Frequently Asked Questions

To help beginners quickly understand the best way to get started in trading, we have put together this list of Frequently Asked Questions.

Traders aim to profit from the rise and fall of prices in the financial markets. These markets include:

• Stock markets, where companies such as Vodafone or Google are traded.
• Foreign exchange markets, where currencies such as the British Pound, the US Dollar and the Euro among others are traded.
• Commodities markets, where oil, gas, grains, meat and others are traded.

Traders can profit from short-term price movements, from a few hours to a few months in duration, whilst carefully controlling their risk. They profit from falling prices as well as rising prices, which gives more profit opportunities, especially in economic downturns.

People become traders to experience the excitement of the markets, and successful trading can be highly lucrative.

More and more people are now turning to trading as a way of profiting from the financial markets. Whilst many people have the potential to become profitable traders, trading is not for everyone due to the risks involved.

These days, a trading account can be opened with as little as £100. Unsuccessful traders can lose all the money in their account, and also be liable for further losses in some cases. Well-prepared traders can control their risks though, to minimise the likelihood of this happening.

You should only trade if:

• You have an amount of money that you can dedicate to trading.
• You would not be affected if all of this money was completely lost.
• You already have a steady income and are not relying on trading to help pay the bills.
• You do not have bad debts or other financial commitments that should be taken care of first.

Trading must not be seen as a way to get rich quick, or to get out of debt.

Even if you do not meet these requirements right now, you can still learn to trade, and trade a demo account for “play” money, so that when you are on a more secure financial footing you can begin trading without delay.

If you have a particular interest in companies then you can start by trading shares, either directly or by using CFDs. CFDs, or Contracts For Difference, allow UK share traders to speculate on both rising and falling prices without having to pay UK stamp duty. Some other countries also allow CFD trading: the United States however does not, and US traders must trade shares directly.

If you are particularly interested in world economies then you can start by trading foreign exchange, also known as Forex or FX. This allows you to speculate on the price of currencies.

If you have no strong interests, many people find it easiest to begin by trading Foreign Exchange. Some people believe that these markets trend more of the time, and that there are more profit opportunities in forex markets. Forex markets also tend to move more smoothly than stock markets, which lessens the chances of sudden losses.

After you have decided on the type of markets you wish to trade (see above), the next step is to prepare yourself. Trading is no different to any other skill: it must be learned and practiced.

The Tradernomics approach is to offer a course in several stages:

1. 1. The first stage is to read through our workbooks, which cover risk management and detailed step-by-step strategies to know when to enter and exit your trades. There are online quizzes to test your understanding.
2. 2. The second stage is to practice in our US patent-pending trading simulator, to quickly hone your skills with real life historical prices from the markets. This speeds up your learning dramatically, since you are able to cover many months of trading in just a few minutes.
3. 3. Finally, you can practice in real-time using a demo account that we have arranged with a leading brokerage. By this time, you will fully understand how to control your risk and trade profitably.
4. 4. You should then be ready to trade for real money. At this stage, you will need to open a trading account with a brokerage and fund it with the money that you will use for your trading.

There are several routes into trading. Some professional traders began by working in brokerages or banks as assistants, or by going on internal training schemes run inside these companies. Others began trading as private individuals before taking a job as a professional trader. These people will often have learned to trade by taking courses, reading books and magazines, and by practicing their trading skills using a demo trading account before risking their own money.

Professional traders think in terms of percentages. If you are a successful trader your profits will be a percentage of the money that you start with. The profits or losses that you make are directly linked to how much risk you are willing to take. The greater the risk, the greater your profits or losses will be.

As a very general rule of thumb, if you are willing to risk 50% of the money in your trading account you could make 50% a year in profits. Most professional traders consider this approach too risky, and therefore scale down their risk.

As a comparison, by some measures the richest man in the world is Warren Buffett, from the USA. He achieved this by consistently making around 20% a year on his investments.

There is a large amount of empirical evidence (gathered from analysing the accounts of professional traders) that on average, sooner or later most traders who have a valid strategy will have a series of losses (called a “drawdown”) equal to their average annual return. Their biggest return could be greater though, to compensate for this. The ones that do not have a valid strategy will lose all of their capital: this is

equally if not more important! In trading, the first question to ask though is not “How much could I make?”, but “How much could I lose?” Careful risk management is vital for any successful trader.

Tradernomics offers self-study courses in Forex, CFDs, Stocks and Futures. The courses are aimed at beginners, and those with some existing knowledge of the markets. Topics covered include:

• An introduction to global markets.
• A detailed look at your chosen markets (Forex, CFDs, etc).
• Risk management.
• Fundamental analysis: how economics and events affect market prices.
• Technical analysis: includes two detailed step-by-step trading strategies.
• The psychology of successful trading.
• Developing a trading plan.

The courses also include access to the members’ area of the Tradernomics website, which includes our trading simulator for rapid learning, quizzes to test your understanding, and trading calculators.

Each course comes with a 14 day 100% money back guarantee.

Each of our courses is written by an experienced and profitable trader. The introduction to each course, which is available free of charge on the Tradernomics website, gives a biography of its author. The Chairman of Tradernomics, Stephan Bisse, has 20 years of professional experience in the financial markets, having worked at Goldman Sachs, Deutsche Bank and Saxo Bank. He is currently the founder and CEO of Tannhauser Gate Gmbh (www.TannhauserGate.ch), a company which develops trading systems for leading hedge funds, with over $300 Million under management.

The trading simulator is not designed to be a full copy of a real trading platform: it is a first step to make sure that you get the basics right, and so we have cut it down to only the things that are needed to help people learn quickly. The core features of a trading platform are all present: historical price data, the ability to place specific types of buy and sell orders, and technical indicators. The main benefit of the simulator is that you can very quickly work through many months or years of data, without having to wait in real time for the markets to move.

After you become comfortable in the simulator, the next step we recommend is that you trade a demo account with a brokerage. We have arranged a 3 month demo account with Saxo Bank, a leading international brokerage. This uses exactly the same software as their real trading platform, so you can become comfortable with the full platform without risking your own money until you are happy to do so. (Of course, you do not have to use the full 3 months of the demo account, you can switch to live trading when you wish.)

We decided that there was a gap in the market for bringing a professional and rigorous trading approach to people who want to trade as individuals on their own private account (often called "retail traders"). The course was written with these people in mind, recognising that the core skills and techniques of professional risk management and trading strategies are the same whether you trade privately or within an institution.

We deliberately chose not to dumb-down the course, and included the concepts of risk management and position sizing that are used by successful traders in the City and on Wall Street. So while there are extra regulations surrounding how institutional traders must operate, which we do not cover, the actual mechanics of professional trading are basically the same: controlling risk across your portfolio, and following careful plans and strategies.

We aim to deliver courses the next working day to customers in the UK, using Royal Mail. For customers outside the UK, delivery will be a few days longer.

Only one: don’t follow hot tips! Tips are the quickest way to lose money. Even if you bought into a tip, how would you know when was the right time to exit and take your profits? And how do you ensure a constant stream of profitable tips?

Long-term trading success is not built on following tips: it is built on understanding risk management, and then by learning and following trusted trading strategies. These are the ideas that are taught and fully explained in each Tradernomics course.

To begin on the path to becoming a successful trader, you can buy a Tradernomics course today: Forex, CFDs, Stocks, or Futures. If you are not sure which course to begin with, we recommend starting with Forex.