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forex

How does trading work?

Financial trading has its own language, which may seem difficult for beginners and those who study trading. Once you understand how everything works, you can begin to build a reliable trading strategy, which is one of the most important factors for successful trading.

How to start trading with Prime Capitals?

At Prime Capitals, we offer CFD trading (contract for difference), which is the most affordable way to start trading. The contract for difference allows you to speculate on the movement of major financial markets without buying real shares. Since CFDs are less costly, this means that trading in the markets is available to more people.

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How to invest in CFD with Prime Capitals?

A "contract for difference"(CFD) is an agreement in which an investor buys a contract in anticipation of a change in the value of a particular financial product. By purchasing CFDs, you are not buying the underlying asset, you are giving a security value for the duration of the transaction. This means that you can use leverage to increase the size of the contract using a smaller deposit (margin).

CFD trading is an affordable way for traders to speculate in the most popular financial markets, such as forex, commodities or stocks. If you want to invest in the movement of the US dollar against the euro, or you have the feeling that Facebook stocks will grow rapidly, instead of spending thousands on stocks, you would take CFDs.

The contract for difference (CFD) allows you to use a share of the total value of the lot for investment. The standard lot size for Forex trading is 100,000 currency units (dollars, euros, etc.), although you can also trade mini-lots (10,000) and micro-lots (1000). When you open your trading account, you deposit money into your account, which is your balance or your capital. If you want to open a CFD, you can use your existing leverage to create a margin for your transaction.

For example, if the available leverage is 10: 1, you can put $ 1,000 to get an investment of $ 10,000. $ 1,000 is your margin (deposit), and an affordable leverage of 10: 1 means that you are ready to make a profit or loss based on the total cost of $ 10,000. Thus, if your transaction grows by 2% to $ 10,200 and you close your position, you will receive a profit of $ 200. Your initial margin was $ 1,000, so you made $ 200 profit on your $ 1,000 margin, which is equivalent to 20% of the profit. However, if the deal fell by 2%, your loss of $ 200 means that you would lose 20%. This extremely simplified example also does not account for transaction fees. Some brokers may charge a commission or a fixed commission on any transactions, as well as on the spread.

Foreign currency trading is the act of buying one currency for another. They are presented in the form of currency pairs. Thus, when a price is indicated, this means that one unit of the first currency will buy the second currency. Traders buy or sell these pairs depending on how they think the currencies will act against each other. In the GBP / USD pair, if you think that the pound will grow against the dollar, you would buy GBP / USD. If you think that the pound will lose value against the dollar, you will sell GBP / USD.

However, you are not just buying several currencies, as if you were going to a currency exchange near your office, for example. You invest in a lot of currency. The standard lot is 100,000 of any currency. You can also trade mini-lots (10000) and micro-lots (1000). But when you start to trade forex, you do not need to buy $ 100,000. Instead, you use CFDs to speculate on the changing value of a common lot.

Let's say you have a trading account with $ 1,000 in it. You think that the pound will increase against the US dollar, so you decided to buy a GBP / USD contract for difference (CFD). Your broker offers you a margin of 30: 1. This means that for every dollar you put, you have access to thirty dollars. This increased margin gives you "leverage", that is, the opportunity to invest in a larger lot, using less investment from your own account. Keep in mind that you are not "buying" an asset. You simply buy a contract that says you are ready to invest in market movements, which you hope will be upward. To work out the necessary stock. To understand how much you will need to make a deposit for 1 lot GBP / USD, while a pound costs $ 1,400. Of course, you only have $ 1,000, so in this case you can trade on a mini or micro lot.

Mini Lot Margin: $ 2142
Micro Lot Margin: $ 214

Having received CFDs, you begin to look at market movements to track your profits and losses. The movement of one unit in any market is called pip (point of price index). Pips are measured from the fourth decimal number. The exception is the Japanese yen, where this is the second decimal number. As this number increases or decreases, it represents the profit or loss per unit of your investment. Pips always refers to the currency indicated second on your currency pair. For example, if your account is in pounds sterling and you are trading EUR / GBP, then one point is 10 pounds (1 lot), 1 pounds (mini-lot) and 0.10 pounds (micro-lot).

Whatever your currency pair, pips will be 10, 1 or 0.1 of the second currency, depending on your leverage / margin. To calculate the value in your currency, simply divide the value in points by the exchange rate of your currency. Therefore, regardless of the total movement of the pip in any direction, multiply it by the pip value to calculate your profit / loss.

When trading CFDs in other markets, margin and leverage are still applied. However, the size and cost of the lot vary. Lot size per share is 100 units. In commodity and futures trading, it can vary depending on the commodity, while gold is 100 troy ounces or 5000 troy ounces for silver. As with any CFD, your gains and losses are determined by the movement of points or the change in the value of the asset.

Direction of trade

The company provides the opportunity to trade both shares of international corporations and world indices on the largest stock exchanges in the world, as well as goods and raw materials on the Commodity Exchanges of America, Europe, Asia, the CIS. And of course, access to most existing currency pairs in the most volatile market - Forex.

The forex market, also known as the Forex, is the largest financial market in the world.

According to some estimates, its daily turnover is 4 trillion. in dollar terms. Forex is a source of income for millions of traders and large banks around the world. This is a mechanism for assessing the value of currencies in relation to each other and their exchange.

When concluding a transaction in the Forex market, an individual or organization buys one currency and at the same time sells another. Currency trading always takes place in pairs, where one currency is exchanged for another. The value of the currency reflects the state of the country's economy in relation to other major economies. A trader makes money by buying or selling currency.

Forex works around the clock 5 days a week in an extensive network of banks.

The stock market or securities market is simply a stock market.

Everything is simple here. There is a company, it issues shares - the company is doing well - stocks are getting more expensive, bad - stocks are getting cheaper. This market lends itself very well to both technical and fundamental analysis. And it is considered the most stable!

The largest stock exchange representing the stock market is the New York Stock Exchange (NYSE), the turnover of this structure reaches up to trillions of dollars per month. As in the example with forex, the trader earns both on the growth of the price of shares and on its fall.

Giving you access to all trading sessions, you get the opportunity to trade shares 24/5 on the world's largest platforms.

Commodity exchange (commodity market, commodity market, futures market) is a type of market in which buyers and sellers of goods and raw materials, as well as online traders, enter into transactions. This includes tools such as: natural resources oil, gas; precious metals gold, silver, platinum, as well as contracts for coffee, tea, corn, cotton and much more. This market is stable, and lends itself well to analysis.

One of the largest commodity exchanges in the world is the Chicago Mercantile Exchange, on which you can conclude a contract for any product or raw material that is mined or produced in the world.

The commodity market is available for trading 24/5.

Index is a purely mathematical concept. In this case, it is an indicator of the state of the economy in numerical terms. The main market for indices is the American one, it has long been formed, therefore the most interesting indices for exchange trading are located on the American market. There are 3 main indexes on it: Dow Jones - the main industrial index of the United States, it displays the state of the US economy as a whole. And this index can rightly be called world, as it appeared first in the world, more than 130 years ago.

S & P500 is such a conditional basket in which the 500 largest companies of America are assembled. The unifying feature by which they are selected in this basket is the maximum capitalization, in other words, these are the richest companies in America.

NASDAQ is a technological index, it presents / collects companies that work in the field of high technology High Tech Technologies - the same Apple, Google, Microsoft, Intel.

The success of trading on the exchange is not luck, well, chance and not like not a lottery. All success in trading depends on the information and data that official and non-official sources transmit, and most importantly, their proper analysis. If you own the information, correctly see the market and understand the situation - you are doomed to success. There are so many different strategies, tactics, and other so-called types of analysis, but they all come in one way or another or are based on two main types:

Technical analysis is the analysis of the price for the previous period. By tracking and comparing the schedule of changes in the price of an asset in the past, given what affected and how it affected future pricing, you can understand how this will affect the instrument in the future. In the technical analysis, a variety of auxiliary tools are used that are applied to the chart.

Fundamental analysis is the analysis of news or reports on the activities of a company or industry as a whole, which directly affect the situation in financial markets. This includes all the economic events taking place in the world, the speeches of politicians, the release of macroeconomic indicators and much more. Understanding the interconnections of economic processes makes it possible to confidently make a profit.

How to start trading

In order to take the first steps and start earning, you do not need to study the theory of trading for a long time, read the basics of exchange trading and attend paid courses!

Our partners understand that they will not need to look for information on what you can earn today or tomorrow, they get all this information from their consultant. This is detailed information about the situation on the market and calculations for current transactions:

fundamental analysis
technical analysis
risk management
calculation of working hours and profit per transaction
full calculations of opening an order

It is no secret that the sphere of exchange trading is fraught with certain risks, therefore the Company insures each transaction with its money, which excludes any losses from partners. Providing recommendations, the Company is responsible for them, including money. Before opening a transaction, the consultant provides all the calculations, as well as warns of possible risks. By trading their money, while defending or risking only the money of the Company, our partners derive maximum pleasure and profit.

How to become a partner?

The whole trading process will occur using the trading platform, it is in it that deals are opened and closed - they actually earn money.

You can install it on any device for the convenience of trading anytime, anywhere! The platform is simple and convenient to use, at the first communication the consultant will teach you to open / close transactions and explain the basic functions. In the future, at each communication, he will provide new information about the platform in order to put his knowledge into practice and improve his trading skills.

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