Start trading

the Financial Markets

T h e E s s e n t i a l s

A starter’s guide for anyone interested in learning

how to trade the financial markets.

www.eightcap.com [email protected] +61385922375

Trading on margin is high risk. Education Guide 1
Table of Contents

Start trading the financial makets…………………………………….....………………….………………….…….…....1

Table of Contents…………………………………………………………………………………………….........…......….……..2

1. Introduction……………..………………………………………………………………………………….............…..……….3

2. The Foundations of the Financial Markets.....................................................................................4

3. How to start trading..........................................................................................................................9

4. What tools and platforms are used in trading.............................................................................14

5. How to choose a CFD broker.........................................................................................................16

6. Conclusion & Next Steps…………………………………………………..........…………………………………...…..18

Trading on margin is high risk. Education Guide 2

1. Introduction

Looking to trade the

What’s the difference between CFD
financial markets?
You are not alone. trading and traditional trading?
There are several differences between CFDs and tra-
ditional trading, including how you get exposure to
Getting started with online
asset classes such as Forex, Indices or Commodities.
trading can feel like a chal-
Did you know that you do not need to own the un-
lenge - today’s world offers
derlying asset to gain exposure to it? With CFD trad-
many possibilities. However,
ing, a trader does not own the underlying asset in
trading isn’t that scary once
order to profit (or lose) from it - he or she is simply
you know what Contracts For
speculating on price movements.
Difference (CFDs) are and how
you can trade CFDs on forex
There are a variety of markets you can trade via CFDs
(FX), commodities, shares, in-
with Eightcap, including over 40 major and minor fo-
dices and cryptocurrencies.
rex pairs, the most popular commodities, the world’s
This guide will cover the dif-
largest indices, the US and Australia’s largest share
ference between CFD trading
CFDs, as well as CFDs on Bitcoin, Ethereum, Litecoin
and traditional share (stock,
and Ripple.the US and Australia’s largest stocks, as
securities) trading, how to
well as Bitcoin, Ethereum, Litecoin and Ripple.
trade CFDs, why markets can
be volatile, risk management,
plus the different strategies CFD & Forex trading.
that can be implemented.
Over the last decade, trading in Foreign Exchange
Let’s start with explaining (FX or Forex) and Contracts for Difference (CFDs) has
trading from the beginning, become extremely popular for traders all over the
slowly getting to basic trading world. The appeal of such products is driven by a
strategies and other impor- trader’s ability to speculate on the price movements
tant aspects. Read on to learn of a range of global financial assets in one trading
more about trading CFDs on platform, with a comparatively small amount of
forex, commodities, indices, starting capital, known as margin. . This means you
shares, and cryptocurrencies. can use a smaller amount of funds to hold a larger
position size.

Trading on margin is high risk. Education Guide 3

2. Тhe Foundations of the Financial Markets
It is important for traders to know
how the financial markets work. Un-
derstanding price movements and
fluctuations can help you make more
informed decisions about your trades.
To help you understand how the finan-
cial markets work, we’ve prepared the
answers to the most frequently asked
questions about trading.
What causes price
fluctuations?

What is trading? The prices of the assets are only

indications of value and may vary
significantly from one day to an-
other. Anyone trading forex, com-
modities, indices or other finan-
cial instruments should be aware
that the price they pay today is
not necessarily indicative of the
price they will receive when sell-
ing their trade.

At its essence, financial markets

are an ecosystem in which a par-
ticipant can buy and sell an asset.

An important driver of the price of

an asset is the volume of buyers
and sellers, sometimes referred
The goal of the trader is to capitalise on
to as liquidity. This is often used
volatility in the markets by either taking
to measure the market’s health.
long (buy) or short (sell) positions on
When a greater number of trad-
a particular market. Traders who spec-
ers wish to sell their assets rath-
ulate on forex, commodities, indices,
er than buy new financial instru-
shares, and cryptocurrencies, tend to
ments, prices drop.
follow the markets closely, often spend-
ing hours a day researching them. They
use technical analysis to study the mar-
kets and to predict where the prices are
heading.

Trading on margin is high risk. Education Guide 4

How can you benefit from the financial markets?

There are many ways to

access the financial mar-
kets, with CFD trading be-
ing an extremely popular
method because of the
ease of access.

CFDs are unique because

you can trade on the value
of an asset without actually
owning it. The underlying
products include different
currencies, indices, com-
modities, shares and much
more.

What are CFDs?

Are there
risks involved?
A Contract for Difference (CFD) is a financial
Risk is one of the most derivative that can be used to speculate on the
fundamental concepts in fi- price of different assets, including Forex, Indices,
nance. This is because finan- Commodities, Shares, Crypto, and more. A deriv-
cial markets are often very ative is a contract between two or more parties
unpredictable. As a result, whose value is dependent on, or “derived” from,
you can either make a lot of an underlying asset. At the end of the contract,
money, or lose a lot of mon- the parties exchange the difference between the
ey. You should take steps to opening and closing prices of a specified under-
make sure you are aware of lying asset. Trading CFDs means that you can ei-
the risks involved and only ther make a profit or loss, depending on which
risk what you can afford to direction your chosen underlying asset moves
lose without adversely af- in. With CFDs, you can trade a variety of markets
fecting your lifestyle. with the flexibility and leverage of margin trading,
without taking ownership of the underlying asset.

Trading on margin is high risk. Education Guide 5

How to trade CFDs?

Why trade Forex?

Trading Forex CFDs

allows you to par-
ticipate in the price
movements of the
When you trade CFDs, you agree to
underlying forex
exchange the difference in price of
pair. The main objec-
an asset from when the contract is
tive of these trades
opened to when it is closed. To do
is to exchange one
this, you need an online provider -
a CFD broker. currency for another in the expec-
tation that the currency pair will ap-
preciate/depreciate depending on
the position taken. There are sever-
al advantages of trading Forex CFDs,
including the ability to trade 24/5 on
one of the most actively traded mar-
kets in the world, the high liquidity of
this market as well as its availability.

The volume of transactions in the FX

What are the bene- market is constantly changing, and
fits of trading CFDs? not all regions are affected equally.
What are the risks of However, it is worth noting that the
trading CFDs? daily turnover exceeds 5 trillion dol-
One of the biggest benefits lars a day.
of CFD trading is that you can
trade a huge range of markets
with leverage. This means you
can deposit a small amount What is technical analysis?
(margin) and be exposed to a
larger position, according to Technical analysis is a trading discipline
the leverage available for that that enables traders to evaluate price action
underlying asset. You can also and identify trading opportunities by analys-
use CFD trades to hedge an ex- ing statistical trends gathered from past mar-
isting physical portfolio. How- ket data, such as price movement and vol-
ever, leverage is also a charac- ume. Technical analysis focuses on an asset’s
teristic of a CFD that may lead historical price patterns or trends.
to greater losses.

Trading on margin is high risk. Education Guide 6

 Understanding pips

What is
fundamental
analysis?

Fundamental anal-
ysis is a method of
evaluating the intrin- Pip is an acronym for “per-
sic value of an asset centage in point” or “price
by looking at external interest point”.
events and influences.
It is based on financial
statements, industry The movement of a currency pair is measured
trends, and external in “pips”. One (1) pip movement is generally the
factors. fourth decimal place. However, most currency
pairs are priced out to five decimal places, which
is 1/10th of a pip.

What is margin?

Margin is the amount of deposit you need to hold a CFD. This means you can use
a smaller amount of funds to hold a larger position size. This deposit amount varies
according to the leverage.

The amount of margin re-

quired to hold a position will
depend on a number of fac-
tors such as the asset type,
market volatility, and the
leverage. Many countries
also have restrictions on
how margin can be provided
to retail traders.

Trading on margin is high risk. Education Guide 7

 What is short selling?

Short selling allows you to speculate

on the decline in an asset’s price. This
means you open a trade by selling a
CFD and close a trade by buying the
CFD.

How to identify trading opportunities?

Trading opportunities may be identified through your analysis. You may adopt a view based
on a particular technical indicator or seek to establish a fundamental basis for why you think a
particular asset will increase or decrease in value.

Trading on margin is high risk. Education Guide 8

3. How to start
trading CFDs?
This is the first question new traders ask
themselves when they want to get into the
world of trading. You are a step closer to
starting your trading journey, as long as
you have taken the time to research how
to get started and, most importantly, have
ensured you fully understand the signifi-
cant risks involved.

Trading on margin is high risk. Education Guide 9

 What are your first
steps in trading?

What should you

know before you
start?

The world of trading is full of

different indicators, confusing
If you’re trading for the very first time,
views on chart patterns and a
then you’re probably trying to get as much
myriad of trading techniques.
knowledge as possible. Researching which
However, some of the more ex-
broker to use, what to buy or sell, how the
perienced traders often warn of
platform works, and how you keep track of
being tempted to overcomplicate
your portfolio, are all basics that a beginner
things.
should understand.

Still, many traders simply rely on

Undoubtedly, the first and most important
the use of technical indicators
part of trading is understanding the risks
and/or looking for unique and
involved. You can then get familiar with the
specific chart patterns.
available risk management tools in trading
and how to use them efficiently. In order
When attempting to take a view
to control your exposure to risk, you can
on a particular asset, one may
choose a strategy, create a trading plan and
also choose to use a combination
follow it closely.
of fundamental and technical
analysis. Fundamental analysis is
Knowing how the trading platform of your
an assessment of the underlying
choice works is fundamental - you should
drivers of the asset, while techni-
start with the basics and build your knowl-
cal analysis measures the move-
edge over time. There are different resourc-
ment of its asset price’s past price
es available to you online as well as many
action.
free courses.

Trading on margin is high risk. Education Guide 10

 Placing your first trade

Finding a good online broker is

an important first step. You’ll need
Choosing a regulated and well-reputed
an account through which you can
broker is also essential.
buy and sell currencies, indices,
commodities, shares, and/or cryp-
Last, but certainly not least, setting clear,
tocurrencies CFDs, using your own
realistic expectations is one of the main
money, with competitive spreads
principles in trading.
and commissions.

What is the spread?

The spread is the difference between

the bid (sell) price and the ask (buy) price
for a CFD. The size of the spread is in-
fluenced by many factors, including the
size of your trade, liquidity, volatility, and
your provider. If you’re a frequent trader,
it makes sense to choose a broker with a
competitive spread.

Eightcap offers some of the lowest

spreads in the industry. Our Raw Ac-
count has spreads from 0.0 pips and fast
execution. However, you should keep in
mind that they can widen when the mar-
ket is volatile.

Trading on margin is high risk. Education Guide 11

How to manage your risk
while trading?

Eightcap can help

you gain access to
educational tools
Trading involves hard work. While experience is a fine that will help you
teacher, knowledge through education is essential make informed de-
before you put your hard-earned money on the line. cisions when trad-
ing.
It is also worth noting that when you’re trading in a
live environment, it is important to understand the
value of your trade.

It is also worth
noting that when
you’re trading in a
live environment,
it is important
to understand
the value of your
trade.

Trading on margin is high risk. Education Guide 12

You can sign up for our training
course which will help you get famil-
iar with both the MetaTrader 4 and
MetaTrader 5. The course is led by
a leading foreign exchange expert
with more than 20 years of financial
market experience, Boris Schloss-
berg. This course will continue for
several weeks.

This training will provide a thorough introduction

to the Forex market, taking into consideration all
the necessary aspects: theory, practice, patterns,
strategies. Even if you are missing one item on that
list, the expert lecturer will help compensate for it
with his extensive experience gained working in the
financial markets.

The course will explain terms like data window

and trade blotter, as well as everything you
need to know about the trading charts and
trading data. You’ll also get an understanding
of risk control, trading robots, indicators,
scripts, and expert advisors.

Trading on margin is high risk. Education Guide 13

 4. What tools and platforms
are used in trading?
The trading world is constantly evolving. This is evident in the different tools and platforms
available to traders. Most CFD brokers offer access to either their own in-house trading
platform or platforms built by a company called Metaquotes - MetaTrader 4 (MT4) or Me-
taTrader 5 (MT5).

What are the MetaTrader 4 and the MetaTrader 5 platforms?

Both Metaquotes platforms are synonymous with Forex and CFD trading.

There are several main differ-

ences between the two plat-
forms. The first one is related to
the available markets - on MT4
you can trade FX, Indices, and
Commodities.

Trading on margin is high risk. Education Guide 14

However, on MetaTrader 5 you’ll also have access to Share CFDs and Cryptocurrency CFDs.
Additionally, the two platforms offer trading with robots as well as access from both Desktop
& Mobile. Furthermore, the MetaTrader 5 can also be used on a web browser. The two plat-
forms have some differences when it comes to chart timeframes and technical indicators: MT4
supports 9 timeframes and 30 indicators, while MT5 offers access to 21 timeframes and 38
indicators.

Determine which platform is right for you and start trading!

How to eliminate the emotional

factor while trading?

Algo-trading, also referred to as using “Expert Advisors” or “Robots”, may assist a

trader to remove the more emotive elements of trading.

Eightcap also gives its clients an opportunity to experience robo-trading. Capitalise.

ai, a tool that Eightcap’s clients receive for free, allows users to create automated
trading scripts without any coding skills. Capitalise.ai is an innovative analytics and
automated trading platform which enables Eightcap to offer an automated trading
option to its clients that is in plain English.

Trading on margin is high risk. Education Guide 15

5. How to choose a CFD broker?
When you are looking for a suitable brokerage firm, you need to keep in mind a few things.
First, you need to select a broker that is regulated, competitive, offers great products and ser-
vices as well as excellent client support. You also need to know what kind of trading environ-
ment you are looking for.

Are there any research and

educational tools available?

What should you

know about
trading fees?

It’s important to under-

stand what fees you will be
paying when you choose
your broker. Trading fees
include brokerage fees
Eightcap is on a mission to create a new home for
and commissions. Fees
MT4 and MT5 traders by educating people who
are likely to differ from
want to trade. There are many resources for this
firm to firm.
already, but they can be difficult to find, especial-
ly if you’re just getting started. Some people have
Eightcap’s Standard Ac-
experienced issues with searching for informa-
count is commission-free,
tion, and that’s why we’re creating an education-
but other costs do apply.
al trading course that you can easily access.
That is, instead of a fixed
monetary commission,
Additionally, you can find a lot of resources on
you pay the spread. On
our website, including MetaTrader guides, arti-
the other hand, you can
cles about the fundamentals of trading, in-depth
choose to trade with a
pieces explaining different trading strategies,
small monetary commis-
and much more.
sion by using our Raw Ac-
count.

Trading on margin is high risk. Education Guide 16

The importance of Customer Support

Customer Support is one of the most important aspects of trading. Our multilingual experts
are here to help you navigate the world of trading. We know that each client has different
needs, and we work hard to answer your questions quickly and accurately.

When you think of Forex and CFD trading, the first thing that comes to mind may be “risk.”
That’s not too surprising. After all, trading is a risky business. There are many methods traders
use to help manage and reduce risks; education and experience is critical to understanding
how. However, every trader should be aware that they can lose all of their initial deposit, and
with some brokers even more.

What can Eightcap offer?

Eightcap is a broker that offers its clients transparency, client support, competitive
spreads, premium liquidity, and much more. Eightcap strives to offer you smooth
deposits, fast withdrawals, and all the perks of a premium trading platform.

We’ll do our utmost to empower you, which is why we walk you through every step of
the process with our education program. We give you access to all major exchanges
around the world via CFD trading, so you can trade what and when you want on our
award-winning platform. Our customer service is there for you 24/5 throughout the
year. We offer competitive spreads on all of our trades and a multitude of trading tools.

Trading on margin is high risk. Education Guide 17

 6. Conclusion & Next Steps?

You may have

tried a bit of CFD and
Forex trading, only to
realise that building your
own strategy is much hard-
er than it looks. You may even
have purchased, and then swift-
ly returned, one or more trading
courses because the information
you were presented with was ei-
ther too basic for your taste or
so complex that you felt totally
overwhelmed. A quality
education in trading from
the beginning is
vital for your
success. Ready to take your trading to
the next level? No matter the
level of knowledge, whether
you’re a beginner or a sea-
soned trader, we’ll do our ut-
most to assist you to take your
trading to the next level.

Trading on margin is high risk. Education Guide 18

Risk Warning: Margin trading carries significant risks, includ-
ing the risk of losing the entirety of your initial investment. You
also do not own, or have any rights to, the underlying assets.
Margin trading is not suitable for all investors, so please ensure
that you are fully aware of the risks involved, seek independent
financial or personal advice if necessary, and read the relevant
legal documentation (available from our website) before making
any decisions. Eightcap’s Product Disclosure Statement (PDS) and
Financial Services Guide (FSG) are available to download from
the legal page on our website. Please assess and consider these
documents carefully before making any decision about using our
products or services. Please also note that Eightcap provides ‘gen-
eral advice’ only which does not take into consideration your ob-
jectives, financial situation or needs. You must operate your trad-
ing account in a manner that is consistent with your own trading
comfort level. Our offers are not designed to alter or modify your
preference or encourage individuals to trade in a manner that is
inconsistent with their own trading strategies.

Trading on margin is high risk. Education Guide 19