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What is Forex - Terminology
https://preview.redd.it/pmjpy8sqh1x51.jpg?width=580&format=pjpg&auto=webp&s=b02715d6d6f153592a967f577c18578363ca731c The FOREX market is the largest financial market in the world. On a daily basis, trillions of dollars are traded in different currencies around the world. Being FOREX the basis for international capital transactions, its liquidity and volume are much greater than any other financial market. It is estimated that the average volume traded by the world's largest stock exchange, the New York Stock Exchange (NYSE) in a full month, is equal to the volume traded daily in the Forex currency market. In addition, it is estimated that this volume will increase by 25% annually. 80% of transactions are between the US dollar (USD), the euro (EUR), the yen (JPY), the British pound (GBP), the Swiss franc (CHF), and the Australian dollars (AUD) and Canadian (CAD).
What is traded in the Forex market?
We could just say that money. Trading in FOREX simultaneously involves buying one currency (for example euros) and selling another (for example US dollars). These simultaneous purchase and sale operations are carried out through online brokers. Operations are specified in pairs; for example the euro and the dollar (EUR / USD) or the pound sterling and the Yen (GBP / JPY). These types of transactions can be somewhat confusing at first since nothing is being purchased physically. Basically, each currency is tied to the economy of its respective country and its value is a direct reflection of people's perception of that economy. For example, if there is a perception that the economy in Japan is going to weaken, the Yen is likely to be devalued against other currencies. In other words, people are going to sell Yen and they are going to buy currencies from countries where the economy is or will be better than Japan. In general, the exchange of one currency for another reflects the condition of the health of the economy of that country with respect to the health of the economy of other countries. Unlike other financial markets such as the stock market, the currency market does not have a fixed location like the largest exchanges in the world. These types of markets are known as OTC (Over The Counter). Transactions take place independently around the world, mainly over the Internet, and prices can vary from place to place. Due to its decentralized nature, the foreign exchange market is operated 24 hours a day from Monday to Friday. >>> Forex Signals With Unbeatable Performance: Verified Forex Results And 5° Rated OnInvesting.com|Free Forex Signals Trial:CLICK HERE TO JOIN FOR FREE
The 8 most widely used currencies (USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD) are known as “ major currencies ”. All other currencies are called " minor currencies ." You don't need to worry about minor currencies, as you probably won't start trading them for now. The USD, EUR, JPY, GBP, and CHF currencies are the most popular and most liquid currencies on the market.
• Base currency
The base currency is the first currency in any currency pair. It shows how much the base currency is worth against the second currency. For example, if the USD / CHF has a rate of 1.6350, it means that 1 USD is worth 1.6350 CHF. In the forex market, the US dollar is in many cases the base currency to make quotes, the quotes are expressed in units of $ 1 on the other currency of the pair. In some other pairs, the base currency is the British pound, the euro, the Australian dollar, or the New Zealand dollar.
• Quoted currency
The quote currency is the second currency in the currency pair. This is often referred to as a "pip-currency" and any unrealized gains or losses are expressed in this currency.
A pip is the smallest unit of the price of any currency. Almost all currencies consist of 5 significant digits and most pairs have the decimal point immediately after the first digit. For example EUR / USD = 1.2538, in this case, a pip is the smallest change in the fourth decimal space, which is, 0.0001. A notable exception is the USD / JPY pair where the pip equals $ 0.01.
• Purchase price (bid)
The buying price (bid) is the price at which the market is ready to buy a specific currency in the Forex market. At this price, one can sell the base currency. The purchase price is displayed on the left side. For example, in GBP / USD = 1.88112 / 15, the selling price is 1.8812. This means that you can sell a GPB for $ 1.8812.
• Sale Price (ask)
The asking price is the price at which the market is ready to sell a specific currency pair in the Forex market. At this price, you can buy the base currency. The sale price is displayed on the right-hand side. For example, at EUR / USD = 1.2812 / 15, the selling price here is 1.2815. This means that you can buy one euro for $ 1.2815. The selling price is also called the bid price.
All Forex quotes include two prices, the bid (offer) and the ask (demand). The bid is the price at which the broker is willing to buy the base currency in exchange for the quoted currency. This means that the bid is the price at which you can sell. The ask is the price at which the broker is willing to sell the base currency in exchange for the quoted currency. This means that the ask is the price at which you will buy. The difference between the bid and the ask is popularly known as the spread and is the consideration that the online broker receives for its services.
• Transaction costs
The transaction cost, which could be said to be the same as the Spread, is calculated as: Transaction Cost = Ask - Bid. It is the number of pips that are paid when opening a position. The final amount also depends on the size of the operation. It is important to note that depending on the broker and the volatility, the difference between the ask and the bid can increase, making it more expensive to open a trade. This generally happens when there is a lot of volatility and little liquidity, as happens during the announcement of some relevant economic data.
• Cross currency
A cross-currency is any pair where one of the currencies is the US dollar (USD). These pairs show an erratic price behavior when the operator opens two operations in US dollars. For example, opening a long trade to buy EUR / GPB is equivalent to buying EUR / USD and selling GPB / USD. Cross-currency pairs generally carry a higher transaction cost.
When you open a new account margin with a Forex broker, you must deposit a minimum amount of money to your broker. This minimum varies depending on each broker and can be as low as € / $ 100 at higher amounts. Each time a new trade is executed a percentage of your account margin balance will be the initial margin required for a new trade based on the underlying currency pair, current price, and the number of units (or lots) of the trade. . For example, let's say you open a mini account which gives you a leverage of 1: 200 or a margin of 0.5%. Mini accounts work with mini lots. Suppose a mini lot equals $ 10,000. If you are about to open a mini lot, instead of having to invest $ 10,000, you will only need $ 50 ($ 10,000 x 0.5% = $ 50).
Leverage is the ratio of the capital used in a transaction to the required deposit. It is the ability to control large amounts of dollars with relatively less capital. Leverage varies drastically depending on the broker, it can go from 1: 2 to even 1: 2000. The most common level of leverage in Forex can currently be around 1: 200.
• Margin + leverage = dangerous combination
Trading currencies on margin allows you to increase your buying power. This means that if you have $ 5,000 in account margin that allows you a 1: 100 leverage, you can then buy $ 500,000 in foreign exchange as you only have to invest a percentage of the purchase price. Another way of saying this is that you have $ 500,000 in purchasing power. With more purchasing power you can greatly increase your potential profits without an outlay of cash. But be careful, working with a high margin increases your profits but also your losses if the trade does not progress in your favor. >>> Forex Signals With Unbeatable Performance: Verified Forex Results And 5° Rated OnInvesting.com|Free Forex Signals Trial:CLICK HERE TO JOIN FOR FREE
How to get started in Forex - A comprehensive guide for newbies
Almost every day people come to this subreddit asking the same basic questions over and over again. I've put this guide together to point you in the right direction and help you get started on your forex journey. A quick background on me before you ask: My name is Bob, I'm based out of western Canada. I started my forex journey back in January 2018 and am still learning. However I am trading live, not on demo accounts. I also code my own EA's. I not certified, licensed, insured, or even remotely qualified as a professional in the finance industry. Nothing I say constitutes financial advice. Take what I'm saying with a grain of salt, but everything I've outlined below is a synopsis of some tough lessons I've learned over the last year of being in this business. LET'S GET SOME UNPLEASANTNESS OUT OF THE WAY I'm going to call you stupid. I'm also going to call you dumb. I'm going to call you many other things. I do this because odds are, you are stupid, foolish,and just asking to have your money taken away. Welcome to the 95% of retail traders. Perhaps uneducated or uninformed are better phrases, but I've never been a big proponent of being politically correct. Want to get out of the 95% and join the 5% of us who actually make money doing this? Put your grown up pants on, buck up, and don't give me any of this pc "This is hurting my feelings so I'm not going to listen to you" bullshit that the world has been moving towards. Let's rip the bandage off quickly on this point - the world does not give a fuck about you. At one point maybe it did, it was this amazing vision nicknamed the American Dream. It died an agonizing, horrible death at the hand of capitalists and entrepreneurs. The world today revolves around money. Your money, my money, everybody's money. People want to take your money to add it to theirs. They don't give a fuck if it forces you out on the street and your family has to live in cardboard box. The world just stopped caring in general. It sucks, but it's the way the world works now. Welcome to the new world order. It's called Capitalism. And here comes the next hard truth that you will need to accept - Forex is a cruel bitch of a mistress. She will hurt you. She will torment you. She will give you nightmares. She will keep you awake at night. And then she will tease you with a glimmer of hope to lure you into a false sense of security before she then guts you like a fish and shows you what your insides look like. This statement applies to all trading markets - they are cruel, ruthless, and not for the weak minded. The sooner you accept these truths, the sooner you will become profitable. Don't accept it? That's fine. Don't bother reading any further. If I've offended you I don't give a fuck. You can run back home and hide under your bed. The world doesn't care and neither do I. For what it's worth - I am not normally an major condescending asshole like the above paragraphs would suggest. In fact, if you look through my posts on this subreddit you will see I am actually quite helpful most of the time to many people who come here. But I need you to really understand that Forex is not for most people. It will make you cry. And if the markets themselves don't do it, the people in the markets will. LESSON 1 - LEARN THE BASICS Save yourself and everybody here a bunch of time - learn the basics of forex. You can learn the basics for free - BabyPips has one of the best free courses online which explains what exactly forex is, how it works, different strategies and methods of how to approach trading, and many other amazing topics. You can access the BabyPips course by clicking this link: https://www.babypips.com/learn/forex Do EVERY course in the School of Pipsology. It's free, it's comprehensive, and it will save you from a lot of trouble. It also has the added benefit of preventing you from looking foolish and uneducated when you come here asking for help if you already know this stuff. If you still have questions about how forex works, please see the FREE RESOURCES links on the /Forex FAQ which can be found here: https://www.reddit.com/Forex/wiki/index Quiz Time Answer these questions truthfully to yourself: -What is the difference between a market order, a stop order, and a limit order? -How do you draw a support/resistance line? (Demonstrate it to yourself) -What is the difference between MACD, RSI, and Stochastic indicators? -What is fundamental analysis and how does it differ from technical analysis and price action trading? -True or False: It's better to have a broker who gives you 500:1 margin instead of 50:1 margin. Be able to justify your reasoning. If you don't know to answer to any of these questions, then you aren't ready to move on. Go back to the School of Pipsology linked above and do it all again. If you can answer these questions without having to refer to any kind of reference then congratulations, you are ready to move past being a forex newbie and are ready to dive into the wonderful world of currency trading! Move onto Lesson 2 below. LESSON 2 - RANDOM STRANGERS ARE NOT GOING TO HELP YOU GET RICH IN FOREX This may come as a bit of a shock to you, but that random stranger on instagram who is posting about how he is killing it on forex is not trying to insprire you to greatness. He's also not trying to help you. He's also not trying to teach you how to attain financial freedom. 99.99999% of people posting about wanting to help you become rich in forex are LYING TO YOU. Why would such nice, polite people do such a thing? Because THEY ARE TRYING TO PROFIT FROM YOUR STUPIDITY. Plain and simple. Here's just a few ways these "experts" and "gurus" profit from you:
Referral Links - If they require you to click a specific link to signup for something, it means they are an affiliate. They get a commission from whatever the third party is that they are sending you to. I don't care if it's a brokerage, training program, hell even an Amazon link to a book - if they insist you have to click their super exclusive, can't-get-this-deal-any-other-way-but-clicking-my-link type bullshit, it's an affiliate link. There is nothing inherently wrong with affiliate programs, but you are literally generating money for some stranger because they convinced you to buy something. Some brokers such as ICMarkets have affiliate programs that payout a percentage of the commission you generate - this is a really clever system - whether you profit or blow your entire account, the person who referred you to the broker makes a profit off you. Clever eh?
Signal Services, Education & Training Programs, Courses - If somebody is telling you they are making a killing with a signal service and are trying to convince you to join it, I guarantee they are getting a piece of your monthly fee. And better still, these signal services often work...for about a week. Just long enough to suck a bunch of poor fools into it. You see people making money, you want in so you agree to pay the $200+/month subscription fee. You follow the signals and it looks like it's making money for a few days or weeks. Then it turns sideways, you start losing money hand over fist. Pretty soon you have lost most of your trading account because you blindly followed a signal service. And better still - when you go screaming at the person running the signal service they will be very quick to point you to their No Refunds policy. To add insult to injury, the buttfucker that referred you to the signal service in the past will likely listen to you getting mad, and then come back with something like "Sorry it didn't work out, but I just joined this other amazing service and it's working great, you should come join it to earn your money back. Here's my link..." You get the point here right?
Multi-Level Marketing (MLMs) - These people are scum. They are going to offer you training and education, signals, access to forex experts and gurus, and all kinds of other shit with the promise that you will live the dream and become financially free. They are also loading you into a pyrmaid scheme where you will be hounded to recruit other people and make money off them just like you got roped into it. A really prime example here is iMarkets Live (or IML for short). Don't touch this shit with a 10 foot pole. I don't care what they are claiming, you will lose everything using them.
Fund Managers - These people make my skin crawl. It's a classic scam and it works like this - somebody will post online about how much money they are making trading forex/commodities/stocks/whatever. Most of the time they won't explicitly post they are offering a trading service, rather they just put the message out there and wait for the ignorant masses (that's you) to contact them. They will charm you. They will lie to you. They will promise you the moon if you simply wire them some money or give them API access to your trading account. Care to guess what happens next? If you send a wire transfer (or Western Union...hell any kind of payment to them) they will vanish. Happens usually after they take a bunch of suckers for the ride. You sent them $2,000 and so do 9 other suckers. They just made $20,000 and are gone. With API access to your account, you will find your account gets blown super fast or worse - possibly leaving you open to persecution by the broker you are using.
These are just a few examples. The reality is that very few people make it big in forex or any kind of trading. If somebody is trying to sell you the dream, they are essentially a magician - making you look the other way while they snatch your wallet and clean you out. Additionally, on the topic of fund managers - legitimate fund managers will be certified, licensed, and insured. Ask them for proof of those 3 things. What they typically look like are:
Certified - This varies from country to country, in the US it's FINRA (http://www.finra.org). They need to have their Series 7 certification minimum. You can make the case that other FINRA certifications are acceptable in lieu of Series 7, but the 7 is the gold standard.
Licensed - They need to have a valid business license issued by the government. It must clearly state they are an investment company, preferrably a hedge fund because they have some super strict requirements to operate (and often require $25,000+ in fees just to get their business license, so you know they at least have some skin in the game).
Insured - They need to be backed by an insurance company. I'm not talking general insurance for shit like their office burning down. I'm talking about a government-implemented protection insurance program - in the US I believe that is issued by the Securities Investment Protection Corporation (https://www.sipc.org/).
If you are talking to a fund manager and they are insisting they have all of these, get a copy of their verification documents and lookup their licenses on the directories of the issuers to verify they are valid. If they are, then at least you are talking to somebody who seems to have their shit together and is doing investment management and trading as a professional and you are at least partially protected when the shit hits the fan. LESSON 3 - UNDERSTAND YOUR RISK Many people jump into Forex, drop $2000 into a broker account and start trading 1 lot orders because they signed up with a broker thinking they will get rich because they were given 500:1 margin and can risk it all on each trade. Worst-case scenario you lose your account, best case scenario you become a millionaire very quickly. Seems like a pretty good gamble right? You are dead wrong. As a new trader, you should never risk more than 1% of your account balance on a trade. If you have some experience and are confident and doing well, then it's perfectly natural to risk 2-3% of your account per trade. Anybody who risks more than 4-5% of their account on a single trade deserves to blow their account. At that point you aren't trading, you are gambling. Don't pretend you are a trader when really you are just putting everything on red and hoping the roulette ball lands in the right spot. It's stupid and reckless and going to screw you very quickly. Let's do some math here: You put $2,000 into your trading account. Risking 1% means you are willing to lose $20 per trade. That means you are going to be trading micro lots, or 0.01 lots most likely ($0.10/pip). At that level you can have a trade stop loss at -200 pips and only lose $20. It's the best starting point for anybody. Additionally, if you SL 20 trades in a row you are only down $200 (or 10% of your account) which isn't that difficult to recover from. Risking 3% means you are willing to lose $60 per trade. You could do mini lots at this point, which is 0.1 lots (or $1/pip). Let's say you SL on 20 trades in a row. You've just lost $1,200 or 60% of your account. Even veteran traders will go through periods of repeat SL'ing, you are not a special snowflake and are not immune to periods of major drawdown. Risking 5% means you are willing to lose $100 per trade. SL 20 trades in a row, your account is blown. As Red Foreman would call it - Good job dumbass. Never risk more than 1% of your account on any trade until you can show that you are either consistently breaking even or making a profit. By consistently, I mean 200 trades minimum. You do 200 trades over a period of time and either break-even or make a profit, then you should be alright to increase your risk. Unfortunately, this is where many retail traders get greedy and blow it. They will do 10 trades and hit their profit target on 9 of them. They will start seeing huge piles of money in their future and get greedy. They will start taking more risk on their trades than their account can handle. 200 trades of break-even or profitable performance risking 1% per trade. Don't even think about increasing your risk tolerance until you do it. When you get to this point, increase you risk to 2%. Do 1,000 trades at this level and show break-even or profit. If you blow your account, go back down to 1% until you can figure out what the hell you did differently or wrong, fix your strategy, and try again. Once you clear 1,000 trades at 2%, it's really up to you if you want to increase your risk. I don't recommend it. Even 2% is bordering on gambling to be honest. LESSON 4 - THE 500 PIP DRAWDOWN RULE This is a rule I created for myself and it's a great way to help protect your account from blowing. Sometimes the market goes insane. Like really insane. Insane to the point that your broker can't keep up and they can't hold your orders to the SL and TP levels you specified. They will try, but during a flash crash like we had at the start of January 2019 the rules can sometimes go flying out the window on account of the trading servers being unable to keep up with all the shit that's hitting the fan. Because of this I live by a rule I call the 500 Pip Drawdown Rule and it's really quite simple - Have enough funds in your account to cover a 500 pip drawdown on your largest open trade. I don't care if you set a SL of -50 pips. During a flash crash that shit sometimes just breaks. So let's use an example - you open a 0.1 lot short order on USDCAD and set the SL to 50 pips (so you'd only lose $50 if you hit stoploss). An hour later Trump makes some absurd announcement which causes a massive fundamental event on the market. A flash crash happens and over the course of the next few minutes USDCAD spikes up 500 pips, your broker is struggling to keep shit under control and your order slips through the cracks. By the time your broker is able to clear the backlog of orders and activity, your order closes out at 500 pips in the red. You just lost $500 when you intended initially to only risk $50. It gets kinda scary if you are dealing with whole lot orders. A single order with a 500 pip drawdown is $5,000 gone in an instant. That will decimate many trader accounts. Remember my statements above about Forex being a cruel bitch of a mistress? I wasn't kidding. Granted - the above scenario is very rare to actually happen. But glitches to happen from time to time. Broker servers go offline. Weird shit happens which sets off a fundamental shift. Lots of stuff can break your account very quickly if you aren't using proper risk management. LESSON 5 - UNDERSTAND DIFFERENT TRADING METHODOLOGIES Generally speaking, there are 3 trading methodologies that traders employ. It's important to figure out what method you intend to use before asking for help. Each has their pros and cons, and you can combine them in a somewhat hybrid methodology but that introduces challenges as well. In a nutshell:
Price Action Trading (Sometimes called Naked Trading) is very effective at identifying when trends will start and finish. This gives you the advantage of staying ahead of the market and predicting when a change in trend direction will occur. It has the disadvantage of being really easy to screw it up if you don't plot your support and resistance lines properly and interpret the chart wrong. Because you can identify a change in trend direction, you'll generally make more profit on a new trend than a technical strategy will.
Technical Analytics (or TA) uses math and statistics to try and identify where the market is headed or confirm/reject whether a trend is happening. It has the advantage of being very math and stat driven which is hard to refute the numbers, but it has the disadvantage of being late to the party when it comes to identifying trends (hence why people call TA a lagging strategy). When people fail using TA, it's not because of the math - it's because you misinterpreted what the math is telling you.
Fundamental Analysis (or FA) uses news and macro scale events to predict what is going on. A really good example right now is Brexit, what a clusterfuck that is. Every time some major brexit news breaks it causes all sorts of choas in almost every currency pair. Fundamental trading has the highest potential profitability per trade but it also has the highest potential drawdown per trade.
Now you may be thinking that you want to be a a price action trader - you should still learn the principles and concepts behind TA and FA. Same if you are planning to be a technical trader - you should learn about price action and fundamental analysis. More knowledge is better, always. With regards to technical analysis, you need to really understand what the different indicators are tell you. It's very easy to misinterpret what an indicator is telling you, which causes you to make a bad trade and lose money. It's also important to understand that every indicator can be tuned to your personal preferences. You might find, for example, that using Bollinger Bands with the normal 20 period SMA close, 2 standard deviation is not effective for how you look at the chart, but changing that to say a 20 period EMA average price, 1 standard deviation bollinger band indicator could give you significantly more insight. LESSON 6 - TIMEFRAMES MATTER Understanding the differences in which timeframes you trade on will make or break your chosen strategy. Some strategies work really well on Daily timeframes (i.e. Ichimoku) but they fall flat on their face if you use them on 1H timeframes, for example. There is no right or wrong answer on what timeframe is best to trade on. Generally speaking however, there are 2 things to consider:
Speed - If you are scalping (trading on the really fast candles like 1M, 5M, 15M, etc) odds are your trades are very short lived. Maybe 10 minutes to an hour tops. For the most part, scalping strategies will produce little profit per trade but make up for it in the sheer volume of trades. Whereas swing trading may only make a few trades but each one could be worth a significant amount of money.
Spread (the fee you pay to the broker when you trade) - If you are a scalper, the spread is your worst enemy because you have to overcome it very fast to make a profit on your order. Whereas swing trading the spread hardly impacts you at all.
If you are a total newbie to forex, I suggest you don't trade on anything shorter than the 1H timeframe when you are first learning. Trading on higher timeframes tends to be much more forgiving and profitable per trade. Scalping is a delicate art and requires finesse and can be very challenging when you are first starting out. LESSON 7 - AUTOBOTS...ROLL OUT! Yeah...I'm a geek and grew up with the Transformers franchise decades before Michael Bay came along. Deal with it. Forex bots are called EA's (Expert Advisors). They can be wonderous and devastating at the same time. /Forex is not really the best place to get help with them. That is what /algotrading is useful for. However some of us that lurk on /Forex code EA's and will try to assist when we can. Anybody can learn to code an EA. But just like how 95% of retail traders fail, I would estimate the same is true for forex bots. Either the strategy doesn't work, the code is buggy, or many other reasons can cause EA's to fail. Because EA's can often times run up hundreds of orders in a very quick period of time, it's critical that you test them repeatedly before letting them lose on a live trading account so they don't blow your account to pieces. You have been warned. If you want to learn how to code an EA, I suggest you start with MQL. It's a programming language which can be directly interpretted by Meta Trader. The Meta Trader terminal client even gives you a built in IDE for coding EA's in MQL. The downside is it can be buggy and glitchy and caused many frustrating hours of work to figure out what is wrong. If you don't want to learn MQL, you can code an EA up in just about any programming language. Python is really popular for forex bots for some reason. But that doesn't mean you couldn't do it in something like C++ or Java or hell even something more unusual like JQuery if you really wanted. I'm not going to get into the finer details of how to code EA's, there are some amazing guides out there. Just be careful with them. They can be your best friend and at the same time also your worst enemy when it comes to forex. One final note on EA's - don't buy them. Ever. Let me put this into perspective - I create an EA which is literally producing money for me automatically 24/5. If it really is a good EA which is profitable, there is no way in hell I'm selling it. I'm keeping it to myself to make a fortune off of. EA's that are for sale will not work, will blow your account, and the developer who coded it will tell you that's too darn bad but no refunds. Don't ever buy an EA from anybody. LESSON 8 - BRING ON THE HATERS You are going to find that this subreddit is frequented by trolls. Some of them will get really nasty. Some of them will threaten you. Some of them will just make you miserable. It's the price you pay for admission to the /Forex club. If you can't handle it, then I suggest you don't post here. Find a more newbie-friendly site. It sucks, but it's reality. We often refer to trolls on this subreddit as shitcunts. That's your word of the day. Learn it, love it. Shitcunts. YOU MADE IT, WELCOME TO FOREX! If you've made it through all of the above and aren't cringing or getting scared, then welcome aboard the forex train! You will fit in nicely here. Ask your questions and the non-shitcunts of our little corner of reddit will try to help you. Assuming this post doesn't get nuked and I don't get banned for it, I'll add more lessons to this post over time. Lessons I intend to add in the future:
Why you will blow your first account and what to do when it happens
Trading Psychology (this will be a beefy one and will take a while to put together)
Exotics vs Majors and which you should focus on as a newbie (aka how to blow your account in a single trade with exotics)
Hi all! Recently we had a bunch of great questions that were asked in the Reddit, right over here: https://www.reddit.com/genesisvision/comments/bbtolk/straight_questions_to_the_gv_team_ten_so_fa We took some time to prepare a reply and here it is! Hello. I am Ruslan Kamenskiy, the person responsible for the GV products in our team. Thank you for the many questions. I will try to answer them as fully as possible, but before answering, I would like to make a small introduction so that members of the community understand more why things are happening anyway. - Development of any project is always a series of trade-offs. Resources are always limited and the need to choose where to send them is always present. Our task is to distribute our resources optimally considering short-term missions and long-term objectives. - We have a very active and large community. It consists of many different representatives. Everyone has their own needs, expectations, problems and pains. And often in some decisions, you need to look for a middle ground, and you can not please everyone. Investors want maximum security, minimum commissions and maximum profits. Managers want huge investments, minimum responsibility and maximum opportunities. Brokers and exchanges want maximum trading volumes from us. And many requirements of different market participants contradict each other. Therefore, we must always look for optimal solutions. - As I said, we have a vast and active community. And as a result, we have a tremendous amount of feedback and suggestions. Every day they come to us from all channels (feedback portal, social networks, Reddit, support mail, and even private messages in telegram). Right now in our task tracker in backlog 160 feedbacks are hanging for implementation. We appreciate the feedback of our users, but unfortunately, due to limited resources, we cannot implement everything at the same time, so we prioritise requests and suggestions. It is excruciating for us to receive messages from our users stating "I suggested this a month ago, but this has not been implemented yet," but we hope for understanding. We are trying. - Investors want the maximum possible profit with minimal risk. But this is impossible. If we go the route of the maximum of investors' safety (for example, we prohibit trading with leverage, we make maximum stop-outs, etc.), this will minimise the potential investor's profit and make the platform uninteresting for managers. We try to find the right balance between protecting investors from rogue managers and allowing investors to make informed on their decisions based on the analytical tools we provide to create transparency in the managers’ trading strategies. However, we do not believe that restricting managers too much is the best path forward for the ecosystem. We view our job as creating a fully transparent system that allows participants to make highly educated decisions => it is then up to them to take ownership of said decision. - Almost every day we get the questions "When exactly this will be." We have internal deadlines for the implementation of various functions, but to make public statements about the exact date of the implementation of some functionality is not always the best idea, because there are many factors affecting the real state of affairs. And the delay, even for a couple of hours, is always perceived by the community as extremely negative. But we do not refuse to share information about our current work and immediate plans. Why do you allow numerous programs by the same manager? Do you intend to curtail it to a limited number? If yes, how many? When will you implement? Allowing managers to have several programs is necessary for the following reasons:
A trader may have several different trading strategies.
A trader can trade in different markets/exchanges.
A manager's account can not only represent a single person but a whole fund with many traders.
All information on the number and performance of all programs is public and available to investors. Do you intend to pose restrictions on entry and success fees to prevent exploitative fees? If yes, what restrictions and when will you implement? Restrictions on maximum fees are already present. At the same time, this information is available in the program details, which allows the investor to evaluate all the sizes of the commissions before making a decision on investing. Additionally, in order to avoid exploitative fees, the entry fee is charged only for programs that have reached level 3. All this together provides, in our opinion, a fairly transparent system of commissions, in which the investor has all the necessary information to make an educated decision. However, if you have any specific constructive suggestions for improving the system, we are always happy to listen and take them into account. Do you intend to start adopting some form of intervention when a trader goes on downward money losing spiral? Some form of trading floor manager action after x% losses? If yes, how and when? If not, why not? We have introduced the Stop-out functionality, just designed to limit the loss of investors. This is an industry standard solution that helps solve the problem described. Do you intend to impose a cool-down time limit or even fee increase limit to prevent managers to close a program and immediately reopen another one? If yes, what/when will you implement? Managers close and open new programs for various reasons, which is a normal workflow, and we do not want to artificially limit them in this. At the same time, information about the number of manager’s programs, as well as their performance, is public and available to investors for analysis. This information, in our opinion, should be sufficient to determine how honest a particular manager acts. Do you intend to implement some form of deletion? In which way? When? The level system is currently being analyzed and re-thought. At the same time, our community takes an active part in this process. Actual information can be obtained in our telegram (work on this is going right now). Do you intend to return entree fees when a program that is announced for a period of X days terminates the program before the end of the period? When? Entry fee is charged starting from 3rd level programs. This means that this is not a new program, but already having a certain history of successful trading. However, your proposal is absolutely reasonable, and in some situations, returning an entry fee may be a fair decision. We are currently working on this issue and are considering how to improve the current situation. Do you intend to implement a policy so that entry fees only vest if the manager makes more profit, net of success fees, than what was charged in the entry fee? When? If you think about it, then this is quite a delicate issue, and we cannot count everything only by profit. I will give a specific example - in the first case, the investor invests 1 BTC in the Forex program, according to the results of the period, the manager does not show a substantial profit (say, he does not cover the entry fee minus the success fee), but during this time the whole crypto market has fallen by 50% (and we all know that this happens). Formally, the conditions for obtaining the entry fee you described are not met, but the manager has helped the investor save (and even multiply) his BTC holdings. Here’s another situation - the investor invests the same 1 BTC in the ETH program, the manager shows a profit sufficient to pay the entry fee according to your policy, but due to a significant drop in the cost of the ETH, the investor is still in the red. So who of these managers really deserves the entry fee? We believe both. Entry Fee is available to programs only from level 3, which means that the manager has successful trading experience, although even with many programs this value is set to zero. A performance-based fee is a success fee, and the entry fee, taking into account all factors, is wiser to leave unconditional, in order to observe the interests of all categories of users. Do you intend to review the way the GVT token is used in the platform to actually create demand for the token? What are the ideas that you have recently been discussing? When are any of those ideas likely to be implemented? Yes, we are constantly working on this issue. Some ideas have been described in recent blog posts (GVT burning, profit distribution in GVT, payment of a subscription for copying in GVT) Nowadays, while the platform have programs with not too much capital, the amount of GVT required to get a discount does not make economic sense. Would you consider a temporary reduction in the number of GVT one needs to hold to get discounts on fees, in the same vein that Binance had very friendly reduced fees in its first year? We have a discount for GVT holders selling on GM in the same way asBinance has discounts for holding BNB on their exchange. And you need to understand that Binance had very friendly fees during a completely different state of the crypto market. The capitalization of all cryptocurrency grew and was much easier to keep them low then it is now. But we are working in this direction. We already know you are planning a new level system. What are some additional concrete investor protection actions the GV team plans to implement? When can we expect them to be implemented? The system of levels is now being revised with the participation of the community. Actual information can be obtained in our telegram (i.e., work on this is underway right now) Will you rethink the functionality and design of the reinvestment toggle, and add clear labels so that users do not have their money tied up in funds that they do not wish to invest in? If yes, when? The reinvest button has already been renamed to “Reinvest profit” for better understanding. When and how will the UI be revamped (The dashboard, so it is clearer how investments are performing; More filters; Display of overall manager performance across all their programs)? Regarding the question “how”, I can not answer shortly. For the answer, you would need to write a whole article, but you can be sure that we are constantly working on improving the UI based on your feedback. If you have been following the development of the platform for a long time, you might notice that with each major update, the UI changes significantly. This is due to the fact that Genesis Vision is a complex system with a lot of information, so it is often possible to find the right balance between informational content and convenience only through trial and error and only with the active participation of product users. Will there be a way to withdraw everything at the next ending of a period? When/how are you going to implement this? Yes, it is already being worked on, but we cannot point to an exact date at the moment. Could you study a way to enable investors to withdraw invested money before the end of the reporting period, in particular if there is money not currently allocated to a trade? What is your thinking about alternative ways to implement this? This issue is not so obvious. If you withdraw funds during the trading period, this can disrupt the manager's trading strategy. Even if these funds are now free, they can be used to maintain margins when trading with leverage. And if you take the money, then Margin Call will happen (and then Stop out) and all investors will lose money, because funds are not enough to maintain the position.
Hi, Sorry in advance for the wall of text! Recently I've tried to add more long term investing to my skills repetoire. I have developed a strategy that provides buy/sell signals based on a weekly time frame for Commodities, Indices, Bonds, and even Forex. Along with this I've created my own system for portfolio optimisation using all assets my broker provides. In tandem this has proven to be a pretty killer combo, from backtesting anyway. I've tried to implement all of this into some forward testing on my demo account but am having issues understanding how to execute everything correctly. To help make it clearer I'll outline the basics of how my system works: Once a week just before weekly candle close, my software will calculate how to best allocate my capital amongst a number of assets - for example, 60% in a US index, 20% in a Euro bond, 20% in Gold - this is assuming my trading system agrees all of these assets are suitable to go long. If for example it deems Gold to not be a good trade, the software will allocate 20% of my capital to the next best thing, Silver for example, then checks against the strategy etc, until everything agrees. Let's assume I have a trading account with $10,000 in and ready to trade/invest. Due to different margin requirements of each asset being traded, and the fact the price of certain indices may exceed $20,000 or so, it's harder than just allocating 60% of $10,000 towards a US index for example. For my more traditional trading, it's easy to calculate position sizes when the risk percentage and distance to stop loss are known. But with the new strategy, no stop loss is calculated and it is only made clear next week once the software and strategy are run whether a current open position needs closing, or if it needs to be increased/decreased in size at all. Therefore my question is how do I determine position size for each asset? My leverage is fixed for the entire account so that can't be variable per trade. I can't allocate a huge amount of my available margin, as worst case I could have a week which results in a relatively large percentage loss and I'd prefer to not get a midweek margin call. With a much larger investing account the maths all makes sense to me, but trying to accomplish all of this with a smaller amount makes the sizing and management of traders much more difficult to figure out in my head. Thanks in advance for any tips/advice. I apologise if a topic similar to this has been brought up previously or if I'm missing something obvious! I hope everything made sense and please let me know if you have any more questions or need any more info on my system etc.
Finding Trading Edges: Where to Get High R:R trades and Profit Potential of Them.
TL;DR - I will try and flip an account from $50 or less to $1,000 over 2019. I will post all my account details so my strategy can be seen/copied. I will do this using only three or four trading setups. All of which are simple enough to learn. I will start trading on 10th January. ---- As I see it there are two mains ways to understand how to make money in the markets. The first is to know what the biggest winners in the markets are doing and duplicating what they do. This is hard. Most of the biggest players will not publicly tell people what they are doing. You need to be able to kinda slide in with them and see if you can pick up some info. Not suitable for most people, takes a lot of networking and even then you have to be able to make the correct inferences. Another way is to know the most common trades of losing traders and then be on the other side of their common mistakes. This is usually far easier, usually everyone knows the mind of a losing trader. I learned about what losing traders do every day by being one of them for many years. I noticed I had an some sort of affinity for buying at the very top of moves and selling at the very bottom. This sucked, however, is was obvious there was winning trades on the other side of what I was doing and the adjustments to be a good trader were small (albeit, tricky). Thus began the study for entries and maximum risk:reward. See, there have been times I have bought aiming for a 10 pip scalps and hit 100 pips stops loss. Hell, there have been times I was going for 5 pips and hit 100 stop out. This can seem discouraging, but it does mean there must be 1:10 risk:reward pay-off on the other side of these mistakes, and they were mistakes. If you repeatedly enter and exit at the wrong times, you are making mistakes and probably the same ones over and over again. The market is tricking you! There are specific ways in which price moves that compel people to make these mistakes (I won’t go into this in this post, because it takes too long and this is going to be a long post anyway, but a lot of this is FOMO). Making mistakes is okay. In fact, as I see it, making mistakes is an essential part of becoming an expert. Making a mistake enough times to understand intrinsically why it is a mistake and then make the required adjustments. Understanding at a deep level why you trade the way you do and why others make the mistakes they do, is an important part of becoming an expert in your chosen area of focus. I could talk more on these concepts, but to keep the length of the post down, I will crack on to actual examples of trades I look for. Here are my three main criteria. I am looking for tops/bottoms of moves (edge entries). I am looking for 1:3 RR or more potential pay-offs. My strategy assumes that retail trades will lose most of the time. This seems a fair enough assumption. Without meaning to sound too crass about it, smart money will beat dumb money most of the time if the game is base on money. They just will. So to summarize, I am looking for the points newbies get trapped in bad positions entering into moves too late. From these areas, I am looking for high RR entries. Setup Examples. I call this one the “Lightning Bolt correction”, but it is most commonly referred to as a “two leg correction”. I call it a “Lightning Bolt correction” because it looks a bit like one, and it zaps you. If you get it wrong. https://preview.redd.it/t4whwijse2721.png?width=1326&format=png&auto=webp&s=c9050529c6e2472a3ff9f8e7137bd4a3ee5554cc Once I see price making the first sell-off move and then begin to rally towards the highs again, I am waiting for a washout spike low. The common trades mistakes I am trading against here is them being too eager to buy into the trend too early and for the to get stopped out/reverse position when it looks like it is making another bearish breakout. Right at that point they panic … literally one candle under there is where I want to be getting in. I want to be buying their stop loss, essentially. “Oh, you don’t want that ...okay, I will have that!” I need a precise entry. I want to use tiny stops (for big RR) so I need to be cute with entries. For this, I need entry rules. Not just arbitrarily buying the spike out. There are a few moving parts to this that are outside the scope of this post but one of my mains ways is using a fibs extension and looking for reversals just after the 1.61% level. How to draw the fibs is something else that is outside the scope of this but for one simple rule, they can be drawn on the failed new high leg. https://preview.redd.it/2cd682kve2721.png?width=536&format=png&auto=webp&s=f4d081c9faff49d0976f9ffab260aaed2b570309 I am looking for a few specific things for a prime setup. Firstly, I am looking for the false hope candles, the ones that look like they will reverse the market and let those buying too early get out break-even or even at profit. In this case, you can see the hammer and engulfing candle off the 127 level, then it spikes low in that “stop-hunt” sort of style. Secondly I want to see it trading just past my entry level (161 ext). This rule has come from nothing other than sheer volume. The amount of times I’ve been stopped out by 1 pip by that little sly final low has gave birth to this rule. I am looking for the market to trade under support in a manner that looks like a new strong breakout. When I see this, I am looking to get in with tiny stops, right under the lows. I will also be using smaller charts at this time and looking for reversal clusters of candles. Things like dojis, inverted hammers etc. These are great for sticking stops under. Important note, when the lightning bolt correction fails to be a good entry, I expect to see another two legs down. I may look to sell into this area sometimes, and also be looking for buying on another couple legs down. It is important to note, though, when this does not work out, I expect there to be continued momentum that is enough to stop out and reasonable stop level for my entry. Which is why I want to cut quick. If a 10 pips stop will hit, usually a 30 pips stop will too. Bin it and look for the next opportunity at better RR. https://preview.redd.it/mhkgy35ze2721.png?width=1155&format=png&auto=webp&s=a18278b85b10278603e5c9c80eb98df3e6878232 Another setup I am watching for is harmonic patterns, and I am using these as a multi-purpose indicator. When I see potentially harmonic patterns forming, I am using their completion level as take profits, I do not want to try and run though reversal patterns I can see forming hours ahead of time. I also use them for entering (similar rules of looking for specific entry criteria for small stops). Finally, I use them as a continuation pattern. If the harmonic pattern runs past the area it may have reversed from, there is a high probability that the market will continue to trend and very basic trend following strategies work well. I learned this from being too stubborn sticking with what I thought were harmonic reversals only to be ran over by a trend (seriously, everything I know I know from how it used to make me lose). https://preview.redd.it/1ytz2431f2721.png?width=1322&format=png&auto=webp&s=983a7f2a91f9195004ad8a2aa2bb9d4d6f128937 A method of spotting these sorts of M/W harmonics is they tend to form after a second spike out leg never formed. When this happens, it gives me a really good idea of where my profit targets should be and where my next big breakout level is. It is worth noting, larger harmonics using have small harmonics inside them (on lower time-frames) and this can be used for dialling in optimum entries. I also use harmonics far more extensively in ranging markets. Where they tend to have higher win rates. Next setup is the good old fashioned double bottoms/double top/one tick trap sort of setup. This comes in when the market is highly over extended. It has a small sell-off and rallies back to the highs before having a much larger sell-off. This is a more risky trade in that it sells into what looks like trending momentum and can be stopped out more. However, it also pays a high RR when it works, allowing for it to be ran at reduced risk and still be highly profitable when it comes through. https://preview.redd.it/1bx83776f2721.png?width=587&format=png&auto=webp&s=2c76c3085598ae70f4142d26c46c8d6e9b1c2881 From these sorts of moves, I am always looking for a follow up buy if it forms a lightning bolt sort of setup. All of these setups always offer 1:3 or better RR. If they do not, you are doing it wrong (and it will be your stop placement that is wrong). This is not to say the target is always 1:3+, sometimes it is best to lock in profits with training stops. It just means that every time you enter, you can potentially have a trade that runs for many times more than you risked. 1:10 RR can be hit in these sorts of setups sometimes. Paying you 20% for 2% risked. I want to really stress here that what I am doing is trading against small traders mistakes. I am not trying to “beat the market maker”. I am not trying to reverse engineer J.P Morgan’s black boxes. I do not think I am smart enough to gain a worthwhile edge over these traders. They have more money, they have more data, they have better softwares … they are stronger. Me trying to “beat the market maker” is like me trying to beat up Mike Tyson. I might be able to kick him in the balls and feel smug for a few seconds. However, when he gets up, he is still Tyson and I am still me. I am still going to be pummeled. I’ve seen some people that were fairly bright people going into training courses and coming out dumb as shit. Thinking they somehow are now going to dominate Goldman Sachs because they learned a chart pattern. Get a grip. For real, get a fucking grip. These buzz phrases are marketeering. Realististically, if you want to win in the markets, you need to have an edge over somebody. I don’t have edges on the banks. If I could find one, they’d take it away from me. Edges work on inefficiencies in what others do that you can spot and they can not. I do not expect to out-think a banks analysis team. I know for damn sure I can out-think a version of me from 5 years ago … and I know there are enough of them in the markets. I look to trade against them. I just look to protect myself from the larger players so they can only hurt me in limited ways. Rather than letting them corner me and beat me to a pulp (in the form of me watching $1,000 drop off my equity because I moved a stop or something), I just let them kick me in the butt as I run away. It hurts a little, but I will be over it soon. I believe using these principles, these three simple enough edge entry setups, selectiveness (remembering you are trading against the areas people make mistakes, wait for they areas) and measured aggression a person can make impressive compounded gains over a year. I will attempt to demonstrate this by taking an account of under $100 to over $1,000 in a year. I will use max 10% on risk on a position, the risk will scale down as the account size increases. In most cases, 5% risk per trade will be used, so I will be going for 10-20% or so profits. I will be looking only for prime opportunities, so few trades but hard hitting ones when I take them. I will start trading around the 10th January. Set remind me if you want to follow along. I will also post my investor login details, so you can see the trades in my account in real time. Letting you see when I place my orders and how I manage running positions. I also think these same principles can be tweaked in such a way it is possible to flip $50 or so into $1,000 in under a month. I’ve done $10 to $1,000 in three days before. This is far more complex in trade management, though. Making it hard to explain/understand and un-viable for many people to copy (it hedges, does not comply with FIFO, needs 1:500 leverage and also needs spreads under half a pip on EURUSD - not everyone can access all they things). I see all too often people act as if this can’t be done and everyone saying it is lying to sell you something. I do not sell signals. I do not sell training. I have no dog in this fight, I am just saying it can be done. There are people who do it. If you dismiss it as impossible; you will never be one of them. If I try this 10 times with $50, I probably am more likely to make $1,000 ($500 profit) in a couple months than standard ideas would double $500 - I think I have better RR, even though I may go bust 5 or more times. I may also try to demonstrate this, but it is kinda just show-boating, quite honestly. When it works, it looks cool. When it does not, I can go bust in a single day (see example https://www.fxblue.com/users/redditmicroflip). So I may or may not try and demonstrate this. All this is, is just taking good basic concepts and applying accelerated risk tactics to them and hitting a winning streak (of far less trades than you may think). Once you have good entries and RR optimization in place - there really is no reason why you can not scale these up to do what may people call impossible (without even trying it). I know there are a lot of people who do not think these things are possible and tend to just troll whenever people talk about these things. There used to be a time when I’d try to explain why I thought the way I did … before I noticed they only cared about telling me why they were right and discussion was pointless. Therefore, when it comes to replies, I will reply to all comments that ask me a question regarding why I think this can be done, or why I done something that I done. If you are commenting just to tell me all the reasons you think I am wrong and you are right, I will probably not reply. I may well consider your points if they are good ones. I just do not entering into discussions with people who already know everything; it serves no purpose. Edit: Addition. I want to talk a bit more about using higher percentage of risk than usual. Firstly, let me say that there are good reasons for risk caps that people often cite as “musts”. There are reasons why 2% is considered optimum for a lot of strategies and there are reasons drawing down too much is a really bad thing. Please do not be ignorant of this. Please do not assume I am, either. In previous work I done, I was selecting trading strategies that could be used for investment. When doing this, my only concern was drawdown metrics. These are essential for professional money management and they are also essential for personal long-term success in trading. So please do not think I have not thought of these sorts of things Many of the reasons people say these things can’t work are basic 101 stuff anyone even remotely committed to learning about trading learns in their first 6 months. Trust me, I have thought about these concepts. I just never stopped thinking when I found out what public consensus was. While these 101 rules make a lot of sense, it does not take away from the fact there are other betting strategies, and if you can know the approximate win rate and pay-off of trades, you can have other ways of deriving optimal bet sizes (risk per trade). Using Kelly Criterion, for example, if the pay-off is 1:3 and there is a 75% chance of winning, the optimal bet size is 62.5%. It would be a viable (high risk) strategy to have extremely filtered conditions that looked for just one perfect set up a month, makingover 150% if it was successful. Let’s do some math on if you can pull that off three months in a row (using 150% gain, for easy math). Start $100. Month two starts $250. Month three $625. Month three ends $1,562. You have won three trades. Can you win three trades in a row under these conditions? I don’t know … but don’t assume no-one can. This is extremely high risk, let’s scale it down to meet somewhere in the middle of the extremes. Let’s look at 10%. Same thing, 10% risk looking for ideal opportunities. Maybe trading once every week or so. 30% pay-off is you win. Let’s be realistic here, a lot of strategies can drawdown 10% using low risk without actually having had that good a chance to generate 30% gains in the trades it took to do so. It could be argued that trading seldomly but taking 5* the risk your “supposed” to take can be more risk efficient than many strategies people are using. I am not saying that you should be doing these things with tens of thousands of dollars. I am not saying you should do these things as long term strategies. What I am saying is do not dismiss things out of hand just because they buck the “common knowns”. There are ways you can use more aggressive trading tactics to turn small sums of money into they $1,000s of dollars accounts that you exercise they stringent money management tactics on. With all the above being said, you do have to actually understand to what extent you have an edge doing what you are doing. To do this, you should be using standard sorts of risks. Get the basics in place, just do not think you have to always be basic. Once you have good basics in place and actually make a bit of money, you can section off profits for higher risk versions of strategies. The basic concepts of money management are golden. For longevity and large funds; learned them and use them! Just don’t forget to think for yourself once you have done that. Update - Okay, I have thought this through a bit more and decided I don't want to post my live account investor login, because it has my full name and I do not know who any of you are. Instead, for copying/observing, I will give demo account login (since I can choose any name for a demo). I will also copy onto a live account and have that tracked via Myfxbook. I will do two versions. One will be FIFO compliant. It will trade only single trade positions. The other will not be FIFO compliant, it will open trades in batches. I will link up live account in a week or so. For now, if anyone wants to do BETA testing with the copy trader, you can do so with the following details (this is the non-FIFO compliant version). Account tracking/copying details. Low-Medium risk. IC Markets MT4 Account number: 10307003 Investor PW:lGdMaRe6 Server: Demo:01 (Not FIFO compliant) Valid and Invalid Complaints. There are a few things that can pop up in copy trading. I am not a n00b when it comes to this, so I can somewhat forecast what these will be. I can kinda predict what sort of comments there may be. Some of these are valid points that if you raise I should (and will) reply to. Some are things outside of the scope of things I can influence, and as such, there is no point in me replying to. I will just cover them all here the one time. Valid complains are if I do something dumb or dramatically outside of the strategy I have laid out here. won't do these, if I do, you can pitchfork ----E Examples; “Oi, idiot! You opened a trade randomly on a news spike. I got slipped 20 pips and it was a shit entry”. Perfectly valid complaint. “Why did you open a trade during swaps hours when the spread was 30 pips?” Also valid. “You left huge trades open running into the weekend and now I have serious gap paranoia!” Definitely valid. These are examples of me doing dumb stuff. If I do dumb stuff, it is fair enough people say things amounting to “Yo, that was dumb stuff”. Invalid Complains; “You bought EURUSD when it was clearly a sell!!!!” Okay … you sell. No-one is asking you to copy my trades. I am not trading your strategy. Different positions make a market. “You opened a position too big and I lost X%”. No. Na uh. You copied a position too big. If you are using a trade copier, you can set maximum risk. If you neglect to do this, you are taking 100% risk. You have no valid compliant for losing. The act of copying and setting the risk settings is you selecting your risk. I am not responsible for your risk. I accept absolutely no liability for any losses. *Suggested fix. Refer to risk control in copy trading software “You lost X trades in a row at X% so I lost too much”. Nope. You copied. See above. Anything relating to losing too much in trades (placed in liquid/standard market conditions) is entirely you. I can lose my money. Only you can set it up so you can lose yours. I do not have access to your account. Only mine. *Suggested fix. Refer to risk control in copy trading software “Price keeps trading close to the pending limit orders but not filling. Your account shows profits, but mine is not getting them”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. * Suggested fix. Compare the spread on your broker with the spread on mine. Adjust your orders accordingly. Buy limit orders will need to move up a little. Sell limit orders should not need adjusted. “I got stopped out right before the market turned, I have a loss but your account shows a profit”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there differences in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. ** Suggested fix. Compare the spread on your broker with the spread on mine. Adjust your orders accordingly. Stop losses on sell orders will need to move up a bit. Stops on buy orders will be fine. “Your trade got stopped out right before the market turned, if it was one more pip in the stop, it would have been a winner!!!” Yeah. This happens. This is where the “risk” part of “risk:reward” comes in. “Price traded close to take profit, yours filled but mines never”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there differences in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. (Side note, this should not be an issue since when my trade closes, it should ping your account to close, too. You might get a couple less pips). *** Suggested fix. Compare the spread on your broker with the spread on mine. Adjust your orders accordingly. Take profits on buys will need to move up a bit. Sell take profits will be fine. “My brokers spread jumped to 20 during the New York session so the open trade made a bigger loss than it should”. Your broker might just suck if this happens. This is brokerage. I have no control over this. My trades are placed to profit from my brokerage conditions. I do not know, so can not account for yours. Also, if accounting for random spread spikes like this was something I had to do, this strategy would not be a thing. It only works with fair brokerage conditions. *Suggested fix. Do a bit of Googling and find out if you have a horrific broker. If so, fix that! A good search phrase is; “(Broker name) FPA reviews”. “Price hit the stop loss but was going really fast and my stop got slipped X pips”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there differences in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. If my trade also got slipped on the stop, I was slipped using ECN conditions with excellent execution; sometimes slips just happen. I am doing the most I can to prevent them, but it is a fact of liquidity that sometimes we get slipped (slippage can also work in our favor, paying us more than the take profit would have been). “Orders you placed failed to execute on my account because they were too large”. This is brokerage. I have no control over this. Margin requirements vary. I have 1:500 leverage available. I will not always be using it, but I can. If you can’t, this will make a difference. “Your account is making profits trading things my broker does not have” I have a full range of assets to trade with the broker I use. Included Forex, indices, commodities and cryptocurrencies. I may or may not use the extent of these options. I can not account for your brokerage conditions. I think I have covered most of the common ones here. There are some general rules of thumb, though. Basically, if I do something that is dumb and would have a high probability of losing on any broker traded on, this is a valid complain. Anything that pertains to risk taken in standard trading conditions is under your control. Also, anything at all that pertains to brokerage variance there is nothing I can do, other than fully brief you on what to expect up-front. Since I am taking the time to do this, I won’t be a punchbag for anything that happens later pertaining to this. I am not using an elitist broker. You don’t need $50,000 to open an account, it is only $200. It is accessible to most people - brokerage conditions akin to what I am using are absolutely available to anyone in the UK/Europe/Asia (North America, I am not so up on, so can’t say). With the broker I use, and with others. If you do not take the time to make sure you are trading with a good broker, there is nothing I can do about how that affects your trades. I am using an A book broker, if you are using B book; it will almost certainly be worse results. You have bad costs. You are essentially buying from reseller and paying a mark-up. (A/B book AKA ECN/Market maker; learn about this here). My EURUSD spread will typically be 0.02 pips or so, if yours is 1 pip, this is a huge difference. These are typical spreads I am working on. https://preview.redd.it/yc2c4jfpab721.png?width=597&format=png&auto=webp&s=c377686b2485e13171318c9861f42faf325437e1 Check the full range of spreads on Forex, commodities, indices and crypto. Please understand I want nothing from you if you benefit from this, but I am also due you nothing if you lose. My only term of offering this is that people do not moan at me if they lose money. I have been fully upfront saying this is geared towards higher risk. I have provided information and tools for you to take control over this. If I do lose people’s money and I know that, I honestly will feel a bit sad about it. However, if you complain about it, all I will say is “I told you that might happen”, because, I am telling you that might happen. Make clear headed assessments of how much money you can afford to risk, and use these when making your decisions. They are yours to make, and not my responsibility. Update. Crazy Kelly Compounding: $100 - $11,000 in 6 Trades. $100 to $11,000 in 6 trades? Is it a scam? Is it a gamble? … No, it’s maths. Common sense risk disclaimer: Don’t be a dick! Don’t risk money you can’t afford to lose. Do not risk money doing these things until you can show a regular profit on low risk. Let’s talk about Crazy Kelly Compounding (CKC). Kelly criterion is a method for selecting optimal bet sizes if the odds and win rate are known (in other words, once you have worked out how to create and assess your edge). You can Google to learn about it in detail. The formula for Kelly criterion is; ((odds-1) * (percentage estimate)) - (1-percent estimate) / (odds-1) X 100 Now let’s say you can filter down a strategy to have a 80% win rate. It trades very rarely, but it had a very high success rate when it does. Let’s say you get 1:2 RR on that trade. Kelly would give you an optimum bet size of about 60% here. So if you win, you win 120%. Losing three trades in a row will bust you. You can still recover from anything less than that, fairly easily with a couple winning trades. This is where CKC comes in. What if you could string some of these wins together, compounding the gains (so you were risking 60% each time)? What if you could pull off 6 trades in a row doing this? Here is the math; https://preview.redd.it/u3u6teqd7c721.png?width=606&format=png&auto=webp&s=3b958747b37b68ec2a769a8368b5cbebfe0e97ff This shows years, substitute years for trades. 6 trades returns $11,338! This can be done. The question really is if you are able to dial in good enough entries, filter out enough sub-par trades and have the guts to pull the trigger when the time is right. Obviously you need to be willing to take the hit, obviously that hit gets bigger each time you go for it, but the reward to risk ratio is pretty decent if you can afford to lose the money. We could maybe set something up to do this on cent brokers. So people can do it literally risking a couple dollars. I’d have to check to see if there was suitable spreads etc offered on them, though. They can be kinda icky. Now listen, I am serious … don’t be a dick. Don’t rush out next week trying to retire by the weekend. What I am showing you is the EXTRA rewards that come with being able to produce good solid results and being able to section off some money for high risk “all or nothing” attempts; using your proven strategies. I am not saying anyone can open 6 trades and make $11,000 … that is rather improbable. What I am saying is once you can get the strategy side right, and you can know your numbers; then you can use the numbers to see where the limits actually are, how fast your strategy can really go. This CKC concept is not intended to inspire you to be reckless in trading, it is intended to inspire you to put focus on learning the core skills I am telling you that are behind being able to do this.
Forex is the short way of saying “Foreign Exchange”. This means the global market for exchanging international currencies, also known as the FX market. When someone prices or exchanges a currency against another, the exchange rate is best on the particular forex trading pair (i.e., both currencies involved in the pair). Currency pairs are typically priced out to four decimal places, depending on the currency denomination, where one ten-thousandth of a unit of currency is known as a pip (i.e., 0.0001 unit), which is the smallest price increment (in addition to fractional-pips). The EUUSD, which is the most widely-traded forex pair, is an example of the Euro (EUR) currency against the US dollars (USD) currency. When trading one unit of EUUSD, you can calculate the price in USD (i.e., a price of EUUSD 1.3000 indicates $1.30 per euro). Conversely, when exchanging the USD/EUR, each unit of USD (i.e. each dollar) will have the prace of a specific number of euros (i.e., a USD/EUR price of 0.7700 indicates €0.77 per dollar). A speculator expecting the price of the EUUSD to go up. He will buy the EUUSD pair long (buying a pair to open a trade can be a bullish or long position). Whereas, a speculator anticipating a drop in the price of the EUUSD may sell the pair. (bearish or short position: selling to open a trade).
Largest international market Globally
The forex market is decentralized across the globe. It consists of dealers such as central banks, private and public banks, non-bank intermediaries, brokerages, and large corporations such as insurance giants and other participants engaged in international finance.
TheForeign Exchange marketis the largest globally, with nearly $6 trillion in average daily volume traded as of April 2019, according to the latestBISTriennial Survey of Central Banks.
The FX market suffers the influence mainly by each government’s monetary policy, the supply, and demand of the global economy. As well as international trade agreements, and users and suppliers of currencies (hedgers), in addition to speculators.
Market integrity and progress
While there have been cases of forex market manipulation by the biggest banks and dealers in the past, the amount of influence any one entity can have on the prices of major currencies is negligible. This resistance to serious manipulation risk is due to the enormous amount of trading and resulting liquidity available. The FX Market itself has high price integrity. Because it is an electronic market, efficient and with a certain size. Participants must still adhere to best practices.
Efforts such as theGlobal FX codewere launched to encourage forex dealers to uphold the best-execution where the best price available is given to traders.
These efforts are why the spreads and trading commissions continued to improve over the years, as the FX market evolved. In addition, regulators have competed to increase local market integrity and efficiency by creating more strict regulations. These come from the top-tier financial centers such as the US, UK, Singapore, Japan, Australia, among other advanced economies.
Investing and trading in the forex market
As an asset class, Forex is well-established and offered by many regulated brokerages from within a margin account.
The use of leverage is what makes forex trading more risky than non-margin investing.
Margin-based trading used by investors as well as self-directed traders and fund managers, thanks to the range of risk-management tools available within forex trading platforms (mobile, web, and desktop software). Wiseinvest provides trading signals with risk-management.
Forex market research and analysis
There are two primary ways for traders to assess and identify trading opportunities in the forex market.
One is through the use of fundamental analysis, which looks at economic news and data released by governmental agencies, as well as market sentiment data.
The second is through technical analysis, which pertains to the historical and current market price of the underlying currency.
Advanced forex trading strategies and algorithms
The foundation of successful trading in the forex market is having a trading strategy. It’s based on a specific methodology that best suits your trading needs. Strategies could be manual, automated, or a combination of both.
Over the past decade, there has been a proliferation of automated trading strategies made available for retail traders.
And while there are many serious traders with established track records for their trading systems, there are many more low-quality trading systems falsely marketed as high-quality by overly eager affiliates, making it harder for investors to navigate the market for trading signals.
There has also been an increase in the social copy trade. Where an operator can mimic other operators’ businesses in real time.
Whether using a copy-trading platform or an automated trading system, in almost all cases, this type of investing is considered self-directed and doesn’t require a power-of-attorney or another third-party money manager to handle your account. Unlike other copy and social trading platforms, Wiseinvet’s AI has the ability to execute a huge set of market data. It does by combining technical and fundamental analysis. This strategy can increase the accuracy of trading signals.
Self-directed forex investors
Compared to investing in a managed fund, there is greater responsibility. Traders put it on self-directed traders who use trading systems. A self-directed trader should conduct more detailed due diligence. It can avoid falling for the countless low-quality trading systems that exist on the internet.
Good quality trading systems will have established track records (historical results), and there will be other quantitative performance rankings, along with qualitative data about the strategy developers and any proprietary math used to operate the strategy.
Bad quality trading systems will usually promise high returns will not equally emphasizing potential risk.
There are no guarantees that a strategy will perform well. But conducting proper due diligence can help traders assess various trading systems. They consider using them to aid their trading or investment strategy.
The Path To Crypto Trading Starts With Knowledge: A Brief Guide To Crypto Trading
Trading cryptocurrencies has come into fad over the last few years and become a relatively good means of earning for both professional traders and enthusiasts. If we look at the price charts that have been compiled over the years by a variety of channels, we can see that the crypto market is exhibiting the market dynamics and fluctuations much like those that can be found on traditional markets. This makes it clear that the presence of volatility on the crypto market makes it a profitable area for trading. Of course, the main question that arises in the minds of most aspiring crypto traders is how to make money trading cryptocurrencies. For this reason, many seek to learn how to day trade cryptocurrencies. Anyone willing to make the effort can truly find opportunities there. For instance, the exchange rate of BTC has grown from about $800 in 2013 to over $6,000 in 2019, after having spiked in price to over $20,000 in 2017. Ethereum was just as remarkable in its dynamics after having gone to $0.57 in 2014 to $1,180 in 2017 to $171 in 2019. Ripple was just as dynamic, going from $0.02 in 2014 to $0.32 in 2019. If that is not volatility, then we don’t know what is. This makes the crypto market one of the best avenues for risky traders seeking to make their fortunes. But mastering how to make those fortunes is over half the matter. https://preview.redd.it/bajehrv10m541.png?width=541&format=png&auto=webp&s=8be0fe84df20245d6db0d64f44aedca2047d27fc
How To Start Trading Cryptocurrencies
Anyone who wants to sink their teeth into the juicy cake of crypto trading has to first realize where cryptos are traded. Like every other financial instrument put up for trading, cryptocurrencies are placed on exchanges. The crypto market is host to over 200 exchanges, some more reputable than others. Among some of the best and renowned are Binance,BitMex, Bittrex, Huobi, Coinbase and many others. Unlike traditional exchanges on Wall Street, crypto exchanges are divided into two types – centralized and decentralized. Both work on blockchain technologies and provide almost the same level of convenience, depending on the offered instruments and the architecture of user interface. However, some exchanges are decentralized, meaning that they do not store any of the user’s information, including the wallets on any of their servers or systems and resort to external services in this regard. Decentralized exchanges do not require any intermediaries to conduct any operations and perform all the order matching themselves. On the other hand, centralized exchanges resort to a number of intermediary services to conduct their operations. The intermediaries provide anything from order matching to user wallet storage. This makes centralized exchanges much riskier and more expensive compared to their decentralized counterparts. Despite the obvious differences in platform structure, there is also the issue of convenience. Most decentralized exchanges have horrible user interfaces and are much more difficult to master. But when it comes to speeds, centralized exchanges win over their decentralized counterparts, since their platforms are better suited for transactions. Though there are tendencies of reversing the issue, the situation still remains in favor of centralized exchanges. Centralized exchanges win over decentralized ones in another important factor that is vital for trading – liquidity. Decentralized exchanges cannot compete with centralized ones in volumes of trading. However, decentralized exchanges win over in an almost complete lack of commissions and security, since they do not rely on any intermediaries. When dealing with crypto exchanges, traders also need to know how crypto trading bots work. This is because bots are allowed on crypto exchanges facilitate trading considerably. When resorting to bots, it is important to first analyze the exchanges and understand which ones offer the best instruments for convenient trading. Given the many restrictions placed on cryptocurrency trading in some countries, many traders would ask how to trade cryptocurrencies in the US. The issue is not as complicated as it might seem, since most reputable exchanges, like Binance and others operate legally on the US market. It is therefore necessary for traders to research their platforms of choice before using them to make sure they comply with US laws.
How To Trade Cryptocurrencies
Trading cryptocurrencies is done almost in exactly the same way as with other financial instruments – through the application of a variety of strategies. The main strategies on the crypto market are much like those on other markets, such as Forex, and they include: Scalping – the launch of a very large number of small orders for the purpose of making small profits in bulk, rather than waiting for one large win. Intraday – this is the basic form of trading which involves placing orders during trading hours and buying and selling assets. This is the base strategy for fixing profits during the same day without risking off-hour volatility. Investing – both long and short term investing is also a type of trading strategy, which involves waiting for an asset’s price to move (preferably up) and fixing the resulting profits. There are dozens of trading strategies on the market and MoonTrader will allow its users to make use of all of them through its convenient interface. How To Trade Bitcoin Bitcoin is the most coveted coin out there with its volatility being its main allure and bane. The first and main question posed by any starting trader is how to trade Bitcoin for profit. In fact, this question is often associated with the question of how to become a Bitcoin trader, which in itself is a rather false view on the crypto market, since the latter is much bigger than Bitcoin alone. The issue of how Bitcoin trading works is largely a reflection of any trading process on the market and does not involve any special circumstances apart from the asset’s volatility. Trading Bitcoin is done exactly the same way as with any other crypto asset. But with trading BTC comes the question of how to automate Bitcoin trading. This is where traders must first realize that their exchange of choice and strategy will be the determining factors in the question of automation and the use of bots. How to trade Ethereum Ethereum is the second most popular name on the market after Bitcoin and is traded in exactly the same way. Ethereum is considered to be a less risky asset, since its prices are lower and it is far more commonly encountered than its more expensive counterpart. How To Trade Ripple Ripple is the third most frequently encountered name on most crypto asset charts, mostly because of its relatively low volatility and popularity as an instrument for transactions used by some banks. The confidence that traders have in Ripple and its low price makes it a favorite for beginning traders and a low-cost option for scalping orders. https://preview.redd.it/vl0e1bo90m541.jpg?width=1254&format=pjpg&auto=webp&s=5b51c59dfa22fc8f4319207d11b3c51e85d24cd5
Learning How To Trade Cryptocurrency
The biggest challenge facing any aspiring trader who wishes to join the crypto market and start trading Bitcoin and other assets is learning how to do it properly. In fact, reading is the only way followed by a gradual and phased transition from test trading to real trading. The process may well be painful at first, but experience counts the most in trading. MoonTrader knows all too well how difficult it may be to learn the ropes of crypto trading, so the platform is delighted to present an entire block of content devoted exclusively to educational content. The https://moontrader.com/en/category/beginners-guide-to-trading-crypto/ section offers accessible, clear and valuable insight into the steps necessary to start the journey into crypto trading.
Crypto trading is not without its risks. The market is inherently risky for a number of factors. Ironically, the profit making factor of volatility is also the factor that can reduce profits to losses. When embarking on the journey of crypto trading, aspiring traders must realize and ascertain the risks involved and consciously undertake all of their next steps. The best step to take is to create a trading strategy first and rely on one of the most important instruments available on the market – the margin. By trading with a margin, traders can minimize their losses and ensure a great enough volume of trading. Binance Futures, for example, offers a large variety of margins from x1 to x125 to ensure that traders have the necessary leverage to trade effectively. It is important to note that margin trading is an advanced instrument and cannot be reliable enough for novice traders. As such, MoonTrader encourages aspiring traders to refrain from margin trading until they are confident enough to risk greater volumes of assets during trading.
Keep It Going
Learning is the process of acquiring experience and the latter counts the most in trading. Before embarking on the path of trading cryptocurrencies, traders must first compile a large enough amount of knowledge that they will be able to rely upon in the variety of situations that can arise on the market. First and foremost, it is vital to refrain from negative sentiment and look ahead into brighter prospects. Secondly, aspiring traders must study the market and find a suitable platform. Thirdly, novice traders must build a strategy that suits their characters and styles and make sure to abide by it. Once that has been mastered, they can start delving into the more advanced aspects of trading. Whatever path traders take, MoonTrader will be there to help them with both information and instruments to make sure their trading is profitable and enjoyable. Check us out at https://moontrader.io Facebook: https://www.facebook.com/MoonTraderPlatform Twitter: https://twitter.com/MoonTrader_io LinkedIn: https://www.linkedin.com/company/19203733 Reddit: https://www.reddit.com/Moontrader_official/ Telegram: https://t.me/moontrader_news_en Originally posted on our blog.
Is forex trading more profitable than stock trading?
To answer this let’s consider, leverage and margin requirement for both. Leverage is higher in FX, in the US it is 50–1 in the UK and Europe it as high as 1000–1. These leverage ratios make FX appear to be very profitable as you can make money on a large amount of burrowed liquidity. This high leverage and implied volatility means that you will still need a lot of capital to truly take advantage of the leverage. In stocks there is no leverage so you need the cash upfront, this creates a barrier to entry. If you wished to buy Boeing stock you can buy 1 share for a little over $100, if you wanted 1000 shares then you need $100,000. You can however trade stock CFD’s but these are rare with many retail brokers. Stocks are more volatile so the profit potential is higher. As an example I purchased Cosan shares (CZZ) at $2.83, they are now worth over $5 a share and that was under 3 months, so a 100% return in under 3 months. This is not really feasible in FX, volatility is just not the same but none the less this can be done if you trade Option derivatives for example. At thewww.LiveTraders.comwe talk a lot about PROFITS AND LOSSES. If you are interested in Live Trading and other forex trading methods then take a look at the LiveTraders.
Valuable information for new investors Warning. Looooong post. TL:DR in the bottom. Recently I have been chatting a ton with people who are very new to investing. I don’t claim to have mastered anything, however I have been able to help a lot of people through chats and messages. I’ve given advice and answered questions, and through that I found out a lot of problems new people run into, and decided to compile some of the points I found important. I will start this with the primary compiled information I usually give people when prompted, and then move on to specific questions I found important. A final note is that this is my own opinion and views, so feel free to disagree! I’d love input, even if I feel confident about this advice. First off I’d recommend searching for posts about starting out & learning the basics, both here and on other investing/trading subreddits. The question has been asked hundreds of times, and you’ll find some amazing answers if you look. The first thing you need to understand is that finance is all about information. If you want to learn, you need to take in information. All of the information. Books, news, financial statements, press releases and earning calls. Read everything. You will find hundreds of words you don’t understand, so look them up (investopedia have a majority of them). In the beginning you will struggle, however, as time goes by, you will start to understand. If you do not like reading, learn to like it. There is no way around this. If you find yourself investing without reading tons, you are going to lose. Books to recommend: Anything written by Warren Buffet, A random walk down wall street by Burton Malkiel (how I started), Stress test by Timothy Geithner & The intelligent investor (“thick” but all important). Pick out your favorite company in the world, and check if they are public. If they are, head over to their investor relations page and read the transcript to their latest earnings call. Read their financial statement (10-Q). If you don’t understand a word, look it up. This is frustrating but required. This method of reading, finding things you do not understand and looking it up (and learning it), will be the absolute unavoidable key to improvement. There are 3 things you should consider buying as your first investment: Large cap companies. These are the most risky you should consider buying. These large companies (Apple, Banks, Microsoft, 3M, JnJ, Walmart and the like) are stable, but can for sure give you a great return. Specific ETFs. An ETF is a basket of stocks, often with some sort of focus. It gives you instant diversification. The specific ETFs are less risky than the single stocks, but hold risk nonetheless. Specific ETFs are baskets of stocks of varying number, letting you buy one security, and get a tiny portion of many companies. This lets you bet on a sector. Say you think that robotics and automation is the future, you can bet on that by investing in $ROBO. Other examples of these are $KWEB, chinese e-com, $FNG, media and tech, $ITA, aerospace and defence and $SOXX, semiconductors. These let you invest in a promising industry, without having the risk of a single company failing. Lastly, and by far the best choice, is indexing. These are ETFS like $VOO, $VTI, $VWO and $VOOG, and is a way to take on the least amount of risk while still gaining along with the market. You get a wide basket of stocks, focusing on things like the S&P500 ($VOO), which is an index of large (minimum 6.1 billion USD) US companies. Historically , you can expect 7% annual gain here. That’s realistic. Anything offering much more than that without risk has tons of risk without disclosing it, per definition. $VOOG indexes growth companies, focusing less on the giants and more on the up and coming. $VWO focuses on emerging markets, getting places like brazil, russia and all over asia. Indexing is by far the best choice, and will very often gain you a steady growth. The final and great choice is $VTI, which is the global basket which contains the market as a whole. Remember, if you have to ask simple questions, you should be indexing. Asking questions is very important and a great way to learn, however, you should not make specific investments unless you can make the call 100% yourself with confidence. If you are not sure, you are making a mistake in purchasing. Lastly, and honestly most importantly, here is a list of things you should ALWAYS be able to answer before buying a security, equity or derivative:
Why am I getting this instead of an index? Where is the upside?
If the stock goes up, what action do I take? When do I sell? At what price or % gain.
If the stock goes down, when do I sell? At what % loss or a price.
What risks are there? How does the worst case realistic scenario look like?
Why am I making this investment right now? Is there a better time?
What exactly am I buying?*
And finally, always, without exception, perform your own Due Diligence. Don’t take advice from other people without understanding the situation yourself. If you have to ask questions, you should not own the equity. Ask about what you do not own. If you have to ask questions about an equity you already own, you have messed up, and should rethink your strategy. A last but VITAL note is to keep a journal. You should note down every stock purchase you make or decided to not make, noting down the stock, price, date and answers to the 6 questions. This will help massively over time, where you can look back how you felt before and why you made decisions. It helps to keep temporary emotion out, as well as self reflecting which is the most vital learning method of any craft. Q&A Should I buy cheap stocks like $XXX for 4 dollars per share, or expensive stocks like $YYY for 500 dollars per share? IT DOES NOT MATTER. The price of the individual share have no effect whatsoever on the price of the company, how much you will gain or how much risk there is. If you buy 10 A-stocks for 1 dollashare, and if you buy 1 B-stock for 10 dollars/share, both these purchases are EXACTLY the same, in practice. If stock A gains 10% you earn $1.00, if stock B gains 10% you earn $1.00. Then the stocks are valued at $1.1 and $11 respectively. But there is no different. Don’t let the price of the share fool you. The only thing that matters is the market cap, which is the (number of shares*price of 1 share). The market cap is the cost of ALL the shares in the entire company. Some stocks like being expensive to seem exclusive and expensive, but it’s really the company's choice. What numbers matter the most for the companies so I can compare? Well, that's complicated. DIfferent investors value different things. Some value P/E (price per earnings) and some value margin changes. You have to decide for yourself what matters, which leads to tons and tons of reading. Really, if you don't like reading and analyzing, this isn't something for you. Look at ETFs then. As a rule of thumb, 1 or 2 numbers is not enough to gauge the HUGE and COMPLEX being that is a corporation, so don’t get caught on something like P/E. Compare everything. Will I be able to profit? Probably. As a new investor, especially a young one, will see both success and failure over time. This is natural. I recommend investing a smaller amount of money. Either you will gain a few % and be excited to learn and continue, or you will lose a few % and you find the ultimate opportunity to analyze what your mistake was. Is $XXX enough money? Probably. It depends on your broker and fees. Any amount invested into the market is great, and a 10% increase is a 10% increase no matter how much you invest. Depending on your broker though, it might be easier or harder. With high commission, a smaller amount will be eaten by fees. With smaller amount, some expensive stocks (see $BRK.A) might be out of your reach. This shouldn’t be too much of a problem though. What broker should I use? The best one for you! Hard question. It is country dependent. Look around. You want low commission and any perks you require. To start out, depending on how much money you have to invest, look for low-commission brokers. $0 - $3 is a good range per stock purchase. If you pay more than 2% on your investment, you lose 2% to buy in. This would generally cause stock to not be worth to buy. So do some thinking on your own, to invest you will have to get used to it. Some brokers let you buy partial shares as well, which might be a plus if your capital is low to buy the more expensive stocks. What should I invest in? There are so many things! Like said above, cheap funds and common stock are good places to start. They are the core of investing, and should be your start. After that, move on and understand bonds. It will be all important during your career in investing. On top of that there are warrants, options, forex, commodities, and all kinds of additional derivatives. Stay clear of those completely until you can confidently make the call to try it out. My stock increased/decreased in value. Should I sell? Asking this question means that you weren’t thorough enough when you made the purchase. You should always have it written down on a paper. When do you get out? A valid answer is never. If you believe in the business and they prove themself strong, why ever sell? Some people like selling if they gain 30% or lose 30%. Some do the same on 15% respective 10%. It comes down to how much long term faith you have in the company, when you’ll need the money and what your risk tolerance is. Personally, when I buy a company, I will ignore it until something changes in the core business. I re-analyze each company each earning. It takes a lot of time, but its my method. If I buy something more high risk, I will sell at a set loss-% (20-40% loss) and the same on gain. How does taxes work and how should I plan for taxes? Taxes are hard and complicated, but it is something you must understand how it works. Capital gains taxes are vital to understand. Sadly, they work differently in each country, so there is no easy answer except for you to look up it yourself. But know it, it is vital. To end, these are the most important 4 rules of learning how to do all this:
Keep a journal and record the answers to all 6 questions each time you make a purchase, or decided in the end to not.
Each time in your reading if you come over a concept, word or idea that you do not understand, get used to looking it up and learning what it is. It’s key.
When you succeed, analyze if you got lucky or if your actual reasoning was the correct call. When you fail, analyze what your mistake was and write it down in your journal. Both are vital.
TL:DR: Investing is about reading. You should probably start by reading this now or give up. If you read it all, success! Keep going! Disclaimer: Don't invest money that you can't afford to lose. You might lose all your funds. Probably don't. lykosen11
https://preview.redd.it/bjix9mvdw2m31.png?width=864&format=png&auto=webp&s=0c7b463f7bcf30dfe1bff31aa70b33ca6e002e8f Article by Forbes: Joresa Blount In 2018, Asia was one of the leading regions in terms of growth of blockchain jobs, cryptocurrency usage, innovation, and general openness. Despite some early woes with China banning ICOs, China still produces nearly 70% of crypto mining activity. For users and entrepreneurs, the Asian ecosystem is in general a friendly one. For example, in Singapore Bitcoin is taxed as a good rather than a currency, setting a 7% flat tax for trades or purchases using Bitcoin. In Japan, messenger giant, LINE, was just granted a crypto exchange license from the Japanese financial regulator. In Korea, news just broke that the country’s largest entertainment company would be launching its own token. Besides the name brand companies that are exploring crypto solutions, there are hundreds of innovative startups and founders looking to radically disrupt their respective industries with blockchain technology. This list contains ten innovative blockchain startups based in Asia worth watching, including exchanges, fintech startups, and more. Today In: Innovation 1. Level01 Level01 is the world’s first broker less derivatives exchange in collaboration with Thomson Reuters. Through using blockchain technology, the platform eliminates middlemen while providing a decentralized trading experience. Users can trade derivatives and options in forex, cryptocurrencies, commodities, stocks and indices, all from the Level01 platform and app. Level01 does this by using Distributed Ledger Technology (DLT) for transparent and automated trade settlement on the blockchain, with their unique Artificial Intelligence (AI) analytics called Fairsense that provides fair value pricing dynamically to counterparties in a trade, based on current and retrospective market data from Thomson Reuters. The platform and app are currently undergoing stringent beta testing by 50 experienced traders. 2. Galaxy Pool Galaxy Pool, also known as GPO, is a brand-new asset issuance style on blockchain that utilizes intelligent contracts for initial digital asset issuance. In general, GPO assets can be best described as mining machines used to explore various kinds of digital assets that can obtain value-added benefits of GPO through the repurchase and destruction of pond profits. With this brand-new asset issuance style on blockchain, more humanistic investment opportunities with free withdrawal rights can be provided to investors. 3. Biki Headquartered in Singapore, BiKi.com is a global cryptocurrency exchange ranked Top 20 on CoinMarketCap. BiKi.com provides a digital assets platform for trading more than 150 cryptocurrencies and 220 trading pairs. Since its official opening in August 2018, BiKi.com is considered one of the fastest-growing cryptocurrency exchanges in the world with an accumulated 1.5 million registered users, 130,000 daily active users, over 2000 community partners and 200,000 community members in under a year. BiKi’s competitive advantages include helping projects with marketing, influencers, brand awareness, and community growth in the Chinese markets and abroad. With a global approach, BiKi also helps Chinese companies go global and international companies penetrate Chinese markets. 4. Whitebit With a global team of over 100 people, Whitebit is a professional digital asset trading platform that services most major Asian markets via a European license. The exchange holds 95% of user funds in cold wallets and offers users an intuitive user interface with real-time orderbooks, charting and technical analysis tools, and automation features. Whitebit’s major competitive advantage is processing speeds of up to 10,000 trades every second and 1,000,000 TCP connections. Whitebit has also announced the release of S.M.A.R.T. Box, a program that allows users to budget and allocate funds based on unique plans with varying durations and interest rates. Next is the launch of margin trading in Q4 2020, as well as mobile iOS and Android apps and an eventual US license. 5. Opu Labs Opu Labs is creating the self-care business model of the future starting with the skincare space. There are over 1.2 billion online skincare consumers with a $3 billion digital services business. Opu Labs helps make the decision-making process easier by offering free advice powered by AI, rewarding users for their purchase data using blockchain technology, and using robust technologies to connect brands and consumers. Under the leadership of CEO Marc Bookman, Opu Labs was named in the top 25 healthcare solutions by CIO Applications and won the start-up GrandSlam in Singapore. To date, $2m in rewards have been earned on the platform and the company will be releasing their long-awaited apps soon. 6. Coinsbit.io Thanks to his vast expertise, experience, and sense of the market, Nikolay Udianskyi created a high-quality crypto exchange called Coinsbit.io. Now leading the Asian crypto market, Coinsbit was named the best 2018 crypto exchange at Asian Blockchain Life 2019. Coinsbit is planning to further distinguish itself from the competition through a series of novel functions. Among its plans is a P2P microfinancing lending service that will enable users to borrow and lend money on the platform. Coinsbit will ensure privacy for all users and will not require borrowers to show their credit history. An additional planned feature is an invest box service, which will reward users who deposit cryptocurrency by paying them interest on various coins. 7. GST Coin GST is a comprehensive digital application platform which integrates encrypted payment currency, blockchain and artificial intelligence technology. It is dedicated to providing the most valuable intelligent digital asset service for every user and creating a new GST digital public chain in a diversified market structure. GST project is committed to using the most advanced technology to create the most perfect user experience, and it has always been in the forefront of the market in the decentralized security sharing architecture. GST was born out of MHC Asset Management Corporation, a high-tech enterprise engaged in R&D and innovation of blockchain technology. Their executive team includes CEO Ms. Zhang Qun and other leading technologists and entrepreneurs in China. 8. Columbu Columbu (CAT) is a global community-based open-source blockchain project that has been active since 2017. Under CTO David Su, CAT’s main focus is building a high-performance DAPP development platform and community encouraging and autonomous system based on software and hardware combined GCloud Everest computing platform. This is the world’s first public blockchain (distributed cloud) using CUDA and blockchain technology. The project will allow for a worldwide distributed and free economic collaborative network of intelligent economies. This will happen through a community incentive mechanism and autonomous system to build in real-time. The project has an ambitious roadmap that will include growing its global developer community and other projects within their ecosystem. 9. KBC Registered in Singapore, KBC is the powering token of a global financial infrastructure and range of products focused around gold. These products include an innovative Voice-over-Blockchain smartphone called IMpulse K1, a crypto payment merchant processor called K-Merchant, and a cryptocurrency exchange and trading platform. Together these products and entities combine to form the Gold Imperium, the company’s financial ecosystem. The company has attracted heavy interest from users who have seen the benefits of having both gold and cryptocurrency exposure, as well as the ease of use of being able to use each day to day through tokens such as KBC. As both markets expand, keep an eye on KBC. 10. TEXCENT TEXCENT is a Singaporean blockchain and fintech startup focused on fully-integrated solutions for remittance, payments, and microfinancing. Using blockchain technology, the company wants to provide seamless and convenient digital financial services solutions to Asia and the world. TEXCENT is currently focusing on the Philippines, Vietnam, Thailand as these markets will grow exponentially in the next 5 years. Their current products include PAYCENT, an app and hybrid wallet, as well as TEXCENT, a remittance solution with zero fees. TEXCENT has already acquired a remittance license from the Monetary Authority of Singapore (MAS) and is in the process of getting similar licenses for UK, Malaysia and Hong Kong in the coming months. The company is also a member of the Singapore Fintech Association.
I'm doing a tribute to the 24 days of Christmas by going over the financial statements of 24 companies that are considered downrange, speculative, and just plain high risk. Our first six stops is fondly captured here. All opinions are my own, and certainly not a recommendation for or against any of them, or to buy or sell. Many are companies I've never looked at before. In some cases, I'd never even heard of them. I limited myself to 45mins to each, and kept mainly to most recent financial statements and MD&A's. You'll likely know more about the company than me if you're following them. This is only my reactions with a brief commentary about what I saw in the financial statements. LDS - Lifestyle Delivery Systems
Capital structure tastes like a 4 week old egg left on a counter. Not dissimilar within this peer set.
No fx hedging. Given forex losses equalled their gross margin…..well…..seriously. Think about that.
Good: Has revenue. Bad: Needs alot more revenue.
Relatively large spend on R&D
Cash flows to exec high relative to earnings
Capital cost is relative to peers. Still means expensive, but this seems around what it is at this stage of legal cannabis.
Curious that they front loaded share price volatility in option valuation. Haven’t seen that before. Good disclosure overall. I don’t like the sliding scale at all, but it’s not material
8.3MM long dated options - large potential trip wire in mid 2019. Most cash that can be has been wrung out
Warrants are a different story. 2018 is a big hill.
Thing feels a like an ATM for management to me. RTI - Radient Technologies
Cash poor, was able to get out of hock by paying in shares.
Issued more shares through November - crazy cheap to buyer. Large discount.
Warrants issued and outstanding very large.
Same with stock options
If their sales don’t take off soon, I put these guys at extreme risk.
They need 10x the revenue they have per month, like, next week.
More financing possible I guess. The market is paying $1.30 higher than what they’re selling shares for tho. Blech.
Of all I’ve looked at, I think this business model could work if they can wait until it actually generates revenue. Top heavy balance sheet needs concrete supports quick. TNY - Tinley Beverage Company
Why in the fuck is none of these outfits able to hedge forex exposure? Not one.
Same hideously expensive capital structure as others (note 8 & 9). Apr2018 important milestone.
Still intending and still developing. Still.
At least they had the cash to open a savings account
Note 10 - complicated. Really complicated.
Thank god, one of the shorter financials.
All sparkles and rainbows and hope. The only question is if there will be anyone who wants to buy what they make. Feedstock not well defined. Scalability a real concern. Suspect they’ll need a shit ton of money if they actually try to. Feels like campers. IMH - Invictus EDIT - Dec21 1100hrs Elves pulled a boner, covered wrong financial statements. Will be corrected after they come to later today. Replaced for now by...... iAn - Ianthus Capital Holdings
Structured financiers and bankers trying to make money off of cannabis.
Lots of contingencies nested in assets, from operations to regulatory. Risk hard to pin down and multi-faceted.
These guy’s hands haven’t touched dirt in their lives.
Cash burn is high, there are some assets being loaded, but strikes me as somewhat schizophrenic, seems constrained by what’s for sale rather than creating them.
Good disclosure on capital and optionality exposure. Not terribly impressed since that’s what these guys do for a living anyway
Related party transactions abound.
Despite decent reporting (a merciful 28 pages), it explains absolutely nothing to a business person. There’s a financial analyst out there somewhere that is drooling with their structuring.
I’d remind that analyst they’ve lost $7MM this year with another quarter to go.
Most complex financials of all so far that say the least.
A business built on excel spreadsheets by bankers for bankers. So many contingencies to revenue combined with jurisdictional uncertainty, this is simply a hedge fund. Short and mid-term operational exposure is extreme. CHV - Canada House Wellness Group Inc
Balance sheet is printed on rice paper, you can see through it if you hold it up to the light
Expenses are a cluster-fuck
I am getting a callous from reading auditor notes that include: “material uncertainties cast significant doubt about their ability to continue”. Many of these companies have it on page 1.
None of these outfits should need 30 pages of financial statements. This one has 45.
Clean disclosure on forex risk. Wish others did it. CHV does it, but on an amount that probably matches their spend on postage stamps for a decade. Immaterial.
Real problems in AP & AR. Heading for a wall.
Capital structure…..sigh. Not atypical, but this company is a great example of how capital costs impair a business. A case study for business students. Notes 2, 14, 15, and 16 should be required reading in business school.
I’m going to stop, because there’s many more to go, and there’s not much more to see here in terms of doing a high level look. This has been my favorite to do so far, because their disclosure is so good. I really like the idea of a focused, vertically integrated company too, but this company is a train wreck on paper. Whether this one can survive for another year…. EDIT UPDATE! Day after I posted this, CHV announced a $7MM convertible raise, spending 25% of it on paying debt and accounts payable. Expensive, and suggests ops aren't paying the bills. Not atypical in growth phases. Exceptionally good disclosure though. Of note, 60% of the stock is owned by only 2 investors and insiders. LIB - Liberty Leaf Holdings
One saves money on accounting costs if you don’t have any revenue to record and report.
If you need to call IR, the same guy is also the CEO and corporate secretary. Saves file size in your contacts list. Feels like a squatteopportunist though, not ops/business guy. Modest salary. Might be built as a pure flip.
Built in a $250k cash (not stock) payout for himself when he walks out the door.
Burnt $70k on a US folly for supply.
Note 12 on capital structure - similar rabbit warren to these others.
Accelerated capital structure - unlike long dates, balance sheet funding is largely compressed into 2018. This means they’d better get a licence, they’d better have production/inventory ready to go, and begin operating fast, channel ready.
Given they look only like a desk and a computer atm, significant operational risk over next 9 months.
Doesn’t look bad on paper. I’d gauge the risk on whether or not production can come in on time, what the facility actually looks like, and if they can get product sold mucho pronto. CEO has no history of anything connected to cannabis, only equity structures. Despite financial ‘health’, high risk Dive Bar goodness. Speculative is an understatement for this one. If IR can specifically address those three top things accurately, it offers focused regional cannabis exposure. Problem with that is the supply bubble potential in BC though. If they were in Manitoba….
Valid and Invalid Complaints. There are a few things that can pop up in copy trading. I am not a n00b when it comes to this, so I can somewhat forecast what these will be. I can kinda predict what sort of comments there may be. Some of these are valid points that if you raise I should (and will) reply to. Some are things outside of the scope of things I can influence, and as such, there is no point in me replying to. I will just cover them all here the one time. Valid complains are if I do something dumb or dramatically outside of the strategy I have laid out here. won't do these, if I do, you can pitchfork ----E Examples; “Oi, idiot! You opened a trade randomly on a news spike. I got slipped 20 pips and it was a shit entry”. Perfectly valid complaint. “Why did you open a trade during swaps hours when the spread was 30 pips?” Also valid. “You left huge trades open running into the weekend and now I have serious gap paranoia!” Definitely valid. These are examples of me doing dumb stuff. If I do dumb stuff, it is fair enough people say things amounting to “Yo, that was dumb stuff”. Invalid Complains; “You bought EURUSD when it was clearly a sell!!!!” Okay … you sell. No-one is asking you to copy my trades. I am not trading your strategy. Different positions make a market. “You opened a position too big and I lost X%”. No. Na uh. You copied a position too big. If you are using a trade copier, you can set maximum risk. If you neglect to do this, you are taking 100% risk. You have no valid compliant for losing. The act of copying and setting the risk settings is you selecting your risk. I am not responsible for your risk. I accept absolutely no liability for any losses. *Suggested fix. Refer to risk control in copy trading software “You lost X trades in a row at X% so I lost too much”. Nope. You copied. See above. Anything relating to losing too much in trades (placed in liquid/standard market conditions) is entirely you. I can lose my money. Only you can set it up so you can lose yours. I do not have access to your account. Only mine. *Suggested fix. Refer to risk control in copy trading software “Price keeps trading close to the pending limit orders but not filling. Your account shows profits, but mine is not getting them”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. * Suggested fix. Compare the spread on your broker with the spread on mine. Adjust your orders accordingly. Buy limit orders will need to move up a little. Sell limit orders should not need adjusted. “I got stopped out right before the market turned, I have a loss but your account shows a profit”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there differences in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. ** Suggested fix. Compare the spread on your broker with the spread on mine. Adjust your orders accordingly. Stop losses on sell orders will need to move up a bit. Stops on buy orders will be fine. “Your trade got stopped out right before the market turned, if it was one more pip in the stop, it would have been a winner!!!” Yeah. This happens. This is where the “risk” part of “risk:reward” comes in. “Price traded close to take profit, yours filled but mines never”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there differences in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. (Side note, this should not be an issue since when my trade closes, it should ping your account to close, too. You might get a couple less pips). *** Suggested fix. Compare the spread on your broker with the spread on mine. Adjust your orders accordingly. Take profits on buys will need to move up a bit. Sell take profits will be fine. “My brokers spread jumped to 20 during the New York session so the open trade made a bigger loss than it should”. Your broker might just suck if this happens. This is brokerage. I have no control over this. My trades are placed to profit from my brokerage conditions. I do not know, so can not account for yours. Also, if accounting for random spread spikes like this was something I had to do, this strategy would not be a thing. It only works with fair brokerage conditions. *Suggested fix. Do a bit of Googling and find out if you have a horrific broker. If so, fix that! A good search phrase is; “(Broker name) FPA reviews”. “Price hit the stop loss but was going really fast and my stop got slipped X pips”. This is brokerage. I have no control over this. I use a strategy that aims for precision, and that means a pip here and there differences in brokerage spreads can make a difference. I am trading to profit from my trading conditions. I do not know, so can not account for, yours. If my trade also got slipped on the stop, I was slipped using ECN conditions with excellent execution; sometimes slips just happen. I am doing the most I can to prevent them, but it is a fact of liquidity that sometimes we get slipped (slippage can also work in our favor, paying us more than the take profit would have been). “Orders you placed failed to execute on my account because they were too large”. This is brokerage. I have no control over this. Margin requirements vary. I have 1:500 leverage available. I will not always be using it, but I can. If you can’t, this will make a difference. “Your account is making profits trading things my broker does not have” I have a full range of assets to trade with the broker I use. Included Forex, indices, commodities and cryptocurrencies. I may or may not use the extent of these options. I can not account for your brokerage conditions. I think I have covered most of the common ones here. There are some general rules of thumb, though. Basically, if I do something that is dumb and would have a high probability of losing on any broker traded on, this is a valid complain. Anything that pertains to risk taken in standard trading conditions is under your control. Also, anything at all that pertains to brokerage variance there is nothing I can do, other than fully brief you on what to expect up-front. Since I am taking the time to do this, I won’t be a punch-bag for anything that happens later pertaining to this. I am not using an elitist broker. You don’t need $50,000 to open an account, it is only $200. It is accessible to most people - brokerage conditions akin to what I am using are absolutely available to anyone in the UK/Europe/Asia (North America, I am not so up on, so can’t say). With the broker I use, and with others. If you do not take the time to make sure you are trading with a good broker, there is nothing I can do about how that affects your trades. I am using an A book broker, if you are using B book; it will almost certainly be worse results. You have bad costs. You are essentially buying from reseller and paying a mark-up. (A/B book AKA ECN/Market maker; learn about this here). My EURUSD spread will typically be 0.02 pips or so, if yours is 1 pip, this is a huge difference. These are typical spreads I am working on. https://preview.redd.it/8qk052gvrw721.png?width=589&format=png&auto=webp&s=5fc779675dde2f260a79d7c58520245885a271dc Check the full range of spreads on Forex, commodities, indices and crypto. Please understand I want nothing from you if you benefit from this, but I am also due you nothing if you lose. My only term of offering this is that people do not moan at me if they lose money. I have been fully upfront saying this is geared towards higher risk. I have provided information and tools for you to take control over this. If I do lose people’s money and I know that, I honestly will feel a bit sad about it. However, if you complain about it, all I will say is “I told you that might happen”, because, I am telling you that might happen. Make clear headed assessments of how much money you can afford to risk, and use these when making your decisions. They are yours to make, and not my responsibility.
"Satoshi Nakamoto" the mysterious creator of Bitcoin is no other than the CIA
Bitcoin has surged to all time highs, Who created Bitcoin, and why? The creator of Bitcoin is officially a name, “Satoshi Nakamoto” – very few people believe that it was a single male from Japan. In the early days of Bitcoin development this name is associated with original key-creation and communications on message boards, and then the project was officially handed over to others at which point this Satoshi character never appeared again (Although from time to time someone will come forward saying they are the real Satoshi Nakamoto, and then have their posts deleted). Bitcoin could very well be the ‘one world currency’ that conspiracy theorists have been talking about for some time. It’s a kill five birds with one stone solution – not only is Bitcoin an ideal one world currency, it allows law enforcement a perfect record of all transactions on the network. It states very clearly on bitcoin.org (the official site) in big letters “Bitcoin is not anonymous” : Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Another advantage of Bitcoin is the problem of Quantitative Easing – the Fed (and thus, nearly all central banks in the world) have painted themselves in a corner, metaphorically speaking. QE ‘solved’ the credit crisis, but QE itself does not have a solution. Currently all currencies are in a race to zero – competing with who can print more money faster. Central Bankers who are in systemic analysis, their economic advisors, know this. They know that the Fiat money system is doomed, all what you can read online is true (just sensationalized) – it’s a debt based system based on nothing. That system was created, originally in the early 1900’s and refined during Breton Woods followed by the Nixon shock (This is all explained well in Splitting Pennies). In the early 1900’s – there was no internet! It is a very archaic system that needs to be replaced, by something modern, electronic, based on encryption. Bitcoin! It’s a currency based on ‘bits’ – but most importantly, Bitcoin is not the ‘one world currency’ per se, but laying the framework for larger cryptocurrency projects. In the case of central banks, who control the global monetary system, that would manifest in ‘Settlement Coin’ : Two resources available almost exclusively to central banks could soon be opened up to additional users as a result of a new digital currency project designed by a little-known startup and Swiss bank UBS. One of those resources is the real-time gross settlement (RTGS) system used by central banks (it’s typically reserved for high-value transactions that need to be settled instantly), and the other is central bank-issued cash. Using the Utility Settlement Coin (USC) unveiled today, the five-member consortium that has sprung up around the project aims to help central banks open-up access to these tools to more customers. If successful, USC has the potential to create entirely new business models built on instant settling and easy cash transfers. In interview, Robert Sams, founder of London-based Clearmatics, said his firm initially worked with UBS to build the network, and that BNY Mellon, Deutsche Bank, ICAP and Santander are only just the first of many future members. the NSA/CIA often works for big corporate clients, just as it has become a cliche that the Iraq war was about big oil, the lesser known hand in global politics is the banking sector. In other words, Bitcoin may have very well been ‘suggested’ or ‘sponsored’ by a banker, group of banks, or financial services firm. But the NSA (as we surmise) was the company that got the job done. And probably, if it was in fact ‘suggested’ or ‘sponsored’ by a private bank, they would have been waiting in the wings to develop their own Bitcoin related systems or as in the above “Settlement Coin.” So the NSA made Bitcoin – so what? The FX markets currently represent the exchange between ‘major’ and ‘minor’ currencies. In the future, why not too they will include ‘cryptocurrencies’ – we’re already seeing the BTC/EUR pair popup on obscure brokers. When BTC/USD and BTC/EUR are available at major FX banks and brokers, we can say – from a global FX perspective, that Bitcoin has ‘arrived.’ Many of us remember the days when the synthetic “Euro” currency was a new artificial creation that was being adopted, although the Euro project is thousands of degrees larger than the Bitcoin project. But unlike the Euro, Bitcoin is being adopted at a near exponential rate by demand (Many merchants resisted the switch to Euros claiming it was eating into their profit margins and they were right!). And to answer the question as to why Elite E Services is not actively involved in Bitcoin the answer is that previously, you can’t trade Bitcoin. Now we’re starting to see obscure brokers offering BTC/EUR but the liquidity is sparse and spreads are wacky – that will all change. When we can trade BTC/USD just like EUUSD you can bet that EES and a host of other algorithmic FX traders will be all over it! It will be an interesting trade for sure, especially with all the volatility, the cross ‘pairs’ – and new cryptocurrencies. For the record, for brokers- there’s not much difference adding a new symbol (currency pair) in MT4 they just need liquidity, which has been difficult to find. So there’s really nothing revolutionary about Bitcoin, it’s just a logical use of technology in finance considering a plethora of problems faced by any central bank who creates currency. And there are some interesting caveats to Bitcoin as compared to major currencies; Bitcoin is a closed system (there are finite Bitcoin) – this alone could make such currencies ‘anti-inflationary’ and at the least, hold their value (the value of the USD continues to deteriorate slowly over time as new M3 introduced into the system.) But we need to pay Here’s some interesting theories about who or whom is Satoshi: A corporate conglomerate Some researchers proposed that the name ‘Satoshi Nakamoto’ was derived from a combination of tech companies consisting of Samsung, Toshiba, Nakayama, and Motorola. The notion that the name was a pseudonym is clearly true and it is doubtful they reside in Japan given the numerous forum posts with a distinctly English dialect. Craig Steven Wright This Australian entrepreneur claims to be the Bitcoin creator and provided proof. But soon after, his offices were raided by the tax authorities on ‘an unrelated matter’ Soon after these stories were published, authorities in Australia raided the home of Mr Wright. The Australian Taxation Office said the raid was linked to a long-running investigation into tax payments rather than Bitcoin. Questioned about this raid, Mr Wright said he was cooperating fully with the ATO. “We have lawyers negotiating with them over how much I have to pay,” he said. Other potential creators Nick Szabo, and many others, have been suggested as potential Satoshi – but all have denied it: The New Yorker published a piece pointing at two possible Satoshis, one of whom seemed particularly plausible: a cryptography graduate student from Trinity College, Dublin, who had gone on to work in currency-trading software for a bank and published a paper on peer-to-peer technology. The other was a Research Fellow at the Oxford Internet Institute, Vili Lehdonvirta. Both made denials. Fast Company highlighted an encryption patent application filed by three researchers – Charles Bry, Neal King and Vladimir Oksman – and a circumstantial link involving textual analysis of it and the Satoshi paper which found the phrase “…computationally impractical to reverse” in both. Again, it was flatly denied. THE WINNER: It was the NSA The NSA has the capability, the motive, and the operational capacity – they have teams of cryptographers, the biggest fastest supercomputers in the world, and they see the need. Whether instructed by their friends at the Fed, in cooperation with their owners (i.e. Illuminati banking families), or as part of a DARPA project – is not clear and will never be known (unless a whistleblower comes forward). In fact, the NSA employs some of the best mathematicians and cryptographers in the world. Few know about their work because it’s a secret, and this isn’t the kind of job you leave to start your own cryptography company. But the real smoking Gun, aside from the huge amount of circumstantial evidence and lack of a credible alternative, is the 1996 paper authored by NSA “HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH” The NSA was one of the first organizations to describe a Bitcoin-like system. About twelve years before Satoshi Nakamotopublished his legendary white paper to the Metzdowd.com cryptography mailing list, a group of NSA information security researchers published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash in two prominent places, the first being an MIT mailing list and the second being much more prominent, The American Law Review The paper outlines a system very much like Bitcoin in which secure financial transactions are possible through the use of a decentralized network the researchers refer informally to as a Bank. They list four things as indispensable in their proposed network: privacy, user identification (protection against impersonation), message integrity (protection against tampering/substitution of transaction information – that is, protection against double-spending), and nonrepudiation (protection against later denial of a transaction – a blockchain!). It is evident that SHA-256, the algorithm Satoshi used to secure Bitcoin, was not available because it came about in 2001. However, SHA-1 would have been available to them, having been published in 1993. Why would the NSA want to do this? One simple reason: Control. As we explain in Splitting Pennies – Understanding Forex – the primary means the US dominates the world is through economic policy, although backed by bombs. And the critical support of the US Dollar is primarily, the military. The connection between the military and the US Dollar system is intertwined inextricably. There are thousands of great examples only one of them being how Iraq switched to the Euro right before the Army’s invasion. In October 2000 Iraq insisted on dumping the US dollar – ‘the currency of the enemy’ – for the more multilateral euro. The changeover was announced on almost exactly the same day that the euro reached its lowest ebb, buying just $0.82, and the G7 Finance Ministers were forced to bail out the currency. On Friday the euro had reached $1.08, up 30 per cent from that time. Almost all of Iraq’s oil exports under the United Nations oil-for-food programme have been paid in euros since 2001. Around 26 billion euros (£17.4bn) has been paid for 3.3 billion barrels of oil into an escrow account in New York. The Iraqi account, held at BNP Paribas, has also been earning a higher rate of interest in euros than it would have in dollars. The point here is there are a lot of different types of control. The NSA monitors and collects literally all electronic communications; internet, phone calls, everything. They listen in even to encrypted voice calls with high powered microphones, devices like cellphones equipped with recording devices (See original “Clipper” chip). It’s very difficult to communicate on planet Earth in private, without the NSA listening. So it is only logical that they would also want complete control of the financial system, including records of all electronic transactions, which Bitcoin provides. Could there be an ‘additional’ security layer baked into the Blockchain that is undetectable, that allows the NSA to see more information about transactions, such as network location data? It wouldn’t be so far fetched, considering their past work, such as Xerox copy machines that kept a record of all copies made (this is going back to the 70’s, now it’s common). Of course security experts will point to the fact that this layer remains invisible, but if this does exist – of course it would be hidden. More to the point about the success of Bitcoin – its design is very solid, robust, manageable – this is not the work of a student. Of course logically, the NSA employs individuals, and ultimately it is the work of mathematicians, programmers, and cryptographers – but if we deduce the most likely group capable, willing, and motivated to embark on such a project, the NSA is the most likely suspect. Universities, on the other hand, didn’t product white papers like this from 1996. Another question is that if it was the NSA, why didn’t they go through more trouble concealing their identity? I mean, the internet is rife with theories that it was in fact the NSA/CIA and “Satoshi Nakamoto” means in Japanese “Central Intelligence” – well there are a few answers for this, but to be congruent with our argument, it fits their profile. Where could this ‘hidden layer’ be? Many think it could be in the public SHA-256, developed by NSA (which ironically, was the encryption algorithm of choice for Bitcoin – they could have chosen hundreds of others, which arguably are more secure): Claims that the NSA created Bitcoin have actually been flung around for years. People have questioned why it uses the SHA-256 hash function, which was designed by the NSA and published by the National Institute for Standards and Technology (NIST). The fact that the NSA is tied to SHA-256 leads some to assume it’s created a backdoor to the hash function that no one has ever identified, which allows it to spy on Bitcoin users. “If you assume that the NSA did something to SHA-256, which no outside researcher has detected, what you get is the ability, with credible and detectable action, they would be able to forge transactions. The really scary thing is somebody finds a way to find collisions in SHA-256 really fast without brute-forcing it or using lots of hardware and then they take control of the network,” cryptography researcher Matthew D. Green of Johns Hopkins University said in a previous interview. Then there’s the question of “Satoshi Nakamoto” – if it was in fact the NSA, why not just claim ownership of it? Why all the cloak and dagger? And most importantly, if Satoshi Nakamoto is a real person, and not a group that wants to remain secret – WHY NOT come forward and claim your nearly $3 Billion worth of Bitcoin (based on current prices). Did the NSA create Satoshi Nakamoto? The CIA Project, a group dedicated to unearthing all of the government’s secret projects and making them public, hasreleased a video claiming Bitcoin is actually the brainchild of the US National Security Agency. The video entitled CIA Project Bitcoin: Is Bitcoin a CIA or NSA project? claims that there is a lot of compelling evidences that proves that the NSA is behind Bitcoin. One of the main pieces of evidence has to do with the name of the mysterious man, woman or group behind the creation of Bitcoin, “Satoshi Nakamoto”. According to the CIA Project, Satoshi Nakamoto means “Central Intelligence” in Japanese. Doing a quick web search, you’ll find out that Satoshi is usually a name given for baby boys which means “clear thinking, quick witted, wise,” while Nakamoto is a Japanese surname which means ‘central origin’ or ‘(one who lives) in the middle’ as people with this surname are found mostly in the Ryukyu islands which is strongly associated with the Ry?ky? Kingdom, a highly centralized kingdom that originated from the Okinawa Islands. So combining Nakamoto and Satoshi can be loosely interpreted as “Central Intelligence”. Is it so really hard to believe? This is from an organization that until the Snowden leaks, secretly recorded nearly all internet traffic on the network level by splicing fiber optic cables. They even have a deep-sea splicing mission that will cut undersea cables and install intercept devices. Making Bitcoin wouldn’t even be a big priority at NSA. Certainly, anonymity is one of the biggest myths about Bitcoin. In fact, there has never been a more easily traceable method of payment. Every single transaction is recorded and retained permanently in the public “blockchain”. The idea that the NSA would create an anarchic, peer-to-peer crypto-currency in the hope that it would be adopted for nefarious industries and become easy to track would have been a lot more difficult to believe before the recent leaks by Edward Snowden and the revelation that billions of phone calls had been intercepted by the US security services. We are now in a world where we now know that the NSA was tracking the pornography habits of Islamic “radicalisers” in order to discredit them and making deals with some of the world’s largest internet firms to insert backdoors into their systems. And we’re not the only ones who believe this, in Russia they ‘know’ this to be true without sifting through all the evidence. Nonetheless, Svintsov’s remarks count as some of the more extreme to emanate from the discussion. Svintsov told Russian broadcast news agency REGNUM:“All these cryptocurrencies [were] created by US intelligence agencies just to finance terrorism and revolutions.”Svintsov reportedly went on to explain how cryptocurrencies have started to become a payment method for consumer spending, and cited reports that terrorist organisations are seeking to use the technology for illicit means. Let’s elaborate on what is ‘control’ as far as the NSA is concerned. Bitcoin is like the prime mover. All future cryptocurrencies, no matter how snazzy or functional – will never have the same original keys as Bitcoin. It created a self-sustained, self-feeding bubble – and all that followed. It enabled law enforcement to collect a host of criminals on a network called “Silk Road” and who knows what other operations that happened behind the scenes. Because of pesky ‘domestic’ laws, the NSA doesn’t control the internet in foreign countries. But by providing a ‘cool’ currency as a tool, they can collect information from around the globe and like Facebook, users provide this information voluntarily. It’s the same strategy they use like putting the listening device in the chips at the manufacturing level, which saves them the trouble of wiretapping, electronic eavesdropping, and other risky methods that can fail or be blocked. It’s impossible to stop a cellphone from listening to you, for example (well not 100%, but you have to physically rewire the device). Bitcoin is the same strategy on a financial level – by using Bitcoin you’re giving up your private transactional information. By itself, it would not identify you per se (as the blockchain is ‘anonymous’ but the transactions are there in the public register, so combined with other information, which the NSA has a LOT OF – they can triangulate their information more precisely. That’s one problem solved with Bitcoin – another being the economic problem of QE (although with a Bitcoin market cap of $44 Billion, that’s just another day at the Fed buying MBS) – and finally, it squashes the idea of sovereignty although in a very, very, very subtle way. You see, a country IS a currency. Until now, currency has always been tied to national sovereignty (although the Fed is private, USA only has one currency, the US Dollar, which is exclusively American). Bitcoin is a super-national currency, or really – the world’s first one world currency. Of course, this is all great praise for the DOD which seems to have a 50 year plan – but after tens of trillions spent we’d hope that they’d be able to do something better than catching terrorists (which mostly are artificial terrorists)
Margin Requirement = [100,000 / 100 ] * 0.6926 therefore: Margin Requirement = 692.6 USD. Conclusion Having a good understanding of margin requirements is essential to trading because it directly affects the size and number of trades that you can safely make. The lower your leverage, the higher your margin requirements will be, and you will ... Intraday margin Overnight margin Value of 1 tick; Position maintenance Initial margin Position maintenance Initial margin; DAX Future: 31,495 € 39,369 € 44,993 € 56,241 € 12.5 € (1 tick = 0.5) Mini DAX Future: 6,299 € 7,874 € 8,999 € 11,249 € 5 € (1 tick = 1) EuroStoxx50 Future: 3,403 € 4,254 € 4,861 € 6,076 € 10 ... Understanding margin requirements, and how leverage levels affect it, is a key part of trading forex successfully. Margin Definition. In the trading world, a margin account involves borrowing in order to gain a greater potential ROI (return on investment). Many investors make use of margin accounts when implementing a strategy to invest in equities using the leverage of borrowed money. This ... Learn the importance of margin in forex trading and how to apply it. Explore common forex margin requirements and how to manage the risk involved. NSFX Minimum Margin Requirements. Traders must maintain Minimum Margin Requirements at all times. NSFX offers leverage up to 1:30. This translates to margin requirements of up to 3.33%. Margin Calls – Marking to Market. All Forex trades are “marked to market.” This means that the position is monitored in real-time to ensure that losses ... With Portfolio Margin, margin requirements are determined using a "risk-based" pricing model that calculates the largest potential loss of all positions in a product class or group across a range of underlying prices and volatilities. This model, known as the Theoretical Intermarket Margining System ("TIMS"), is applied each night to U.S. stocks, OCC stock and index options and U.S. single ... To avoid margin closeouts, ensure you have sufficient additional margin in your account at all times to address updated margin requirements. The Commodity Futures Trading Commission (CFTC) limits leverage available to retail forex traders in the United States to 50:1 on major currency pairs and 20:1 for all others.
Lesson 10: All about margin and leverage in forex trading ...
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