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WALL STREET

WAKE-UP CALL !

The fast, simple lunchtime breakout trading strategy

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Trader’s Bulletin !

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CONTENTS

INTRODUCTION 4

TRADING THE FINANCIAL MARKETS 5

THE WALL STREET WAKE-UP CALL STRATEGY 8

TAKING A PROFIT – RISK VS REWARD 19

PLACING TRADES 27

MONEY MANAGEMENT 30

FAQS 32

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INTRODUCTION Welcome to Wall Street Wall-Up Call, the lunchtime breakout trading strategy. For me, Wall Street represents the beating heart of the world financial markets – and the techniques in this guide can enable ordinary folk, like you and me, to get right to the centre of that money-making action. You don’t need deep pockets to use this … you don’t need trading know-how … and you don’t need to spend hours studying charts and figures. A few minutes every lunchtime is all it takes. I hope that you enjoy using this as much as I do, and I’m confident that you’ll welcome the financial freedom it can bring. To get started, I recommend that you read through this manual a couple of times. It shouldn’t take too long – I’ve tried to keep the “chat” to a minimum, so that you can get on with the nitty-gritty of applying the system and making money. If anything is unclear, there’s a “frequently asked questions” section at the back of the book. Mark Rose support@tradersbulletin.co.uk

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TRADING THE FINANCIAL MARKETS

To some people, the financial markets are a huge money-making playground. To others, they are a closed world, where “other people” get rich. What I aim to show you here is that anyone – that’s right, absolutely anyone – can access profits from the markets, by following a few simple rules. In a moment, I’ll explain those rules to you, so that you can get started. But first, I’d like to look at a couple of mistakes that most traders make – and how we’re going to do it differently … What most traders do wrong There are two mistakes that I see traders make all the time. I’m not talking about just novice traders here – I’m talking about people who are new to the markets, and those of us who’ve been trading for years. I’m not afraid to admit that I’ve made these two mistakes myself (and more than once). Mistake number one: There are days when I wake up with the idea that I can “beat” the market – that I need to “outsmart it” to make a profit. I think that if I’m knowledgeable enough … clever enough … brave enough … and lucky enough – I’ll uncover the secrets of the markets and find untold wealth. It’s a nice idea. But then Father Christmas is a nice idea, too. The honest truth is that trading the markets is a bit like trying to predict the weather. However much you study the meteorology, you’ll never be 100% sure of what the weather will do.

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And, however closely you follow the forecast, you’ll never “outsmart” the weather. It just doesn’t work like that. What we can do, however, is build up a good idea of what might or might not happen. A bit like working out when you’ll need to take an umbrella out with you! As traders, we can use these probabilities to our advantage. And that’s exactly what Wall Street Wake-Up Call does … again … and again. Mistake number two: The second mistake really follows on from the first – when we’re trying to be clever, we’re often getting a bit too greedy. If the market price is going up, we want to be sure to buy at the lowest price and sell at the highest price. That way, we’ll make the biggest profits.

Sounds good, doesn’t it?

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But trying to predict the market is not easy – and judging the tops and bottoms of price rises like this is nigh on impossible. It involves a lot of hard work, and even then you’ll get it wrong a great deal of the time. Fortunately, we’re not trying to do anything as complicated as this. We’re not interested in making the kind of money that would make an investment banker’s eyes water. We just want a steady profit – without taking any crazy risks. How will we do this? By keeping it simple – and not getting greedy …

Many, many traders fall down by trying to be too clever and trying to make too much money. Yes, trading the markets can be extremely complicated. But, as long as you’re happy with picking up a modest profit – you can skip that hard work. All we want to do is catch a small piece of the action – there’s plenty of money for us in that tiny slice of the Wall Street pie! And in the next chapter, I’ll show exactly how we’re going to get in on that action …

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THE WALL STREET WAKE-UP CALL STRATEGY

Right, let’s get down to the nitty gritty … I’ve already given you my first two rules. In case you missed them, here they are again … Rule 1. Don’t try to be too clever. Rule 2. Don’t get greedy. They might sound easy to follow, but once the profits start rolling in, they’re surprisingly easy to forget. Please don’t. Wall Street Wake-Up Call isn’t about making a fast fortune. It’s about making regular, modest gains again, and again. Patience is key. So, let’s move on to how we’re going to make our very own breakout profit … Okay, so it’s coming up to lunchtime … Your stomach is beginning to rumble … You’re about to go and grab yourself a sandwich … Hang on. Just wait a couple of minutes while you set up this simple trade. (You may already have a profit to show for it by the time you’ve eaten your lunch.) You just need to open up your trading account and check one number. (Don’t worry if you don’t have a trading account – I’ll show you exactly how to open one and get started in the next chapter.) First, I’ll explain a little about why UK lunchtime is so important, and what this special number is that you need to check.

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Taking advantage of our time zone UK lunchtime is a crucial time for our trade. Not because of what’s happening here – but because of what’s happening on the other side of the Atlantic Ocean, in New York. Wall Street to be precise. New York is five hours behind us. So, at 1pm UK time, many New Yorkers are just arriving at their desks at 8am.

The New York Stock Exchange opens at 9.30am local time (2.30pm in the UK), so we’re ahead of the action. Markets are just gearing up. If you wanted this kind of “out of hours” opportunity on the London Stock Exchange, you’d have to be up at 6.30 in the morning and – more importantly if you’re interested in making money – you’d be charged an extra “out of

hours” rate by your broker. (I’ll explain exactly how your spread-betting company makes charges in Chapter Three.) But with Wall St Wake-Up Call, we can cut out those extra costs – which means that it’s that much easier to make a profit. PLUS, it means that I can place a trade at time that suits me, instead of getting up with the larks. And those aren’t the only reasons that catching New Yorkers over their breakfast bagels is so profitable. Because there’s a very important market in New York, that has exactly the kind of big moves that we’re interested in piggy backing … The only number you need to know … every lunchtime The price I mentioned above that we’re interested in is the Dow Jones Industrial Average, also known as the Wall Street index. And the Dow Jones is another very good reason why we wait for the sun to rise over Manhattan before we begin our trading day … … the Dow Jones is BIG …

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… and it moves A LOT. If we compare it to the main UK index, the FTSE … Over the past five years, the lowest level the FTSE has reached has been around 4,800, and the highest level around 6,800. Compare that to the Dow Jones, which has spent the past five years moving around between 9,000 and 18,000. The simple fact is, that sometimes bigger is better. And if the Dow Jones makes bigger moves – it’s that much easier for us to piggy back those moves for our relatively modest (remember, we’re not going to be greedy) profits! The smaller European indices, like the FTSE or the German DAX just don’t make the kind of big moves that we’re looking to ride. If the moves are too small, there isn’t enough for us to get a comfortable slice of the pie – and we can often end up with a losing trade. We don’t want that to happen. Of course, there will be some losing trades along the way – I want you to be clear about that. Every trading system will have some losing trades. What’s important is that we win more than we lose. And that’s why the Dow Jones index is so important for our trade. So, what we’re ready for every weekday lunchtime, is for the Dow Jones to wake up and make a move.

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When it does – we’ll be on board for the ride. Some days, the US markets open like a cavalry charge – boosting energy into European markets that have been floundering all morning.

And the same thing can happen in the other direction as the market moves down on the US open.

Other days they might open with a piece of news that sends the markets in a new direction …

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Either way, these are exactly the kind of moves that we are looking for. And, as you’ll see in a moment, it doesn’t matter if these moves are up or down. Either way, we can take advantage of them. Wait for it! So … back to that price you were checking on your trading platform …

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That price is the current level of the Dow Jones index at lunchtime UK. You don’t need to do this at an exact time, but I recommend between 12.55pm and 1.25pm. Always try to get your trade on before 1.30pm as often a piece of economic news is released around this time, which can send prices shooting off. If you miss one of these moves – you’ve missed a great profit opportunity. We’re not going to open a trade immediately – remember, we’re not trying to get in at the beginning of a move – instead, we want to piggy-back it as soon as we’re sure it’s taken a direction. So, we’ll wait for the price to rise by 20 points. This gives us the confirmation we need that a move is happening. In the example below, I check the price soon after 1pm. It is 17380. Therefore, I set up a trade that will BUY when the price hits a level 20 points above this, at 17400. By opening a BUY trade, I can profit from any moves the price makes above 17400.

Probably a lot of traders would jump in earlier – wanting to get bigger profits. But remember – we’re not going to get greedy. We only need a little piece of this move to make our profits. That’s the beauty of the Dow Jones – we can afford to be patient, because it makes bigger moves than other markets.

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Protecting your trade The next step is to protect ourselves from any nasty risks. This is one of the most important parts of trading. We do this with the use of a “stop loss”. A stop loss will automatically close our trade for us if the market moves against us – it is crucial to use one of these to protect ourselves from unexpected losses. What I really don’t want you to do is to go into this trade with your eyes closed – as with all forms of trading, there are risks involved. I’m really not interested in pretending otherwise. If you manage these risks carefully, this method can make good money for you. If our trade has opened, and something causes the market to move against us – we need a “stop loss” to close our trade before we incur any serious losses. By placing this stop loss 20 points away from the level we’ve opened our trade at, we limit any losses to just 20 points. So, if we “got it wrong”, it shouldn’t bother us too much.

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Collecting your profits Okay, so we know what level we want to buy the Dow Jones at, and we’ve protected our trade in case the price moves against us. All that remains is to decide how much money we want to make from our trade. While deciding how much we want to win might sound like the easy (and fun) bit – it actually requires very careful consideration. That’s why I’ve devoted a whole chapter of this guide to selecting your profit limit – i.e. the level at which a successful trade will close, and you’ll take your profit. The levels we’re aiming for are between 25 and 35 points. If you aim for a very high profit limit, you’ll find that you won’t reach those dizzy heights as often as if you aim for something more modest. It requires a careful balancing act, between occasional big wins – and frequent small wins. You can find a detailed discussion of profit limits, with lots of advice and figures to help you, in Chapter Five. In this example, I’ve got a profit limit set 25 points away from my entry point, so my trade opens at 17400, and closes for a profit at 17425.

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As you can see, we’ve only profited from a fraction of the big move that the Dow Jones index made, but this is enough for us to be profitable, without taking big risks (or getting too greedy).

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Great – that’s our buy trade on the Dow Jones all set. However, there’s a problem … … What happens if the price of the Dow Jones doesn’t go up at all? … What happens if it goes down?

Covering our backs It’s very possible that the price will go in the opposite direction, and won’t trigger our clever little buy trade. What then? Surely I’m not claiming to “KNOW” which way the Dow Jones will go each lunchtime? Am I heck! Like I said earlier – successful trading isn’t about “knowing” what will happen (no one can do that). It’s about being prepared for what “might” happen. So, if the markets move down instead of up – we’ll want to do exactly the same thing, but in the opposite direction. Now, anyone who’s traded with me in the past will know that I’m NOT a big fan of sitting at my computer screen and waiting to see what the market will do. Instead, I like to get a nice simple trade set up – and then get on with the rest of my life. So, instead of waiting to see whether the market moves up or down … I set up both trades (i.e. the buy trade that we’ve discussed above, and a mirror-image trade in case the market goes down) on my trading account. I can then link the two trades, so that if one is triggered – the other one automatically cancels out. This type of trade is called an OCO (one cancels other) and has become very popular since it became widely available a few years back. This is what my second trade will look like … It will SELL the Dow Jones at 17360 (20 points below the lunchtime level of 17380). It will take profits if the price reaches 17335 (moves down by 25 points), or will cut losses at 17380 if the price moves against it.

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Remember, only one of these trades (the BUY or the SELL) will be triggered – depending on which way the markets move. That’s it! Now you can turn off your computer and go for lunch …

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TAKING A PROFIT – RISK VS REWARD

This chapter is essentially about deciding how much money you want to make from each Wall Street Wake-Up Call trade you make. It might sound like a relatively straight-forward decision. However, the choice you make here is uniquely dependent on the funds you have available … your attitude to suffering a losing trade … your response to winning a trade … your approach to day-to-day trading, and – ultimately – will affect your long-term profitability. It’s always nice to think about the rewards of our trading, but reward always comes hand-in-hand with risk. The higher the profit limit you aim for – the lower your success rate will be – i.e. you’ll be making a few big wins, as opposed to many smaller wins. Many trading strategies gloss over the subject of risk – it can make for uncomfortable reading, and we’d all like to believe that every day will be a winner for us. However, let’s be grown-ups about this. All trading involves risk. Whether your trading is profitable or not … depends in a large part on how you manage that risk. Play it sensibly, and there’s no reason why you should suffer uncomfortable losses. Play fast and loose with risk – and you will most likely come a cropper.

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Personal choice Wall Street Wake-Up Call gives you the flexibility to adapt your trading to match the kind of risk-reward level you want to take – and the kind of profits you’re interested in making. However, it never pushes our risk on each trade beyond 20 points. (That means that the amount you can lose on a trade is £20 (if you’re trading at £1/point) or £10 (trading at 50p/point).) Obviously, we’d all like to make as much money as possible – but the bigger profits you go for, the lower your percentage of winning trades will be. Let’s take a look at some examples of how you can adjust your profit targets – and how that can affect your trade … Example One

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In this example, there was a big, steady climb on the Dow Jones, which would have driven our buy trade straight through to any of our possible profit limits. We could have made 25 …, 30 …, 35 points …or even more … However, the markets don’t always move up so neatly, so we have to be cautious of high profit limits, as the next example shows … Example Two In this case, any target above 35 points would have hit the stop loss, when the price fell back, before the target was reached.

However, a profit limit of 25 points, 30 points or 35 points – would all have recorded a winner. As you can see, the profit limits that you chose will make a significant difference to the amount you can win on a trade – and it also affects how often you can expect that trade to win. The higher the target you go for – the less often your trades will win. A lower target will give you a more persistent win rate – however, you’ll need to bear in mind that you’re winning less each time.

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Risk–reward ratios The risk-reward ratio is an extremely important concept in trading. If you understand it properly – you can take control of it and prevent “nasty surprises” that other traders have to suffer when losing trades come along. The “risk” part is how much you would expect to lose if your trade is unsuccessful. The “reward” is how much you expect to gain if your trade is successful. So, the risk-reward ratio, is one of these figures against the other. Now (just to keep us on our toes!) the standard way of writing this ratio is backwards – with the reward figure before the risk! I.e. If you’re risking £1 to make £2 – your risk-reward ratio is 2:1. Many, many traders see 2:1 as a kind of golden rule that you should never go below. They believe that you should always aim to make at least twice the amount that you are risking. I’ll talk a bit more about whether or not these “experts” have got it right in a moment. First I’d like to explain how to calculate your risk-reward ratio. Ask yourself these two questions: 1. If I’m correct and the trade wins, how much do I expect to earn? 2. If I’m wrong and the trade loses, how much to I expect to lose? Let’s say that I’m buying the Dow Jones 17,500, and my profit limit is 30 points above that, and my stop loss 20 points below. So, my potential reward is 30 points, and my potential risk is 20 points. That gives me a risk-reward ratio of 3:2. Let’s take another example … This time, I’m going to sell the Dow Jones at 17500. My profit limit is 40 points below that, and my stop loss is 20 points above. So, my potential reward is 40 points, and my potential risk is 20 points. Therefore my risk-reward ratio is 2:1.

A balancing act So, you’ve grasped the risk-reward ratio – surely the higher the reward, the better your trade? Right?

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Well, not necessarily! The important thing to remember about risk-reward ratios is that they tell us nothing about the amount of money you can expect to make in the medium- to long-term. For that, you need an extra piece of the jigsaw puzzle – probability. Probability tells you how often you can expect your trade to be successful. A trade that gave you a 10:1 risk–reward ratio would be great, but if it only won 5% of the time, you’d quickly be out of pocket. Here are some examples … A 20% success rate tells us that for every 100 trades, you can expect 20 of them to be profitable. That doesn’t sound great, does it? But if your risk-reward ratio is 5:1, you’ll only need to win 1 out of every 5 trades to turn a profit. A 70% success rate means that for every 100 trades you place, you expect 70 of them to be profitable. This kind of success rate doesn’t demand such a high risk-reward ratio – you could afford to run a risk-reward ratio of just 1:2 (i.e. your winning trades make half what your losing trades lose.) Put bluntly, the higher the profit limit you aim for on your trades – the more each winning trade will make, but the fewer winning trades you’ll enjoy. The lower the profit limit, the less your winning trades will make, but the more winning trades you’ll enjoy. In my experience of Wall St Wake-Up Call trades, and trading in general, I believe a risk-reward between 1:2 and 2:1 give the best results. And (just as importantly) this range gives a trading pattern that works on a psychological level. If you go below 1:2, then a couple of losing trades can make a big dent in your fund; and above 2:1 tends to see success rates drop dramatically, meaning that you’ll have bigger losing runs, which will always hit our trading psyche hard. Based on my trading and testing, the profit targets I recommend are between 25 and 35 points.

How to decide When choosing a profit target, I’d advise that you don’t just consider the “points profit”. Think about what kind of person you are – and what you expect from your trading.

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How will you feel when you lose a trade? If you suffer a few losses in a row, are you likely to become demoralised? If so, look for a route with a higher success rate, even it if means dropping a little on the profitability. Will you occasionally miss trading days? If so, steer away from profit limits that have only a few big wins – you don’t want to risk missing one of these. Being a successful trader isn’t just about picking out a winning strategy – it’s about making that strategy fit with your life in a way that you can stick to. There’s a school of trading “wisdom” that says you should always go for a risk–reward ratio of 2:1 or above (i.e. you should win at least twice what you’re risking). This would mean always going for a 40-point limit, with a 20 point stop loss. However, in practice (talk to any professional trader), 2:1 is very hard to maintain, and is better viewed as an optimum to aim for. 2:1 normally come hand in hand with a success rate below 50% – this means that there will be more losing trades than winning trades.

Risk: asking the hard questions I’ve spent many years studying the behaviour of traders (myself included!) when it comes to risk. As human beings, we’re evaluating and managing risk every day – when we judge our distance from other cars on the motorway … when we sniff the milk in the morning … each time, we’re assessing risk. However, when it comes to financial risk – too often our common-sense approach flies out of the window. If you believe you have a good handle on it, try this test … Imagine you’re a contestant on a TV game show. You have just won £10,000. The host offers you a choice: you can quit now and keep the £10,000, or you can play again. There’s a 50% chance that you’ll win, and if you do win you’ll increase your £10,000 to £20,000. Do you keep the £10,000 or do you play again? If the answer is to keep the £10,000 (the risk-averse option), then what figure would tempt you to play again? £22,000 ... £30,000 ... £40,000 ...?

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When faced with these types of decisions, we realise how little we know and understand about our own personal risk tolerance. And there’s another problem we run into with risk – we aren't consistent with it. Most people have a very different attitude to large risks compared with our attitude to small risks. If we were risking £100 for a 50/50 chance of making £200, we’d feel very differently about it than we do risking £10,000 for a 50/50 chance of making £20,000. It all comes down to how valuable that £100 or £10,000 is to you as an individual. And that’s why only YOU can make these judgments about risk. I should also point out here, that trading is nothing like that TV game show – you don’t have to squeeze all your trading into a 30-minute timeslot! Trading is a long game, and one of the most important things a trader needs are sufficient funds to continue trading, tomorrow, next week, next year … Please read carefully the next chapter about money management and staking, as this is the information that can ensure you a long and prosperous career as a trader.

Slippage – when things move too fast When markets make big moves, a problem that can arise is: slippage. Slippage is when the market is moving so quickly, that your spread betting firm is unable to open or close your trade at the level you’ve requested. This means that a buy trade might open a few points higher than you’ve requested, meaning that your profit is reduced (or even negated). Or, it could mean that a stop loss is filled a few points away from your requested level, which leaves you with a bigger loss than you were expecting. Slippage can be a serious problem when you’re trading individual shares, as the volume of traffic in those shares is lower, so the buying/selling process can be more clunky. On a large index like the Dow Jones, these problems don’t occur very often. However, when big moves happen quickly – which they can when economic data is released – our orders can suffer from this slippage or gapping.

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Gapping is similar to slippage, but happens when the price makes a sudden jump – and this can mean that our orders are filled a fair distance from the level we wanted. The US usually make economic announcements at 1.30pm (UK time). And the main piece of economic news to watch out for is the non-farm payroll numbers (US employment figures) which come out on the first Friday of each month. These figures can cause the market to move very suddenly at 1.30pm. In the time that I’ve been trading Wall Street Wake-Up Call, I have very rarely suffered adverse effects of slippage or gapping – with the exception of non-farm payroll days. For that reason, I don’t trade Wall Street Wake-Up Call on the first Friday of each month, when the non-farm payroll figures come out. (Very occasionally, the non-farm payroll comes out on the second Friday of the month – you can check the dates on a calendar like www.forexfactory.com) Beyond these days, it’s always worth being aware of what economic announcements are coming up. If you log on to Forex Factory (www.forexfactory.com ), you can check their economic calendar for these events. And, if you’re concerned that something might have a big impact, here are some ways to protect yourself:

• If your trade isn’t triggered by 5 or 10 minutes before an important

announcement, you could cancel it – that way you avoid the risk of being filled at the wrong level.

• Another option would be to set up the trade 5 or 10 minutes after the

announcement has been made. You can then still benefit from the catalyst that the official Wall Street open can provide.

On a personal level, I’ve found that these big fast moves have often worked in my favour, so I will only sit out on the non-farm payroll days. However, it is important that I point out all the risks involved in trading. If your trade is triggered just as the price slips or gaps, then it is possible your risk on that trade will be increased. I want you to be comfortable with the trades you’re placing, so please give this matter some consideration.

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PLACING TRADES Here I’ll show you the practicalities of placing your trades and getting Wall St Wake-Up Call working for you. There are lots of spread-bet brokers out there that you can use – you may already have an account with one of them. The firm I’ll be using is called ETX Capital.

Choosing a broker There are two key reasons I use ETX: • Their costs of very competitive (I don’t like paying out if I don’t have to). • They offer the special “OCO” orders that we need (not all brokers have these). You can get your account set up quickly and easily here: ETX Capital – how to open an account and claim your bonus

Placing your trades Once you’re logged onto your ETX Capital account , you can find the market you’re trading by selecting “US Indices” under the “Indices” menu in the left-hand column.

The market we’re interested in is called “Wall Street – Daily Rolling”. Next, click on the “order” button …

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On the next page, I explain what all the parts of the order ticket are. First, we need to check what the current mid-price is (this will be halfway between the buy price and the sell price). For this example, the buy price is 18002, and the sell price is 17998. We work from the mid-price, which is halfway between these two, at 18000. We’ll buy if the price moves 20 points above this … or we’ll sell if the price moves 20 points below this. As soon as one order to trade is triggered, we want the other order to be cancelled (this is the ‘oco’ – one cancels the other). Therefore, we’ll buy at 18020, with a stop at 18000; and we’ll sell at 17980, with a stop at 18000. For this example, my profit target is 20. And my stake is £1 (see the section on money management for important information about staking levels). Note on the ticket that for a buy trade, the stop will be -20 away, and the profit limit will be a positive number. But for the sell trade, the stop will be +20 above, and the profit limit will be a negative number.

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Now all we need to do is click ‘place’ and all these instructions will automatically play out. You don’t need to lift a finger until you come back to see how your trade has done. (Order tickets may look a little different with other brokers, but this is the way to set up trades with the recommended ETX Capital platform .)

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MONEY MANAGEMENT

However brilliant and successful a trading strategy is – without good money management, you’re going to have an uphill struggle. Money management means – not throwing all your money into a single trade. It also means not throwing half of your money into a single trade … … or a quarter of your money for that matter! In fact, careful money management would advocate that you only ever risk between 1% and 2% of your investment fund on a single trade. Why do we have to be so cautious? Because trading involves losing money as well as winning money. A successful strategy will always win more money than it loses – but it will still have losing trades. And it’s an uncomfortable fact that losing trades do not space themselves nicely between winners – they have a habit of coming in runs. And unless you’re practicing careful money management – these runs can give you a nasty surprise.

Calculating stakes As we’ve seen, Wall St Wake-Up Call always trades with a 20 point stop loss. This means that the maximum we can lose on a trade is 20 points (sometimes a little more if we have slippage on the price). So, the amount of money we can lose on a trade is 20 points multiplied by our stake. Let’s take an example, where you’re trading with a 20 point stop loss, and a 30 point profit limit. You’ve an investment fund of £3000, and are prepared to risk 2% per trade. 2% of £3000 is £60. Your stake = £60 ÷ 20 points = £3 So, your trading stake will be £3 / point.

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Your maximum potential profit on the trade will be £90. Your maximum potential loss on the trade will be £60 (this figure will always be 2% of your trading fund). Now, let’s say that this was a winning trade … You’re now faced with two options of what to do with those winnings … … pocket them … or reinvest them?

Compounding your winnings If you take your winnings off the table to spend, your stake will remain the same for the next trade. However, if you reinvest your winnings, this process of compounding wealth can see your profits grow significantly faster. If you’re compounding your profits, you will now have £3090 in your trading fund. 2% of £3090 is £61.80 So, your stake will be £61.80 ÷ 20 points = £3.10 (NB: if you trade with Capital Spreads, you can only increase your stake size in £1 increments.) Your maximum potential profit will be £93. Your maximum potential loss on the trade will be £62. Keep doing this over weeks … months … even years … And you can see your investment fund grow very rapidly. The chart on the previous page shows how wealth can grow through compound investing, compared to simple investing … Of course, whether you decide to reinvest your winnings, or to spend them, is up to you. Both are very valid approaches for a trader to take.

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FAQS Q: Am I trading the Wall Street index or the Dow Jones index? What’s the difference? A: The two are exactly the same. The instrument we’re interested in is often called called “Wall Street – Daily Rolling” on spread-bet platforms. This is the Dow Jones, and I use the terms “Dow Jones” and “Wall Street Index” interchangeably in this guide. Q: How much money do I need to start using Wall St Wake-Up Call? A: I recommend a starting fund of at least £1,000. That way, you can maintain a risk level of just 2% while staking at £1 per point. However, if you have less funds available, it is still possible to use this with lower stakes on some platforms. Q: What happens when the clocks change – do I need to change my trading time? A: In the UK, we change our clocks by one hour, twice a year. On the last Sunday in March we add an hour and go to British Summer Time (BST). Then, on the last Sunday in October, we put our clocks back one hour and adhere to Greenwich Mean Time (GMT). North America also change their clocks seasonally, but do so on the second Sunday in March and the first Sunday in November. This means that our times are “out of synch” for approximately three weeks each year. Traders need to be aware of when these weeks are, and how they should adapt their trading time for this short period. Q: What happens if yesterday’s trade is still open at 12.55pm the next day? A: In the unlikely event that this occurs, I recommend that you cancel any orders that are still open or close any open trade and start afresh.

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KEEP LEARNING WITH TRADER’S BULLETIN

I set up Trader’s Bulletin back in 2009, because I wanted to create a genuine service for genuine traders – something that was different from anything else out there. Having worked for many years in financial publishing, I was sick of the jargon, misinformation and downright lies that were being peddled by so-called professionals and “gurus”. It never ceased to amaze me how few of these “gurus” actually followed their own advice and traded the ideas they came up with.  Why should you trust anyone who isn’t prepared to put their own money behind a strategy or idea that they are selling? That’s why I wanted Trader’s Bulletin to be different. I wanted to offer as much information as I could for free – there are plenty of great trading ideas out there that you shouldn’t have to pay a penny for. Take a look at our resources section – it’s crammed with strategies, technical know-how, market reports and simple tools. Plus, I’m adding more free stuff all the time. And when it comes to reviewing new products, Trader’s Bulletin is an independent company, so I’ve complete control over what I say. This means that I have the freedom to be forthright and to tell you what I really think. What’s more, I will never promote a product that I haven’t tested myself. So, sign up to the weekly bulletin, and I’ll ensure that it’s sent to your inbox every Friday lunchtime. That way you’ll get the latest reviews, resources, news and views from the markets. So, if you’d like to find more trading strategies or improve on the systems you’re using by learning new tricks and techniques, please visit www.tradersbulletin.co.uk Regards, Mark Rose Trader’s Bulletin www.tradersbulletin.co.uk

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