1. How to Open a Trade in Libertex
To start trading in Libertex, select an underlying asset. We recommend a CFD EUR/USD currency pair.
Analyze the chart to determine whether the price will go up or down. Rotate your smartphone to enable full screen mode. If you are a beginner trader, we recommend following the trend, i.e., the price movement.
Select your trade amount, multiplier is set by default. Default valueswork best for beginners.
To open your trade, click on Buy or Sell.
You can monitor your results in the Active Trades section.
To lock in your profit, close your trade. If you make profit. your earnings will be instantly credited to your account.
Now you know how to open a trade in Libertex.
In the next lesson, you will learn about multiplier and why most Libertex traders use it.
2. What Is Multiplier?
Multiplier is a major Libertex tool used by most traders.
How does it work? Let’s assume you trade CFD EUR/USD, your trad amount is 50€, and your multiplier i 1. If the price goes up 10%, your profit will be 5€
However, if instead of 1 the multiplier is 20 a, and the asset price goes up 10%, your trade amount will increase to 1000€, and the profit would be 100€.
As you can see, your profit has been multiplied by 20.
However, multiplier does have a downside: if the market goes against you, your potential loss will increase accordingly.
Multiplier works like your car speed: the higher it is, the faster you can reach your destination. However, driving at a high speed is more risky.
This is why every driver selects a speed based on experience, road condition, and the traffic rules.
For novice traders, we recommend trading without multiplier, in order to avoid risks if the underlying asset’s price moves against your expectations.
As your trading experience grows, you can start using greater multiplier values.
3. What Is Take Profit?
Take Profit is a pending order that helps to automatically lock in yourtrading profit.
If you have no time to monitor the price movements, or if the price fluctuates too quickly, all you need to do is set your profit target, and then you can leave the platform and engage in other activities. As soon as the price reaches the level you have set, the trade will close automatically, and the profit will be credited to your account.
To get the maximum profit from a trade, you need to learn to set your profit targets.
Here is an example of how to place a Take Profit order:
You buy CFD EUR/USD for 1,000€
As you open your trade, go to Take Profit/ Stop Loss
In the Profit field, enter the desired amount.
According to money management rules, your Take Profit should be 1.5 times higher than your Stop Loss. In our case, Stop Loss was 100€, hence, Take Profit will be 150€
You’re done. If your profit reaches 150€, the trade will close automatically, and the money will be instantly credited to your account.
To predict price movements and your potential profit more accurately, you need to master ‘news trading,’ i.e. fundamental analysis.
Our next lesson will provide a quick and easy demonstration of fundamental analysis using such popular underlying assets as CFDs on oil and Apple stocks.
4. What Is Stop Loss?
Stop Loss is a pending order traders set in advance to limit their losses. If the market moves against the trader’s prediction, the trade will close automatically, without putting the whole account balance at risk.
Every trader defines a loss limit individually. However, the rule of thumb is not to risk more than 10% of your trade amount.
Here is how you can set your Stop Loss:
You buy CFD EUR/USD, and your investment amount is 1,000€.
As you open your trade, go to Take Profit/ Stop Loss
In the Loss field, enter the desired amount. In our case, it is 100€ or 10% of €1,000
You’re done. When your loss reaches 100€, your trade will close automatically.
To fully control your trades, use Stop Loss in combination with Take Profit.
5. Fundamental Analysis Explained (Crude Oil)
Crude prices are changing constantly, they are influenced by OPEC decisions, Middle East conflicts, production boosts in Iran and many other factors.
As an example, let’s take news published in January 2016: Russia and OPEC to Cut Down Crude Oil Production to Stop the Sell-off.
On February 16, 2016, OPEC and Russia succeeded indeed in freezing crude production.
On February 17, crude oil price jumped from 32.29€ to 34.31€ (6.3%).
For the next 20 days, the price kept on rising, and on March 7, it reached 40.76€, a rise of 26.2%.
Breaking news including important announcements and agreements show up every day. One can watch them on TV or online. Such economic events can be regarded as trading signals; by analyzing them, you can predict whether the price will be rise or fall.
Making trades through this approach is commonly known as fundamental analysis.
6. Fundamental Analysis Explained (Apple)
A long expected event, such as a release of a new iPhone, iPad, or MacBook, can cause long queues in stores. This demand, in turn, may influence a dramatic rise in the price of Apple stocks.
This presents a great earning opportunity for any successful trader.
Let’s take an example. On September 7, 2016, the new iPhone 7 was presented to the public.
The very same day, Apple stocks rose from 107€ to 115€.
This event was covered on all news portals, so everyone (most likely, including you) would have known about it.
Such pieces of news regarding most popular brands, products and services (Facebook, Microsoft, Google, Tesla, etc.) are released daily, online and on TV. Each of these events is a trading signal that can help
you to make a decent profit.
Trades based on news and events are commonly referred to asfundamental analysis, one of the most popular trading strategies.
7. Technical Analysis: Introduction
To take informed trading decisions, such as whether to buy or to sell an uderlying asset, you need to analyze market prices. For your convenience, these prices are visualized in the form of charts.
If you plot an atmospheric temperature chart to two decimal points, you will clearly see periods when the temperature was stable, i.e. when it fluctuated in a tight range between seasons and then increased sharply in summer and decreased in winter.
What happened in the past will also happen in the future – this concept is as applicable to temperatures as it is to the financial markets. This is actually the essence of technical analysis.
Let’s take one of the most popular tech analysis tools, Support and Resistance, as an example.
When the price goes up and suddenly reverses direction, as if hitting a wall, it’s time to sell.
When the price falls and then suddenly bounces up, like a ball bounces up off the floor, it’s a good signal to go long.
Using our trading platform, you can plot additional lines on a chart to detect reversals, or use indicators that give you buy and sell signals.
8. Three Golden Rules of Trading
There are three so called Golden Rules of trading we would like to share with you!
Always use trend trading. Remember the saying: The Trend is your friend! If you see the price is clearly moving in a certain direction, trade this way. It’s always easier to run with the wind!
Let your profits grow, while limiting your losses. Your profits must exceed your losses, it’s that simple! It is the same as in real life: earn more, spend less. Your risk/reward ratio should be 1:2… or more!
Here’s the third rule: Manage your money. When you’re just starting to trade, use tradre amounts and multipliers, so that you may not risk more than 2% of your account balance. For your convenience, we’ve developed Trader Tracker, a very handy tool that will help you stick to these rules while you’re making your first steps as a trader.
9. Why Do Professional Traders Use Libertex Mobile?
Try to imagine the following scenario: you have successfully run your market analysis in the Libertex Web terminal and have decided to open a trade, but then you had to leave your desk and got stuck in a traffic jam, or perhaps you went to see a movie or went to visit a friend. By using the Libertex App you can swiftly react to all price movements whilst being far away from your desktop, i.e. you can trade on the go, anytime, anywhere. With the Libertex App, you can edit open positions, as well as open new trades and monitor your results in real time. This is especially useful when the overall market situation is already clear to you.
When you want to spend time in analysis, making key decisions, the Libertex Web terminal is a great solution. With this trading platform, you’ve got everything you need at hand: asset ratings, technical
analysis tools, and breaking news.
Download Libertex mobile app via the Google Play or through the AppStore, and use our web platform via your favorite browser.
10. When Do I start Trading with Real money?
Lets compare it to learning to drive a car.
First of all you need to understand the basic theory, some terminology and the relationship between the clutch, accelerator and the gears.
You need to know how to change direction, to stop and to go. You need to be able to use your indicators, your lights and your horn. You also need to practice before you head off onto the public streets.
A similar approach can be used in learning to trade.
You need to understand the terminology, how you manage your profit, limit your losses and the concept of multipliers. You need to gain some practice with the trading system.
Once you have done the above you are ready to open your first live trade, using real money.
Whilst it is good to test your first steps using a driving simulator, or by watching how to drive videos, nothing beats practicing with a real car.
Practice with a real car will give you the insight, the confidence and skills to improve your driving.
From our previous lessons, you’ve already learned about the technical side of making trades. If you haven’t switched to a live account yet, it’s high time to do so! This is where you will get a real feel for the road.
11. What Deposit Amount to Start with?
Minimum deposit for opening an account and start trading is 100 €, and minimum amount per trade is 20€.
12. How To Deposit?
To start trading with real money, you’ll need to fund your account first.
To do so, please follow these simple steps. If you are using Libertex trading platform you will need to switch from a demo account to a Real Account. Clicking “Deposit” will take you to the deposit screen.
You will be able to choose a payment method (Bank card for example) and will be able to enter an amount in the box provided. Once you are on the deposit screen, you simply choose you deposit method and enter an amount you wish to deposit.
If it’s your first time funding your account, you’ll have to verify your identity.Just upload your ID (front and back) and proof of residence.
The verification is usually instant. If your verification is successful, congratulations! Now you’re able to trade with a live account. Deposit now and start trading and investing today!
13. Trading Hours
Each asset class has specific trading hours during which market participants are free to trade. Assets traded on stock exchanges are available for trading almost round the clock on weekdays, except for a few hours’ break. Weekends and major public holidays are days off.
Currencies and precious metals are traded Monday through Friday intermission-free, while cryptocurrencies are available for trading 24/7.
Such differences in trading hours depend on the individual schedules of major exchanges. As with traditional brick-and-mortar stores, you can’t go shopping if the store is closed.
To learn about trading hours:
– Go to our website and find Contract Specifications for the asset class you’re interested in. Here you can get detailed info on trading hours and more.
– In the Libertex platform, underlying assets unavailable for trading are marked red, and the time left before the next trading session is shown.
To effectively manage your time, select underlying assets with trading hours that are most suitable for your time zone.
14. What are Japanese Candlesticks?
Japanese Candlesticks are the best way to visualize asset price fluctuations.
For instance, you have selected the CFD EUR/USD currency pair and set a 1 hour time frame. In this case, a new candlestick will appear every hour and show how the price has changed during this 1 hour time frame.
Here is an example of how a candlestick is formed.
At the beginning of the hour, the asset price was at Point 1 – this is the open price. Then, influenced by certain economic events, the price went down to Point 2, and then up to Point 3. At the end of the hour, it stopped at Point 4, which became the close price.
The area between the open price and the close price is called ‘Body’, and the vertical lines between the highest/ lowest price of the day and the body are called ‘Shadows’.
A green candlestick indicates that the asset price has gone up in a given time period; a red candlestick means that the price has dropped.
The candlestick technique helps build market forecasts and achieve gains by using specific trading strategies.
15. Time Frames
Underlying asset prices fluctuate constantly in the market. Traders may monitor these changes in real-time mode, eyes glued to their computer screens, or they may review them on a daily or even weekly
basis, depending on their trading style.
A time frame of a chart is a selected period of time showing the asset price changes within this period. Thus, if you select a one day (1D) time frame on a candlestick chart, a candlestick will form each day. To
view the date the candle was generated, point your mouse cursor to the candle in question.
In Libertex, you can select the following time frames: one minute (1M), five minutes (5M), one hour (1H), four hours (4H), one day (1D), one week (1W), and one month (1MN).
For day trading, use 1M, 5M, and 1H time frames. For longer trades, it would be wiser to use 4H, 1D, or 1W time frames.
Select a time frame based not only on the trading time but also on your account balance. 1H or longer time frame trades are more predictable and reliable than trades based on 1M or 5M time frames.
However, the longer the time frame, the higher your account balance should be, in order to protect you from short term market fluctuations.
16. How to Increase Trade Amount?
The Market is constantly changing. That’s why traders sometimes trade with small amounts, in order to mitigate risks. But what do you do when you have opened a trade in the right direction, but the trade amount is too little to generate maximal yield? In this case, you can use Libertex Increase Trade Amount tool that allows you to put more money in any currently open trade.
Here’s how it works:
You have invested 1,000€ in gold at 1193.88 in an uptrend.
At some point you see that you have identified the trend correctly and would like to increase your trade value, in order to generate a greater yield.
To do so:
– Select the trade in question in Open Trades section
– In a new window, select Increase Trade Amount from Advanced menu
– Enter the amount you want to add, for example, 1,000€, and click OK.
You will see that your trade amount has been changed from 1,000€, to 2,000€.
This feature helps you make additional profit, although it also increases your risks proportionally.
17. Reinvesting Your Profit
There is a possibility to keep further re-investing your earnings.
You can re-invest your earnings not only when you have already closed your trades, but also while your ‘in the money’ trades are still open.
For example, you have invested 1,000€ in EUR/USD pair CFD at 1.0670 in an uptrend. The price went up, and your position is ‘in the money’. To capitalize on your earnings and get further profit, you can do the following:
– Select the trade in question in Open Trades section
– In a new window, select Invest Current Profit from Advanced menu
– Check the details and click OK
Now you can increase your profit without closing the trade. But do not forget the risk of making a loss if the trend changes direction.
18. Trends
The term Trend refers to a general direction of the price of an underlying asset. A trend can be ascending, descending, or flat. If the price is moving in a certain direction, trade in the same direction. It is always easier to go with the tide. This is one of the golden rules of trading.
To determine a trend, look at the price chart:
– If the price makes higher highs and higher lows, it is an ascending trend, and you might look for an opportunity to buy.
– If the price makes lower highs and lower lows, it is a descending trend, and you might look for an opportunity to sell.
– If neither is the case, it is a flat trend, and you can either buy or sell.
To project the end of a trend, look at the support if the trend is ascending, and at the resistance if the trend is descending. Once the support or resistance is broken out, you can open trades in the breakout direction.
19. Support & Resistance Levels
Everyone knows what support and resistance levels are. For example, if you are buying a car, you’ll be looking for the lowest price within the same product range. And when selling a car, you would want to get the highest price possible. In this example, the minimum and maximum prices are your support and resistance levels, respectively.
In financial trading, support and resistance levels are used for placing Stop Loss and Take Profit orders, as well as for capitalizing on support and resistance bounce and breakout strategies.
When an underlying asset’s price reaches the resistance level and retraces, it is a sure sign you may sell.
When the price bounces from the support level, it means you may buy.
This is how the bounce strategy works.
If the price goes beyond support or resistance, traders apply the breakout strategy, on the expectation that the trend will continue.
If you already have an open trade, support and resistance levels are your reference points for placing a Stop Loss or Take Profit order. To do that:
• Find the underlying asset’s high and a low on the chart
• Set Take Profit before the support/resistance level, and Stop Loss beyond the support/resistance level.
Experienced traders have many tricks up their sleeve.
20. Top 3 Chart Patterns
A chart is an analytical tool that may be used by traders to make more informed decisions. Charts visually present combinations of underlying asset price lows and highs.
In the same way that you can use the constellations of Ursa Major and Ursa Minor to locate the North Star to allow you to navigate, charts help traders determine their targets based on the price fluctuations and set profit margins.
To begin your chart pattern analysis, draw support and resistance lines, i.e., straight lines that connect the price respective lows and highs.
Depending on direction of the lines, there are three major chart patterns:
Channel – parallel lines
Triangle – converging lines
Head and Shoulders -lines shape a triangle
Names of chart patterns are not that important, as all charts are used in the same way. To set your profit target:
– Measure the maximum distance between the support and the resistance lines in your chart.
– Wait for a breakout in one of the lines.
Open a trade in the same direction, with the profit target being equal to the distance you have measured.
Along with charts, you can use so-called Japanese candlesticks.
21. Candlestick Patterns and Trading Tactics
Candlestick pattern analysis helps pick time for every trade in financial markets.
Let’s take a look at the main candlestick patterns of bearish trades:
The Hammer is a standalone candle with a short body and long shadow The Dark Cloud Cover pattern has two differently colored candlesticks, where the second candle closes below the middle of the first one but
doesn’t cover it completely
The Evening Star is a three-candle pattern, where one small candle is situated between two directly opposed large ones
These reversal patterns apply to any underlying asset and time frame, and every profitable trade requires the same steps to be completed.
For a timely bearish trade you may:
• open a 15M candlestick chart for a selected underlying asset
• find one of the three reversal patters described above
• as soon as all the candlesticks have been formed, open a trade
• specify the trade amount ( multiplier value is set by default)
• set the profit and risk limits or close the trade manually, when a candlestick of the opposite color has appeared in your chart
22. Moving Average
The Moving Average is one of the most popular mathematical analysis tools. It is calculated as an average underlying asset price for a specific time period.
To use moving averages in practice you may:
– Open the chart of your trading underlying asset, e.g., EUR/USD CFD, with a 1H time frame
– Add a ‘fast’ moving average, with the period of 6
– Add a different color ‘slow’ MA with the period of 24
– Monitor the chart. If the ‘fast’ MA crosses the ‘slow’ one from top down, you should sell
– Conversely, if the ‘fast’ MA crosses the ‘slow’ one from the bottom up, you should buy
– Use Stop Loss and Take Profit orders or just close your trade manually when an opposite signal comes in
Please note that the MA strategy works best when the price is clearly trending, and may not work as expected when the price is ranging.
To try to get profit regardless of market conditions, you may use additional tools, such as oscillators.
23. Oscillators
While trend trading is certainly very convenient, a clear trend cannot always be easily detected. So, what can be done instead? In such situations oscillators come in really handy. Oscillators are indicators effective when dealing with horizontal or sideways price movements.
One of the most popular oscillator types is the stochastic oscillator that shows the current underlying asset price against a past price range.
To correctly use a stochastic oscillator and trade during a sideways market situation you may:
– Open an hourly chart of an underlying asset, for example, EUR/USD CFD.
– Add a 5-3-3 Stochastic. This indicator has two zones: overbought, ranging from 80 to 100, and oversold, ranging from 0 to 20.
– Open a buy trade when the oscillator leaves the oversold zone, and one of its lines is crossing the other one.
– If the oscillator is out of the overbought zone and its lines are crossed as well but in a reverse direction, open a sell trade.
You have to remember that oscillators alone are not sufficient for market analysis and should be used in conjunction with other tools, such as candlestick patterns or support and resistance levels.
24. News Trading
Trading the news is one of the most popular short-term investment strategies. Abrupt market developments and skyrocketing prices provide an excellent opportunity for nanalyzing the market.
Among the key types of news on financial markets is the USA employment situation summary that is usually published on the first working Friday of every month.
This is how this tactics works:
Thirty minutes prior to the summary publication open a CFD on EUR/ USD currency pair chart. Set a buy pending order and a sell pending order, placing them respectively 0.2 euro cents above and below the
current price. No matter which way the price moves, your trade will remain open.
If both orders become active after the news release, you should close these positions and avoid taking any further steps.
If only one trade opened, and you are ‘riding the wave’, wait for one hour to get the results and remove the other order.
25. Analytics
Financial markets are sensitive to global events that affect underlying asset prices. Interpreting news and making the right decisions is not easy.
This is why many traders use analytics, or tips from experts in economics and finance that present news in a more clear way.
To use our analytics, simply select your area of interest and subscribe to email notifications. You will turn into an expert at the push of a button!
You will be emailed daily trading signals ready for immediate use. In addtion, our Periscope application for smartphones and tablets is available on the Libertex Channel. It will provide you video tips with detailed descriptions daily analytics. You will have instant access to information on market changes!
26. Diversification
Diversification is the distribution of capital that helps you minimize trading and investment risks. You have probably heard the saying, “Don’t put all your eggs in one basket.” If you drop the basket, all the eggs will break but if you put eggs in several different baskets, and one basket falls down, this will not affect the other eggs in your other baskets.
The same principle applies to investing and trading in financial markets. If you invest all your money in one underlying asset, and the price changes are not in your favor, you will incur a loss. By investing and trading different underlying assets, you prevent this from happening. Your loss generated by one underlying asset may be compensated by profit from elsewhere.
You can diversify not only underlying assets or trading instruments, but also markets, trading systems, and regions!
Diversification is a cornerstone of portfolio theory and the “buy and hold” strategy that will be discussed in detail in another lesson.
27. Buy and Hold
Another financial markets trading principle is that of “buy and hold”.
The idea is to buy an underlying asset and hold it for a maximum period of time. The higher the underlying asset’s price gets, the greater your return.
This strategy is widely used in the real estate market, when people invest in houses and apartments. But what do you do if the property price doesn’t go up? How do you mitigate your risks?
The modern portfolio theory’s answer is simple: spread your investments! This is what professionals refer to as “diversification.”
In this case, even if the price of one underlying asset goes down, the profit from your other investments may compensate it.
Remember:
– the more underlying assets you have in your portfolio, the more stable results your investments and trades may yield;
– the longer you hold your portfolio, there is an opportunity to have higher your chances for good return.
28. Dealing with Emotions
Emotions may be hard to exclude from the trading process, even if you are already familiar with the difference between mock and live trading.
So, how do you control your emotional state while trading?
As we all know, flying an airplane is a very stressful job involving serious responsibility. However, pilots have checklists specifically designed to help them deal with emergencies. The purpose of a checklist is for a pilot to stay focused, organized, and to avoid panic.
Pilot checklists are one of the reasons air travel is the safest transportation mode today.
Traders need their checklists too. You will require a trading plan or system which addresses all possible market development scenarios and steps you should take.
To create your trading plan:
• break down into each stage the entire process of making your trading decisions.
• Try to predict all possible scenarios, both favorable and adverse.
• Determine your target profit and maximum admissible risk levels, at,which you will close the trade.
Such a detailed checklist will help you deal with two main emotions of any trader – fear and greed.
Your trading will become more profitable and much less stressful.
29. Capital Management
In everyday life, we all try to make more money while keeping our spendings under strict control. Financial market professionals call it capital management.
Managing money is like driving a car: at first, whilst we are still learning, we drive slowly to make sure we fully control the situation.
With greater experience we drive faster as we have more skill.
However, despite our higher speed, we are still in control and will feel at ease despite the faster speed.
To be a wise trader, follow these simple steps:
• Use the 1 multiplier value for your first trades – this will minimize your risks.
• As you become more experienced, increase the multiplier value.
Make sure your trade amounts are such that you never lose more than 2% of your capital.
• Set your Stop Loss and Take Profit values so that your return to risk ratio is always 2 to 1 or greater. In this way, you will keep making money even if the number of your unsuccessful trades exceeds the number of your profitable ones.
Observe these rules and trade carefully or smart.
30. Trading System
A trading system is a set of rules and guidelines for making trading decisions. By now you should know enough to implement a systematic approach.
Review everything you have learned in our lessons and create yourown trading system. You can combine different methods of analysis, but you need not use them all. Remember: the simpler a trading system, the better it works!
You can also use ready-made trading systems developed by our Academy experts. These systems offer high yields and low risks, and more importantly, they have been tested over time in real trading
environment.
Regardless of what you decide to do, keep practicing using your live account. You will not make any profit unless you actually trade! But make sure you keep the risks in mind.
Start trading with the multiplier value of 1, so that even if your trading system is not perfect and errors do occur, you will still save your money for further trades.
Jump at opportunities markets offer, try different approaches, and you will eventually find your own unique way to trade on financial markets.
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Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.