Frequently Asked Questions

Does MoneyConversation.com manage my money?

No. You will at all times manage and control your own account, and your own money. With regard to your trading, MoneyConversation.com will provide general advice. Ultimately the decision to trade and/or invest is yours, as is the level of risk you take on each trade.

How many should I buy? What should my position size be?

The decision regarding position size is crucial. This plays a big role in determining your potential upside, and potential downside. It is important you understand the risk you are taking with each trade. Each recommendation we send will have an Entry Price and a Stop Loss. The difference between these represents the risk on each trade. This detail will be included in the email you receive. You need to determine how much money per trade you are prepared to risk. Once you know this dollar amount, you must then calculate your position size. For example if the described risk is $3.50 per share, and your limit to risk per trade is $1,000 - you would trade $1000 / $3.50 = 285 shares.

Why can't I find this Instrument in IG Markets?

Firstly, check that you are correctly searching for the exact name of the instrument, or using the exact navigation 'path' detailed in the email.

Secondly, ensure that you have the US Markets available on your account. Follow these instructions from IG Markets:

In order to activate US price feeds on your account please click on the 'My Account' section in PureDeal and select 'Data Feeds'. Once you have navigated to this option, you will be presented with a form that lists each available exchange, relevant access cost per month and activity level (i.e. number of trades) required to get free access to that particular exchange. Scroll down to US shares labelled Shares - NASDAQ, Shares - AMEX, Shares - NYSE. If you have not completed the necessary exchange agreements, you will not be able to select your options via this form. You will however be able to access the necessary documents from this area.

When and How Do I Exit a trade?

As a trade begins to move in our desired direction, we will issue advice on moving the Stop Loss in the same direction. This has the effect of either reducing the risk on the trade, and/or starting to lock some profits in on the trade.

For example: If we purchased a Stock at $10, with a $9 Stop Loss, and the Stock rose to $11, we may then increase the Stop Loss to $9.50. This would have the effect of taking half of the initial risk away from the trade (Purchase was $10, new Stop Loss is $9,50, so a risk of $0.50 per share instead of the initial $1 per share).

Should the stock rise to $12, and we increase the Stop to $11, we have in effect locked in $1 of profit on the trade ($10 purchase price, $11 Stop), while still giving the stock room to increase higher, giving us access to great gains.

Should the stock fall back to $11, and hit our Stop, that is how we would exit the trade.

In 95%+ of our trades, this is how we will exit a trade, by having our Stop hit - which may be in Profit or Loss, depending on how the trade has moved.

Whenever we suggest you move a Stop Loss, you will receive a text message and an email with the exact details. Should we decide to exit a trade 'at market' and sell it, again, we would text message and email you.

This is how we exit our trades.

How much can I make from this trade? Do you tell us the potential upside on a trade before we open it?

Generally, we will have an idea of how much a trade can move in our favour (how much profit may be available). With this in mind, and the stop loss set, we can determine the type of risk reward that is available with each trade. However, as trades and markets can react differently over time, we constantly reassess the risks and potential upsides of being in the trades we have. As this is always moving, we do not issue 'profit targets' (or similar) when a position is opened.

Your recommendation seems to have two (2) trades, which do I take?

Each recommendation will usually have 2 choices - however this is for the 1 trade only. The choice is provided to allow all members, in all jurisdictions, the ability to take the position. The 2 choices offered will usually cover a "US Person" option (like a futures contract, a stock or an ETF), and a "Non-US Person" option (like a CFD contact).

Again, each trade recommendation is for only 1 position - you choose from the options provided, depending on what you have access to (and where you live).

What is an "ETF"?

A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETF's provide a simple and effective way to express a trading view as it is just like trading a stock.

What is a "CFD"?

A contracts for difference creates, as its name suggests, a contract between two parties speculating on the movement of an asset price. The term 'CFD' which stands for 'contract for difference' consists of an agreement (contract) to exchange the difference in value of a particular currency, commodity share or index between the time at which a contract is opened and the time at which it is closed. The contract payout will amount to the difference in the price of the asset between the time the contract is opened and the time it is closed. If the asset rises in price, the buyer receives cash from the seller, and vice versa. There is no restriction on the entry or exit price of a CFD, no time limit is placed on when this exchange happens and no restriction is placed on buying first or selling first. CFDs are traded on leverage to give traders more trading power, flexibility and opportunities.

What does "Long", or "going Long" mean?

Long or Going Long means we are BUYING a position. We will profit as the price increases.

What does "Short", or "going Short" mean?

Short or going Short mean we are SELLING a position. We will profit as the price decreases.

What broker do I use?

You are free to use whichever broker you wish. You should have access to the following markets:

  • Major Indices: S&P 500, NASDAQ etc
  • Precious metals: Gold and Silver etc
  • Commodities: (Oil, Copper etc)
  • Currency Markets: US Dollar, Euro, Australian Dollar etc. (Also referred to as "Forex" of "FX Trading")
  • Direct US listed shares/equities: 'Apple Inc' for example including US based "ETFs" (Exchange Traded Funds).
  • "Options" on the global markets (these trades are not regular, but do come up)

Email us at members@moneyconversation.com as we can suggest some options for where you are residing.

What does "GTC" mean?

An order to buy or sell a security at a set price that is active until the investor decides to cancel it or the trade is executed. If an order does not have a good-'til-canceled instruction then the order will expire at the end of the trading day the order was placed.

All of our orders are "GTC" or "Good 'til Canceled", unless otherwise indicated.

What does "On Stop" mean, or a "Stop Limit Order"?

Trading "on Stop" is an order placed with a broker that combines the features of stop order with those of a limit order.

A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.

We will almost exclusively enter our trading using the method.

What does "Stop Loss" mean?

A Stop Loss is an order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor's loss on a security position.

We will always define our Stop Loss point when issuing a trading recommendation.

Why do you generally buy 'On Stop' rather than 'At Market'?

Our recommendations are generally made outside of US Market hours. In most cases we are wanting to see an instrument reach a certain point before we commit to the trade - this is usually a technical point. When a trade is close to reaching our entry requirements, we will issue the Buy 'on stop' recommendation (outside of market hours) - so, if the price is reached in the next trading day (or days following), our order will automatically be completed. This enables us to enter our trades during non-market hours, and means we don't have to watch the market minute-by-minute looking for our confirmation before entering the trade.

This is why, for example, a stock may be trading at $49.50, but our recommendation is to buy at $50.25 'on stop'. Most new trader view would probably say "well if I can buy it at $49.50, I will do that now because it's cheaper than $50.25". That is not what we are looking to achieve when buying a position - we are looking to enter a position only when our entry requirements are met, even if that is a higher price than the current market.

Why use Stops?

We believe Stops are an important part of trading. For our methodology, it tells us when we are 'wrong' and should close/exit our position. We only want to hold positions that are acting according to our expectations; and when a Stop is 'hit' (and our position closed), it is because the room we have given the trade to perform has been used. Stops also enable us to lock in some open profits on a trade by moving the Stop up as the price moves in our favour, whilst we are still able to keep the position open, and perhaps move further in our favour.

How effective are Stops?

In our experience, generally Stop Loss trades are effective. By effective, we mean, the Stop Loss point, when reached, has been the price at which the position was closed, within an acceptable margin.

Where a Stop Loss order wont be totally effective is when a position opens up past/below the stop loss price set. A Stop Loss order becomes a market order once the Stop Loss point has been reached/breached. Therefore (by way of example), if you have a stock position trading at $10, with a $9 Stop Loss, and the Stock opens at $8 the next morning, then the Stop Loss order will be executed at the best possible market price - being $8 in this instance.

Certain providers do offer guaranteed stop loss positions - and you should investigate such offerings direct with your provider. Money Conversation cannot provide advice around using guaranteed stops.

What do I do if I've missed a Trade?

If you missed entering a trade for any reason (sick, traveling, busy etc), it is at your discretion if you enter the trade after it is open.

We would suggest you take a look at the current price, along with the current Stop Loss and calculate, if you do wish to enter, what the risk will be.

As new trades are always coming along, most members will simply miss the trade if they missed the initial entry. Again however, this is at the discretion of each member. Money Conversation is not in a position to advise on this on a case-by-case basis.

What do I do with existing open trades when I sign up?

Again, Money Conversation is not in a position to provide case-by-case advice regarding open positions. Most members will wait for new trades to open, rather than entering existing positions, however they may enter existing positions at their own discretion. We believe the current price, and current Stop Loss need to be considered and the risk level calculated before entering an existing position, should you choose to do so.

How often do you send recommendations?

Recommendations will come as we see trades present themselves in the markets. We have no set trading 'volume' parameters to meet.

It is not uncommon for us to go a week or two without entering a new position. Equally, it is not uncommon to open 3-5 trades in the same week, or even the same day.

We are market driven on our recommendations, however our average has been about 1.4 new trades per week.

How does leverage/margin work?

You may ask, "How can I control $200k worth of gold with only $20,000 in my account".

All members should understand what 'margin' and 'leverage' opportunities their broker/provider has to offer. Margin and Leverage effectively amount to borrowings, so each member needs to be aware of the risks involved in trading in such a manner.

The use of leverage/margin effectively magnifies the results - both good and bad. You need to be 100% sure of the risks of any leverage/margin you are taking on each and every trade.

As a concept, you can liken it to borrowing money via a bank loan to purchase a house. A $200k deposit may enable you to borrow $800k to buy a $1 million house. In this example, your $200k is your 'margin', and you are exposed to the movement in price of the full $1 million you have in the market.