The Risk/Reward Properties of Bull Spreads

Size: px
Start display at page:

Download "The Risk/Reward Properties of Bull Spreads"

Transcription

1 The Risk/Reward Properties of Bull Spreads

2 ThE RiSk/REWaRD PRoPERTiES of BUll SPREaDS Bull Spreads are versatile instruments. They can be used to trade direction, to trade volatility or, in conjunction with conventional products, as a short term risk-mitigation tool. In all these uses, the key Bull Spread advantages apply a low amount of collateral is typically required, and your risk is strictly capped without the danger of you being stopped out by a temporary adverse move. This means it is often possible to use Bull Spreads to enhance your Return on Risk and Return on Capital Employed over a short term trading horizon. In this document we will compare the risk/reward properties of Bull Spreads with the risk/reward properties of trading the underlying, where risk is managed in the underlying by the use of a stop order. an EXamPlE network of BUll SPREaDS: SPoT The chart below shows a typical pattern of Bull Spread contracts on the spot rate. For, contracts are available with tenors of one day, 8 hours and 2 hours (overlapping each hour). This means there are 10 potential contracts available at any given time. The contracts are created throughout the day, centered on where the underlying is at the time of creation, so there are almost always contracts with fl oors and ceilings close to the latest level of the underlying. The chart below shows the fl oor and ceiling levels for 7 of the contracts available on at 7am ET on a hypothetical day (we ve left out the 6am-8am set of contracts, for clarity) Daily Ceiling 7am-3pm Ceiling am-9am Ceiling 7am-9am Ceiling 7am-3pm Ceiling 7am-3pm Ceiling 7am-9am Ceiling 7am-9am Floor 7am-3pm Floor 10am 11am 12pm 1pm 2pm 7am-9am Floor 3pm am-9am Floor 7am-3pm Floor am-3pm Floor Daily Floor Zooming in Zooming in, we can see which contracts might be of interest to a spot trader. If the trader has a view that is small scale and short term, (that is, he/she is expecting a trade duration of less than a couple of hours with a profi t target of less than 100 pips), the 7am-9am contracts (in lighter blue, here) may offer the most attractive trading opportunities. If the trader has a view going out to the end of the trading day (3pm ET), or is targeting a bigger market move, then the wider 7am-3pm Bull Spreads (in darker blue, here) may be the most appropriate am -3pm Ceiling am -9am Ceiling am -9am Ceiling am -9am Ceiling 7am -9am Floor 5am 6am 7am 8am 7am -3pm Ceiling 7am -3pm Floor 9am am -9am Floor 7am -9am Floor am -3pm Floor Futures, options, and swaps trading involves risk and may not be appropriate for all investors. Any trading decisions that you may make are solely your responsibility. The information presented herein is for informational purposes only. The contents hereof are not an offer, or a solicitation of an offer, to buy or sell any particular fi nancial instrument offered on Nadex. Past performance is not necessarily indicative of future results. The Risk/Reward Properties of Bull Spreads, June 2013 Page 2 of 9

3 7am-9am contracts Let s assume we have a very short term trading horizon, and focus on the 7am-9am contracts. There are three. The highest, shown in red here, has a Floor roughly where the current market is, and a Ceiling 100 points higher. It is priced around 10 pips higher than the spot rate. This is because any buyers of the contract would gain the benefit of a nearby Floor that would cap their risk but never stop them out. The lowest, shown in blue here, has a Ceiling roughly where the current market is. It is priced around 7 pips lower than the spot rate. This is because any sellers of the contract would gain the benefit of the nearby Ceiling that would cap their risk but never stop them out. The middle contract, shown in green here, is centered on the current spot rate and trades almost exactly at that rate it has no nearby Floor or Ceiling to introduce optionality into its price. Note that these prices assume average volatility for and that no major announcements are expected. If, for example, Nonfarm Payrolls were about to be announced at 8.30am, it is likely that Nadex participants would place a higher value on the protection offered by Bull Spread Floors and Ceilings. In that scenario it is likely that the top and bottom contracts would trade further from the spot rate than the 7-10 pips seen here am -9am trading at am -9am am -9am am -9am Contract Bid Size Bid Offer Offer Size EUR/USD (9am) Bull Spread trades above spot rate when spot rate is close to floor EUR/USD (9am) Bull Spread trades at or close to spot rate in middle of range EUR/USD - (9am) Bull Spread trades below spot rate when spot rate is close to ceiling The Risk/Reward Properties of Bull Spreads, June 2013 Page 3 of 9

4 EUR/USD - (9am) Now let s assume we have a view that the, having met resistance, is about to start tracking downwards. One way to trade this move in a limited risk way would be to sell the spot at and place a stop at some key level like, say, This caps risk at 33 pips in most cases (although if the market makes a surprise jump upward, gapping through our stop level, the biggest potential loss could be worse, possibly much worse, than this). Another way to take this view is to short the - Bull Spread, shown here in blue. The risk here would be capped at just 11 pips in all circumstances the Bull Spread cannot settle, or be priced, any higher than its Ceiling level of at any point, regardless of gapping in the market. And the risk cap here has the quality of an option; in other words, the underlying market may temporarily go through the level of the Ceiling without stopping out our position we could still profit if we re proven right later on in the life of the contract. The price for this is that we are selling 8 pips below the spot rate and we are accepting a cap on our highest possible profit just as the contract cannot settle above, neither can it settle below. So we are risking an absolute worst case loss of 11 pips to make a profit that can never be higher than 89 pips. trading at Bull Spread bid at Maximum risk: 11 pips Maximum profit: 89 pips Contract Bid Size Bid Offer Offer Size EUR/USD (9am) EUR/USD (9am) EUR/USD - (9am) The Risk/Reward Properties of Bull Spreads, June 2013 Page 4 of 9

5 Scenario 1: We are wrong in our view Now let s roll the clock forward in a hypothetical world where we were wrong about the. In this world, the travels thorough the stop level at 8.05am; had we been short the spot with a stop at we would have seen our position close at this point for a loss of 33 pips. Our Bull Spread would remain live until expiration at 9am, when it would settle at a value of ; a loss to us of only 11 pips. entry level at Stop at trade stopped out at 8.05am at 14050, for a loss of 33 pips Bull Spread entry level at am-9am - Bull Spread expires at 9am at, for a loss of 11 pips Here s what this would look like in terms of P&L. These numbers have assumed we have traded in the same $-per-pip size in each case: 1 standard lot (E100,000) of, or 10 lots of the Nadex Bull Spread. In either case, our exposure per pip (of spot ) or per point (of the Bull Spread) would be $10. We can see that the Bull Spread strategy cost us only one third of the losses we would have experienced trading the spot with a 33 pip stop. We can also see that the Bull Spread strategy required only about 4% of the capital required to establish the spot position, assuming spot FX is margined at 2% ($110 vs. $ ). This has the effect of hugely magnifying our (negative) Return on Capital, from -12% to -100%. But, in absolute dollar terms, we only lost one third as much. FX margin required (1 standard lot) $2, Bull Spread collateral required (10 lots) $ FX risk (USD, assuming no slippage) $ Bull Spread risk (USD) $ FX P&L (pips) -33 FX P&L (USD) -$ Bull Spread P&L (points) -11 Bull Spread P&L (USD) -$ Return on Capital Employed (spot FX) -12% Return on Capital Employed (Bull Spread) -100% Return on Risk (spot FX, assuming no slippage) -100% Return on Risk (Bull Spread) -100% The Risk/Reward Properties of Bull Spreads, June 2013 Page 5 of 9

6 Scenario 2: We are immediately correct with our view Now let s look at another scenario. This time, let s assume we were right the is unable to break through resistance around the level and falls back by 70 pips or so over the following 2 hours. This time we take profits when the spot hits The Bull Spread can also be bought back at at this point (we are not particularly close to a Floor or Ceiling, and very little time is left until expiration, so the Bull Spread trades at the same price as the spot rate). entry level at Stop at Bull Spread entry level at Bull Spread exit level of 13950, for a profit of 59 pips trade exit level of 13950, for a profit of 67 pips Comparing the numbers, we can see that the Bull Spread strategy has made less than the simple spot trading strategy in absolute dollar terms, because we paid for option-like risk insurance that, in this case, wasn t needed. Again though, we can see the effect of the very low collateral requirements of Bull Spreads at work. Because we only had to put $110 down to establish the Bull Spread position (rather than the $2800 necessary to trade the spot), our return on capital was enormously magnified, coming to 536% rather than 24%. FX margin required (1 standard lot) $2, Bull Spread collateral required (10 lots) $ FX risk (USD, assuming no slippage) $ Bull Spread risk (USD) $ FX P&L (pips) 67 FX P&L (USD) $ Bull Spread P&L (points) 59 Bull Spread P&L (USD) $ Return on Capital Employed (spot FX) 24% Return on Capital Employed (Bull Spread) 536% Return on Risk (spot FX, assuming no slippage) 203% Return on Risk (Bull Spread) 536% The Risk/Reward Properties of Bull Spreads, June 2013 Page 6 of 9

7 Scenario 3: We are right, but face an intermediate adverse move This time consider a scenario where the option-like nature of the Bull Spread contract s Ceiling level is at its most valuable. Here our position moves significantly against us before coming good. And in this hypothetical example, the adverse move is enough to trigger the stop on spot, locking in a loss on the spot trade of 33 pips. The Bull Spread position survives, however, and we are able to close it out later at a level of 13950, for a profit of 59 pips. entry level at Stop at trade stopped out at 14050, for a loss of 33 pips Bull Spread entry level at Bull Spread exit level of 13950, for a profit of 59 pips And here are the numbers a huge difference in outcome. This is the kind of result that explains why stop orders are free, but options cost money. Or, to put it another way, why Bull Spread prices diverge from the underlying market level when the underlying is close to the Bull Spread s Floor or Ceiling. This divergence in price is a reflection of optionality in the contracts, and it is only optionality that can control risk without stopping a trader out. FX margin required (1 standard lot) $2, Bull Spread collateral required (10 lots) $ FX risk (USD, assuming no slippage) $ Bull Spread risk (USD) $ FX P&L (pips) -33 FX P&L (USD) $ Bull Spread P&L (points) 59 Bull Spread P&L (USD) $ Return on Capital Employed (spot FX) -12% Return on Capital Employed (Bull Spread) 536% Return on Risk (spot FX, assuming no slippage) -100% Return on Risk (Bull Spread) 536% The Risk/Reward Properties of Bull Spreads, June 2013 Page 7 of 9

8 Scenario 4: We catch a major market move perfectly Finally, let s look at the dream scenario where, almost immediately after we go short, the market suffers a significant sell-off, and we let our position run. In this case the Bull Spread bottoms out at its Floor level, expiring at 9am at for a profit of 89 pips. The spot trade, however, has no cap on profits in this example an exit is assumed at 13890, a profit of 127 pips. entry level at Stop at Bull Spread entry level at Bull Spread expires at 9am at, for a profit of 89 pips Exit from spot trade at 8.45am at 13890, for a profit of 127 pips The spot strategy is the clear winner here, in absolute dollar terms, mostly because of the fact that the maximum profit available on our Bull Spread strategy, given our entry level, was 89 pips. However, the Bull Spread is still ahead in terms of return on capital; collateral of just $110 resulted in a profit in this case of $890. The spot trade required 25 times as much capital over $2800 to generate a profit of $1270. FX margin required (1 standard lot) $2, Bull Spread collateral required (10 lots) $ FX risk (USD, assuming no slippage) $ Bull Spread risk (USD) $ FX P&L (pips) 127 FX P&L (USD) $1, Bull Spread P&L (points) 89 Bull Spread P&L (USD) $ Return on Capital Employed (spot FX) 45% Return on Capital Employed (Bull Spread) 809% Return on Risk (spot FX, assuming no slippage) 385% Return on Risk (Bull Spread) 809% The Risk/Reward Properties of Bull Spreads, June 2013 Page 8 of 9

9 Scenarios compared Looking at these scenarios together, we can see a few general patterns. One of the most obvious is that Bull Spreads, when traded in the way described in this presentation, tend to significantly magnify Return on Risk and Return on Capital Required (note that this sometimes applies to negative returns as well as to positive returns). Another is that, for a given $-per-point exposure to the underlying, a Bull Spread strategy will tend to deliver a smaller profit, or a smaller loss, than a trade in the underlying the optionality in the contracts costs a few pips of profit when your trade is successful, but also tends to protect you from some of the downside when you are wrong. Finally, Bull Spreads can deliver a radically better outcome (in comparison to trading the underlying with a stop order in place) in cases where the market eventually moves in your chosen direction, but initially moves against you. This benefit is a result of the contracts in-built optionality it is why optionality costs money, but stop orders are free. Scenario Details Scenario 1 We are flat wrong Scenario 2 We pick a moderate move correctly Scenario 3 We get the move right, but face an adverse move in the interim FX margin required (1 standard lot) $2, $2, $2, $2, Bull Spread collateral required (10 lots) $ $ $ $ FX risk (USD, assuming no slippage) $ $ $ $ Bull Spread risk (USD) $ $ $ $ FX P&L (pips) FX P&L (USD) -$ $ $ $1, Bull Spread P&L (points) Bull Spread P&L (USD) -$ $ $ $ Return on Margin (spot FX) -12% 24% -12% 45% Return on Margin (Bull Spread) -100% 536% 536% 809% Return on Risk (spot FX, assuming no slippage) -100% 203% -100% 385% Return on Risk (Bull Spread) -100% 536% 536% 809% Scenario 4 We get the right side of a big market move Summary Bull Spread trading is sometimes a more appropriate choice than trading the underlying, sometimes less. The choice depends on your trading style, risk appetite, trading horizon and immediate outlook on the market. Trading a specific Bull Spread contract may make sense when: (i) You have a short term view (your time horizon ends before the expiration time of the contract in question). (ii) You want the protection of strictly capped exposure without the risk of getting stopped out by short term adverse moves (i.e. you foresee short term volatility/whipsawing in the market). (iii) Your intended take-profit level lies within the Floor-Ceiling range of the contract in question (Bull Spreads can cap profits as well as losses not a desirable effect if you strongly believe the market is about to move a very long way in your favor). (iv) You want to magnify your Return on Capital or Return on Risk. Selling a Bull Spread near its Ceiling (or buying a Bull Spread near its Floor) will tend to have this effect in most scenarios. But remember this is a double-edged sword. Negative returns are magnified, just as positive ones are. Range of Markets We offer Bull Spread contracts on: Equity Indices: US 500, Wall Street 30, US Tech 100, US SmallCap 2000, Germany 30, Japan 225, FTSE 100 FX: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, EUR/JPY, GBP/JPY Energies: Crude Oil, Natural Gas Metals: Gold, Silver, Copper Agriculturals: Corn, Soybeans Futures, options, and swaps trading involves risk and may not be appropriate for all investors. Any trading decisions that you may make are solely your responsibility. The information presented herein is for informational purposes only. The contents hereof are not an offer, or a solicitation of an offer, to buy or sell any particular financial instrument offered on Nadex. North American Derivatives Exchange, Inc. 311 South Wacker Drive Suite 2675 Chicago, IL Phone: Fax: The Risk/Reward Properties of Bull Spreads, June 2013 Page 9 of 9

An Introduction to Nadex

An Introduction to Nadex An Introduction to Nadex AN INTODUCTION TO NADEX MULTIPLY YOUR TRADING OPPORTUNITIES, LIMIT YOUR RISK Discover a product set that: Allows you to trade in very small size (risking no more than a few dollars)

More information

Using Binaries for Short Term Directional Trading

Using Binaries for Short Term Directional Trading Using Binaries for Short Term Directional Trading Using Binaries for Short Term Directional Trading Binaries can be used to take an intra-day directional view on underlying markets, allowing the trader

More information

Nadex Multiply Your Trading Opportunities, Limit Your Risk

Nadex Multiply Your Trading Opportunities, Limit Your Risk Nadex Multiply Your Trading Opportunities, Limit Your Risk Discover a product set that: Allows you to trade in very small size (risking no more than a few dollars) Gives you the security of trading on

More information

SHADOWTRADERPRO FX TRADER USERS GUIDE

SHADOWTRADERPRO FX TRADER USERS GUIDE SHADOWTRADERPRO FX TRADER USERS GUIDE How to get maximum value from your ShadowTraderPro FX Trader subscription. ShadowTraderPro FX Trader delivers value to its subscribers on multiple levels. The newsletter

More information

Brokerage/ E-trading. www.company.com

Brokerage/ E-trading. www.company.com Brokerage/ E-trading OSYS & World Best Voted Trading Platform OFFER: Cyprus Company Set Up & Brokerage Account To: Trade Tax Free on International Markets Act as Director of the Company and Repatriate

More information

NEW TO FOREX? FOREIGN EXCHANGE RATE SYSTEMS There are basically two types of exchange rate systems:

NEW TO FOREX? FOREIGN EXCHANGE RATE SYSTEMS There are basically two types of exchange rate systems: NEW TO FOREX? WHAT IS FOREIGN EXCHANGE Foreign Exchange (FX or Forex) is one of the largest and most liquid financial markets in the world. According to the authoritative Triennial Central Bank Survey

More information

MODULE 4 MODULE 4 INTRODUCTION PROGRAMME LEVERAGE AND MARGIN

MODULE 4 MODULE 4 INTRODUCTION PROGRAMME LEVERAGE AND MARGIN INTRODUCTION PROGRAMME MODULE 4 LEVERAGE AND MARGIN This module explains leverage and gearing and compares CFDs with non-geared investments. Additionally, there are a number of worked examples of how our

More information

Forex Basics brought to you by MatrasPlatform.com

Forex Basics brought to you by MatrasPlatform.com Forex Basics brought to you by MatrasPlatform.com Table of Content What is FOREX... 3 FOREX Basics... 4 Trading Hours... 4 What Is Traded on FOREX?... 4 The Six Majors... 4 Currency Pair Distribution...

More information

DEALING HANDBOOK FOR FX TRADERS

DEALING HANDBOOK FOR FX TRADERS DEALING HANDBOOK FOR FX TRADERS ONLINE TRADING Trading on the QuestradeFX platforms is available 24hrs a day from 5pm ET Sundays through 5pm ET Fridays. Clients have the ability to execute trades directly

More information

The purpose of this ebook is to introduce newcomers to the forex marketplace and CMTRADING. Remember that trading in forex is inherently risky, and

The purpose of this ebook is to introduce newcomers to the forex marketplace and CMTRADING. Remember that trading in forex is inherently risky, and The purpose of this ebook is to introduce newcomers to the forex marketplace and CMTRADING. Remember that trading in forex is inherently risky, and you can lose money as well as make money. Manage your

More information

Trading University Trade Successfully with Trend Following

Trading University Trade Successfully with Trend Following Trading University Trade Successfully with Trend Following By Kevin J. Davey Today s Agenda Who Am I? What is Trend Following? Does Trend Following Work? Different Methods of Trend Following Trend Following

More information

Carry Trade Explained What Is the Carry Trade?

Carry Trade Explained What Is the Carry Trade? I The Forex Trading Formula Carry Trade Triad Trading Formula - The Introduction Carry Trade Carry Trade Explained What Is the Carry Trade? The carry trade is a trading strategy in which you simultaneously

More information

World Cup University. Trade Successfully with Trend Following. By Kevin J. Davey

World Cup University. Trade Successfully with Trend Following. By Kevin J. Davey World Cup University Trade Successfully with Trend Following By Kevin J. Davey Today s Agenda Who Am I? What is Trend Following? Does Trend Following Work? Different Methods of Trend Following Trend Following

More information

SPOT FX Trading Strategies. Copyright Powerup Capital Sdn Bhd

SPOT FX Trading Strategies. Copyright Powerup Capital Sdn Bhd SPOT FX Trading Strategies Currency Codes USD = US Dollar EUR = Euro JPY = Japanese Yen GBP = Great Britian Pound CHF = Swiss Franc CAD = Canadian Dollar AUD = Australian Dollar NZD = New Zealand Dollar

More information

Getting Started With Forex Trading: A Forex Primer. Member NASD, NYSE, SIPC, and NFA

Getting Started With Forex Trading: A Forex Primer. Member NASD, NYSE, SIPC, and NFA Getting Started With Forex Trading: A Forex Primer Member NASD, NYSE, SIPC, and NFA 1 Important Information and Disclaimer: TradeStation Securities, Inc. seeks to serve institutional and active traders.

More information

TRAITS OF SUCCESSFUL TRADERS: a four part series

TRAITS OF SUCCESSFUL TRADERS: a four part series TRAITS OF SUCCESSFUL TRADERS: a four part series Research & Analysis: DailyFX Over the past several months, the DailyFX research team and the DailyFX trading instructors have been closely studying the

More information

Leverage and margin. Module 3 Introduction Programme. Leverage and margin

Leverage and margin. Module 3 Introduction Programme. Leverage and margin Module 3 Introduction Programme Leverage and margin This module explains leverage and gearing and compares spread bets with non-geared investments. Additionally, there are a number of worked examples of

More information

BINARY OPTION TRADING. Lesson #1

BINARY OPTION TRADING. Lesson #1 BINARY OPTION TRADING Lesson #1 1 Table of Contents Forward. 3 Introduction to Binary Option... 4 Benefits of Trading Binary Options. 5-6 Binary Option Basics 7 Types of Binary Option. 8-10 Unique OptionBit

More information

Using Formations To Identify Profit Opportunities

Using Formations To Identify Profit Opportunities Using Formations To Identify Profit Opportunities Using Formations To Identify Profit Opportunities The concepts and strategies discussed may not be suitable for all investors. It is important that investors

More information

Ideas for improving your trading in 2010. Trader_Dante

Ideas for improving your trading in 2010. Trader_Dante Ideas for improving your trading in 2010 Trader_Dante Copyright Trader_Dante 2010 Page 1 of 18 Disclaimer All reasonable steps and due diligence have been taking in preparing this document. However, it

More information

WHS FX options guide. Getting started with FX options. Predict the trend in currency markets or hedge your positions with FX options.

WHS FX options guide. Getting started with FX options. Predict the trend in currency markets or hedge your positions with FX options. Getting started with FX options WHS FX options guide Predict the trend in currency markets or hedge your positions with FX options. Refine your trading style and your market outlook. Learn how FX options

More information

TRADING RULES ONLINE FX AND PRECIOUS METAL Effective August 10, 2015

TRADING RULES ONLINE FX AND PRECIOUS METAL Effective August 10, 2015 TRADING RULES ONLINE FX AND PRECIOUS METAL Effective August 10, 2015 PRODUCTS Contract Size EUR/USD EUR 100,000 USD/JPY USD 100,000 GBP/USD GBP 100,000 USD/CHF USD 100,000 AUD/USD AUD 100,000 NZD/USD NZD

More information

Gap Trading The Forex

Gap Trading The Forex Gap Trading The Forex How To Profit from a Forgotten Trading Strategy that is Right 89.1% of the Time Special Report By Jason Fielder, Founder - ForexImpact.com Page 1 ALL CONTENT OF THIS REPORT IS COPYRIGHT

More information

OPTIONS EDUCATION GLOBAL

OPTIONS EDUCATION GLOBAL OPTIONS EDUCATION GLOBAL TABLE OF CONTENTS Introduction What are FX Options? Trading 101 ITM, ATM and OTM Options Trading Strategies Glossary Contact Information 3 5 6 8 9 10 16 HIGH RISK WARNING: Before

More information

THE UNDAMENTALS AND ECHNIQUES RADING OMMODITY PREADS. c s

THE UNDAMENTALS AND ECHNIQUES RADING OMMODITY PREADS. c s c s THE UNDAMENTALS AND ECHNIQUES OF RADING OMMODITY PREADS The purpose of this booklet is to give you a better understanding of various aspects of spread trading in the futures market. Center for Futures

More information

Chapter 2. My Early Days Trading Forex

Chapter 2. My Early Days Trading Forex Chapter 2 My Early Days Trading Forex I want to talk about my early days as a Forex trader because I m hoping that my story will be something you can relate to. So it doesn t really matter if you are brand

More information

The Impact of Gold Trading

The Impact of Gold Trading The Impact of Gold Trading By: Dan Edward, Market Analyst: FOREXYARD Date: December 2010 In this Issue: I. Introduction A brief history of gold trading II. What affects commodity prices? III. The Global

More information

TRADING FUTURES ON THE SAXOTRADER PLATFORM

TRADING FUTURES ON THE SAXOTRADER PLATFORM TRADING FUTURES ON THE SAXOTRADER PLATFORM Saxo Capital Markets Tel: +65 6303 7788 Web Site: www.saxomarkets.com.sg 1 TRADING FUTURES ON THE SAXOTRADER PLATFORM OPEN DEMO OPEN LIVE WORLDWIDE INVESTMENT

More information

Introduction to Forex Trading

Introduction to Forex Trading Introduction to Forex Trading The Leader in Rule-Based Trading 1 Important Information and Disclaimer: TradeStation Securities, Inc. seeks to serve institutional and active traders. Please be advised that

More information

Chapter 3.4. Forex Options

Chapter 3.4. Forex Options Chapter 3.4 Forex Options 0 Contents FOREX OPTIONS Forex options are the next frontier in forex trading. Forex options give you just what their name suggests: options in your forex trading. If you have

More information

PRODUCT DISCLOSURE STATEMENT FOR MARGIN FX & CONTRACTS FOR DIFFERENCE

PRODUCT DISCLOSURE STATEMENT FOR MARGIN FX & CONTRACTS FOR DIFFERENCE PRODUCT DISCLOSURE STATEMENT FOR MARGIN FX & CONTRACTS FOR DIFFERENCE This document provides important information about Margined Foreign Exchange and Contracts for Difference contracts to help you decide

More information

International Academy of Exchange Trading. Lesson 2: Forex lowdown

International Academy of Exchange Trading. Lesson 2: Forex lowdown Contents Lesson 1: All you need is... Lesson 3: Leverage (a little help from your friends) Lesson 4: Orders Lesson 5: A beginner s guide to technical analysis Lesson 6: Technical indicators Lesson 7: Fundamental

More information

THE POWER OF FOREX OPTIONS

THE POWER OF FOREX OPTIONS THE POWER OF FOREX OPTIONS TOPICS COVERED Option basics Call options Put Options Why trade options? Covered call Covered put Hedging your position using options How to repair a trading position THE POWER

More information

Forex Trading Strategies: One way to trade the Non Farm Payroll report.

Forex Trading Strategies: One way to trade the Non Farm Payroll report. Forex Trading Strategies: One way to trade the Non Farm Payroll report. June 3 2011 1 Upshot Trade Signals disclaimer The information provided in this report is for educational purposes only. It is not

More information

Scalping Trade Strategies April 14, 2009

Scalping Trade Strategies April 14, 2009 www.fxcm.com sales@fxcm.com Scalping Trade Strategies April 14, 2009 DailyFX Research Team John Kicklighter David Rodriguez Currency Strategists 1-212-897-7660 1-888-50-FOREX (36739) Just a decade ago,

More information

The World s Elite Trading School. The Trusted Source for Online Investing and Day Trading Education Since 1994. What is a Forex?

The World s Elite Trading School. The Trusted Source for Online Investing and Day Trading Education Since 1994. What is a Forex? What is a Forex? Forex is the market where one currency is traded for another Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there

More information

RISK WARNING. Retail transactions conducted with NatureForex are not insured by any deposit insurance of any kind.

RISK WARNING. Retail transactions conducted with NatureForex are not insured by any deposit insurance of any kind. RISK WARNING High Risk Investment Margined retail foreign exchange or currency ( forex ), commodities and financial derivatives transactions are extremely risky. Trading with Nature Forex Ltd. ( NatureForex

More information

Advanced Trading Systems Collection FOREX TREND BREAK OUT SYSTEM

Advanced Trading Systems Collection FOREX TREND BREAK OUT SYSTEM FOREX TREND BREAK OUT SYSTEM 1 If you are a part time trader, this is one system that is for you. Imagine being able to take 20 minutes each day to trade. A little time at night to plan your trades and

More information

Introduction to Forex Trading

Introduction to Forex Trading Introduction to Forex Trading The Leader in Rule-Based Trading 1 Important Information and Disclaimer: TradeStation Securities, Inc. seeks to serve institutional and active traders. Please be advised that

More information

Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT

Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT CONTENTS An Exchange with Credentials (Page 3) Introduction to Derivatives¬Ľ

More information

Welcome to FOREX e-book

Welcome to FOREX e-book Welcome to FOREX e-book Table of Contents 1. About BRAND... 2 2. Trading Platforms... 3 3. What is Traded in the Forex Market?... 4 4. What is Forex?... 4 5. Advantages of the Forex Market... 5 6. How

More information

FOREX Markets & Trading Currencies

FOREX Markets & Trading Currencies FOREX Markets & Trading Currencies Updates Tonight: FOREX & Demonstra1on of thinkorswim pla9orm Next Week: Stock & Op*ons Trading 101 on March 3 rd Execu1ve Board Applica1ons out now Apply for COO & CMO

More information

Contents Risk Disclaimer... 3 Introduction... 4 Choosing the Right Broker... 4 The Financial Markets... 5 The Forex Market...

Contents Risk Disclaimer... 3 Introduction... 4 Choosing the Right Broker... 4 The Financial Markets... 5 The Forex Market... Contents Risk Disclaimer... 3 Introduction... 4 Choosing the Right Broker... 4 The Financial Markets... 5 The Forex Market... 6 Trading methodologies... 7 Developing a trading strategy... 8 Risk Management...

More information

THIS IS THE TRADING METHOD FOR THE STEALTH FOREX TRADING SYSTEM V10

THIS IS THE TRADING METHOD FOR THE STEALTH FOREX TRADING SYSTEM V10 THIS IS THE TRADING METHOD FOR THE STEALTH FOREX TRADING SYSTEM V10 YOU SHOULD HAVE ALREADY READ AND APPLIED THE INFORMATION IN THE SET-UP DOCUMENT. IF YOU HAVE NOT ALREADY DONE SO - PLEASE COMPLETE SET

More information

FX Options NASDAQ OMX

FX Options NASDAQ OMX FX Options OPTIONS DISCLOSURE For the sake of simplicity, the examples that follow do not take into consideration commissions and other transaction fees, tax considerations, or margin requirements, which

More information

Intro to Forex and Futures

Intro to Forex and Futures Intro to Forex and Futures 1 Forex Trading Forex is a term meaning foreign exchange, and refers to trading the currency of one country against the currency from another country simultaneously. Over $1.4

More information

USING ORDERS TO TRADE

USING ORDERS TO TRADE INTRODUCTION PROGRAMME MODULE 3 USING ORDERS TO TRADE X This module introduces Stop and Limit orders and considers how they can be used to both open and close positions. Also covered is the difference

More information

Introduction... 4 A look at Binary Options... 5. Who Trades Binary Options?... 5. Binary Option Brokers... 5 Individual Investors...

Introduction... 4 A look at Binary Options... 5. Who Trades Binary Options?... 5. Binary Option Brokers... 5 Individual Investors... Table of Contents Introduction... 4 A look at Binary Options... 5 Who Trades Binary Options?... 5 Binary Option Brokers... 5 Individual Investors... 5 Benefits of Trading Binary Options... 6 Binary Option

More information

27PercentWeekly. By Ryan Jones. Part II in the Series Start Small and Retire Early Trading Weekly Options

27PercentWeekly. By Ryan Jones. Part II in the Series Start Small and Retire Early Trading Weekly Options By Ryan Jones Part II in the Series Start Small and Retire Early Trading Weekly Options Important My 27% Option Strategy is one of the best option trading opportunities you will come across. When you see

More information

SaxoTraderGO. Saxo Academy. Placing Forex Trade Orders. academy.tradingfloor.com

SaxoTraderGO. Saxo Academy. Placing Forex Trade Orders. academy.tradingfloor.com Saxo Academy SaxoTraderGO Placing Forex Trade Orders Please note, these notes are transcripts of the videos on Saxo Academy and are designed to accompany the SaxoTraderGO video series. Placing FX Trade

More information

SPREAD BETTING MODULE 3 RISK MANAGEMENT 1 MODULE. Spread betting. Risk Management

SPREAD BETTING MODULE 3 RISK MANAGEMENT 1 MODULE. Spread betting. Risk Management RISK MANAGEMENT 1 MODULE 3 Spread betting Risk Management RISK MANAGEMENT 2 How to use this module Navigation There are two navigation systems in this PDF. You can move forwards and backwards using the

More information

The Truth about Forex TRADING GUIDE

The Truth about Forex TRADING GUIDE The Truth about Forex TRADING GUIDE Contents No Dealing Desk vs. Dealing Desks... 2 1. How does FXCM's No Dealing Desk (stp) service make money?... 2 2. How do traditional dealing desks make money?...

More information

Learn to Trade FOREX II

Learn to Trade FOREX II Lesson 1 The Forex Market The Foreign Exchange market, also referred to as the "FX market" or "Spot FX", is the largest financial market in the world with daily average turnover of US$1.9 trillion. Unlike

More information

Forex Trading Guide & Tutorial For Beginner

Forex Trading Guide & Tutorial For Beginner Forex Trading Guide & Tutorial For Beginner Copyright FCMarket.com Website : http://www.fcmarket.com Email : info@fcmarket.com WARNING : You may not modify, copy, distribute, display, reproduce, publish,

More information

Implied Volatility and Profit vs. Loss. Presented by The Options Industry Council

Implied Volatility and Profit vs. Loss. Presented by The Options Industry Council Implied Volatility and Profit vs. Loss Presented by The Options Industry Council Implied Volatility and Profit vs. Loss Options involve risks and are not suitable for everyone. Prior to buying or selling

More information

Option Basics: A Crash Course in Option Mechanics

Option Basics: A Crash Course in Option Mechanics 1 chapter # 1 Option Basics: A Crash Course in Option Mechanics The concept of options has been around for a long time. Ancient Romans, Greeks, and Phoenicians traded options based on outgoing cargoes

More information

KE Forex Product Term Sheet

KE Forex Product Term Sheet KE Forex Product Term Sheet ** Please note that Page 1-5 is for your reference, and only Page 7 is required to be completed and returned. What is leveraged trading in Forex (Foreign Exchange) Contracts?

More information

FX Key products Exotic Options Menu

FX Key products Exotic Options Menu FX Key products Exotic Options Menu Welcome to Exotic Options Over the last couple of years options have become an important tool for investors and hedgers in the foreign exchange market. With the growing

More information

TRADING GAPS TAIL STRATEGY SPECIAL REPORT #37

TRADING GAPS TAIL STRATEGY SPECIAL REPORT #37 TRADING GAPS TAIL STRATEGY SPECIAL REPORT #37 Welcome to Market Geeks special report. Today I m going to teach you a little bit about gaps, how to identify different gaps and most importantly how to put

More information

Trading the Non Farm Payroll Report Like a Savage Pip Fiend

Trading the Non Farm Payroll Report Like a Savage Pip Fiend Trading the Non Farm Payroll Report Like a Savage Pip Fiend Rob Booker with tons of help from Jacob Fedje Copyright 2006 Rob Booker. All rights reserved. No part of this publication may be sold, distributed

More information

Samara State University of Telecommunication and Technologies

Samara State University of Telecommunication and Technologies Samara State University of Telecommunication and Technologies Information Systems for Financial Analyses and Investment (ISFAI) Customer-oriented Systems (CRM) Internet Trading on Financial markets and

More information

Commodities not finding much traction despite USD weakness

Commodities not finding much traction despite USD weakness Commodities not finding much traction despite USD weakness Commodities continued to show weakness into the second week of 2013 despite rising stock markets and a falling US dollar. Investors are generally

More information

International Academy of Exchange Trading. Lesson 4: Orders

International Academy of Exchange Trading. Lesson 4: Orders Contents Lesson 1: All you need is... Lesson 2: Forex lowdown Lesson 3: Leverage (a little help from your friends) Lesson 5: A beginner s guide to technical analysis Lesson 6: Technical indicators Lesson

More information

Adjusting the Iron Condor Kerry W. Given, Ph.D. (Dr. Duke) Parkwood Capital, LLC

Adjusting the Iron Condor Kerry W. Given, Ph.D. (Dr. Duke) Parkwood Capital, LLC Adjusting the Iron Condor Kerry W. Given, Ph.D. (Dr. Duke) Parkwood Capital, LLC Disclosures and Disclaimers Buying and selling stocks and options involves risks and may not be suitable for all investors.

More information

Other Financial Markets You Can Trade with Spread Betting 14878.0351 348939.487 34598.6325 66875.0449

Other Financial Markets You Can Trade with Spread Betting 14878.0351 348939.487 34598.6325 66875.0449 14878.0351 348939.487 34598.6325 66875.0449 34838.0371 34898.5321 94898.6327 54798.0321 44898.0324 54695.3522 96898.0321 24848.6323 44898.0321 34898.0328 14878.0351 348939.487 34598.6325 66875.0449 34838.0371

More information

CFD & FOREX TRADING RULES

CFD & FOREX TRADING RULES CFD & FOREX TRADING RULES WHS TRADING RULES Version: JAN. 2016 WH SELFINVEST Est. 1998 Luxembourg, France, Belgium, Switzerland, Germany, Netherlands Copyright 2007-2016 all rights attached to this guide

More information

Basket Method Made Easy!

Basket Method Made Easy! Trader101's Basket Method Made Easy! Retold by Icicle, with help from Nubchai, Alex84, Cliffedwards and Slade.[0] THE PHANTOM MENACE Set up a demo account (tutorials below [1]). This ghost account will

More information

FOREX PLATFORM USER S GUIDE

FOREX PLATFORM USER S GUIDE FOREX PLATFORM USER S GUIDE Table of Content 1. Introduction... 2 2. Top Menu Bar... 2 3. Distinguishing Features of the Forex Platform... 3 3.1 Market Orders... 3 3.2 Trailing Stops... 4 3.3 Margin Watcher...

More information

A practical guide to FX Arbitrage

A practical guide to FX Arbitrage A practical guide to FX Arbitrage FX Arbitrage is a highly debated topic in the FX community with many unknowns, as successful arbitrageurs may not be incentivized to disclose their methodology until after

More information

Margin and Exposure 14878.0351 348939.487 34598.6325 66875.0449

Margin and Exposure 14878.0351 348939.487 34598.6325 66875.0449 14878.0351 348939.487 34598.6325 66875.0449 34838.0371 34898.5321 94898.6327 54798.0321 44898.0324 54695.3522 96898.0321 24848.6323 44898.0321 34898.0328 14878.0351 348939.487 34598.6325 66875.0449 34838.0371

More information

FX Option Solutions. FX Hedging & Investments

FX Option Solutions. FX Hedging & Investments FX Option Solutions FX Hedging & Investments Contents 1. Liability side 2 Case Study I FX Hedging Case Study II FX Hedging 2. Asset side 30 FX Deposits 1 1. Liability side Case Study I FX Hedging Long

More information

Guide to Online Forex Trading

Guide to Online Forex Trading Start Trading and Making Money in Forex WebTrader and MetaTrader If this is your first time coming across the online Forex market, then you have come to the right place! This guide will provide you with

More information

IntroductIon to commsec cfds

IntroductIon to commsec cfds Introduction to CommSec CFDs Important Information This brochure has been prepared without taking account of the objectives, financial and taxation situation or needs of any particular individual. Because

More information

Phone: 1800 886 514 (Press '1' for Trade Desk or '2' for Enquiries)

Phone: 1800 886 514 (Press '1' for Trade Desk or '2' for Enquiries) POPULAR MARKETS Market Name Brackets = Out of Hours Spread 24hr Fixed Spread Contract Value per Index Point/Pip Margin per Unit Trade Per Phone: 1800 886 514 AUD/USD 0.8 (0.8) $1 0.50% 0.0001 Open Monday

More information

Lesson 5: The Trading Station

Lesson 5: The Trading Station Lesson 5: The Trading Station Objective To understand the basic functions of the Trading Station and become proficient with market order entry, the stop loss and limit functions, closing trades manually,

More information

BEST TIMES TO TRADE THE FOREX MARKET

BEST TIMES TO TRADE THE FOREX MARKET BEST TIMES TO TRADE THE FOREX MARKET The forex market is the largest financial market in the world, trading around $3.1 trillion each day. (Every three years, the Bank of International Settlements (BIS)

More information

The 3 Rules of Successful Swing Trading

The 3 Rules of Successful Swing Trading The 3 Rules of Successful Swing Trading Trade with the Wind at Your Back The Rule That Hits Home Runs & Be In the Right Place at the Right Time by Michele Mish Schneider, Director of Trading Research &

More information

FX Options. Dan Juhl Larsen FX Options trader at Saxo Bank. Moscow 19 Marts 2014

FX Options. Dan Juhl Larsen FX Options trader at Saxo Bank. Moscow 19 Marts 2014 FX Options Dan Juhl Larsen FX Options trader at Saxo Bank Moscow 19 Marts 2014 4 June 2013 Disclaimer None of the information contained herein constitutes an offer (or solicitation of an offer) to buy

More information

AUTOCHARTIST TRADE IDEAS

AUTOCHARTIST TRADE IDEAS A QUICK START GUIDE AUTOCHARTIST TRADE IDEAS Sometimes, it s hard to know what to trade. Even if you do your research, you may still wonder if the trade you set up will go the way you want. Now, you can

More information

CONTRACTS FOR DIFFERENCE

CONTRACTS FOR DIFFERENCE CONTRACTS FOR DIFFERENCE Contracts for Difference (CFD s) were originally developed in the early 1990s in London by UBS WARBURG. Based on equity swaps, they had the benefit of being traded on margin. They

More information

FOREX HIGH RISK WARNING

FOREX HIGH RISK WARNING FOREX HIGH RISK WARNING Please read the disclosures and warnings below. optionsxpress, Inc. ( optionsxpress ) strongly advises Trader to review and consider carefully the risks associated with leveraged

More information

FXCM Asia Trading Station II. User Guide

FXCM Asia Trading Station II. User Guide FXCM Asia Trading Station II User Guide Table of Contents Platform Short Guide... 3 Introduction... 3 Top Menu Bar... 4 Distinguishing Features of the FX Trading Station... 5 Market Orders... 5 Trailing

More information

Trading Station II User Guide. To the No Dealing Desk Forex Execution Platform

Trading Station II User Guide. To the No Dealing Desk Forex Execution Platform Trading Station II User Guide To the No Dealing Desk Forex Execution Platform Table of Contents Introduction... 3 Top Menu Bar... 3 Distinguishing Features of the FX Trading Station... 4 Market Orders...

More information

Real Time Short-Term Trading Gregory McLeod Currency Strategist

Real Time Short-Term Trading Gregory McLeod Currency Strategist Real Time Short-Term Trading Gregory McLeod Currency Strategist Risk Disclosure Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree

More information

The Forex Profit System :

The Forex Profit System : The Forex Profit System : How to Earn $50 to $500 a day Forex Trading from the Comfort of Your Own Home! OVERVIEW Dear Friend, Thanks for your interest in my Forex Profit System. The Forex Profit System

More information

WELCOME TO FXDD S BULLISH OPTIONS STRATEGY GUIDE

WELCOME TO FXDD S BULLISH OPTIONS STRATEGY GUIDE GLOBAL INTRODUCTION WELCOME TO FXDD S BULLISH OPTIONS STRATEGY GUIDE A bullish options strategy is one of the most common starting points for options trading beginners. Bullish options strategies are designed

More information

Transaction Cost. AETOS Capital Group (UK) Limited. May 2016 V20160503

Transaction Cost. AETOS Capital Group (UK) Limited. May 2016 V20160503 AETOS Capital Group (UK) Limited May 2016 V20160503 Product Symbol Tick Value Swap Rate - Swap Rate - LONG 2 SHORT 2 Typical Margin Spread 3 FOREX Australian Dollar vs U.S. Dollar AUDUSD 10.0USD 0.50%

More information

Day Trade System EZ Trade FOREX

Day Trade System EZ Trade FOREX Day Trade System The EZ Trade FOREX Day Trading System is mainly used with four different currency pairs; the EUR/USD, USD/CHF, GBP/USD and AUD/USD, but some trades are also taken on the USD/JPY. It uses

More information

Commodities & Forex Classical Chart Patterns Report

Commodities & Forex Classical Chart Patterns Report TWO WAYS TO SHARE: Commodities & Forex Classical Chart Patterns Report Week of August 24, 2014 1. Patterns in Play (CANADIAN $, EURO, AUSTRALIAN $, EUR-JPY, COFFEE, SOYBEANS, BRAZIL EQUITY INDEX, JAPANESE

More information

SYNERGY Trading Method. CompassFX, 2009 www.compassfx.com Rev. 81009

SYNERGY Trading Method. CompassFX, 2009 www.compassfx.com Rev. 81009 SYNERGY Trading Method SYNERGY Method INSTALLATION Basic Synergy is designed to automatically download onto the C: drive of your computer. If your local drive is not the C: drive, please send an email

More information

Trading Manual. Effective date: 07 July 2015

Trading Manual. Effective date: 07 July 2015 Trading Manual Effective date: 07 July 2015 LMAX Trading Manual Effective date: 07 July 2015 This Trading Manual ( the Manual ) provides further information and worked examples on our trading services.

More information

Evolution of Forex the Active Trader s Market

Evolution of Forex the Active Trader s Market Evolution of Forex the Active Trader s Market The practice of trading currencies online has increased threefold from 2002 to 2005, and the growth curve is expected to continue. Forex, an abbreviation for

More information

Scandinavian. Exotic and Emerging

Scandinavian. Exotic and Emerging MARKET INFORMATION SPREAD BETTING MARKETS FOREX Majors spread Unit risk AUDUSD 0.50 0.000 3 0 2 EURCHF 2 0.50 0.000 N/A 0 2 EURGBP 0. 0.50 0.000 3 0 2 EURJPY.6 0.50 0.0 3 0 2 EURUSD 0. 0.50 0.000 3 0 2

More information

DB Guide to Risk Reversals

DB Guide to Risk Reversals FX Relative Value 9 th October 6 Deutsche Bank DB Guide to Risk Reversals How to value risk reversal contracts and identify relative value trading opportunities Global Markets Inside: Skew Analysis Risk

More information

RISK DISCLOSURE STATEMENT

RISK DISCLOSURE STATEMENT RISK DISCLOSURE STATEMENT OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS INVOLVE THE LEVERAGED TRADING OF CONTRACTS DENOMINATED IN FOREIGN CURRENCY CONDUCTED WITH A FUTURES COMMISSION MERCHANT OR A RETAIL

More information

MetaTrader 4 for Android TM Guide

MetaTrader 4 for Android TM Guide MetaTrader 4 for Android TM Guide Android is a trademark of Google, Inc. Logging in Upon downloading and installing MetaTrader 4 for Android TM from Google Play, you will see the Metatrader 4 icon appear

More information

A Manual for New FOREX Traders

A Manual for New FOREX Traders FOREX Tradiing 101 A Manual for New FOREX Traders Table of Contents I. INTRODUCTION... 1 II. LEGAL RISK WARNING DISCLAIMER... 1 III. INTERNET INFORMATION DELIVERY SYSTEMS DISCLAIMER... 1 IV. WHAT IS THE

More information

DAILY TECHNICAL REPORT

DAILY TECHNICAL REPORT RESEARCH TEAM DAILY TECHNICAL REPORT DISCLAIMER & DISCLOSURES Please read the disclaimer and the disclosures which can be found at the end of this report EUR / USD Moving higher. EUR/USD has been range-bound

More information

MASTER THE MARKET IN 10 MINUTES

MASTER THE MARKET IN 10 MINUTES MASTER THE MARKET IN 10 MINUTES HIGH RISK INVESTMENT WARNING Trading Foreign Exchange (Forex) and Contracts for Differences (CFDs) is highly speculative, carries a high level of risk and may not be suitable

More information