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SOP – Standard Operating Procedures

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SOP meaning – What does SOP mean in business?

SOP or standard operating procedure is written, detailed, step-by-step instructions compiled by an organization to help workers carry out complex routine operations.

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SOP acronym means standard operating procedure. As you probably know that SOPs are nothing but some documented processes that are primarily used to deliver consistent quality every time. If you are a product owner or process owner, then it’s important to use SOPs so that your products and services provide quality and consistent value to its customers. When a company is in a growing phase, then the company owner mostly takes all important decisions. But, when the company has already reached its capacity, then the company owner can’t possibly take all the required decisions properly. That’s why the company should prepare documented SOPs so that the company can meticulously establish a proper succession plan and train its employee base accordingly.

Standard operating procedures are important to maintain the efficiency and safety for every department of a company/organization, such as strategic management, human resources, and payroll management, production and operations, employee training, sales and customer service, legal, financial, and information technology, etc.

Additionally note, SOPs should never be documented poorly and they should not be vaguely worded. Rather, the step-by-step instructions of SOPs need to be brief, crisp clear, and easy to understand. Additionally, standard operating procedures should be also simple to follow as well.

The SOP should be the key basis for every employee that’s working in an organization. Plus, standard operating procedures should be also used to training all new employees. On top of that, these instructions need to be updated on a frequent basis so that they are in line with the current needs of a company.

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Reveal three key aspects of SOP

Standard operating procedures can possibly increase the value of any company (irrespective of its size and type).SOP follows a process-driven approach instead of a founder driven approach for its target customers.SOPs deliver consistent quality value to its customers.

What do you actually need SOPs or standard operating procedures?

i) SOPs save both money and time: If a company doesn’t follow a streamlined or standard operating procedure, then it will be too difficult to accomplish a specific task. For example, if the same task is getting performed by employees of an organization in many different ways, then it will surely take more time to complete. Thus, it will certainly ensure a time-consuming process. That’s why it’s important to follow SOPs so that the employees can accomplish their tasks in lesser time and money.


ii) SOPs improve communication and process flow: It has found in a recent survey that SOPs can excellently improve communication and process flows of a company and its organizations. Consider a situation, when an organization hires an employee. In that case, the employee must have the right idea about the processes and standards to be followed. That’s why the employees should follow SOPs as defined by the company for improved communications and expedited process flows.

iii) SOPs provide consistency: As already described before, the prime feature of SOPs is that they deliver consistent quality value to its target buyers or customers. Now, when a standard operating procedure is already in place, then the applicable business processes will automatically be followed in a correct and accurate way.


iv) SOPs ensure a safe and efficient work environment: As you probably know that it’s important to maintain a safe and efficient work environment in every organization. Now, when it comes to maintaining a safe and efficient work environment, it’s utmost important to follow the SOPs precisely. Otherwise, if the company doesn’t follow a standardized process, then it will be too chaotic. The assigned job responsibilities of the organization will not be fulfilled correctly. As a result, it will impact the work environment. In turn, the company won’t be able to deliver the right value to its customers in terms of its products and services and this situation can significantly hamper the company’s reputation.

So, being a business owner or company owner, are you planning to create your own standard operating procedure? If yes, then please follow the below sections to learn more about it.

i) Create a detailed list of business processes: First of all, it’s needed to find out and create a detailed list of business processes. This list can be reviewed by the managers; the managers can remove the redundancies and add any new points (if needed). Note, this list will act as the starting point when it comes to creating an SOP.

ii) Plan the right process: Once you have created the list, it’s time to plan for the right process. For example, whether the process will be written in the form of a workflow diagram or a step-by-step guide — this thing needs to be planned beforehand.


iii) Communicate with your employees: In the above steps, you have learned to create a detailed list of business processes and plan the process. Now, it’s time to speak with your employees as they need to understand and follow the process carefully.

iv) Write and review the process: Document the SOP instructions in a simple, clear, and detailed way so that it’s easy to follow by all. Also, you must review it at once.

v) Maintain the process: In order to make the SOP useful and relevant, it should be maintained properly. Additionally, you may need to update it from time-to-time basis so that it meets the current company needs and expectations.

In our trading industry, a lot of prop companies and trading corporate companies have SOP and all those procedures help that traders, analysts, managers work better in the ordered systems.

Hedge Fund Backers and How to Raise Money for a Hedge Fund?

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Hedge fund backers are all companies that provide the seed capital necessary to get a new hedge fund up and running. Hedge fund backers are a private equity or venture capital funds that invest in startup hedge funds.


How do Hedge Funds raise capital?

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If you are keen on finding the right answer as to how and where do hedge funds get their money from, then it is quite obvious that you will find this article interesting and informative. However, before doing so, we need to have a reasonably good understanding as to what hedge funds are all about. Put in simple words, hedge funds are offshore investments. The hedge fund companies are typically private limited partnerships. They engage in speculative trading in funds that are borrowed.

In most cases, a single person is the one who manages the entire limited partnership firm that is into hedge fund investment. He makes the investment choices and also decides as far as the entire fund management is concerned. He also looks into the ways and means when it comes to raising money for investment funds. The main persons with others who run the show are those who have rich experience and a track record that is proven. The person who runs the entire show takes help or professional fund managers and they go about seeking funds from potential investors so that they can invest in these hedge funds.

What Makes Hedge Funds Attractive

According to figures and reports, good hedge funds are able to bring in billions of dollars each year. This is because of their professional and efficient portfolio management and the well-thought-out strategies that they have in place. Hedge funds make their money mostly through a well-planned fee structure. These fees are paid by fund investors. The fees they may depend on the Assets under Management or AUM. Apart from the regular fees, the hedge fund managers also collect some other charges. This is a percentage of the returns that are earned by the investors over and above the hurdle rate or benchmark rate. The more investors they have under the hedge fund, the more money they make through fees and other sources of income.

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How Is Money Raised?

There are a number of sources from where hedge fund managers raise their monies. The biggest chunk comes from individuals with high net worth. There are also other contributors like foundations, endowments, corporations, and pension funds. Generally, hedge fund managers do not seek funds from small individual investors. This is because it requires a big investment in terms of capital and only then is it possible to form a limited partnership.

So, Hedge Fund Backers are an excellent opportunity for hedge funds.

However, raising funds for hedge funds is not easy. It depends on various parameters including the performance of the fund managers during the initial phases. On many occasions, the fund managers invest their own money into the fund. This is done with the main objective of attracting the attention of big sized institutional investors. These big fishes do have huge money to play around with and therefore they can invest significant amounts of capital into the hedge funds.

Usually, Hedge Fund Backers are limited partners, investors.

The initial few years are important because of a number of reasons. If the fund manager can perform well and show impressive returns, the fund starts getting noticed. It catches the attention of big institutional investors. The job of these fund managers is to ensure good performance of the fund and this is not easy in a highly volatile and highly unpredictable market. It all depends on the skill sets of the fund managers and they have to work overtime and have to work smartly to show impressive returns. Only then will they be able to convince the initial investors that they have the experience, expertise, and wherewithal to manage the hedge funds profitably. Once they are able to establish their credentials and reputation, it will not be long before the floodgates of new funds from big-time investors start coming into the hedge funds. The whole process takes some time and in many cases, it may take a year or two before the hedge fund to start performing the way it should.

The Fee Structure Also Matters

The fee that is charged from the investors is highly critical. It is the main source of income for hedge fund managers. The fund managers must be able to reasonably good tight walk between the need for generating adequate fee-based earnings. As mentioned earlier, the fee structure basically is divided into two types. One is a flat fee that is charged irrespective of the funds invested. The other is related to the profit that the investors are able to earn through the respective hedge funds. It is based on a percentage of earning. The hedge fund managers have to think through the fee structure so that it is a win-win situation for both the stakeholders.

To sum up, there is no doubt that hedge funds can help investors to make big money provided they choose the right fund managers. The managers should also know-how, where, and when to raise money for investing in various instruments. In the last several year’s hedge fund businesses started to be very complicated in very competitive environment.

Hedge Fund Backers very often do not appreciate high returns on small portfolios because 20% on 1 million accounts are not the same as 20% on a billion dollars account. There a huge difference in managing big portfolio and your own small portfolio.

How to calculate a pip value?

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Calculating Pip Value in Different Forex Pairs. Forex pips explanation

PIP is the acronym for the phrase percentage interest point. It’s also known as a price interest point. A forex pip is the lowest price increase for a given pair. The pip value is a unit of measurement for currency movement in the forex trade for most currency pairs. The pip between two currencies varies. However, it is generally equal to the fourth decimal place in most currency pairs. For EURUSD or GBPUSD, for example, 0.0001 is one pip.

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The pip value, as you know is the standard by which a currency pair is compared. This also includes the exchanges of the currency pairs as well as the trade size. The significance of pip value is that it’s through pip that you can show the amount of exposure and can influence your position significantly. The pip value is defined by the pair of currency, trade value and the rate of exchange of the currency pair.

Currency must be exchanged to enable international transactions. There are a lot of bets and other transactions happening in the forex market. All these take place via speculators who are on the watch-out to earn money as the price of foreign currency moves.

The absolute value of the pip

To make it simple, each forex account will have a certain number of lots and pips. A lot is a collection or the lowest quantum of a currency that you’re going to trade. And the pip the lowest amount that currency can change.

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The value of a foreign currency keeps on varying with respect to other currencies. And, the absolute value varies with different currencies and with a particular currency. The pip shows to what extent a pair of currencies move up and goes down. The value of a pip is, therefore, varies across pairs of currencies. This article discusses pip value and the various aspects that go into calculating the pip value.

If the value of the currency pair increases up or goes down 0.0001 the price of the currency pair has gone 1 pip. Likewise when the price increases or decreases 0.0005, it implies the price has moved 5 pips.

pip value in currency price

We explain it with an example

If the price of the AUDUSD forex pair varies from $1.0000 to $1.0009 it’s said the at the AUDUSD has raised by 9 pips ($0.0009).

If the price of EUR/USD rises from $1.3040 to $1.3045 the EUR/USD is said to have moved 5 pips.

Measuring PIP for the different currency

There are a few currency pairs that are expressed in terms of the second digit following the decimal. The pip value of yen-based currency included EUR/JPY, USD/JPY, AUD/JPY, GBP/JPY are said using two digits after the decimal.

Thus when the US/JPY goes from 112.00 to 112.90, the price is said to have increased by 90 pips (0.9).

Measuring pips for currency pairs

See more as in this Forex Pips Calculator:

Using this pip difference calculator (above) you can calculate Eurgbp pip value, Eurusd pip value, Usdchf pip value and etc.

A different way of expressing pips in forex

So far, we have defined a pip in forex as the lowest incremental variation in the currency pair price. However, be aware that a pip’s monetary value is not the same across all pairs of currencies. It’s for this reason that each trader must know the way the pip of the forex currency pair is determined. This helps the currency to gain currency and risk management.

Determining pip in USD trading account

The formula to calculate pip value in USD trading account (or non JPY account) is : (0.0001 / Current Exchange Rate)

The most traded currency in the international currency market is the US dollar. When the US dollar is listed second in a pair, the pip value is constant and does not have an account financed in USD.

On the other hand, if the USD is listed the other way, that it’s not the second, you need to dive the pip value by the USD/x***rate

Determining pip from a non-USD trading account

The currency account is funded is listed second in a given pair of currencies.

Formula to calculate pip value in non USD account for cross currency pair is:


EURJPY Pip Value = [(0.01 / EURJPY Exchange Rate) x (EURUSD Exchange Rate)] x (Units Traded)

YYYJPY Pip Value = [(0.01 / YYYJPY Exchange Rate) x (YYYUSD Exchange Rate)] x (Units Traded)

Determining pip for pairs of other currencies

It is not that many currencies are being traded in your forex account. Of course, you can have a US account but wish to trade the EUR/GBP (Great Britain Pound).

We will explain how to determine the pip for pairs that are not included in your currency account.

As you know, the second currency is constant if you had an account in that currency. Thus, if you have GBP count, the EUR/GBP pip is GBP10 for a standard lot.

Make sure to consider the current is proved the pip value: the second currency. Once you know the value, you can determine pip in the particular currency to your desired currency. You can do this by dividing it in the format PPP/YYY where PPP is your currency account.

Facts are:

The constant pip amounts are equivalent to USD $10 for a standard account.
The constant pip amounts are equivalent to USD $1 for a mini account.
The constant pip amounts are equivalent to USD $0.1 for a micro account.

These pip values are coterminous where USD is listed second. For example, the euro/US dollar, British pound/US dollar, Australian dollar/USD. New Zealand dollar/USD.

Conclusion

If you have a clear understanding of the notion of PIP and the way it works, it would help significant benefits, You will be able to judge the quality of the forex market in terms of profitability. Profitability, in turn, is determined by the quality of your judgment, and foresight. For all this, you need to keep abreast of the market: the PIP value of the currency pair and the general market condition around. Thus, to realize the best result, calculating a pip value is important and you need to leverage it.

In this article you have a PIP calculator – so test it easily using different currency pairs.

How to Calculate Lot Size in Forex trading

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How to Determine Position Size When Forex Trading

For a foreign exchange (forex) trader, the trade size or position size decides the profit he makes more than the exit and entry points while day trading forex. Even if the trader has the best strategy for forex trading, he is taking too little risk or too much risk if the trade size is very small or very large. Traders should avoid taking too much risk since they will lose all their money. Some tips on how the trader should Determine Position Size are provided.

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What is lot size in currency trading?

What is a lot in forex? Lot in forex is the name of the position size of each trade. A micro-lot consists of 1000 units of currency, a mini-lot 10.000 units and a standard lot has 100,000 units? The position size of a trader depends on the size and type of lots that are bought or sold while trading. The risk of the forex trader can be divided into account risk and trade risk. All these factors are considered to determine, the right position size, irrespective of the market conditions, trading strategy, or the setup.

Risk limit for each trade

Most traders consider specifying the dollar amount or percentage limit risked on each trade as the most crucial step in determining the size of the forex position. Lot size forex calculation is simply because usually, professional and experienced traders will risk a maximum of 1% of their account in trade, usually, the amount is lower. While the other variables for trading may change depending on the trade, most traders will keep the percentage they risk on the trade constantly, though the amount risked for the trade may be reduced if it exceeds the 1 percent limit.
(Max risk per trade position should be 1%-2%)

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Pip risk

A pip is an abbreviation for price interest point or the percentage in point, is the lowest unit for which the currency price will change. When currency pairs are considered, the pip is 0.0001 or one-hundredth of a percent. However, if the currency pair includes the Japanese yen, the pip is one percentage point or 0.01. Prices with an additional decimal place are shown by some brokers and this fifth decimal place is called a pipette. In the case of the Japanese yen, the third place is the pipette. m The Pip risk for each trade is calculated as the difference between the point where the stop-loss order is placed and the entry point.

A stop-loss will close a trade when it is losing a specified amount. This is used by traders to ensure that their loss does not exceed the loss risk for the account. The stop-loss level also depends on the pip risk for a specific trade. The volatility and strategy are some factors that determine pip risk. Though traders would like to ensure that their stop loss is as close to the entry point as possible, keeping it too close may end the trade before the expected forex rate movement occurs.

Pip value

In a currency pair that is being traded the second currency is called the quote currency. If the trading account is funded with the quote currency, the pip values for various lot sizes are fixed at 0.0001 of the lot size. Usually, the forex trading account is funded in US dollars. So if the quote currency is not the dollar, the pip value will be multiplied by the exchange rate for the quote currency against the US dollar.

What information do we need to make forex position size calculator formula?

Account Currency: USD
Account Balance: $5000 for example
Risk Percentage: 1% for example
Stop loss: 200 pips for example
Currency: EURUSD

Step 1: Calculate risk in dollars
Calculate Risk percentage from account balance: 1% for $5000 is : $5000/100=$50.
$50 is 1% from $5000.

Step 2: Calculate dollars per pip

(USD 50)/(200 pips) = USD 0.25/pip

Step 3: Calculate number of units
USD 0.25 per pip * [(10k units of EUR/USD)/(USD 1 per pip)] = 2,500 units of EUR/USD

2.5 micro lots or 0.25 mini lots is the final answer.

On the end here you can use Position Size Calculator below:
Lot size forex calculator is represented below. You can use to calculate forex lot position size:

The risk you can define either using % or either using risk in dollars.

The Top Forex Trading Books

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Forex Education Books
Learning about the world of foreign exchange, forex can be challenging even for professional investors. However, there are books that are written specifically for beginners and persons who already do currency trading and need additional help. Many books that are being sold on the subject; of simple forex trading to advanced strategies for technical analysis and fundamental analysis are listed here. These are six of the books that traders have used to help themselves throughout the years when the markets have their ups and downs.

The best forex trading books are books that universities and certification bodies (see list of forex trading certifications on our website) use for their students. Many Amazon best selling books now are the main literature in all worldwide universities.

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Becoming a professional Forex Trader can be very beneficial for you, it is best for you to learn strategies and be equipped to earn in this new way so you can build a stronger financial foundation for your life. We won’t worry about job loss as much when we know about this other way of earning.
As a Currency trader, you can become a broker and you can do the trading for yourself. When you know all about forex trading you are equipped to face life without a job, and you will be earning in a new way in markets that will always be open and active.

These are the six books that are recommended for you (best books to learn trading forex):

1.Forex Trading: The Basics Explained in Simple Terms, by Jim Brown Currency Forecasting

A book that is written for beginners, you will be learning six strategies that will help you to make money right away and how the market works.

2.Day Trading and Swing Trading the Currency Market, by Kathy Lien

This book provides a two-pronged approach that combines actionable strategies and theory. You will be given step by step instructions about fundamentals such as the long, and short term, effects of factors that affect currency pairs.

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3.Currency Trading for Dummies, by Brian Dolan

Easily understood the information on currency trading and forex markets that is used by persons in the media. Dolan is the chief currency strategist at Forex.com. This book is a must-read.

4.Currency Forecasting: A Guide to Fundamental and Technical Models of Exchange Rate Determination, by Michael Rosenberg

You will learn about the macroeconomics of foreign exchange and international monetary dynamics with technical and fundamental analysis.

5.How to Make a Living Trading Foreign Exchange, by Courtney Smith

This book tells you about six strategies you can use to start making money right away from the markets. You’ll also find risk management techniques and information about the psychology of trading.

6.Japanese Candlestick Charting Techniques by Steve Nison

This book gives in-depth information about candlestick charting, this is used for futures, speculation, hedging, equities, and information you can use where technical analysis can be applied.

It is also recommended that you start trading with virtual money, and you can test your skills with a stock simulator as you compete with other traders and try to make it to the top. You will be trying different trading strategies as you prepare to trade in the real markets. You will not be losing your cash and you will be learning very valuable lessons. Finding the best Forex Brokers to work with as an investor is very important, you should do proper research so you can make the best decisions when you are ready to trade.

Technical Analysis Books

Persons who want to learn about Technical Analysis are always inquiring about the books they can read to learn about this subject. There is a list of the best ones here just for you.

1. Technical Analysis of Stock Trends, by Robert D. Edwards and John Mage.

This book is seen as the Bible of Technical analysis, it is filled with very valuable information.

2. Technical Analysis of the Financial Markets, by John J. Murphy

This book is written in a language that is very easy to understand, you should read it along with the first book so you can understand its content fully. This is the best book written about forex and stocks trading in my opinion. University book.

3. Japanese Candlestick Charting Techniques, by Steve Nison

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This book is written by a man who is credited with bringing the technique of Japanese candlestick making to the Western world.

4. Technical Analysis Using Multiple Time Frames, by Brian Shanon,

you will benefit from learning how to use more than one time frame and this book compliments all the other books.

5. Investment Psychology Explained, by Martin Pring

You will learn about the Tulip and the Sea Company bubbles; it is a book you will like to relax and read.

6. The Little Book of Stock Market Cycles, by Jeffrey Hirsh

You will be learning about the time-proven Market patterns and how you can take advantage of them when you read this book.

7. Technically speaking, by Chris Wilkinson

In this book, old technicians are interviewed, this is simply a technical analysis of the Market Wizards series. It is filled with the right information you will need.

8. Intermarket Analysis: Profiting from Global Market Relationships

You can get added information about this writer from stockcharts.com he is very equipped with Important information that you will need.

9. Elliot Wave Principle, by Elliot Frost and Robert Prechter

The Fibonacci concepts are explained in this book very well and there is information here about counting waves. This book will help you to become a professional trader that you want to be.

10. Technical Analysis for the Trading Professional, by Connie Brown

This book will get your mind going and cause you to think outside the box, it is quite different from any other book you will read. You will learn how to manipulate different oscillators and get a signal that the persons who use default settings will not get.

11. A Complete Guide to the Futures Market: Technical Analysis, Trading Systems, Fundamental Analysis, Options, Spreads, and Trading Principles (Wiley Trading) 2nd Edition, by Jack D Schwager and Mark Etzkorn

This book is necessary for anyone who is serious about investing or trading in the futures markets. You will learn how to know the difference between market myths from reality.

This book has all the information with a step by step guide for developing and testing original trading ideas and systems, It has all the information you will need to keep you on the right track so you can earn a living.

You will be developing and testing trading ideas as you access a wealth of practical trading guidelines and market insights from the professionals.

12. Market Wizards, Updated: Interviews with Top Traders, by Jack D. Schwager

In this book, you will find out how the world’s top traders amass millions of dollars per year. Jack D Schwager managed to interview some of these wealthy people and collected the best information and tips so he could share this valuable information with you. He has broken down the information he collected into simple language so you can have all the details you will need to be successful as a forex trader.

“Market Wizards” is a best seller because it is the most fascinating book you will read about trading at Wall Street.
You will be reading true stories about sensational trading coups, even the one about the trader who turned $30,000 into $80 million, the T-bond futures trader who turned $25,000 into $2 billion in a single day and the hedge fund manager who averaged 30% returns every year for the past 21 years.

Schwager will help you to understand exactly what these super traders are doing by writing in their own words. He has put together all the information you will need to become a trading star just like Tudor Jones, Ed Sekota, Tom Baldwin, and others.
This is an investment you need to make, get your copy of this book today.

Why You Should Be Properly Informed about Forex Trading

Getting prepared to become a forex trader takes a lot of mental preparation as no one can afford to lose a lot of money in these times. It is best for persons to be fully equipped with the right knowledge before they open their forex accounts. However, reading the wrong books can cause you to have problems and lose money, it is therefore very important for persons to invest in the right books so that fewer mistakes will be made when actual trading begins.
Preparing to be a forex trader can be a daunting task, you might be discouraged when you speak to persons who lost money during the time when they did forex trading. They might tell you to quit before you even start, this makes it important for you to find other persons who are making money from forex trading so you can learn from them and stay motivated.
There are persons who make a living or get super rich doing currency trading and they retire whenever they want to, so you can do well as a forex trader when you have all the right information and the correct mindset. Be determined and keep on learning from the best, and you will have no regrets when you become an investor in the forex markets.

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