Getting started with CFDs
When you first start working in the markets, it may seem extremely difficult and incomprehensible to you. A large amount of information that changes in real-time, a lot of options for interpreting charts, fast-moving markets-all this overloads the novice client of the market Forex, who may feel a sense of fear of the unknown. Therefore, one of the first tips that we will give you is not to complicate the execution of investment operations. Start working with the simplest algorithms, create several models for yourself and use them in your work. Below you will find some useful tips from experienced clients that will help you navigate the OTC Forex markets
Rules for getting started:
Focus on a few tools
You should focus on working with a small number of tools, and also, importantly, work only with those assets that you more or less understand. Every day, when you open and close positions, you will become more familiar with this tool – its patterns, behaviour patterns, and amplitude of fluctuations. All this will allow you to better understand what affects the prices of the instrument and where they may go soon.
Get acquainted with news that can cause volatility on the selected instrument. For example, if you work with the Euro, but you don’t know about the meetings of the European Central Bank and the press conferences of its Chairman, which cause a surge in volatility for pairs with the EUR, then you will be at a known disadvantage. Therefore, try to find time to understand what may affect the movements of a particular market.
Choose the time frame that suits you
The style of your work depends largely on the time frame in which you feel more comfortable. For example, a long-term client keeps almost all of their client open for several weeks, months, and sometimes two or three years. As a result, the number of transactions he usually has is very small-2-3 per month, or even less. Thus, the long-term client makes most of their decisions based on monthly and weekly charts and uses the D1 or H4 charts only to find entry points to the market.
At the same time, a swing client is a medium-term client who holds positions for several days or at least one or two weeks. But the day client usually closes positions during the day, only occasionally leaving them for a longer period.
Consider all possible time frames and think about which ones best suit your work style and your character. This time frame should correspond to the amount of time you can devote to otc investments – hourly, daily, weekly, or monthly.
If you can respond quickly to changes in the situation, you are likely to be interested in a shorter time frame. But for those people who are affected by emotions and do not always respond adequately to certain events, we would recommend a longer time frame, where they could analyze the situation in the market more carefully.
At the same time, many people who work full-time cannot check positions during the day. It would be much more convenient for them to perform the main part of the analysis in the evenings or on weekends. In this case, you should also look at medium-and long-term OTC investment. So your task is to find the right time frame that suits you.
Creating an investment plan
A very important aspect of OTC investment is the availability of an investment plan. You should know the direction in which you will work (up or down), the signals that justify the position, the specific entry and exit points, as well as the size of the risk and potential profit. Creating an investment plan, you can avoid some of the typical mistakes of novice clients, who often start working without any planning. Your investment plan will also serve you well if market conditions change and you need to urgently change your tactics. In this situation, it is extremely useful that you have a pre-prepared algorithm of actions.
Risk management: always use the Stop Loss order
The main purpose of this order, as its name suggests, is to stop losses if the market price moves against you. In essence, a Stop Loss is an order to close a making investment transactions , with the help of which you immediately determine what risk you are willing to accept for a particular operation. If the market moves in the opposite direction from your position and you start losing money, our system will automatically close the making investment transactions at the set point. You can set the Stop Loss level either immediately at the moment of opening a making investment transactions, or later – our platform allows you to do this at any time.
Stop losses are the most effective way to protect margin collateral from adverse market movements, but keep in mind that they can’t guarantee 100% closing of the transaction exactly at the place you set. If the market suddenly becomes very unstable and creates a price gap beyond your stop (the gap is a price jump from one level to another after several points or even several dozen points), then your position may be closed at a less favourable price than the one specified in the order to fix the price of the underlying asset. This phenomenon is known as slippage. At the same time, we want to reassure you that this phenomenon is quite rare and usually occurs during the release of strong news.
Closing transactions on a Stop Loss Order with the lowest risk of slippage from the stated price is available on Comfort accounts. Consult with your manager to clarify the information and open the account that suits you best.
See our weekly market reviews
On your site FTM.by we publish weekly market reviews, where we review price movements for the past week, as well as make plans for the future. In these reviews, you will find not only a list of the main news on foreign currency instruments but also a list of key levels that you need to pay attention to when working on the Forex market in the Republic of Belarus. Weekly reviews are available in Analytics.