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MATITraderSystemLesson1PDF

The document introduces the MATI Trader System programme, designed to guide individuals through trading basics and strategies, emphasizing the importance of understanding markets, methods, money, and mindset. It covers key concepts such as supply and demand, trading versus investing, technical and fundamental analysis, and the advantages of trading derivatives. The lesson aims to equip traders with foundational knowledge to navigate financial markets effectively.

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Henok Nigussie
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0% found this document useful (0 votes)
4 views31 pages

MATITraderSystemLesson1PDF

The document introduces the MATI Trader System programme, designed to guide individuals through trading basics and strategies, emphasizing the importance of understanding markets, methods, money, and mindset. It covers key concepts such as supply and demand, trading versus investing, technical and fundamental analysis, and the advantages of trading derivatives. The lesson aims to equip traders with foundational knowledge to navigate financial markets effectively.

Uploaded by

Henok Nigussie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 31

- L E S SO N 1

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- L E S SO N 1

Copyright © 2020 Timon and MATI Enterprise (Pty) Ltd (2017/320981/07)

First Edition: 2019

First published in South Africa in 2019. All rights reserved:

No part of the MATI Trader System programme may be reproduced, distributed or transmitted in any form or by
any means, electronic or mechanical, including recording, photocopying or via a computerised or electronic
storage without written permission granted from the author.

The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be
guaranteed.

All material in the MATI Trader System programme is provided for general information only and may not be
construed as personal financial advice or instruction. The information and opinions provided in this programme
are believed to be accurate and sound. Before trading the markets, first consider your financial situation and
ensure you fully understand the risks involved with trading derivatives. Only risk money you can afford to lose.
Market prices can move rapidly against you, resulting in losses that may be more than your original deposit.

The founder is not responsible for any errors nor any personal financial risk.

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- L E S SO N 1

Dear MATI Trader,

Here we are in the first lesson of the MATI Trader


System programme.

You’ll find this programme is presented in a Founder

user-friendly, interactive and easily understood Timon Rossolimos

language. It’s also assembled into a series of


what I call the ‘4 Trading Pillars To Your Success’ (Markets, Method,
Money and Mind). Plus one bonus lesson with the extra tools and
information you’ll need to optimise your trading performance.

Whether you’ve never traded the markets, dabbled a bit or you’re an


experienced trader looking to improve, this could be the guide you’ve
been waiting for.

Every bit of advice, knowledge and wisdom I’ve learnt since 2003,
you’ll find in this exclusive and single concise piece of work.
Throughout this journey, you’ll learn different trading lessons,
strategies, ideas and tools along the way.

My passion and priority with the MATI Trader System programme, is to


show you how to trade for a living using proven and trusted methods –
with practical and real examples – in a clear, understandable and easy
way.

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- L E S SO N 1

This is not an instant-gratification and a ‘Get-Rich-Quick’ programme.


This is a complete guide you’ll need to absorb and apply to your
everyday trading.

The MATI Trader System programme will show you how to bank a
consistent income, on both rising and falling markets.

We’ll now get into the first lesson of the programme.

This lesson will tackle the first pillar to your trading success – The
MARKETS Pillar.

LEARNING GOALS
At the end of lesson 1, you'll be able to:
Understand trading basics: What, why, where and how?

See why trading is a profitable career choice

Know all the markets available to trade

Compare a day at the Farmer’s Market to the financial world

See how trading and investing are like relationships vs marriage

Differentiate between technical and fundamental analysis

Know the main drivers to profitable fundamental analysis

Define technical analysis with just one word

See why derivatives are special to traders

Understand how gearing is a money-multiplier

Know the advantages and disadvantages of trading

Prepare your trading work station with – Minimalism

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Just so you know. I’m going to be with you every step of the way during
this programme.

Let’s get started.

Trade well,

Timon Rossolimos
Founder, Timon and MATI Enterprise (Pty) Ltd

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Trading – A Long History Story Short

As old as mankind is, so is the practice of trading.

A simple concept which remains the same today as it was over 10,000
years ago.

To exchange one item for another item for the sake of mutual benefit.

However, instead of exchanging cacao leaves for shiny gemstones,


today we exchange paper bills in the form of money for a cup of coffee.

We are all familiar with the concept of ‘trading’ as we exchange money


for goods and services almost every day of our lives.

In the financial markets, it is the same principle. With trading, you’ll buy
a market at a lower price, with the speculation that you’ll sell it at a
higher price for a profit. Or you’ll sell a market at a higher price, with
the idea that the price will drop, where you’ll re-buy it at a lower price
for a profit.

In order to do so, we’ll need to ask an important question.

“How do you know which way the market will go?”

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- L E S SO N 1

To answer this question, you’ll need to tackle the age-old concept of


supply and demand.

Let’s head to the Farmer’s Market, to see how it works.

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- L E S SO N 1

At The Farmer's Market

Day 1

Dum’s Fruit Stall is known as the best place to buy strawberries.

The owner tells you he has 10 boxes of these strawberries to sell. With
you being the only customer in sight, the owner decides to sell you the
strawberries at a reasonable price of just R10 per box.
As there is a higher supply of strawberries than there
is demand, you were able to buy them at a low price.

Day 2

The next day, the stall owner arrives with another 10 boxes of
strawberries to sell.

This time he is surprised to find that there are over 20 willing buyers
lined up. The owner decides to pump up the price of the strawberries to
R50 instead of R10 per box.

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He knows that with a higher demand for strawberries than he has to


supply, the buyers will be willing to pay more. To conclude the power of
demand and supply, here’s a summary over the last two days at the
Farmer’s Market.

The stall owner will keep raising the price to allocate his scarce supply
of strawberries. As the prices rise, so does the stall owner’s profits.

He’ll do this every day, until the customers find that the strawberries
are too expensive to buy. He’ll then have no choice but to drop the
price per box once again.

This phenomenon is based on human nature. With traits such as fear,


greed, ego and anticipation, the art of exchanging, bartering and
trading goods and services for a profit was almost inevitable.

The supply and demand concept also applies to the financial world.

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Let’s look at two scenarios with shares.

✓ Scenario #1:

When a company’s financial results come out better than expected, the
more people will want to buy the company’s shares. This rise in buyers
(demand) will lead to an increase in the share price.

 Scenario #2:

However, if the company’s financial results finished off worse than


expected, then this will have an opposite effect. The investors will want
to sell their positions resulting in less buyers, which will drive the share
price down.

As traders, with supply and demand, we will speculate and anticipate


the market’s price direction first and then profit in one of two ways.

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Either we’ll:

ⵙ Buy low (go long) and sell it at a higher price or,

ⵙ Sell high (go short) and buy it back at a lower price.

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You can trade just about anything online nowadays including:

✓ Shares
✓ Indices
✓ Commodities
✓ Currencies
✓ Crypto-currencies

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Trading & Investing

Relationships Vs Marriage
There are two foundations of analysing the financial markets namely:
Technical and fundamental analysis. Let’s start with the foundation that
most investors use.

#1: Fundamental analysis


Investors focus mainly on fundamental analysis. This is the art of
buying a market below an anticipated future value. Investors’ do this by
analysing several financial drivers and factors of the market, which
includes the:

✓ Financial statements
(Income, cash flow statement and balance sheet)
✓ Accounting ratios
(EPS, DPS, P:E, DY and PEG)
✓ Company prospects
(Future valuation of the stock)
✓ Economic and political factors
✓ Changing lifestyles and demographics
✓ Income tax rate and laws
✓ Industry trends
✓ News and earnings announcements
(Quarterly and annual earnings)

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#2: Technical analysis


Technical analysis is the other school of thought.

If I had to sum up what technical analysis is in just one word, I would


say...

Charting.

This relies on chart analysis, price data, indicators and volume that a
technical analyst uses to make different probability predictions on the
future market prices.

With technical analysis, you’ll base your probability prediction using;


chart analysis, price data, indicators and volume.

Technical analysts try to time the market entries and exits using
different:

✓ Price charts (Line charts, candlesticks and OHLC charts)


✓ Oscillators (RSI, MACD, Stochastics, OBV and ADX)
✓ Momentum indicators (Moving averages and Bollinger Bands)
✓ Volume
✓ Patterns, formations and trends

Note: In this programme, you’ll learn a simple breakout momentum


strategy with a 62.5% win rate I’ve used since 2003.

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Trading and investing similarities and differences

With trading and investing you can buy, sell and monitor different
financial markets.

That is pretty much where the similarities end.

As there’s not one true definition and representation between trading


and investing, here’s a table with some of my main differences.

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If there was one significant difference that separates trading from


investing, I would imagine it would have to be based on the level of:

Commitment.

With investing, the relationship is more of a long-term commitment. It’s


as if the shareholder decides to marry the share. The marriage may
either last a lifetime or end up with a content or a devastating divorce
after a couple of years.

With trading, the relationship is more of a short-term proposition. You


could call it speed dating. Some relationships will be great and others
will be heart-breaking.

Most traders nowadays use geared and risky instruments called


derivatives.

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- L E S SO N 1

Derivatives

A Trader's Dream

A derivative is a financial instrument between two parties whose


market value derives and depends on an underlying asset.

The underlying asset can either be a share, index, commodity,


currency or even a crypto-currency.

There are several forms of derivatives you can trade, including:

CFDs (Contracts For Difference)

Spread trading

Futures

Options and warrants

The main reason why most people use these types of derivatives is
because it’s a cheaper and a more profitable method to trade the
markets...

To understand this better, we’ll need to examine the very essence of


how derivatives work through the function of gearing.

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- L E S SO N 1

Gearing

The Money-Multiplier-Effect

Gearing (leverage or margin trading), allows you to


pay a small amount of money (deposit) in order to gain
control and be exposed to a larger sum of money.

Let’s simplify this with a more relatable life example:

When you buy a house for R1,000,000, it is very similar to trading


derivatives.

At first, the homeowner most probably won’t have the full R1,000,000
to buy the house with just one purchase.

Instead, they’ll sign a bond agreement, make a 10% deposit


(R100,000), borrow the rest from the bank and be exposed to the full
purchase price of the home.

This is a similar concept for when you trade


derivatives.

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How gearing works with CFDs

Let’s say you buy 1,000 shares of Jimbo’s Group Ltd at R50 per share.
Based on your analysis, you believe the share price will rally to R60.

As a shareholder, you’ll need to pay the full R50,000 to own the entire
value of the 1,000 shares (R50 Per share X 1,000 Shares).

In three months’ time, if the share price hits R60 your new share
exposure will be R60,000 worth of shares (1,000 Shares X R60 Per
share).

Note: I’ve excluded trading costs for simplicity purposes.

If you sold all your shares, you’d bank a decent R10,000 profit
(R60,000 – R50,000). However, you had to pay the full R50,000 to be
exposed to those 1,000 shares.

When you trade a geared instrument like CFDs, you won’t ever have to
pay the full value of a share again.

A CFD is an unlisted over-the-counter financial derivative contract


between two parties to exchange the difference
between the opening and the closing price
of the underlying asset.

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- L E S SO N 1

Let’s break that down:

• A CFD (Contract For Difference) is an

• Unlisted (You don’t trade through an exchange)

• Over The Counter (Either via a private dealer or a market maker)

• Financial derivative contract (Value from the underlying market)

• Between two parties (The buyer and seller) to

• Exchange the

• Price difference between the opening and the closing price of the

• Underlying asset (The market the CFD price is based on)

Using the example from earlier – you see that Jimbo’s Group Ltd offers
the function to trade CFDs.

If the initial margin (deposit) requirement is 10% of the share’s value,


this means, you’ll only have to pay R5.00 per CFD rather than the full
R50 payment for one share.

With this information, you can now calculate the gearing of the Jimbo’s
Group Ltd CFD.

The gearing calculation on a per CFD basis is as follows:

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- L E S SO N 1

Gearing = (Exposure per share ÷ Initial deposit per CFD)


= (R50 Per share ÷ R5.00 Per CFD)
= 10 Times

With a gearing of 10 times, this means two things...

#1. For each one CFD you buy for R5.00 per CFD, you’ll be
exposed to 10 times more (the full value of one Jimbo’s Group
Ltd share).

#2. For every one cent the share price rises or falls, you’ll gain or
lose 10 cents.

To be exposed to the full 1,000 shares value of Jimbo’s Group Ltd,


you’ll need to buy 1,000 CFDs. This will require a deposit of R5,000
(1,000 CFDs X R5.00 Per CFD).

If the share price reaches R60 in three months time, your new overall
trade exposure will be R60,000 worth of shares (1,000 Shares X R60
Per share).

If you sold all your CFDs, you’d bank a R10,000 profit (R60,000 –
R50,000).

Now that we’ve covered how derivatives and gearing works with
trading, let’s highlight the advantages and the disadvantages of trading
derivatives.

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- L E S SO N 1

Derivative Trading – Advantages

#1: ADVANTAGE
Minimal costs

When you trade using a derivative, you never actually own anything
physical. This means, you won’t have to worry about paying high
brokerage and other trading costs like:
 STT (Securities Transfer Tax)
 Stamp duty
 Settlement and clearing fees
 Investor Protection Levy
 VAT
 STRATE

#2: ADVANTAGE
Profit from up or down markets

With derivatives, you can buy (go long) a market at a low price and sell
it at a higher price for a profit. Or you can sell (go short) a market at a
high price and buy it back at a lower price for a profit.

#3: ADVANTAGE
Get paid dividends

When you buy a derivative of the underlying share, which pays


dividends, you’ll be entitled to the full amount.

Note: You’ll need to make sure the underlying share does pay
dividends to their shareholders.

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- L E S SO N 1

#4: ADVANTAGE
Instant access to world markets

Your broker or market maker will most likely offer you a large range of
markets to trade on your one account, including: local & international
shares, commodities, currencies, indices and even crypto-currencies.

#5: ADVANTAGE
Profit from more with less

As you’ll only have to pay a tiny portion of the price per derivative,
you’ll have more free capital to commit to other trading opportunities.

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- L E S SO N 1

Derivative Trading – Disadvantages

#1: DISADVANTAGE
Gearing – Magnified losses

Gearing is a double-edged
sword. If the trade goes against
you, you could wind up losing
more money than what you deposited.

If your trade continues to move against you, you may receive a margin
call from your provider. This is the worst-case scenario where you’ll
need to deposit more funds into your account, in order to keep your
trade open.

Note: It’s important to carefully implement the money and risk


management strategies, you’ll learn in this programme.

#2: DISADVANTAGE
Commitment

With derivatives trading, you’ll need to commit more time to your trades
than you would with ordinary investing.

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- L E S SO N 1

If you’re an intraday trader, this could range to a couple of hours a day.


Or if you’re a position trader like myself, you’ll need to commit to
around 30 minutes per week.

#3: DISADVANTAGE
No shareholder privileges

With derivatives, you give up the benefit of owning a part of a company


through shares. In other words, you won’t be able to vote, attend
AGMs or have any influence in the underlying companies.

#4: DISADVANTAGE
Pay dividends when you’re short

If you sell (go short) a trading derivative and the underlying share pays
dividends, you are liable to pay the portion of the dividend instead.

Now that you know the advantages and disadvantages of trading


derivatives, it’s time to create your trading work station.

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Prepare Your Trading Work Station

The best place to start your trading career is by creating your work
station at home. This is where you’ll analyse, monitor, trade the
markets and prepare for the next trading day.

Let’s start with your...

#1: Trading room – Fresh and so clean

If you’d like to be, somewhat, a minimalist trader, the first important


step is to find a room away from anything that might interfere with your
trading such as noises from the TV, family, animals and even social
media.

You might also want to remove any paintings, photos or anything else
you have hanging on the wall.

They might be nice to have in other areas of your house but with
trading, you’ll find they will distract you.

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#2: Trading desk – Less is more

Next, make sure the room is cool, with fresh air and has enough
lighting. I’d suggest you change your lights to cool-white. With just
these few tips, I am sure you will have a more professional feel and a
calmer experience with your trading.

With a trading desk, you’ll need a comfortable chair with only two
screens. One screen for your trading platform, to buy and sell trades,
and another screen to analyse your charts.

Next, you’ll need to de-clutter your desk. Take off any unnecessary
table-pieces, stationery and try to neaten up your desk as much as you
can. A cleaner desk will give you a calmer, more organised and a clear
work place for when you trade.

Spare just 10 minutes after each trading day to neaten up your desk.
This will help you prepare for the next day with a clear and a refreshed
mind.

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- L E S SO N 1

Here are seven things you’ll find on my trading desk:

✓ 1 Laptop
✓ 1 Monitor
✓ 1 Good Internet connection
✓ 1 Calculator
✓ 1 Pen
✓ 1 Exam pad
✓ 1 Trading cheat sheet (which I’ll send to you in Lesson two)

You might be thinking, is that it? Yes, that’s it. Simple and minimalistic.
The way I believe trading should be.

Let’s now get into the three essential tools you’ll need to set up your
trading platform, in the next part of the MATI Trader System
programme.

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- L E S SO N 1

Final Words For Lesson 1

We’ve come to the end of part one of the MATI Trader System
programme. Whether you’re a novice or an experienced trader, you’re
about to learn many new tactics and tips you can apply to your
everyday trading routine.

With this programme you’re about to skip the steep learning curve and
avoid paying any unnecessary school fees. In lesson two, we’ll cover
the second pillar to your trading success – The METHOD Pillar.

At the end of lesson two, you’ll be able to:

• Build your trading system with three tools


• Trade the most powerful chart type – Candlesticks
• Know which way the market is going with three lines
• Create your ideal watch list with these criteria
• Identify the best and most liquid markets to trade
• Differentiate between a healthy and an unhealthy chart
• Know when it is the best time to trade
• Choose whether you're a short term or a medium-term trader
• See why MATI is the perfect word for the system
• Understand what breakout trading is in a nutshell
• Find the strongest support and resistance levels on any chart
• Identify the perfect breakout with a three-step-checklist
• Place your entry, stop loss and take profit levels with each trade
• Spot five profitable breakout patterns on any market
• Validate high, medium and low probability trades with MATI
• Download the MATI Trader System Cheat sheet
• See how MATI went from 22 indicators to just 1 since 2003

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- L E S SO N 1

PLEASE NOTE:
If you are not a VIP member of the complete MATI Trader System
programme yet where you can watch and enjoy the next four lessons,
you can become a member by clicking here.
Or you can email me your NAME with the words “Yes, I want to
complete the MATI Trader System programme”
and we’ll personally send you everything you need to continue with
the programme within 24 hours.

I’ll see you in lesson two.

Trade well,

Timon Rossolimos
Founder, Timon and MATI Enterprise (Pty) Ltd

Join our Facebook group today!

www.facebook.com/groups/MATITrader

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ABOUT THE CREATOR

Timon Rossolimos – professional trader, author, speaker and


entrepreneur – brings you what he has had the honour of sharing
to over 257,000 people since 2003, everything you need in one
place to trade for a living.
OUR AIM

To empower, create and grow a life-time community of the most


passionate and aspiring MATI Traders. This way we can all look
for high probability trades to profit and live a lifestyle of financial-
freedom from the MATI Trader System and other trading
strategies.
WHY MATI?

MATI stands for Momentum Automatic Trading Indicator. You’ll


learn strategies and tactics that uses MOMENTUM to AUTOMATE
breakout TRADING signals with just one INDICATOR – price
action.

CONTACT US

If you have a trading question, suggestion or you’d like to share


your feedback, you are more than welcome to contact Timon by
emailing [email protected].

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