OBJECTIVES:

This unit focuses on the structure and trading mechanics of various financial asset classes, providing a comprehensive understanding of their key principles and how they operate within global markets. It examines the fundamentals of trading in Foreign Exchange (Forex) markets, highlighting the essential principles that govern these dynamic environments. The unit also assesses the structural similarities and differences between futures markets and Over-the-Counter (OTC) markets, helping you understand their unique attributes and implications for trading. Additionally, it explores the mechanics of options trading, explaining how these instruments can be used for hedging or speculative purposes. The structure of the stock market is also evaluated, considering where, why, and how stocks are traded. Furthermore, the unit examines major commodity markets and their relationships with other global asset classes, emphasising the interconnectedness of financial systems. The unit then delves into the influence of fundamental, economic, and political events on financial markets. It considers the impact of macroeconomic data releases on global markets, providing insight into how these events shape market trends. Political events are discussed in the context of their ability to create price fluctuations, while the role of economic cycles in shaping longer-term asset price trends is analysed. The unit also evaluates the implications of international trade balances and imbalances on financial market stability, highlighting their potential to drive significant market movements. Finally, the unit addresses the risks associated with both retail and institutional trading, examining key financial instruments such as Exchange Traded Funds (ETFs), Contracts for Difference (CFDs), spread betting, and cash trade execution. It analyses different types of investment risk and discusses strategies for mitigating these risks effectively. This comprehensive approach equips you with the knowledge to navigate the complexities of financial trading while understanding the dynamic factors that influence markets.

This unit focuses on understanding how crowd behaviour and human psychology can influence asset prices and trading performance. It examines the effects of psychological biases on trading behaviour, analysing how factors like overconfidence can impact traders’ decisions and exploring potential solutions to mitigate these effects. The unit also justifies the processes traders use to overcome the adverse effects of natural psychological biases, equipping learners with strategies to enhance rational decision-making in trading environments. The unit then shifts focus to the use of chart analysis in forecasting financial market price behaviour. It begins with an analysis of the tenets of Dow Theory, offering foundational insights into market trends. The causes and effects of typical bull and bear market cycles are explained, providing a deeper understanding of market dynamics. The significance of support and resistance levels, as well as trends in supply and demand across different asset classes, is assessed to highlight their role in price movements. Additionally, the construction of Japanese candlestick patterns is evaluated, with attention to how these patterns can signal future price behaviour. The unit also justifies the use of Fibonacci retracements in financial market trading and explores how price patterns can be identified and used to predict future price targets. Finally, the unit explores technical analysis strategies as tools for identifying trading opportunities. It examines the application of moving averages for identifying trends and generating trading signals, evaluates how price momentum and volume can be used to anticipate price behaviour, and analyses specific trading strategies to illustrate the S-T-E-M (Strategy, Timing, Execution, and Management) trading approach. This comprehensive study of human psychology, chart analysis, and technical strategies provides a well-rounded perspective on forecasting and capitalising on market movements.

This unit focuses on developing the skills and expertise required to trade in real-time financial markets using a trading platform. It begins by teaching the practical aspects of executing trades on a real-time platform, including identifying optimal points to set stop losses and profit targets to manage risk and enhance returns. Learners will also demonstrate the application of trend lines and support/resistance lines to identify price patterns and forecast future movements. Additionally, the unit explores the use of secondary indicators, showing how these tools can reinforce trading decisions and improve accuracy. The unit then transitions to the development of a structured trading plan. This involves creating a trading process with specific rules to define valid trade setups and explaining the key events required to trigger trading signals. Learners will also explore how time and price filters can be applied to ensure precise and consistent trade execution. A crucial component is understanding how trades are managed throughout their duration, with an emphasis on setting relevant stop losses and profit targets to maintain control over trading risks. Finally, the unit provides an opportunity to apply a structured trading plan to financial assets in real-time markets. Learners will demonstrate the integration of technical and/or fundamental analysis in live trading environments and monitor and record all trade details for evaluation purposes. The unit concludes with an assessment of trading performance over a fixed period, including a critical evaluation of the strengths and weaknesses of the trading strategy. Learners will propose enhancements and developments to refine their approach, equipping them with the ability to adapt and improve in dynamic market conditions.