How To Choose the Best Forex and CFD Broker

The Forex market is the world’s largest financial market with a turnover in excess of around $4 trillion a day. Despite its huge size, this market has no central exchange for Forex traders to conduct their transactions. Instead, Forex traders must conduct their trading activities through an intermediary, the Forex broker. This shows the importance of the broker’s role in the trading process. When it comes to choosing a broker, traders have literally thousands of Forex brokers to choose from on the internet. But the real question is how can you be certain that the broker you have chosen is the right fit for your trading needs.

To help you in your broker selection process, we have prepared a guide with a list of key factors that you have to look at when choosing a broker.


Guide Sections


Regulations

The first thing that you should look at when selecting a broker is to see if the broker is regulated by a competent regulatory agency(read more about Forex and CFD broker regulations). By dealing with a regulated broker, you can have the assurance that the broker has met the operating standards imposed by the regulatory body. Some of these standard regulatory requirements include having adequate capitalization and maintaining segregated accounts in order to protect the clients’ funds. Additionally regulation offers fund protection should the firm become insolvent and ensures the broker is upholding rigorous standards as a financial service provider.

Countries that have financial regulatory agencies that are backed with strict regulatory enforcement include:

  • Australia  (ASIC)
  • Eurozone (Mifid and local regulators)
  • India (SEBI)
  • Japan (FSA and JSDA)
  • Switzerland (FINMA)
  • UK  (FCA)
  • USA (CFTC and SEC)

Discover the best regulated forex and CFD brokers

Trading Platform & Software

As the trading platform is your gateway to the market, you want to ensure that the trading platform that you are using can be relied upon. Most brokers will offer traders a selection of trading platforms to choose from. Most of the time, the trading platforms are provided by third party trading solutions providers such as MetaQuotes Software. There are also some brokers who have taken to developing their own proprietary trading platforms in an attempt to differentiate themselves from other brokers in the industry. Often times, these proprietary platforms are the best platforms to trade with as they are specifically designed by the broker’s client base.

Nevertheless, a good broker should be able to provide a good selection of platforms. This is because some traders prefer to trade from the desktop computer and some traders prefer to trade from their smartphones. It should be noted that the most common trading platform that you will find among the different brokers in the industry is the MetaTrader 4 platform. It is estimated that at least 85% of brokers in the industry uses the MetaTrader 4 platform. So this means there is a very strong possibility that this is one of the platforms that you will be using.

Additional Features

Look at the features which the trading platforms have to offer. Do they come with:

  • Comprehensive charting package
  • Wide range of technical indicators
  • One click trading on the trading platform
  • Risk management tools such as stop loss order and trailing stops.

While all these may seem trivial initially, they will later play a crucial part in ensuring that you will get to enjoy a seamless and productive trading experience.

But when it comes to platform selection, it is really a matter of personal choice. Most of these platforms will have the same basic features. The best way for you to find out which platform is right for you is to try them out with the demo account provided by the broker. For those brokers that do not provide a demo account, they may not be worth considering.

Commissions & Spreads

This market unlike other traditional financial markets mostly operates on spreads rather than commissions. This is the reason why most brokers advertise their services as being commission free.

So how do brokers make money?

Simply, they earn by charging traders a spread. The spread is the difference between the buying price and selling price. For example if the Bid & Ask price for the EUR/USD currency pair is 1.0875/1.0878, this means the spread is 3 pips.

As a Forex trader, you will come across 3 kinds of trading cost structure charged by a broker:

  • Fixed spread – where the spread is not changing and you know the spread amount before you trade.
  • Floating spread – this spread is variable and always moving depending on the market volatility.
  • Commission fee – this is calculated as a percentage of the brokers spread. You should be aware of the amount payable before you trade.

Generally for traders looking for certainty with their trading costs, fixed spreads will be the preferred choice. Traders who are looking to pay a smaller spread would prefer floating spreads. Ultimately as to which is better will depend on your specific trading needs.

The kind of spreads that you will receive depend to a large extent on the kind of business model the broker is operating on.

Broker’s Business Model

In the course of your search for a broker, you will come across terms like “STP”, “ECN”, “NDD” and “Market Maker”. All these terms are in fact used to describe the business model which the broker is operating by.  So what do they all mean?

There are two major types of broker – Dealing Desk and Non Dealing Desk.

Dealing Desk

Forex dealer or Market Maker processes their clients trading instructions through a dealing desk within their company. A dealing desk broker takes the other side of the trade to you, meaning when you open a position like the EUR/USD the trade will be executed by the broker and they are then exposed to that trade.

Non-Dealing Desk

A Non-Dealing Desk (NDD) broker passes the trade straight through to a third party. There are two kinds of NDD broker (ECN and STP). They are both essentially the conduit between you the trader and the market maker or dealer.

ECN

With the first type (ECN) when you press “Buy” on your trading platform, your trade orders will be processed on the broker’s computer trading system automatically and transmitted through the Electronic Communications Network (ECN) without a dealing desk (This is where the term “Non Dealing Desk” (NDD) comes from).

What is ECN Trading and What are its Advantages?

STP

With the second type of NDD broker, upon receiving your trade orders they will pass the trade orders directly to another party to be executed by the market maker’s dealing desk. In this instance, the broker is known as a Straight Through Processing (STP) broker.

Both the Forex ECN and STP brokers are intermediaries to several dealing desks or market makers in the global Forex market. Market makers or dealers will transmit their pricing to the ECN or third party liquidity provider together with the volume which the quote is valid for. The ECN/STP will in turn distribute the pricing to traders/market makers linked to the system. It should be noted that the ECN/STP does not execute trades but rather acts as the conduit for transmitting the trade orders from the trader to the dealing desk where the trader took the price from.

Why is this important?

The business model of the broker is important as this will affect the kind of spreads that you will receive and whether the spread will be fixed or variable.

Forex Broker for Beginners

For beginner traders, look for brokers with the following qualities:

  • Comprehensive trading education resources – many brokers supply a suite of education materials to help push traders into mastering their skills. These usually include webinars, videos, courses, guides and articles.
  • Unlimited access to the demo account for practice trades – most if not all Forex brokers supply demo-trading accounts to their clients. This is particularly useful if you are new to the world of Forex trading or if you’d like to test-drive a broker’s platform before you trade for real.
  • User friendly trading platform – there are a whole host of trading platforms on the market, some more complicated than others. As a beginner trader you will not need a complicated platform with features like EA’s and complex trading strategies. That comes later, but now you should be looking for a platform that is fast and simple to grasp.

Here you can find the best forex brokers for beginners

Forex Broker for Professionals

For professional traders, their trading needs differ significantly from those of a beginner trader. Generally, professional traders prefer brokers which can provide them with:

  • Comprehensive trading tools – as a professional trader you will now need a variety of tools including commission calculator, economic calendar and of course complex live charts in order to implement trading strategies.
  • High leverage – not for the faint hearted, professionals will seek to use leverage in order to multiply their capital. Leverage increases the risk and equally increases the reward.
  • Low spreads – if you trade a lot you want to ensure that your spreads aren’t eating away at your capital. It’s important to check the spreads payable before you select a broker, usually the greater the account type you take the lower are your spreads.

Forex Broker for Day Trading

Generally for a day trader, most brokers will be able to meet their trading needs. However given the shorter time period with day traders are trading with, it is best that the broker is able to provide a diverse range of instruments for the day trader to scout for trading opportunities. These can include a signal service, tools like an economic calendar, updating market news and also earnings reports. As you will probably be placing more short term trades make sure that you are aware of the spreads before you trade.

Forex Broker for Scalping

Scalpers are traders who hold their market positions for an extremely short period. While they only hold a market position a short period of time, the frequency of their trades is higher than the average trader. Their objective is only to make a small profit on all the trades that they make spread across a large number of trades. Note that not all brokers allow scalping. As such if you intend to trade as a scalper, you should always check with the broker that you intend to sign up if they allow scalping.

Account Types

The majority of the forex brokers in the industry offer traders a selection of trading accounts to cater for different categories of traders.

  • Micro Account – The smallest type of trading account is the Micro trading account where one trading lot is equivalent to 1000 units of the instrument traded.
  • Mini Account – The next type of trading account higher up the hierarchy is the Mini account where one lot represents 10,000 units.
  • Standard Account – The standard account is where one lot is equivalent to 100,000 units.

With the Micro and Mini account, only a low minimum initial investment is required to let you start trading. With the standard account, although the minimum investment may vary from broker to broker, generally you will need a higher amount of trading capital. Given the varying minimum investment for each type of trading account, you should select the trading account that is commensurate with your investment capital.

Customer Service

Most beginner traders tend to forget to factor in customer service when making their choice of the broker to sign up with. They may not realize the importance customer service plays in their overall trading experience. With customer service, it is not whether you will ever need their assistance but rather a question of when you will need their assistance. Because regardless of how experienced or knowledgeable a trader might be, there will always come a time when assistance from customer service is required. When that time comes, you want to be able to get in touch with the support team without any difficulties. So it is important to check if the broker that you intend to sign up with is able to provide you with reliable customer support.

Check to see if there are multiple ways of contacting customer support. Most brokers will provide their clients with several ways such as email, live chat and telephone for their clients to get in touch with customer support. In short, you don’t want to be in a position where you have to spend countless nights worrying about what your broker is going to do with your problem.

Value-Added Services

In an industry as competitive as the online forex trading industry, some brokers will try to distinguish themselves from other brokers, by offering additional value added services such as free market analysis, real time news feeds and trading signals. Most of these value added services are provided free of charge but there are some brokers which may require you to deposit a minimum amount before you can have access to these services.

Questions to Ask the Broker

If you have any general questions regarding brokers we can usually advise and recommend, however for more specific information you can read our broker reviews for deep insight. Our video reviews cover many aspects of the trading cycle. Please note, it is important that if you have any doubts about a broker’s product offerings or service, by asking the right questions you can clear up any ambiguity that you might have before they develop into an issue later after you sign up.

The kind of questions that you should ask include:

  • How the broker maintains the safety of your funds
  • The broker’s regulatory status
  • The range of instruments that is available for trading
  • Their business model
  • Their customer service hours
  • Their deposit and withdrawal process and whether there any fees involved
  • Whether there are any conditions attached to the value added services provided

Check our broker filter tool >>> FX Empire is perfectly placed to help our readers choose reliable CFD brokers to work with. We have compiled this resource, which looks at all the key factors a trader should consider before selecting a broker to work with. We hope you find it useful.

Click here to check the broker filter tool now!

Q&A

  • How Can I Choose A Broker?

We are here to help with that! Check out our list above and choose the most suitable broker for you.

  • Should I Pick a Regulated Broker?

Yes, you should try to pick a regulated broker to work with. This ensures recourse in the event of a dispute or should your broker face insolvency. Remember by using a regulated broker you will also have access to an investor compensation fund, which insure your deposit up to a certain amount.

  • What Else Should I Look at When Selecting a Broker?

You should look at the range of platforms on offer and even ideally test-drive the platform you may wish to use. Take a look at the additional resources being offered by that broker eg. Signal service, educational tools, copy trading. Finally remember to find out about spreads, and account types before you place a deposit.

Conclusion

As noted above, there are many factors that you have to consider when selecting your broker. Nevertheless with the help of this guide that we have provided, you should be able to see which broker is better suited to your needs. To further facilitate your search, we have also conducted in-depth reviews and vetted each of the brokers in our recommended list to ensure they meet up the right standards. Once you have found the right broker to work with, you can focus more on your trading activities and trade more confidently thereby increasing your chances of success trading the market.

Click here to discover the best forex and CFD broekrs

How Can You Profit From A Short Squeeze?

Markets are fickle. You never know when sentiment will take control and move in an unexpected direction. There are times during a trend or even a range bound situation that despite the fundamental backdrop prices of specific security will not move lower. When everyone is bearish and negative sentiment is exaggerated a short-squeeze can commence sending prices surging. There are several ways to measure if specific players are short. By using a combination of regulated reporting tools and technical analysis you can quickly determine if the market is offsides.

What is a Short-Squeeze?

The definition of a short squeeze is a scenario where a stock, index, commodity or currency surges higher forcing short sellers to exit their positions. The acceleration in the upward pressure drives irrational sentiment pushing prices higher. The term denotes a situation where short sellers are being squeezed out of their short positions. When you are short an asset, you are generally speculating that the price of the asset will decline. When you are short regulated security such as a US commodity or equity your short position is reported to the regulators of that market. Short positions in OTC currencies or CFDs are generally not reported. When you short a stock, you need to borrow the stock from someone else who owns it. The goal is to buy the stock back at a lower price and repay the loan that you used to borrow the stock.

What Starts a Short Squeeze?

The impetus for the squeeze can come from fundamental factors, where a rebound is justified, or negative sentiment becomes unsustainable creating irrational price momentum. A fundamental impetus could be economic or macro information. Most of the time, those who have short positions are closing their position at a loss during a short-squeeze.

How Can You Determine if the Market is Short?

Before a short-squeeze commences, and prices begin to rise, you can observe how the market is positioned using specific tools. For example, one of the best tools is the Commitment of Trader’s report released by the US Commodity Futures Trading Commission. This report is released every Friday unless there is a holiday during the week. The report reflects specific holdings per investor. Investors are categorized by size and occupation. For example, swap dealers managed money and retail investors are reported separately.  Swap dealers are liquidity providers to investment managers and commercial entities. Managed money funds and retail investors are self-explanatory.

For stocks, short interest reporting is readily available. All short interest positions by FINRA member firms are reportable twice a month. The SEC also requires short interest reporting. Member firms are considered members of an exchange such as the NASDAQ and the New York Stock Exchange. The exchanges report short interest generally twice a month. The first time during the middle of the month and the second time at the end of the month. The exchange has a mechanism to handle stock splits that occur inter-month.

How Can You Trade a Short-Squeeze?

Your goal is to purchase an asset when you believe that market participants are offsides and negative sentiment is overdone. As mentioned, you can use tools such as the Commitment of Trader’s report of exchange short interest to determine if there is a large short interest in a stock or commodity.

CFTC Net Short Positions
CFTC Net Short Positions

The table above is a picture of the disaggregated Commitment of Trader’s report for a combination of futures and options for the date ending November 20, 2018. Each futures contract is reported separately. The soybeans contract that is traded on the Chicago Board of Trade shows that managed money is short 132K contracts compared to long 72K contracts. The number of shorts is nearly double the number of hedge funds that are long. This is a sign that speculators are somewhat convinced that prices will continue to trend lower.

There is also a fundamental reason for prices to move lower and that’s a tariff on US soybeans installed by the Chinese government in retaliation for tariffs initiated by the US. The trade war that these economic powerhouses are experiencing is driving down the price of soybeans.  Soybeans are piling up in storage facilities in the US as farmers were caught off-guard by the tariffs and the cancelation of orders from Chinese buyers. What can change is an agreement between the US and China and an announcement by the Chinese government that they are lifting the soybean tariff.

Soybean Futures Daily Chart
Soybean Futures Daily Chart

You can also use a technical indicator as a form confirming that sentiment has become too bearish. Two good indicators are the relative strength index and the fast stochastic. Both indicators are momentum oscillators. The relative strength index measures momentum and oversold/overbought conditions based on an index that swings between 1-100. Levels below 30 are considered oversold and reading above 70 is considered overbought. The fast stochastic oscillates between 1-100 with a reading below 20-considered oversold and readings above 80 considered overbought.

If you combine a technical indicator in conjunction with a short interest rate such as the Commitment of Trader’s report, you can find specific scenarios where managed money is short and the market is oversold. These are situations that could lead to a short-squeeze especially if the fundamental news changes.

The Risks Versus the Rewards

Generally, during periods ahead of a short-squeeze, prices are trending lower. There is a very important trading concept which states that markets can remain irrational longer than most traders can remain solvent. Just because the markets are set up for a short-squeeze does not mean that the process will play out.  When you are buying a diving knife you need to have sound risk management to make sure you don’t ride a downtrend the wrong way. You can also build a position by dipping your toe in and making sure you can hold the position if it continues to trade sideways.

Natural Gas Daily Chart
Natural Gas Daily Chart

The rewards can be substantial, and the upward momentum can be extraordinary. In November of 2018, natural gas experienced a massive short-squeeze, at some points rising as much as 18% per day.

How Blockchain is Connecting Humans

Blockchain or the technology of trust, has redefined the way we transact. The technology is based on a patriotic concept, i.e. a huge database authenticated by a wider community, rather than any middle authority further allowing a self-sustaining, secure, and fast movement of information/payments/data.

To be more technically sincere, what happens when you integrate computers, and internet– records are shaped, established over a distributed network of computers and paired with preceding entries in the chain, developed, as a result of continuous data addition (blocks), conclusively, a blockchain is forged.

Since the technology is now no more extrinsic to timeless controversies, the utility of the technology is what is being debated, left, right and center, everywhere online, offline, the right usage or implementation of the massive technology is still being “talked”. Adding some more debatable, but logical and proof-injected, the utility of blockchain, in this article, I will discuss the fusion of social media and the wide and economically responsive tech.

How Blockchain works and Why its proof model provides trustless and distributed consensus?

Blockchain has the potential to move beyond just buy and sell; it has the capability to change the way social interactions take place today, at Viral News Teller–Facebook; Excessive and Unnecessary Trolls–Twitter; Restricted Content–YouTube and Open Scams.

Required and proved benefits of Social Media with Blockchain backing

  • Exclusive control over content: A decentralized approach to connectivity, and a good riddance from a central server, no single authority can enforce monitoring, and control over user-generated content. Since there has to be a financial incentive attached to maintain the decentralized nature of the platform, cryptocurrency can be used to reward the hosts who continue to contribute technically. Again, this removes every financial liability on the company like advertising, payments and software maintenance.
  • The removal of middlemen: Portals like Upwork, Freelancer have annoyingly high ritualistic checks that are indeed necessary but they reduce the employee/employer power. Considering Social Job Portals are now relevantly required, blockchain based SN job portals are evolving where the data is controlled by the users. An already established an ongoing effort of Humans.net is bringing back the concept of privacy back in the most compulsory part of internet i.e. online services. Built on the axiom of “by the people and for the people”, the SN portal charges no fees, has no middlemen, and has no uncertainties of user profiles.

In an interview with Entrepreneur, Humans.net, CEO quotes: “The fundamental building block of Humans is the development of a huge databank or directory of people, and their skills, made accessible to other people on the platform.” and continues to say “We will be a full-fledged decentralized system with social recommendations in the blockchain ranking the skills and services on offer.” In short,  users can provide and seek services through the clever implementation of the blockchain.

  • Riddance from Data Manipulation: Eavesdropping on user data is at present an outcome of rising connected population and interestingly, as shared earlier, Facebook was the false prophet of privacy. However, the third generation of social networking will give users the stick of control, as they can monetize on their content, and decide whether their data is eligible to receive payments or not.
  • A place where user is NOT the product: Social Media is a goldmine of user data which has been exploited/ or is still be exploited by Facebook, Twitter, and Instagram; Blockchain which is the spinal cord for new social media networks, eliminates the possibility of exchanging aggregated information for targeted marketing and money exhaustive campaigns. Hence, the user is NOT the product with blockchain based social media networks, instead is the driver of a reliable, pure and a content-rich community.
  • Improved, Promising and Proven Security: Digital sales is a painful reward of targeted marketing where the smartphone penetration has been taken excessively for granted and has played the catalyst for promoting the same, i.e. user targeting. Facebook was recently accused of invasion of privacy, done at a ridiculously massive scale. The result was a mockery, but again, Facebook is still riding the same horse, this time carefully.

Blockchain-based social networks ensure security and privacy through a distributed consensus mechanism further giving the freedom back into the hands of users. Companies like Nexus is working on decentralizing and encrypting all the data and uploads.

  • A new way to transact payments: Facebook is at present working on creating a payment platform, integrated with messenger but as history says, there is always a disjoint in terms of the messaging and the payment platform, how much is achieved, is to be seen. On the other hand, blockchain based social networks can easily prosper in terms of payment capabilities as a smart token exchange through messaging is already into play.
  • Freedom of Speech: The result of social sharing today is that each and every user, leaves breadcrumbs of information which is usually picked up by third parties. This can happen intentionally or unintentionally as well, but the outcome of the same is usually uncalled interference. Blockchain-based social media networks phenomenally eliminate the need of user accounts and only use digital addresses which cannot be used, exploited or even determined, as well. Obsidian Platform is one of the companies that implement decentralized tech, and, as a result, the communication metadata is scattered over the globe, further giving “immortal privacy and freedom of speech” to its users.

What makes Blockchain a special ingredient in its awkward yet beneficial handshake with social media, is the combination of security provided by cryptography with the immortality of the internet.

Backing the claim with some examples, here is what a few blockchain companies are doing with social media networking as a key ambition. Stay with me!

Steemit: Steem, one of the earliest adopters of the blockchain, has matured into the most trustable, effective and organically growing blockchain based social media network. Unlike Facebook, that only implies viral content growth, Steemit, is based on a decentralized reward platform for publishers who can monetize on content and ultimately grow a community.

A Steemit user, David Kadavy in a short interview with Bloomberg says: “I feel like I’m in the Stone Age when I’m on Facebook or Twitter,” and continues by saying: “They have no value without what you’re contributing to them. If Facebook doesn’t respond to this, things can change very quickly. They should be very concerned.”

Sola: A hybrid of social network and media, commanded by Artificial Intelligence, has more than 700,000 users worldwide now as claimed by the website. Sola is responsible for spreading information at a viral pace, by applying AI algorithms further combined with user reactions. The quality content then reaches the user base of Sola where the rest is done, and that is, making it more viral.

As reported by ICO Alert, an interview with Sola’s CEO, he explains: “It allows us to share revenue from advertising, user payments, and partnerships with users, providing a strong financial incentive to use our service and create quality content.”

PROPS Project: The Props Project is an unusual yet very critical to the need of social networking today. The project is responsible for providing users with real-time engagement, content trending boosts, and gains upvote curation power, along with, knowing the status of their contributions to the whole network growth. Social Media stars like Phil DeFranco and Casey Neistat are broadcasted regularly on the platform, which has in a way, attracted many new users.

CEO of Props Project quotes: “We asked ourselves, how can we leverage our strengths and what would the next generation of a social video look like?” according to WIRED.

Opportunities within the social network that have become available thanks to Blockchain

The best example or indicator of public traction is the continuous, traumatic yet exciting up and down of Bitcoin price. This year 2018, was the year where Blockchain emerged into a greater collective conscious which was the reason why Bitcoin price has been swinging to and fro through hell and heaven. Knowing that blockchain will contribute consequently into cybersecurity, the smart integration of the tech with social networking will bring the following changes:

  1. Access to content
  2. Content Authenticity
  3. Content Consumption

Will blockchain-based platforms replace traditional modes of interaction? Predictions

It is a brutal truth that Facebook is in no imminent danger; the blockchain has the potential to offer a necessary solution to plenty of industries deep-seated problems. A more rewarding, interactive and intellectual experience can be created if the fusion of blockchain and social media maintains the growth it has come up to today. All we have to do is, accept!

Bitcoin or Altcoins: What Should You Invest in?

The cryptocurrency industry is packed full of different coins. Seemingly, every day we have a new altcoin bursting onto the scene that could potentially change the crypto landscape. So, knowing how to invest your money can save your nerves and time.

With so many different currencies available for purchase, how can you hope to make the right choice? In reality, there is no right or wrong option in the cryptocurrency market, as it all depends on goals and application areas. Arming yourself with knowledge can allow you to make an informed decision and minimize your investment risk. Let’s look at the pros and cons of various options available, which might help you to decide on whether you should buy Bitcoin or opt for altcoins instead.

Why so many investment opportunities?

Before we examine Bitcoin and altcoins, we can look briefly at why there are so many cryptocurrencies on the market. Bitcoin is hugely successful – no one ever thought it would take off in the way it has. Furthermore, the underlying technology, such as blockchain, has proven relatively easy to recreate.

Due to these factors, many budding entrepreneurs and Bitcoin enthusiasts created their own coins. They saw an opportunity to rival Bitcoin or to create their own legacy. As a result, we now have an abundance of altcoins on the market.

Bitcoin as the cryptocurrency poster child

Bitcoin is the original cryptocurrency. Initially created and released in 2009, it introduced blockchain technology and the proof-of-work principle to the world. Since inception, Bitcoin has grown to become the most prominent cryptocurrency. There are over 17 million coins in circulation valued at over $113 billion. This figure vastly outnumbers any other altcoin – the second largest cryptocurrency after Bitcoin is Ethereum and its market cap totals only $21 billion.

Bitcoins are mined, and this mining process is an integral part of the coin’s existence. Miners find new Bitcoins and bring them into circulation for rewards. Furthermore, they are responsible for validating Bitcoin transactions on the ledger.

Bitcoin Advantages

The main advantage of Bitcoin is its widespread use and acceptance. It is by far the most accepted as an actual form of payment. Many financial institutions are backing Bitcoin, and it is certainly the currency that most people have heard of. Moreover, Bitcoin has a vast community of users who are dedicated to its long-term development. Finally, it also has an immense pool of miners who maintain the network and ensure it is secure.

Bitcoin Disadvantages

Although Bitcoin undoubtedly has a host of advantages, it has its flaws. The price of Bitcoin has taken a large hit since December 2017 when it rose to stratospheric heights of around $20,000. The price still remains positive, but many analysts wonder if it will ever return to those numbers.

Another major drawback that is becoming increasingly evident is the Bitcoin transaction fees. Bitcoin was meant to have ultra-low transactions fees – this was one of its main selling points. Since miners can choose which transactions to process, they will opt for ones with higher fees.

Finally, many people comment on heavy energy consumption that Bitcoin mining requires – they see this a damage to our environment and would prefer to use a more ‘eco-friendly’ alternative.

Altcoins as alternatives with great potential

Bitcoin is seen as the original cryptocurrency, therefore any new currency has deemed an alternative. There are currently thousands of altcoins available to invest in, and more are developed on a regular basis. Some of them prevail and remain in high demand, for example, Ethereum and XRP; whilst others fizzle out. The following are some of the altcoins and their market cap (as of October 18, 2018):

  • Ethereum: $21 Billion
  • XRP: $18 Billion
  • Bitcoin Cash: $7.7 Billion
  • EOS: $4.9 Billion
  • Stellar Lumens: $4.5
  • Litecoin: $3.1 Billion
  • Monero: $1.7 Billion
  • Dash: $1.3 Billion

As you can see, there are many altcoins available, and each offers something slightly different.

Altcoin Advantages

One of the main advantages of altcoins is that by their nature they serve as an alternative to Bitcoin. If the almighty Bitcoin crumbles, there are altcoins to fall back on. Furthermore, many altcoins actually have a unique function. For instance, Po.et (POE) is built around a platform where publishers and content creators can easily manage their licensing.

Finally, many altcoins offer different systems and processes to Bitcoin and have a greater scope to evolve in the future. XRP and Ethereum, for example, are two different altcoins that have been widely adopted and used in many industries.

Altcoin Disadvantages

The main disadvantage of altcoins is their relative lack of exposure and acceptance. While Ethereum, XRP, and Bitcoin Cash have great support, others just don’t have the same scope. Moreover, there is a limited number of outlets and ways in which you can use many altcoins as they simply haven’t been adopted to the same degree that Bitcoin has.

Conclusion

Just because Bitcoin is the largest currency in supply and has the best support, it doesn’t necessarily mean that altcoins are worthless. You could consider diversifying your investment portfolio and purchasing some Bitcoin and some of the major altcoins. The main consideration is to minimize your risk and make an informed purchase.

How Has Inflation Affected Pension Funds?

Inflation refers to the way goods and services increase in price over time, and it is often compared to wage growth to see how much richer or poorer the population is becoming. An increase in inflation and stagnation in wage growth lead to less disposable income for most, but inflation can also affect pension funds too.

Given that pensions are such a crucial preparation for retirement, it is worth looking at how they can be affected by changes in the rate of inflation, so here are some points worth considering.

Pension deficit

It is worth noting that if you have a final salary pension, it is supposed to increase in value in line with inflation, and this means a higher value is placed on defined benefit liabilities. There is already a considerable pension deficit which is predicted to grow further as inflation rises.

For employers, this either means that they will have to pay more into the pension schemes of their employees, or that they will simply deem their current pensions schemes to be unaffordable and offer a different, less generous one instead. Ultimately, continued rises in inflation along with low-interest rates could spell bad news for pensions.

How does the future look if inflation rises again?

Many workplace pensions have been in a precarious position for some time now, mainly as a result of the current economic conditions. The collapse of Carillion (a company with a large pension deficit) earlier this year highlighted some of the potential problems which can arise from companies having large pension deficits.

With many pensions at risk, The PPF (Pension Protection Fund) has had to step in to ensure that Carillion’s workers still have a pension when they retire. Similar events could well see hard-earned pensions put at risk and rising inflation could exacerbate the problem for companies that are already struggling financially.

Solutions

With rises in inflation potentially threatening the stability and existence of current pension schemes as we know them, effective solutions are needed to ensure that people can afford to sustain themselves in retirement (especially with an ageing population).

One solution could be to pool resources together into ‘super-funds’, which would allow for greater investment opportunities and potentially mitigate the risk of current pension schemes collapsing. If one thing is for certain though, it is that pension schemes will have to change in order to keep up with the changing economic climate.

How to protect individual pensions?

There are a few different measures which can be taken in order for individuals to protect their pensions. First, it may well be worth exploring investment opportunities and putting some money aside for regular investments in the likes of stocks and shares each month. Over a long period of time, this can act as a safeguard in case a pension scheme does collapse (although investments aren’t guaranteed to make a profit).

It may also be worth seeking the advice of specialist pension/investment firms like Bestinvest as they can provide sound advice as to the best course of action for individuals to take when managing their pension.

Inflation Forecasts

It is clear that the future of pensions could rest on inflation figures for the coming years. Luckily, the future looks fairly bright, with inflation predicted to fall from an average of 2.5% in 2018 to 2.1% in 2019. This trend looks set to continue for the next five years, which could help pension funds to recover.

As for the long-term future, much will depend on how the economy performs, especially with events like Brexit on the horizon. With that being said, those paying into a pension scheme may, for now, breathe a sigh of relief, as inflation figures look to be more forgiving.

Inflation has exacerbated the problems pension schemes have been facing and pensions still face a rocky road ahead, despite positive predictions for the coming years. Those with defined benefits pension schemes would do well to keep an eye on any developments to navigate potential future risks.

5 Things You Need to Know About the Cannabis Industry

Though global demand for cannabis has existed for decades (and arguably even millennia), it was not until recently that the international cannabis market began to become completely legitimized. Ongoing legislative efforts and ballot initiatives in the United States and elsewhere around the world have transformed the industry from a black market operation to one that offers investors incredible opportunities to openly increase their wealth.

Normally, when a “new” market is created, industry producers need to wait a significant amount of time before there exists a sufficient level of demand for their product. The cannabis industry, however, has demonstrated itself to be much different. Because high levels of demand already existed all around the world, industry producers quickly recognized that if anything was lagging behind, it was the availability of the global supply.

Clearly, the cannabis industry is uniquely positioned upon a frontier of tremendous opportunity. In this article, we will discuss the most important things for you to know about the industry as a whole and—whether you plan to ever consume cannabis or not—we will also discuss the many unique opportunities for you to earn a significant return on your investment from cannabis trading.

1. The Difference Between Hemp and Marijuana

Before you consider investing in the cannabis industry, it is important to recognize that the term “cannabis” can actually be used to describe a broad range of different products. Though many of the terms in the industry are often wrongfully used interchangeably, both hemp and marijuana are distinctively different manifestations of the more-inclusive cannabis plant.

The primary difference between hemp and marijuana is that, contrary to hemp, marijuana typically contains relatively high levels of tetrahydrocannabinol (THC). THC is the primary component of the cannabis plant that causes users to feel “high” and, consequently, the way in which these products are regulated and managed are significantly different. In the United States, in order for a cannabis product to be labeled as hemp, it must have a THC content of less than 0.3%. Hemp still typically has some active ingredients—usually referred to as cannabinoids—such as CBD, CBN, and others, but these ingredients do not affect users nearly the same way as THC does.

Generally speaking, governments around the world are much less hesitant to allow the growing of hemp than they are to allow the cultivation of marijuana. Hemp can also be used for an incredibly wide variety of industrial purposes including paper, fibers, fuel, animal feed, and many others. This is especially beneficial because, contrary to marijuana, industrial hemp is actually quite easy to grow. Still, because both products are derived from the same cannabis family of plants, there are still some unresolved complications involved in the legalization process.

2. Dramatic Legal Changes around the World

As cannabis use began to enter the mainstream American public in the early 1900s, various groups—including tobacco, paper, and alcohol lobbyists—began to advocate its prohibition. By 1937, the Marihuana Tax Act began to place federal controls on the plant and, by 1970, the Controlled Substances Act outlawed cannabis altogether.

However, despite the fact that the Federal Government of the United States still considers cannabis to be a “schedule I” substance that is more heavily restricted than opiates and certain amphetamines, multiple states across the nation have effectively begun to allow its use. The first “pro” cannabis piece of legislation was California’s Proposition 215, which was successfully passed in 1996.

In 2012, Colorado and Washington were the first states to legalize cannabis for personal use. Furthermore, as of 2018, a majority of states allow the use of cannabis for medical purposes and several more states (AK, OR, CA, NV, MA, ME, VT, DC) have also decided to permit recreational use as well. Currently, only four states (KS, NE, SD, ID) do not allow at least the use of non-psychoactive cannabis.

Though—despite opposition from the federal government—the United States has effectively positioned itself as one of the leading forces with regards to recreational cannabis legalization, there have been significant efforts made elsewhere around the world as well. Uruguay, South Africa, and Georgia are the first three countries to allow full recreational consumption within their borders. Spain, Italy, and the Netherlands are believed to be on the verge of achieving total legalization as well.

Other countries around the world have begun to decriminalize recreational use, allow for medicinal use, or effectively stop enforcing their laws altogether. Furthermore, one of the most notable efforts that have been made is that, as of October 17th, 2018, Canada will allow the recreational use of cannabis across the entire country. Considering the close relationship that exists between the United States and Canada, Canada’s legalization may inadvertently accelerate the pro-cannabis movement in the United States as a result.

3. The Economic Impact of the Cannabis Industry

Though these figures are often difficult to generate, recent research conducted by Grand View Research suggests that the marijuana market is estimated to be worth more than $146.4 billion by the year 2025. When compared to IMF figures from 2017, this means that the marijuana industry alone would be the 59th largest economy in the world.

Clearly, the marijuana industry has the potential to have a major impact on the global economy and to influence a wide variety of different industries.

  • “Cannabis Tourism” is expected to rapidly grow.
  • Medical marijuana—which some claim can help treat chronic pain, cancer, various mental health disorders, and other conditions—will likely begin competing with traditional healthcare and effectively drive down costs.
  • Marijuana cafes, marijuana clubs, and other recreational venues will likely begin to emerge in Canada, the United States, and elsewhere.
  • Once cannabis is fully legal in the United States and Canada, this will likely lead to an increase in international trade (especially in light of the new trade deal).
  • The marijuana industry is also believed to have already created more than 200,000 jobs—many of these employees enjoy more than a 15% pay raise each year
  • Furthermore, in the United States, hemp—the distinctively non-psychoactive derivative of the cannabis plant—has also begun to enjoy bipartisan support from pro-business and pro-agriculture Republicans and generally pro-cannabis Democrats. The Hemp Farming Act of 2018 intends to remove hemp (cannabis with less than 0.3% THC content) from the list of federally controlled substances, support hemp farmers and researchers with various grants, and also allow hemp farmers to have clearer access to the national banking system.

Even though this act has not yet passed, the hemp industry has already begun to flourish in states such as Colorado and elsewhere and has already surpassed $1 billion in domestic value. Once hemp is fully legalized across the United States, it can be expected to perpetually compete with paper mills, animal feed producers, center wellness treatments centers, and various other industries.

4. The Cannabis Industry is “Going Public”

There is no doubt that the general movement toward the legalization of cannabis has already begun to disrupt a wide variety of different industries. What remains unclear is whether these industries—particularly those involved in the medical community—will continue to resist this seemingly inevitable growth or if they will embrace it and find a way to position themselves as industry innovators.

Until such a decision has effectively been made, it remains clear that cannabis producers will continue to occupy a significant portion of the agricultural start-up market. As is the case with many new businesses, the typical large-scale cannabis operations begin with funding from a few angel investors and then seeks additional private funds once they have been able to demonstrate a potential for growth. However, even though there still remains some legal uncertainty regarding the cannabis market, several cannabis producers have already begun the process of issuing IPOs and going public.

Here are some of the top performing cannabis stocks over the course of the past year (2018):

  • Tilray (NASDAQ: TLRY): grew from $25.60 on August 9th to $214.06 on September 19th
  • POTN (OTCMKTS: POTN): grew from $0.19 on January 12th to $0.85 on January 26th
  • Aurora (OTCMKTS: ACBFF): grew from $4.09 on August 14th to $11.36 on October 15th
  • Canopy (NYSE: CGC): grew from $24.62 on August 14th to $54.89 on October 15th
  • Cronos (NASDAQ: CRON): grew from $5.65 on August 14th to $13.75 on September 20th

Clearly, the fact that some of these stocks have demonstrated a potential to more than double their value in a matter of weeks (or even days) will continue to attract initially skeptical investors to cannabis trading. The period between mid-August and early October 2018—occurring near the time many outdoor growers were harvesting their crop—was particularly lucrative for the industry as a whole.

However, despite this potential for growth, it is important to recognize that the cannabis industry is exceptionally volatile. For example, the company India Globalization Capital (IGC) experienced more than 1,000% growth between September 14th and October 2nd, but then lost 70% of that rapid growth over the next three days. Though those who held the stock before this period of volatility are indeed still wealthier because of these movements, anyone who entered the market when IGC stock happened to be at its zenith, may be questioning their initial decision.

Source: Statista
Source: Statista

5. Reasons for Continued Growth

Despite the high levels of volatility that the cannabis industry has clearly begun to demonstrate, one thing continues to remain undeniably clear: even when using conservative projections, the cannabis industry as a whole is still significantly increased in value over time. As capital is gradually shifted from black-market operations to legal, publicly traded firms, the question is no longer whether the industry has what it takes to succeed, but who will ultimately be the most successful.

There are plenty of reasons for outside observers to believe that the cannabis industry will continue its steady rate of growth.

  • As the cost of cancer treatments and other medical treatments continue to rise, patients who find relief in the consumption of cannabis will have a significant impact on global demand.
  • Changing attitudes, legislation, and the opening of markets will help make it possible for major cannabis firms to access a wider audience.
  • Operating on an economy of scale—which is typically made much easier when done through legal avenues—will allow the cost of cannabis to decrease, which will increase accessibility without any damages to profit margins.
  • Increased competition will help spur innovation, drive down production costs, and increase the general quality of cannabis producers around the world.

For better or for worse, the days of full cannabis legalization are undeniably on the horizon. This industry presents the capacity to both complement and disrupts a variety of other industries, meaning that its economic impact is something that no investor can justifiably ignore. Between the bipartisan movement towards legalizing hemp, Canada’s dramatic push to become a world leader in cannabis production, countless initiatives occurring across the states, and various other legalization efforts occurring elsewhere in the world, the industry is clearly prepared to establish itself as a permanent economic fixture.

Conclusion

The cannabis industry—which consists of both hemp and marijuana—is volatile because, as we have seen with other industries (think about the “.com” era), all new industries are positioned upon a frontier of initial uncertainty. However, despite the fact that this level of volatility is likely to continue on into the perpetual future, it remains clear that the value the cannabis industry can offer the world is indeed authentic. The future of cannabis is exciting and will likely witness increased competition, innovation, and consolidation of the world’s top firms. Though investing in the industry is something that can certainly not be done without risk, the almost universally recognizable potential for growth that exists there has uniquely attracted the attention of investors all around the globe.

Trading Litecoin Contract for Difference

Litecoin (LTC), one of the most popular cryptocurrencies, was designed to be an alternative to Bitcoin. It’s one of the biggest altcoins with the 7th biggest market capitalization at the moment. It was released in 2011, works on a proven open source technology, and has many enthusiasts worldwide.

What’s the most important Litecoin changes a lot as you can see on the weekly chart below. Whenever you believe in the bright future of Litecoin or not, if you follow the news about this coin, it’s always a good idea to try to use the information for profit. The good thing about CFD is that that it allows you to benefit from either price change: up or down – doesn’t matter.

All you need is a handy platform that provides useful intuitive tools. You also need a trading account, preferably without minimum deposits. A simple trading app makes it much easier to make a profit when an opportunity comes.

In this article, we will show you how day trade Litecoin with SimpleFX WebTrader – CFD made easy – where you can trade. You can test it with a fully functional demo or a live account with some small funds for a start.

Litecoin Weekly Chart
Litecoin Weekly Chart

Contract for Differences (CFD’s)

A contract for difference, better known as CFDs, is a form of futures contract agreement, which involves a settling of the difference in the value of the CFD on the sale of the contract.

CFDs do not involve an actual owner of the security itself or delivery of physical goods, such as gold, crude oil or even share certificates.

The purpose of trading CFDs is to enjoy the volatility and price fluctuation, without actual ownership, allowing investors to purchase order sizes that can be smaller than the value of a single unit.

Advantages to trading Litecoin through CFDs include

While for certain investors, ownership of Litecoin is part of the trading experience, certain limitations in ownership of Litecoin makes the trading of Litecoin through CFDs a far smoother experience, with a number of trading options that are not available in trading Litecoin as a cryptocurrency via crypto exchange.

trading litecoin with simplefx

Some of the key advantages include:

  • Litecoin CFD investors are not faced with the daunting task of having to identify and download a Litecoin compatible wallet, purchase Litecoin on a crypto exchange and then transfer the Litecoins purchased to the newly created wallet to avoid possible theft by hackers.
  • Most exchanges have a limited number of pairings that tends to result in investors having to purchase Bitcoin or Ethereum first to then be able to buy Litecoin on an alternative exchange that caters for either BTC/LTC or ETH/LTC pairings, many exchanges not accepting fiat money as a source of funding. In contrast, Litecoin CFDs can be purchased with fiat money, which is a far simpler process.
  • Order execution when trading Litecoin CFDs is instantaneous, removing slippage and other issues faced when purchasing Litecoin.
  • Investors are able to go both long and short when trading Litecoin CFDs, providing the opportunity to build trading revenues as the cryptomarket and Litecoin rollercoasters along. Volatility throughout this year certainly justifies investors entering sell orders to go short and buy orders to go long on Litecoin depending upon market sentiment and momentum.
  • In addition to being able to go long or short, investors and traders are also able to enhance yields through the use of margin, with some brokers offering as much as 500:1.

For those looking for high frequency, leveraged trading of Litecoin, the CFD option would certainly be the favorable choice, removing the need to withdraw and deposit Litecoins from a particular exchange account before being able to even place a buy or sell order, the market likely to have moved during the deposit and withdrawal process.

How to Buy Litecoin CFD’s

The first step in any investment decision-making process is to identify the target investment and then type of investment, whether actual or through a CFD.

Litecoin trading

As mentioned, some investors will be wanting to enjoy the full experience of owning Litecoin, including holding the Litecoin in a Litecoin compatible wallet. Traders and investors looking to make shorter dated trades will, however, be looking for the exposure without going through the entire process of buying, withdrawing, depositing and selling Litecoin.

The next step in the Litecoin CFD investment process would be to identify a broker that ticks all of the boxes, certain requirements likely to include appropriate security levels, ease of payment, fees and user-friendly interfaces (trading platforms) and of course attractive margins to enhance returns.

SimpleFX is a reputable broker that offers investors a number of platforms to trade or invest into Litecoin CFDs, on Android phones, iPhones, tablets or the web, with the popular Metatrader 4 (MT4) platform available for desktop.

The first step will be to open a trading account with SimpleFX by selecting the ‘Open a Live Account’ link located at the top right-hand-side of the homepage.

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Once you enter your email address and confirm that you’re not a robot, open the link in the email sent across to you and click verify, where you will then be prompted to set your account password.

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For those looking to fund the newly created trading account with fiat money, there are additional steps involved, while those funding with Bitcoin or Litecoin can proceed without providing additional information.

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In the interest of completeness, we have opted for opening a hard currency account.

Choose account type, we have opted for “Individual”, and click Next.

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You are then prompted to select whether you are from the EU or outside of the EU. Select appropriately and click Next and agree to the terms and conditions.

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Complete the personal information page and click Next.

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Once completed and you have uploaded a scan of your identity card or passport, you will then be prompted for address information and upload a scanned copy of a utility bill or other as proof of address:

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Click Next and you will then be prompted to take and upload a selfie, holding a piece of paper with SimpleFX written on it along with the day’s date.

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Once completed, we would advise that you wait for the verification process to be completed before funding the account.

You will, at this stage, have received an email that, not only confirms the activation of the account but also provides you with useful links, including a link to download the MetaTrader4 application.

Upon confirmation that the verification process has been successfully completed, you can then fund the account and begin trading. Don’t forget to download your MT4 trading platform if you don’t already have one.

To fund the account, go to the menu option at the top left-hand side of the home page and select deposits and withdrawal.

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Select ‘Deposit’ and then choose your preferred method of funding the newly opened account, options including, but not limited to, funding with Bitcoin, DASH, Ethereum, Litecoin and Bitcoin Cash, while also having the option to fund using Skrill, Neteller, Local Payments and FasaPay.

Do review the funding currency options when using Skrill, Neteller, Local Payments and FasaPay and it’s also worth noting that, while you are able to fund the account with cryptocurrencies, funding with fiat money is instant, though additional verification steps are involved.

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Once the account has been funded, you’re good to go!

Litecoin vs Litecoin CFD’s

As mentioned earlier, there are numerous advantages in trading Litecoin CFDs over the buying and selling of Litecoin, the only real disadvantage being the fact that a Litecoin CFD investment doesn’t give you the ownership of the cryptocurrency.

From a trading perspective, however, trading Litecoin CFDs is far more efficient, with significantly shorter execution times perhaps the most important benefit when considering the continued volatility seen in Litecoin and the broader cryptomarket.

With the outlook for Litecoin and the broader market having been muddied this year, uncertainty over what lies ahead from a regulatory standpoint weighing, traders who opted in favor of Litecoin CFDs over Litecoin would have been able to enhance earnings by going short as well as long and, when considering Litecoin’s collapse from a December all-time high $420 to current sub-$90 levels, it would have been quite a 2-way trade, investing long into Litecoin CFDs through to the December’s high and then short through this year.

Throw in the margin and the intraday volatility and trading Litecoin CFDs look even more attractive for traders and investors who are not looking to just buy and hold.

Trading Litecoin CFDs on margin, both long and short does require vigilance however and, while hindsight may make the whole trading game look easy, the use of technical analysis as well as the monitoring of news and protecting losses is vital.

Cryptocurrencies markets are very difficult to predict. The prices can go up or down any day. If you want to profit from the bitcoin and other altcoins price volatility, CFD trading is your best option. You need a handy platform that provides useful intuitive tools. You also need a trading account, preferably without minimum deposits. A simple trading app makes it much easier to make a profit when an opportunity comes. If you want to try crypto CFD trading check out SimpleFX WebTrader. You can test it with a fully functional demo or a live account with some funds for start.

Trading the Economic Calendar

Most traders believe that the current exchange rate or the price of a security reflects all the currently available information. Prices move when new information becomes available. Of course, there is always noise that will whipsaw prices around a range, but for an exchange rate to move to a new range, new information must become available.

New information can come at any time, but some of the most important information is scheduled. This includes economic data, as well as monetary policy decisions. Since the information is scheduled you can use an Economic Calendar to trade around as the new information becomes available.

The Most Important Economic Events

An economic calendar is a schedule of economic events that will take place over the next day, week, month or quarter. An economic calendar will tell you what time a release will take place. In addition, many Forex media sites and brokers offer an economic calendar that includes an estimate that is generally the average of several analysts who are covering that economic release.

There are several very important economic indicators that are market moving events. For example, the employment report in the world’s largest economy (Non-Farm Payrolls), the United States, will consistently generate volatility. The Consumer Price Index (CPI) that measures inflation in the U.S., Europe, Japan and the rest of the developed country, provides insight into price changes and this can be a driver of interest rates and currency exchange rates. Growth is reflected in an economic release called the GDP (Growth Domestic Product). Monetary policy changes by central banks, including the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan, are key events that drive market volatility.

Trading the economic calendar or economic events applies also to commodities and other instruments. For example, if you trade crude or brent oil, you must be attentive to the EIA weekly petroleum report published on Wednesday. Also, The USDA grains report is published once a month and generate high volatility if you trade any of the grains/softs commodities (corn, wheat, soybeans, coffee, cotton, etc).

If the market is surprised by an economic release, you can bet there will be volatility. This happens but is more the outlier than the norm. Analysts from around the globe report their forecasts, which are reflected in an average, with highs and lows by analysts noted. If the actual release is unexpected, the markets will change to reflect the new information. Additionally, market changes after new information can be sharp and nasty. If you monitor these whipsaws in the securities or currency pairs you are trading, you will see that many times these events generate a breakout in the direction of the trend.

Trading the Economic Calendar

Since volatility will follow in the wake of an economic release, you will have an opportunity to take advantage of this situation. Economic releases are generally released like clockwork at a regularly scheduled time during a month. Most releases that are of significance come out once a month and generally reflect the economic situation during the prior month. For example, the May unemployment report in the United States will be released at the beginning of June. There are several economic releases that come out weekly including unemployment jobless claims and the Department of Energy’s inventory report. As a trader, once you find your broker and platform to trade with, you must follow the economic calendar on a daily basis.

How to Trade Economic Events

You can employ several strategies to take advantage of economic releases. You can use a purely technical strategy, or you can combine a technical strategy with your view of what has happened. Additionally, you need to provide yourself with robust risk management. Trading around the numbers can be very risky if you take a position before an important event. If you decide to initiate a position before a market moving event, understand that you need to incorporate illiquid market conditions into your risk management process. Stop losses when markets are illiquid can generate huge slippage. One way to measure this risk is to evaluate the changes in the price of the exchange rate you plan on trading following specific economic releases. If you find for example that the average range of the EUR/USD in the hour following the Non-farm payroll report is 50 pips, you should understand that your stop loss could be at least 50-pips.

A more conservative approach to trading the numbers is to wait for the results and then formulate a view within 30-minutes of the release. As traders begin to jockey for position, you can avoid the initial whipsaw price action as an exchange rate finds a range. Many times, an exchange rate will break in one direction and then consolidate before it continues to trend. Other times the initial move is a fake out. You can combine some technical analysis into your trading to determine a market has positive or negative momentum.

There are hundreds of products you can trade to take advantage of the new information. By trading currencies as well as Contracts for Differences (CFD), you can take a view of most financial instruments. A CFD allows you to trade indices, commodities, cryptocurrencies, and shares. Companies like HQBroker, provide a state of the art CFD trading platform that will allow traders to take a view on a financial instrument while watching economic releases in real-time.

Summary

The capital markets are efficient markets, and most investors believe that all the currently available information is incorporated into the price of a security or exchange rate. Prices generally begin to move when new information is available such as economic data, or a change in monetary policy. Market noise will generate minor fluctuations in prices and add to volatility. You can track changes in economic releases by using a financial calendar where the time and date of most economic releases will be posted.

Additionally, you will be able to find the average analyst forecast which is measured against the actual release. Once this becomes available an exchange rate will begin to move if the forecast is different from the actual release. Obviously, there are degrees of surprise, but if the market is caught offsides it will experience volatility.

How to Trade Using the Carry Trade Strategy

Carry trade is the borrowing or selling of a financial instrument with a low-interest rate, then using it to buy another instrument with a higher interest rate. The trades will either be going short on the lower interest rate currency or going long on the higher interest rate currency, with the carry trades needed to be held for a prolonged period of time using leverage for enhanced returns and take advantage of interest rates spread between the two currencies.

The use of leverage with a broker to increase earnings multiples through interest rate arbitrage is considered to be a ‘risk on’ strategy, where investors will either consider the current economic environment to be positive for their position or, more importantly, for the economic outlook to be positive, supporting an interest rate diverging environment that enhances carry trade returns. The strategy is based on the evaluation of the economic situation of each country or financial zone.

Risk Aversion – How to Trade the Carry Trade?

The carry trade has been a particularly popular medium to long-term strategy within the FX world, with shifts in interest rates tending to be few and the opportunity to take long-term positions to appeal to investors and hedge funds. 

Basically, carry trade is all about the interest rates differentials, and, more importantly, interest rates prediction.

Yet, for the retail investors, cautions must be taken into the account. While in an ideal world, where political stability persists and macroeconomic conditions have been supportive of carry trades, it is not always as simple as moving from a low yielding to a high yielding environment.

Economic shocks will be reflected within the FX world, sometimes far more quickly than in other asset classes.

Additionally, while central banks have a tendency to provide guidance for the financial markets, supposedly giving ample time to respond and position in anticipation of a shift in policy, some central banks are less interested in forwarding guidance than other. A surprise shift in policy by a central bank capable of eroding any returns made through a carry trade on a given day and even lead to heavy losses.

Risk aversion can also come about from natural disasters or war and not just from a shift in the policy outlook.

In summary, key risks to carry trade positions include:

  • Geo-Political Risk – A political event that will influence sentiment towards monetary policy and economic outlook for a given country, such as Brexit, sanctions, trade war and more.
  • FX risk – returns from interest rate differentials offset by exchange rate movements in the carry trade, leading to losses in spite of interest rate differentials favoring the carry trade.
  • Gearing risk – Losses resulting from unexpected movements that are exasperated by leveraged positions that could result in margin calls or even positions being stopped out by an exchange.
  • Interest Rate Risk – More of an issue when including compounding interest. Movements in interest rate differentials can have a positive or negative impact on returns, with a narrowing in differentials leaving returns lower than expected until the next interest compounding period.

And yet, although risk aversion can be a risk for carry trades positions, carry trades can come as a smart decision for a long-term investment or a trigger to buy/sell any instrument.

The most traditional carry trades have been the USD/JPY, the NZD/USD, NZD/JPY, AUD/USD and the AUD/JPY, with the EUR/USD coming into its own since the global financial crisis. There are others, including the Brazilian real and the Turkish Lira, with some more volatile exotics also on offer, but risk appetite will need to be particularly high and with some economies less transparent than others, carry trades into such exotic currencies come with significant risk. Although these pairs are at the highest level of popularity when it comes to carry trades, any currency or currency pair can be considered a carry trade transaction.

Interest rates spread between two countries can be the main catalyst for a strength of one currency over another currency.

Looking at today’s interest rate environment, the EUR and the Japanese Yen are amongst the preferred funding currencies, with interest rates sitting at or below 0%.

When looking at the recent moves in yields for 10-year U.S Treasuries, the material shift in sentiment towards the U.S economy and monetary policy outlook has seen the Dollar rally of late, with year-to-date losses having been all but wiped out in just a matter of weeks.

For those looking to take on carry trades, finding the right trading platform that offers the appropriate trading tools is key. HQBroker is one such platform that offers the trading of FX and CFDs, giving the trader the option to scalp, swing or take on longer-term positions that includes carry trades, with the use of leverage to enhance returns.

Every trader must research and understand the significance of carry trades prior to entering a transaction and at the exit of the transaction. Carry trades and interest rates differentials provide the volatility in the FX market and more importantly, provide the opportunity for a trader to execute a carry trade, with high odds of a positive return.

Ripple vs. Stellar: Will There Be Only One Winner?

Cryptocurrency enthusiasts frequently compare Stellar and Ripple due to the similarities in their blockchains. To get a feel for which of these two cryptocurrencies will pull ahead in the grand scheme of things, you need to take a closer look at each and then examine some points of comparison.

Understanding Ripple

To start, take a closer look at Ripple, which Chris Larsen and Jed McCaleb, American programmers, created in 2012. Ripple’s cryptocurrency is XRP, and that crypto has the third top market capitalization with the XRP/USD price of $0.32. It is important to understand that Ripple refers to the technology, while XRP refers to the token itself. The idea behind Ripple is the ability for banks to make international transfers within seconds at almost no cost. The founders decided to create Ripple to overcome challenges of the existing cross-border payment systems, including slowness, inefficiency, and high cost.

Ripple relies on distributed ledger technology that ends the need for third parties when transferring money across borders, cuts costs and reduces the time spent. XRP is also useful for banks thanks to its ability to provide liquidity. Although the target audience of Ripple is banks, everyone is welcome to use it, and banks are certainly not the only ones who have already put it to good use.

Understanding Stellar

One of the co-founders of Ripple, Jed McCaleb, created Stellar in 2014. As with Ripple and XRP, Stellar refers to the technology, while XLM or Lumens refers to the cryptocurrency. Stellar is like Ripple in that it also allows for quick and affordable sending and receiving of funds. It also has similar coding to Ripple, which should be unsurprising considering their shared founder.

The difference lies in whom the blockchain and token target. Stellar Lumens is for the average person, particularly those in the developing areas of the world, although banks can still use it. The focus of Stellar is on increasing the abilities of those in poor or less-developed countries to interact in the global economy with nearly instant and highly affordable transactions. The Stellar protocol allows for a direct exchange of fiat currencies in cases of high activity, but it typically converts the sender’s money to Lumens, then converts the Lumens to the receiver’s currency.

Are Both Necessary? Similarities and Differences

The lengthy list of similarities between Ripple and Stellar would make some believe that there is no need for both. After all, they both:

  • Have private nodes without mining allowed;
  • Rely on distributed ledger technology;
  • Deliver almost free and instant transactions, making them ideal for international payments and transfers.

Despite those similarities, there are enough differences between Ripple and Stellar to account for a need for both cryptocurrencies. The biggest differences are the target audiences and the goals behind the blockchains. As mentioned, Ripple’s creation occurred specifically to appeal to banks, a huge market with a great deal of potential for profit. By contrast, Stellar’s creation was to extend the reach of financial services around the globe, helping the unbanked. In fact, Stellar refers to itself as “not for profit” because its goal is helping people rather than making money.

The two also use different consensus algorithms, with the unique consensus protocol for Stellar and proof of correctness for Ripple. Furthermore, Lumens coins are inflationary, while XRPs are deflationary, meaning they increase and decrease circulation, respectively. Finally, Ripple is more centralized than Stellar, although both are much more decentralized than traditional currencies.

It is also interesting to note that Ripple tends to be a larger organization and has raised much more capital, something likely related to the difference in target audiences. By contrast, Stellar has a smaller yet highly experienced team and has not put as much of an emphasis on marketing as Ripple has.

Overall, there are differences in:

  • Goals;
  • Size of the organization;
  • Inflationary vs. deflationary nature of tokens;
  • Consensus protocols.

Can They Coexist?

Given the differences between Ripple and Stellar, many believe that there is no reason that only one of the two can exist or “win.” In fact, both are among the most popular cryptocurrencies and they have similar prices. At the time of writing, one XRP was at $0.32, while one XLM (Lumens) hit $0.223. Based on market cap, Ripple’s XRP ranks at number 3 with Lumens not far behind at number 6.

Who Would Win?

Those who want to know which of the two cryptocurrencies would come out on top if one had to disappear, will be hard-pressed to get an accurate answer. The world of cryptocurrency is volatile and unpredictable. At the time of writing, however, Ripple’s XRP has a higher market cap than Stellar’s XLM, $12 billion compared to $4 billion.

There is also the fact that Ripple has partnerships with many high-profile banks and continues to target financial institutions. As such, there is a great deal of money invested in Ripple, and those who are most interested have more money to spend. There are more than 100 banks working with Ripple already, a figure which includes RBC and Bank of America.

To make up for this advantage of Ripple, Stellar has the potential to allow for a cheaper and more seamless exchange of currencies, provided it has sufficient users to exchange currency regularly. Additionally, Stellar has the advantage of being more decentralized, which can prove useful if the world is moving toward decentralization, which seems to be the trend.


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Conclusion

Both Ripple and Stellar make it their goal to improve the ease of completing transactions across borders, particularly those that involve multiple currencies. Ripple is two years older and targets banks when spreading its technology, while Stellar targets the unbanked. Both rank incredibly high in terms of popularity and market value, and their prices are relatively similar. As such, it appears that Ripple and Stellar are different enough to coexist in harmony, and each currently enjoys success. Despite their similarities, those in the crypto community seem to support both currencies, indicating that there does not necessarily have to be a winner.

What is VIX and How Can You Trade It?

The CBOE Volatility Index (VIX) is a market index used to measure the general volatility of the stock market as implied by the S&P 500 Index Options over time. It is calculated and published by the Chicago Board Options Exchange. Analysts and traders use it to predict how volatile the market is likely to be in the foreseeable future. As such, it has gained many trading names over time including ‘the fear index’, or simply ‘the VIX’ among others.

The VIX uses the S&P 500 Index (SPX) options to capture the expected volatility for the next 30 days. The index uses the two options expirations that have more than 23 days and less than 30 days to narrow down on the 30-day timeframe.

Volatility Index Chart
Volatility Index Chart

As demonstrated on the charts above, the VIX and the SPX appear to have a direct relationship with significant spikes and curves occurring just about the same time, or within a 30-day period. This white paper the Chicago Board Options Exchange explains the whole relationship properly and also illustrates how the VIX is calculated using the SPX options.

Trading the VIX

So clearly, it looks like trading the VIX would be pretty a simple task. However, as it turns out, you cannot directly trade the VIX. However, as expert traders at Engine forex point out, the two key extremes of the VIX are known ahead of time that makes it a lot more complicated than it visually appears to be. As such, traders try to trade the VIX by trading products that track the volatility index.

Therefore, the market has created various products that traders can use to capitalize on the opportunities created by tracking the VIX. Most of these are ETNs that allow traders to hedge using funds. Some of the notable ETNs in the market today include VelocityShares Daily Inverse VIX Short-Term ETN (XIV) and the iPath S&P 500 VIX Short-Term Futures ETN (VXX).

When using the VXX to hedge against market volatility, analysts and online trading experts seem to have a bias towards going long when they anticipate a market correction in the foreseeable future. This decision is usually taken when the VIX appears to bottom indicating that it cannot go any lower.

However, as many traders have found out, this theory does not hold when individual funds and ETNs are involved. Sometimes these have moved lower, even when the VIX appeared to have bottomed, which again illustrates the potential impact of trading an asset that tracks a predictive measure of market volatility.

Therefore, in order to understand better how to trade products that track market volatility, it is important to use a shorter timeframe, in this case, the Volatility Index pegged to short-term S&P 500 Index options, represented by the Mini SPX Index Options (XSP).

It is pretty much like using a narrower window to determine how volatile the market is likely to be for the next few weeks, which is likely to return more accurate results.

In general terms, the VIX has also been used to determine the overall market sentiment and views towards the economy. When the market has a bullish view on the economy, the VIX tends to rise as investors flock to the stock market to invest in capital assets.

This is very well demonstrated in the chart above. Starting in late January 2018 to early February 2018, the market experienced one of the sharpest bull-runs in a long time as speculation hit multi-year highs, and this can be seen on both the S&P 500 Index and the CBOE Volatility Index.

However, what followed shortly after was a period of low market volatility as normalcy returned with most of the investors having exhausted their investment capital. Since then the VIX has traded within what appears to be a tighter range and this indicates high levels of market stability. This is also backed by the steady rally in the market as demonstrated by the SPX.

In summary, the VIX predicts market volatility and due to its wider timeframe, it is hard to target the two extremes making it difficult to trade directly. However, traders have adopted the practice of trading products that track the VIX and as demonstrated on the charts, it tends to pay off some of the time.

How to Trade Forex During the Asian Trading Hours? The Best Pairs and Strategy

While the Forex market is considered to be a 24-hour market during the working week, the trading sessions continue to be broken down into the Asian, European and North American sessions.

More specifically, the respective financial centers tend to be tagged, making the Asian session the Sydney and Tokyo sessions, with the European and North American sessions, also referred to as the London and New York sessions.

The main part of the Asian session traditionally begins at 2200 GMT, with the Sydney session, followed by Tokyo that starts at 0000 GMT, the markets opening on Sunday night and closing on Friday evening with the New York session ending at 2200 GMT.

For the Asian markets, the Sydney session ends at 0700 GMT, with the Tokyo session ending at 0900 GMT.

It’s worth noting that there is an overlap between the respective sessions, with the last hour of the Tokyo session overlapping with the first hour of the London session.

So, the Asian session starts on Sunday night at 2200 GMT and ends at 0900 GMT on Friday, with the Forex markets closed from Friday to Sunday evening.

Other than the weekends, there are just a number of public on which all of the forex markets are closed, these being 25th December and 1st January.

On a session basis, national public holidays will also result in national markets being closed, which impacts on trading volumes for the national currency and price action, with no economic data released on public holidays.

Trading Forex during the Asian Trading Hours

When looking at trading through the Asian session, the currency pairings are categorized into the majors, cross-currency pairings (also referred to as the crosses) and the exotics.

The major FX pairings for the Asian session are the U.S Dollar ($) – Japanese Yen (¥) or USD/JPY, Aussie Dollar (A$) – U.S Dollar ($) or AUD/USD and the Kiwi Dollar (N$) – U.S Dollar ($) or NZD/USD.

The Global FOREX markets major currency pairings, which also include the EURO – U.S Dollar, UK Pound – U.S Dollar, U.S Dollar-Swiss France, and the U.S Dollar – Canadian Dollar, account for over 70% of market turnover and are considered to be the most liquid as well as the most popular pairings to trade.

While the EUR – U.S Dollar may be the most traded currency globally, the U.S Dollar – Japanese Yen is the most traded currency through the Asian session and accounts for close to 20% of FX trades on a daily basis.

In recent years, there has also been an increased influence from China, with the markets paying closer attention to China’s central bank, the PBoC, and the daily fixing rate for the Chinese Yuan. How the PBoC fixes the Chinese Yuan is a guide on how the central bank views the Chinese economic outlook. Any devaluations and there would be concerns that the economy is about to weaken, such a view a negative for the Asian emerging currencies.

The Cross-currency pairings include the major currencies, but with the pairings exclusive of the U.S Dollar. For the Asian crosses, these would be AUD/CAD, AUD/CHF, AUD/JPY, AUD/NZD, GBP/JPY and NZD/JPY, with the Japanese Yen crosses being the more favored during the Asian session.

When it comes to the exotics, the currencies belong to economies that have a limited to no impact on the global economy and will have significantly lower trading volumes and therefore much tighter liquidity. Exotics would, as a result, be far more volatile and would be considered to be of much greater risk, which is reflected in their wider bid-offer spreads.

Asian exotics include, but are not limited to the Thai Baht, Singapore Dollar, Philippine Peso, Malaysian Ringgit, Indian Rupee and Hong Kong Dollar.

To have access to the full suite of Asian currencies, it is important to select the right platform to trade on, with there being little point in using a London or U.S based platform, when considering the need for liquidity, support and the availability of fundamental and technical analysis on the Asian pairings during the session.

Alpari is considered to be one of the top brokers to trade during the Asian FX market. The broker delivers a fast execution environment, supported by strong liquidity, low transaction fees, together with all the necessary analytical tools for a trader to make trading decisions and execute on a daily basis.

Best Strategies to Trade Forex during Asian Hours

The key for anyone looking to trade Forex is a strategy. Based on upon a trader is looking to trade for longer-term positions or based on fundamentals or whether a trader is looking for volatility, such as day traders, the periods during the day to trade become more relevant. Some day traders, who complete multiple trades on a daily basis, would make a little gain in a low volatility environment. However, there are many day traders that are more profitable and know how to take advantage of a low volatility market.

It is generally advised for long-term or fundamental traders to avoid the more volatile periods of a session, which are the trading session overlaps, which in the case of the Asian session would be the New York close, Asian open and the Asian close, European open.

While there may be opportunities to trade fundamentals or for the longer-term during the overlaps, should price action be favorable, the volatility could lead to a trade execution at a less desirable strike price.

In addition to the session overlaps between the U.S, Asia, and Europe, the economic calendar will also have a material influence on price action, which again plays into the hands of short-term traders looking for volatility, whilst creating uncertainty for the longer-term or fundamental trader.

Understanding the economic calendar and the level of influence of the data that is released on a monthly, quarterly or on a semi-annual basis is certainly an important consideration for short-term and long-term traders. For short-term traders, being able to predict whether the data release will be positive, neutral or negative for a particular currency presents plenty of trading opportunities, with much of the price action taking place in the hour prior to the release, upon release and in the ten to fifteen minutes following the release. It goes without saying that the greater the deviation of the data released from forecasts, the greater the volatility upon release and the minutes after release.

When it comes to the longer-term trader, having a good knowledge of the key economies, how they are performing and the respective central banks’ outlooks on monetary policy and which economic data release can alter the outlook is important.

For the Asian markets, economic data out of Australia, China, Japan and New Zealand tend to have the greatest impact, with China’s economic data releases not only influencing the Asian markets, but also beyond Asia, though the Aussie Dollar and Kiwi Dollar will be most susceptible to China’s data, particularly when it comes to trade and manufacturing sector data.

With a plethora of stats scheduled for release each day, it is important for traders to focus on the more influential stats and these would be:

  • Consumer price index.
  • Trade Balance, Imports, and Exports.
  • Consumer Confidence.
  • Business Confidence
  • Private Sector PMIs
  • Unemployment Rates
  • Wage Growth.
  • Consumer Spending / Retail Sales.
  • GDP figures.
  • Central Bank Monetary Policy Decisions.
  • The release of Central Bank Policy Meeting Minutes.
  • Central Bank Member Speeches.

So, to sum it up, traders looking for increased volatility during the Asian trading hours should be looking to trade economic data releases, during central bank member speeches and in the overlaps between sessions. It is recommended to find a local broker that operates during the Asian trading hours as decreasing trading errors and having helpful support team from your broker can significantly increase your trading confidence. Alpari operates since 1999 and considered to be a reliable broker with a wide selection of instruments.

For a trader looking to take on more risk, the crosses and even the exotics are there, though, with the exotics, it’s not just the data and sentiment towards the economies that influence, but also a geopolitical risk.

For the longer-term or fundamental trader, avoiding periods of volatility stemming from session overlaps and economic data releases would be advised and, when considering the risks and volatility associated with the exotics, avoiding them would also be a wise decision.

Effective Tips for Creating a Killer Cryptocurrency Portfolio

Cryptocurrency investments are worthwhile. In fact, some people are now billionaires because they invested in virtual money and the systems that support it. Some of them include Chris Larsen, Changpeng Zhao, Joseph Lubin, and Winklevoss Twins, and they worth $8 billion, $2 billion, $1.5 billion, and $1.1 billion respectively.

Their success stories have encouraged many people to invest in cryptocurrencies. Some of these people have failed while others have succeeded. Failures arose out of flawed analyses. For example, people make mistakes when it comes to analyzing market capitalization, diversification portfolios, product development, and investment patterns. Another problem is following the market hype instead of market dynamics. Various reasons for success exist as well. In fact, here are practical tips for creating an incredible cryptocurrency portfolio.

  1. The Supply of the Coin Matters

The supply of a cryptocurrency refers to the number of coins that are present in the market. Examining this quantity helps you determine if there is an adequate supply of the digital currency. Remember, the relative unavailability of the coin relative to the demand for it means the price for each coin will increase. The reverse happens when an oversupply of the digital currency exists relative to people who want it.

Coins Added to the Market

New coins entering the market affect the supply of virtual currency as well. For instance, there will be an oversupply of the coin if additional coins come into the market at a high rate. A drop in the price of the cryptocurrency results from this oversupply. The reverse scenario occurs when new coins enter the market at a low rate. More specifically, the cost of the cryptocurrency will drop.

Investment Decision

Therefore, a prudent investor scrutinizes the supply of the coin and the rate at which new coins are entering the market. Avoid it if there is an oversupply of the digital currency relative to its demand. Give it a wide berth as well, if new coins are entering the market at a high rate.

  1. Diversification Based on Market Capitalization and Target Market

Market Capitalization refers to the total value of a cryptocurrency. Multiplying the number of coins a cryptocurrency has in circulation by the market price of the currency gives you this value. Prudent investors divide cryptocurrencies into high, medium, and low market capitalization categories. Then they invest 50%, 30%, and 20% of their investment money into these categories respectively.

Target Market

Unlike fiat currencies that seek to address any issue, some cryptocurrencies focus on specific needs. For example, some are specific to publishing, lending, and storage. Others include micropayments, advertising, social media, and computing. Unfortunately, many cryptocurrency investors focus on one digital currency addressing one issue in a particular market.

Investment Decision

The top 30 cryptocurrencies are high market capitalization currencies. The 150 digital currencies that follow them are medium capitalization, and any cryptocurrency after that is a low capitalization one Invest 50% in a few of the top 30, 30% in some of the next 150, and only 20% in low category currencies. Diversify your portfolio according to the target market of the coin as well

  1. Analyze Investors and Funding

An ICO may be worthwhile if renowned venture capital firms are investing in it. Remember, these firms have an adequate number of researchers. Therefore, spending your money on a particular ICO means that they have evaluated it thoroughly. More importantly, they have determined that it is a sensible investment.

The Funding

A cryptocurrency whose ICO suffered from inadequate funding is likely to experience massive failure in the future. Avoiding it is an excellent idea as is selling it if you already bought it. Examine the team as well. Remember, an ICO takes time, effort, and a lot of skill. A small staff is an indication of limited funding. In fact, it is likely that some members of the team are developing the code free.

Investment Decision

According to the leadest affiliate crypto platform Stepium, investors should avoid highly valued currencies that have a small team. Similarly, avoid a lowly valued cryptocurrency that has a large staff behind it. Moreover, go for digital currencies that have highly respectable firms investing in them as well.

  1. Look at Product Development and Activity

Product Development

Products are as good as the effort the developers put into them. The same case applies to cryptocurrencies. They are as good as the people behind it. Look at the cryptocurrencies public code repositories to determine the worth of the individuals who are pushing it. Examine the organization of these repositories and the number of contributors who had pushed commits to them.

Level of Activity

The level of activity behind a cryptocurrency tells you whether it will withstand emerging challenges in the industry. Determining their level of activity is possible by looking at public code depositories to see how often they commit code. You can scrutinize their social media as well watch out for details such as appearances in technical conferences or discussions.

Investment Decision

Go for cryptocurrencies that have committed developers behind them. Uninvolved developers could be an indication of a coin that is failing or might fail sometime soon. Moreover, the developers might be inexperienced or inadequately knowledgeable if their level of activity in the industry is low.

  1. The Marketing and the Future

Peter Drucker, an organizational management guru, once said that marketing and innovation are the only two things that help businesses grow. The same principle applies in the cryptocurrency market, i.e., effective marketing leads to the growth of the digital currency and vice versa. Examine the marketing campaign across various platforms including social media and cryptocurrency forums.

The Future Cryptocurrencies are facing multiple challenges including government regulation, hacking attempts, and common misconceptions. Overcoming these challenges is difficult. Fortunately, developers can prevail over them if they have a viable plan to do so. Examine the strategies that the cryptocurrency developers have when it comes to overcoming these hurdles. Are they feasible?

Invest in a cryptocurrency after you determine that the people behind it have a plan to market it. A strategy for overcoming challenges that it might face is necessary as well.

The Difference Between Fiat Money and Cryptocurrencies

The fact that some people, nowadays, transact through electronic money continues to affirm suggestions that cryptocurrencies could be the currencies of the future. However, it will take some time before they find their way into the mainstream sector, given the strong opposition from regulators around the world.

Even as the world moves towards a cashless society, very few people have an idea of how different cryptocurrencies are from fiat currencies.

What Is Fiat Money?

Fiat Money is a kind of currency, issued by the government and regulated by a central authority such as a central bank. Such currencies act like legal tender and are not necessarily backed by a physical commodity. Instead, it is based on the credit of the economy.

Fiat currencies such as the US Dollar, Pound or Euro derive their value from the forces of supply and demand in the market. Such currencies are always at risk of becoming worthless due to hyperinflation as they are not linked to any physical reserves such as commodities.

Fiat currency first came into being at around 1000 AD in China before spreading to other parts of the world. Initially, currencies were based on physical commodities such as gold. It is only in the 20th century that President Richard Nixon stopped the conversion of U.S dollar into gold.

Advantages of Fiat Money

Fiat Money has remained legal tender in most countries in part because they are highly stable and controlled. Unlike other forms of money, such as cryptocurrencies and commodity-based currencies, fiat currencies are relatively stable. The stability allows regulators and governments to navigate the economy against recession and inflation.

Stability also allows fiat money to act as a means of storing value and facilitating exchange. It can also be used to provide a numerical account. Greater control also allows central banks to manage various economic variables such as liquidity, interest rates and credit supply key to ensuring a robust, stable economy.

Disadvantages of Fiat Money

Though Fiat Money is considered a stable currency, yet that is not always the case. Economic recessions over the years have highlighted some of the deficiencies associated with Fiat money. The fact that a central bank’s greater control at times does little to stop inflation or recession has led most people to believe that gold could be a much stable currency given its unlimited supply. The notion of central banks control over the economy and the constant increase in global prices create the need for cryptocurrencies.

What is a cryptocurrency?

A cryptocurrency is a form of digital or virtual currency that can work as a medium of exchange. Being virtual in nature, they use cryptography technology to process, secure and verify transactions.

Unlike Fiat currencies, cryptocurrencies are not controlled by any central authority such as a central bank. Instead, they are limited entries in a database such as a blockchain that no one can change or manipulate, unless certain conditions are met.

Cryptocurrencies came into being as a side product of Satoshi Nakamoto, the brainchild behind Bitcoin cryptocurrency. Nakamoto did not intend to develop a currency but a peer-to-peer electronic cash system for facilitating transactions without any central oversight.

The decentralization aspect of the network means there is no central server where transactions are hosted or controlling authority. In a decentralized network like Bitcoin, every transaction to have ever happened is displayed for everyone to see. Each transaction file also consists of senders and recipients public keys.

Cryptocurrencies Advantages

Cryptocurrencies are available on a click of a button, all over the world. Anyone that can make an online transfer can also acquire and own a digital coin of choice. Although the process is still complicated, in the futures, it will be easier to transact and own cryptocurrencies.

Fast settlement times are another attribute that continues to accelerate widespread adoption of virtual currencies. Unlike other electronic cash settlement systems that take days to process transactions, cryptocurrencies enable instant settlements.

Lower transaction fees have seen cryptocurrencies emerge as a preferred means of sending money across borders. Transferring money using other bank gateways can be quite expensive given the number of fees charged along the way.

Privacy is another aspect that has made cryptocurrency desirable as users don’t have to share their identity to be able to complete transactions. There are altcoins which the main functions are to maintain the privacy of people behind transactions.

Disadvantages of Cryptocurrencies

Cryptocurrencies can be quite difficult to understand – one of the reasons why some countries and regulators continue to shun them. A lack of knowledge on how to use them is another headwind that continues to clobber digital currencies prospects and sentiments.

The fact that it is not possible to reverse a transaction once it is made is another headache that has forced most people to shun cryptocurrencies. If a wrong a transaction is made the only thing one can do is ask for a reversal from the recipient. There is nothing one can do on recipients of a wrong transaction turning down a request for a refund

Volatility is by far the biggest disadvantage that has clobbered cryptocurrencies sentiments. Volatility goes a long way in affecting the value of a coin, which can be difficult to comprehend or contend with.


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Differences Between Fiat Money and Cryptocurrencies

While both fiat money and cryptocurrencies can be used as a means of payment, there are some differences.

Legality

Governments issue fiat currencies, which are in return regulated by the central bank. Fiat money is deemed legal tender in that it is often the official means of finalizing transactions. Governments control fiat money supply and issue policies from time to time that affects their value.

Cryptocurrencies, on the other hand, are merely digital assets that act as a medium of exchange that governments have no control over. The decentralization aspect means no central body can control or influence their value.

Some countries have banned cryptocurrencies on concerns that some of them are being used to fuel illegal activities such as terrorism and money laundering.

Tangibility

It is not possible to have a physical feel of cryptocurrencies as they operate online as virtual coins. Fiat currencies, on the other hand, have a physical aspect as they can exist as coins and notes thus possible to have a physical feel. Fiat money physical aspect at times does present a lot of challenges as it can be a nuisance to move around with vast chunks of money.

Exchange Aspect

Cryptocurrencies exist in digital form as they are created by computers and operate as private pieces of code. The means of exchange is thus purely digital. In contrast, fiat money can exist in both digital and physical form. Electronic payment services allow people to transfer fiat money digitally. In addition, people can transact with one another and exchange money physically.

Supply

A major difference between fiat money and cryptocurrency has to do with supply. Fiat money has an unlimited supply which means central authorities have no cap to the extent in which they can produce money.

Most cryptocurrencies have a cap when it comes to supply, which means there is a set amount of coins that will ever be in supply.  For example, the total number of Bitcoin coins that will ever be in supply is capped at 21 million.

With fiat money, it is impossible to tell the amount of money in circulation at any given time, but with cryptocurrencies, it is possible.

Storage

Cryptocurrencies virtual aspect means they can only exist online thereby stored in digital wallets commonly referred to as cryptocurrency wallets. While most digital wallets claim to offer secure storage, some of them have been hacked resulting in people losing a substantial amount of holdings.

The versatility of fiat money, on the other hand, means it can be stored in various forms. For instance, there are payment providers such as PayPal that allow people to store fiat money in digital form. Banks also do act as custodian of hard currencies.

Bottom Line

Cryptocurrencies and fiat money come with attributes that make them stand out as a means of legal tender regardless of jurisdiction. However, they also come with cons that have seen them continue to divide opinion around the world.

While there are many advantages of cryptocurrencies over fiat money, it seems that cryptocurrencies are not yet mature to replace the current standard payment method. It is a matter of time and not necessarily will be in the form of Bitcoin, Ethereum or any other cryptocurrency. The crypto market will most likely evolve to create a positive product that might change the current money system.

All the Ways to Backup Your Bitcoin Wallet

Bitcoin and other cryptocurrencies allow for the decentralization of the entire financial situation. One of the consequences of that is that you get to be your own bank. Rather than letting a bank look after your money – and charge you a fortune for doing so – you can look after your own crypto assets. But that also means you must take responsibility for the security of your digital currencies.

Unfortunately, there are dishonest people out there doing everything they can to get hold of your wealth. As more people are buying and storing cryptocurrencies, hackers have more incentive to try to hack every device they can to steal those digital assets. They are also becoming more sophisticated over time.

All this means you need to take secure storage of your digital assets seriously. It also means that whatever method of storage you decide on, you need a backup of your wallet, and you need to know how to recover your wallet.

Cryptocurrencies are going to be an increasingly important part of our future, and it’s important to develop a habit of securing your digital assets properly and knowing what to do if a device fails, or if it’s stolen.

To help you navigate the options and some of the confusing jargon that comes with them, we have put this guide together.

Contents

Terminology

First, let’s define some of the key terms you will come across when you buy, sell or store Bitcoin:

Wallet: A wallet is used to store private and public keys. A wallet can be compared to a bank account, a credit card, or even the wallet in your pocket. However, unlike these, a crypto wallet doesn’t actually store your Bitcoin, but rather the keys you use to access your Bitcoin.

Public Key: A public key is like a bank account number. This is the address another sender will use to send Bitcoin to you.

Private Key: A private key is required to access your Bitcoin. In order to send Bitcoin from your wallet, you will require the private and public keys.

Software wallet: A software wallet is a wallet that you download to a PC, notebook, or mobile device.

Popular Bitcoin Software Wallets include:

  • For Windows: Bitcoin Core, Electrum, ArcBit, Armory
  • For Android: Bitcoin Wallet, Bither, Edge, Electrum, Airbitz
  • For iOS: Edge, Green Address, Bither

Hardware wallet: A hardware wallet is a device similar to a USB stick that allows you to store your keys offline.

Popular hardware wallets include: Trezor, Ledger Nano S, KeepKey

Hot wallet: A hot wallet is any wallet that is online. This can be a software wallet on your own devices, or a wallet hosted on an exchange or elsewhere in the cloud.

Cold Wallet: A cold wallet is an offline wallet. Cold storage means either keeping your keys on hardware wallet or printed on a piece of paper, stored in a safety deposit box or hidden somewhere.

Backup: A backup is a file containing your private and public keys which will allow you to restore your wallet if you lose a device or if your hard drive is damaged.

Which Wallet Is Right for You?

Your choice of wallet comes down to the trade-off between security and convenience. The easiest way to store Bitcoin is on an exchange. However, this is also the least secure method. When your cryptocurrencies are stored on an exchange, you do not have control of your keys. If the exchange is hacked, the hackers can steal the assets belonging to all the exchange’s clients, including yours.

At the other end of the spectrum are hardware wallets and paper wallets. If your assets are stored offline, hackers can’t get hold of them. But this also means you need to take full responsibility for storing your keys where nobody can get them.

If you own very little in the way of Bitcoin, an exchange is probably the way to go. If losing your Bitcoin would be a big problem, a software wallet is a better option. And, if your crypto assets are worth a considerable amount, you’ll want to keep the bulk of those assets offline, either on a hardware wallet, or a securely stored paper wallet.

All the Ways to Back up Your Bitcoin Wallet

One of the disadvantages of decentralized ledgers is that you cannot retrieve a lost password. If you lose the password to the website, or if you forget the PIN code for a bank account, there is always a way to reset that password.

Public keys are like a bank account numbers on a blockchain, and private keys are the passwords to access those accounts. The problem is that if you lose either, there is no one to turn to. If you lose the device that stores those keys, they are gone forever, and so are your Bitcoin. Therefore, you must always back up your wallet.

There are several ways to back up your wallet, the following being the most popular:

Seed phrase: Most wallet software does include a recovery process. The software will generate a seed phrase, which you need to write down and store somewhere safe. If for whatever reason, you lose your wallet, you can use this phrase to recover it.

A seed phrase will look something like this:

slim sugar lizard predict state cute awkward asset inform blood civil sugar

The words need to be in the exact order they are generated. For most wallets, if you lose your password, it cannot be recovered or reset, however, if you do lose the password, you can recover the wallet using the seed phrase.

Text File: Software wallets have a function that allows you to export your keys. On some wallets, the function is labeled backup wallet, while on others it is labeled export keys. When making backup files, it’s a good idea to disconnect your computer from the internet before doing so.

On the Electrum wallet, the function is under Wallet > Private Keys > Export and looks like this:

Electrum wallet – Exporting private keys
Electrum wallet – Exporting private keys

Once you click on Export, you will be able to choose between a CSV file or a JSON file, and then choose the drive to send it to.

The file that will be generated is a text file containing all your public and private keys. Remember that once you have that file on your computer, anyone who has access to it has access to all your Bitcoin. As soon as you have created a backup file you should move it somewhere secure, encrypt it (see below), or delete the contents of the file. If you delete the file, go to your Recycle Bin and delete it there too – that’s one of the first places hackers will look for valuable information.

Copy Wallet.dat Files: The other way to make a digital copy of your wallet, is to copy the file the wallet uses to store the keys. Each software wallet stores the file in a slightly different location on your PC, so look at the documentation to find it.

The Electrum wallet stores this file on Windows as follows:

\Users\YourUserName\AppData\Roaming\Electrum\wallets (or %APPDATA%\Electrum\wallets)

For Apple and Linux operating systems you can search for: ~/.electrum

You will probably have to make sure hidden files are being shown to find it.

Paper Copy: One of the safest ways to store your keys is to make a paper copy. Disconnect your computer from the internet and print out the file. Then cover the paper with foil (so it cannot be viewed against a light source), and seal it in an envelope. This should be hidden somewhere, or stored in a safety deposit box or a safe. Once you have done this, remember to delete the file you printed from your computer

How to Encrypt a Digital File

If anyone can open a digital backup file, they have access to all your keys, and therefore all your Bitcoin. For this reason, it’s a good idea to encrypt the file with a password.

When it comes to encrypting a file, there are several options. Most operating systems have a built-in encryption function that is secure enough for most people’s needs.

If you want to use the best encryption possible you can download encryption software from VeraCrypt, AxCrypt or a similar provider. This software allows you to choose between several methods of encryption. You can usually choose between 128 and 256-bit encryption and you can to use two-factor encryption too.

Where Should You Store Your Backup Files?

If you have made a digital backup file (preferably encrypted) you will need to store it somewhere. There are a couple of options for storing these files. Remember, there is little point keeping this file on the same devices as the device with the original wallet on it.

You could store it on another PC, notebook, or even a mobile phone or tablet. Or you can store it on a USB drive, but not if you are likely to lose the drive. The safest way to store a backup file is on a USB drive in a safety deposit box at a bank, or in a safe.

Digital backup files can also be stored using cloud storage services like Dropbox, One Drive, and others. Some people are skeptical of the level of security offered by the most popular cloud services, so make sure you encrypt files before sending them to the cloud.

Restoring Bitcoin Wallet

Restoring a Bitcoin wallet is easier than it sounds. If you have a seed phrase, you can simply use the ‘Restore’ function. Even if your device is lost or stolen, you can download a new wallet on another device, and restore it using the seed phrase.

Simply look for the ‘Restore’ function in the menu, and follow the instructions.

Electrum wallet – Restoring Private Keys
Electrum wallet – Restoring Private Keys

To restore a wallet using the wallet.dat file, simply replace the default wallet file on your computer with the backup file you made. It’s as simple as that.

If your backup file is a text file, you will need to log into the wallet interface, create a new wallet, and then copy and paste the keys from your backup text file. Again – it’s as simple as that.

Your Last Will and Testament

There’s one last thing to consider. Another challenge that cryptocurrencies have introduced is inheritance. If, or rather when, we die, if no one else has access to our Bitcoin, it’s impossible for them to be passed on to our heirs. Even if you explicitly state in your will that you are leaving your crypto assets to a spouse or child, without access to your keys, they will have no access to your digital assets.

There are several ways to make sure your heirs can access your private and public keys. Here’s a relatively simple solution: Create a simple text file with all your keys on them. Put the file in an encrypted, password-protected file on a USB stick. Use a different password from all your other passwords for this. Then give the USB stick to a family member and ask them to keep it somewhere secure. Finally, include the password for the file in your will, a copy of which is kept with your solicitor. When you die, the password will be given to your family, and they will have access to the file on the USB stick.

Conclusion

There are two important aspects to remember about storing your Bitcoins. Firstly, you and you alone are responsible for making sure your crypto assets are safe and that they can’t be accessed by hackers. And secondly, if you are securing your assets properly, there is no password recovery option – if you lose your wallet or access to it, your Bitcoins are gone forever.

For this reason, it’s is important to have a process to both secure your keys using a wallet AND backup those keys. Even if you don’t yet have a large Bitcoin holding, it’s worth getting into the habit of doing this thoroughly. Cryptocurrencies will play an increasingly large role in our lives in the future, and storing them properly will only become more important with time.

How Can You Build a Cryptocurrency Portfolio with Little Money?

This is the question that most people who are just starting out with crypto investing have in their minds. And it is a very pertinent question to ask.

Cryptos are volatile assets, and as much as they can make quick gains, they can roast your rooster to charcoal as fast if your finger is not on the proper dial. This is more so if you have a little cash to start off.

So is it possible to watch your dimes grow from almost zero? Let us try and find three ways of doing exactly that.

Investing in CFD Trading

Welcome to the world of Contracts for Difference (CFDs) and the way they are used for leveraging stocks of underlying assets. Let us explore a few things to get you started;

What is CFD trading?

In Contracts for Difference trading (CFD’s), you are allowed to speculate on the rise or fall of an asset’s value without really buying the asset.

Let me explain; You sell if you predict a fall in the value of the underlying asset, and you buy if you predict a rise.

By using the leverage provided by the exchange, you could be speculating on an asset ten times larger than your investment for an equivalent gain to someone who owns the asset. For example, if you have 100 dollars, you could bet on Bitcoin and gain as much money, with good prediction, as someone who holds $1000 worth of Bitcoin if your leverage is 10%!

But note. You could lose by the same margin if your predictions are wrong! CFD trading is a zero-sum game, and so if the price goes down, the buyer has to pay the seller the difference. It’s prudent to also keep an eye on broker spreads. The larger the spreads, the riskier the CFD if you are good at predicting a particular effort. A spread is simply a price allowance

the broker puts in the rise or fall of an asset price before they can apportion gains or collect losses from traded positions.

How to start trading Cryptocurrencies?

When you decide to try out CFD but do not have a huge budget, you will need a broker to help you out. A reliable broker that provides CFD trading is crucial because they lend you the money to leverage.

From you, a broker will require a margin which is a sort of deposit to protect himself from losses.

Protecting yourself from losses

CFD trading allows you to leverage your position on asset price increase or decrease. The underlying assets (cryptocurrencies) fluctuate a lot. Your goal is to predict the right kind of movement.

To avoid massive losses, you should avoid overextending yourself financially. Hence, You should never take a position that is worth more than what you hold in your CFD account. For instance, if you have $1,000, do not take a position that is worth $1,500 as this will wipe you out if there is a massive drawdown.

In the same breath, do not take credit from your broker that is more than your portfolio. Your broker should only lend you 5% to 10% of your portfolio amount. Lastly, do not invest in CFDs with credit money. There is money to be made, but you can also make losses.

A good piece of advice with CFDs is to make good use of the stop-loss and profit target functions to manage the movement of your portfolio as you speculate. Some brokerage platforms allow you to shadow successful traders, and most have practice accounts.

Trading on Admiral Markets

Admiral Markets UK Ltd is a European based online brokerage firm. They have been in the business for a while and have earned themselves a reputation for being efficient.

In the business of money, reputation is critical. This is why Admiral markets is a known name in the CFD circles. They opened their platform to CFD trading in 2013. Their website and trading platform are user-friendly, and it allows you to keep an eye on your investments 24 hours a day.

Trading in CFDs does not have to be a million-dollar affair. In fact, starting small is most recommended. However, you should take caution to avoid suffering losses and developing cold feet from the get-go.

If you have ever wanted to trade cryptocurrencies but are risk-shy, this is a great way to warm up.

Well-researched investment

The crypto universe has seen a proliferation of many different tokens. There is a massive opportunity to buy cheap tokens and get good returns within a short time as a token starts getting enough interest.

You can make handsome returns with some good research about many tokens that are not yet mainstream. Obviously, you have to be familiar with the crypto world, the impact of fundamental news on some cryptos and, as it recently becomes the main catalyst for cryptocurrencies volatility, the effect of regulation over cryptos’ prices.

If you decide to dig into cryptocurrencies trading, read as much as you can, follow some cryptocurrencies’ investors and analysts on social media, connect to Reddit and find a broker that provides you with the best terms. From that point, your profit depends on your discipline and trading skills.

Early Bird Crypto Looting

Token sales are a great way of making early investments in ICOs that you think will generate a lot of public interest. An ICO is a tokenized business which seeks to fund its future operations using crowdfunding.

When you learn about a blockchain company and its investment idea, the first thing you do is read about how the business will unfold.

What are the problems it seeks to address? Are there better alternatives? Who is developing the idea?

Once you are confident that the idea you are funding will generate interest, you now can invest in the token either for long-term holding or until you can reap a targeted return.

How to prevent losing your portfolio with ICOs

As much as you can make money with ICOs, the risks are high with many of them. Many tokens crash soon before issue, or you could have difficulties liquidating some of them if they are not being bought at the exchanges.

There are several things you can do to manage the risks;

Read the white paper – The whitepaper is the blueprint of any ICO. It spells out what the ICO intends to bring to the market. However, most importantly, it states the amount it needs to raise and how it plans to do that.

You should invest only in tokens that convert at the ICO, that way, even if the price decline sharply, the program will not be derailed.

Look for that needle in the haystack kind of token – Most tokens nowadays are doing the same thing. They mostly just want to add themselves to the decentralized system bandwagon. When investing always go for that coin or token that goes an extra mile.

For instance, most coins that are as a result of a hard fork such as Bitcoin cash or Litecoin cash will be worth your money if their improvement is revolutionary and in demand. Endeavor to also have in your portfolio those tokens that have been well marketed as they tend to have a lot of initial gains in the market.

Final thoughts

While having a good capital base when investing in cryptos can be a good thing, it is possible to start small, learn, and grow your portfolio with time. Whatever you do, be it CFD trading via brokers such as Admiral Markets, Early Bird ICO investment or simple token purchases, use most of your time to research and get facts.

CFD trading can allow you to get leveraged earnings without buying the crypto you are speculating about. When you start with little money, you can learn early through less costly mistakes.

Learn and learn well. No one will give you foolproof advice on investing in cryptos. They are volatile assets, and this means that they make massive profits and return huge losses to different people, in different measure.

Risk disclosure: Forex and CFD trading carries a high level of risk that is not suitable for all investors. Presented information is not an offer, recommendation or solicitation to buy or sell. Before making any investment decisions, you should seek advice from an independent financial advisor to ensure you understand the risks involved. Read more at admiralmarkets.com.

The Separation of Ripple and XRP: Why it Happened? What Does it Mean and What are the Differences?

Contrary to perception, Ripple and XRP are two different and totally independent entities. However, most people, for the longest time have used ‘Ripple’ to refer to the underlying cryptocurrency XRP. While it has been okay, things could soon change as the Securities and Exchange Commission pushes for a clear distinction between the two.

A separation between XRP and Ripple is set to come into effect, a move that will allow both retail and institutional investors to have a clear idea of what the two are and what they stand for.

What Is Ripple?

Ripple is a San Francisco startup company, and the majority holder of cryptocurrency XRP. The company develops software that banks use to facilitate fast, global financial transactions powered by the network’s underlying cryptocurrency XRP. Its platform is one of the most successive, having been used by large financial institutions to enable cross-border payments.

Founded in 2012, the American technology company was originally named OpenCoin before being renamed Ripple Labs in 2015. The company’s main objective is to provide a frictionless experience for sending money using the power of the blockchain.

Financial institutions are increasingly joining the company’s growing global network also called RippleNet to process customer payments reliably, instantaneously and cost-effectively from anywhere in the world.

Ripple has offices in San Francisco, New York, London, Sydney, India, Singapore, and Luxemburg. The company’s value comes from being the creator and majority holder of digital currency XRP. Ripple owns about 60 billion of the 100 billion XRP tokens that will ever be in circulation.

The company placed about 55 billion of the XRP coins it owns in a secured escrow account from which it can only release 1 billion every month. Ripple has never come close to releasing 1 billion tokens to the market as part of an effort that seeks to prevent over flooding of the market that would significantly affect the value of the altcoin

Ripple core product away from its XRP holdings is xCurrent, a network used by banks as a messaging solution for settling cross-border payments in real time.  The company also owns xRapid, a solution that allows financial institutions to convert fiat currencies to XRP quickly and cheaply.

What is XRP?

XRP is an independent digital currency that is used to facilitate transactions on the Ripple Network. The technology behind the cryptocurrency is called XRP Ledger and acts as the blockchain in which the XRP token reside. The ledger is community-based which means only users can decide whether it succeeds or fails.

The virtual currency acts like a bridge between different fiat currencies as well as a source of liquidity. The first version of the cryptocurrency dates back to 2004 as work of web developer Ryan Fugger. However, the protocol in its current form began in 2012, immediately after OpenCoin now Ripple Labs came into being.

Developed as a currency for powering the Ripple Network, XRP allows people to send money digitally. The cryptocurrency came into being as an upgrade of Bitcoin with the aim of solving issues of high transaction costs and slow transaction speeds associated with the popular digital coin. XRP can process transactions in as little as 4 seconds compared to Bitcoin which can take minutes. It can also handle up to 1,500 transactions per second.

Ripple Labs helped develop XRP, resulting in the creation of 100 billion XRP tokens that are used to run and power the Ripple Network concept. While the people behind XRP and Ripple are the same, the two operate independently. The fact that the network is open source and XRP can be bought, ensures the independence of the two form each other.

Ripple Labs owns 60 billion XRP coins of the 100 Billion produced at inception. The remaining coins are traded freely in the market. Despite being the majority holder, Ripple only utilizes the XRP tokens in one of its product, xRapid. The product was developed with the aim of providing a form of liquidity to XRP tokens while acting as a bridge currency for cross-border payments

The success of Ripple, the company, is not in any way tied to the value of XRP the currencies.

Differences between Ripple and XRP

Ripple  Vs. XRP  Differences
RIPPLE XRP
What is It
Ripple is a privately owned company  based in San Francisco in the U.S with Offices in New York London, Sydney, India Singapore  and Luxembourg XRP is an independent virtual currency that acts as an underlying currency powering for powering Ripple’s network
AIM
Ripple seeks to develop and provide solutions for sending money with ease, and at low costs all over the world XRP seeks to act as a bridge currency  for facilitating cross-border payments  between different fiat currencies
Relationship
Ripple uses XRP in its xRapid products to provide banks and other financial institutions with access to on-demand liquidity.

Ripple does not in any way own or control the technology behind the digital currency XRP

XRP being an open source cryptocurrency can be used by anyone including Ripple. That said, it is neither owned or controlled by any entity or person as it operates independently
Control
Ripple Labs are owned by the board,  founders and employers who helped start the company in 2012 Being a decentralized cryptocurrency XRP is owned by anyone who uses XRP and the XRP Ledger.
Usage
Ripple develops and offers products that are used in the financial industry, mostly banks Anyone can use XRP for a variety of purposes, i.e. for making payments. Developers can also build on the XRP Ledger

Ripple-XRP Separation

Ripple control of a good chunk of XRP, while not a bad thing, has been the subject of increased scrutiny and criticism in the recent past. The fact that most people are attracted to cryptocurrencies because of the promise of decentralization has not gone well with some. With Ripple Labs controlling a good chunk of XRP coins, there is fear that the firm wields too much power making it a central authority in a project that is supposed to be decentralized in all aspects.

Ripple, the company, has in the recent past gone on a rebranding drive, trying to emphasize its relationship with the digital asset XRP. The clarification comes at a time of mounting regulatory pressure as regulators call for more clarity on how the two are related.

The unveiling of a new logo for XRP token marks the first step in Ripple moving to distinguish itself from the token. The new logo emphasizes the need for XRP operating independently.  However, the two will still maintain close ties.


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Ripple-XRP Separation Consequences

Separation is a good thing in that it will lead to a clear distinction between the two entities, something that regulators have been calling for. Ripple is currently entangled in three legal cases all of which have been thrown into disarray on regulators and authorities struggling to understand how the two are different and independent from each other.

Ripple and its products led by xCurrent and xRapid won’t be affected in any way by the separation. xCurrent does not use XRP. xRapid on the other hand only uses the cryptocurrency as an exchange mechanism and not for storage of value.

Separating XRP from Ripple should also help alleviate the centralization concerns that many people have come to question. Ripple has already made it clear that even if it holds a majority of XRP coins, it does not mean that it controls it or have an impact on its market cap. Talk of separation should thus help alleviate the concerns allowing market participants to treat XRP just like any other decentralized cryptocurrency.

While there have been concerns that separation could see Ripple dumping a lot of the XRP coins, it currently owns in the market, that won’t be the case. The people at Ripple Labs are smart enough to understand that the success of XRP as a cryptocurrency would be to their benefit thus won’t do anything that would hurt its market value.

There are a number of institutional investors who have been’ skeptical about investments in XRP, on concerns of its association with Ripple Labs. Separation should clear the wave of uncertainty, especially on the three legal cases in court, allowing investors to be in a position to value the token for investment purposes.

XRP has seen its value disintegrate in the recent past on its sentiments in the market taking a hit as a result of regulators alleging that it was issued as an unlicensed security Offering. Breakaway from Ripple could see the matter put to rest on regulators having a clear understanding of what the altcoin is all about.  The coin price should thus receive a boost on the regulatory pressures easing off.

Bottom Line

Ripple is one of the most successful payments and exchange platform that will have a big impact on financial transactions in the future. XRP on the other hand, the underlying digital currency powering the network, should see its value continue to tick higher as more financial institutions use the Ripple network to facilitate cross-border transactions.

The Full Guide to Kodak Coin: How to Buy and How to Use it

What is KODAKCoin?

Back at the beginning of the year, there had been plenty of hype surrounding cryptocurrencies, in particular, Bitcoin, the Blockchain technology and initial coin offerings.

Kodak was amongst the first looking to cross the divide and certainly, the oldest, established in 1888, with a 31st January Initial Coin Offering having been delayed, but not canceled, the advantages of raising funds through an ICO and the benefits of blockchain technology too great to ignore for the Kodak team.

For Kodak, a shift in direction has been needed for some time, with the evolution of the industry into digital imagery having led to Kodak to filing for bankruptcy protection back in 2012. The move into blockchain making more sense than initially meets the eye.

Back in January, when the ICO was announced, Kodak shares rallied by 197% in a single weak as the prospects of a move into the virtual world have been seen as a positive, one that could take Kodak back to the pinnacle of the industry. Kodak’s share price that had hit a high of $13.28 is back down at $3.7, but success in the development of KODAKOne could see more traditional stockholders cash in alongside those grabbing KODAKCoin tokens, once they are available.

Kodak’s initial coin offering is to fund and develop the KODAKOne blockchain technology in partnership with Wenn Digital.

KODAKCoin is described as an ERC-20 token that works on the Ethereum network and could become a mainstream means of payment in the world of digital imagery.

KODAKCoin ICO

At present, KODAKOne is not offering and selling KODAKCoin tokens directly, with all offers and sales being made pursuant to SAFTs (Simple Agreements for Future Tokens), priced at $1.00 during the initial funding round. No KODAKCoin tokens will be issued immediately.

The KODAKCoin SAFT Offering is live and to subscribe, investors can subscribe via the KODAKOne website.

Each SAFT requires the relevant purchaser to submit payment to WENN Digital, Inc. or authorized agents in exchange for the right, upon exercise of the option, to receive KODAKCoin tokens in the future. The Option is only exercisable on or after the later of (i) the launch of the KODAKOne platform and (ii) the one-year anniversary of the date of the purchase of the relevant SAFT; provided, however, that WENN Digital, Inc. may, in KODAKOne’s sole discretion, postpone issuance of KODAKCoin tokens upon the exercise of any Option until such date on which, in the opinion of KODAKOne’s legal counsel, KODAKCoin tokens will not be deemed to be “securities” under the SEC’s Securities Act.

In the event that no legal opinion is issued by 1st July 2019 and the relevant purchase has exercised the option under the terms of the SAFT, KODAKOne will immediately issue KODAKCoin tokens to such purchaser.

The SAFT structure is being used to allow the KODAKOne team to develop the KODAKOne platform and analyze any changes or developments in applicable law prior to the issuance of KODAKCoin tokens.

At present, the purchase of KODAKCoin tokens by way of SAFTs is only possible for accredited investors, as per SEC regulations.

WENN Digital, Inc. anticipates conducting a public KODAKCoin token offering, open to all investors, once the KODAKOne platform is fully functional and KODAKCoin tokens have been issued.

The launch of the beta phase with agencies is anticipated to take place in the 4th quarter of this year, with the KODAKOne platform expected to go live in June 2019.

How to Buy KODAKCoin?

While accredited investors are able to purchase SAFTs by subscribing via the KODAKOne website, actual KODAKOne tokens will not be available for sale until the KODAKOne platform goes live, currently scheduled for June 2019.

Upon ‘Go-Live Date,’ WENN Digital, Inc. anticipates conducting a public KODAKCoin token offering open to all investors once the KODAKOne platform is fully functional and KODAKCoin tokens have been issued.

For Photographers and other members of the KODAKOne platform’s community, who are not accredited investors, alternative methods of acquiring KODAKCoin tokens will include:

  • Users will be able to upload their high-quality images and earn KODAKCoin tokens in the form of licensing and post-licensing payments.
  • Users will be able to acquire KODAKCoin tokens by selling products and services on the KODAKOne marketplace.
  • Users will be able to earn KODAKCoin tokens by participating in KODAKOne’s big data and artificial intelligence programs for corporate clients.

Once KODAKCoin tokens have been issued, a number of exchanges are also anticipated to offer KODAKCoin tokens for trading.

The Usage and Benefits of KODAKCoin

With the rollout of KODAKOne, KODAKCoin will be the token of choice for professional and amateur photographers the world over and even more so if KODAKOne takes the digital imagery world by storm and there’s certainly no reason for it to fail.

On the one side, photographers who have registered their digital works on KODAKOne will receive royalties and payments for works in the form of KODAKCoin tokens, with photographers, both professional and amateur, able to place works on KODAKOne, with prospective customers able to make payment for both services and registered digital imagery under defined copyright laws, protecting both the photographers and the users of the digital images made available on KODAKOne.

The benefits are all too clear, with the World Wide Web as we know it today failing to identify copyright infringements and provide revenue streams to the owners of digital imagery as a result of frequent infringements.

When considering the volume of digital imagery already found on the World Wide Web, estimated to be in excess of 1.2tn, KODAKOne’s target of 10m images to be on the KODAKOne platform by the 2nd quarter of 2019 certainly looks achievable, the incentive for copyright owners clear with the prospect of increased revenue streams from the appropriate licensing of digital imagery under copyright.

KODAKOne has three key areas of focus to address in order to level out the playing field:

  • Money: Amid the proliferation of content on the web, many images are invariably used without a license; it’s also inefficient and costly for photographers to administer image licensing, infringement detection and reporting. As a result, photographers leave a lot of money on the table.
  • Trust: Industry-wide lack of transparency means that photographers are unable to verify royalty statements.
  • Time: Considerable effort goes into managing, protecting and distributing photographers’ images; it’s fragmented across multiple parties and platforms and demands an unnecessary amount of attention and care from photographers.

The team believes that blockchain technology provides the most optimum way for photographers and agencies to store digital image assets and associated metadata in a way that can track ownership, rights and license transactions regardless of where those images are used and by whom.

The combination of the KODAKOne platform and KODAKCoin tokens deliver a licensing platform that tracks usage, gives creators more control over licensing, while also enforcing copyright, not to mention create a marketplace to meet all of the needs of photographers.

The key aspirations of KODAKOne and KODAKCoin can be summarised as follows:

Cryptocurrency: KODAKCoin tokens simplify and speed up payments, with all stakeholders involved in the licensing process receiving their share simultaneously according to the terms of the smart contract saved on the KODAKOne licensing platform. Additionally, it is the driving force behind the KODAKOne marketplace, where photographers can purchase almost everything needed in orders to succeed in their professional careers.

Post-Licensing: The KODAKOne platform acts as a “police officer,” enabling any infringements to be quickly discovered; the platform identifies violations and provides simplified legal proceedings and preservation of evidence; with a friendly approach, the team aims to recover license fees and convert infringers into customers.

Artificial Intelligence: The KODAKOne platform will categorize and enrich images in multiple ways – helping collect and tag valuable information associated with a certain image to help photographers and agencies to effortlessly organize imagery. The KODAKOne platform will also support copyright holders to legally clear their images and make the process as simple as possible.

Big Data: With the use of AI Tech, KODAKOne will collect and process everything there is to know about an image, including how people are using it digitally. This provides photographers and agencies with real-time data to assist them with content plans, refining distribution and marketing strategies.

Blockchain: The digitized, decentralized blockchain ledger will make it easier to store and access information without the need to go through a central authority such as a distributor. Photographers will have much more control over licensing and most importantly, can earn a much higher share of the license fee. It establishes proof of ownership and enables the platform to process license fees in real time using smart contracts – lending both trust and ultimate control to copyright holders worldwide.

Web Crawling: KODAKOne’s web crawlers search millions of websites globally in order to collect active data about the usage of a photograph and to check for a valid license. By using AI, the more information the web crawlers collect, the more intelligent and efficient they become in data collection and infringement identification over time.

KODAKOne Platform and KODAKCoin Cryptocurrency

KODAKOne is described as an image rights management platform that delivers an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they will then be able to license on the platform.

For photographers, the world of photography may get a lot simpler should KODAKOne take off, with KODAKCoin tokens allowing participating photographers to take part in a new economy for photography that facilitates payments for licensing work immediately upon sale and to sell works confidently on KODAKOne’s secure blockchain platform.

KODAKOne’s platform will provide continual web crawling to monitor and protect the IP of the images that are registered in the KODAKOne system. Where unlicensed usage of images is detected, the platform will efficiently manage the post-licensing process, with photographers then rewarded with KODAKCoin tokens.

The KODAKOne platform not only widens the net for the more established professional photographers but also gives amateur photographers a platform to display works and possibly become paid photographers, with the virtual world of blockchain breaking down boundaries to bring photography to the far reaches of the globe.

KODAK’s move back into the digital imaging space could not have been timelier with there being any single, global rights management platform for image licensing.

The KODAKOne platform eliminates problems that most, if not all photographers face with the publishing of works on the World Wide Web, where images are frequently used without the permission of the photographer despite being protected by copyright, leaving the owners of the work to miss out on sizeable income streams.

With the lack of a rights management platform today, photographers are just unable to license their images and identify copyright breaches, let alone benefit from the royalties that would come from such a platform.

The KODAKOne platform essentially removes all of the obstacles that photographers face, by delivering a platform that uses Ethereum smart contracts, with the owners of the rights to images receiving payment instantly with KODAKCoin tokens.

The platform is an end to end management system that handles the registration, protection, and distribution of imaging to deliver income streams that are absent for photographers today.

While photographers will receive royalties with KODAKCoin tokens, holders of KODAKCoin tokens will, not only be able to buy digital images online, but also services including flights, hotels, and apartments, while also being able to make payments for venues and studios and hire models for shoots.

The added benefit for photographers who join the KODAKOne community, is the web crawling functionality that will detect the usage of the images that they have registered on the KODAKOne platform, with any copyright breaches leading to users being charged for usage or for damages stemming from the illegal use of the works, giving photographers the prospect of being back paid for work as well as opening revenue streams that were not accessible before.

Features of the KODAKOne platform can be summarised as follows:

  • Image Registration: Provides immutable proof of ownership of images and enables members to take advantage of the platform’s wider services.
  • Rights Management: Every license will be documented by a smart contract on the blockchain confirming copyrights, licensing terms and conditions to the associated image or images.
  • Transparent Accounting: Royalty payments will be able to be received instantly via the KODAKOne platform’s smart accounting and reporting system; community members don’t need a separate accounting system, as all payment and accounting related information is saved on the blockchain.
  • Community Marketplace: The KODAKOne platform marketplace will enable KODAKCoin token holders to buy, sell and book products and services.

There’s a long way to go before the KODAKOne platform hits the public domain and for non-accredited investors to be able to get in on the action, but the structured approach to rolling out the platform and KODAKCoin tokens may set new standards for the broader ICO market.

What are ILP’s (Initial Loan Procurements) and How Does it Work?

Initial Coin Offerings have for the longest time emerged as a preferred means of raising funds in the blockchain and cryptocurrency space. In most cases, they involve projects selling tokens to investors in a bid to raise funds to support the development of new projects and innovations.

In the recent past, the legality of ICOs has been brought to question after the majority of projects that raised funds have gone under, and in the process closed shop with people’s money. With billions of dollars, having evaporated in thin air, the need for another crowdfunding alternative has never been stronger.

Initial Loan Procurement (ILP) is slowly emerging as an alternative crowdfunding means of raising funds, given that it promises to bypass some of the issues that have clobbered ICOs credibility.

What is an Initial Loan Procurement(ILP)?

Initial Loan Procurement is a crowdfunding method that allows borrowers and creditors to enter into loan agreements through legally binding smart contracts. The fact that the contracts are based on blockchain technology means they cannot be altered, thus providing a level of security something that was lacking with ICOs.

ILPs work by simply providing a way for creditors to lend money to a company or project, after entering into an agreement. Terms of such agreements are stipulated’ and embedded in a smart contract, stored on a blockchain for reference. This method provides an alternative way for companies to raise funds while leveraging blockchain technology without having to develop tokens that may be of little or no use.

One of the key benefits of ILPs is that they don’t require emerging businesses in need of funds to develop tokens. Instead, they only have to enter into legally binding agreements that are implanted in smart contracts. Given that ILPs are a form of loans, also means such kinds of funds are not subject to tax as is the case with ICO funding in some jurisdictions.

What is Blockhive?

Blockhive is an Estonian based company with Japanese roots. The company is the pioneer of Initial Loan Procurements that seek to change the way blockchain and other projects are funded. Founded in 2017, the company seeks to create an ecosystem whereby parties will work together and get rid of blockers in a bid to facilitate innovation.

The company partners with other projects looking to design and implement blockchain strategies. Instead of charging a fee for its services, the company enters into partnerships and generates revenues by sharing profits. The model ensures that all parties work together for the success of a project given what is at stake.

Blockhive shot to prominence on the introduction of Initial Loan Procurements, seen as the next big thing when it comes to crowdfunding in the blockchain space. The company has partnered with smart contract developer Agrello to ensure ILP becomes the desired means of raising funds in the industry. The unique funding method can be harnessed by both startups as well as established businesses and nonprofit organizations.

In addition, the two have unveiled FLAT tokens that are to be issued on Ethereum Blockchain while utilizing smart contracts for handling know your customer and AML checks.

Initial Loan Procurements Basics

Just like ICOs, ILPs structure is as effective as it can get and open to individuals all over the world. The fact that the contracts are signed using blockchain technology means they are legally binding, which acts as a layer of security that creditors can rely on.

Initial Loan Procurements come with legal parameters that govern the mainstream credit market. Investors who decide to invest their money using this method can rest assured that their funds are well protected thus cannot dissipate in thin air as has been the case with many Initial Coin Offerings Projects.

ILPs are also regulatory friendly, in that they can be compliant even with the most stringent regulatory frameworks around the world when it comes to fraud and money laundering. Participants are required to submit identification to show who they are thereby solving one of the biggest issues that have seen regulators castigate ICOs.

How ILPs Works

Blockhive has the responsibility to carry the first Initial Loan Procurement as it moves to showcase how the new crowdfunding method will work and the kind of impact it will have compared to ICOs.

In the case of Blockhive’s ILP, potential creditors will first have to first register their identification by entering an Ether address among other information. Once all the information is verified, the creditors will have to digitally sign a loan agreement and send Ethers to the projects account address from a pre-registered account.

Once the Ethers are received, and a smart contract signed, the creditors will be entitled to annual interest payment of up to 20%. Blockhive is to issue Future Loan Access Tokens, a type of utility token that is to give creditors a right to transfer loans to others, once the smart contracts are issued.

Individuals who receive FLAT tokens can become creditors and use the tokens to sign a loan agreement with other borrowers in need of funding, thereby expanding their funding network.

Tokennote is to serve as the platform for Initial Loan Procurements once the Blockhive ILP is complete.

The Need for Initial Loan Procurements

The Blockhive team believes it is time for ILPs to take over as an effective means of addressing some of the shortcomings that have belittled ICOs. For starters, countries like China have banned ICOs completely, making it impossible for companies pursuing blockchain innovation to raise funds to support their projects.

Funds raised through ICOs in some countries are considered a form of income rather than capital, thus subjected to a tax rate of as much as 40%. With ILPs, the same may not be the case, as funds raised through the crowdfunding method are considered loans, thus not liable to taxation.

Initial Coin Offerings requires businesses to develop tokens some of which don’t have a real function in real life. ILPs, on the other hand, should provide projects an easy way of raising funds without having to go the route of developing tokens to be issued to investors.

ILP as an Alternative to ICO

In an era where regulators are discussing the validity of Initial Coin Offerings, Initial Loan procurements are slowly emerging as an alternative to avoiding stringent regulations. The fact that the crowdfunding method boasts of Know Your Customer and AML standards should see it gain favor with regulators who for the longest time have remained skeptical about ICOs credibility.

The smart contracts embedded on ILPs should be an attractive feature to strategic investors who have been eyeing opportunities in the blockchain space but did not know how to go about the same. The added security layer should enable investors to finance projects they believe in, unlike in ICO where investments are mostly based on speculation.

Initial Loan Procurement is seen as a reliable alternative for raising funds in the blockchain space in part because the issuance of tokens, as is the case with ICOs, is not sustainable. Instances of overcrowding and substandard tokens have come into being in the recent past further denting ICOs credibility.

There is usually zero protection for investors when it comes to investing in ICOs. Startups that issue tokens often don’t provide anything in return that investors can claim to be it a company’s assets or equity. However, with ILPs, smart contracts are legally binding which offers leeway for arbitration in case of anything.

Unlike ICOs, ILP should appeal to the masses, who view cryptocurrencies as volatile investments. ILPs value is tied to the performance of the company rather than a token on offer as is the case with ICOs. What this means is that creditors will always enjoy a form of return in the way of annual interest.

Prospects of earning an annual interest of up to 20% is another aspect that should continue to ramp up ILPs credibility compared to ICOs. Being legally binding, creditors will not have to worry about their money as is often the case with ICOs.

The fact that Know Your Customer Checks are conducted on all borrowers, should make ILPs a secure debt-based alternative method for raising funds in the cryptocurrency space. Investors will now be able to invest in a company rather than overhyped tokens.


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ICO vs. ILP

Taxation

Regulators around the world are increasingly looking for ways to generate some income from the burgeoning cryptocurrency and ICO business. Some countries have already classified ICO funding as capital gains thereby subjecting them to taxation.

The fact that ILPs are actual debts and not capital gains mean proceeds are unlikely to be subjected to taxation as is the case with ICOs.

Tokens

A major difference between ICOs and ILPs has to with the creation of tokens. Projects raising funds through ICO’s issue tokens to creditors that they claim will be valuable in the long run. As it has come to be, that is not always the case as most projects have collapsed leaving investors with nothing to cling on to.

With ILPs, investments are tied to the performance of a company, which removes the need of projects developing tokens to issue to creditors. ILPs work as loans allowing people to transfer contracts instead of tokens.

Coverage

ILPs being a form of the loan means they will be open to people around the world. The same cannot be said about Initial Coin Offerings. China is one of the countries that has banned ICOs, thereby making it extremely difficult for people to participate in projects with huge prospects of success.

Earn Interest

Initial Coin Offerings are mostly based on speculation. What investors stand to walk away with in the long run is dependent on issued tokens becoming valuable. That cannot be said about ILPs. With ILPs, once a smart contract is issued an investor is entitled to returns in the form of interest on capital invested.

ILPs investments are contractually tied to the performance of a company and not speculation as is the case with ICOs.

Use Case

Initial Coin Offerings have for the longest time been the domain of projects looking to come up with new cryptocurrencies or developing blockchain innovations. ILP, on the other hand, acts as a reliable way of raising funds not only for blockchain based startups but other businesses and government entities in need of funding for new projects.

Bottom Line

Initial Loan Procurements promises to be a reliable and effective means of raising funds in the future, in part because of the smart contract feature tied to such agreements.  Smart contracts provide some form of assurance that a project is legit as opposed to ICOs where investors cling on to the hope that tokens issued will be valuable in the long run.

Given the uncertainty that faces ICOs in many jurisdictions, Initial Loan procurement should enhance the growth of decentralized crowdfunding with greater protection for creditors. The Know Your Customer requirements should allow the funding method to gain favor with regulators at a time of increased scrutiny.

3 Common Forex Mistakes Beginners Should Avoid at all Costs

Choosing the Wrong Platform

Choosing the right forex trading platform is essential if you want to get to a good start. A good platform should provide good educational resources, access to news and a variety of trading signals. They should also allow you to trade exotic pairs since some brokers can be very limited as to which pairs you can actually trade. You should also know how they’re charging you for trades, what their withdrawal and deposit conditions are, and how good the customer service and actual platform is.

Risking Too Much

One of the most fundamental mistakes newcomers make is risking too much and getting struck by FOMO, or the fear of missing out. They see a trade they could’ve got in and think about how much they would have gained instead of thinking of how much they could’ve lost.

You should make sure that you only trade what you can afford to lose, and this can be different for everyone, but a good rule of thumb is to not spend more than 2% of your total available capital on any trade. While it may seem small at first, it’s the only sure-fire way to limit how much you could eventually lose.

Just look at it this way, if you end up losing 50% of your capital on a losing trade, you’ll need to double your money on your next trade just to break even. That’s just not sustainable, especially if you’re just getting started. Another advantage of only investing small sums is that you’ll be able to stay calm and not lose your cool if you’re in an initially losing trade. That will prevent you from closing positions too early out of panic since you won’t be afraid to lose whatever you put in.

Ignoring Longer Time Frames

Too many new forex traders come in with a day trading mentality and get sucked into short term 1 minute or 5 minute charts. But sometimes, clear uptrends can only be seen on daily, four hourly, or hourly charts. The longer the trend is, the stronger it will usually be. A dip on a 5-minute chart will never be long enough to give you the clear picture on a trend. While some traders do good on short term trades, they require a lot more discipline than long term ones. There’s also much more chance that there will be interference or noise since companies and big institution players use the market as well.

The foreign exchange market can be very lucrative if you know what you’re doing but it is not as easy as many would make you think. Make sure that you do your homework and know everything there is to know about the market before you consider going in.