A yield is a return generated from an investment over a particular period, usually in the form of interest or dividend payments. Yields are typically expressed in percentage.

 Yield is commonly mentioned across a variety of products including:

• Bond yield
• Dividend yield
• Stock yield

Changes in yields can tell investors many things. A higher yield could be an indication of a lower risk and bigger income but that should be taken into context. The same scenario could mean a declining security price leading to a higher yield.

At the same time, a company paying higher dividends may be performing well and in peak conditions but this could also mean overpaying and potentially putting their financials at risk if the company is not very profitable.

Whatever the case is, yield is an important measure that should be looked at and followed across different periods.

 Key takeaways

• Yield is the earnings measure of a specific investment
• Higher yields are seen as an indication of lower risk and higher income but not necessarily a positive factor which is the case for a higher dividend yield when a stock price drops
• There are different types of yields including yield-to-maturity, yield-to-worst, and yield-to-call in the case of callable bonds.

If the price of the asset is unstable and changes frequently, with big spikes from time to time, the asset is said to have high volatility. On the other hand, if the price is consistent and stable over a long period, the asset is said to be less volatile. As a new trader, you must decide if trading during the highly volatile trading session is part of your strategy or if you feel more comfortable during times of quieter market movements. If you’re looking for a lot of market movements then you might schedule those times when different trading sessions overlap into your trading strategy. These timings can vary depending on which products and how many different asset classes you trade.

The commodity market is characterized by high near-term volatility. Sometimes, even a relatively small incident can cause a large swing in prices. In 2020, crude prices plummeted to the point where there was more supply than demand and companies were paying people to take the oil off their hands. Especially in Saudi Arabia, which is among the world’s largest oil-producing countries.

The volatility calculator helps traders employ money management strategies by reducing their position sizes at times of high volatility. It computes historical volatility in real-time for each currency pair using past information on exchange rates for several timeframes which can range from one week to one year.

Key takeaways

• Volatility is the measure of price fluctuations on an asset over a given time period.
• Do your research, it is important to gain some knowledge of trading and the factors impacting market prices.
• A volatility calculator helps traders employ money management strategies.

Virtual trading is another term for demo account trading. A demo account is a virtual account used mostly by beginner traders (or experienced traders looking to practice new strategies) before committing to a live account to ensure they feel confident before trading with real money.

A demo account helps you get familiar with the dynamics of the market and how orders are placed. Different financial instruments will be impacted by different factors.

Remember that successful trading is about making informed and confident decisions, assessing the potential, and understanding the risks involved.

Key takeaways:

• Virtual trading is another term for demo account trading.
• A demo account helps you get familiar with the dynamics of the market and how orders are placed.
• Successful trading involves making informed and knowledgeable decisions.

 Trends are an important aspect of trading and technical analysis. At any point in time, the market is either trending up, trending down, or ranging.

They form across multiple timeframes with one timeframe showing a trend while a smaller one could be showing an opposite trend.

Identifying trends can be done using the naked eye or by integrating technical analysis tools and studying charts. While it’s relatively easy to look at a chart and decide what the trend is, it’s a bit difficult to assume whether the trend is resuming or will reverse.

Key takeaways:

• Trends are always happening across different timeframes.
• Identifying trends is relatively easy but deciding whether the momentum will continue or not is difficult.
• Trends are a great addition to any strategy or plan as they help you filter opportunities further.

Trailing stop orders are a special type of stop-loss order that trails with price fluctuations that come with the financial markets. Instead of being set at an absolute amount, the stop-loss price is at a certain percentage. If the price moves up, the stop-loss order moves up with the price. When the price stops rising, the trailing stop remains fixed at the new level that it was dragged to, enabling a trader to lock in more gains while minimizing losses.

While they may be beneficial during strong trends, they may lead to early exits if the market stalls and does a quick reversal before continuing in the main direction.

Key takeaways:

• A trailing stop is designed to lock in profits or limit losses as a trade moves favorably.
• It is especially important that during volatile times, a wider trailing stop is set.
• Trailing stops can be set as limit orders or market orders.

A trading platform is software that allows traders and investors to execute trades in the financial markets. It acts as the intermediary between the traders and the brokers. Brokers tend to offer a trading platform to access the financial markets, free of charge.

The best trading platforms come bundled with features such as news feeds, real-time quotes, premium research, charting tools, among others. Platforms may also be customized and specifically tailored for specific markets like currencies, futures, options, or stocks.

CFI offers the world-renowned MetaTrader 5 trading platform which is one of the most widely used trading interfaces in the world and comes with a range of features that assists traders on their trading journey.

Features include:

• Advanced charting capabilities
• Trade directly from charts
• Full hedging support
• Live news tab
• Automated trading
• Highly secure platform

This trading platform is available on Windows, Mac, and mobile phones. It has been adapted to offer the same functionality as the desktop platform on iOS and Android smartphone devices. There is also the web trader option which provides traders with access through any web browser or computer.

Key takeaways:

• A trading platform is a web-based software tool that allows traders and investors to execute trades.
• The best trading platforms include news feeds, real-time quotes, premium research, and charting tools.
• CFI offers the world-renowned MetaTrader 5 platform, one of the most widely used trading interfaces in the world.

The first thing to be clear on when deciding when to enter a trade is your trading plan. only enter trades that align with your trading plan, because they will give you higher profit potential and you will be able to manage your risk better. knowing what kind of trader, you are, and what your plan is, will help you choose the trades that align with your personality portfolio.

Are you an investor, day trader, swing trader or a trend-following trader? if you are a trend-following trader, is there an established trend in the market? is the market going up or down? if you are bearish, then avoid trading when the market doesn’t reflect a bearish pattern – wait for possible reversal points before you enter a position.

A trade trigger helps you decide when to enter a trade. after you have established that the market has the right conditions for your trading plan, you need to have a specific trigger that tells you "now is the time to enter or exit the trade". whether the market is in an uptrend or downtrend, there are specific features in each trend that provide better opportunities to trade than others.

For example, after the price has widened, you may wait for a pullback, or for new highs to form. if you are bearish and you think that the trend will reverse, wait for a bearish engulfing pattern. you should always look for precise events that help you distinguish trading opportunities from the overall price movements.

How much are you likely to make from the trade you intend to place? is it worth your time and effort? don't just choose your profit target randomly but base it on something measurable. look through the charts to see the targets that are being projected based on the pattern. trends will also show you the possible reversal points based on past price action to help you determine the profit potential of the trade.

For example, if you buy near the bottom of the chart, you can set your price target closer to the top of the chart. having a price target helps you identify the right moment to exit a trade so that you do not hold it for too long and start incurring losses.

key takeaways

• No matter what your level of trading is or your experience in the finical markets, a trading plan will always help you enhance your trading activities.
• Knowing what kind of trader, you are will help you develop a trading plan that aligns with your trading personality.
• Define your tradable trend to avoid placing a trade when market conditions do not reflect your trading plan.

Trading capital refers to the funds a trader has available for them to buy and sell various assets on the global financial markets. Without trading capital, it is not possible to be a trader.

Many brokers, including CFI, allow you to start trading with no minimum deposit.

A trader should never deposit more money to their trading account than they would be willing to lose.

The 1% rule is a rule of thumb which many successful traders follow. This rule advises that you should never put more than 1% of your trading capital into a single trade position. Say, for example, you have $1000 capital in your account: you should not put more than 1%, or $10, in your position in any given asset you are trading. If your trading account balance is less than $100,000, the 1% rule is a good guideline, though some traders with large balances can afford to go up to 2%.

Remember: as your account balance dwindles, so does your position in the market. So, the best way to keep losses at bay is to stick with a risk below 2% so that you do not lose a huge amount of your trading account on one or two trading deals that go badly.

The expected return is the amount you expect to gain if all goes well, as well as the amount you expect to lose if the trade turns against you.

Calculating your possible loss or gain from a trading deal is an important technique. It helps you to rationalize your trade by forcing you to think through them carefully and enables you to compare different trades systematically and select the ones with high profitability potential.

Key takeaways:

• Trading capital refers to the funds a trader has available for them to buy and sell various assets on the global financial markets.
• Never put more than 1% of your trading capital into a single trade position.
• If you would be unable to cope with the potential loss, do not take the risk.

Whether you trade forex, commodities, or equities with CFI, there are hundreds of opportunities to place a trade whenever markets are open, therefore knowing what a trade trigger is and when to enter a trade is vital.

The biggest challenge is usually deciding when to place a trade and when to decide against it – the profit potential is not always equally high. A new trader must learn to evaluate each trade against certain criteria so that they can identify the right moment to place a trade in a sea of infinite trading possibilities.

A trade trigger helps you decide when to enter a trade. The first thing to be clear on when deciding when to enter a trade is your trading plan. Only enter trades that align with your trading strategy. After you have established that the market has the right conditions for your trading strategy, you need to have a specific trigger that tells you "now is the time to enter or exit the trade".

Whether the market is in an [uptrend] or downtrend, there are specific features in each trend that provide better opportunities to trade than others. For example, after the price has moved, you may wait for a pullback, or for new highs to form. If you are bearish and you think that the trend will reverse, wait for a bearish engulfing pattern. You should always look for precise events that help you distinguish trading opportunities from the overall price movements.

Key takeaways:

• A trade trigger helps you decide when to enter a trade.
• After you have established that the market has the right conditions for your trading strategy, you need to have a specific trigger that tells you "now is the time to enter or exit the trade".
• You should always look for precise events that help you distinguish trading opportunities from the overall price movements.

The two most common forms of analysis used by traders are fundamental analysis and technical analysis. Sometimes, these are used in combination with each other and other times, separately. It all depends on your trading style and strategy.

Technical analysis makes it easier to identify support and resistance levels. When you can do this, you can make better trading decisions as it helps you decide whether it is a good idea to invest in a specific financial instrument or not. When prices break these price points, known as support and resistance levels, that have been identified, it means that there have been significant changes in sentiment.

Technical analysis can also help you analyze trends and better understand current price action. The combination of tools that can be used can help traders pinpoint more accurate entries and exits.

Key takeaways:

• Technical analysis makes it easier to identify support and resistance levels.
• Support levels generally identify a price point at which the markets are unlikely to move lower.
• Resistance levels are prices identified in a chart that the market is unlikely to break above.