Trading 212 Takes Center Stage at One of the Largest Financial Fairs in Germany

Tradefair Germany Frankfurt

Tradefair Germany Frankfurt

Showcasing our platform’s capabilities to German traders in Frankfurt

Trading 212 took part in one of the most prestigious gatherings of technology and financial companies in Europe. We wanted to demonstrate the Trading 212 PRO platform live and on the spot to anyone interested in forex, commodities, stocks and indexes.

Some of our colleagues were on hand to demonstrate both basic and more advanced functions to visitors who had different levels of knowledge about trading and the global markets. We met beginners and more experienced visitors from a wide range of professional backgrounds.

Some of them were looking to diversify their investment portfolios, others were more interested in trying their hand at day trading so that they can react to the constantly changing financial environment. One of the frequent themes at the fair was “alternative investment opportunities” and with our extensive list of trading instruments, recently enriched by the presence of ETF’s and Chinese currency pairs, we were able to capture their attention.

Carsten Umland, one of the most respectable names in the German trading scene, partnered up with us to answer some more detailed questions about the life of a full-time trader and how someone who has limited time can take advantage of trading through advanced mobile apps without the need to devote excessive time for it.

As one of the main sponsors of the event we also had one little surprise for our guests – the Lamborghini Aventador at our stand, a nod to the design that inspires and drives us forward. Оur visitors took part in a lottery and two of them wоn a Lamborghini driving experience.

Setting Targets in Trading

Setting Targets in Trading 1

Setting Targets in Trading 1

How to arrange your trading experience and get the most out of your efforts

Why do people trade? To make a profit? To learn something new? To compete against others? All can be true with making a profit the one present among them, but reaching that goal is actually more of a process than a final goal. Just like the cliche, it’s the journey that matters, not the destination.

To make this journey more sensible and worthwhile, a small number of objectives need to be set. The first part of the process is to identify what other targets beside profits make sense and are realistic. These are the building blocks of trading and no trader can mount a serious challenge on the markets without them.

It starts with something easy and straightforward – understanding what you are seeing and doing. The first part of this consists of the terminology involved in trading. This should be the initial target you set your sights on – understanding the most frequently used terms and concepts involved in trading. Without this you are at a disadvantage, even if you do manage to achieve a good win ratio by guessing price directions. By not knowing things like stop loss, take profit and margins, you’re limiting yourself in terms of what you can do. Our advice is to go through the tutorial and stop and look up anything new that you come across, this way placing it in context.

Next are the tools you have at your disposal. Price alerts, trailing stops, sentiment indicators, technical analysis tools – all of them have a role to play and its up to you to choose how much emphasis they get. Their mix forms your trading behaviour and style, but making choices about them can only be done by understanding what they do.

One example of such a tool would be the news feed in the Trading 212 PRO platform – it provides information on what is happening in terms of planned and unplanned news events that influence the markets. A purely technical trader wouldn’t bother with that as s/he relies only on indicators to determine entry and exit points, but for anyone trading shorter timeframes, they would definitely add something to the picture. It’s up to you to test both and find the exact predictability you feel they provide.

Setting Targets in Trading 2

A more direct example of a target has to do with something many traders overlook – the size of their deposit. Although trading on margin gives you the chance to trade volumes larger than what you’ve put into your account, that doesn’t mean you should expect to double it every day with genius trades. Just for comparison – until several years ago, banks offered interest rates on deposits of around 3-4% annually and that was considered a nice return, as long as inflation was lower than that level. Successful hedge funds bang the drum if they manage anything above 20-30%.

Of course an individual investor can turn over their deposit many more times and make “sell” positions far more freely than these institutions, respectively the potential for profits is far greater, but so is the risk. So this should be one of the first things you do – set a target for yourself and risk according to your deposit. Compounding profits and increasing the room for error is what trading is all about, not a constant 100% win ratio.

The next target you should try and formulate is the number of trades you’ll be making. This is an important component and one that is closely connected with your trading system if you choose to use one. Depending on the time and effort you can devote to trading, you should predetermine either a number or range of trades you’ll be making per day, week or month. The reason for this is that overtrading is a risk, especially if you start winning or losing more than expected. If the conditions that seem suitable come around more often, then maybe something was wrong with your initial calculations.

Another target is to monitor your time and efforts. Trading is much more like a profession than many people think. Although powerful mobile apps and online tools let you perform analysis that previously took hours of pouring over data, in our fast-paced society time has turned into a scarce commodity. For someone who has a job or other main activity beside trading, a reasonable plan of how much time you’ll spend is something to prepare in advance so that you don’t start putting pressure on yourself while trading (and while resting). Pressure leads to stress, stress leads to mistakes on and off the trading charts.

By making choices about these targets you will, in the end, form your own trading style. It will be adjusted for your own risk tolerance, the time you have available, your deposit, etc. If at some point you have more time or you’ve found a better system or instrument, you can rinse and repeat with every change you try out. In any case you should always lay the wide foundations of knowledge before thinking of the towers of success.

Book of the Month – “Trading in the Zone” by Mark Douglas

Book of the Month - “Trading in the Zone” by Mark Douglas

Book of the Month - “Trading in the Zone” by Mark Douglas

Mind over matter, or how mental analysis is as important as technical

Our selection for March is another book we consider among the must-haves for any trader. Mark Douglas’ “Trading in the Zone” is a work rooted in the inner structure of the brain when it comes to trading. Well written and constructed, it is one of our favourite reads and aside from the overall even spread of valuable content, it also has those bits that manage to stick in the reader’s head, hopefully for when they need them.

This isn’t a book with strategies to take on the market, or with advice on situations that prompt specific actions. It’s an exploration of the mental side of the trading experience. Many traders initially get caught up in the action and excitement of the actual buying and selling, following how the prices change, how news events stir them up. They start to learn about the specifics of these factors, start to put their finger on what makes the market tick, but even down the road of experience some tend to forget one crucial ingredient – themselves.

Having said that, the book doesn’t make the same mistake in reverse – it doesn’t forget that the psychological aspect to trading exists within a framework made up of many different things – fundamental and technical analyses, the strength of the market and the folly of going against it, as well as some mathematics and probabilities.

One of the more pleasant features of the book is it’s rhythm and arrangement. Starting with a clear-cut comparison between the widely popular technical plus fundamental analyses and the mental analysis, the text sets off on a journey of the different aspects of trading. Chapters on responsibility, consistency, perception and beliefs slowly but surely deliver the two main things we feel are the book’s aims. The first is that in all of these “areas,” if we can call them that, there is the possibility of error and flaws. The second is that any trader should consider these areas and build them from the ground up, along with his knowledge and trading style.

Apart from the slight missteps in the beginning of the book, that have to do with some poorer examples and perhaps too strong an emphasis on the psychological without explaining it to the necessary extent, this remains an excellent piece of writing and it’s teachings will remain relevant in the changing world of online trading. Some parts may need re-reading, perhaps too laden with terminology, but we don’t see it as a negative, on the contrary – if the book was too simple it wouldn’t add anything of value to traders.

Drop us a line in the comments with any questions and suggestions about the platform, the blog or any general trading issue that concerns you. One of the commenters will get the book as a gift from us in return.

Why are ETF’s one of the most popular trading instruments?

Why are ETF’s one of the most popular trading instruments

Why are ETF’s one of the most popular trading instruments

 We look under the hood of one the latest additions to the Trading 212 portfolio

Exchange traded funds (ETF’s for short) have become one of the rapidly expanding instruments in recent years and we duly obliged by updating our product lineup by including, what we feel, cover some of the more important and interesting funds.

But what are these funds and what makes them so appealing to both retail and institutional investors?

First lets go over what funds are – it’s people’s or organisation’s money, grouped together, investing in the same way, for a, hopefully, increased benefit and profit. Larger pools of money can purchase more expensive stocks, or make more long-term investment. Not to mention that they are better equipped to weather any negative volatility with their increased size. Think seven-storey ocean liners in a storm.

There is a multitude of funds operating on the global markets – mutual funds, hedge funds, pension funds, sovereign funds all of them with their different agendas, styles of investing, risk/reward targets, etc. Their structure generally follows some common principles, chief among them that they invest in The difference between all of these and ETF’s is that the latter are actually tradeable on the market. They look like a fund, but behave like a stock. This means they can be bought on margin and shorted when you think the components of the fund are in for a bad period.

There exist two main types of ETF’s – those that cover separate countries and the so-called “sector” ETF’s. Country ETF’s offer you the chance to invest by proxy in a country which you have a strong opinion about, be it positive or negative. The ETF for say China contains in itself a list of companies that are structural for the local economy and their well-being reflects that of the overall economy. You wouldn’t be able to invest there as a retail trader, as the local stock exchange still imposes restrictions of foreign investment and stock trading.

ETF’s are liquid, through the Trading 212 PRO Platform you can trade them at all times during the market session and this isn’t even among their most important advantages. One is that you don’t need to perform the trades with all the instruments included in the fund (if they’re available in the first place). Which results in less time needed to perform the trade.

Financially there is also an upside – effectively there is a smaller spread. If for example you had to make ten trades with the companies in the Banking Sector ETF, then for each of them there would be a spread, added up they are considerably higher than the one we have in place for our ETF’s.

Country ETF’s are very flexible instruments. Researching them is generally seen as easier than that for currencies or stocks, although it has some underwater currents of its own. But it definitely lets you invest in a certain country in a straightforward way. The companies usually included in a country index are either the largest, or the most (structurally) important ones. Or both of course. They are blue chip companies who are diversified and connected with multiple other companies in the respective country and they influence the supply and demand of many products in the local economy.

One bonus that has to be mentioned with country ETF’s is that you can trade something that may not be readily available to a retail trader. A Korean company may be included in an ETF, but not the local index KOSPI, . The BRIC countries are the one’s we deliberately added – we have ETF’s for Brazil, Russia, India and China, so you can now invest in the emerging markets of the world.

Sector ETF’s are the other variation that we now offer. They are focused on the different components of an economy and take companies with a similar line of work. These are usually competitors, so you can’t play off their weaknesses compared to each other, but you can actually trade on them compared to other sectors. As this is a quite a large subject and the trading style of many an investor, next week we will be dedicating a separate article to them.

With the ETF’s we have, we hope to provide access to something that larger traders and investors usually sink their teeth in, but by accessing them from our platform, anyone can do it a lower cost and in an easier way.

Do you have any other particular instrument that you’d like to trade with us? ETF’s were added due to client requests, we answer those.