Advanced diploma in financial trading

• The Level 5 Advanced Diploma in Financial Trading is a financial qualification aimed at 16+ learners, who wish to pursue a career as a financial trader, or a career within the financial sector.

 What does this qualification cover?

This qualification is based on attaining professional competence within financial trading and includes the required elements to work effectively as a financial trader. Learners must achieve all mandatory units:

• Financial markets and operations
• Financial products and associated risk
• Financial trading techniques

Throughout this qualification, learners will develop their knowledge and understanding of trading the financial markets. They will also develop the ability to apply practically the knowledge, understanding and skills to actively trade the financial markets through the use of a professional trading platform. In parallel, learners will develop their communication skills, professional conduct skills and time management skills, all of which are valued highly by employers. Research skills will also be highly developed.

Within the mandatory units, learners are required to complete set research tasks based on current economic activity and complete a daily diary of their learning activity, showing how this has been implemented into real time trading decisions. Alongside this, a real time portfolio of activity is a mandatory requirement to track the learner’s progress and determine the learner’s understanding and implementation of the knowledge required to attain professional competence.

Transferable skills are those generic ‘soft’ skills that are valued by employers. The following transferable skills are developed and assessed throughout this qualification:

• Communication
• Customer service
• Commercialism
• Problem solving
• Research

What could this qualification lead to?

The primary purpose of this qualification is to prepare learners for employment in a range of financial services roles, for example, Financial Trader, Compliance officer, Investment administrator.

Specific resources and requirements:

• Delivered by industry experienced trading professionals
• Have access to industry standard professional trading platform software
• Have access to up to the minute economic news releases

Teaching staff

In order to deliver this qualification, teaching staff:

• Are occupational experts and have knowledge and understanding in the area for which they are delivering the training
• Have recent and relevant industry experience in the area they are delivering, alongside a minimum of 3 years experience within the financial trading industry
• Understand the qualification’s structure and content, and the learning outcomes they are delivering
• Have credible experience of teaching the required qualification modules and have full understanding of the practical implementation of the learned modules
• Maintain their knowledge of the curriculum requirements and current economic environment in relation to financial trading events

Qualification structure

To be awarded the Level 5 Advanced Diploma in Financial Trading, learners must achieve all mandatory units. The guided learning (GL) hours required to achieve this qualification are 270.

Financial markets and operations 108; Financial products and associated risk 108; Financial trading techniques 54 (see below)

Financial markets and operations

Overview

The aim of this unit is for learners to develop the knowledge and skills to understand and analyse how the financial markets operate. Learners will be able to summarise the economic history and how it impacts on today’s markets and explain the supply and demand with current economics. Learners will be able to define financial technical analysis and be able to compare different analysis chart types to evaluate the advantages and disadvantages of market analysis.

Assessment

This unit will be assessed by an internally assessed portfolio of evidence. All assessment criteria must be evidenced to achieve this unit.

Delivery guidance

Trainers and assessors must be familiar with the qualification specification when delivering this unit, to ensure:

• Delivery is in a suitable environment with correct resources available
• An appropriate portfolio of evidence is produced

Understand how derivatives markets operate and how to analyse the market components

a. Analyse the types of market derivatives and asset classes in modern financial markets
b. Explain how financial markets operate
c. Explain the origins and operations of the financial futures market
d. Analyse the advantages and disadvantages of trading futures contracts
e. Analyse the components of a futures contract
f. Explain underlying markets for bonds, equities, forex, commodities, indices and options 2

Understand fundamental macro and micro economic analysis in relation to financial market trading

a. Explain the purpose of economics
b. Explain the impact of economic supply and demand
c. Explain economic variables and their interaction
d. Explain management and solutions of the economy
e. Analyse government policy and its implications on the economy and financial markets
f. Explain monetary and fiscal policy of:

• U.S. Federal Reserve
• European Central Bank
• Bank of England

g. Analyse key economic indicators and data release
h. Summarise relevant economic history and its impact 3

Understand technical analysis of financial market trading

a. Define financial technical analysis
b. Explain the philosophy behind financial technical analysis
c. Compare different financial technical analysis type charts
d. Evaluate the advantages and disadvantages of market analysis, using various technical analysis indicators for chart overlays and momentum indicators
e. Implement learned technical analysis techniques for both short term trading and long term investment strategies

Financial products and associated risks

Overview

The aim of this unit is to develop the knowledge and understanding of the different types of financial products and the risk associated with them. You will learn about trading bonds, foreign exchange, commodities and the factors that could make them a risk to trade. You will also develop an understanding of the short term interest rates and the index markets and how these influence trading.

Assessment

This unit will be assessed by an internally assessed portfolio of evidence. All assessment criteria must be evidenced to achieve this unit.

Understand the operation of different types of bond trading and associated financial risk

a. Explain the different types of bonds in financial markets
b. Explain bond futures, their function within financial markets and associated risks
c. Explain how bond futures are priced and contributing factors
d. Explain the relationship between bond futures yield and maturity
e. Explain the operations of government bond yield curves
f. Explain bond futures secondary markets
g. Explain how government bond futures are traded 2

Understand the operation of foreign exchange trading and associated risk

a. Summarise the features of the foreign exchange market
b. Analyse how foreign exchange markets function and associated risk
c. Analyse market influencing factors of the foreign exchange markets
d. Compare different foreign exchange currency pairs and associated correlations
e. Explain how foreign exchange is traded 3

Understand the operation of the commodities market and associated risk

a. Summarize the features of the commodity market
b. Analyse how commodity markets function and associated risk
c. Analyse market influencing factors of the commodities futures market
d. Compare and contrast different commodities futures correlations
e. Explain how the commodities futures market is traded 4

Understand the operation of options and potential risk

a. Compare the different asset class options
b. Analyse the different options’ contract strategies and associated risk
c. Analyse advantages and disadvantages of options trading 5

Understand the operation of Short Term Interest Rates (STIRS) and associated risk

a. Summarise the STIRS market and associated features
b. Analyse the STIRS market function and associated risk
c. Explain how STIRS futures are priced
d. Explain how the STIRS futures markets are traded 6

Understand the operation of index markets and associated risk

a. Explain why equity exists
b. Explain the different types of equity
c. Explain how equity is used within the financial markets
d. Analyse how equities are valued
e. Explain index markets
f. Analyse various world index markets
g. Analyse index futures components and pricing
h. Explain how index futures are traded

Financial trading techniques

Overview

The aim of this unit is to develop your knowledge, understanding and skills to be able to trade. You will learn how to keep a daily diary of the markets’ behaviours and analyse the pricing support and resistance that creates the supply and demand. You will also learn how to evaluate your own trading behaviour and produce a personal development plan for improvement.

Assessment

This unit will be assessed by an internally assessed portfolio of evidence. All assessment criteria must be evidenced to achieve this unit.

Be able to analyse financial market data and trading patterns whilst understanding the greater macro and micro economic environment

a. Use trading techniques to identify overvalued and undervalued futures prices for a multitude of financial asset classes
b. Analyse the price support and resistance levels which have been created by investor supply and demand
c. Use analysis techniques to forecast short-term trading opportunities and longer term investment opportunities 2

Be able to trade a multitude of futures asset class products

a. Maintain a daily trading diary of market analysis, trade execution and reasoning behind trading decisions
b. Devise a daily structured trading plan
c. Apply trading techniques to financial products
d. Calculate the profit and loss of trades whilst managing associated risk 3

Understand both market psychology and individual trading psychology

a. Assess psychology and behaviour in trading
b. Review own trading behaviour and produce a personal plan for improvement