The User's Manual is a guide for Members on how to apply the Fat Prophets Trading Report to a trading portfolio. The manual also contains useful information regarding the website, capital allocation, stop losses, and how to access the report on a daily basis.
The User's Manual also establishes the ground rules for the Fat Prophets CFD Trading Report, and what happens after a recommendation is made. A complete list of recommendations made by Fat Prophets can be easily referenced in the Members area. It is our intention to make our recommendations as transparent and accountable as possible, regardless of whether a trade is profitable or not. We believe that Fat Prophets is one of the few advisory services to achieve 'transparency' of this clarity.
Information available in Members Area Buy/Sell recommendations Publishing Times
Password Position Sizing Stop Losses Stop Entries Additional Advice
Information available in Members Area
Access to the Members Area is gained by entering your registered e-mail address and password into the orange bar of the Trading Report homepage.
Trade Recommendations
This section displays all current trading recommendations. Trade recommendations are updated on a daily basis until they are either executed or cancelled. An executed trade recommendation will become an "Open position" while a cancelled trade recommendation will be stored in the "Cancelled Trade Recommendations" section.
Fat Prophets provide recommended entry and exit prices, as well as take profit and stop loss levels.
The trade recommendations we generate will typically include time constraints as well as price constraints.
Fat Prophets will not specify volume for each trade recommendation. This is a personal decision that will depend on your personal risk profile and goals. As a guideline for calculating our trading performance, Fat Prophets will use fixed fractional Position Sizing.
Open Positions
Once a trade recommendation is executed it moves to the open positions section. Open positions are updated on a daily basis until the trade is closed.
Each open position report will detail when the trade was opened, along with our target and stop prices. These are subject to change as each trade progresses, according to market conditions.
Once a trade is closed out, the recommendation is removed from the Open Positions section and placed to the Completed Trades section.
Completed Trades
Completed trades are grouped according to the type of security each relates to (Bonds, Equities, Commodities, and Currencies).
The Completed Trades section details the entry price, entry date, exit date, exit price, and profit or loss, along with percentage return (after finance and brokerage costs).
The individual trade pages track each trade from the initial recommendation through to the closing out of the position.
Cancelled Trade Recommendations
If we publish a trade recommendation and market conditions change, Fat Prophets will cancel the trade recommendation without filling the order. The recommendation will then be moved to the a Cancelled Trade Recommendation
In the interests of transparency, Fat Prophets lists all trade recommendations which were filled or executed. They are stored in the Completed Trades area.
Cancelled Trade Recommendations are grouped according to the type of security each relates to (Bonds, Equities, Commodities, and Currencies).
Watch lists
The watch lists are intended to provide an overview of markets which Fat Prophets are currently watching, as well as highlighting features that we believe are of particular interest and potential future trade recommendations.
There is a separate watch list for each type of security (Bonds, Equities, Commodities, and Currencies). The pages are updated on a daily basis. Though sometimes our view will not change.
Comments on today's trades and markets
Fat Prophets believe macro financial market analysis (or the big picture) is crucial to successful trading.
Each day we will present our view on what is driving markets at the current time. We will also seek to raise Member awareness of market events, specific or general, that we believe to be particularly noteworthy.
Comment of the Day Archive
Here you will find the complete history of every Fat Prophets comment of the day published. The list is in chronological order.
Search function
The search function is located in the top right hand corner of the Members homepage. To search for a security simply enter the ticker code or company name.
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Buy/Sell Recommendations
Trade recommendations will only be made when the right opportunities surface. In the event of there being no suitable trading ideas for a given day, no recommendation will be made. 'Thou shalt always be patient when investing' is one of Fat Prophets' 10 Commandments - being patient and waiting for the right opportunity is important when trading.
When a recommendation is made, we will always nominate an entry level. If prices move away from this level before your order is executed, we suggest leaving the order in place rather than chasing the market. Patience is a key element of trading success.
see STOP LOSSES
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Publishing Times
Fat Prophets is published daily around 7am British Standard Time for UK and US content, and 6.30pm Australian Eastern Standard Time for Australian Equity content. We publish approximately 255 times a year.
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Password
When registering to Fat Prophets you will be asked to choose a password. Your access details are specific to you and must not be transferred to anyone. You can change your password by contacting Fat Prophets via email.
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Position Sizing
Fixed fractional position sizing is a relatively simple method of controlling risk exposure. While there are more complex methods available, the use of this basic tool will help to greatly improve the performance of most traders.
The first step is to determine how much of your total trading account you would be willing to lose on any single trade. A widely used figure is 2%, which explains why this is sometimes known as "The 2% Rule". For example, if you have $50,000 in your trading account, the application of this rule would limit losses on any single trade to $1,000 (2% of $50,000).
The second step fixed fractional position sizing is to calculate the loss per share (or CFD, or lot, or contract) represented by the gap between the entry level and the stop-loss level. For example, if an equity CFD is to be bought at $2.85 with a stop-loss at $2.60, the risk per CFD is 25 cents.
To determine the maximum number of CFDs (or other security) to be traded, simply divide the maximum allowable risk (2% of account balance) by the risk per security - In the above example, this is $1,000 divided by 25 cents, which equals 4,000.
So, given the above parameters, you could trade up to 4,000 CFDs if the risk on each was 25 cents. If the trade did not progress as planned and the position was stopped out, losses would be limited to the pre-determined amount of $1,000.
A larger size position could be traded provided a tighter stop was used. Or, if a wider stop was required, the formula would demand use of a smaller position. Either way, risk is limited to the pre-determined percentage of your trading account - in this instance 2% or $1,000.
Obviously, for commodities, futures etc, you would need to work out the dollar amount of risk between the entry level and the stop for 1-lot, then divide the Max Risk $ amount by this number to get the number to trade.
This is a very basic methodology. It can be improved by making allowances for trading costs (brokerage, financing, slippage) and by using the value of open positions when calculating current Account size. But even in its simplest form (as above) it will put traders well ahead of most retail players that NEVER even think of this kind of thing.
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Stop Losses
In the Fat Prophets Trading Report, each trade recommendation will include a stop-loss level. This is an essential tool for preserving your trading capital in the event that trades do not develop as anticipated. Losing trades are a part and parcel of trading, so it is important to take steps to minimise their impact. This is particularly important when trading highly geared products such as CFDs.
As trades progress, our open position updates will include advice on when to move stop-loss orders to protect unrealised profits. In all but the most exceptional circumstances, our stop-loss levels will only be 'tightened' - or moved closer to the current price level.
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Stop Entries
Many of the trade recommendations will carry "stop entry" orders. This means a trade is entered only when a certain price is reached. For a long position, the buy-stop will be higher than the current price. For a short position, the sell-stop will be lower than the current price. If the stop entry price is never reached, then there is no trade. Stop entries are a vital tool for the modern day trader.
As with all trades in the Fat Prophets Trading Report, a trade opened with a stop entry order will also have a stop-loss level recommended. Certain trading platforms will also allow traders to place a stop profit order conditional on the stop loss not being triggered.
Placing a stop loss and a conditional stop profit at the same time where ONE CANCELS the OTHER means that the trade is squared off and risk return levels will only change if you have slippage.
Slippage can occur when a market gaps or has an extremely volatile move. If you have a stop-loss in place when the market behaves like this, your capital will be protected. If you do not enter a stop-loss and the market has a volatile move then your losses can be much larger than you anticipated.
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Can I ask for additional trading advice?
As a rule we do not provide advice outside of the report. Each of our recommendations are thoroughly researched and this takes up a significant amount of time and resources. Unfortunately from a time perspective we are simply unable to extend this to providing general advice on trades not covered by Fat Prophets.
We encourage feedback about the report, and if there are any questions relating to a particular edition please email your query through to us. However please understand that we cannot comment on trading ideas outside of the Fat Prophets Report.
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