the EURUSD instrument and the blue (Ask) chart - at what price you can open a buy transaction. These two rates differ slightly from each other, as well as from the price you see on the main chart in the Terminal. The difference between these quotations is the market commission, or spread. Let's click on “Sell” and open a transaction for the sale of our pair at the bid price.
The Bid price is always a little lower than the current price (and, of course, than the Ask price). At the bottom of your screen, below the chart, you will see all the information related to your open transaction and the changing size of your profit.
Once you open any transaction you will initially start out with slight minus until the price chart move for a few points and until you cover the spread. Only after that will you start earning money. If you click on “Buy,” transaction to Buy will be opened at the risk price and, as we previously mentioned, it will be “above market prices” meaning that it is a bit higher than on the chart." By the way, you may be wondering what the letter “f” means after the symbol in some currency pairs. This indicates a floating spread (flex), that is, a fluctuating commission spread. Depending on the market situation and the current news, the commission amount may go up or down, while the commission on pairs with fixed spreads remains the same no matter the conditions. In other words, the difference between the Bid and Ask prices in pairs with “f” at the end of the symbol are always changing, while the others remained unchanged.
How do you monitor an open position?
If you view your transaction in the "Trade" tab below the chart, you will see the following: "order" (the transaction ID of your deal, or ticker), time (the exact Terminal time when the was opened), type (Buy/Sell or pending order), volume (how many lots or fractions are involved in the deal), "symbol" (instrument used in trading), price (the market quote at which you carried out the transaction), "S/L" (the level at which you set your stop loss), and "T/P" (where you set your profit line, or take profit). Then there are the charts: “Price,” which shows the current price and is constantly changing, "Commission" (this is an additional fee for trading stocks and futures contracts; in our case this chart shows zero), the "Swap" chart (this is the amount of the Commission that will be paid in order to carry your transaction through the night to the next trading session) and "Profit" (how much you currently have earned or lost). Such gain or loss is called "paper" or "floating" because you have not yet received it (after all, the deal is not closed) and they are constantly changing, or “floating.” Click right mouse button anywhere in the window, and you will see another tab called “Profit.” There you can choose displaying mode: in points of price movement, in currency of your account (it can be dollars, euros, as well as rubles) or in currency of the transaction.
It is most convenient, of course, to see your income in the currency used for your deposit. When your transaction is closed, you are able to find it here, but you need to access it through the “Account History” tab. The second line, or “Take Profit” line, will be highlighted in green if the position is closed with a profit.
And those that will be closed with a loss by stop loss order will turn red.
If you decide to close the transaction manually, they will not be highlighted.
You will receive a “Daily Statement” of your completed transactions via email to the address you listed when you set up your account. Also, this information is available to you at any time in your account in "History" and "Records" sections.
How do you limit your losses?
So, since we have opened a deal, over time we will either start earning or lose funds, if we did not accurately predict the direction of prices. In both cases, we need two types of safeties. The first limits our possible loss (stop loss), and the second helps us to take our profits at the right time (take profit). Since we chose to open a Sell transaction, the higher the price goes, the more we lose. So our stop loss should be set at a level higher than the opening price of the transaction. For example, let’s suppose its 10-15 points to start out. Have a look at the quote and set the limit. To do this, go back to the panel below the chart where the line with your transaction is located. Click right mouse button and select "modify or delete order.”
In the new window, you will see that you can use the default stop-loss or manually enter your own quote.
You will also see the “take profit” field nearby. Here you can also choose to keep the default quote or enter your own.
For a sell transaction, the stop loss should be set above the opening price and while take profit should be set below the price. For buy transactions it’s vice versa. Professional traders recommend to set the take profit three times higher than the stop loss. Let’s do the same now. It turns out that it should be 30 points above the current price. You can increase the value of take profit and stop loss manually as well as by using the up-down arrows. One arrow step is equal to one price point. There are some traders who like to set the take profit the same as the stop loss, preferring a difference of 10-15 points. This is called "market noise." They believe that this way the transaction will almost certainly be completed the same day, as the price fluctuates up and down. But, this is not always the case. So, the option that works best for you will be found after a few training trades on your demo account. Of course, there is no 100% guarantee of earnings using one method or many different trading strategies have been developed over time using market indicators and trading robots, which traders call "advisers." In the third section of our training we will talk more about not just opening transactions, but doing so intelligently. Since our deal hasn’t closed yet, let's get acquainted with the Terminal.
What other important functions does the Terminal offer?
We already mentioned that you can change and move almost everything in the Terminal. So, the size and location of all the windows and panels in your terminal can be changed by dragging and stretching the charts. Try to adjust your trading desktop in a way that is the most convenient to you. You can close any windows you don't need by clicking on the X in the upper right-hand corner. If you want to increase the size of your charts, you can click on the magnifying glass with the plus or minus on the top panel.
Nearby you will find the "auto scroll" button.
If you click it, then every time the price changes even one point, the chart will shift to show you the current price at that moment, even if you have scrolled back to see what happened yesterday. This makes it difficult to view historical data. It’s better to deactivate this function first before scrolling back through historical data.
You will also see an "indicators" button, which is duplicated in the "Navigator" window. A lot of things are duplicated in the Terminal in order to give you the option of creating the view that suits you best.
In the "Navigator" window, which is located to the left of the chart, you will find information about the account which is is currently open (you can change it). Here, you will also see the list of technical indicators that can be used to examine the movement of prices and make predictions about where they will go next.
In the same terminal window, you will also find some pre-loaded trading robots that can conduct transactions on their own according to their programmed algorithms, indicators that have been uploaded by other traders, as well as scripts – trading scenarios that you can program yourself.
To do it, click the right mouse button on a script and choose "Edit" or "Create" if you want to re-write the entire script.
In addition, you can click right button on any indicator or script and select "Add to Favorites." In the nearby “Navigator” tab, you will see only those scripts or indicators that you have added to your favorites.
Also, any indicator can be dragged to a chart to see how it looks and how it can help you in your trading.
What is the volumes chart?
This is a helper chart which, if you drag it to the main chart, will place itself at the bottom right corner of the window and will indicate how many lots participated in your various transactions during the chosen period of time. The more lots are opened in the market at that time, the higher the columns will be. So, how do you build a volumes chart? Upon opening the Terminal, press Ctrl + L or choose “Volume” from the drop-down menu at the top of the “Charts” tab.
Another chart with columns of varying sizes will appear under your main chart. Let's open the 1-minute view of the EURUSD instrument. Now, each candlestick shows the range in which the price fluctuated during the last minute and under each candlestick you see a volume column that indicates the volume of transactions opened by traders (i.e., did they take a risk, invest, or did they just wait and watch).
It is important to know that if the small columns are getting shorter and shorter, that means that the trading volume is going down, signaling a reduced interest among traders in the current pricing dynamics (future growth expectation may be waning). Consequently, you can expect the current trend to reverse itself (possibly a sharp decrease) or simply a temporary stabilization of prices (flat). Columns that are increasing in height signal an increasing trading volume and increasing interest among traders in the current price. Most likely this trend will be strengthening.
What is on the top panel?
Just like in a web browser, the upper panel of the Terminal is the most important and will never go away, even if you close all the other windows. You can customize the toolbar by right-clicking on it with your mouse. The default menus are:
File - this button is useful if you want to open anything (new account, new schedule), change users, save anything or exit the Terminal.
View - this menu is used to configure the way your terminal looks. Here you can change the menu language, customize the toolbar, as well as remove or add any window. So if a window suddenly disappears, now you know where to go to get it back.
Insert – by clicking on this button, you can choose additional lines for your chart. These indicators can help you to predict the direction of price in the near future: will they rise or fall. There is also an option to add text to your chart. This can be handy if you want to create a reminder for yourself.
Charts – here you will find a list of all the objects that you have dragged onto your chart during your experimenting. You can remove some of them or all at once. There are also duplicated functions such as time-frames, bars or candlesticks, zoom-in or zoom-out, etc.
Tools – you can start a new transaction from this menu, launch the MetaTrader editor to write a script, access advisers or view an archive of prices in the form of a table for a specific instrument over any period of time.
Window - click on this menu to change your settings, for example, to display several charts for different instruments. To get started, click "new window" and select instrument that appears. Then, when you have a lot of windows opened, you can cascade them horizontally or vertically.
Help – this is a very important one. Here you will find links to technical analysis training: you can participate in automated strategy competitions and learn all about mobile trading. If you want to learn how to write successful scripts and create trading robots that will make your market trading more successful, you can visit the MQL4 or MQL5 communities. Here you will find a tutorial, various documents, articles, codes list, and even access to the MQL Developers Forum.
Explore the Terminal a little bit on your own - open and close menus and windows – and try to get used to the way everything works. The Terminal interface is very user-friendly and, as we mentioned before, much of it is duplicated in several locations. Then, after your experimenting, the answer to the following question will definitely come in handy:
What do you do if you have deleted something and don't know how to recover it?
If you accidentally delete…
…the main trading window (the “Terminal” window), press Ctrl + T
…the panel with all of the trading symbols (“Market Watch”), press Ctrl + M
…the “Navigator” panel, press Ctrl + N
…the dotted grid on a chart, press Ctrl + G
…the volume chart, press Ctrl + L
…the chart window: just drag and drop any instrument or currency pair into the empty space and a new window will appear.
If you accidentally drag one of the windows somewhere and don’t know how to get it back, click on the window’s header-tab and drag it where you want. Note: the "Terminal" window’s header-tab is on the left side, not on the top.
About senang hati
Hi, My Name is Lamet Se. I am a webdesigner, blogspot developer and UI designer. I am a certified Themeforest top contributor and popular at JavaScript engineers. We have a team of professinal programmers, developers work together and make unique blogger templates.
0 komentar:
Posting Komentar