It’s not often that traders get the opportunity to cancel a losing trade. That’s until dealCancellation came along and completely changed the way we view mistakes in the financial markets.
easyMarkets launched dealCancellation with the newbie trader in mind. Rather than punish new and inexperienced traders for their mistakes, we decided to forgive and forget that it even happened. That’s because dealCancellation allows traders to cancel a losing deal within one hour and get their invested amount returned. There is a small fee based on recent volatility but insignificant compared to the amount you could save if your deal goes into loss.
For inexperienced traders, dealCancellation removes fear from decision-making. Without fear, traders have just conquered half of their trading psychology. The other half is greed, by the way.
There’s another reason why new traders love dealCancellation, it gives them the courage to trade highly volatile market events. In the financial markets, volatility isn’t always a bad thing. In fact, it can be very, very good – if you are right. Trading a volatile market event, such as nonfarm payrolls or a central bank statement, can lead to huge gains. Unfortunately, many new traders never experience the excitement of trading these events because of fear.
Another great thing about dealCancellation is how easy it is to use. When you open a trade, you select the dealCancellation button, the small fee it incurs is shown clearly alongside the rest of the information on your trading ticket. If your deal begins to lose and you want to cancel it, simply select the deal and click cancel within one hour from when you opened it.
Improved psychology, guaranteed protection and the freedom to apply your trading strategy are just some of the benefits provided by dealCancellation. In this environment, traders have more opportunity to trade larger contract sizes and more leeway to learn from their mistakes.
Guaranteed Stop loss
For traders, managing risk is absolutely essential. You may think that you’re onto a winning position, but if things go the wrong way then you want to make sure that your losses are limited. Traders use stop losses to achieve this, ensuring that they exit their position if the market moves in the wrong direction.
Regular stop losses aren’t guaranteed
However, the problem with placing stop losses on a trade is that you don’t guarantee a maximum loss under all market conditions. If a market moves very suddenly in one direction, then the problem is that there may not be any traders on the other side who are willing to help you close your position at the stop loss exit price. While this doesn’t happen frequently in intra-day trading, if it does then you are potentially facing a loss that is much larger than you expected.
Even more concerning is the possibility that an equity or forex price will gap up or down. For example, let’s assume that you have bought a particular stock and there is earning news after the bell. If things go as you expect, then you’re going to rack up a profit when the results match analysts’ expectations. On the other hand, if there is an unexpected surprise, then you’re exposed to a major fall in the price.
The exact same issue applies in the forex markets. While currencies are traded 24 hours a day, seven days a week, there is still the potential for a particular currency pair to gap. A significant rise of fall can occur without any opportunity to exit your position. This is even more problematic if you want to hold your positions open over the weekend, you could face significant losses if the currency pair opens significantly above or below its previous value on Monday morning.
Real-world examples of where a guaranteed stop loss will help you
There are a number of good examples where a guaranteed stop loss can help you to limit your losses. For example, consider the case of the decision of the Swiss Central Bank to decouple the valuation of the Swiss franc from the euro. This caught many investors unawares leading to huge losses. However, if you had a guaranteed stop-loss in place, then there is a very good chance that you would have avoided the worst repercussions of this currency move.
Look for brokers who guarantee their stop loss
When you’re selecting a broker – whether that is a forex broker or a stockbroker – look for one that offers guaranteed stop loss orders. easyMarkets offers all of their traders the opportunity to minimize the risk through guaranteed stop losses. This is worth doing, although you will probably see additional trading requirements. easyMarkets is one of the only brokers that offer guaranteed stop loss for free. In all other ways, most guaranteed stop losses behave in the same way as regular stop losses, so you can use them in exactly the same way to manage risk under normal circumstances. The key advantage is that when you encounter unexpected market conditions, then you still know that your downside is precisely limited.
There are many kinds of charts (see Technical Analysis). Start with simple charts. Try to identify trends and major changes, and try to relate them to technical patterns as well as to macro events (news, either financial or political). Make an effort to determine the general magnitude of each change on the chart (meaning: what is the $ value of the change, if you were trading at that point).
Guided tours on trading platforms
Most platforms provide guided tours, demos or tutorials, either online or via download.
When you’re first starting out as a trader, it can be tempting to start trading real money right away, however this may be a recipe for disaster. If you trade real money without understanding how trading really works, then the chances are you’re going to make more bad decisions than good ones.
Fortunately, many reputable brokers offer demo accounts. These accounts allow you to trade in live market conditions but you don’t actually risk any money. Instead, you trade with demo funds, which are a good way to learn about trading without risking your capital. Of course, none of your profits are real either, but the goal is to learn about the markets and to try new things, it’s not all about making money at this point.
Learning the trading platform
For new traders, just learning how to use a trading platform can be overwhelming. There are so many charting options, so many different types of trades that you can make, stop losses to place, hundreds of different indicators available and much more. Just mastering the mechanics may take awhile and the last thing you want is to make a mistake just because the platform didn’t do what you expected. A demo account is a great way of getting familiar with your tools and it will also allow you to compare trading platforms from different brokers.
Trying out strategies
However, a demo account allows you to do much more than just get familiar with the trading platform. It is an excellent way to try out different trading strategies and to become familiar with spotting chart patterns and trading signals. You may want to try out many different strategies at absolutely no risk and see how effective they are. Of course, there’s no single strategy that delivers profits on every trade, otherwise everyone would use it, but you will learn over time how to identify high-probability opportunities in real trading conditions with a demo account.
Even when you become more experienced, it’s an excellent idea to still keep a demo account. This will give you a sandbox to try out new things – so that you can continue to refine your trading approach.
A few words of caution
Demo accounts are risk-free so you may be tempted to throw caution to the wind and go after big wins. However, this is a mistake. You should use your demo account to perfect your money management skills as well so that you can carry these over when you start to trade real money.
Another problem is that when you open a demo account, you are going to receive a large starting balance, perhaps $100,000. This desensitizes you to trading large amounts. In fact, it’s often better to trade small amounts even if you do have a large demo balance, so that you don’t get impatient with the much smaller amounts that you’re going to trade when you go live.
Finally, no one cried because they lost $5000 on a demo account. Trading real money is completely different. That’s when real greed and fear kick in. This can completely warp your judgment, making you do things that you wouldn’t do on a demo account. Don’t assume that you can just carry over what you do on a demo account into live trading. The pressure will change your behavior unless you make a firm resolve to stick to your strategy no matter what.
Market News / breaking news
Keep abreast of world news. Read all the headlines, particularly those directly related to trading. Check the impact of such news if any, on the charts.
Read forecasts, some of which are available free of charge. Bear in mind that forecasts and predictions are made by people, none of whom can guarantee the occurrence of future events
Follow the indices of the leading markets (e.g. Dow-Jones, NASDAQ; Nikkei; etc.). Compare them to the changes in the market you’re trading.
Pay attention to the release of economic indicators (for example, the monthly unemployment rate in the USA), and try to identify their impact on the market in general, and on specific currency pairs in particular.
Don’t hesitate to browse glossaries , which are offered free on many platforms. A given word may have different meaning as it relates to Forex and to the terminology used by the Forex market participants.
Want to know more?
easyMarkets is dedicated to educating its customers. Customers can access FREE 1-on-1 online training. The training goal is to teach people specific strategies for trading currencies over the internet. Both novice investors and expert day traders have benefited from the training provided by easyMarkets.