THE COMPLETE CFD GUIDE

Transcription

1 THE COMPLETE CFD GUIDE 1

2 TABLE OF CONTENTS: Introduction 03 About Opteck CFDs Definition 7 Registration 8-9 Deposits Withdrawals CFD Assets Things to Know Order Types Account Information Examples of Opening and Closing Trades Examples of an Account Balance Glossary FAQ What Does it Take to Become a Profitable Trader

3 Introduction The complete CFDs guide was written by our top market experts in order to fit all levels of expertise. You will find it helpful regardless if you're a beginner or an experienced investor. This guide's purpose is to provide you with the most extensive introduction to the world of CFD trading, including a breakdown of all the various tools and features presented in our trading platform. We advise you to sit back, relax and read this guide before you start trading on the platform. This way, as you familiarize yourself with all the tools, features and terms, it would become much easier and simpler for you to focus on sharpening your trading skills. We hope you enjoy this ebook and get the competitive edge you need to succeed. We wish you successful trading! 3

4 About Opteck Since 2011, our team of industry professionals has been constantly providing both beginners and advanced traders worldwide with an innovative and user-friendly trading experience. In a world filled with financial institutions and investment choices, we strive to provide an alternative that is as simple as it is unique; To create a seamless and unmediated environment, where EVERYONE can trade and earn. Opteck is a fully licensed and regulated broker that provides you with the security and protection you need to invest with complete confidence. 4

5 EDUCATIONAL INFRASTRUCTURE Our educational materials allow even the most inexperienced of traders the ability to understand the financial markets efficiently, quickly and successfully. Our industry professionals assembled a collection of ebooks, video courses and webinars exclusively designed to implement on our platform. Our personal account managers are available for 1-on-1 strategy sessions that will take your training process one step further. Opteck Customer Support We exist to serve customers whenever they need it, wherever they are. We believe in listening, understanding expectations and working around the clock to exceed them. Our multilingual 24/7 customer support is accessible via phone, chat or . From the first call, to your personal account management, our world-class service accompanies and assists you every step of the way. 5

6 Our Platform Creating products that are as elegant and stylish as they are easy to use is how we implement quality and simplicity acrossthe-board. Opteck's trading platform was created through years of market research, and is designed with you, the trader, in mind. Available for desktop and mobile, its advanced interface is packed with all the latest features and live-streamed market info that will take your trading to the next level. Transparency and trustworthiness We do business in an open, direct and sustainable way, and communicate problems as honestly as we do achievements. It's easier to solve them this way. The asset market prices we showcase in our platform are live streamed from several market data providers, allowing you to implement financial news and fundamental analysis in real time. Opteck presents a single Option rate for Call and Put to avoid any additional market fees. 6

7 CFDS DEFINITION CFDs or Contracts for difference are agreements between you and the market maker which allow you to speculate on the changing values of a variety of underlying assets without having to take ownership of them. The underlying instruments cover a broad spectrum and traders can choose from Foreign Exchange, Shares, Indices or Commodities. Gains or losses are made based on how the underlying instruments prices change relative to the price at the initiation of the contract. When trading CFDs, you agree to exchange the difference in value of the CFD between when the CFD is opened and when it is closed. If you correctly predict the direction of an instruments price movement, your account will be credited with the profits from this move. If you do not correctly predict the direction of an instruments price movement, your account will be debited with the losses from this move. CFD trades can be kept open for as long as the margin requirement are maintained or in the case of certain instruments, until expiry. 7

8 REGISTRATION To get started with CFD trading you will first need to open your trading account. As a part of the registration process, you ll be asked to fill in your personal details. Please make sure not to miss any of the required fields. Simply follow the steps below to complete your registration: 8

9 OPENING A TRADING ACCOUNT From the home page on our website: 1. Click the Open Account link, located on top of the page. 2. Fill in the Join Us Now form and press the Sign Up button. You will then get an with your credentials (username and password) and an exclusive welcome package. FX CFDs 9

10 DEPOSITS The process of funding your trading account is quick and simple. Deposits can be made via the trading platform or with the assistance of an account manager. To fund your account you will first need to log in, then click the Deposit button located on the right-hand side. 10

11 Deposit Page In stage 1 of the deposit page, you will be asked to enter your billing information and in stage 2, to select a payment method and enter your payment information (from the provided options). Please enter the required billing and payment information and press on the Deposit button. Please note: Client s account balance must be sufficient to cover all opened trading positions at all times. FX Opteck accepts a variety of payment methods, including Visa, MasterCard, Neteller, Skrill, PaySafe, CashU and Bank Wire Transfers. 11

12 WITHDRAWALS We offer ultra-fast and 100% secure withdrawals. For your convenience, we allow a broad range of currencies and a wide selection of withdrawal methods, such as bank wire, credit cards and more. All withdrawals are processed and approved within 3-5 business days from the time the request was issued. 12

13 Withdrawing Funds: To withdraw funds from your account, go to the Trading Room and click the Withdrawal link under the Deposit button, located on the right side. Withdraw Funds Page: Fill in the amount of money you wish to withdraw and click Witdraw. An account manager will contact you to finalize your request. Please note: in order to withdraw funds, you must first verify your account. FX CFD 13

14 CFD ASSETS 14

15 As we have seen, traders can choose from a variety of financial assets to trade using CFDs, let us take a look at each of these assets and their different characteristics before moving on to examples of how Opteck allows you quick access to these markets; FOREX The Foreign Exchange Market is a decentralized global marketplace for the trading of currencies, also known as the FX or Forex market, it is the largest and most liquid market in the world, with a daily turnover of over $5 trillion. Trading is divided into three main sessions: the Asian session, the European Session and the North American Session, which open one after the other throughout the day and overlap, ensuring that the market is operational 24 hours a day, 5 days a week. When looking at a forex pair, you will notice that they are always quoted as two currencies, for example the EURUSD or the GBPUSD, the first currency in every pair is called the base currency, and this is the one that you are being given the value of. It is also the one on which you are performing the action of either buying or selling When looking at a forex pair, you will notice that they are always quoted as two currencies, for example the EURUSD or the GBPUSD, the first currency in every pair is called the base currency, and this is the one that you are being given the value of. It is also the one on which you are performing the action of either buying or selling when trading Forex. The second currency is the quote currency, the figure quoted in an exchange rate is denominated in this currency. Essentially when you see an exchange rate, you are being informed what the base currency is worth in terms of the quote currency. A EUR/USD exchange rate of 1.20 means that 1 euro is worth 1 dollar and 20 cents, or that $1.20 is required to purchase 1 euro. When purchasing 100,000 EURUSD at 1.20, you are said to be holding 100,000 EUR or 120,000 USD. When EUR/USD rises, this means that the euro is growing higher and/or the dollar is getting weaker. A move of the exchange rate to 1.33 would mean that your 100,000 euros are now priced at 133,000 USD and you have effectively made a profit of 13,000 USD. Currency crosses are priced as , and have increments known as pips and points. Therefore when the EURUSD moves from to , we say the pair has moved 1 point, when the EURUSD moves from to , we say the pair has moved 1 pip (10 points). 15

16 STOCKS Also known as a stock or equity, a share is a tradable security which grants the purchaser ownership of a fraction of a corporation, as well as a claim on a percentage of its assets and earnings (dividends). When trading CFDs, you do not take ownership of the stock and therefore have no rights other than receiving/paying any speculative gains/losses made from the difference in price on initiation of the CFD and the exiting of the contract. Shares are priced as and move in increments of cents, so a stock that is priced at that goes on to move to , is said to have moved 5 cents. COMMODITIES Commodities are goods of standardized quality and quantity that are traded over an exchange. Commodities fall into two broad categories: hard commodities such as crude oil, gold, silver and platinum that are extracted from the earth, and soft commodities such as wheat, corn, coffee and sugar that are cultivated and harvested. Commodities are priced in US dollars and structured as with increments known as cents, so a commodity that is priced at that goes on to move to 31.40, is said to have moved 15 cents. 16

17 INDICES Indices are imaginary portfolios of securities which represent the relative health of a given market or sector of the economy. For example, the S&P 500 tracks the value of 500 of the largest American companies, and represents around 75% of the American equity market. Its value represents the aggregated performance of all the stocks that comprise it. Though each index has its own calculation methodology, what investors look for is the percentage that an index rises or falls above or below its base value. Indices are not technically investment vehicles. However CFDs allow investors to take positions on the changing fortunes of the economic sectors represented by indices. Shares are priced as and move in increments of cents, so a stock that is priced at that goes on to move to , is said to have moved 5 cents. Indices are priced in the currency of the host country in which they are a representive of and are structured as and have minimum increments known as cents, so an index that is priced at $ that goes on to move to $ , is said to have moved 9 dollars and 60 cents. A UK index will move in pound and pence. 17

18 CFDS THINGS TO KNOW In the past, these types of assets were only accessible and tradable by banks, corporations and wealthy individuals. This is because the standard trade size of the contracts are large and require a large amount of invested capital as margin to take advantage of any movement in the price of the assets. In fact, It wasn t until recently, with the creation of CFDs and the use of leverage, that everyday investors could take part in the largest markets in the world and together with sound risk management be successful with a relatively small initial investment. Let us take a look at what the spread, trade size, leverage and margin are and how they can impact your trading. 18

19 SPREAD Market prices are quoted in pairs known as bid/ ask. Bid and ask prices are determined by the most a buyer is willing to pay for a unit of a given instrument, and the least that a seller is willing to accept in order to sell it. The spread is the difference between these two figures. The bid is the price at which an underlying instrument can be sold at and the ask price, also known as the offer, is the price at which an underlying instrument is available for purchase. So when trading on a currency pair, for instance EUR/USD, when listed as / , the bid price for this currency pair is the first figure of , meaning that selling 1 Euro will earn the seller $ While, the ask price for this currency pair is , meaning that 1 Euro costs $ The difference is the spread, which in this case is 1.8 pips. The same can be said for commodities, stocks and indices. An ounce of gold will be priced at / , implying that gold can be bought at 1106 and sold at at that point in time. The difference is the spread, which in this case is 50 cents. TRADE SIZE The trade size of an asset refers to how much of an asset you buy or sell, the bigger the size you trade the larger your exposure to a specific asset and the larger your potential gains or losses. There are minimum size thresholds in place, which vary depending on the instrument being traded. For example, a minimum size of $2500 can be taken on FX trades, now this might sound like a lot but don t forget about leverage. Let us take a look at leverage. 19

20 LEVERAGE Leverage enables you to command positions that exceed the value of your initial investment. Any time you borrow money or use a financial instrument such as a CFD to make an investment that exceeds the value of your capital, you are using leverage. Leverage is expressed as a ratio. Opteck offers its clients leverage from 5:1 (5 times the amount invested) to 200:1 (200 times the amount invested) depending on the asset being traded. The leverage for each asset class is as follows; Forex and commodities have a leverage of up to 200:1 (ie. You need 0.5% of the notional value in margin) Indices have a leverage of 100:1 (You need 1% of the notional value in margin) Stocks have a leverage of 20:1 (You need 5% of the notional value in margin) Let us assume that we want to enter CFD position as follows; $2500 in EURUSD,2 ounces of GOLD at $ , 3 contracts of DJIA at $16000 and 10 stocks of APPL at $100, what is the required investment you would need in your account? $ (2* ) 100 (3 * 16000) 100 (10*100) 20 $12.50 For the EUR/USD position $21 For the GOLD position $ For the DJIA position $50.00 For the APPL position All in all, you would need $564 in your account to open up an exposure equal to $53, The only requirement for this benefit is that you maintain the required investment as a margin in your account so that this position can be maintained. Before leverage was available you would have needed the whole $ 53, in margin to place these trades. Let us take a closer look at margin and its components. 20

21 MARGIN Margin can be thought of as a deposit that is required when using leverage. Each time you open a leveraged position a certain amount of your account balance is secured as margin. The exact amount is dependent on the size of the position and the leverage which is being used. Margin is there to guarantee the position you have opened in case it goes against you. Just as each pip up or down in an open trade will be reflected in your account balance, it can also eat into your margin should it turn against you. Initial margin requires that the whole margin is available in your account before a position is opened then reverts to requiring a maintenance margin (minimum margin you should have in the account in order to keep your open positions active) of a relative percentage of this value to hold the positions and for further calculations. In our previous example, the initial margin required is $564 and the maintenance margin is $282. Your available margin is the amount you have in your trading account which is not currently being used to guarantee any positions; this amount can be used to guarantee the opening of further trades. If your available margin is less than the maintenance margin required to open additional trades, the trades will not be opened. The available margin is calculated as equity less the maintenance margin of your open positions. If we have an equity of $1000 in our account, we would have $ 718 ( ) in the available margin and can only open positions whose maintenance margin requirements are equal to or less than $718. Your equity is your trading account balance plus or minus the profits or losses from any open positions you have. Your margin usage is the percentage of your equity currently being used as maintenance margin and is calculated as maintenance margin divided by equity multiplied by 100. In our example, this would mean our margin usage at the time of opening is at 28.2% ($282/ $ *100). When this figure increases to 100% it means that all of your equity is being used to cover the maintenance margin and the system will begin closing out positions to reduce this figure. 21

22 Should your equity drop to a level that increases your margin usage to 70%, you will receive a margin alert, alerting you to the fact, and depending on market volatility, giving you the opportunity to add additional funds to maintain any open positions. Should no action be taken by you and your equity falls below the maintenance margin, leaving your margin usage above 100%, you will receive a margin call/stop out, in which the system will begin liquidating your positions one by one, starting from the most unprofitable until the margin level falls below 100% or all positions are closed. This is why you need to be well capitalized and maintain a margin usage level as far below 100% as possible. This will allow you to stay in a trade for longer should it move in the opposite direction, so if you are convinced of the underlying trend you can wait for it to re-establish itself without risking a margin call. Let us summaries our example: We have: $ (2* ) 100 (3 * 16000) 100 (10*10) 20 $12.50 For the EUR/USD position $21 For the GOLD position $ For the DJIA position $50.00 For the APPL position This means that we have a total exposure of $53, and require $ as initial margin and a maintenance margin of $ Therefore; 77% A Margin alert will be issued when your margin usage reaches 77%. When your equity falls below your maintenance margin of $271.50, resulting in your margin usage increasing above 100%, the account will receive a stop out or forced liquidation starting with the most unprofitable trade first, at which point the system will recalculate the margin usage for the remaining positions, liquidating the next most unprofitable trade until the margin usage is restored below 100% or all positions are closed. 22

23 It is your responsibility to ensure that your account is sufficiently funded at all times, If the Available Margin on your account falls below the required collateral limit(s), you will only be allowed to close open positions, until the Available Margin on your account is back in excess of the required margin percentage for all open positions. If any of your positions are denominated in a currency other than the base currency of your account, they will be continually valued at the applicable exchange rate. Your Account Statement report will then value all your positions in your nominated currency. ROLLOVER INTEREST Initial margin requires that the whole margin is available in your account before a position is opened then reverts to requiring a maintenance margin (minimum margin you should have in the account so that you do not receive a margin call/stop out.) of 50% of this value to hold the positions and for further calculations. In our previous example, the initial margin required is $564 and the maintenance margin is $282. When a position is held at the end of a business day, it rolls over to the next value date and becomes subjected to a swap charge or credit, based on the interest rate of the relevant currency being held. For Forex, traders are charged interest on the currency they have borrowed and are paid interest on the currency they have bought. So, depending on whether the quote currency s interest rate is higher than that of the base currency, a trader may owe interest, or be owed interest when a roll over occurs. For Commodities, US Indices and US Stocks will be exposed to US interest rates while European Indices and Stocks will be subject to EU interest rates. Rollovers are calculated in points, and are automatically converted into the account base currency at 00:00 GMT. CURRENCY CONVERSION Your account balance is always denominated in one currency, which can be in either USD, EUR or GBP. However, assets can be priced in another currency and depending on the asset, your account information will need to be adjusted so that all positions are priced in your accounts currency automatically by the system which uses the market prices at the specific time of conversion. 23

24 For open positions, the system converts the Initial Margin and Maintenance Margin to your base currency at the time of opening and only once the positon is closed does the system convert the net P&L to your own currency- till then the position P&L is valued according to the asset currency. CFDS ORDER TYPES There are two types of orders that are required to successfully open and close a CFD, one is the entry order and the other is a closing order. These orders can take the form of a market order, in which you simply click to buy or sell an asset and then select to close that asset by clicking to do so at the current market prices. Or, an order can be in the form of a pending order, which are specific instruction to buy or sell an instrument when certain preconditions specified by the trader are met.pending orders fall into two categories, limit orders and stop orders. Essentially, when placing a pending order a trader is informing their broker that they do not want the current market price, but rather that they only want their order executed if the market price reaches a certain level. Limit orders Limit the price at which a trader is prepared to buy or sell. There are two types of limit order; a buy limit order instructs that an instrument is bought at a specified price or lower, a sell limit order instructs that an instrument is sold at a specified limit price or higher. A take profit order is a popular limit order which, should price action reach a certain value predefined by the trader, liquidates a position and realizes the resulting profits from it. Stop orders Are pending orders which also instruct that positions are opened or closed when specified prices are reached. Buy stop orders are entered above the current market price and sell stop orders are entered below the current market price. Stop orders are used to lock in profits, restrict losses, or to go long when an asset s price is rising and short when it is falling. A Stop-loss order is used to minimize losses incurred by a trader in the event that a trade moves in an unprofitable direction. This is done by automatically closing an open trade when the price reaches a level predefined by the trader. 24

25 You should note that your Orders may be executed regardless of the length of time for which your Order is reached or exceeded. In volatile markets our quote might gap through your Order level, so that the closing level (which still limits your loss) or the opening level may be beyond the exact level specified by you. It is important to understand that when you place an Order, you are dealing with Opteck as the principal; you are not dealing on the underlying market. While we seek to execute your order at the requested price, it may at times not be possible and the next best price will be executed instead. This might either be in your favor or against depending on market volatility. Margin requirements are not affected by adding an Order to a position. 25

26 CFDS ACCOUNT INFORMATION 26

27 Account Currency: Balance The amount of money held in your account excluding P&L of open positions. Equity Your account balance, including P&L of all open positions. Balance + P&L Available Margin Funds available for trading (unattached to any position yet). % Maintenance Margin Amount currently used to maintain your open positions. In order to keep your open position/s active, ensure that your equity exceeds the maintenance margin level. Otherwise the position will automatically close. Open P&L Your total Profits and losses in all open positions. Σ(P&L + Daily premium * number of days) Margin Usage The percentage (of the 100% equity) you are currently using in your open positions. Margin usage (Maintenance margin/equity) * 100 During the day, on a real time basis, your account balance(s), including all open positions, are valued against the underlying assets current quote. Therefore your Equity, Available Margin and P&L are constantly calculated in line with market movements. 27

28 Buy Sell CFDS EXAMPLES OF OPENING AND CLOSING TRADES 28

29 Let us now look at an example that will place the above information in a practical context. You open an account with Opteck and deposit USD 1,000, your balance is now $ 1,000. You analyze the markets and decide to invest in 3 assets; Buy 30,000 GBP\USD at market price of / Buy limit of 100 contracts of Ford stock at Sell stop of 5 ounces of GOLD at POSITION 1 Position 1 is opened immediately because it is a market order, we are buying therefore the positon is opened at the ask price of Our exposure is 46,806 USD ( *1.5602), this implies that we have a margin requirement of USD (46,806/200). Don t forget that all margin and profit and losses are converted to your deposit currency. Buy 30,000 at ask price: 30,000 x $46,806 USD The contract is leveraged on a 1:200 ratio. We convert the contract size to the account currency and the apply the leverage 46, USD (Initial Margin) The broker earns the Spread. In this example, the difference is (known as two pips ), which amounts to $6 USD. It is built in to the price when you clicked buy and again when you click sell. ( ) x 30,000 $6 USD 29

30 You place a 25 pip stop loss and a 50 pip take profit on your position and step away from your computer. The position remains open overnight until the take profit is hit the next day. When a position is held open overnight, you are paid or debited a premium based on interest rate differentials. In this example: GBP/USD has a daily swap BUY of Points The next day the price of GBP/USD has increased by 50 pips to (bid)/ (ask). The trade has moved in your favor and your take profit has been triggered 30,000 x x 30,000 -$5.7 USD $46,950 USD And the position Is automatically closed at the bid price Your gross profit is the difference between the opening position and the closing position Your net profit is the gross loss + the rollover costs. 46,950-46, $144 $138.3 USD 30

31 POSITION 2 The price of Ford at the time of placing the limit order was 13.00/13.05, only once the ask price (remember we are buying) reaches would our order be triggered, until then no action will be taken regarding the position until it is triggered or canceled by the trader. Assume the market price drops and the Price of Ford is now at 11.95/ The Limit order will be triggered at Buy Sell Buy 100 at ask price: 100 x $1,200 USD *remember the price of a stock is dependent on which country The contract is leveraged on a 1:20 ratio. We convert the contract size to the account currency and then apply the leverage. In this case, it was the same 60 USD (Initial Margin) The broker earns the Spread. In this example, the difference is 0.05 (known as 5 cents ), which amounts to $5 USD. It is built in to the price when you clicked buy and again when you click sell. 1,200 it is from. 20 ( ) x 100 $5 USD 31

32 You place a 100 cent stop loss and a 200 cent take profit on your position and step away from your computer. There is no cost or fee charged for placing a Stop Order. Should the market move against you, your position would be closed at 11.00, however, should the market gap straight through your Stop Order, your position would be closed at the next available level that is considered representative and fair. The position remains open through the US session but moves against our favor, luckily we have a stop loss in place and our losses are restricted as follows. Ford has decreased by 200 cents, but we have a stop loss at 100 cents which is triggered And the position Is automatically closed at the bid price Your gross loss is the difference between the opening position and the closing position 100 x ,200-1,100 1,100 USD $100 32

33 POSITION 3 The price of Gold at the time of placing the limit order was / , only once the bid price (remember we are selling) reaches $ would our order be triggered, until then no action will be taken regarding the position until it is triggered or canceled by the trader. Assume the market price drops and the price of Gold is now at $ / The stop order will be triggered at $ Sell 5 ounces at bid price: 5 x $5,250 *remember commodities are priced in USD. The contract is leveraged on a 1:200 ratio. We convert the contract size to the account currency and then apply the leverage. In this case it was the same 5, USD (Initial Margin) The broker earns the Spread. In this example, the difference is 0.50 (known as 50 cents ), which amounts to $2.50 USD. It is built in to the price when you clicked buy and again when you click sell. ( ) x 5 $2.5 USD Gold continues to drop another $10 at which point you decide to manually close the position to book your profits. Gold has decreased by $10 to / Your gross profit is the difference between the opening position and the closing position 10 x 5 50 USD 33

34 CFDS EXAMPLES OF AN ACCOUNT BALANCE 34

35 You signed up and deposited $1000 via credit card Balance: $1000. (Deposits - Withdrawals + P&L of closed positions) P&L = $0. (Total profit and loss of all open positions including rollover premiums) Equity: $1000 (Balance + P&L of open positions) Maintenance Margin: $0. Available Margin: $1000 (Balance + P&L of open positions - Maintenance Margin) You buy 50 Gold ounces at a market price of $ The total amount bought is: 50*$ = $60000 The Initial Margin that is needed for Gold is 0.5%: $300 The Maintenance Margin that is needed to maintain a Gold position is 0.25%: $150 10:00 AM If your equity falls below $150 you will get a margin call and the position will be closed automatically. Balance: $1000 P&L = 0 (usually the Spread of Gold is 50 cents so you would have a P&L of -$25) The Available Margin after You bought the Gold is: $850. ($ %*$60000 = $150). Equity is $1000 ($ $0). 35

36 Gold jumps to $1205. 'Balance': $1000 'P&'L: +$250. (50*$ *$1200) 12:00 PM Available Margin: $950. ($ %*$ $250= $1100). Equity: $1250 ($ $250). Gold jumps to $1208. 'Balance': $1000 'P&'L: +$400. (50*$ *$1200) 12:15 PM Available Margin: $1100. ($ %*$ $400= $1250). Equity: $1400 ($ $400). You close the Position. Your P&L is $400 on the trade. Balance: $1400. P&L:$0 Equity: $ :15 PM Available Margin: $1400 Maintenance Margin: $0 36

37 GLOSSARY 37

38 PIP (Point in Percentage): The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal. Bid Price: Price for which the market maker will buy the base currency. Ask Price: Price for which the market maker will sell the base currency. Spread: The difference between the Bid price at which you can sell the trading instrument and the Ask price at which you can buy the trading instrument. Stop Loss order: This is a stop order that will execute and close a position to limit losses in case of an adverse market movement. When a stop order is executed, it becomes a market order and is filled as soon as possible at the price obtainable on the market. Note that this price may differ from the price you set for the order (Slippage). Limit Order: Limit orders are commonly used to enter a market and to take profit at predefined levels. Limit orders to buy are placed below the current market price and are executed when the ask price hits or breaches the price level specified. Limit orders to sell are placed above the current market price, and are executed when the bid price breaches the price level specified. GTC: A type of limit order that is active until it is filled or canceled. As opposed to a day order, a GTC order can remain active for an indefinite number of trading sessions. If Done Order: An If Done order actually consists of two orders: a primary order that will be executed as soon as market conditions allow it, and a secondary order that will be activated only if the first order is executed. Leverage: The ability to hold an investment position of greater value than your equity. When leveraging your investment, simply deposit a part of the current value of the instrument you are investing in. Rollover: When a position is held at the end of a business day, it rolls over to the next value date and becomes subjected to a swap charge or credit, based on the interest rate ratio between the two trading currencies. Rollover/swap rates are calculated in points, and are automatically converted into the account base currency. Position: An investment in an instrument. For example, when you trade (say, buy) USDJPY, you open a USDJPY position. When you then execute the opposite trade (in this case, sell) USDJPY, you close the position. Market Maker: A recognized institution or individual willing to trade certain securities any time that a trader wants to buy or sell. 38

39 (FAQ) (FREQUENTLY ASKED QUESTIONS) 39

40 What are CFDs? CFDs are leveraged derivative financial products. When you trade CFDs, you basically take a position on the change in value of the underlying asset ove rtime. CFDs are derivatives because their value is derived from the value of another asset (such as a stock, commodity, index or currency.) CFDs do not have an expiry date like binaries and they can only be closed by making a reverse trade What is an initial margin requirement? The minimum amount that an investor must have available in their account in order to keep it open, or maintain a specific trading position. It is calculated by multiplying the initial position value by asset maintenance margin %. In other words, the maintenance margin requirement is considered as the minimum amount to be collateralized in order to keep a position open. What is an entry order? An entry order acts like a conditional order to buy or sell at a price other than the current price What is a bid price? A bid price represents the maximum price that a buyer, or a group of buyers, are willing to pay for an underlying financial asset. In other words, it is considered as a price quotation that indicates the best price at which an underlying financial asset can be sold. What is an ask price? An ask price represents the minimum price that a seller, or a group of sellers, are willing to receive for an underlying financial asset. In other words, it is considered as a price quotation that indicates the best price at which an underlying financial asset can be bought. What is the time zone presented on the platform? Opteck s platform presents the time zone according to GMT (Greenwich Mean Time). When can I Trade? Financial assets are available for trading as long as the financial markets are active. The markets are open throughout the week, apart from Saturdays and Sundays (with the exception of TA-25 and DUBAI). Financial assets that are attached to a specific market, such as indices and stocks, are only tradable if a related stock exchange is operative. 40

41 How to open a Trade? The next 4 steps lay out how to invest in binaries: 1. Select a financial asset- this depends on your personal perspective or the use of different methods described in the ebook. 2. Enter the amount you would like to invest we suggest you read the money management explanation to ensure an effective investment. 3. Choose whether to BUY or SELL the asset chosen. 4. Click Invest. Note: By clicking the Invest button, the investment sheet will allow you to enter this information and approve the execution of the trade. The data on the information sheet will update constantly to reflect the changing price of underlying financial assets. The selection can be canceled at any time by pressing the X button before the transaction has been approved. How does Opteck set the market price of a financial asset? Opteck receives the financial asset value from several market data providers. The accuracy of our market prices is evident when they re compared to several feed providers' prices (considered to be the standard pricing tool for traders all around the globe). The market price at Opteck provides an extra digit, therefore presenting prices through a more precise reflection. What is the rate displayed in the trading box? The rate is a reflection of the financial assets market price. Levels are determined by the Opteck proprietary algorithms, a calculation of the bid price and the ask price of the financial asset in the market. Are these profits taxable? Taxation will generally depend on the tax law governing your country of residence. Opteck customers are therefore responsible for their own tax liabilities and Opteck has no liability over payments of tax. Why am I unable to trade? 1. If your account contains insufficient funds, you will need to fund it before being able to trade. 2. Our trading platform operates within the market hours, quoting real-time market prices. Therefore, there's no trading while the markets are closed. If these are not the reasons for your issue, please contact us at support@opteck.com 41

42 What are my deposit possibilities? Deposits can be made in multiple ways. You can use Visa, MasterCard, Neteller, Skrill, Western Union, PaySafe, CashU and bank wire transfers to fund your account. More details on deposit methods are available on the Funding Process page. What currencies can I use in my account? The account currency is determined in advance by the country from which you have registered. This currency cannot be changed after the account has been administered. Opteck customers can trade with all major currencies. Is there a minimum withdrawal amount? Yes, the minimum withdrawal amount is $100. In order to withdraw funds, you will first need to verify your account. How may I withdraw profits? Log in to your account and press Withdrawal under the Deposit button. Then, follow the displayed instructions for withdrawal: 1. Fill in the withdrawal amount. 2. Click Withdraw. 3. Your account manager will contact you to finalize your request. Must I deposit money to register? No, deposits and financial data are not necessary during registration. What is the meaning of a Reverse Withdrawal? A Reverse Withdrawal allows a withdrawal request to be canceled even if it has already been entered into the system. This prevents situations where a withdrawal may prevent investing activity due to insufficient funds. The reversal procedure guarantees that funds can be reaccredited to your Opteck account and later be utilized for trading. 42

43 What is a Swift code? A Swift code is an interbank transfer code which allows money to be exchanged. Each Swift code has a unique eight-digit code ending in XXX. Your bank will provide you with the code once in need. I forgot/lost my password. How can I recover it? In case you forgot your password, you will need to press the LIVE CHAT box or click on the forgot your password? When trying to login to your trading account, enter your personal details and click send. You ll then receive an to the account used during registration, containing your password reset instructions. In case you would like to change your password, please do the following: 1. Click your username in the middle of the site header and Select Change Password. 2. Fill in your current password in the Old Password field. 3. Fill in your new password in the New Password and Re-type New Password fields. 4. Click Change Password. That's it. You have a new password. Where can I see my transaction history? All account activity may be accessed by clicking the Reports button. Why can't I see a particular financial asset? The only case where a financial asset is not displayed on the platform is when it's not available for trading. All financial assets can be found on the trading platform by pointing on the selected tradable asset or in the Asset Index. How can I change my personal details? Personal details and information can be changed and updated at any time: 1. Click your username in the middle of the site header. 2. Select Account Details. 3. Type your new details in the designated fields and, when done, click Save. You will receive a message indicating your Info has been updated. Do I need to download any software to use Opteck's trading platform? No. Trading with Opteck only requires registration and an initial deposit. How may I switch the display language? Languages can be changed by using the drop down menu at the top of Opteck s platform. The default language after login will be the one selected at registration. In order to change language on a later occasion, please contact our Customer Support team. If you are inside the trading platform and you would like to change the displayed language, click on the Settings tab located in the top right corner of the screen, select a different language from the Select Language drop-down menu and press the Save button. 43

44 What Does it Take to BECOME A PROFITABLE TRADER Turtle Trading; A Market Legend 44

45 Back in the 80 s, legendary commodity traders Richard Dennis and William Eckhardt used to have frequent discussions about their success. Dennis believed anyone could be taught to trade successfully, while Eckhardt countered that Dennis had a special gift that allowed him to profit from trading. An experiment was set up by Dennis to finally settle this debate. Dennis would find a group of people to train, using his rules, and then have them trade with real money. He called his students "turtles" after recalling turtle farms he had visited in Singapore and professed that he could grow traders as quickly and efficiently as farm-grown turtles. The turtles were taught very specifically how to implement a trend-following strategy. The idea was that the "trend is your friend," meaning you should trade call (UP) on the breaking out of the upside of a trading range and trade put (DOWN) on the downside. Dennis had two turtle classes that he personally trained, lasting two weeks. They then went on to trade professionally, under supervision, and earned more than $175 million in an astonishing five years. What can we learn from this historical tale? First of all, it is worthwhile to take note that once the turtles quit their jobs as traders and went home to try and duplicate this same line of work, using their own funds they lost it all. The moment they tried to trade as home-traders, they failed to follow the strict rules of trading. The absence of a supervising manager, overseeing their trading list, opened the door for their individual perspective, driven by psychology and emotions. Once you have the help of your personal account manager, you ll be provided with a professional analysis of your behavior as a trader in addition to critique, and elevate your knowledge and trading skills. Binary trading is the only trading method that allows you to eliminate the noise of the live market by applying a specific pattern of trade, that will actually lower the emotional element and elevate the professionalism of an individual trader. As a result, you d be able to position yourself with a competitive advantage in front of other members of the traders community. As an Opteck trader, you will be granted a broad range of educational tools to help you quickly and effectively understand the financial markets in general, and the art of binary trading in specific. We highly recommend you to use these tools and follow our brokers advice in order to raise your trading confidence and consequently increase your earnings. And while in the process, make sure you properly understand and use the tools we equip you with. 45

46 A few guiding rules to get you started: 1. Base your trading decisions and predictions on the financial assets prices, rather than relying on information from the media. 2. Have some flexibility in setting the parameters for your buy and sell signals. Test different parameters for different markets to find out what works best. 3. Plan your exit as you plan your entry. Decide when you will gain profits and when you will cut losses. 4. Use the average true range to calculate volatility and use this to vary your position size. Take larger positions in less volatile markets and lessen your exposure to the more volatile markets. 5. Don't ever risk more than 2% of your account on a single trade. 6. If you want to make big returns, you need to get comfortable with large drawdowns. Please note: These guiding rules were founded and performed on the stock market. When trading binaries, we can discard rules 2, 3 and 5, and further simplify your trading experience. 46