US dollar continues higher as Fed pledges patience toward raising interest rates

29/01/2015

The US dollar advanced against a basket of currencies Wednesday, as the Federal Reserve conveyed optimism that inflation would gradually reach its target in the medium-term despite pledging to be patient on raising interest rates.

The US dollar index – a weighted average of the greenback’s performance against a basket of six currencies – climbed 0.33 percent to 94.33. The index reached an intraday high of 94.46 in the hours leading up to the Federal Open Market Committee rate statement.

The Federal Reserve made no changes to monetary policy on Wednesday, pledging to remain patient about raising interest rates in the face of below-trend inflation.

“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,” the Federal Reserve outlined in its official rate statement.

The statement added, “When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”

Policymakers are confident that inflation will gradually return to target in the medium-term as the “transitory effects” of lower energy prices and labour market underutilization diminish. Energy prices have plunged nearly 60 percent since the summer, driving down inflationary pressures throughout the advanced industrialized world. This has prompted central banks in Canada, Switzerland and Singapore, among others, to ease monetary policy to stave off deflation and promote economic growth.

The Federal Reserve has maintained rock-bottom interest rates for more than six years, having only in October ended its record bond-buying program. According to experts, the Federal Reserve could begin lifting interest rates in the second half of the year. Analysts had previously forecast a rate hike to materialize by June.

Rate-hike speculation has fueled the US dollar over the past seven months. The US dollar index is trading at 12-year highs, having gained more than 17 percent year-over-year.

The dollar was trading higher against the euro on Wednesday, as the EUR/USD declined 0.67 percent to 1.1307. The pair is likely to face initial support at 1.1277 and resistance at 1.1359.

The greenback rose more than 100 pips against its Canadian counterpart, as the USD/CAD retook the critical 1.25 level. The pair consolidated at 1.2509 in the North American session. Initial support is likely found at 1.2425 and resistance at 1.2555.

The US dollar could receive a boost at the end of the week when the Commerce Department reports on fourth quarter GDP. The US economy is forecast to rise 3.3 percent annually in the fourth quarter, following a 5 percent gain in the July to September period.

Who Really Moves Wall Street? The Top 10 Trading Firms Revealed

Market Place

26/01/2015

Just a few days ago, Goldman Sachs revealed that its trading revenues were at lows not seen since 2005. The company, which is the most reliant of all the big banks on trading revenue is suffering as a result, but it’s not the only one having trouble. Trading revenues are falling all over Wall Street.

But what exactly does trading revenue mean, and what’s causing the big changes in the market? Here’s a look at why the number is an important indicator for investors, and what’s happening that’s crushing Goldman Sachs.

What is Trading Revenue and why should I care?

Trading revenue is, most basically, the amount of money that institutions earn from buying and selling financial instruments. The way that big firms do this isn’t the same as the way a retail investor does. Goldman Sachs doesn’t buy Apple stock and hold on. It buys every stock by the bucket-load and sells them for a tiny profit margin.

This is called market making and it forms the basis of bank trading revenue. The two main sources tend to be equity market making and fixed income market making. In equities Goldman Sachs acts as a clearing house, offering to buy almost any common shares and sell them at a small spread, or gap between those numbers.

Market makers are a structural necessity in the stock market, providing liquidity where it couldn’t exist normally. In fixed income banks perform the same basic function, but make money off of the interest paid on debt they hold. There are other assets that banks tend to hold for market making including currencies and commodities futures, and every other instrument under the sun.

There’s a couple of reasons these numbers are important. First of all they’re an absolutely essential part of valuing a bank. Secondly, trading revenue gives a glimpse into the way the markets are moving and, particularly over the last year or two, may clues about how to invest going forward.

Top Ten Trading Companies

Over at Investopedia Shobhit Seth took a look at the world’s biggest trading companies measured by revenue. The list gives an insight into how trading actually works on a big level, as discussed above. Here’s quick look:

Barclays PLC $17.6 billion

JPMorgan Chase & Co $20.26 billion

Citigroup, Inc. $16.2 billion

Goldman Sachs $15.7 billion

Bank of America Merrill Lynch $13.59 billion

Deutsche Bank AG $13.15 billion

Morgan Stanley $10.81 billion

HSBC Holdings plc $8.69 billion

UBS Group, Inc. $5.058 billion

Credit Suisse 2.475 billion

Following the money trail

Most retail investors don’t really know how the $10,000 they manage on eTrade actually gets moved around the market and gets turned into shares and bonds. The above list should give you some idea.

If you have an account with Charles Schwab and you want to buy 100 shares in Twitter, that company might not waste time trying to match you with buyers, it can sells you the shares directly, and assumes it will make a profit by buying them lower when somebody else wants to sell them. This isn’t how orders are carried out all of the time, but it is the path that best illustrates the role of the market maker.

When Charles Schwab wants to buy a hundred thousand shares it has a similar relationship, but with the banks listed above, buying directly from their stock rather than from a counterparty truly interested in selling..

This is how Wall Street works. There’s no big computer that allots everyone shares, there’s hundreds and thousands of small deals that make the price and the big banks make money off of each one. Trading revenue is, basically, the income a bank gets from being big enough to make a market, but there’s risks involved, as Goldman is finding out.

Big changes on the horizon

Regulations have been tough on trading revenues in recent years, but some of the biggest pain has come from movements inside the fixed income market.

The compression of yields on US bonds, and others around the world, means that while they’re sitting in the Goldman Sachs vault they’re earning the company very little money. At the same time volatility has disappeared meaning the peaks and troughs that Goldman relies on to power its revenues are almost nonexistent.

The fixed income market has changed, possibly forever, and one place to see that effect holistically is in the trading revenues of the major banks. Wise investors who try to get a view of the entire market before making a big bet need to watch these numbers, even if they’re not planning on buying financial shares any time soon.

Top 10 Web Investment and Trading Resources

Market Place

22/01/2015

Want to lose money? The internet is full of trading ideas that will help you do just that. What you need is not to be told what to do, but to get advice that will allow you to think for yourself. To meet this end we’ve put together a list of ten resources that you will need to make your own decisions and have a chance of success on the capital markets.

SEC Edgar

We’re sure of one thing. If you don’t spend time on the SEC Edgar platform you’re not doing well in stocks, or you won’t be for much longer. Every single public filing is searchable and downloadable on this database and every company that’s ever gone public is displayed for your analysis. If you don’t read annual reports you’re not investing, you’re gambling.

Investopedia

Billed as a great solution for beginners, Investopedia is so much more than that. Everybody runs into a metric or a strategy they’re not familiar with every now and then even big traders rarely know what’s going on outside of their discipline. Investopedia, augmented by Wikipedia itself, is a great resource for any trader who’s bogged down in jargon and looking for a simple way out.

Yahoo Finance, Google Finance

With a range of simple to use tools and basic charts, the two financial news and information aggregatiors are there to give an all-round look at the way companies are performing. You’re getting the basic package on Google Finance and Yahoo Finance, so don’t expect miracles. Use them to glance at how the markets are doing, but go elsewhere to really get your hands dirty.

Twitter, Feedly

Depending on your tolerance for social interaction you’ll need to choose between these two sites to give you a constant news ticker. Feedly uses RSS feeds from news websites, while Twitter is more adaptable allowing you to add in Carl Icahn’s latest comments, along with those from Justin Bieber.

If you’re trading regularly you’ll need to keep up to date with the latest news, and sticking to a single source just isn’t good enough anymore. Even investors with access to a Bloomberg terminal use a Twitter feed on the side.

Ycharts

Take any two pieces of information and chart them against each other in order to find a relationship. Ycharts is one of the best charting systems out there, and beats many of its rivals by sheer range of indicators and ease of use. It’s a one stop shop for data visualization and comparison, and it’s got a great free trial.

FRED

The Federal Reserve’s collection of financial data is one of the best sources of economic information in the world. We know that the world runs on macroeconomic indicators and you’ll need access to them in order to make good decisions.

Zero Hedge

You won’t want to be basing your decisions off of what you read here, but Zero Hedge is full of challenging contrarian views that will keep you on your toes and test your real knowledge of the financial markets you are betting on.

You may disagree completely with what you read, but if you can’t write an argument to back up your side you’re running on instinct alone, something that will more than likely emaciate your retirement fund.

eTrade, Ameritrade etc.

We’re not going to pick one online broker above all the others here. You know which one is best for you and you should stick to it. There are some interesting options out there, but this isn’t the time or place to list them. Do some research and find out what works for you.

If there’s one piece of advice we could give out: pay attention to the trading costs. You’ll need a suitable online brokerage to drive your investments, so make sure it doesn’t eat your kids college tuition fees.

WhaleWisdom.com

If you’re a hedge fund nut you’re probably aware of the limitations of the 13F filing. The .txt copy published by the SEC is woefully unreadable, and requires manual spreadsheet work to allow comparisons.

Whalewisdom does the work for you on this one and creates an accurate look at how hedge funds have been buying and selling according to their most recent filings. Have a look at the site and see how it can help make hedge fund decisions form a reasonable, readable whole.

SeekingAlpha, Fool.com

For something a little different head to sites like Seeking Alpha and the Motley Fool. While not a thorough learning experience, and certainly not full of information to take at face value, the essays on the platforms will get your creative juices flowing and give you a decent insight into the markets and the way other investors are thinking.

Set yourself up with something from each heading in the above list, and you’ll be able to do most of the basics of analysis and portfolio management by yourself. If we’ve left out anything you love to use, or an up-and-coming darling, be sure to let us know in the comments.

Copy Trading Rules Clarified By FCA UK

Market Place

21/01/2015

The Financial Conduct Authority of the UK has released a clarification on the nature of copy-trading services like eToro and the kind of permissions that platforms will need in order to carry out the practice in the country.

Copy trading is a relatively new type of investment that allows investors to release their trades publicly and have other traders follow them in their decisions. Online social trading platforms are driving the possibilities, and they’re becoming a big enough problem that financial regulators are .

The basic definition at the heart of the statement from the FCA is the following: If the brokerage asks permission before every copied trade it’s not managing the portfolio. If it executes the trades automatically it is involved in portfolio management and will need a license that allows it to do so legally.

In its own words it is portfolio management in a case where“managing portfolios in accordance with mandates given by clients on a discretionary client-by-client basis where such portfolios include one or more financial instruments.”

Regulators move in
The increased popularity of copy-trading is making it impossible for investors to avoid regulating the area, though there seems to be little protest from inside the industry to the current level of regulation. It’s clear that the area is becoming important enough to pay attention to, though it’s not being regarded as a major concern.

A relatively light touch procedure is certainly being followed, but increased regulation may still bring massively increased costs. This week’s announcement could cause an increase in wages and legal fees for some copy trading platforms, and the effects of regulatory action in the UK will inform the debate on similar moves on the line in the United States.

As with so many Internet-borne financial innovations, most traders are waiting to see what the establishment thinks before getting in on the action. With stories of fraud and bad returns strangling much of the media coverage of breakout Fintech, it’s not surprising.
Big returns are there for some people, and there will always be stories of the major victors in the papers. Copy trading should only be added to a portfolio if the risks are understood, and you have a good idea of the process from start to front.

Copy trading gains prominence

With an increase in lower cost trading platforms, copy trading is becoming a real force in retail investment. Though people have always tried to follow the likes of Warren Buffett into big moves, today’s atmosphere is decidedly different from that old-school style.

Nowadays using platforms like eToro you can follow somebody without a news presence and attempt to get exposure to their good decision making. The point of the regulator’s clarification is that this sometimes constitutes portfolio management by the investment services offering it.

Regulators have essentially decided that if the client needs to approve each trade there is no need for the platform to follow portfolio management regulations. If, however, the trades are executed automatically in line with the investor’s follows, that is seen as portfolio management and extra rules have to be followed in order to make it legal.

Shock risks loom big

Famed experts on copy trading sites, like Chris Fahrner a 25-year-old German currency trader, aren’t immune to the problems of the wider market, meaning that shocks, like that in Switzerland last week can cause huge slumps.

Fahrner is one of the stars of eToro who, at his peak, had more than 5,000 people copying his every trade. His total gain across the last year is close to 300%, but in the last three months he’s lost 10% of his portfolio value and copiers keep deserting him. In the last month he’s dropped 15% of his value.

Copy-trading is investing in a single person and, though you may be able to pick the wheat from the chaff, one irrational decision can ruin an investor and wipe out your portfolio at the same time. Shock macro situations, like the Swiss Central Bank’s decision last week can be similarly destructive.

Some are still betting that copy trading will remain a niche method of investing, but the sites involved continue to grow. eToro says that growth in 2014 was four times levels in the previous year, a striking statistic.

Regulators also seem interested in letting the industry breath for the time being, so copy trading, and other forms of network driven social investment, will likely form the backbone of a major trend in changing investment in 2015.

Swiss Franc Black Swan and the Hedging Volatility of the Global Economy

Market Place

16/01/2015

A black swan event is a term coined by Nassim Nicholas Taleb and it works as a metaphor that describes an event that comes as a surprise and has major consequences. These kind of events are rare and its occurrence deviates beyond what is normally expected of a situation and can create substantial damage and chaos. Black Swans without any doubt are extremely difficult to predict, even in a time of sophisticated trading real time, risk management and predictive capital market algorithms.

The Black Swan term sums up what is happening in the hedging volatility of markets after the currency move by the Swiss National Bank and it displays something holistic we perceive at this moment in the world’s fragile and sensitive economy.

This disruptive and influential theory was developed and highlighted by Nassim Nicholas Taleb, a finance professor and former Wall Street trader, in the book with the same name of 2011. This influential concept was drafted, introduced it before in Taleb other 2001 book Fooled By Randomness, which concerned financial events and the power of random events and things that changes the normal trajectory of things.

The pillars of the Black Swan concept can be summarised in these 3 points in Taleb’s words:

“The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.
The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).
The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs.”

Unlike the earlier concepts and philosophical “black swan problem“, the Taleb “black swan theory” refers specially to unexpected events of large magnitude and consequence and their dominant role in history. This theory has become special relevant in the capital markets and trading world where the theory became a Bible for traders and part of the implicit DNA of trading.

Aerial Photo of Davos – the host Alpine City of the World Economic Forum Annual Meetings

Such special and unexpected events, that happen very fast in hawkard circumstance, considered extreme points of no return, or outliers, collectively play vastly larger roles than expected regular occurrences and shift actions and special the players. More technically, in another paper, Taleb describes in the scientific monograph Lectures on Probability and Risk in the Real World: Fat Tails, a more sophisticated mathematically explanation that highlights and translated the black swan problem as “stemming from the use of degenerate metaprobability”.

So yesterday move of the global markets after the Swiss National Bank’s sysmic shock move to stop intervening in its foreign exchange market, has been one of the biggest Black Swans of the last years for traders. Special only after three days the Swiss National Bank, Vice President Jean-Pierre Danthine had defined the Swiss Franc cap a “pillar” of monetary policy.

In these circumstances people and special traders, markets, brokers and investors don’t behave normally special when central banks don’t. This has created a butterfly effect in the global markets with riddle effects still difficult to predict.

This move all comes in the follow up of the European Central Bank big introduction of quantitative easing when it meets Jan. 22 2015. Switzerland is making its home work and somehow surrendering before a critical and polmic wave of post-QE money fleeing the euro that threatens to make a mockery of its currency policy. It’s also in the follow up of the lower oil prices that brings global deflation ever closer.

This move has been affecting the world markets, disrupting even big retail trading players of the industry such as FXCM with its Shares Trading down 85% in Pre-Market Trading and a Massive $225 Million Client Negative Balance Hit Due to CHF Volatility ). IG Group another massive world trading house disclaimed losses up to £30 Million, Tip of Industry CHF Volatility Losses. And the most radical case Alpari Uk entered in admnistration following up client losses. LCG Group also faced up to $2.5 Million Losses.

To add a more positive note Gain actually generated profit with this black swan Forex Industry black Thursday. Other retail trading players such as Saxo Bank and Mahih FX, CMC Markets, City Index continued with their businesses and trading operations despite the CHF Convulsion. Also IC Markets and Darwinex persisted despite Minimal Losses and Setbacks.

This exceptional market turmoil following up from the Swiss move has created and trickered a series of events and dsiruption and has extended its impact worldwise. Swiss stocks such as Swatch and Nestle fell sharly and in the same path Asian shares dropped with U.S. index futures, while Japanese and Australian government bond yields had record plunges.

This action by the Swiss National Bank taking will put in question the effective strenghts or weakness of the euro polemic currency adventure that started some 15 years ago.

Adding to the chaos coming from Swiss central bank unexpected moves there is the Russian ruble and its weakening economy that continues to lose buying power, and a lot of the big Oligark money that has been flowing into Switzerland from that country. The challenge now is how this will affect more the sensible and fragile Russian economy completely fragilised by the lower and lower prices of cheap oil.

No doubt this move by the Swiss National Bank is a black swan game changer. And its repercussion will probable continue as the ECB continues its path to a massive action that will intensify new actions and potential disruptions. The US economy probably will be the balance in this complex and fragile system.Investors and traders have to be wise at the moment and eventually move their portfolios to solid commodities. This is the case of gold that will be growing its value. Example of that is the move in its the price that keeps its trajectory of 4 month highs. Gold in these occasions is the traditional safe haven out of paper money.

Interesting also that the Swiss Central Bank did this less than some weeks before the global Davos World Economic Forum Annual Meetings – that are host in the Swiss Alpine City.

Be safe and wise if you are trading these days! and beware of the black swans riddle effects in the hedging volatility of the global economy.

Forex Trading Platform: case of cTrader

Market Place

12/01/2015

The cTrader platform, designed for Forex traders, is an insightful and precise, and user-friendly platform designed by Spotware. It offers top-level liquidity and a vigorous trading structure into the platform, with a fast and smart ECN connection. A fast ECN connection is what gives clients the edge when they compete in a cut throat Forex environment.

Spotware cTraders Platform dashboard, TradersDNA

Here are some of the benefits of cTrader:

A Fast and Effective Trade Execution

When you talk about Forex trading, timing is absolutely essential. A successful trade is only guaranteed if you’re fast and calculating. Spotware cTrader is an innovative platform that helps to fill in trade order in a matter of seconds. Moreover, with cTrader, you can easily and very quickly process all your orders simultaneously.

Level II Pricing

Another advantage of using cTrader is its ability to identify and display a variety of different executable prices straight from the liquidity providers. Using the VWAP (Volume Weighted Average Price), you can conveniently fill in all your orders using your trade book.

Precise Charting

The charting feature of the platform boasts a number of different options for you to use while trading in the Forex market. For example, you can use a variety of different presentation options, view information in any layout you want and alter any template you want.

Chart Trading

Another great benefit of the platform is it makes your trading experience a lot simpler. Using the platform’s interactive click and drag feature you can choose to open and close all your trade orders. Plus you can customize your own stop losses, calculate profits and minimize your orders.

In-Depth Analysis

You’d be surprised to know that cTrader provides you with all the customizable trading tools that guarantee a precise technical evaluation of all your trades. This may include factors such as common trade trends, oscillators, volatility analysis and line drawings. Additionally, via cPanel you will more easily be able to plot different objects and trade indicators.

Custom Indicators

Traders using cTrader can easily familiarize themselves with the algorithmic infrastructure which will help them develop their own indicators. In other words, cTrader offers the option for easily customizing your indicators for both manual and automatic trading. Developers can also designate different parameters and graphical integrations for different indicators.

Favorites Option

The ‘Favorites’ option in cTrader allows traders to bookmark their most desired currency pairs allowing them to conveniently access those pairs anytime they want.

QuickTrade Feature

The QuickTrade feature allows you to quickly access different trading charts. Combine this with the platform’s fast executions and you have a powerful tool helping you any fast trading market.

Multiple Accounts

Spotware’s cTrader allows traders to maintain an unlimited number of accounts. You can even designate each account with your preferred currency. Switching accounts is fast and easy.

Feedback Driven Updates

cTrader takes into account different feedbacks, especially when developers decided to launch new products. Now, as a trader using cTrader you will be able to directly control the dynamics of your trades using your account at cTrader. The feedback process is relatively easy and just by clicking the feedback tab on the platform you will be able to offer your suggestions and queries pertaining to any aspect you deem necessary on the platform. Upon completing your feedback, you will see that the process of launching feedback is automated and takes no time at all.

Charting Templates

Using Spotware’s cTrader, you will see that developing newer charting templates becomes easier. Furthermore, your templates are shared on cAlgo which means you will encounter zero problems upon switching templates between automated and manual trading.

Trading Sessions

When trading, the element of knowing which markets are open for trading around the world is critical. This way, you can optimize your trading strategies to determine a more favorable outcome. cTrader’s trading sessions give you an edge by instantaneously notifying you which markets are in session around the globe.

cAlgo Integration

Although cAlgo and cTrader are two different trading platforms Spotware’s developers have provided with an easy way to integrate the use of both platforms simultaneously. This way, traders can streamline their strategies and switch between manual and algorithmic trading easily.

Detachable Charts

Each chart on cTrader is designed to be separable, which means it can act as an impartial trading application on your desktop, allowing you to use options in full screen.

Concluding Thoughts

The cTrader platform is tailored for Forex traders that need to make quick trades with customizable options and features. Plus, with a user-friendly interface, you can even trade on the go, using the platform on your mobile device. All in all, there are few brilliantly designed Forex trading platforms and Spotware Systems’ cTrader is one of them.

Global Currency Forecast for 2015

Market Place

11/01/2015

World digital map Tradersdna

The Global Currency Forecast 2015 by Scandinavian Capital Markets (SCM).

The outlook for the EURUSD in 2014 was for the prices to move within a 1.2753-1.4225 zone with a downside break of 1.2753 favoring further price decline to 1.2319 followed by 1.2185, and 1.2050. The range for EURUSD in 2014 was 1.2096-1.3992 and the pair closed at the low of 1.2096 and more importantly well below the 200 month simple moving average (SMA) which is at 1.2237. For 2015, the EURUSD risk remains for further price decline in the weeks and months ahead as a monthly open and lower close below the 200 month SMA will confirm further price decline to 1.1580, 1.1423, 1.1295, 1.1096 and 1.0033. As to the upside, only a monthly open and higher close above 1.3322 will confirm further rise is once again underway initially targeting 1.3522 and the 2014 high of 1.3992.

GBPUSD

GBPUSD fall continues to unfold as our November 2014 outlook confirmed a weekly open and lower close below the 200 week simple moving average (1.6032) would witness further price decline to 1.5721, 1.5373 and eventually 1.4812. November prices closed at 1.5641, below the 1.5721 prior target as our December outlook confirmed lower prices was underway to 1.5373 and 1.4812 in the weeks that followed. December prices opened 1.5641 and closed 1.5577 thus confirming continued decline to 1.5371. As of this writing, GBPUSD has reahed 1.5324 and remains offered into the months and weeks ahead. For 2015, GBPUSD risk remains for significant price decline as a weekly open and lower close below 1.5373 followed by a monthly open and lower close below 1.5373 will confirm continued downside risk to 1.4812, 1.3904 and 1.3623 into the months ahead. As to the upside, only a monthly open and higher close above 1.6037 will turn the outlook to neutral with modest upside risk to 1.6477. Currently, we continue to hold GBPUSD September 2, 2014 short trade from 1.6565 for 1.4812, 1.3904 and 1.3523 targets.

AUDUSD

AUDUSD’s fall from the April 2013 high remains active as prices will continue to move lower in the week’s and month’s ahead with the 200 Simple Moving Average (SMA) currently at 0.7780 as the next downside target. As to the upside, only a monthly open and higher close above 0.9334 will turn the outlook to neutral with modest upside risk to 0.9629. For 2015, AUDUSD will continue to move lower as USD makes broad gains with an AUDUSD monthly open and lower close below 0.7780 confirming further downside risk to 0.7203 followed by 0.6006.

USDJPY

For 2015 USDJPY will likely continue to move higher with 122.55, 124.13 and 128.83 as the next upside targets into the weeks and months ahead while only a monthly open and lower close below 99.48 will turn the outlook to neutral with modest downside risk to follow.

USDSEK

The multi-month rise from 6.3221 continues to unfold as risk remains for further price rise in the weeks and months ahead is favorable. For January 2015, look for a monthly open above 7.6662 and higher close to confirm further price rise is underway to 8.0492 followed by 8.5375 and 9.3270 in the months ahead. As to the downside, only a month open and lower close below 7.2585 would turn the outlook to neutral with modest downside risk to 7.0827.

USDCAD

USDCAD rise from 0.9405 continues to unfold with 1.2199, 1.2323, and 1.3062 as the next upside targets in the month ahead. For 2015, look for a monthly open and higher close above 1.2323 to confirm further price extension to 1.3062, while to the downside, only a monthly open and lower close below 1.0335 would change our outlook to neutral.

UAXUSD – Spot Gold

Gold continues to consolidate the multi-year rise from $212 as 2015 will witness prices consolidating within a $889-1,526 zone as a sustained break of this zone will witness further price extension in the direction of the break. For 2015, look for $889-$1,526 range as a month open and lower close below $889 will witness further price decline to $777.41 followed by $645.94. As to the upside, a monthly open and higher close above $1,526.85 will confirm further price rise is once again underway initially targeting $1,637.83 and 1,745.90. Though still in a multi month consolidation phase, the spot gold market remains net long as this net long sentiment could witness a very painful downside correction or squeeze similar to that recently witnessed with crude oil prices. Look for a monthly open and lower close below $654.53 to witness a dramatic decline or near collapse of the gold market with prices eventually reaching $263.45.

Crude Oil (WTI)

Barring any significant cuts in production from OPEC or any geo-political events which could impact oil prices, crude oil prices will remain low throughout 2015 and risk for further price decline towards $33 is favorable. For 2015, look for a WTI monthly open below $52 and lower close to support further price decline to $33.18 while to the upside only a monthly open and higher close above $86.40 will remove any downside risk.

Scandinavian Capital Markets SCM is a Sweden based asset and fund manager founded 2010. The company was founded by a group of traders and former portfolio managers to help investors diversify their portfolios and provide a profitable alternative to other asset classes with risk-adjusted returns. The company’s global wealth management seeks to identify and capitalize on intermediate-term price movements in a broad range of major currencies through global macro investing using a combination of fundamental, technical and systemic trading. The company is registered under Swedish Financial Supervisory Authority (Finansinspektionen)

Investment Philosophy

The team has based on several years of research and trading effectively developed automated and discretionary strategies that incorporate macro-economic views and technical analysis that seek not only to outperform major benchmark and stock indices but also to generate uncorrelated and risk-adjusted returns that offer true diversification.

Investment Team

The investment group consists of a highly competent trading team of currency traders, market analysts and skilled portfolio managers including former Head of Portfolios from Barclays, Citigroup and Lloyds TSB. The team utilizes more than 25 years of trading experience within the banking and institutional investment sector which has made it well suited to generate risk-adjusted returns irrespective of market climate.

Scandinavian Capital Markets Social Media presence:
Twitter: @ScmFX
LinkedIn: linkedin.com/pub/scandinavian-capital-markets-scm/52/2bb/33b
Facebook: facebook.com/ScmForex

Guide to Trading and Gamification Part 2

Market Place

22/12/2014

Continuing from where we left with the first part, the second part will focus on different examples of online trading and gamification integration and some investor based games to give you a better idea. We have already discussed the advantages of using gamification techniques in online trading and also briefly discussed the point of view of the critics. If you want to know about the details, you can refer to the part 1 of these series.

Gamification became a mainstream trend since 2011, and as predicted by 2015 50% of organisations that manage innovation processes will gamify those processes by 2015. Whether this prediction came true or not, we can deduce from the trading industry that introduced already different investing games.

Now, let us look at the different investing games and tools that could reshape and open doors to endless learning for new traders as well as experienced ones. It is highly recommended to play these trading games at least once or twice to see what the hype is all about. Many multinational companies are also using gamification for educating their employees.

Benefits of Gaming and Gamification

Gamification creates engagement that leads to employee development. The chart below reveals the specific skills that might be developed by employee through gamification.

Source: VenueGen

The employees learn more quickly and have fun doing so. They are able to retain more information as compared to the traditional methods of learning. Research also points out the benefits of using games to eliminate anxiety and depression. Some might go as far as saying that game can produce better results than medicine. All the neuroscientists and researchers on the field agree gaming could increase the retention power and increase concentration levels.

Traders who play trading games can build a strong network which is important and you can get instant feedback and rewards. Gamification offers a lot of potential for business applications. For traders and businesses, gamification offers an easy way to train, monitor and motivate employees. Businesses can engage customers to participate and keep them engaged. Individuals can apply the same things they learn from games in real–life situation, such as anticipation, problem solving skills and creativity. Here are some of the games you can try to polish your understanding of different concepts used in online trading:

Flick a Trade

Start with casual games, such as flick a trade, which is a gesture based trading game for Android and iOS devices. The game allocates different gestures to different commodities currencies and indices. You can play around with virtual currency but you will have to take time into consideration. The graphics will appeal to you and the game play will keep the player engaged. Not only this, but you can also share the fun by challenging your friends in the multiplayer mode. View your performance and share it on social media to show your friends.

World of Tradecraft

Truly inspired by one of the most popular multiplayer online games, World of Warcraft, this game offers traders and opportunity to experience gamification of higher degree. It is a full-fledged multiplayer online trading game. Similar to World of Warcraft, this game also give you an option to work collaboratively in a team towards a single goal or get involved in one on one competition. As you move higher, new challenges, rewards and territories are unlocked which will push you to play well and play more. New traders will get the experience which could help them in real world trading.

Investing Apps

Some of the best investing game apps that took advantage of gamification are:

Trade Hero

It is one of the best virtual investing apps and works as a financial literacy tool as well. It engages users to improve their trading by using gamification. Users can create a virtual portfolio and compete with one another. You can comment and share you score on social media. The app is free to download but uses the in-app purchase model to earn money. There are many other features you can explore.

Stox

Another app worth mentioning here is Stox. It has a series of small lessons to teach you how to create online trading accounts. You will have to go through quizzes after you have gone through the lessons. Stox focuses on traders who are new to online trading and don’t know much about online trading. Stox app is available for both Android and iOS. Take a look at different indicators and do your technical analysis with a touch of gamification with this app.

These are only a few examples but there are countless others as well. These apps and games can enhance your knowledge about financial markets and improve trading skills which is beneficial for traders in the long run.

Relevant Posts:

Guide to Trading and Gamification – Part 1

The Gamification of Online Trading

How “Tradimo Play” ApS integrates Gamification and Trading

Satoshi Nakamoto and the Inception of Bitcoins Part 1

Market Place

18/12/2014

Innovation and inventions has been a driver for advancement in technology from the early days. The world remembers the people who make a breakthrough in any field that could prove to be helpful for the whole society. History is filled with inventors who have dedicated their entire life to a goal that they are able to achieve finally. Today, we will shed some light on one such innovator who made an impact on business and trading.

Background

As we entered into the 21^st century, the internet turned into a necessity from being a luxury. Initially, no one thought it could bring about a significant change in many different fields. As time passed, many applications started to trickle in and some of them created an impact in different fields. The internet gained popularity among the masses. After this, businesses also started to take it more seriously. The internet penetrated every field you can think of and now it has become an integral part of several different industries.

The impact of the internet can be seen everywhere, from healthcare to business, sports to entertainment. When you talk about the business world, paper currency was replaced by credit and debit cards but many security issues created doubts in the mind of users. Even today, many people are still reluctant to share their credit card details online. Although online payment security has improved significantly, there still are security breaches being reported.

This created a vacuum and the need for a universal online payment solution that could ensure secure transactions online. This gave rise to the concept of digital currency. Many researchers and scientists put in their effort to develop a solution that could facilitate users who want to buy things online. This need was further fueled by the popularity of E-commerce. Finally, the wait came to an end when Bitcoins were developed.

Satoshi Nakamoto

The credit for developing the first crypto-currency commonly, known as Bitcoins, goes to Satoshi Nakamoto. A 64-year old Japanese by origin who lives in California, USA, in a strange turn of events, he was denied credit for being the creator of Bitcoins and hired a lawyer to ensure he received the criedt. Basically, Nakamoto developed the Bitcoin protocol in 2008 and then went on to launch Bitcoin software client in 2009. He also published a paper to support his Bitcoin protocol in 2008.

There is not much information about him known publicly because he used to be reserved and doesn’t discuss his personal life with anyone. He worked on other projects with open source teams. His future plans are to explore the different domains and sideline himself from the digital currency business. He developed the algorithm that changed the world of business and money forever. There are many misconceptions about his personality and many people have made many false claims about him.

Other People Involved

It is still unclear that whether Santoshi developed Bitcoins or some other person deserves the crown. Some of the names that are taken in this regard are Michael Clear, Martii Malmi, Jed McCeleb, Michael Weber, Hal Finney, Nick Szabo and many more have been named in place of Satoshi as the founder of the first digital currency known as Bitcoins.

Michael Clear, a cryptography graduate has denied any such claims publicly. Joshua Davis, New Yorker journalist has made this prediction about Michael Clear after analyzing Nakamoto’s writings. Martii Malmi has been involved with cryptocurrency from the early days which made some people vote in his favor. Jed McCeleb, cofounder of Rapple and founder of Mt Gox, was also been given preference over Satoshi Nakamoto.

According to another popular belief which tilts the scale in the favor of a computer scientist by the name of Donal O’Mahony purely based on a paper he published on Digital Payments. In May 2013, Ted Nelson, who is an internet veteran named Professor Shinchi Mochizuki, but he also admitted there is not much evidence to prove him as the main person behind Bitcoins. Who really is the founder of Bitcoins is still a mystery that needs to be solved. Irrespective of the creator, the innovation has certainly made a huge impact on ecommerce, in fact any business which operates online regardless of industry.

Guide to Trading and Gamification Part 1

Market Place

17/12/2014

The trend of integrating two completely different fields to find a comprehensive solution to a problem is becoming commonplace. Scientists and researchers have experimented with it and have received positive results. Now, they are taking it to the next level. It might look odd to some of us but gamification and online trading integration is on its way.

In one of our recent posts, we reviewed the current trends of gamification in online trading and how it affects traders’ experience.

Gamification

Gamification is a technique which applies game elements and mechanics on real-world situations. This emerging field has been able to capture the attention of many businesses because it produces the desired results for your business in less time by engaging your targeted audience to participate. Gamification is also used in many other fields with varied success rates.

Online Trading

The trading of securities online has become the norm after wider adoption and acceptance of internet. The popularity of online trading is on the rise as suggested by statistics and the trend is going to continue in the same fashion. Many new traders are also entering the market regularly after seeing the success their counterparts are enjoying in the field.

Integration

Efforts are underway and some positive results have also been achieved which will further speed up the process of gamification of online trading. Most traders who are experienced hang out in chat rooms and forums to keep themselves updated but they neglect the booming platform of social media. New traders, who want up to date information but do not know where to look for it and lack the required knowledge to succeed in online trading, will find this useful.

Using game elements or developing tools and technologies that could help online traders in their quest to success can play a crucial role. Social media can be involved to make things easier by sharing the latest news and articles to help investors make the right decisions. There should be a review and ratings method followed to rate forums which makes it easier for traders to select the best forum to get the knowledge.

Some people are in favor of gamification of online trading while others criticize it by saying there is a huge difference between real world and virtual situations. A real world loss could cost you money but a virtual loss would not hurt you that much. Irrespective of what both parties say, gamifying online trading has turned into a more engaging and enjoyable experience.

Many trading services, such as eToro, have experimented with social media and game elements. The flexibility to experiment in the game and learning different things without putting your hard-earned money at stake is the biggest advantage gamification of online trading can give to traders. Using virtual funds in games will help you learn and experiment with different things that could prove to be handy when you trade with real money.

Many people who don’t like games only look at one side of the picture to shape their opinion. They only focus on health issues and other problems associated with gaming and completely neglect the positive side of gaming. You can learn a lot regarding stock investing. There is even a social platform called Cloud Stock where you can test your investing skills while at the same time competing with friends. Recommend stock to your friends. Invest with your friends and see who can earn a better return.

If used properly, gamification can be used as an educating tool to teach new investors the tricks that could make them more capable of doing well when making investments in the real world.

Another common mistake made by traders who are new to this field is to follow the footsteps of famous traders who are earning more profits. This might or might not be fruitful for new traders because it purely depends on the situation. This problem is solved by using gamified investor tools which can help young investors to check whether a strategy would work for them in particular situations or not without risking their money.

Now, you can easily get access to relevant material to get the help you need but you must know where to look for it.

Relevant Posts:

The Gamification of Online Trading

How “Tradimo Play” ApS integrates Gamification and Trading

The Best Price Action Trading Strategies

Market Place

16/12/2014

Business trading is not simple anymore. You must have in-depth knowledge of hundreds of factors that could play a vital role in bringing about a change. Businesses invest time and effort to make a strategy that could help them in achieving their goals. They pay hefty amounts to business experts to help them do that and guide them about the future.

What is Price Action Trading?

In one of our recent posts, we provide detailed introduction to price-action trading strategy. Price action trading is a method by which you can analyze a few factors before making the decision and neglecting other factors. You look at a couple of indicators and trends in price action trading. Price action trading is mainly focused on the data of movement of price and the time it takes for the price movement. This data is indicated on a price chart. It shows the actions of humans and machines that are involved in trading market.

When these actions are viewed with respect to time, they become price action that it also presents in price charts. The biggest drawback of price action trading is it neglects global events which could have a positive or negative impact on the price. But the advantage is that you can trade successfully without considering global events and other factors using price action trading.

The main reason is that all the global events changes and economic data is indicated through price action on a price chart. Price action shows a glimpse of all elements that are influencing the market with respect to time using different indicators such as MACD and RSI. You must only focus on price movements and you can easily conduct profitable trading business.

Forex Trading and Price Action Trading

You will have to learn what the patterns in the market is saying and then do Forex trading. The price action may repeat itself because the same participants interact in the same way with the system. Many price trading strategies are used in different ways. Price action reflects change or continuation of market situations and opinion. Analyze the original price and leave out all other indicators out of your charts in Forex trading. Economic and currency data do influence the price in Forex trading.

Price Action Trading Strategies

There are many price action trading strategies out there. Some of them are as follows:

Fakey Trading Strategy

Fakey trading strategy is a commonly used price trading strategy and highlights the neglect of an important level within the trading market. The pattern consists of inside bar, false break of inside bar and close back inside the range in the same order as mentioned here. The entry is done when the price moves. The entry is recorded when the price moves higher than the level of inside bar. Another variation of Fakey trading strategy is bearish Fakey. The only difference is that the entry is recorded when price moves lower than the inside bar in bearish Fakey.

Inside Bar Strategy

Inside bars are completely contained within the boundaries of a previous bar. It can show a brief consolidation and start to move in the trend direction which is dominating the market. Analyzing inside bars on a daily and weekly basis can be more fruitful. There is a large reward and small risk at stake in this strategy and this is why most traders love this price action strategy.

Swing Trading Strategy

Swing trading holds middle ground between buy and hold traders or day traders. Basically, swing trading is a moderate method and focused on market trends and momentum. It gives you the chance to pocket larger profits than other trading strategies. Many traders won’t like to use swing trading strategy because they want frequent trade signals which swing trading don’t provide.

You don’t have to put in a lot of effort to be successful in swing trading. You just have to do a market analysis on a daily basis or if you want to keep yourself updated you can do it twice a day. Closing price of the day is of great importance for swing traders. When a trade signal reaches swing traders, they can set their trade order by inputting stop and target price and entry and do their business.

How to Measure Money Flow with Different Indexes

Market Place

15/12/2014

Businessmen need to take hundreds of factors into account before they can make business decisions. Missing out a significant factor from the analysis could prove to be devastating because the same factor you have neglected could make the biggest impact in changing the whole scenario. You will have to take every step by looking at the indicators or otherwise you will get into trouble. Some of the most common indicators used to measure money flow are as follows:

Money Flow Index

Money flow index takes both price and volume into account. In MFI, money flow is positive when buying pressure rises and is on the negative side when selling pressure falls. The ratio of negative to positive value is calculated with respect to time period, i.e. on a yearly basis, using a formula. The money flow index ranges from 0 to 100. MFI is more efficient when it comes to finding out about price boundaries and identifying sudden trend changes and opposite price movements.

Money flow is positive when typical price rises from one period to the next period and it is negative when typical price comes down from one period to another. The money flow index is treated in the same way as RSI. Volume sets both of them apart. The MFI leads prices and with addition of volume, lead time increases. Analysts can easily view the overbought and oversold levels to tell you price boundaries and high and low trends can be used to predict reversals. An MFI value higher than 80 is considered overbought and MFI value below 20 is considered oversold.

You should not rely on MFI as a sole indicator and make decisions based only on the results MFI gives you. It is highly recommended you take multiple indicators into account and use a hybrid approach than only relying on any one indicator. Looking at the situation from different perspective (indicators) will put you in a better position to make the right decision especially when it is about your business and money.

Relative Strength Index

Another momentum metrics used to measure the fluctuations in price movements and speed at which it changes. Similar to MFI, RSI also has the range from 0 to 100. A value higher than 70 is taken as overbought and a value below 30 is considered oversold. RSI are best if you want to know about the general trend in the market. It uses similar techniques to exponential moving averages to calculate the value. The accuracy of value increases over a longer period of time.

The default period value is 14 but it can be increased to decrease sensitivity or brought down to boost sensitivity. The overbought and oversold criteria can also be readjusted by looking at the analytical requirements. Divergence could mislead you if you are looking at the strong trend. Failure swings accurately predicts imminent reversal and are independent of price action. It takes signals from RSI and doesn’t take divergence into consideration.

On Balance Volume

On balance volume treats buying and selling pressures cumulatively unlike other indicators which consider them independently. It includes volume on up days and excludes volume on down days. It is one of the oldest indicators used for measuring positive and negative volume flow. Want to confirm price trends or want to predict price movements? Use on balance volume for such situations. The value of OBV increases when volume on up days surpasses volume on down days. The value decreases when volume on down days is higher than that on up days.

Increasing value of OBV indicates positive volume pressure that results in higher prices. Declining value of OBV shows negative volume pressure that can result in lower prices. You must pay more attention to characteristics of OBV line. OBV value is normally based on closing prices. Analyze closing prices when finding support or resistance breaks or divergences. Rise in volume will also cause an extreme move which will take some time to settle and come back to normal.

The bottom-line is that most indicators work well in specific situations, so it is better to use a combination of these indicators to make the right decisions.

How ‘Tradimo Play’ ApS Integrates Gamification and Trading

Market Place

12/12/2014

“Games are the new normal” Al Gore

Many companies are now focusing their attention on developing useful applications by integrating two or more fields. Combining the concepts of multiple fields to solve a common problem has become quite common in this day and age. The companies who experimented with this formula have also attained success and that has inspired other companies to follow suit. This might look odd to many but it is effective and has proven its worth by providing brilliant solutions to complex problems.

Tradimo Play ApS

The latest experiments in the series of events are being done to fuse gamification with trading. A new company known as Tradimo Play ApS has developed gamification tools to take trading to the ever expanding gaming community and to anyone who wants to learn trading concepts. Tradimo Play ApS has also tried to cater to the people who prefer mobile devices by launching its mobile app for popular mobile platforms which has managed to gain the attention of major brokers and traders.

The company has diverted all its energy towards bringing something new to the market and has succeeded in doing so in the form of its latest gamification tools. Innovation and creativity is what they are striving and wants to give something unique and refreshing to their clients which is the right way to go especially in today’s competitive world.

Gamification

Gamification is thinking and applying game elements in non-gaming environment to solve major problems. The main purpose of gamification is to ensure user participation and it has succeeded in achieving that goal. It is used in many different fields, from education to entertainment. It is focused on main players and how they act in a game situation. A concept of reward is also there to motivate the player in achieving their goals.

Internet as a Medium

People who like to trade frequently are still using chat rooms and other instant messaging platforms to stay up to date with the latest happenings and indulging in discussion of hot topics. While the brokers have extended their reach and increased their customer base, many new traders are still not familiar with investments and stocks.

Online Trading and Gamification

Online trading has started to look more or less like role-playing games if you analyze closely. You will have to make decisions that could bring about a change, for example losses and savings. The popularity of online trading will grow in the years to come which will give an opportunity to companies like Tradimo Play ApS to develop gamification tools and capture a large market share with their handy tools for trading.
Social media has helped traders in interacting with the stock markets in a more reserved way. Times have changed and now you don’t need exclusive access to read experts opinion and predictions. Many traders believe articles posted on social networking sites such as Facebook and Twitter influence business and the trading decisions they take today.

Some might not agree with the idea of integrating real world with virtual world, especially when your money is at stake. They argue that in-game situations won’t match with real-world situations and both are completely different. A loss in the game would not hurt you but a loss in business and trading will hurt you bad because you will lose your hard-earned money in the process.

Trading decisions are still made on the basis of trade signals and not only on the articles which traders read on social media. Frequent traders know where to look when it comes to finding the latest news and to know more about trends but it might be a problem for new or part-time traders. Gamification elements could come in handy in rating forums for authenticity and credibility so that part-time traders could easily select the right trading forum to learn what is happening in the world of trading.

Social media has sped up the gamification process of the online trading market. It will take time but gamification and online trading together does have a bright future and could benefit many traders. Proper execution using the tools could even turn critics into supporters. People would be slow to react initially but with the passage of time things are bound to change.

Find a Bitcoin ATM near You

Market Place

11/12/2014

Technology has brought about a big change in many different fields and business is no exception to that. It started when paper money was replaced by credit and debit cards. Now, we have more than a dozen varieties of digital currencies at our disposal. Although they may have to overcome many issues before they can replace traditional money, they have made already a huge impact.

Bitcoins

Among many different currencies, Bitcoins is the most popular and is already being used in some places. It is also traded. It is a form of electronic money that is supported by a software-based payment system. There is no central regulatory authority and the system works on peer to peer basis. It is the first crypto currency that is fully implemented. It uses strong cryptographic techniques to secure the transactions but still it had to face some security issues in the past.

Bitcoins are stored on a computer system and this process is known as mining. Users can trade bitcoins to purchase a product or service, and even exchange it for real money. Sending and receiving Bitcoins has not been an issue for some time but you will have to pay a fee for that. The rates of Bitcoins fluctuate regularly and are made known publicly. The transactions are recorded in a ledger known as block chain. It is also distributed pubicly to authenticate ownership.

Mining

Mining is a process to store Bitcoins and keep the records of the transaction. Another duty of miners is to keep the block chain consistent and complete. They have to record every new transaction made and combine similar ones to form a block. Information in the new block is used to connect the new block with older blocks. SHA-256 cryptography is used by Bitcoins of the previous blocks.

Miners who are able to find the next block successfully are rewarded with a transactional fee and newly created Bitcoins. A special transaction needs to be made to receive the reward, which is known as Coinbase. These Coinbase transactions play an important role in tracking all the Bitcoins in circulation at any given time.

Bitcoin ATM

Similar to paper currency, Bitcoins can also be withdrawn through ATMs but they are specialized ones and different from normal ATMs. Basically, it is an electronic device which helps you to conduct a transaction using Bitcoins without the need for any human involvement. Some Bitcoins ATMs also offer the facility to purchase Bitcoins by paying cash.

It is a recent phenomenon with the first Bitcoin ATM starting operation late last year in Vancouver, Canada. Since then, many Bitcoin ATMs have stated to crop up in different parts of the world. The Number of Bitcoin ATMs is still quite low and you will have to see a map to find one. The map which shows Bitcoin ATMs is known as Bitcoin maps.

Laws Governing Bitcoin ATM

These machines operate under different laws. There are different laws applicable in different countries regarding the operations of Bitcoin ATM. Laws are still in its development stage in many countries but they are fully implemented in a few countries, such as the US. Different bodies responsible for regulating and monitoring money are responsible to make the laws regarding Bitcoin ATM which can be implemented regularly.

Future

The popularity of Bitcoins cannot be denied but some issues, such as security issues and no regulatory authority to monitor and manage the digital currency are some of the biggest hurdles in its growth as the future of business. Bitcoin ATMs can take cross border e-commerce to the next level and it has the potential to do that

It could prove to be helpful for those who want to shop online but don’t have a bank account or credit card to make payments. They could use Bitcoins to make payments anywhere in the world because it is accepted everywhere. Travelers who visit different countries will not have to face any issues regarding converting currencies.

They will not need a bank account or credit card for that matter. If they have some cash to spare, they can also convert it into Bitcoins. There are many other uses of Bitcoin ATM but before it could control and find a solution to security and other issues that plagues Bitcoins, things mentioned above could not become a reality.

How Artificial Intelligence affects financial market

Market Place

10/12/2014

The dawn of the 21st century has brought many novelties with it, Robo Advisor among them. Today, financial markets are not just monitored by humans. They are also flooded with artificial intelligence. Artificial Intelligence, or AI, is the new theme for covering desired financial aspects of the market. A human mind has shortcomings as it cannot remember large portfolios and databases simultaneously. A Robo Advisor, however, is a different story.

The first version, known as the Robo-1, was more like a preliminary assistant, encompassing basic financial matters conducted by the client. However, Robo-2 is a different story. Robo-1 was more of a technical demonstration model of the basic user-friendly interface with basic financial assessment functions.

The Robo Advisor 2 is a quantum leap over the original model. The IBM Watson is the new name of the artificially intelligent financial assistant. Watson is programmed with the human cognition in mind. The model has the capacity of understanding financial databases and daily requirement-based model assessments to facilitate the client regarding what activity is deemed probable.

As a learning CPU, Watson can read, learn and talk and has the assisted memory to learn with experience. A true model of state of the art technologies, Watson can present an argument, reason and present a case based on the financial history of a client. In other words, if you are going off the mark, Watson can give you reasons not to do so.

Human Interaction Not Needed Anymore

As an intelligent cognitive design, Robo Advisor 2 can assist the client in making decisions, analyzing the market, what to purchase and what not to, Robo Advisor can help. In fact, the model encompasses the capability of becoming your online financial portfolio of choice in years to come. Watson is designed with these fundamental aspects on purpose, since the aim is to provide the easiest financial advice possible. The user can feed login details and Robo Advisor can log in as the user, analyze the market, see the financial portfolios and predictions and execute the orders for profitable trades.

Evolution Instead of Revolution

Despite advancements, the Robo Advisor is far from perfect. It may serve best as a financial assistant but not as a financial legal advisor. Not only does it lack the capability to look into legal documents, it also lacks a basic understanding of executing legal barricades as it is not an authorized entity to sign documents.

Even if it does, several websites have secure codes to fill, something the Advisor cannot do, which leaves the legal aspect out of its reach. It is a quantum leap over the basic model, so much so that it is 2 to 3 times more efficient in every aspect. However, the Robo-Advisor 2 is more of an evolutionary design which needs improvements and additional functionality.

What Is Money Flow Index (MFI)?

Market Place

09/12/2014

When you are performing a technical analysis, you need to focus on various indicators and what they say. Closely analyze the indicators and the bigger picture will be in front of you. Same is the case with the asset trading business. There are many indicators you must consider when trading securities and one of those indicators is the Money Flow Index (MFI).

Money Flow Index

The money flow index is an indicator which shows the strength of money flowing in and out of asset trading. It is interlinked with RSI (Relative Strength Index). The main difference between the two is that RSI only considers prices while money flow index (MFI) takes both price and volume into account. Its range is from 0 to 100.

All the bars whose average price is more than or less than the previous bar are considered while calculating the MFI. Index values are used to plot the money flow. The price and volume nature gives more in-depth information from different angles which could help in determining the progress towards your goal. The money flow index can show lot of fluctuation and highlights overbuying and overselling in an effective way.

Overbought and Oversold

On a scale from 0 to 100, a value of 20 or less is considered oversold and a value of 80 or above is considered overbought. This is also known as accumulation and distribution. It is used to indicate the momentum and direction of the market. You will have to add the distribution and accumulation values of all the trading days and divide it by the number of days you want to find MFI of.

Calculations

Firstly, determine the actual price by using the following formula:

Price = (High + Low + Close)/3

Next, calculate the money flow by following formula:

Raw money flow = Price × Volume

Specify the number of days you are trying to find the money flow for. For example, you want to find money flow for 20 days. Now, it is time to calculate the ratio of money flow by using the following formula:

Money flow ratio = (20 days’ accumulation)/(20 days’ distribution)

Accumulation and distribution can also be replaced with positive and negative money flow respectively in the above formula.

The final step is to find the money flow index. The formula to find the money flow index is:

Money Flow Index = 100 – [100 / (1+Money flow ratio)]

Many traders are looking to take advantage of opportunity when price and money flow index move in opposite directions. This brings about a significant change in the market. Divergence of these two factors, price and money flow index, can be beneficial or can also be disastrous depending on the situation you are in. It is a little risky but if you consider some other factors then you will end up on the safe side.

Other Factors

It would be much better for you if you consider factors other than price and volume because you will be able to see the bigger picture and can easily make the right decision. If there are large gaps in price action, then there is some problem because calculation of money flow is done by taking mid-points of price action into account. If there is a large gap, then it means some mid-points are missing and the complete calculation becomes suspicious and ambiguous.

If the mid-points are missing, the results will be disturbed. It is highly recommended to verify your results through other indicators and don’t depend only on price and money flow. You can also check out exponential moving averages and moving average convergence and divergence which are more accurate as compared to money flow index indicator.

It can give early warning signs for a changing currency trend so you can be prepared beforehand to tackle such issues and save yourself from losses. The STC indicator can also be used but it was primarily developed for the currency trading. The STC indicator reduces the risk of false signals significantly. With computers at your disposal, you can quickly judge the accuracy and reliability of prices thanks to trading software. Be aware of the latest indicators because they might be more efficient as compared to older methods.

Price-Action Trading Strategy

Market Place

08/12/2014

To succeed in today’s trading world, you need to be aware of what is going on the market so you can accurately predict what could happen in future. Your biggest chance of survival and making it big in the industry is to know and do things according to a plan or a strategy. This will make it easier for you to achieve your goals.

Price Action Trading

Price action refers to the fluctuation in prices, either high or low. It is analyzed by considering the price changes that have occurred in the recent past. This gives an overview of the market to the trader and what he could expect in days to come. The trader can also make short-term decisions based on this analysis. It depends on technical analysis tools instead of looking at other indicators.

Price bands, price swings (high or low), trend lines, charts, break outs, etc are the technical tools which can be used to analyze the price action. Each trader has his own method to interpret the information they receive. Behavior and psychological aspects also play a crucial role in the decisions made by the traders. For example, if a market is showing a positive trend for a week, traders believe it will continue to do so in the future, which is always not the case.

Uses

Price action trading is mostly used to speculate and predict future trend and price movements. It is mostly used by speculators, retail traders and trading firms. It is used in many types of trading, such as Forex trading, bond, equity, and commodity trading. Traders recognize trading patterns using price action trading and keep an eye on stop losses and entry and exit levels among other indicators.

Strategies

Using a single strategy on a stock will restrict your trading opportunities. Use a combination of strategies to be more effective when trading. The first thing you need to do is to identify the situation when things go high or low, break outs occur etc. Next, analyze the scenario and identify trading opportunities such as when it is more feasible to trade? When the market will go up or down? Trading opportunities vary from trader to trader. It is a highly volatile market so you need to be alert to be successful and keep an eye on trends and what experts say.

Make a strategy by considering different factors which influence the price shifts and your trading goals. Action trading analysis and price analysis is done through tools but the decision has to be taken by the trader after closely assessing and studying the results of the price action analysis. Price action trading strategies works well for short to medium-term investments. It is not that effective when it comes to long-term investments.

Advantages of Price Action Strategy

The trading markets follow a random pattern which may be hard to predict but if you keep an eye on various factors which influences price changes, you can speculate what will be the future of the market. A price action trading strategy offers traders the liberty to choose a strategy that suits their needs best. As mentioned before, action trading strategies can be applied on different kinds of trading, such as bonds, equity, commodities and Forex.

The biggest advantage of price action trading is that it gives control and power to the trader so he can decide according which set of rules would be better suited for them instead of following rigid rules. You can easily use a price action trading strategy through trading software. A software gives you charts, graphs and uses other tools to present data in an organized way so you can make a plan or a strategy to achieve your goal. Using the right combination of strategies can lead you to success. You can also test your price action strategy before you apply it, which is an added advantage.

You can apply the same strategy you have chosen on past data and see the results before applying it in future trading. Decide on a strategy after analyzing your requirements carefully. You can also set limits within which you can sustain the price fluctuations of stocks. Many traders support price action trading strategies for their advantages.

Pros and Cons of High Frequency Trading

Market Place

05/12/2014

Norway’s $860 billion sovereign wealth fund — the world’s largest — has decided to abandon algorithm-based High Frequency Trading (HFT). The electronic “trail” left by such trading allows traders elsewhere to profit on the HFT orders placed by the fund. But the decision comes at a very tumultuous time for HFT trading: Although the majority of stock market trade volume is by way of HFT, regulators continue to cry “foul” when HFT abuse crosses the line into market fraud.

The Emergence of HFT Stocks

HFTs have become controversial in large part due to the fact that they now account for at least 50 percent of all trades transacted by traders in United States equity markets — although in 2011, that figure was widely quoted as being as high as 70 percent. But it is not just the percentage of volume that has sparked debate over its implementation but also whether it places conventional, institutional investors at a distinct disadvantage. In addition, the technology has given rise to a category of stocks known as “HFT stocks” that are favored by HFT traders. These easily traded, highly liquid stocks in large companies put long-term investors at a disadvantage if they do not employ the fastest trading media utilizing the latest, most aggressive algorithms.

The Liquidity Debate

Defenders of HFT point out that it lends greater liquidity to the market. However, opponents cite instances of large orders being placed only to be immediately canceled, creating nothing more than “phantom liquidity.” The SEC recently investigated a New York HFT firm for the manipulative practice of placing rapid-fire, aggressive trades in the last two seconds of almost every trading day during a six-month period from June through December 2009 that resulted in the manipulation of closing prices of thousands of NASDAQ-listed stocks. The tactic overwhelmed the market’s available liquidity and artificially pushed the closing price in the firm’s favor.

Crossing the Line

Although the defendant firm was relatively small in size, it dominated the market in the last few seconds of a trading day for stocks that it otherwise traded only minimally. During the period investigated by the SEC, the firm’s trades constituted more than 70 percent of the total trading volume of the stocks it manipulated. A statement released by SEC Chair Mary Jo White cautioned: “When high frequency traders cross the line and engage in fraud we will pursue them as we do with anyone who manipulates the markets.”

The condemnation of HFT abuse was echoed by Andrew J. Ceresney, director of the SEC’s Division of Enforcement:

“Traders today can certainly use complex algorithms and take advantage of cutting-edge technology, but what happened here was fraud.”

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