Educational Articles

Learn basic and advanced concepts inside our detail-oriented educational articles.

Understanding Financial Markets

What Is A Stock Market Index? An index measures a specific stock market or part of it continuously which helps investors assess current prices and performance versus previous ones. Indices are made up of the prices of several stocks and each has its own method of calculation. Some indexes ...

Introduction Options contracts, or simply options, are agreements that give the holder the right, but not the obligation, to buy or sell a specific amount of an underlying security at a specified price at or until a defined time in the future. Options are derivative instruments because their ...

Introduction to the stock market The thought of investing is never an easy-to-digest for most people with little experience in the financial markets. Many have been tricked by so-called experts who have promised huge returns on stocks that ended up not moving at all while others did it th ...

What is Forex? Forex, short for Foreign Exchange, is the act of converting one currency into another. This is usually done for a variety of reasons and could range from personal such as tourism to large-scale commercial needs or import/export operations. In 2019, the Forex Market averaged ...

What Is a Commodity Market? Similar to any other market around the world, the commodity market allows participants to buy or sell products that range from luxuries to everyday essentials. Many commodity centers exist around the world, facilitating trade between suppliers, manufacturers, spe ...

How To Trade

About Metatrader 5 Metatrader 5 is one of the most sought-after and widely used trading platforms in the world. It’s the successor to Metatrader 4 which is currently being phased out by most trading providers in favor of the more powerful and highly customizable Metatrader 5. The popularit ...

About Metatrader 5 Metatrader 5 is one of the most sought-after and widely used trading platforms in the world. It’s the successor to Metatrader 4 which is currently being phased out by most trading providers in favor of the more powerful and highly customizable Metatrader 5. The popularit ...

About Metatrader 5 Metatrader 5 is one of the most sought-after and widely used trading platforms in the world. It’s the successor to Metatrader 4 which is currently being phased out by most trading providers in favor of the more powerful and highly customizable Metatrader 5. In this guide ...

Financial Products

I. What Are ETFs And Their Benefits? A popular diversification method that was first introduced in 1993, Exchange-Traded Fund (ETF) is a basket of open-funded pooled securities traded on stock exchanges managed by brokerage firms; the first US fund S&P's Depositary Receipts (SPDRs) known ...

NFT stands for Non-Fungible Token; essentially, it's a digital asset that can take any form and shape. "Non-fungible" signifies that it is unique and cannot be substituted with anything else. It is a one-of-a-kind trade card, you'd get something altogether different if you swapped it for a ...

What are Derivatives? Derivatives are financial instruments that derive their value based on underlying assets such as commodities, currencies, interest rates, and stock prices. Derivatives are considered the umbrella of many sub-financial instruments under which futures, forwards, and option ...

CFD stands for contract for difference. CFDs are a form of derivative trading. they derive their value from the movement of an underlying asset. They allow traders to trade price movements without actually owning the underlying asset. When traders choose to trade CFDs, it means that they are ...

What is a CFD? A CFD, also known as a contract for difference dictates that a buyer will pay the seller the difference between the current value of a specific asset and its value at the time of initiating the contract. Contracts for difference allows market participants the opportunity to gen ...

What is an ETF? An ETF which stands for Exchange-traded fund, (Figure 1) is a mix between a regular stock and a mutual fund. To explain this further, imagine the flexibility of trading a regular stock combined with the diversification previously found only within mutual funds. An ETF is ...

The definition of Intermarket analysis Intermarket analysis focuses on analyzing multiple asset classes that are related. You may be wondering which asset classes are related and the general answer is all of them. For example, stocks may be positively or negatively correlated to bonds or the ...

It’s true when they say the financial markets never sleep and that is because the markets are open 24 hours a day, 5 days a week, and are constantly moving, sometimes in a tight range and other times in explosive parabolic moves. Most assets trend especially if the asset is seeing a surge of ...

Technical & Fundamental Analysis

Most traders, regardless of their experience level, risk tolerance, or style of trading use or have used technical analysis to make trades or at least analyze the market. The importance of it is undeniable which means that learning at least the basics is a must for any individual involved in the ...

Introduction Moving Averages is the oldest technical indicator used by the trader. It was drawn by hand before computers were used in technical analysis. It is beneficial for any trader and has a lot of trading applications.   What is a Moving Average? It is a mathematical cal ...

Introduction Technical Indicators are a mathematical formula calculated from price data to provide traders with some information that cannot be easily shown from the pure prices like momentum and volatility. Indicators have two major classifications trend-following like Moving averages and Boll ...

What is Bollinger Band? Bollinger Band is constructed by two bands surroundings a 20 simple moving average. They expand and contract based on the standard deviation of the moving average. Bollinger Band uses two standard deviations on each side of the moving average enabling 95% of the data ...

What is VIX Index? VIX is CBOE indicator that measures is the implied volatility that is being priced into S&P 500 index options. Through the use of a wide variety of option prices, the index offers an indication of 30-day implied volatility as priced by the S&P 500 index option market. ...

What are Fibonacci Numbers? Leonardo Fibonacci was a mathematician born in 1170 AD. From his work, we get the Fibonacci sequence of numbers and the well-known Fibonacci golden ratio. The Fibonacci sequence is a series of numbers where the next number is simply the sum of the two preceding numbe ...

What is Elliott wave theory?   The theory was developed by R.N. Elliott in the 1930s and was popularized by Robert Prechter in the 1970s. Elliott studied several years of stock market data across various indices and discovered that market forms the same types of patterns on a smaller ...

Introduction Volume is the fuel that drives the market. The volume reveals when the major operators are moving in and out of the market. Without volume, nothing moves, and if it does move and the volume is not in agreement, then there is something wrong, and an alarm bell ring! Although price i ...

Introduction Chart pattern analysis is probably one of the most popular forms of technical analysis. Chart patterns help to identify market tops and bottoms as well as trend continuations. Chart patterns also indicate the minimum price movement expected once the pattern is completed. Chart patt ...

Intro Central banks are the driving force behind the economy of every country in this world. They play a very important role related to the growth and sustainability of societies and use a variety of tools to keep all broad monetary aspects in check. Some central banks are more known than ot ...

I. What are the similarities and differences between ETF vs Stock? A stock is one particular security that denotes the ownership of a fraction of a certain company, while an ETF is a basket of different securities and not necessarily only shares. For example, owning a share of Schlumberger, and ...

Intro Stock market Prices move randomly in the short term daily; you cannot be sure if tomorrow will be an up or down day, so it is tough to predict this movement over short time periods, but in the long term, this randomness decreases significantly. We see market prices move in trends, sometim ...

Introduction The financial markets comprise more than 500,000 securities, derivatives, currencies, bonds, and other financial instruments. All interact with each other to some extent and a seemingly unimportant event can cause a chain of reactions causing a landslide of large-scale changes to t ...

Before the existence of financial data tool providers, and before retail traders were able to trade online; for a transaction in the financial markets to occur, there used to be a process that was dependent on human interaction.  Dealers/Brokers used to contact potential investors in ord ...

Reading charts Studying charts is part of the broader method of technical analysis which is the study of historical prices and patterns that could help in predicting future outcomes. While technical analysis involves different elements, reading charts is the basis and foundation of technical ...

What is price action trading? Price action is the idea of trading a fairly “naked” chart with very little or no indicators and simply focusing on price and structure. Before we go deeper into price action trading, it’s important to remember that price is the only truly leading indicator, an ...

What are support and resistance? Among the many different ideas that form technical analysis, one of the most important ones would have to be support and resistance. Nearly all trading strategies use support and resistance in one way or another, and if they do not, can benefit from its addi ...

What are trend lines? Trend lines are diagonal or horizontal lines drawn across specific swing points on a trend that represents support or resistance levels and help predict where the next touchpoint could be. Let’s take a look at a chart (Figure 1) with a trendline: See how the tren ...

About simple candlestick patterns By now, you should know the definition of a candlestick and what it represents. Candlestick patterns are recurring formations of candlesticks that are made up of one or more candles. The simple ones are usually represented by one candlestick and can indicate, ...

About advanced candlestick patterns Previously, we looked at simple candlestick patterns, made up of one single candlestick and allowing traders to use them for further confirmation.   This time around, we will look at advanced candlestick patterns, made up of 2 or 3 candlesticks, ...

Real versus Nominal Interest Rates Let’s suppose I have some euros and if I deposit them at the bank for 1 year, they will give me a return of 3%. This is the nominal interest rate. What this means is, after 1 year I will get back 3% more euros than I put in. Yet if inflation is 1%, this mean ...

Introduction If any trader is sure the next deal will be a winner, he will use all his capital to enter this transaction, but because trading is based on the probabilities, it is impossible to say whether the next position will be a winner or loss, so professional traders use small trading vo ...

Different types of Forex traders   The world of financial markets can be approached in many different ways. While the end goal is to make money, the way to get there is different based on the personality of every trader. Some are focused on taking risks while expecting bigger rewards ...

Introduction The interest rate is one of the main tools of monetary policy for central banks. Interest rates refer to the cost of borrowing money that is measured by yield to maturity. There are two types of interest rates, nominal and real interest rates. The nominal interest rate does not a ...

Introduction There’s no doubt that the dollar index plays a dominant role in the financial markets, in which it controls 88% of transactions in the foreign currency market and all commodities such as oil, gold, and industrial metals priced through the U.S. The dollar’s daily changes have majo ...

What is sentiment in trading? Sentiment refers to the mood of traders related to a specific market. As traders develop a certain sentiment towards the market, it affects their positioning and in turn, the price action as it unfolds in real-time. A specific sentiment does not go on forever. ...

What is a trading range in the market? Financial markets spend a considerable amount of time going back and forth within a relatively defined price area. This is known as a range. In fact, most trading products spend about 70% of the trading hours within a range. While trading trends and ...

Fundamental analysis is a broadly used method of analyzing an entire market, an asset class, a sector, and even a specific company. Fundamental Analysis focuses on the key economic and financial figures of the asset in question and gauges the current strength or weakness based on those numbers. ...

The importance of trading indicators. There is no doubt about the importance of trading indicators for those who seek to technically analyze the financial markets. This applies to FX, Commodities, Indices, Stocks, ETFs, and any asset class that includes financial instruments with smooth enoug ...

Introduction Out of the thousands of trading products available throughout the world, one characteristic brings them all together: They are either trending up or down, or ranging within two rough areas. Some traders prefer joining the trend and riding it while others look for consolidating pr ...

Moving Average A moving average is a lagging technical analysis indicator of which its main function is to smooth prices thus decreasing price noise and creating constantly updated average price. That said, moving averages would identify price trends and, support and resistance levels. Mov ...

What is Scalping? Scalping is a day trading strategy where an investor buys and sells an individual stock multiple times throughout the same day. It is a popular trading technique that’s been around for a long time and is a common way to take advantage of a daily run-up on a stock o ...

Introduction Suppose you want to become a successful trader in financial markets. In that case, you have to choose a way of trading that suits your way of life, trading methods can be classified into many classifications, but we will mention here the classification of trading methods by time ...

The MACD was invented by Gerald Appel. It is one of the well-known indicators that use moving averages.   How to calculate the MACD: The MACD consists of two lines, the first line is named the “main line” and it is constructed by subtracting the 26 exponential moving average from ...

What is a balance sheet? A balance sheet, also called the Statement of Financial Position, acts as a snapshot of the company’s financial position at a certain point of time. It reports the assets and the liabilities of a company; in simple words, it shows what the company owns and is owed. ...

Price gaps are simply areas on the chart where no trading has taken place. In an uptrend, for example, prices open above the highest price of the previous day, leaving a gap or open space on the chart that is not filled during the day. In a downtrend, the day's highest price is below the previ ...

William’s percentage Range is a momentum oscillator developed by the trader Larry R. Williams in 1973. The concept behind this indicator is to demonstrate the price’s closing range in reaction to the high price for a specific period. Based on this concept it would be logical that prices will clo ...

Introduction The charting system of Ichimoku Kinko Hyo was developed by a Japanese newspaperman named Goichi Hosoda. He began developing this system before World War II with the help of numerous students that he hired to run through the optimum formulas and scenarios - analogous to how we wou ...

What is a recession? There is not a specific definition for recessions; however, according to the National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee, an economy is said to be in a recession if there is a trough in the business cycle that is characterized by a negati ...

What is a cash flow statement?   A cash flow statement is a financial statement that summarizes all cash inflows received by a company from continuing operations and external investment sources during a specific period of time. It also comprises all cash outflows used to fund the comp ...

What is a currency pair? A currency pair is the quotation of two different currencies that constitutes a currency rate and acts as an object of operations in Forex. The view of the currency pair is: “Base currency/quote currency” The base currency is always on the left while the quote cur ...

What is Fundamental Analysis? Fundamental analysis is a method of measuring a security’s real value. It includes examining the factors affecting the price of stock including both macroeconomic and microeconomic factors scrutinizing both the financial statements of the companies and the genera ...

An income statement also called a Profit and loss account (P&L) is a financial statement that shows the company’s revenues from sales, expenditures, and profits over a specific time. In simple words, it explains how the company's net revenue is converted into net earnings whether profits o ...

Introduction The Moving Average Convergence-Divergence (MACD) timing model become one of the most popular technical tools, used by short- and longer-term investors in the stock, bond, and other investment markets. It is a featured indicator on virtually every computer-based technical trading ...

Introduction Technical Indicators is a mathematical formula calculated from price data to provide traders with some information that cannot be easily shown from pure prices like momentum and volatility. Indicators have two major classifications trend-following Moving averages and Bollinger Ba ...

J. Welles Wilder, the developer of the well-known and commonly used Relative strength index RSI leading indicator developed the parabolic stop and reverse indicator, commonly known as the "Parabolic SAR," or "PSAR" . The PSAR is a trend-following indicator, displayed as a single parabolic line ...

What is a trend? Despite only showing up 30% of the time, compared to ranging conditions prevailing around 70% of trading sessions, trend trading is a popular and easy to get into strategy that can give you an edge if approached properly.   Trends manifest themselves as a cont ...

Market Moves in Cycle Prices move in different cycles, whether long term, medium-term or even short-term cycles. These cycles reflect the long-term, medium-term, and short-term trading signals, as shown in figure (1).   The MWC and LWC are both sub-waves of the HWC and are re ...

Introduction Technical Indicators are mathematical formulas calculated from price data to provide traders with some information that cannot be easily shown from the pure prices like momentum and volatility. Indicators have two major classifications trend-following, like Moving averages and Bo ...

What is the ATR indicator? It was developed by J. Welles Wilder and was first mentioned in his book, New Concepts in Technical Analysis Systems (in 1978).   The true average range (ATR) indicator is a volatility indicator that measures how much the price of an asset has been movi ...

Risk Management

Intro Portfolio diversification is the process of investing your money in different asset classes and securities in order to minimize the overall risk of the portfolio. When you diversify your portfolio, you incorporate a variety of different asset types into your portfolio. Diversification c ...

Introduction “Don’t put all your eggs in one basket” is a proverb that warns against investing all of your resources in a single source. If something were to happen to that basket, you’d lose all of your eggs. To mitigate that risk, it’s wise to spread out your assets. Spreading your money ac ...

What is leverage? Leverage is a tool that allows you to control a trading position with only a fraction of its total value. Effectively, it gives you bigger exposure and allows you to maximize your returns by taking advantage of even the smallest price changes. Before we go any further, it’s ...

What is risk management in Forex? Risk management is the practice of limiting or reducing risks associated with trading or investing in the financial markets. From a theoretical perspective, rewards are always associated with different levels of risks and when it comes to trading, it’s no dif ...

The importance of developing a trading strategy Traders often hear the importance of having a plan when trading the financial markets and it’s one of the best pieces of advice anyone can be offered. Rarely does random trading generate consistent, stable, and long-term profits. It’s akin to ga ...

Trading Strategies for beginners Every trading strategy out there has certain elements that need to be kept in mind. Trading is never random in nature and should not be approached without a plan and, in order to have a plan, traders need to keep the following elements in mind: Money manage ...

Forex Trading Wisdom There is a lot of wisdom and advice shared among traders and usually believed to have originated from so-called market experts. While some of it may be true, others are simple myths with no serious value behind them. Day trading is a low risk/high reward trading approa ...

What is OPEC? OPEC stands for Organization of the Petroleum Exporting Countries and represents a group of the largest oil-producing countries in the world. While OPEC has been around for a while, it unofficially expanded in 2016 to include other non-OPEC member nations that are also major oil ...