HTTP 200 OK
Allow: GET, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept
{
"url": "https://www.pagoolabs.com/stories/api/38/edit/?format=api",
"id": 38,
"title": "Setting up a Trade in the Futures or Forex Market - Part 1",
"slug": "basic-trade-setup-part-1-introduction",
"status": 2,
"publication_date": "2017-10-24T03:05:48Z",
"lead": "How do you set up a trade in either the forex or futures markets? You will learn how to measure the risk and potential reward of a trade before you open it and you will minimize the risk to just a small percentage of your portfolio.",
"excerpt": "Learn how to trade Futures and Forex markets. Understand contract size, stop loss, target, take profit, margin, basic trade setup, risk management, position size.",
"poster": "SeanManefield",
"content": "---\r\n\r\n#### **Basic Trade Setup Part 1 - Introduction**\r\n<div style=\"padding: 0 0 .1rem 0\"></div>\r\n\r\nA trade setup describes how to take a position in a market in order to profit from that market rising or falling. If for some reason (discussed later) you expect the market price to rise then you would open **`long`** by buying a number of contracts. If instead you expect the price to fall then you would open **`short`** by selling some contracts.\r\n\r\nIt may seem strange to sell first and buy later but it is just the symmetrical opposite of buying first and selling later. **`Short selling`** is also an important part of keeping **`futures`** markets liquid: how could you buy if someone else is not willing to sell? Also, a prime purpose of these derivative markets is to enable **`hedging`** and the offsetting of risks from other markets. Half the time that will require short selling.\r\n\r\nFor our purposes here, a trade setup is just a description of how you open that contract. It answers the following questions:\r\n\r\n- What is the **`open price`**?\r\n- Where is the **`target price`**, the price where you will automatically close out your position for a win?\r\n- Where is the **`stop loss`**, the price where you will automatically close out your position for a loss?\r\n- How many **`contracts`**?\r\n- What is the **`margin`** your broker requires from you to open and maintain your position?\r\n\r\nWhen you have finished this series of stories you will know how to only risk a specific percentage of your funds in each trade and how to calculate the number of contracts you need to do so. The material we discuss here is fairly basic, however it assumes a level of knowledge about charts, trading software and jargon that may be unfamiliar. Do not be discouraged by this, we all have to start somewhere. Most of the terms are common enough that a quick internet search should yield all the information you need.\r\n\r\nIf not, turn for help to our forums or the comment section under each story. If you want a special article on a topic you believe is important but not yet covered, make a post below and argue your case. If you can convince us the problem deserves its own story, we will be happy to oblige.\r\n\r\n\r\n#### **A Gold Trade Example**\r\n\r\nTo describe a setup, I am going to choose a reasonably simple example in a popular market: gold. Consider the following recent daily gold chart from April to August 2017. ![Gold daily chart](/media/uploads/2017/a_basic_trade_setup/20171008-Gold-setup1.png \"Basic setup\"):C90\r\n\r\nIf you remember the news at that time, there were ominous rumblings coming out of the Korean peninsula through July. War drums are usually bullish for gold because paper money often does not survive long when central governments are in turmoil.\r\n\r\nThe month long upswing from point B on the chart to O (for **O**pen) was followed by a six day downward **`retrace`**. Then, as the last trading session on the chart closed we can see that the **`candlestick`** of the day's trading was an **`outside bar`** enclosing the previous day's trading, and ending positively. Summarizing these developments to get a feel for market direction, we have:\r\n\r\n- The market is overall sideways, but currently trading in the middle of the range.\r\n- Since point A, the faster moving average (MA100) has crossed above the slower 200 day MA.\r\n- The current swing is up since point B.\r\n- the market has completed a week long retrace down.\r\n- The top of the sideways market is near points C and D, above the current price.\r\n- External global risk factors lean bullish on gold.\r\n- The previous trading session ended with a bullish reversal.\r\n\r\nI will get into all of these points more fully in a later story but for now I just want to walk through a basic trade setup with you. For our purposes here, let's just assume we have a bullish **`signal`**.\r\n\r\nWe will not be discussing **`brokers`** as your options vary widely by country. However there are many possibilities, from full service all the way through computer based online trading. Recently, since the 2008 financial crisis, many regulations have been tightened. Check the advertisements in your region and review the stories from other traders on the many social media platforms available to you.\r\n\r\nIn this story, I have presented a bullish signal in an example from the gold market. In the [next story](/stories/39/2017/10/24/the-basic-setup-part-2-stop-loss-and-open-price/) we will discuss *how* we will open a long position in gold. I will show you the key data you need to lock down the potential risk and reward before opening the trade.\r\n\r\n---\r\nCopyright (C) PagooLABS 2017. All Rights Reserved.\r\n\r\n*[SL]: stop loss\r\n*[TP]: target price\r\n*[OP]: open price\r\n*[CR]: Contract Risk\r\n*[CS]: contract size\r\n*[CO]: number of contracts opened\r\n*[USD]: United States Dollar\r\n*[AUD]: Australian Dollar\r\n*[Yen]: The Japanese currency\r\n*[Euro]: The European currency\r\n*[forex]: Foreign Exchange including markets and trading\r\n*[signal]: a price pattern in the market triggering the opening of a position\r\n*[instrument]: a particular traded forex or futures contract such as gold or USDJPY\r\n*[instruments]: a particular traded forex or futures contract such as gold or USDJPY",
"image": null,
"html": "<hr>\n<h4><strong>Basic Trade Setup Part 1 - Introduction</strong></h4>\n<p></p><div style=\"padding: 0 0 .1rem 0;\"></div><p></p>\n<p>A trade setup describes how to take a position in a market in order to profit from that market rising or falling. If for some reason (discussed later) you expect the market price to rise then you would open <strong><code>long</code></strong> by buying a number of contracts. If instead you expect the price to fall then you would open <strong><code>short</code></strong> by selling some contracts.</p>\n<p>It may seem strange to sell first and buy later but it is just the symmetrical opposite of buying first and selling later. <strong><code>Short selling</code></strong> is also an important part of keeping <strong><code>futures</code></strong> markets liquid: how could you buy if someone else is not willing to sell? Also, a prime purpose of these derivative markets is to enable <strong><code>hedging</code></strong> and the offsetting of risks from other markets. Half the time that will require short selling.</p>\n<p>For our purposes here, a trade setup is just a description of how you open that contract. It answers the following questions:</p>\n<ul>\n<li>What is the <strong><code>open price</code></strong>?</li>\n<li>Where is the <strong><code>target price</code></strong>, the price where you will automatically close out your position for a win?</li>\n<li>Where is the <strong><code>stop loss</code></strong>, the price where you will automatically close out your position for a loss?</li>\n<li>How many <strong><code>contracts</code></strong>?</li>\n<li>What is the <strong><code>margin</code></strong> your broker requires from you to open and maintain your position?</li>\n</ul>\n<p>When you have finished this series of stories you will know how to only risk a specific percentage of your funds in each trade and how to calculate the number of contracts you need to do so. The material we discuss here is fairly basic, however it assumes a level of knowledge about charts, trading software and jargon that may be unfamiliar. Do not be discouraged by this, we all have to start somewhere. Most of the terms are common enough that a quick internet search should yield all the information you need.</p>\n<p>If not, turn for help to our forums or the comment section under each story. If you want a special article on a topic you believe is important but not yet covered, make a post below and argue your case. If you can convince us the problem deserves its own story, we will be happy to oblige.</p>\n<h4><strong>A Gold Trade Example</strong></h4>\n<p>To describe a setup, I am going to choose a reasonably simple example in a popular market: gold. Consider the following recent daily gold chart from April to August 2017. <img alt=\"Gold daily chart\" class=\"center\" src=\"/media/uploads/2017/a_basic_trade_setup/20171008-Gold-setup1.png\" title=\"Basic setup\" width=\"90%\"></p>\n<p>If you remember the news at that time, there were ominous rumblings coming out of the Korean peninsula through July. War drums are usually bullish for gold because paper money often does not survive long when central governments are in turmoil.</p>\n<p>The month long upswing from point B on the chart to O (for <strong>O</strong>pen) was followed by a six day downward <strong><code>retrace</code></strong>. Then, as the last trading session on the chart closed we can see that the <strong><code>candlestick</code></strong> of the day's trading was an <strong><code>outside bar</code></strong> enclosing the previous day's trading, and ending positively. Summarizing these developments to get a feel for market direction, we have:</p>\n<ul>\n<li>The market is overall sideways, but currently trading in the middle of the range.</li>\n<li>Since point A, the faster moving average (MA100) has crossed above the slower 200 day MA.</li>\n<li>The current swing is up since point B.</li>\n<li>the market has completed a week long retrace down.</li>\n<li>The top of the sideways market is near points C and D, above the current price.</li>\n<li>External global risk factors lean bullish on gold.</li>\n<li>The previous trading session ended with a bullish reversal.</li>\n</ul>\n<p>I will get into all of these points more fully in a later story but for now I just want to walk through a basic trade setup with you. For our purposes here, let's just assume we have a bullish <strong><code>signal</code></strong>.</p>\n<p>We will not be discussing <strong><code>brokers</code></strong> as your options vary widely by country. However there are many possibilities, from full service all the way through computer based online trading. Recently, since the 2008 financial crisis, many regulations have been tightened. Check the advertisements in your region and review the stories from other traders on the many social media platforms available to you.</p>\n<p>In this story, I have presented a bullish <abbr title=\"a price pattern in the market triggering the opening of a position\">signal</abbr> in an example from the gold market. In the <a href=\"/stories/39/2017/10/24/the-basic-setup-part-2-stop-loss-and-open-price/\">next story</a> we will discuss <em>how</em> we will open a long position in gold. I will show you the key data you need to lock down the potential risk and reward before opening the trade.</p>\n<hr>\n<p>Copyright (C) PagooLABS 2017. All Rights Reserved.</p>",
"forums": [
{
"url": "https://www.pagoolabs.com/forums/api/trading-education/?format=api",
"title": "Trading Education"
}
],
"all_story_posts": "https://www.pagoolabs.com/posts/api/38/posts/?format=api",
"recent_story_posts": [
{
"url": "https://www.pagoolabs.com/posts/api/67/edit/?format=api",
"post": "I like this as a kind of how to. I looked ahead into the systems stuff in the future chapters. Not having read those yet I can still see why setups are important info. The systems stuff is heavier going if you ask me. I wanna see some more. FX is the way to go.",
"html": "<p><p>I like this as a kind of how to. I looked ahead into the systems stuff in the future chapters. Not having read those yet I can still see why setups are important info. The systems stuff is heavier going if you ask me. I wanna see some more. FX is the way to go.</p></p>",
"userprofile": "https://www.pagoolabs.com/userprofiles/api/texas/?format=api",
"submit_date": "2017-11-06T06:39:40Z",
"is_public": true,
"previous_version": null,
"edited_date": null,
"upvotes": 1,
"downvotes": 0,
"replies": 1,
"parent": null,
"story": "https://www.pagoolabs.com/stories/api/38/?format=api",
"forum": null
},
{
"url": "https://www.pagoolabs.com/posts/api/73/edit/?format=api",
"post": "Agreed.",
"html": "<p><p>Agreed.</p></p>",
"userprofile": "https://www.pagoolabs.com/userprofiles/api/jono/?format=api",
"submit_date": "2017-11-08T14:11:10Z",
"is_public": true,
"previous_version": null,
"edited_date": null,
"upvotes": 1,
"downvotes": 0,
"replies": 0,
"parent": "https://www.pagoolabs.com/posts/api/67/?format=api",
"story": "https://www.pagoolabs.com/stories/api/38/?format=api",
"forum": null
}
]
}