Bitcoin Fork Explained

Since the Beginning

In response to the global financial crisis of 2008, Satoshi Nakamoto ventured into the unknown and delivered the global financial markets with Bitcoin and blockchain tech.

Bitcoin’s creator set on a path to bring to end the control that central banks held over the global financial markets.

The concept and ideology of blockchain and ultimately Bitcoin was to allow the community to advance the technology on a united front in a bid to bring down central banks and the world’s largest financial institutions.

Things have not turned out, perhaps, how Satoshi had intended.

Miners vs Developers

In order to police and keep Bitcoin and the blockchain world moving forward, Bitcoin and the crypto community, not only needed developers, but also miners to verify transactions on the Bitcoin network and other crypto networks.

In contrast to Satoshi’s ambition to decentralize, miners and developers, have on occasion, fallen into disagreement over blockchain enhancements and/or developments.

For Bitcoin, minors had cornered the market with mining farms, leaving want-to-be minors out in the cold. This also meant that the income stream was just too large to give up control. Decentralized became centralized in a matter of years.

As a result, the Bitcoin community and the crypto community became divided between those in search of crypto income and the ideologists looking to continue to prize control from governments, central banks, and the world’s largest financial institutions.

This divergence in view and intent ultimately led to the splitting of crypto communities. The crypto technical term for this being a “Fork.”

The Fork

In the crypto sphere, there are two types of forks that investors need to be concerned with. The first and generally of little impact to value and the broader market are soft forks.

In the event of a soft fork, only one blockchain remains valid, with users adopting the changes made to the blockchain.

By contrast, hard forks can have a material impact on price in the lead up and immediate aftermath of a fork.

In a hard fork event, both blockchains coexist. The coexistence occurs from nodes continuing to support the original blockchain.

In some instances, therefore, both blockchains can coexist and remain prominent in the crypto market place. This is when there is sufficient support for both the old and the new versions.

In some cases, however, nodes may eventually shift to the new version, leaving the old blockchain obsolete.

From an investor perspective, an important feature of a hard fork is that holders of the original crypto are awarded the new coins upon completion of the hard fork.

In the case of a successful hard fork, where both chains coexist, the value of the coins can increase substantially.

For this reason, anticipation and an eventual hard fork can have a material impact on price and crypto market volatility.

Since Bitcoin’s creation, the total number of cryptos in the market place have surged to a whopping 11,064 based on numbers from CoinMarketCap.

Notably, in spite of numerous soft and hard forks, Bitcoin (“BTC”) continues to be the dominant crypto.

The 2017 Convergence

Back in late 2017, we did see Bitcoin’s dominance converge with the likes of Ethereum. This coincided with Bitcoin’s first major hard fork, which resulted in the creation of Bitcoin Cash (“BCH”).

While Bitcoin Cash (“BCH”) enjoyed a lengthy period in the top 10 by market cap, a Bitcoin Cash hard fork in late 2018 led to the creation of Bitcoin Cash ABC and Bitcoin Cash SV.

The Bitcoin community have not been alone in dealing with hard forks.

Ethereum hard forked, leading to the creation of Ethereum Classic. In this case, Ethereum Classic maintained the old blockchain history. We also saw Litecoin hard fork, leading to the creation of Litecoin Cash.

In spite of disagreements between respective developers and the communities, however, Bitcoin, Ethereum, and Litecoin have all remained the dominant chain.

Lessons Learned

Major disagreements between developers and communities can lead to significant disruption. More importantly, market stability also comes into question.

Since the headline grabbing hard forks of Bitcoin, Ethereum, and Litecoin, the number of notable hard forks have fallen.

Developers and nodes working together to achieve Satoshi’s ambition of toppling central banks is now a more plausible outcome. Infighting had led to significant disruption and ultimately a marked decline in value.

Stability across the major crypto blockchains have supported the increased adoption. The increased adoption contributed to Bitcoin’s surge to an all-time high $64,829.0, struck in April 2021.

While volatility across the market place will unlikely abate anytime soon. The absence of hard forks and infighting, however, would serve the crypto community and investors well in the short to medium term.

The Role of Blockchain in Finance

Blockchain offers tremendous benefits for businesses. The question is whether they will use them to their advantage.

The rapidly progressing adoption of blockchain technology and cryptocurrencies are disrupting the financial industry.

According to CoinMarketCap, the crypto market – which now includes over 9,800 digital assets – has a combined capitalization of $1.25 trillion, outpacing Apple on the road to challenge gold’s leading position ($11.65 trillion).

At the same time, a recent report estimates the blockchain market to expand from 2019’s $2.01 billion to $69.04 billion by 2027 at a compound average growth rate (CAGR) of 56.1%.

By now, it has become clear that distributed ledger technology (DLT) is in high demand.

But how can blockchain and crypto help financial organizations in improving business efficiency?

Blockchain Is More Than Crypto

When most people hear the phrase “blockchain”, the first thing that comes to their minds is cryptocurrency.

Indeed so, blockchain is the underlying technology of crypto, which powers nearly all digital assets on the market while promoting transparency, high security, peer-to-peer (P2P) transactions, and decentralization.

That said, blockchain is not solely about cryptocurrency transactions. Instead, DLT can be used in almost any field related to data delivery and information processing.

For that reason, many companies are either considering or already adopted blockchain technology to enhance their business processes.

Despite that DLT is still in its very early form, there are many examples of large corporations utilizing the blockchain for real-world use-cases.

One is Walmart that has partnered with IBM and Unilever to leverage the Hyperledger Fabric blockchain for tracking product supply chains.

IBM also has its own blockchain, with the multinational tech firm becoming a leading B2B distributed ledger technology provider in recent years.

Real-world blockchain applications continue to proliferate, with an increasing number of companies integrating DLT-based solutions into their business processes to achieve higher efficiency.

Through transparency in a decentralized environment, businesses can promote trust as well as attract new customers and increase their existing clients’ loyalty, who can now track their products to assess their quality via the blockchain.

In China, the clothing-retail giant H&M partnered with the VeChain blockchain platform to implement a similar solution.

By leveraging DLT, the company’s customers can access detailed information about the production of branded clothing by simply scanning a QR code via their smartphones. Furthermore, shoppers can even watch videos of how the products in the stores were made in the factories.

The Power of Blockchain

As you can see, blockchain is a powerful tool for businesses.

And for an excellent reason, DLT offers both service providers and end-users tremendous benefits compared to traditional systems.

Due to its transparent nature, blockchain technology allows data to be tracked from start to finish, eliminating the need for blind trust from customers. At the same time, it offers an opportunity for businesses to attract more users.

Furthermore, blockchain transactions are peer-to-peer, which means there’s no need for intermediaries or other third parties. As a result, companies can significantly reduce their operational costs while improving business efficiency by accelerating and automatizing processes via smart contracts.

Despite the traceability and visibility of blockchain transactions, users do not know the real persons behind the transfers, which makes them more private than traditional solutions.

How Businesses Adopt Crypto

Blockchain and cryptocurrency often walk hand in hand.

For that reason, many businesses are increasingly exploring crypto as an asset class for investments.

Since 2020, we have seen that this has become a growing trend among not just private and digital asset businesses but also publicly traded companies.

For example, MicroStrategy, Tesla, and Square have invested $2.24 billion, $1.5 billion, and $220 million in BTC to date, respectively.

But what would happen if businesses decided to adopt cryptocurrencies for payments as well?

The thing is, many of them already did.

In addition to the travel industry where digital assets have demonstrated increased adoption for payments (e.g., Expedia, airBaltic, LOT Polish Airlines), large enterprises like Microsoft, Starbucks, AXA Insurance, etc. have integrated crypto as a payment method for their solutions.

Furthermore, while PayPal has already added support for crypto transactions, Visa and MasterCard are racing against each other to integrate digital asset settlement into their massive payment networks.

Cryptocurrency Promotes Financial Sovereignty

Compared to fiat currency, crypto has three major advantages: autonomy, convertibility, and decentralization.

Blockchain networks are highly resilient against network issues and do not require third-party intervention to operate.

For that reason, cryptocurrencies are virtually independent of government action, with the latter potentially causing severe failures in the monetary system that can often lead to economic collapses.

Furthermore, with the industry maturing, it has become much easier to exchange fiat currency to crypto with only a small commission.

Thereby, crypto can be effectively used for cross-border transactions, which usually feature much faster settlements and cost-efficient fees compared to traditional international transfer (especially for payment-optimized assets like XRP or XLM).

Businesses Must Adopt Blockchain to Become More Efficient

Blockchain is a technology that is still being studied.

Yet, despite its early development stage, DLT already has a lot to offer for the companies willing to adopt it.

Besides, as more of blockchain’s potential gets harnessed, we will undoubtedly see drastic changes in the financial industry and many other sectors as key players seek to achieve greater operational efficiency.

Petr Kozyakov, co-founder and CEO at the global payment network Mercuryo

How To Choose The Right Forex Strategy

How To Choose The Right Forex Strategy

There are many trading strategies available, but going through them one by one is not practical. Instead, traders should focus on the following key things when choosing a trading strategy.

Available Time

Your search should start with the question “How much time do I have”. If you can sit behind your desk for hours watching charts, you’ll be able to choose from the whole set of forex trading strategies, including those that were developed for day trading and scalping.

If this is not your case, you should focus on longer timeframes. Such strategies will allow you to set alerts at key entry points in advance, and you’ll be able to trade according to your plan while taking a look at markets from time to time rather than staying glued to your screen all day long.

It’s important to note that you should be frank with yourself. Markets will not wait for you to come back home from your daily job. If you try to use a strategy that does not fit your schedule of life, your results may be disappointing.

Traits Of Character

Your forex trading strategy should fit your personality. This is a very important point as success in trading is very dependent on the psychological strength of the trader.

If your trading strategy is uncomfortable for you for whatever reason, you will become anxious, get tired and make mistakes that will cost you money.

If you are able to make fast decisions but patience is not your strength, you’d be better off searching among strategies for shorter timeframes, like the ones created for day trading or scalping. In the opposite case, you’d look into strategies developed for swing trading or positional trading.

A forex trading strategy that fits your personality will make your trading much easier so you should not neglect this important part when choosing which strategy to use.

Risk Tolerance

Some forex trading strategies are rather risky (but offer higher potential returns), while other are more conservative. Your forex trading strategy should fit your risk tolerance level, or you’ll set yourself up for trouble.

Your risk tolerance depends on your psychological traits (some traders are more conservative, while others are risky and are ready to experience material losses in pursuit of big profits) and financial situation.

If you plan to supplement you current income with trading, you’d be better off choosing more conservative strategies. In case your goal is to grow your account aggressively and you have other sources of income that support your lifestyle, you could try strategies that involve bigger drawdowns.

In any case, if the risk of your forex trading strategy exceeds the level of your risk tolerance, you will not be able to execute the strategy correctly and your results would be poor. In this light, aligning your trading strategy with your financial goals is very important for your future success in trading.

Market Direction

There are two basic types of market behavior – a trending market and a ranging market. You must evaluate the type of market before choosing your forex trading strategy.

Using strategies that tend to perform in a trending market when the market is in the range may lead to a disaster. For example, various strategies based on breakouts will fail time after time in a true-ranging market since you’ll get caught in many false breakouts.

The same is true for using strategies for the ranging market at a time when the market is moving in a strong trend. Your attempts to buy at support levels or sell at resistance levels will fail in a trending market since these levels will likely get breached.

In this light, you should learn to distinguish between a trending market and a ranging market and have a forex trading strategy for each type of market behavior.

Recent Performance Of The Forex Trading Strategy

Past performance is no guarantee of future results – you have probably heard this statement many times. This is true as trading strategies that worked in the past may not work in the current market environment.

However, this does not mean that you should not back-test the forex trading strategy that you are going to use. If you have correctly identified the current type of the market (trending or ranging) and selected the appropriate forex trading strategy, you should take a look at how it would have performed in recent weeks or months.

If you see that the strategy would have delivered positive results, you should try it in real trading. However, if your analysis shows that the strategy was not working in recent weeks, you should search for another forex trading strategy that had better performance.

Putting It All Together

Now that we’ve discussed the main things to consider when choosing a forex trading strategy, let’s take a higher-level view on this process.

The most important thing is to stay realistic when choosing a forex trading strategy. There is no need to rush. You should take your time and carefully evaluate your personal financial goals, time available for trading, current preferences in trading and the current state of the market.

You should also prepare for various market conditions. At a minimum, you should have a plan at hand for a trending market and a ranging market. Ideally, you should have several strategies for each type of market so that you can quickly switch between them if you see that one of your strategies does not perform according to your initial expectations.

You must also keep in mind that any strategy needs time to show its true performance in current market conditions so you should be patient and give it some time before you draw final conclusions.

If you do everything correctly, you’ll have a set of trading strategies that could be tweaked over time to suit your needs.

Forex Trading involves significant risk to your invested capital. Please read and ensure you fully understand our Risk Disclosure.

This article is brought to you by Forex4you

What You Need to Know about SPACs – Wall Street’s Hottest Trend

Recently, U.S cryptocurrency exchange “Bullish” announced it is aiming for a $9 billion listing on the New York Stock Exchange via a merger with Far Peak Acquisition Corporation, a special purpose acquisition company (SPAC).

While many were focusing on what this transaction will mean to the crypto industry, others were asking, what is a SPAC and why should I learn about it? Still, others want to know if it’s an investment strategy that’s here to stay or another Wall Street fad.

What is a Special Purpose Acquisition Company (SPAC)?

According to most legal sources, a special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.

SPACs aren’t new. They have been around for decades, but have recently become more popular because low yields have driven investors to seek alternative ways to increase their capital. Not only have they become popular with sophisticated, high-wealth individuals, but they have also drawn the attention of underwriters who envision a big payday in the form of commissions and fees.

SPAC IPOs have seen a resurgent interest since 2014, with increasing amounts of capital flowing to them.

  • 2014:  $1.8 billion across 12 SPAC IPOs
  • 2015:  $3.9 billion across 20 SPAC IPOs
  • 2016:  $3.5 billion across 13 SPAC IPOs
  • 2017:  $10.1 billion across 34 SPAC IPOs
  • 2018:  $10.7 billion across 46 SPAC IPOs
  • 2019:  $13.6 billion across 59 SPAC IPOs
  • 2020:  $83.3 billion across 248 SPAC IPO

How is a SPAC Formed?

A SPAC is created, or sponsored, by a team of institutional investors, Wall Street professionals from the world of private equity or hedge funds. They create this entity that has no commercial operations. It makes no products and does not sell anything. In fact, the SPAC’s only assets are typically the money raised in its own IPO, according to the Security and Exchange Commission (SEC).

What’s interesting about a SPAC is that when it raises money, the investors buying into its IPO do not know what the eventual acquisition target company will be. That’s part of its mystique, however, since institutional investors with track records of success can more easily convince other investors to invest in the unknown. Due to this, a SPAC is also often called a “blank check company.”

How Does a SPAC Operate?

After the SPAC is legally created, it now needs cash to create the capital needed to do the acquiring of another company, for example, in the future. Remember, the SPAC is not going to raise money to buy equipment, computers, software, or even pay rent. It needs the money to buy what is often referred to as the “eventual acquisition target company”.

A SPAC will raise the money it needs through its own IPO. CNBC says that SPAC IPOs are usually priced at $10 a share. Once the initial capital is raised, the money goes into an interest-bearing trust account until the SPAC’s founders or management team finds a private company looking to go public through an acquisition.

Legal experts say that once an acquisition is completed (with SPAC shareholders voting to approve the deal), the SPAC’s investors can either swap their shares for shares of the merged company or redeem their SPAC shares to get back their original investment, plus the interest accrued while that money was in trust. The SPAC sponsors typically get about 20% stake in the final, merged company.

Time is of the Essence

Once SPAC sponsors raise the capital they need to go to work acquiring companies, they can’t sit on the funds forever, even if they are protected by trust and earning interest. SPAC sponsors also have a deadline by which they have to find a suitable deal, typically within about two years of the IPO. Otherwise, the SPAC is liquidated and investors get their money back with interest.

What are the Advantages of a SPAC and Who Benefits?

Owners of smaller companies find selling to a SPAC more profitable because the sale often adds about 20% to the price of the deal compared to a typical private equity deal. Additionally, being acquired by a SPAC can also offer business owners what is essentially a faster IPO process under the guidance of an experienced partner, with less worry about the swings in broader market sentiment.

Business owners are often worried about extreme market volatility or the fear that weak investor sentiment could force the postponement of an IPO. By dealing directly with the SPAC, these worries are essentially eliminated.

Furthermore, a deal with a SPAC can be wrapped up in just a few months versus the traditional process of registering an IPO with the SEC, which can take up to six months.

Basically, the key advantage is a business owner can get his money faster and without a lot of government tape.

Are There Any Pitfalls?

Nothing is guaranteed and SPACs are no exception to that rule. Although they are extremely popular in 2021 for large institutional investors and other billionaire backers, this trend can go away quickly if “something better” comes along.

Other factors that could determine its long-term popularity include the fact that target companies run the risk of having their acquisition rejected by SPAC shareholders. Even the rich get cold feet about a deal. Furthermore, investors are literally going blindly into the investment.

SPACs will probably retain their popularity until the major players decide to let the smaller investors into the game. That’s usually when the rules change and the government regulations get tougher in order to protect undercapitalized investors from losing all their money.

What are Some High-Profile Examples of SPACs?

We don’t know yet how the SPAC for Bullish will play out because it was just announced. But since it involves cryptocurrencies, it will probably become a profitable venture since investors looking to get aboard the craze have been throwing money at the asset class.

High-profile SPACs like DraftKings and Virgin Galactic have performed well for investors, but that hasn’t always been the case with average returns from SPAC mergers completed between 2015 and 2020 falling short of the average post-market return for investors from an IPO.

A noted prominent short-seller of SPACs said, “a business model that incentivizes promoters to do something – anything – with other people’s money is bound to lead to significant value destruction on occasion.”

Like any investment, it pays to do your homework before putting money into a SPAC.

What Distinguishes Japanese Technicians from Western Technicians

However, within years I realized that there were major shortcomings to the Western technical approach as they were based upon technical studies which used lagging indicators.

One of my mentors, Larry Williams expressed that sentiment in the best possible way. He said that as a Western technical analysts we are like individuals sitting at the back of a boat looking at the wake caused by the propellers. We are attempting to derive where the boat is headed by determining where it has been. Truly a lagging indicator. But he added one caveat, “only the captain knows when he will turn the wheel”.

However, it was a client of mine that first exposed me to the art of Japanese technical analysis. Within my first few years of trading, I noticed that the vast majority of first-time futures traders lost money. Within that pool of new traders, I noticed one gentleman who had the uncanny knack of selling market tops right before a key reversal, as well as buying market bottoms before a pivot occurred.

After witnessing him correctly predict and profit from 10 consecutive trades, I realize he was using a technique that was completely foreign and unfamiliar to me. I asked him what techniques he used to have such a stellar performance and he answered that it would be too complicated to explain, but he could send me a book that would detail this technique.

The book I’m referring to is the Japanese chart of charts written by Seiki Shimizu. It was the first book written by a famous Japanese trader and translated into English in 1986. It is one of the more difficult books I have ever tackled in that the Japanese language is composed of “Kanji”, or word pictures.

According to Seiki Shimizu, “A chart is like a cat’s whiskers” In his book, he writes “Standing on the corner we notice many things… in the case of a skipping rope, a child will always focus on the moving rope while jumping. However, this habit and instinct are not limited to human beings. A cat preying for a mouse will wait near a likely hiding hole. If a mouse does appear, the cat must decide which way it thinks the mouse will go and springs in that direction once the mouse begins to move. I don’t think the cat understands the mouse’s feelings and thought patterns. It’s the cat’s whiskers that are said to have the telepathic power of being able to interpret a mouse’s movement by smell, light, and wind. Therefore, I believe it is this power that moves a cat’s whiskers, whereupon the cat decides whether to wait or chase after the mouse.

It is said that “A market price is a living thing.”

Japanese Candlestick Charts and their patterns were conceived over three hundred years ago by a rice trader named Sokyu Honma (1716 -1803). Sokyu lived in Sakata, Japan, and was also known as Sokyu Honma and Munehisa Homma.

It was rumored that he made 100 consecutive profitable trades. His success was so great that he achieved the rank of honorary Samurai, as well as attaining the government rank of a financial advisor.

At first, his methods of trading were kept a secret as they were passed down when he compiled a book in 1755 called the ‘Fountain of Gold – the Three Monkey Record of Money’. This book detailed his findings and observations of market sentiment.

Simply put the Japanese technical approach can mathematically quantify market sentiment. Something that has alluded to Western traders.

This article has been written as an ancillary discussion to the interview that David Linda myself did this morning in which we spoke about my methodology. As it is too complex to be able to discuss the totality within a single opening letter I am providing links to articles that I have written for Kitco education at the end of this article.

I hope that the knowledge presented within these brief presentations will allow you as a trader to gain insight, and most importantly be a more effective trader.

For those who want more information, please use this link.

Wishing you, as always, good trading and good health,

Gary S. Wagner

References on the Japanese candlestick technique found in the Kitco education section;

THE HISTORY OF JAPANESE TECHNICAL ANALYSIS

EAST VERSUS WEST (LESSON ONE)

EAST VERSUS WEST – CLASSIC NAMES AND EXPLANATIONS OF JAPANESE CANDLESTICKS (LESSON TWO)

THE SAKATA FIVE

AN INTRODUCTION TO HEIKIN-ASHI CHARTS

How To Choose A Cryptocurrency Exchange

Most people consider investing or trading in Bitcoin and other cryptocurrencies as intimidating. This is because the cryptocurrency market has been presented to most people as a very technical financial market.

However, that is not the case. You can start trading or invest in cryptos in no time, as long as you follow the right process. Following the right process starts by choosing the cryptocurrency exchange to use. Crypto exchanges are your gateway to the cryptocurrency market. Hence, the reason why they are important.

This guide helps you learn how to choose a crypto exchange and some of the best ones in the market.

Table of Contents

What Are Crypto Exchanges?

Crypto Exchanges are platforms where people can buy and sell cryptos like Bitcoin. You can use the exchanges to trade one cryptocurrency for another — converting Bitcoin to Ether – or to purchase the cryptocurrency using regular fiat currencies like the USD or GBP. These platforms reflect the current market prices of the cryptocurrencies they offer. The users can also convert the cryptos back to fiat currencies on an exchange, giving them the option to withdraw the funds back to their regular bank account or leave it on the exchange platform to trade back into cryptocurrencies later.

There are hundreds of cryptocurrency exchanges available to traders and investors. Hence, making it a tough decision to choose the best ones. However, the criteria outlined below will help you determine how to choose the right cryptocurrency exchange for you.

What Are The Criteria For Choosing Crypto Exchanges?

  • Authenticity and security.

Conduct your research to determine whether the exchange you are choosing is a legitimate and secure platform. The authenticity and security of a platform will help you determine if your funds would be safe with the crypto exchange. Traders have lost billions of dollars to scam platforms. Hence, ensure you check the reputation of the platform and the various security protocols they have in place to secure your data and funds.

  • Method of purchase.

The method of purchasing cryptos varies between platforms. Some platforms support deposits by bank transfer, some use PayPal, others accept credit and debit cards, and some only use cryptocurrency for purchases. Study the various payment options available on the platforms and choose the one most suited to you. For starters, with no coins, it is essential that you choose a platform that accepts fiat currency as it allows you to enter the market with little stress.

  • Supported coins and tokens.

Virtually all crypto exchanges support Bitcoin and Ethereum. However, there are thousands of cryptocurrencies, and some investors want to gain exposure to others aside from BTC and ETH. Thus, you have to know the coins and tokens supported by a crypto exchange before you choose one. Binance is the most popular because it grants traders and investors exposure to more cryptocurrencies than other platforms.

  • Fee structure.

The transaction fee structure differs across various crypto exchanges. Understanding the fee structure of a crypto exchange is crucial as it allows you to know what you are dealing with when conducting several activities. Ensure that you choose a platform that doesn’t have hidden transaction fees. You can choose a platform that offers flat transaction rates or those with a more flexible structure.

  • User interface and user experience.

This criterion is very important to your success as a cryptocurrency trader or investor. An exchange with an intuitive interface and good user experience makes it easier to trade the cryptocurrencies available. However, user experience is subjective, and people enjoy various interfaces. Furthermore, ensure to check the customer service and other customer-related functionalities offered by a crypto exchange. The easier to access the platform, the better.

The Top Four Cryptocurrency Exchanges For Experts And Beginners

There are hundreds of cryptocurrency exchanges available to traders and investors. However, these four are some of the leading and most powerful crypto trading platforms in the world.

Binance

Binance is considered the most powerful cryptocurrency exchange in the world. With a trading volume above $13 billion per day, Binance is the largest. It also offers traders access to hundreds of coins and tokens as it has one of the largest collections of altcoins in the market. In addition to regular spot trading, Binance offers other services such as staking, derivative trading services and more. Binance is available in over a hundred countries globally, providing crypto trading services to millions of people. Finally, Binance is a good option for anyone who wants more advanced charting than most other exchanges.

Register on Binance here.

Coinbase

Coinbase is amongst the most widely used digital currency trading exchanges, especially for traders in the United States. It is now a publicly listed company and provides services to crypto traders in the US, Europe and other parts of the world. Coinbase processes over $2 billion in trading volume per day. It offers crypto trading services to both retail and institutional traders, with the Coinbase Pro platform specially dedicated to the professional traders and investors. As a publicly-listed exchange, Coinbase offers insured custodial wallets for investors and traders to store their coins. Coinbase is highly secure but doesn’t offer as many cryptocurrencies as Binance.

Sign up with Coinbase here.

Kraken

Kraken is one of the oldest trading platforms currently in existence in the crypto space. Due to the number of years, it has been around, Kraken is admired by many and provides trading services to thousands of traders globally. Similar to Coinbase, Kraken is looking to become a publicly-listed company. Kraken allows traders to access hundreds of cryptocurrencies, fund their accounts using fiat currencies and cryptocurrencies, and gain access to other cryptocurrency trading services.

Register with Kraken here.

CEX.IO

CEX.IO is another leading cryptocurrency exchange. Its excellent user interface makes it a good platform, especially for people new to the cryptocurrency world. It allows users to access a wide range of cryptos, including the leading ones such as Bitcoin, Ether, and Litecoin. The customer support on CEX.io is also one of the best in the crypto space

Register with CEX.IO here

How To Use A Cryptocurrency Exchange

Using a cryptocurrency exchange is simple and involves a few steps. They are;

  • Register with the cryptocurrency of your choice.
  • Provide your name and other correct details and proceed to verify your account in accordance with the AML and KYC standards
  • Access your cryptocurrency exchange account and fund it using any of your preferred payment methods
  • Identify the coin or token you wish to buy and swap the deposited funds with the desired cryptocurrency. You can also buy BTC, ETH or USDT with the deposited fiat currency before swapping these cryptocurrencies with your desired coin or token.
  • If you intend to hold the coins for long, it is best to move them to a cold storage wallet. However, you can leave them on the exchange wallet if you intend to trade the coin.

Final Thoughts

Cryptocurrency exchanges are central to your success as a trader or investor. Hence, knowing how to choose a crypto exchange is crucial. The above-reviewed platforms are some of the best exchanges available to traders globally.

Cost-Push and Demand-Pull Inflation: Definitions and Examples

Economists tell us that controlled inflation is a sign of economic growth. Central banks, such as the U.S. Federal Reserve, actually set monetary policy to maintain a consistent inflation rate of around two percent per year.

The gradually rising prices associated with inflation can be caused in two main ways:  cost-push inflation and demand-pull inflation.

Both are associated with the principles of supply and demand.

Table of contents:

What is Cost-Push Inflation?

Economists describe cost-push inflation as a condition when the supply of goods or services is limited in some way but demand remains the same, pushing up prices. The increased price of labor or raw materials, for example, leads to decreased supply of these goods. While demand remains constant, the prices of commodities increase causing a rise in the overall price level.

The overall price level increases due to higher costs of production which reflects in terms of increased prices of goods and commodities which primarily use these inputs. This is essentially inflation triggered by less supply.

Cost-Push Inflation is usually associated with an unexpected external event like a natural disaster or the depletion of natural resources, monopoly, government regulation, government taxation, and changes in exchange rates. Basically, any event that hinders a company’s ability to produce enough of certain goods to keep up with consumer demand. This forces them to raise or inflate prices.

Examples of Cost-Push Inflation

The most common example of cost-push inflation occurs in the energy sector – oil and natural gas prices.

You and pretty much everyone else need a certain amount of gasoline to fuel your car or natural gas to heat your home. Refineries need a certain amount of crude oil to create gasoline and other fuels. Electric power suppliers need high levels of natural gas to create electricity.

When global policies, war, or natural disasters drastically reduce the oil supply, gasoline prices rise because demand remains relatively stable even as supply shrinks. Additionally, the recent shutdown of a natural gas pipeline due to cyber-theft trimmed the supply of natural gas, driving up prices despite steady weather-driven demand.

Hurricanes or floods are often the causes of cost-push inflation when they lead to the shutdown of certain refineries. Demand usually remains the same, but the refineries available to produce gasoline usually have to jack up prices because they don’t have enough crude oil supply to turn into fuel.

What is Demand-Pull Inflation?

Demand-pull inflation is the tendency for prices to increase due to increasing aggregate demand, or the amount of goods and services the entire population buys. This type of inflation is usually associated with a strong economy.

As an economy strengthens, employment tends to rise. As more people go back to work, they make more money and they spend more money. However, if goods are limited at a time when people are willing to spend more money, competition among consumers drives prices up. Economists often refer to this type of inflation as “too many dollars chasing too few goods.”

Demand-pull inflation is not limited to the consumer sector of the economy. We get a similar outcome if the government puts more money into circulation, or if a low interest rate environment encourages too much borrowing.

Examples of Demand-Pull Inflation

In March of 2020, the global economy shut down due to the coronavirus pandemic. With the advent of a number of vaccines in late 2020, the global economy began to slowly open up. As the availability of vaccines increased, the pace of vaccinations rose sharply and the global economic recovery moved forward at a rapid speed.

The global economic recovery is driving up demand for goods and services that weren’t readily available for close to a year. Inventories have been depleted as consumers demand more food, household items, and fuel. This increased demand is “pulling” up prices.

Employment is rising also which means consumers have more disposable income. Gasoline demand and prices are rising as more employees drive to work. Airline tickets and hotel rooms are also rising as pent-up consumers increase travel.

The current low-interest-rate environment is keeping a lid on mortgage rates, which is encouraging consumers to buy more houses, but with the supply of homes limited, prices are skyrocketing. Some are buying new homes which have driven up the prices of lumber and copper to near-record levels.

Essentially, as the global economy opens up, individuals want to spend money, but factories haven’t been able to meet demand as quickly. Consumers are willing to pay higher prices, thereby, creating demand pull-inflation.

Price Inflation: Definition, Measures, Types and Pros and Cons

Inflation news has been dominating the headlines for several months as the global economy begins to slowly reopen following the more than year-long pandemic. The rapid rise in prices has become a top concern as central bankers, consumers and investors fret about the rising cost of groceries, housing, gasoline, and other living expenses. The most immediate way inflation is felt by consumers is the negative effect on purchasing power and quality of life.

Table of Contents

What is Inflation?

The simple definition is a general rise in prices. The classic definition is “too much money chasing too few goods.” The price of individual items fluctuates all the time so it takes a collection of items rising at the same time to drive the inflation meter higher.

How is Inflation Measured?

Probably the best-known measure of inflation in the U.S. is the Consumer Price Index (CPI), which measures the average change in prices paid by urban consumers for things like food, clothes, housing, and transportation. The Federal Reserve measures inflation by the personal consumption expenditure (PCE) price index. While CPI looks at what people are buying, PCE looks at what businesses are selling.

Core inflation is another term that is tossed around quite often. It takes into consideration all inflation minus food and energy, which tend to be volatile. They can be influenced by oil supply and weather, and since the events can be deemed as short-term, their numbers are stripped out of the total inflation picture.

Cost-Push Inflation vs. Demand-Pull Inflation: What’s the Difference?

Cost-push inflation is not that common. It starts with a decrease in total supply or an increase in the cost of that supply. Suppliers raise prices because they know consumers will pay it.

Demand-pull inflation exists when aggregate demand for a good or service outstrips aggregate supply. It begins with an increase in consumer demand. Sellers meet such an increase with more supply. But when additional supply is unavailable, sellers raise their prices. (Learn more about cost-push and demand-pull inflation here.)

Why Should I Care About Inflation? (Pros and Cons)

It’s the Fed’s job to calm people’s nerves over inflation. Generally speaking, consumers don’t worry about inflation being too low.

Throughout April and May 2020 at the start of the pandemic when prices were plunging, consumers weren’t fretting over low food and gasoline prices. They were focused on avoiding coronavirus. While quarantined, and with the economy on lockdown, fewer people were driving and gasoline and crude oil prices fell sharply.

Now that most of the lockdowns have ended, more people are working and individuals are driving and flying. This is driving up gasoline and crude oil prices. In other words, prices are reflating from extremely low levels in early 2020 to higher prices in the Spring/Summer of 2021.

Historically low-interest rates are also helping to drive inflation higher. When the economy was stable in early 2020 before the pandemic, mortgage rates were relatively stable but higher than they are at this time. When the Fed slashed its benchmark rates, mortgage rates fell sharply. Low mortgage rates are one of the factors driving up demand for housing.

Demand for housing is increasing, but the supply of available homes to buy is low so people are building new houses. After a sluggish 2020 drove down demand for building materials such as copper and lumber, the current surge in home building is driving up demand for these materials. The increase in prices is another contributing factor to a rapid rise in inflation.

The Fed sees the rise in gasoline, copper, and lumber prices as a temporary reaction to the reopening of the economy. They don’t see the rise in prices as here to stay. Policymakers can explain away the jump in prices as economic growth. They feel they have the measures to combat inflation, but they also run the risk of stopping growth too fast.

Factors Affecting Currency Prices

No financial marketplace comprehends as much of what is proceeding in the global trading community at any given time as foreign currency exchange, but in the end, Forex prices are a result of supply and demand forces.

The cost of one currency relative to another is constantly shifting due to the forces of supply and demand. So it is safe to say that a currency’s value is not influenced by one single force, but by several. These forces generally fall into three categories:

How Does Market Psychology Drive Forex Prices?

One of the more difficult aspects of the Forex markets to comprehend is the influence market psychology can have on the price of a currency. Since it doesn’t involve financial statements or central bank policy decisions, Forex traders have a hard time putting their fingers on it.

Sometimes it’s only the way a central bank phrased its policy statement or the tone of a speech, but Forex traders quickly turn “hawkish” or “dovish” in their sentiment and thus exert the force of market psychology on the currency markets.

Falling under the category of market psychology are the following:

Buy the rumor, sell the fact

It is the tendency for the cost of a currency to reflect the impact of a particular action before it occurs and when the anticipated event comes to pass, react in exactly the opposite direction.

Flight to Quality

Forex investors often seek the protection of a safe haven currency during times of unsettling international events. During this event, investors demand currencies perceived as stronger over their relatively weaker counterparts.

Flight to Safety

When there is clarity in the markets, investors will seek the currency offering the highest yield. This is generally known as a “risk-on” scenario. In other words, investors are willing to take on additional risk to capture a higher reward. During times of uncertainty investor sentiment may revert to a “risk-averse” mentality where they sell the higher-yielding or “risky” currencies in favor of the lower-yielding or ‘safer” currencies.

Whether because of economic or political trends, very often certain currencies move in long, pronounced trends attracting the attention of long-term cycle investors. Since there is no real business cycle or growing season affecting currency prices, certain types of investors who have the staying power look to exploit the long-term tendencies of currencies.

What are the Key Economic Influences Driving Forex Price Action?

The key economic influences driving the price action are usually disseminated by government agencies, central banks, and major private industry experts. They come in the form of regularly scheduled reports, press conferences, news releases, speeches, and news media quotes.

Falling under the category of economic influences are the following:

Economic Numbers

Although all economic numbers have some impact on the Forex markets over the short run, some numbers wield more powerful influences on the movement of the markets. These numbers typically rotate, giving each a chance to share the spotlight.

An example would be traders putting more emphasis on a GDP report than a retail sales report when overall economic growth is a major issue.  At times, a weekly jobless claims report will move a currency more than a monthly jobs report.

Under certain conditions, economic data may influence a currency more than a central bank decision. At times, a central bank may issue an unchanged policy decision, but a stronger-than-expected labor market report may drive prices higher as investors price in a possible change in policy in the near future.

The easiest way to understand this is to assume that trader tastes and preferences change.

Economic Policy

Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a government’s central bank influences the supply and cost of money, which is reflected by the level of interest rates).

Government and central bank policies can often change as both tend to identify a problem then try to fix it by providing emergency fiscal stimulus (Government) or slashing interest rates (Central Banks).

These moves often take time to work through an economy, but Forex traders don’t necessarily wait for this to occur. They react to the initial move by the government or the central bank then make adjustments later.

The price action in the EUR/USD in June 2021 highlighted how central bank policy can influence a Forex pair’s direction. The single-currency plunged that month when the Federal Reserve changed its tone to hawkish by moving up the dates of its next interest rate hike. Meanwhile, the European Central Bank (ECB) held rates steady and offered no guidance as to the timing of its exit from its loose monetary policy.

Economic Conditions

Economic conditions fall into several broad categories that are usually driven by longer-term events. In other words, a bad report here and there, wouldn’t be considered an “economic condition”. However, a weak trend in employment or strong inflation figures will fall into the “economic conditions” category.

While a short-term surprise in a report may cause a day or two of volatile, counter-trend price action, longer-term trends in economic data tend to drive longer-term movement in a currency.

Economic Growth and Health

Reports such as gross domestic product (GDP), employment levels, retail sales, capacity utilization, and others, detail the levels of a country’s economic growth and health.  Investors tend to demand the currencies with the best economies.

Government Budget Deficits or Surpluses

Simply stated, narrowing budget deficits are usually good for a currency’s value. Widening government budget deficits are generally bad. These reports tend to have a longer-term influence on a currency’s price. These reports usually don’t cause short-term volatility until they hit an extreme or record level.

Balance of Trade Levels and Trends

Forex investors watch balance of trade levels and trends very carefully. Surpluses and deficits are perceived as indicators of the competitiveness of a nation’s economy. Once again, these reports tend to drive the longer-term trend in a currency.

How Do Political Conditions Influence Forex Prices?

Internal, regional, and international political conditions can have a profound effect on currency prices. Political upheaval and instability can have a negative impact on a nation’s economy, while the rise of a political faction that is perceived to be fiscally responsible can have a positive effect.

One country in a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency. Election results and shifts in political party power.

Why Pandemics Can Be a Source of Forex Volatility?

Forex traders have learned the hard way that a pandemic can be the source of price volatility. In 2020 when the COVID-19 pandemic hit the global economy, the playing field was leveled around the world.

With all economies tanking at the same time, all the major currencies plunged. However, traders tried to maintain the relationships between the major Forex pairs, but for a short-time, money was flowing into the U.S. Dollar for protection. We learned earlier that this was because of flight to safety, or flight to quality buying.

Most central banks and governments made the same moves – drastically lower rates and flood the financial markets with tremendous amounts of cash.

As conditions changed and economies began to settle and reopen, trading conditions improved, but now traders were more focused on GDP growth, rising inflation increased factory activity, but most importantly, domestic interest rates.

Interest Rate Differential Ultimately Determines a Currency’s Strength

All of the factors mentioned earlier in the article are great for identifying short-term volatility and long-term trends, but ultimately, it all comes down to the interest rate differential or the difference in government bond yields. It’s the interest rate differential that drives the Forex price action and makes one currency more attractive than another.

As economic conditions improve, government bond yields tend to rise. The yields in the most improving economies tend to move up faster than others. Since money seeks the highest yield, investors will buy the currency with the most attractive yield.

The most glaring confirmation of how the interest rate differentional drives a currency is in the USD/JPY Forex pair.

In mid-2021, the U.S. Federal Reserve announced it was moving closer to raising interest rates, while the Bank of Japan announced it was considering additional stimulus. In the U.S., yields rose on the news, widening the spread between U.S. Government bond yields and Japanese Government bond yields, this made the U.S. Dollar a more attractive investment.

Crypto Trading Beginner’s Guide

Sentiment about cryptocurrencies was split among users after the market drawdown in May. More experienced traders were ready for the fall, and mainly newbies and enthusiasts lost their funds and exited the market in anger.

In this review, I will try to tell, based on personal experience and knowledge, all the subtleties of trading on the crypto market.

Cryptocurrency trading spot or derivatives

Today, exchanges and marketplaces offer many trading tools for trading in the cryptocurrency market. Crypto markets offer different contracts, like spot and derivatives. A significant difference between trading on the spot market and the derivatives market is the actual acquisition of an asset. So, for example, when trading on the spot market, a person acquires an asset for the purpose of selling it in the future to generate profit from a difference in price.

Trading in the spot market can be compared to trading in the stock market, and the person trading in this market will be considered an investor. To fix profits on the spot market, you can set only one order – a sell order, and place a buy order to buy putting the amount of the purchased or sold the asset. The most popular exchanges for spot trading are Coinbase, Kraken, Gemini, Binance.

Coinbase

Unlike the spot market, when trading in the derivatives market, a person does not actually acquire an asset but opens a position for the purpose of price speculation, and a person trading in this market is classified as a trader. The advantage of trading in the derivatives market is trading in both directions, that is, profits can be obtained even if the price of an asset falls, comparable to trading contracts for differences (CFDs) and trading futures (also a class of derivatives). Derivatives trading platforms provide a fairly high leverage, which allows a trader to increase his capital and reap great benefits, but also implies the risk of losing all funds in the position.

It is also important to take into account that trading on the derivatives market, a trader can set various orders to make a profit from the trade or accept a loss for the trade: take profit and stop loss functions. That is, since the asset is not actually purchased, two orders can be placed simultaneously. The advantage is that a trader, when the price reverses, will be able to close the position with an insignificant loss, and if the price continues to move in the predicted direction, close the position and fix the profit automatically. Popular exchanges and platforms for trading crypto derivatives: FTX, Bybit, Overbit, and Bitget.

Overbit

Market analysis and education

There are several types of analysis for predicting price movement: technical, fundamental, market sentiment analysis.

Technical analysis

The most popular type of market analysis, which includes the study of asset price movements and trading volumes. Everyone determines for themselves a trading strategy based on technical analysis, but mainly Dow theory, Elliott Wave theory, and Fibonacci mathematical tools are used. The best tool for technical analysis nowadays is considered TradingView.

TradingView

Fundamental analysis

The study includes an analysis of such fundamental data as the financing of the project, reports on the updates made, deposit/withdrawal of funds to/from the exchange, the open interest ratio, the funding rate, as well as, if the asset is traded against a currency, economic data affecting this currency (more often the US dollar).

Market sentiment analysis

The second most popular analysis method in the cryptocurrency market. Market sentiment is calculated using algorithms that wander popular social networks and all over the Internet looking for positive and negative comments about the cryptocurrency. Such algorithms are used to calculate one of the important indexes – the “Fear and Greed” index.

Education

Most crypto exchanges and cryptocurrency trading platforms provide their own training materials, but they are more introductory and do not contain detailed information. Therefore, after reading materials on any type of analysis of the cryptocurrency market, you should not consider yourself a pro and open positions that exceed 50% of your deposit. Coinbase is a good example of providing educational material. To start trading after completing the training, you can use indefinite demo trading on HitBTC for spot, Binance and Bitget for derivatives, the latter provides only a few pairs, but the balance can be replenished with an unlimited number of times.

Coinbase

Signals

There are groups and traders, as well as various applications/indicators that sell signals for a certain fee. Signals are calls to open a position or place an order when a certain price is reached. You must study each received signal yourself, if you are ready to use such services, then do not disregard your own analyses, so you can learn how to trade yourself even faster.

Copy-trading

You can use signals and enter manually into the market, or you can copy the orders of popular traders. Copy trading is based on the automatic opening of a position with the copying of all settings: entry price, take profit, stop loss. The world leader and first social trading platform, eToro pioneered copy trading in the forex market, and now provides the same platform with minor modifications for trading cryptocurrencies. Copy-trading can also be used to conduct your own analysis, to consider why the trade was successful and vice versa.

On BitGet platform, which claims to have a higher copy trading turnover than eToro, it is possible to view all traders in detail, consider the trading strategy and positions, which can also be used to study trading in the market. Just like trading with other tools, copy-trading has its own risk of account drawdown, therefore, before subscribing to a trader to copy his trades, you need to view the history of his trades in detail, as well as find information about him on the Internet, in social networks.

BitGet

Conclusion

Trading in the cryptocurrency market has its risks, but so does the reward. You should always take a cold-blooded attitude towards all market situations. To begin with, study the market, study and possibly start using signals and copy trading on small volumes, but always strive for an independent understanding of the market and analyze. Study carefully risk management, never trade more than 50% of the balance at the initial stage. Do not get upset about low profits, a small profit is better than any loss.

Technical Analysis in the Forex Markets

Traders apply technical analysis to the Forex markets because they believe that exchange rates are not always determined by economic fundamentals like central bank activity, prices and interest rates. Although long-term trends in the Forex markets are likely caused by these fundamental events, it seems that Forex traders are driven to use technical analysis because of the volatility and leverage offered by the various Forex markets.

Despite being a separate asset class, technical analysis when applied to Forex markets is no different than technical analysis used to analyze equities or futures markets. How Forex markets trade, how orders are executed, leverage and the hours the markets are open has a lot to do with how to apply technical analysis to Forex markets, but basically the same oscillators and indicators relevant to equities and futures markets apply to Forex markets.

Forex Technical Analysis – The Basics

It is generally accepted that there are three branches of technical analysis. These three areas are: sentiment indicators, flow-of-funds, and market structure indicators.

Sentiment indicators deal with the action of different market participants such as central and commercial banks. The idea behind using this information as an indicator is that their actions may represent major turning points.

Flow-of-Fund indicators analyze the financial positions of various investor groups. Basically they keep track of who is buying and who is selling. This may include tracking cash positions of the major foreign currency players.

The last branch of technical analysis and the one that we are mainly concerned about in this article deals with market structure or the character of the market indicators. These indicators include moving averages, price patterns, trendlines and oscillators.

Why Study the Trend?

The basic principle of technical analysis is the trend. In order to understand the trend, the technical trader must first define trend, know why the trend is important, and distinguish between major and minor trends.

There is no question that markets trend. Traders and investors hope to buy a Forex pair at the beginning of an uptrend at a low price, ride the trend, and sell the currency pair when the trend ends at a high price.

Trends exist in all lengths, from long-term trends that occur over decades to short-term trends that occur or 1-minute or tick charts. Trends of different lengths tend to have the same characteristics. In other words, a trend on the monthly chart will behave the same as a trend on a five-minute chart. One key to understanding trends is for the investor to choose the trend which is most important for them based on their investment objectives, their personal preferences, and the amount of time they can devote to watching the market action.

Trend traders tend to have 20/20 hindsight since past trends are easy to spot. Trading trends would be easy if the investor could spot a new trend at a bottom, buy and then exit at the top. This does not happen of course in practice since investors may be too early or too late in spotting optimal entries and exits. This is the reason for studying charts, moving averages, oscillators, support and resistance as well as other important technical tools.

Investors need to determine when a trend is beginning and ending as early as possible. This sounds simple but remember that technical analysis is not fortune telling so trend trading ideas may not perfectly predict the future. The idea is to use the indicators in the investor’s toolbox to find opportunities that under the right conditions could generate a successful trade. Investors should also be aware that under certain market conditions, these technical tools may not work. Trends can change suddenly and without warning. This is why investors should be aware of the risks and protect themselves against such occurrences.

The basic trend trading strategy involves two things:  first the investor must decide where to enter a position and second, where to exit. The entry is often easier than the exit. When exiting a position, the investor must choose when to exit to capture a profit, and when to exit to protect against a loss. The key is to make the right decisions at the right price levels in order to avoid giving back profits and to protect against large losses.

One of the great advantages in studying the trends of markets is that technical analysis involves analyzing prices. Knowing prices can help an investor know when something is either right or wrong with an investment. At the same time, risk of loss can be determined ahead of time. This ability is unique to technical analysis. Because actual risk can be determined, investors can practice money management principles to further lessen the risk of financial “ruin”.

In summary, technical analysis can be used by the investor to determine the trend, when it is changing, when it has changed, when to enter or exit a position. When trend trading, the basic premise is: when analysis of the trend is wrong, exit the position.

What is a Trend?

Simply stated, a trend is a series of higher-tops and higher bottoms or lower-tops and lower-bottoms. Of course, higher-tops and higher-bottoms indicate an uptrend and lower-tops and lower-bottoms indicate a downtrend. Recognizing when a trend is beginning or ending is most important to the trader.

If one cannot make sense of the chart, then the best thing to do is stay out of the market until an easily identifiable trend can be determined. Trends vary in terms of length and magnitude so it is important to the investor that the trend be recognized early and long enough for the investor to take advantage of it.

Basic Trends

In order to be a successful trend trader, the investor must know why identifying trends is important. In addition, they must be able to recognize an uptrend, downtrend and a trading range. The concept of support and resistance is also important to the trend trader. Finally, the trend trader must be aware of the major methods for determining trends as well as the major signals that a trend is reversing.

As an investor, you must know why identifying trends is important. Firstly, it allows one with a minimum amount of risk of error to determine at its earliest time when a trend has begun. Secondly, trend trading allows the trader to select and enter a position in the direction of the current trend either up or down. Finally, trend trading allows the investor to exit when the trend is changing.

Trend Indicators

Trend Indicators are used to follow the trend of the market. Following is a list of the main trend indicators used by most technical analysts and explanations on how to use them. These trend indicators are also found in most market analysis software packages like the MT4, eSignal and TradeStation platforms.

Trend Indicators:

Average Directional Movement Index
Accumulation Swing Index
Bollinger Bands
Commodity Channel Index
Exponential Moving Average
Mass Index
Parabolic SAR
Simple Moving Average
Weighted Moving Average
Williams Accumulation/Distribution

In summary, Forex markets like all trading instruments follow trends. Because of leverage and volatility, however, traders must make adjustments to their trading style based on their use of leverage and volatility. This means finding the right time period to trade that fits their trading goals and objectives.

Once a trader is satisfied that he is using the correct time frame, then the first thing he must do is study and experiment with the various trending tools available.

The first step in becoming a successful Forex trader is to learn to trade the trend. The trend to follow will be determined by a trader’s personal preference for a particular time period.