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CAPITAL MARKET AND OTC
DERIVATIVES
CAPITAL MARKET
Capital markets provide for the
buying and selling of long term
debt or equity backed securities.
21st century capital markets are
mainly hosted on computer based
Electronic trading systems; most can
be accessed only by entities within the
financial sector or the treasury
departments of governments and
corporations, but some can be accessed
directly by the public.
Physically the systems are hosted all
over the world, though they tend to be
concentrated in financial centers like
London, New York, and Hong Kong.
DERIVATIVES MARKET
The term derivative comes
from how the price of these
contracts is derived from the
price of financial contracts
Derivatives are financial contracts
whose value is linked to the price of an
underlying commodity, asset, rate,
index or the occurrence or magnitude
of an event
Derivatives markets have been in
existence for as long, and even longer
than that for securities, it has been the
growth in the past 25 years that has
made them one of the pillars of
financial systems
It is true not only of developed, but
also developing economies
Derivatives are traded in two kinds of markets:
Exchange-traded derivative contracts (ETD) are
those derivatives instruments that are traded via
specialized derivatives exchanges or other
exchanges
Exchanges and OTC markets
Interest rate & index products
Over-the-counter (OTC) derivatives are contracts
that are traded (and privately negotiated)
directly between two parties, without going
through an exchange or other intermediary
The london market – international OTC for gold and
silver
OVER THE COUNTER MARKET
Tailor-made derivatives, doesn’t trade on a futures
exchange but trades on over-the-counter market
Over-the-counter (OTC) or off-exchange trading is to
trade financial instruments such as stocks, bonds,
commodities or derivatives directly between two
parties
Products traded on the futures exchange market must
be well standardised for transparent trading
Non-standard products are traded in the over-thecounter (OTC) derivatives markets
OTC derivatives have less standard structure and are
traded bilaterally (between two parties)
THE
OTC MARKET ALLOWS FLEXIBILITY
Unlike
exchange-traded
derivatives,
OTC
derivatives are not traded on an exchange, but
are rather negotiated between two parties, one
typically an investment bank and the other a
corporate, which has an economic utility to be
addressed by the instrument
For example, a manufacturing company may
have receivables in US Dollars but incurs costs in
Ringgit.
A declining US Dollar may prompt the company to
hedge its risks against further decline
Market analysis
How to begin?
• Let's look at three ways on how you would
analyze and develop ideas to trade the market
– Technical analysis
– Fundamental analysis
– Sentiment analysis
Market
Bullish
Bearish
Technical analysis
• Technical analysis is the framework in which
traders study price movement.
Technical analysis
looks at the price
movement of a
security and uses this
data to predict its
future price
movements.
Fundamental analysis
• Fundamental analysis is a way of looking at
the market by analyzing economic, social, and
political forces that affects the supply and
demand of an asset
Fundamental analysis looks at
economics factors.
Sentiment analysis
• The markets do not simply reflect all the
information out there because traders will all just
act the same way, it determine the market on
current or future outlook
Sentiment analysis
looks at one’s personal
judgement or
evaluation.
Conclusion
Which type of analysis is the best?
Candlestick Pattern
Candlestick movement
Open
High
Close
Close
Low
High
Open
Low
Candlesticks Movement
HIGH
CLOSE
Bullish
candle
OPEN
LOW
CLOSE/
HIGH
OPEN/
LOW
HIGH
OPEN
Bearish
candle
CLOSE
LOW
OPEN/
HIGH
CLOSE/
LOW
Movement (cont…)
Hanging Man
CLOSE/
HIGH
OPEN/
HIGH
OPEN
CLOSE
LOW
Hammer
HIGH
Shooting Star
CLOSE
OPEN/
LOW
LOW
HIGH
Inverted Hammer
OPEN
CLOSE/
LOW
Doji Movement (cont…)
HIGH
OPEN/
CLOSE
LOW
OPEN HIGH/
CLOSE HIGH
LOW
HIGH
OPEN/
CLOSE
OPEN LOW/
CLOSE LOW
What is Candlestick Trading?
• Candlesticks can be used for any time frame,
whether it be one day, one hour, 30-minutes whatever you want! Candlesticks are used to
describe the price action during the given time
frame.
Candlesticks are formed using the open, high,
low, and close of the chosen time period.
• If the close is above the open, then a hollow
candlestick (usually displayed as white) is drawn or in
green
• If the close is below the open, then a filled candlestick
(usually displayed as black) is drawn or in red
• The hollow or filled section of the candlestick is called
the "real body" or body.
• The thin lines poking above and below the body display
the high/low range and are called shadows.
• The top of the upper shadow is the "high".
• The bottom of the lower shadow is the "low".
Body
• Short bodies imply very little buying
or-selling activity.
• Long bodies imply very much buying
or selling activity.
• The Bulls mean buyers and Bears
mean sellers.
• Long white candlesticks show strong
buying pressure. The longer the white
candlestick, the further the close is
above the open.
• Long black (filled) candlesticks show
strong selling pressure. The longer
the black candlestick, the further the
close is below the open.
Mysterious Shadows
• The upper and lower shadows on candlesticks
provide important clues about the trading
session.
• If a candlestick has a long upper shadow and
short lower shadow, this means that buyers
bid prices higher
• If a candlestick has a long lower shadow and
short upper shadow, this means that sellers
forced price lower
Basic Candlestick Patterns – Single,
double, triple and a group
Spinning Tops
• Candlesticks with a long upper shadow, long
lower shadow and small real bodies are called
spinning tops
• The pattern indicates the indecision between
the buyers and sellers
If a spinning top forms during an uptrend???
If a spinning top forms during a downtrend???
Marubozu
• Marubozu means there are no shadows from
the bodies.
• Depending on whether the candlestick's body
is filled or hollow, the high and low are the
same as its open or close.
White Marubozu
• Contains a long white body with no shadows.
• The open price equals the low price and the
close price equals the high price.
• This is a very bullish candle.
• It usually becomes the first part of a bullish
continuation or a bullish reversal pattern.
Black Marubozu
• Contains a long black body with no shadows.
• The open price equals the high price and the
close price equals the low price.
• This is a very bearish candle.
• It usually implies bearish continuation or
bearish reversal.
Doji
• Doji candlesticks have the same open and close
price or at least their bodies are extremely short.
• A doji should have a very small body that appears
as a thin line.
• There are four special types of Doji candlesticks
• If a Doji forms after a series of candlesticks
with long hollow bodies (like White
Marubozus), the Doji signals that the buyers
are becoming exhausted and weakening.
• In order for price to continue rising, more
buyers are needed but there aren't anymore!
• Sellers are licking their chops and are looking
to come in and drive the price back down.
• If a Doji forms after a series of candlesticks
with long filled bodies (like Black Marubozus),
the Doji signals that sellers are becoming
exhausted and weak.
• In order for price to continue falling, more
sellers are needed but sellers are all tapped
out!
• Buyers are foaming in the mouth for a chance
to get in cheap price.
• There are a lot of candlesticks pattern that you
need to study!!!
The hammer is a
bullish reversal pattern
that forms during a
downtrend.
The hanging man is a
bearish reversal pattern
that can also mark a top
or strong resistance
level.
The inverted hammer
occurs when price has
been falling suggests the
possibility of a reversal.
The shooting star is a
bearish reversal pattern
that looks identical to the
inverted hammer but
occurs when price has
been rising
Single
candlestick
Double
candlestick
Triple
candlestick
Chart pattern
• You have to know the basic chart patterns and
formations
• When correctly identified, it usually leads to
an explosive breakout
• Our goal is to spot big movements before they
happen so that we can ride them out and rake
in the cash
Double tops
• Double top is a reversal pattern
that is formed after there is an
extended move up
• The "tops" are peaks which are
formed when the price hits a
certain level that can't be
broken
• After hitting this level, the price
will bounce off it slightly, but
then return back to test the
level again.
• If the price bounces off of that
level again, then you have a
DOUBLE top!
It is telling us that the buying
pressure is just about finished.
Double bottoms
• Double bottom is also a trend
reversal formation, but this time we
are looking to go long instead of
short
• The “bottoms" are lower peaks
which are formed when the price
hits a certain level that can't be
broken
• After the previous downtrend, the
price formed two valleys because it
wasn't able to go below a certain
level
• The second bottom wasn't able to
significantly break the first bottom,
This is a sign that the selling
pressure is about finished
Head and Shoulders
• It is formed by a peak (shoulder), followed by a higher
peak (head), and then another lower peak (shoulder).
• A "neckline" is drawn by connecting the lowest points
of the two troughs.
Inverse Head and Shoulders
• A valley is formed (shoulder), followed by an even
lower valley (head), and then another higher
valley (shoulder)
• A "neckline" is drawn by connecting the highest
points of the two troughs
Support and Resistance
Support and Resistance
• Support and resistance represent key
junctures where the forces of
supply and demand meet
• In the financial markets, prices are driven by
excessive supply (down) and demand (up)
• Supply is synonymous with bearish,
bears and selling
• Demand is synonymous with bullish,
bulls and buying
Support and Resistance
• Support and resistance is one of the most
widely used concepts in trading.
Support and resistance
• Support and Resistance are like a
floor and ceiling while the price is
located between them.
• The main objective is to help us
knowing price trends, chart patterns
and determining whether the trend
is likely to continue or reverse.
• Support and Resistance exist because
traders have memories. They tend to
repeat actions took place in the
past.
• Resistance is a price level where seller's action
is strong enough to interfere or reverse an
uptrend. (Sellers overcome buyers)
• Resistance can be drawn by a horizontal (or
near horizontal) line connecting a few price
tops.
• Resistance also helps traders to decide when
to sell.
• Support is a price level where buyer's action is
strong enough to interfere or reverse a
downtrend. (Buyers overcome sellers)
• Support can be drawn by a horizontal (or near
horizontal) line connecting a few price
bottoms.
• Support also helps traders to decide when to
buy.
How to draw???
• Its better to draw support and resistance lines
by drawing horizontal lines through lower and
upper edges of congestion areas rather than
extreme points
• When the price passes through resistance, that
resistance could potentially become
• The more often price tests a level of resistance or
support without breaking it, the stronger the area
of resistance or support is.
Resistance line
Support line
Resistance line
Profit USD10
Support line
Profit USD17
Trend Lines
• To draw trend lines properly, all you have to
do is locate two major tops or bottoms and
connect them.
Channels
• If we take the trend line theory one step
further and draw a parallel line at the same
angle of the uptrend or downtrend
• We will have created a channel
The Bounce
• One method of trading support and resistance
levels is right after the bounce.
The Break
• There are two ways to play breaks: the
aggressive way or the conservative way.
– The Aggressive Way
– The Conservative Way
Fibonacci
Fibonacci
• Fibonacci ratios will be used a lot in our
trading
• Fibonacci arise from the following number
series: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89,
144…
• Fibonacci Retracement Levels
0, 0.236, 0.382, 0.500, 0.618, 0.764, 1
• Fibonacci Extension Levels
0, 0.382, 0.618, 1.000, 1.382, 1.618
Fibonacci Retracement Levels
0, 0.236, 0.382, 0.500, 0.618, 0.764, 1
• : 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…
• The key Fibonacci ratio of 61.8% - also referred to as "the
golden ratio" or "the golden mean" - is found by dividing one
number in the series by the number that follows it.
– For example: 8/13 = 0.6153, and 55/89 = 0.6179.
• The 38.2% ratio is found by dividing one number in the series
by the number that is found two places to the right.
– For example: 55/144 = 0.3819.
• The 23.6% ratio is found by dividing one number in the series
by the number that is three places to the right.
– For example: 8/34 = 0.2352.
• Fibonacci level calculate the different between
the high and low
• Then divided the zone according to the
Fibonacci ratio
• 0, 0.236, 0.382, 0.500, 0.618, 0.764, 1
Why are we using Fibonacci?
• Fibonacci can be treated as the golden line,
everyone in the world are looking at this level
• Fibonacci will tell you the comfortable profit
zone
• It is a signal for you to enter trade
• Traders use the Fibonacci retracement levels
as potential support and resistance areas
• So many traders watch these same levels and
place buy and sell orders on them to enter
trades or place stops, the support and
resistance levels tend to become a selffulfilling prophecy
Fibonacci Retracement Levels
• To find the retracement levels, you have to
find the recent significant Swing Highs and
Swings Lows.
• For downtrend, click on the Swing High and
drag the cursor to the most recent Swing Low.
• For uptrend, click on the Swing Low and drag
the cursor to the most recent Swing High.
Uptrend
0
23.6
31.8
50.0
68.2
76.4
100.0
Downtrend
100.0
76.4
61.8
50.0
38.2
23.6
0.0
What Does Fibonacci
Extensions Mean?
• Levels used in Fibonacci retracement to forecast
areas of support or resistance.
• Extensions consist of all levels drawn beyond the
standard 100% level and are used by many
traders to determine areas where they will wish
to take profits.
• The most popular extension levels are 161.8%,
261.8% and 423.6%.
Combining Fibs with
Support and Resistance
• The best ways to use the Fibonacci tool is to spot
potential support and resistance levels and see if
they line up with Fibonacci retracement levels.
Combining Fibs with
Trend Lines
• Another good tool to combine with the
Fibonacci tool is trend line analysis.
Combining Fibs with
Candlesticks
• We can also combine Fibs with candlesticks pattern
• In combining the Fibonacci tool with candlestick
patterns, we are actually looking for exhaustive
candlesticks
Indicator
Indicator
• To find the right time to enter
• Set at default setting – in mathematic form –
in mathematic formula
Parabolic SAR
• Indicator that can help us
determine where a trend
might be ending is the
Parabolic SAR (Stop And
Reversal)
• Parabolic SAR places dots, or
points, on a chart that
indicate potential reversals in
price movement
How to Trade Using Parabolic SAR
• When the first dots are below the candles, it is
a buy signal
• When the first dots are above the candles, it is
a sell signal
Enter trade
Stochastic
• Stochastic is another indicator that helps us
determine where a trend might be ending
• Stochastic is an oscillator that measures
overbought and oversold conditions in the
market
How to Trade Using the Stochastic
• Stochastic tells us when the market is
overbought or oversold. The Stochastic is
scaled from 0 to 100
• When the Stochastic lines are above 80 (the
red dotted line in the chart above), then it
means the market is overbought
• When the Stochastic lines are below 20 (the
blue dotted line), then it means that the
market is oversold
This is the signal
for you to quit or
enter trade
Death cross
Overbought
Golden cross
Oversold
Moving average
• Moving averages smooth the price data to form a trend
following indicator. They do not predict price direction,
but rather define the current direction with a lag.
• Closing price
• The trend
More active, closer to
candlestick
• Moving average – 5 periods
An example
• Moving average (5) is the most active line, if
this line cross up to moving average (20)
– There is a signal of uptrend market
• Moving average (5) is the most active line, if
this line cross down to moving average (20)
– There is a signal of downtrend market
The bigger the angle,
the stronger the
moving beat
Moving average (5)
CROSS
Moving average (20)
CROSS
Moving average (20)
Moving average (5)
Technical analysis
• Types of Charts
– Line chart
– Bar chart
– Candlestick chart
Line chart
• A simple line chart draws a line from one closing price
to the next closing price.
• When strung together with a line, we can see the
general price movement of a currency pair over a
period of time.
Bar chart
• A bar chart is a little more complex. It shows the
opening and closing prices, as well as the highs and
lows prices
• Bar charts are also called "OHLC" charts, because they
indicate the Open, the High, the Low, and the Close
Open: The little horizontal line on the
left is the opening price
High: The top of the vertical line
defines the highest price of the time
period
Low: The bottom of the vertical line
defines the lowest price of the time
period
Close: The little horizontal line on the
right is the closing price
Candlestick chart
• Candlestick chart show the same information as a
bar chart, but in a prettier, graphic format.
• Candlestick bars still indicate the high-to-low
range with a vertical line.
Sentiment Analysis
Sentiment analysis
• The sentiment analysis is the general
prevailing attitude of investors as to
anticipated price development in a market.
• This attitude is the accumulation of a variety
of fundamental and technical factors,
including price history, economic reports,
seasonal factors, and national and world
events.
• For example, if investors expect upward price
movement in the stock market, the sentiment
is said to be bullish.
• On the contrary, if the market sentiment
is bearish, most investors expect downward
price movement.
• It is basically:
–
–
–
–
–
Your judgment
Your evaluation
Your concern
Your decision
You trade
Risk Control
Risk Control
• How to control risk
• Every trading there must be a target
• Trading system
• Cut Loss System (Target 1535)
1535
Buy new
Stop loss
1530
1525
Sell close, -5
• Holding System (Target 1535)
Sell close, +5
1535
Buy new
Stop loss
1530
1525
• Locking System (Target 1535)
Sell close
1535
Buy new
Profit = 5
1530
Sell new
Stop loss
1525
1520
Profit = 10
1515
Buy close
06.1 Risk Management
Locking / Hedging
•
•
Locking is a technique used to minimise the loss via performing a new transaction in the
opposite direction of the former transaction (using the same lot size) as it will aid in locking
the trading position.
Unlocking is a technique to recover the loss and/or profit from the locked trading position.
Switching
•
Switching is one of the techniques used to change the transaction direction to the
opposition direction via performing a new transaction in the opposite direction from the
former transaction (by doubling up the lots) as it will switch the risk of the transaction and
profit from it. Hence, the switch covers the loss and gain you profit.
Rolling
•
Rolling is one of the techniques used to gain additional profit via performing a new
transaction by doubling up in the same direction from the former transaction, as it used to
gain the equal if not more profit in the same or faster time taken than the previous
transaction.
When to trade?
When to trade?
• When start to trade, you need to know
the below analysis
– Technical analysis
– Fundamental analysis
– Sentiment analysis
And follow the Golden rules
•Buy low
•Sell high
Conclusion
• There are many factors to influence you in
trading
• So, develop your own trading system, and
abide to this system whenever you enter
trade.
– Find indicators that help identify a new trend. Find
indicators that help CONFIRM the trend.
– Define Your Risk
– Define Entries & Exits
Type of Trading
Type of trading
Type of
Trading
Capital
Time
Frame
USD$20000 USD$30000
15 min 1 Hour
Fastest
Day
Trading
USD$30000 USD$40000
1 Hour 4 Hours
Fast
Swing
Trading
USD$40000 USD$100000
1 Day 2 Weeks
Slow
Position
Trading
USD$100000
Above
2 Weeks
Above
Slowest
Scalping
Speed
Charts to
analysis
Target
Profits
Prepare for
Losses
Technical
Analysis
Fundamental
Analysis
M1, M5,
M15, M30
100-150
pips
200-300
pips
XXXXX
XX
M15, M30,
H1
150-500
pips
300-1000
pips
XXXXX
XX
H1, H4, D1,
W1
500-3000
pips
1500-9000
pips
XXXX
XXXX
D1, W1, M1
3000 pips
Above
9000 pips
Above
XXX
XXXXX
Day trade
Overnight trading
Position trading
Products We Provide
Commodities
Commodity futures markets have long been popular among producers of various raw
materials that need to hedge price risk to protect business but due to huge
improvements in accessibility many investor are now utilizing these markets to enhance
capital gains. This sector is largely affected by growth, especially from China and
emerging economies, and on the whole commodities outperformed equities during 2009
to 2011 period. Similar to equities they are considered risk assets performing well in
growth environments but assets such as gold and silver can also receive safe haven
demand meaning they can do well during uncertainty and investor fear making the
sector very interesting and potentially profitable. The study of price action is very useful
to determine future price movements along with global economic data and decisions by
the Federal Reserve in the US on monetary policy.
Currency Pairing
There was a time when dealing in currencies was just for large organisations looking to
hedge against currency risk but now due to lower capital requirements the markets have
been opened up to the average investor. Price action analysis works very well in this
sector but be aware big moves can occur from news regarding interest rates,
employment and GDP from the respective country. Any pair involving the USD is can be
very active given the attention surrounding quantitative easing at present.
Indices
A stock index is a weighted average of a group of company share prices. If you are an
investor more inclined to digest macro-economic data rather than individual stock news
then trading stock indices may be the product for you. Sometimes good news about a
specific stock can be overshadowed by events on a broader scale therefore during
these times it can be very beneficial to trade indices instead. Similar to commodities a
stock index future price movement can be anticipated via price action analysis,
assessment of economic data, market sentiment and earnings results from major
corporations within the index.
(Reg : 171326)
DEPOSIT ADVISE
S/No.
Date
Name
Trading Account No.
Amount
Amount Transfers / Bankin to :
Name of bank
Bank Account Number
Bank Reference
New Account Margin
Rate :
Additional Margin
I hereby declare and also aware that :
1. All the above information's given above are true and correct
2. All bank charges from your bank account ARE bound by me
3. Number of days clearing and credit to my bank account are subject
your company and bank policy.
4. I shall hold you NO responsibilities in any due cause.
Signature of Depositor
For Official Use Only
Marketing
Operation
Finance
Dept.
Dept.
Dept.
Remarks
Morgan & Morgan Building, P.O. Box 958, Pesea Estate Road Town, Tortola, British Virgin Island
Customer Hotline : +65-81176259, Email : [email protected], Website : www.theunitedcapital.com
(Reg : 171326)
PAYMENT INSTRUCTION
Date
Name of
Client
Trading Account No.
Amount
USD / Other
Request
Request Amount to Be Transfer to :
Name of Bank
Bank Account Number
Bank Address
Swift Code
Type of Account
Saving
Current
Individual
Joined
USD
Others :
For Official Use Only
I hereby declare and also aware that :
1.
2.
3.
4.
All the above information's given above are true and correct.
All bank charges from your bank account ARE bound by me
Number of days clearing and credit to my bank account
are subject your company and bank policy.
I shall hold you NO responsibilities in any due cause.
Signature of Client
Marketing
Dept
ID/Passport Number
Morgan & Morgan Building, P.O. Box 958, Pesea Estate Road Town, Tortola, British Virgin Island
Customer Hotline : +65-81176259, Email : [email protected], Website : www.theunitedcapital.com,
Operation
Dept
Finance
Dept
Remarks
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CAPITAL MARKET AND OTC
DERIVATIVES
CAPITAL MARKET
Capital markets provide for the
buying and selling of long term
debt or equity backed securities.
21st century capital markets are
mainly hosted on computer based
Electronic trading systems; most can
be accessed only by entities within the
financial sector or the treasury
departments of governments and
corporations, but some can be accessed
directly by the public.
Physically the systems are hosted all
over the world, though they tend to be
concentrated in financial centers like
London, New York, and Hong Kong.
DERIVATIVES MARKET
The term derivative comes
from how the price of these
contracts is derived from the
price of financial contracts
Derivatives are financial contracts
whose value is linked to the price of an
underlying commodity, asset, rate,
index or the occurrence or magnitude
of an event
Derivatives markets have been in
existence for as long, and even longer
than that for securities, it has been the
growth in the past 25 years that has
made them one of the pillars of
financial systems
It is true not only of developed, but
also developing economies
Derivatives are traded in two kinds of markets:
Exchange-traded derivative contracts (ETD) are
those derivatives instruments that are traded via
specialized derivatives exchanges or other
exchanges
Exchanges and OTC markets
Interest rate & index products
Over-the-counter (OTC) derivatives are contracts
that are traded (and privately negotiated)
directly between two parties, without going
through an exchange or other intermediary
The london market – international OTC for gold and
silver
OVER THE COUNTER MARKET
Tailor-made derivatives, doesn’t trade on a futures
exchange but trades on over-the-counter market
Over-the-counter (OTC) or off-exchange trading is to
trade financial instruments such as stocks, bonds,
commodities or derivatives directly between two
parties
Products traded on the futures exchange market must
be well standardised for transparent trading
Non-standard products are traded in the over-thecounter (OTC) derivatives markets
OTC derivatives have less standard structure and are
traded bilaterally (between two parties)
THE
OTC MARKET ALLOWS FLEXIBILITY
Unlike
exchange-traded
derivatives,
OTC
derivatives are not traded on an exchange, but
are rather negotiated between two parties, one
typically an investment bank and the other a
corporate, which has an economic utility to be
addressed by the instrument
For example, a manufacturing company may
have receivables in US Dollars but incurs costs in
Ringgit.
A declining US Dollar may prompt the company to
hedge its risks against further decline
Market analysis
How to begin?
• Let's look at three ways on how you would
analyze and develop ideas to trade the market
– Technical analysis
– Fundamental analysis
– Sentiment analysis
Market
Bullish
Bearish
Technical analysis
• Technical analysis is the framework in which
traders study price movement.
Technical analysis
looks at the price
movement of a
security and uses this
data to predict its
future price
movements.
Fundamental analysis
• Fundamental analysis is a way of looking at
the market by analyzing economic, social, and
political forces that affects the supply and
demand of an asset
Fundamental analysis looks at
economics factors.
Sentiment analysis
• The markets do not simply reflect all the
information out there because traders will all just
act the same way, it determine the market on
current or future outlook
Sentiment analysis
looks at one’s personal
judgement or
evaluation.
Conclusion
Which type of analysis is the best?
Candlestick Pattern
Candlestick movement
Open
High
Close
Close
Low
High
Open
Low
Candlesticks Movement
HIGH
CLOSE
Bullish
candle
OPEN
LOW
CLOSE/
HIGH
OPEN/
LOW
HIGH
OPEN
Bearish
candle
CLOSE
LOW
OPEN/
HIGH
CLOSE/
LOW
Movement (cont…)
Hanging Man
CLOSE/
HIGH
OPEN/
HIGH
OPEN
CLOSE
LOW
Hammer
HIGH
Shooting Star
CLOSE
OPEN/
LOW
LOW
HIGH
Inverted Hammer
OPEN
CLOSE/
LOW
Doji Movement (cont…)
HIGH
OPEN/
CLOSE
LOW
OPEN HIGH/
CLOSE HIGH
LOW
HIGH
OPEN/
CLOSE
OPEN LOW/
CLOSE LOW
What is Candlestick Trading?
• Candlesticks can be used for any time frame,
whether it be one day, one hour, 30-minutes whatever you want! Candlesticks are used to
describe the price action during the given time
frame.
Candlesticks are formed using the open, high,
low, and close of the chosen time period.
• If the close is above the open, then a hollow
candlestick (usually displayed as white) is drawn or in
green
• If the close is below the open, then a filled candlestick
(usually displayed as black) is drawn or in red
• The hollow or filled section of the candlestick is called
the "real body" or body.
• The thin lines poking above and below the body display
the high/low range and are called shadows.
• The top of the upper shadow is the "high".
• The bottom of the lower shadow is the "low".
Body
• Short bodies imply very little buying
or-selling activity.
• Long bodies imply very much buying
or selling activity.
• The Bulls mean buyers and Bears
mean sellers.
• Long white candlesticks show strong
buying pressure. The longer the white
candlestick, the further the close is
above the open.
• Long black (filled) candlesticks show
strong selling pressure. The longer
the black candlestick, the further the
close is below the open.
Mysterious Shadows
• The upper and lower shadows on candlesticks
provide important clues about the trading
session.
• If a candlestick has a long upper shadow and
short lower shadow, this means that buyers
bid prices higher
• If a candlestick has a long lower shadow and
short upper shadow, this means that sellers
forced price lower
Basic Candlestick Patterns – Single,
double, triple and a group
Spinning Tops
• Candlesticks with a long upper shadow, long
lower shadow and small real bodies are called
spinning tops
• The pattern indicates the indecision between
the buyers and sellers
If a spinning top forms during an uptrend???
If a spinning top forms during a downtrend???
Marubozu
• Marubozu means there are no shadows from
the bodies.
• Depending on whether the candlestick's body
is filled or hollow, the high and low are the
same as its open or close.
White Marubozu
• Contains a long white body with no shadows.
• The open price equals the low price and the
close price equals the high price.
• This is a very bullish candle.
• It usually becomes the first part of a bullish
continuation or a bullish reversal pattern.
Black Marubozu
• Contains a long black body with no shadows.
• The open price equals the high price and the
close price equals the low price.
• This is a very bearish candle.
• It usually implies bearish continuation or
bearish reversal.
Doji
• Doji candlesticks have the same open and close
price or at least their bodies are extremely short.
• A doji should have a very small body that appears
as a thin line.
• There are four special types of Doji candlesticks
• If a Doji forms after a series of candlesticks
with long hollow bodies (like White
Marubozus), the Doji signals that the buyers
are becoming exhausted and weakening.
• In order for price to continue rising, more
buyers are needed but there aren't anymore!
• Sellers are licking their chops and are looking
to come in and drive the price back down.
• If a Doji forms after a series of candlesticks
with long filled bodies (like Black Marubozus),
the Doji signals that sellers are becoming
exhausted and weak.
• In order for price to continue falling, more
sellers are needed but sellers are all tapped
out!
• Buyers are foaming in the mouth for a chance
to get in cheap price.
• There are a lot of candlesticks pattern that you
need to study!!!
The hammer is a
bullish reversal pattern
that forms during a
downtrend.
The hanging man is a
bearish reversal pattern
that can also mark a top
or strong resistance
level.
The inverted hammer
occurs when price has
been falling suggests the
possibility of a reversal.
The shooting star is a
bearish reversal pattern
that looks identical to the
inverted hammer but
occurs when price has
been rising
Single
candlestick
Double
candlestick
Triple
candlestick
Chart pattern
• You have to know the basic chart patterns and
formations
• When correctly identified, it usually leads to
an explosive breakout
• Our goal is to spot big movements before they
happen so that we can ride them out and rake
in the cash
Double tops
• Double top is a reversal pattern
that is formed after there is an
extended move up
• The "tops" are peaks which are
formed when the price hits a
certain level that can't be
broken
• After hitting this level, the price
will bounce off it slightly, but
then return back to test the
level again.
• If the price bounces off of that
level again, then you have a
DOUBLE top!
It is telling us that the buying
pressure is just about finished.
Double bottoms
• Double bottom is also a trend
reversal formation, but this time we
are looking to go long instead of
short
• The “bottoms" are lower peaks
which are formed when the price
hits a certain level that can't be
broken
• After the previous downtrend, the
price formed two valleys because it
wasn't able to go below a certain
level
• The second bottom wasn't able to
significantly break the first bottom,
This is a sign that the selling
pressure is about finished
Head and Shoulders
• It is formed by a peak (shoulder), followed by a higher
peak (head), and then another lower peak (shoulder).
• A "neckline" is drawn by connecting the lowest points
of the two troughs.
Inverse Head and Shoulders
• A valley is formed (shoulder), followed by an even
lower valley (head), and then another higher
valley (shoulder)
• A "neckline" is drawn by connecting the highest
points of the two troughs
Support and Resistance
Support and Resistance
• Support and resistance represent key
junctures where the forces of
supply and demand meet
• In the financial markets, prices are driven by
excessive supply (down) and demand (up)
• Supply is synonymous with bearish,
bears and selling
• Demand is synonymous with bullish,
bulls and buying
Support and Resistance
• Support and resistance is one of the most
widely used concepts in trading.
Support and resistance
• Support and Resistance are like a
floor and ceiling while the price is
located between them.
• The main objective is to help us
knowing price trends, chart patterns
and determining whether the trend
is likely to continue or reverse.
• Support and Resistance exist because
traders have memories. They tend to
repeat actions took place in the
past.
• Resistance is a price level where seller's action
is strong enough to interfere or reverse an
uptrend. (Sellers overcome buyers)
• Resistance can be drawn by a horizontal (or
near horizontal) line connecting a few price
tops.
• Resistance also helps traders to decide when
to sell.
• Support is a price level where buyer's action is
strong enough to interfere or reverse a
downtrend. (Buyers overcome sellers)
• Support can be drawn by a horizontal (or near
horizontal) line connecting a few price
bottoms.
• Support also helps traders to decide when to
buy.
How to draw???
• Its better to draw support and resistance lines
by drawing horizontal lines through lower and
upper edges of congestion areas rather than
extreme points
• When the price passes through resistance, that
resistance could potentially become
• The more often price tests a level of resistance or
support without breaking it, the stronger the area
of resistance or support is.
Resistance line
Support line
Resistance line
Profit USD10
Support line
Profit USD17
Trend Lines
• To draw trend lines properly, all you have to
do is locate two major tops or bottoms and
connect them.
Channels
• If we take the trend line theory one step
further and draw a parallel line at the same
angle of the uptrend or downtrend
• We will have created a channel
The Bounce
• One method of trading support and resistance
levels is right after the bounce.
The Break
• There are two ways to play breaks: the
aggressive way or the conservative way.
– The Aggressive Way
– The Conservative Way
Fibonacci
Fibonacci
• Fibonacci ratios will be used a lot in our
trading
• Fibonacci arise from the following number
series: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89,
144…
• Fibonacci Retracement Levels
0, 0.236, 0.382, 0.500, 0.618, 0.764, 1
• Fibonacci Extension Levels
0, 0.382, 0.618, 1.000, 1.382, 1.618
Fibonacci Retracement Levels
0, 0.236, 0.382, 0.500, 0.618, 0.764, 1
• : 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…
• The key Fibonacci ratio of 61.8% - also referred to as "the
golden ratio" or "the golden mean" - is found by dividing one
number in the series by the number that follows it.
– For example: 8/13 = 0.6153, and 55/89 = 0.6179.
• The 38.2% ratio is found by dividing one number in the series
by the number that is found two places to the right.
– For example: 55/144 = 0.3819.
• The 23.6% ratio is found by dividing one number in the series
by the number that is three places to the right.
– For example: 8/34 = 0.2352.
• Fibonacci level calculate the different between
the high and low
• Then divided the zone according to the
Fibonacci ratio
• 0, 0.236, 0.382, 0.500, 0.618, 0.764, 1
Why are we using Fibonacci?
• Fibonacci can be treated as the golden line,
everyone in the world are looking at this level
• Fibonacci will tell you the comfortable profit
zone
• It is a signal for you to enter trade
• Traders use the Fibonacci retracement levels
as potential support and resistance areas
• So many traders watch these same levels and
place buy and sell orders on them to enter
trades or place stops, the support and
resistance levels tend to become a selffulfilling prophecy
Fibonacci Retracement Levels
• To find the retracement levels, you have to
find the recent significant Swing Highs and
Swings Lows.
• For downtrend, click on the Swing High and
drag the cursor to the most recent Swing Low.
• For uptrend, click on the Swing Low and drag
the cursor to the most recent Swing High.
Uptrend
0
23.6
31.8
50.0
68.2
76.4
100.0
Downtrend
100.0
76.4
61.8
50.0
38.2
23.6
0.0
What Does Fibonacci
Extensions Mean?
• Levels used in Fibonacci retracement to forecast
areas of support or resistance.
• Extensions consist of all levels drawn beyond the
standard 100% level and are used by many
traders to determine areas where they will wish
to take profits.
• The most popular extension levels are 161.8%,
261.8% and 423.6%.
Combining Fibs with
Support and Resistance
• The best ways to use the Fibonacci tool is to spot
potential support and resistance levels and see if
they line up with Fibonacci retracement levels.
Combining Fibs with
Trend Lines
• Another good tool to combine with the
Fibonacci tool is trend line analysis.
Combining Fibs with
Candlesticks
• We can also combine Fibs with candlesticks pattern
• In combining the Fibonacci tool with candlestick
patterns, we are actually looking for exhaustive
candlesticks
Indicator
Indicator
• To find the right time to enter
• Set at default setting – in mathematic form –
in mathematic formula
Parabolic SAR
• Indicator that can help us
determine where a trend
might be ending is the
Parabolic SAR (Stop And
Reversal)
• Parabolic SAR places dots, or
points, on a chart that
indicate potential reversals in
price movement
How to Trade Using Parabolic SAR
• When the first dots are below the candles, it is
a buy signal
• When the first dots are above the candles, it is
a sell signal
Enter trade
Stochastic
• Stochastic is another indicator that helps us
determine where a trend might be ending
• Stochastic is an oscillator that measures
overbought and oversold conditions in the
market
How to Trade Using the Stochastic
• Stochastic tells us when the market is
overbought or oversold. The Stochastic is
scaled from 0 to 100
• When the Stochastic lines are above 80 (the
red dotted line in the chart above), then it
means the market is overbought
• When the Stochastic lines are below 20 (the
blue dotted line), then it means that the
market is oversold
This is the signal
for you to quit or
enter trade
Death cross
Overbought
Golden cross
Oversold
Moving average
• Moving averages smooth the price data to form a trend
following indicator. They do not predict price direction,
but rather define the current direction with a lag.
• Closing price
• The trend
More active, closer to
candlestick
• Moving average – 5 periods
An example
• Moving average (5) is the most active line, if
this line cross up to moving average (20)
– There is a signal of uptrend market
• Moving average (5) is the most active line, if
this line cross down to moving average (20)
– There is a signal of downtrend market
The bigger the angle,
the stronger the
moving beat
Moving average (5)
CROSS
Moving average (20)
CROSS
Moving average (20)
Moving average (5)
Technical analysis
• Types of Charts
– Line chart
– Bar chart
– Candlestick chart
Line chart
• A simple line chart draws a line from one closing price
to the next closing price.
• When strung together with a line, we can see the
general price movement of a currency pair over a
period of time.
Bar chart
• A bar chart is a little more complex. It shows the
opening and closing prices, as well as the highs and
lows prices
• Bar charts are also called "OHLC" charts, because they
indicate the Open, the High, the Low, and the Close
Open: The little horizontal line on the
left is the opening price
High: The top of the vertical line
defines the highest price of the time
period
Low: The bottom of the vertical line
defines the lowest price of the time
period
Close: The little horizontal line on the
right is the closing price
Candlestick chart
• Candlestick chart show the same information as a
bar chart, but in a prettier, graphic format.
• Candlestick bars still indicate the high-to-low
range with a vertical line.
Sentiment Analysis
Sentiment analysis
• The sentiment analysis is the general
prevailing attitude of investors as to
anticipated price development in a market.
• This attitude is the accumulation of a variety
of fundamental and technical factors,
including price history, economic reports,
seasonal factors, and national and world
events.
• For example, if investors expect upward price
movement in the stock market, the sentiment
is said to be bullish.
• On the contrary, if the market sentiment
is bearish, most investors expect downward
price movement.
• It is basically:
–
–
–
–
–
Your judgment
Your evaluation
Your concern
Your decision
You trade
Risk Control
Risk Control
• How to control risk
• Every trading there must be a target
• Trading system
• Cut Loss System (Target 1535)
1535
Buy new
Stop loss
1530
1525
Sell close, -5
• Holding System (Target 1535)
Sell close, +5
1535
Buy new
Stop loss
1530
1525
• Locking System (Target 1535)
Sell close
1535
Buy new
Profit = 5
1530
Sell new
Stop loss
1525
1520
Profit = 10
1515
Buy close
06.1 Risk Management
Locking / Hedging
•
•
Locking is a technique used to minimise the loss via performing a new transaction in the
opposite direction of the former transaction (using the same lot size) as it will aid in locking
the trading position.
Unlocking is a technique to recover the loss and/or profit from the locked trading position.
Switching
•
Switching is one of the techniques used to change the transaction direction to the
opposition direction via performing a new transaction in the opposite direction from the
former transaction (by doubling up the lots) as it will switch the risk of the transaction and
profit from it. Hence, the switch covers the loss and gain you profit.
Rolling
•
Rolling is one of the techniques used to gain additional profit via performing a new
transaction by doubling up in the same direction from the former transaction, as it used to
gain the equal if not more profit in the same or faster time taken than the previous
transaction.
When to trade?
When to trade?
• When start to trade, you need to know
the below analysis
– Technical analysis
– Fundamental analysis
– Sentiment analysis
And follow the Golden rules
•Buy low
•Sell high
Conclusion
• There are many factors to influence you in
trading
• So, develop your own trading system, and
abide to this system whenever you enter
trade.
– Find indicators that help identify a new trend. Find
indicators that help CONFIRM the trend.
– Define Your Risk
– Define Entries & Exits
Type of Trading
Type of trading
Type of
Trading
Capital
Time
Frame
USD$20000 USD$30000
15 min 1 Hour
Fastest
Day
Trading
USD$30000 USD$40000
1 Hour 4 Hours
Fast
Swing
Trading
USD$40000 USD$100000
1 Day 2 Weeks
Slow
Position
Trading
USD$100000
Above
2 Weeks
Above
Slowest
Scalping
Speed
Charts to
analysis
Target
Profits
Prepare for
Losses
Technical
Analysis
Fundamental
Analysis
M1, M5,
M15, M30
100-150
pips
200-300
pips
XXXXX
XX
M15, M30,
H1
150-500
pips
300-1000
pips
XXXXX
XX
H1, H4, D1,
W1
500-3000
pips
1500-9000
pips
XXXX
XXXX
D1, W1, M1
3000 pips
Above
9000 pips
Above
XXX
XXXXX
Day trade
Overnight trading
Position trading
Products We Provide
Commodities
Commodity futures markets have long been popular among producers of various raw
materials that need to hedge price risk to protect business but due to huge
improvements in accessibility many investor are now utilizing these markets to enhance
capital gains. This sector is largely affected by growth, especially from China and
emerging economies, and on the whole commodities outperformed equities during 2009
to 2011 period. Similar to equities they are considered risk assets performing well in
growth environments but assets such as gold and silver can also receive safe haven
demand meaning they can do well during uncertainty and investor fear making the
sector very interesting and potentially profitable. The study of price action is very useful
to determine future price movements along with global economic data and decisions by
the Federal Reserve in the US on monetary policy.
Currency Pairing
There was a time when dealing in currencies was just for large organisations looking to
hedge against currency risk but now due to lower capital requirements the markets have
been opened up to the average investor. Price action analysis works very well in this
sector but be aware big moves can occur from news regarding interest rates,
employment and GDP from the respective country. Any pair involving the USD is can be
very active given the attention surrounding quantitative easing at present.
Indices
A stock index is a weighted average of a group of company share prices. If you are an
investor more inclined to digest macro-economic data rather than individual stock news
then trading stock indices may be the product for you. Sometimes good news about a
specific stock can be overshadowed by events on a broader scale therefore during
these times it can be very beneficial to trade indices instead. Similar to commodities a
stock index future price movement can be anticipated via price action analysis,
assessment of economic data, market sentiment and earnings results from major
corporations within the index.
(Reg : 171326)
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I hereby declare and also aware that :
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your company and bank policy.
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Marketing
Operation
Finance
Dept.
Dept.
Dept.
Remarks
Morgan & Morgan Building, P.O. Box 958, Pesea Estate Road Town, Tortola, British Virgin Island
Customer Hotline : +65-81176259, Email : [email protected], Website : www.theunitedcapital.com
(Reg : 171326)
PAYMENT INSTRUCTION
Date
Name of
Client
Trading Account No.
Amount
USD / Other
Request
Request Amount to Be Transfer to :
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Saving
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1.
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3.
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All the above information's given above are true and correct.
All bank charges from your bank account ARE bound by me
Number of days clearing and credit to my bank account
are subject your company and bank policy.
I shall hold you NO responsibilities in any due cause.
Signature of Client
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Customer Hotline : +65-81176259, Email : [email protected], Website : www.theunitedcapital.com,
Operation
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