Academy · how markets work

Market primers

13 longer explanations, one subject to a page: what the thing is, how it works, one worked example in round numbers and what the page does not tell you. They describe; none of them recommends anything.

The primers

One subject to a page.

Primer 01How commodities tradeOne raw material, three kinds of price: for delivery now, for delivery later, and a contract that only follows.Three ways to trade one raw material · The futures curve: contango and backwardation · Rollover: why a contract has to be replaced · Seasons · Physical delivery and cash settlement
Primer 02Bonds and interest ratesWhy a bond’s price falls when rates rise, what the curve shows, and why currencies watch both.What a bond is · Why price and yield move in opposite directions · Duration, in plain words · Credit, in plain words · The yield curve · Why currencies follow yields
Primer 03ETFs and fundsWhat a fund is, what it costs to hold, and why a CFD on an index is a different thing.What a fund is · Active and passive · What a fund costs · Tracking difference and tracking error · How a fund differs from a CFD on an index
Primer 04Order types, in depthEvery order type, then what happens at the moment of execution: partial fills, slippage and gaps.Market and limit orders · Stop and stop-limit orders · Trailing stops and one-cancels-the-other · Partial fills and fill policies · Slippage and gaps · Time in force
Primer 05Market microstructureWho takes the other side, how the two sides meet, and why there are two prices and not one.Two kinds of market · The order book · Market makers and liquidity providers · How a broker can handle a client’s order · Last look · Why spreads widen
Primer 06Algorithmic tradingA program follows the rules exactly. Whether the rules are any good is a separate question.What an algorithm is, and is not · What an Expert Advisor is · Backtesting and its pitfalls · Overfitting · Latency and a VPS, in plain words · What goes wrong in operation
Primer 07Trading psychologyThe habits of mind that bend a decision, what tilt is, and the plain tools that help: a routine, a journal, a stopping rule.Why the mind is part of the method · Five biases, in plain words · Tilt and revenge trading · Routines: decide before the screen is moving · The journal as a tool · When to stop for the day
Primer 08What moves a currencyRates, inflation, trade, growth, mood and central banks: the forces behind an exchange rate, and how to read a release.A price with two sides · Interest-rate differentials · Inflation and purchasing power · The balance of payments and the current account · Terms of trade · Growth · Risk sentiment · What central banks say · Reading a release without predicting
Primer 09Islamic finance and tradingRiba, gharar, why overnight interest matters, and what a swap-free account does and does not change.What this page is, and is not · Riba · Gharar and maysir · Why overnight interest matters · What a swap-free account is, and is not · Where scholars differ · Suitability is a personal question
Primer 10Tax and record keepingWhat records to keep, what to ask an adviser, and why no single answer fits every country.What this page can and cannot do · Why the rules differ · The records worth keeping · Keeping them well · Currency conversion · Questions to ask a tax adviser
Primer 11Regulation explainedWhat a regulator does, who the main ones are, and how to check any firm on a public register in six steps.What a financial regulator does · The main regulators, by jurisdiction · Offshore registries · Authorisation and company registration are different things · How to check any firm on a public register · What a register entry does and does not settle
Primer 12How to choose a brokerEight questions to put to any broker, in order, with what a good answer looks like and the signs that should stop you.How to use the checklist · 1. Authorisation · 2. Client money · 3. Costs · 4. Execution · 5. Platforms · 6. Support · 7. Withdrawals · 8. Warning signs
Primer 13Trading mythsTen things traders are told, each put through a small sum. Most fail on the arithmetic, and one is half true.1. “More leverage, more profit” · 2. “A high win rate means profit” · 3. “You need to be right most of the time” · 4. “Indicators predict” · 5. “Stops are hunted every time” · 6. “A 50% loss is recovered by a 50% gain” · 7. “Doubling after a loss must win in the end” · 8. “Costs are too small to matter” · 9. “A good backtest proves the method” · 10. “A losing streak means the method is broken”

How these pages are written

Each primer keeps to what is general, durable and well established. There are no prices, no forecasts and no statistics, and nothing is called the best. Where a matter is disputed, or differs from one firm or country to another, the page says so.

Every primer has one worked example. Its figures are invented round numbers chosen to make the arithmetic easy to follow. They are not market prices and they are not GIO4X’s fees.

Several of these pages describe things GIO4X does not offer, such as bonds, funds and exchange-traded futures, because they explain the markets it does list. Each page has a section headed “At GIO4X” that says plainly what is listed, what is not, and what has not yet been published. Educational information, not investment advice or a recommendation to trade.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.

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