Mobile Trading Technology Redefining the FX Trading Landscape

08/10/2014

Traders are normal people too, you know and they use mobile trading technology. And like normal people they too can’t sit in front of their laptops and computers, staring at the screen non-stop. They have to do other things too which requires leaving their terminals and sometimes their office. However, nothing is more unpredictable and uncertain than the Forex currency market and who knows, just after you leave, there is a sudden increase in the value of a currency, which could have been favourable for you. But you weren’t there to do anything. Tough luck, isn’t it?

However, there is a way around this. As a matter of fact, you already to know what it is and you use it every day to do most of your stuff. Yes…you have guessed it: using a smartphone. Thanks to some brilliant applications, you can now trade fairly easily and effectively using your phone.

Vast developments and improvements in cellular technology have made so many things that were considered impossible possible. For example, in just a few clicks and taps, you can view your account, initiate trading and simultaneously monitor your account. You can evaluate and follow your trading region from anywhere in the world without having to worry about anything. Thanks to technology, traders have now broadened their horizons with respect to the various methods they use to carry out business in an environment which is constantly evolving.

Information at Your Fingertips

The use of smartphones and tablets has become imperative for everyday Forex trading. You see, trading software used a decade or so ago was slow but now faster applications have replaced the slower ones. Moreover, a majority of these applications have been designed to mimic desktop versions. And thus, the demand for these applications grew exponentially because there is nothing more traders can ask for than trading using application which allow them to trade when they want and where they want.

The power of having the right information at the time you need it most is an exceptional feeling. It gives traders a sense of control they can enjoy over the currencies. Plus, this quick and easy access to information also allows them, or rather empowers, them to use any given or presented opportunity to the maximum. After all, the nature of the Forex market is to flourish on volatility and how else can you benefit from this fluctuating volatility than carrying around a smartphone or tablet anywhere and everywhere you go.

With applications designed to give traders a sense or real time Forex pricing, traders can now track their position in the market and simultaneously place orders. And because of this flexibility in technology, people now check their accounts and analyze the Forex markets while on their way to work on the train. On the other hand, with the increased benefits of using mobile technology in Forex trading, one also cannot look the other way when it comes to the risks associated with it.

For example, traders who rely heavily on the use of smartphone technology to track and analyze markets need to subscribe to reliable data package, which can be quite expensive. And because the initiation of trading orders can differ tremendously as the entire traffic has to be directed through the ISP, the network the trader relies on can be overloaded.

According to Michael Greenberg, who works for Forex Magazine, there will be a tremendous increase in the use of smartphones and tablets in trading this year and the next and this demand will ceaselessly rise as more advanced applications are launched in the near future. He also says the next best thing is the ‘mobile-first broker’.

Think about it. Amazon sells Kindles at a lower price so more people buy from their online store. A mobile-first broker will do the same, but in this case, it will be creating and promoting a trading experience which they will sell directly to the first mobile user who trades using a standard desktop trading platform. Another example of how mobile technology is rapidly changing the landscape of Forex trading is the StreamLink application by Caplin Systems, this application allows traders to create their own mobile trading application on a number of different trading platforms.

Forex.com, Saxo Bank along with IG Market released statistics indicating there has been a substantial increase in the use of mobile phone technology for trading. And according to the same reports, there were many brokers who said that 20% of their clients depend on mobile technology to trade daily.

The nature of trading has changed so much that you can now trade even if your 30000 feet in the air, travelling to your favourite destination for a quick summer getaway. And things are just going to get easier. There is no shred of doubt that mobile technology has indeed made an everlasting mark on Forex trading and has proved to be a game changer.

Top 10 Equity Crowdfunding Platforms

Market Place

07/10/2014

Equity crowdfunding, also known as crowd investing, is a growing and constantly evolving substitute for companies that would like to sell equity in small quantities to a larger number of investors via online platforms. It was ten years ago when equity funding was introduced in the US and is still a rather fresh crowdfunding alternative. The chief objectives of these and previous crowdfunding platforms was to aid charitable companies, NGOs and artists to finance their projects by making them known to other investors and stakeholders which is known as the (crowd), through online platforms.

Today we observe steady growth in crowdfunding, with major growth in specific industries.

Thus, there was this influx of online crowdfunding platforms which were set up in between 2000 and 2010, platforms like Kickstarter (2009) and ArtistShare (2000). Compared to the traditional contribution processes associated with crowdfunding, equity crowdfunding is still under the regulatory microscope and a number of barriers. This is mainly due to the fact that soliciting funding and investments from the general public is illegal. That is, unless there has been a prospectus filed with the concerned securities authorities.

In April 2012, US President Barack Obama made a conscious effort to smoothen the process of investing in the US by approving the JOBS Act legislation, which (a variety of different rules and regulations) permits equity crowdfunding platforms to crowdsource a year ago. And as a direct result, there have been a number of new and old platforms which have emerged strongly. Mentioned below are some of the top equity crowdfunding platforms you can use:

Crowd Cube

Crowd Cube was launched back in 2011 by a UK-based company. Crowd Cube is considered to be a strong platform and is used widely across Europe. The platform’s main developers are Luke Lang and Daren Westlake and since its advent, 30 enterprises have successfully been able to generate equity using Crowd Cube.

Grow VC

Grow VC, which stands for Grow Venture Community, is a worldwide crowdfunding online platform providing an active crowdfunding community amidst a number of entrepreneurs and investors. The main focus of the platform is to aid start-ups to create their teams and generate funds which can run up to $1 million.

Grow VC defines itself as an encompassing and expanding ecosystem nurturing entrepreneurs and allowing them to connect with other experts, new team players, funders and with new clients and partners. In the Grow VC community, clients and members are responsible for building their own profiles. However, whatever they do is tracked. Today, Grow VC has more than 50 employees with its headquarters situated in Hong Kong.

Kickstarter

Kickstarter is another equity crowdfunding platform which encourages creative projects to emerge via donations and funding. The project can be anything, for example there can be an art installation, an innovative watch or a music album. However, Kickstarter is not meant for business causes, charities, and personal financing. And over the years, the online platform has experienced tremendous growth.

Indiegogo

While Kickstarter focuses more on creative projects which have to be first approved on the website, Indiegogo encourages fundraising campaigns for almost everything, including music, personal finance, hobbyists and charities. However, it is not meant for investments and due to their heightened flexibility, they have progressed extremely well and grown considerably.

Crowdfunder

Crowdfunder is an excellent online platform for generating investments (no rewards) and is considered to have the largest number of investors of any platform. On top of that, it is a rapidly growing company. Gaining immense popularity, the company also featured on Fox News as a top-notch crowdfunding company primarily because a story pertaining to another company which exited Crowdfunder with $2 billion.

RocketHub

RocketHub operate a powerful donation-based crowdfunding platform for a number of creative and curative projects. The thing that is unique about this online crowdfunding platform is their FuelPad and LaunchPad programs which significantly aid campaign owners and marketing/ promotion partners to interconnect with each other, allowing them collaborate to form successful techniques for the promotion of the campaign.

Crowdrise

Crowdrise is another crowdfunding platform which solely operates for causes and charities. Moreover, they have managed to successful attract a number of community do-gooders to work towards inspiring needs and causes for the betterment of the world.

Somolend

Somolend is a website designed for small business lending. Based in the US, Somolend provides qualified small businesses with debt-based funding and investments cope with their operations and revenue. The equity funder has also teamed up with banks to give out loans as well being instrumental in providing help for businesses to employ their family members and friends. Having Midwest roots along with a driven and commanding founder who was also a strong participant in the JOBS Act legislation, the company had expanded into different cities and states in the US.

Appbackr

As the name suggests, this is a platform which encourages talented developers to come and get the funding they require to design and develop promising smartphone applications. They provide initial funding for developers to get their projects off the ground.

Invested.in

In order to use the services of Invested.in, it is imperative that you create your own crowdfunding community to support the contributions based fund generating for a particular group or niche in the market. Based in Venice, California, Invested.in is a top-notch white label software tools provider to help you start and grow your own business.

So, these are some of the best equity crowdfunding platforms you can go to for fulfilling the requirements of your project or small business.

How to Hedge Against Risk When Investing in Bitcoins

Market Place

06/10/2014

Understanding the Association of Risk When Investing in Bitcoin

Bitcoin has become an exciting new cryptocurrency. Well, it’s not new anymore, but it does provide users lower international trading costs. Are there risks when investing in bitcoin? Yes. Bitcoin is also a cross-border cryptocurrency unit which many traders believe could have exponential advantages for the purpose of international business to be more specific, business conducted online. However, for many people, Bitcoin has proved to be an alternative to the everyday banking system and the printing of money by the central bank like it’s going out of fashion.

From the perspective of an investor, Bitcoin’s price has increased over the years, which means that if you owned Bitcoins, you could have beaten other investments nine time out of ten. Various investment analysts comment that if Bitcoin allows itself to come out of the fringe geek circles, which has considerably pushed its value upwards over the years, and is made accessible to the general public more easily, there is a lot of potential for it in terms of price increase.

But it is important to remember that investing in Bitcoin is not for the fainthearted. This is mainly because there are a lot of risks associated with Bitcoin investments and trades. For example, the value of Bitcoin can fall abruptly after an increase. And the volatility levels in the Bitcoin market in 2013 should be enough for you to realize that. However, those volatility levels have died down.

Fortunately, you can do a number of things to hedge against risk when investing in Bitcoin and mentioned below are some of them:

Invest in Alternative Digital Currencies

There is no doubt that Bitcoin has given birth to a strong ‘proof of concept’ when it comes to powerful cryptocurrencies. However, you have to understand it is not the only cryptocurrency out there and definitely not the last. There are various cryptocurrencies you can invest in, a majority of which are now dubbed as ‘alt coins’, and that is solely to differentiate them from Bitcoins.

Many of these alternative coins in the market are simply hopping around, moving from one speedy bandwagon to another, and have little to offer to users in terms of value. However, there are some which have genuinely progressed to compete against Bitcoin in terms of reliability, speed, security, efficiency and costs. If you are an avid digital currency investor, you must consider investing in other digital currencies as well to be diverse.

If Bitcoin prices increase, there is also a strong chance the price of other currencies will increase, although by a lesser margin, because Bitcoin will always take point in creating a new market in which all cryptocurrencies can thrive. And so far, alt currencies have also proven to be fairly lucrative in relation to the Bitcoin.

However, there is also another fundamental aspect you should understand. If, because of any legal or security issue, the price of Bitcoin falls, and you see that the problem can be solved by another digital currency, or if other currencies have features that can gain an even bigger market share, you could well see an exponential increase in the prices of these ‘alt currencies’.

Buy Apple Shares

If you think about, and you won’t have to think hard, Apple is the number one long-term threat to this innovative technology. Believe it or not, the threat from regulators and hackers is minimal compared to the smartphone giant, especially from one that is reputed to be a ‘great innovator’.

Although if you look at it, Apple has never invented anything even if everybody thinks it is an innovative company, what it does is or rather its modus operandi is to search for new technologies invented by different companies and produce the ultimate spinoff version of the same invention to capitalize on the market by launching it just before the original invention is about to hit the market, a product which becomes instantly successful. Apple did the same with MP3 players, tablet computers and high-tech smartphones. However, they are also considering to the same with cryptocurrency.

So, if you think this from a logical and a more financially inclined perspective, it may be a good idea to invest in Apple shares and hedge against the risks posed by investing in Bitcoin. Investing in Apple is safe regardless of what happens to Bitcoin and if they succeed in promoting and creating iMoney, consider yourself lucky.

To conclude, it is important that you consider the aforementioned options if you want to make sure you don’t suffer any hefty losses by investing in Bitcoin.

ForexFactory.com: Site Overview

Market Place

04/10/2014

Forexfactory.com is an immensely popular Forex trading website on which a majority of traders converge and trade. Forex Factory was established in March 2004. The website was uniquely designed and developed to provide traders top-notch information they can use and implement to make hefty profits. And according to Alexa, Forex Factory is the most viewed Forex trading website in the US and ranks at 1,242 in the list of most viewed websites around the globe.

And it is because of the website’s impeccable design and its uncompromising efforts to provide traders better options, top financial products, and features, which has resulted in the website’s considerable growth and success. Options like adjustable time zones, which enables Forex traders to look and gather important trading information in their own time zones. It also provides traders revolutionary features like Google-based worldwide search, gathering via member post history which makes obtaining information simpler.

Forex Factory also has a Member Impact Ranking System (MIRS) which can be instrumental in gaining opinion and in-depth analysis of various trades through different members. You would be amazed to know that all of these features and options have consistently been refined and made better for more than ten years now, providing traders the richest of trading and investing experiences.

Members of Forex Factory are considered among the most brilliant minds in trading across the globe. Their knowledge, experience and strategies are what make the Forex trading experience here an oasis compared to other platforms. Moreover, people from over the world come and trade on Forex Factory regardless of their creed or nationality which in turn promotes a productive trading environment.

It is important to understand that Forex Factory cannot be considered a social networking platform and neither is it a web portal. It’s quite simply a website designed and developed to provide state of the art features in trading and high quality trading information to all who want to participate in Forex trading.

ForexFactory for Clever Businessmen

If you are an aspiring trader or want to become a successful one, it is important you join Forex Factory. That is primarily because it is designed specifically for traders who are smart, sure of themselves and not afraid to lose. The website guides rookie traders on how to make educated trades and staying risk free at all times.

Products Offered by Forex Factory

Mentioned below are the names and brief descriptions of some of the products offered by Forex Factory:

Forums | Launched March 2004

Did you know that more traders post on ForexFactory forum than on any other platform around the world? That is because at Forex Factory forums, traders from across the world gather and talk about trades, orders and different aspects of Forex trading. Trading forums here offer a professional environment where traders bounce ideas and opinions off each other, learn, debate and compete against each other.

Market | Launched November 2009

This product consists of different applications, including charts, broker quotes, composite quotes and sessions. All these applications are powered by the Market Data System of Forexfactory.com. The Market Data Structure or MDS is a complex trading infrastructure designed to gather aggregate data from different brokers, all in real-time. By amalgamating these sets of data from different sources, the MDS allows for traders to gain access to the ‘true’ price which can be set in comparison to prices from other brokers. What this does is promote a stable trading environment in a volatile market.

Trade Explorer | Launched February 2011

The Trade Explorer application is basically a web oriented interface which enables traders to evaluate and monitor their trading output and efficiency. You can say that it is a trade measuring tool which allows you to analyze your historical trade performance. Trade Explorer also automatically integrates with the individual trader’s brokerage account to allow him access to real-time evaluative abilities.

Trade Explorer has been instrumental in launching an array of different innovative applications. It provides users automatic graphing options, synchronization, time zone control and balance/equity controls. These are all options Forex Factory provided way before any other trading platform did.

Brokers | Launched May 2012

This product is designed seasoned and experienced Forex brokers. It is a guide which explains and analyzes the various ways in which brokers and traders do their research. It gathers high quality information with precise details and real-time spreads, all combined in a single, impeccably-designed trading platform. Furthermore, the information provided in the application is regularly maintained and updated by the administrators. They ensure the content you get is fresh and usable.

The ‘Spreads’ area on the website gathers ratings from each individual broker’s account in real-time and indicates all the current spreads in the form of pips. These spreads are indicators of what ‘traditional account’ traders are viewing from their platforms without the inclusion of demo accounts.

All in all, Forexfactory.com is a wonderful and groundbreaking website which has a plethora of trading tools and features that have designed to help traders get the best out of their trades. So, the website may considerably benefit you in your trades as well.

Crowdfunding and Trading

Market Place

03/10/2014

According to famous economist Paul Volcker, if the modern society has benefitted from any financial innovation, it is the Automated Teller Machine (ATM). He went on saying the ATM has brought the public a lot of advantages and improvements. However, most experts don’t agree with what Volcker has to say. According to an essay posted by the founder of GigaOM, Om Malik, who is also a venture capitalist, entirely placed emphasis on the fact that crowdfunding will be the new face of day trading and the fact it is the newest financial innovation, a digital product designed to reduce costs and promote a broadened participation in the market that has been defined by him as being closed and clubby.

To be abundantly clear, Malik isn’t referring to the popular crowdfunding platform ‘Kickstarter’, where crowdfunders make separate contributions that are actually meant to be pre-orders. What Malik is referring to here is the access to buying stock in private enterprises by the public, which is something which can soon be expected to be legalized, all thanks to the JOBS Act, which came out with some new regulations from the SEC permitting private companies to market their investment opportunities for legitimate investors.

For example, various hedge funds and start-ups can market their opportunities and advertise the fact they are raising a lot of money. Just consider the fact that soon a majority of people will be given the chance to invest with some of the wealthier citizens of the society.

And if that happens, it would trigger a massive influx of participation in crowdfunding and start-up investing. However, if you compare this with day trading, it would provide an affirmation for the crowdfunding sceptics’ worst fears, which is, that if the party ends, the public will end up losing most of their money. And to much surprise, that has happened with day trading.

According to a research study conducted in 2004 by day traders in Taiwan, while a handful of traders repeatedly made money, eight of ten day traders ended up losing money. Another report confirmed that less than 1% of day traders’ actually succeeded in making money.

Two of the researchers who conducted the research discovered similar information on stock trading 4 years prior to their initial research. The paper they wrote was titled “Trading is Hazardous to Your Wealth.” Once you deduct the commissions, the research identified the households that traded poorly when they invested in index funds. In fact, they found out that the more these households traded in the index funds, the more they lost.

According to them, their empirical proof is derived from 20% of the households that were engaged in frequent trading. With the average revenue being more than 20%, the households turn their nominal investing portfolios twice every year. The gross returns they made were less than decent and they virtually had no net return. So, it is true that when you talk about crowdfunding and day trading, it kind of begs the question whether or not a wider participation by active day traders is a good idea.

Om Malik does acknowledge this problem and explains that although people don’t hesitate to consistently try earning big amount in the stock market and it does work at times, but the streak is rather short-lived. Ironically, the crowdfunding innovation led to an influx of new traders which caused those returns to collapse, leaving other day traders with zero capital.

However, it is also true that it is due to a lack of knowledge of day traders that they lose rather than their timings and this is the major concern. Nonetheless, the most important question that needs to be answered here is whether or not this innovation can help people? There are numerous causes for doubt and cynicism. For example, venture capital taken as an asset has consistently performed below par in the S&P 500 for the past ten years. Flushing more capital into the VC has led to lower returns. But when you talk about start-ups, the timeframes concerned are long enough that it has impeded basic trading.

The central partiality that was discovered by researchers and the reason they believe individual stock traders lose their investments is that they are overconfident. To conclude, when you talk about the stock market, it is always the case where the stack is set against the new guy or the guy who doesn’t have much. So, that little guy is then forced to invest in boring index funds which also don’t prove to be lucrative for him.

What is a Bitcoin Exchange?

Market Place

02/10/2014

Bitcoin currency exchange operates in a similar way to banks. Just like in a bank, you have to deposit a certain amount of money in your account, but in this case the money you deposit should be in a currency or currencies which the exchange supports. The person depositing the sum of money would then on his own account use that currency to engage in trading with thousands of other traders on the market who are also registered on the exchange. After a profit is made, the user withdraws his money and comes back to trade another day.

Unlike traditional trading transactions, when you talk about making a currency or rather cryptocurrency trade on Bitcoin exchanges, there are no immediate risks of losing money because other traders haven’t stood up to their part of the deal. You will only stand to lose money if the Bitcoin exchange itself is involved in fraud or some other legal issues.

Exchanging is initiated by placing either “buy” or “sell” orders. These orders are then matched with other orders via the exchange system. ‘Buy’ orders are also known as bids and are offers to buy a certain number of Bitcoins. “Sell” orders are referred to as ‘asks’ where a trader offers to sell his Bitcoins for a minimum price per Bitcoin in the market. If the buy price of a buy order is more than the ask price of the sell order, a digital currency exchange is established and both bid and sell orders can be eliminated from the ‘order book’.

Thus, at each given moment, a price exists over which there can be no more buy order and a little higher price over which there can be no further sell orders. These transactions and further communication via the Bitcoin exchanges is done mainly through traditional web browsers which have a secure SSL connection.

Payment Methods Commonly Accepted by Most Bitcoin Exchanges

Bitcoin transfers
Liberty Reserve
Bank wires
Credit cards

Currencies Exchanged via Automation on Bitcoin Exchange

US Dollars
Euros
Japanese Yen
Russian Rubles
Pound Sterling
Pecunix Gold

Soft Currencies & Chargeback

It is important to understand that exchanging a cryptocurrency like Bitcoin for other types of currencies could lead to some issues pertaining to chargeback fraud. Particularly, automated payment methods like credit cards and payment gateways, such as PayPal, through which you can get a 90-day chargeback facility after the transaction is done.

On the contrary, Bitcoins are considered a hard currency, which means that if you spend them, you will not be able to get those Bitcoins back through pulling. In essence, if you initiate a Bitcoin trade for a soft currency trade, (such as PayPal) you stand the risk of a chargeback after you trade your Bitcoins.

The person buying your Bitcoins can file for a chargeback by declaring the non-receipt of the Bitcoins or if the buyer is using a stolen account, the true owner of the account might reverse the charges because he hasn’t made any transaction, resulting in a loss for you. This is why it is important that you trust the person you trade with.

Exchange Rates and Market Forces

A few years earlier, when Bitcoin was still in its infancy, the digital currency indicated a strong fluctuation in exchange rates and prices, which ranged from $50 to $266. However, it was in 2013, that Bitcoin indicated a rather stable progression in its exchange rate. According to the statistics provided by ConvertHub, the exchange rate for Bitcoins stood at $959.58 in February 2014.

Bitcoin has been a subject of much criticism from various economists who claim the only thing it does is bubble around itself, something which is vaguely similar to what happened before the housing market collapsed. However, no one can deny that Bitcoin has indicated a great tendency to fluctuate massively.

On the other hand, due to growing instability in the global economy, many consider Bitcoin to be a reliable and progressive investment vehicle compared to other well-known currencies. While access to Bitcoins is getting convenient by the day, more people are buying and selling Bitcoins and the availability of that access serves to be prime source of unpredictability and inconsistency in the prices of Bitcoins in the market.

Due to bans on Bitcoin converts imposed by governments around the globe, most notably the US government, it can now be difficult to convert your Bitcoins into US Dollars. This has, in turn, led to a massive instability in the price of Bitcoins pertaining to its geographical integrity, which ironically has become a problem for the currency which was created to be free from borders.

Trader Personality: Jesse Livermore

Market Place

01/10/2014

Jesse Livermore, who is thought to be the grandfather of stock trading, was born in 1877 and died in 1940. Although Jesse traded more than 100 years ago, the principles he used for trading at the time are still practiced firmly by many of the legend’s followers today. He was an ordinary American citizen who rose to riches through trading and also saw his share of multi-million dollar losses.

‘Boy Plunger’ was the nickname given to him early in his life when he started his journey towards a successful future as a trader through various bucket shops, which is another name for gambling houses. He used to trade there and started at the tender age of fifteen. When Livermore turned 40, he already had a $100 million fortune which in today’s terms can amount up to $6 billion dollars, a staggering amount. And he rose to fame when he shorted the market in 1929 when the entire US stock exchange was crippled.

The Trading Style of Jesse Livermore

Jesse was an active and successful trader in the US even before the great spike and plunge of the US economy. The Civil War, having been long over, people still remembered it. However, it was also era of great industrial development in the US at the time which presented a great deal of opportunities for smart traders and businessmen. It was at this time that America rose to becoming a safe haven for all who needed shelter and food.

This induced a massive influx of settlers who chose to escape the endless hardships of the Old World to embark on new beginnings through hard and honest labour. And this is what Jesse Livermore loved and the sort of environment he chose to invest in. He got involved with people like Henry Osborne Havemeyer, the owner of American Sugar Refining Co, along with the owner of the National City Bank, which has become Citigroup today, E.H. Harriman, the master of the railroads, J.P. Morgan legendary banker and the founder of Standard Oil, William Rockefellar.

He was rolling with all the big people responsible for developing these booming industries. Livermore was familiar with each and every industry, from coal to coffee, to sugar and the world of banking, which meant he had a tremendous amount of knowledge and information available to him at any given time.

Yet with all that knowledge, Livermore was convinced not to anticipate anything in the market and chose to be patient and let things swing in the way his knowledge enabled to predict and believe that it should and it did, so he did what he did best: invested in a bullish market and shorted in a bear market.

However, Livermore’s personal life was not as successful as one might imagine. Having endured three unsuccessful marriages he was also stricken with clinical depression which had been with him for a long time. And this is what led him to taking his own life in 1940.

The Grandmaster’s Principles in Momentum Trading

Although Jesse Livermore was active along time ago, trading in commodities and stocks, making millions. Believe it or not, the methods and principles he used are not so different from today’s financial world and just as legitimate. Jesse Livermore used to say a successful trader never acts on his own instincts until the market has deemed his instincts correct. If you try to understand the meaning behind what Livermore was talking about, it would do you good to remember you are in the market to make investments and not to form prophesies.

And many of the successful traders today follow in Jesse’s footsteps, which is not to anticipate but to follow the markets to a more fruitful return. The maestro also used to stress on the fact a trader can never buck the stock market, because there is never anything new. However, there are always variations of the same patterns, insightful for a man who traded 10 decades ago.

Livermore also emphasized on the fact one should never trade when he is unsure of the opportunities in the market, learn to hold money. This means all good trades need time and a lot of patience and greed is the worst enemy of a trader. All in all, Jesse Livermore’s wisdom still carries out, even today where everything is modernized in the world of stock, hedge funds and ETFs.

The DNA of Successful Trading

Market Place

30/09/2014

The world of trading is often filled with enigmatic elements due to the fact there is no one formula to trade and be successful. Think of the trading market as an ocean and imagine that all the traders in it are surfers. Now, what does a good surfer require? He requires balance, discipline, patience, a proper surfboard and a keen eye on the environment around him. That is what will allow him to ride the waves successfully and not crash at every attempt. Well, the world of trading isn’t that different and you have to do all of the aforementioned if you wish to conduct successful trading.

The DNA of Effective Trading

The Approach

Before you begin to trade, it is important that you first prepare. You should identify your targets, your goals and align yourself with the market and the instruments you would require to successfully accomplish your goals. Do what you know best. For example, if you’re into retail, then look up retail stocks instead of oil trades.

A Proper Time Frame

After you set your goals, the next thing to do is identify a proper timeframe in which you will assess what type of trading is best suited to your ability and your attributes. For example, trading using five-minute market charts indicates that you are more comfortable in a position where there is no overnight trade risk. However, selecting a weekly chart to trade would suggest you are more comfortable with overnight trades and the risks associated with them which includes letting a couple of days slide by.

Moreover, try to first determine whether or not you have the strength and focus to sit in front of your laptop or PC or if you would rather do research all weekend and arrive at a trading decision in the week ahead based on your evaluations. Always remember that if you want to make money in the trading market, learn to wait.

Methodology

Once you have determined a timeframe, the next thing to do is discover a good methodology. For example, most traders prefer to buy support and then sell resistance, while others prefer to buy or sell breakouts, yet many trade using MACD and crossover indicators. Furthermore, upon selecting a methodology, it is important that you give it a test run to see whether or not it is consistent with your strategies. If you see that your system combined with your methodology is reliable most of the time, it is safe to say you have an edge. So, test each methodology for positive results.

Discipline

Discipline here refers to how much patience you have. It is essential that you have the patience to sit and wait for you system to indicate an opportunity for you and when that happens, you have to be ready. However, there will be times when the price action will not reach your predicted price level. When that happens, you have to be patient enough not to start second guessing your system.

Objectivity

Objectivity plays a crucial role in trading and it can make or break a trader. Your emotional detachment relies on your strategies and methodology of trade. When you see you have a system that gives you a good entry and exit into the market, you have nothing to worry about. You can’t allow your emotions to get the best of you and be influenced by other traders who will never be interested in your trade levels and may often misguide you. This is by the far the most important aspect of trading.

Keep Your Expectations Real

It is true that, at times, the market does makes exceptionally big moves, but being realistic here implies to the fact you can expect to make $2000 off a $500 trade each time you make a move in the market. Though using short-term timeframes entails fewer opportunities to make a profit, long-term trades carry high risk, but high profits. In the end, you will have to make a ‘reward versus risk’ decision.

Control the Risks

At the end of it all, successful trading depends on how you control and manage your risks. Be quick with taking losses, if necessary. It is important you direct your trade in the right direction. If it pushes you back, exit the market and try again. Controlling risk requires both discipline and patience.

So, in the end, it is all about your approach, tactics and discipline when it comes to pulling off successful trades. In regards to this, Warren Buffet says that there are two rules to trading successfully

Don’t ever lose money
Always remember rule number one.

So, always be prepared to counter losses quickly and never wait for big losses to happen.

The traders glossary

Market Place

29/09/2014

Mentioned below are some of the most common terms used in the Forex trading market:

Ask Price

Also known as the Offer Price, Ask Prices are market prices for traders interested in purchasing currencies. Ask Prices are displayed on the right side of a quote, for example, EUR/USD 1.1965/68. This means that you can buy €1 Euro for $1.1965.

Aggressive

Traders and/or price action are acting with conviction.

Analyst

An analyst is a financial expert who has the knowledge and evaluative skills to assess investments and in light of his research, diligently pulls together buy, sell and hold recommendations for his clients.

Appreciation

A product will ‘appreciate’ when it gains strength in terms of price correlating with the total demand in the market.

Arbitrage

The concurrent buying or selling of a financial product to enjoy the benefits of small price differentials in between different markets is known as arbitrage.

Bar Chart

Bar charts are used in the technical analysis of trading in a market. Bar charts consist of time divisions which are shown vertically with the following information: the top of the bar is the price high, the bottom is low price and the horizontal line, which is on the left, indicates the opening price and the horizontal line on the right side indicates the closing price.

Base Currency

Refers to the first currency when you look at a currency pair, a trade quote indicates how much the base currency is worth. For example, in the quote USD/JPY 112.13, the base currency is US dollars with $1 having a worth of 112.13 Japanese Yen.

Bid Price

Bid price is the price at which traders can sell their currencies. The bid price is always indicated on the left side of each quote, for example, EUR/USD 1.1965/68. This means that €1 can be sold for $1.1965.

Bid/Ask Spread

This refers to the difference between the bid price and the ask price pertaining to a currency quotation. The spread indicates the broker’s fee and differs from broker to broker.

Broker

A broker is an intermediary representing both buyers and sellers. Most brokers in the Forex market are linked with well-known financial institutions and make a commission by placing a spread between bid and ask prices.

Big Figure

A big figure refers to the beginning 3 digits of a currency quote, for example 117 USD/JPY or 1.26 in EUR/USD. So, if the price alters by 1.5 big figures it has moved 150 pips.

Candlestick Chart

A candlestick chart is also used for the technical analysis of a trade. Every time the division on the chart is shown as a candlestick, which is basically a red or green vertical bar with extensions which run above and below the body of the candlestick body, the highest point of the extension indicates the highest price for the chart and the bottom extension indicates the lowest price. Red candlesticks indicate a reduced closing price in comparison to the opening price while the green candlestick indicates a rise in the price.

Cross Currency

It is a currency pair which does not have US dollars, for example EUR/GBP.

Currency Pair

Two currencies involved in a FOREX transaction, for example, EUR/USD.

Capitulation

Refers to the point at the end of an intense trade where traders are holding losing positions and exiting. Capitulation is usually a sign that traders expect a reversal soon.

Economic Indicator

An economical indicator is a statistical report published by the government or by the academic institutions, indicating various economic changes, factors and conditions in the economy.

First In, First Out (FIFO)

Refers to open orders liquidated in sequence, for example, the first order liquidated is the first one which will be opened in the market.

Foreign Exchange (Forex, FX)

FX refers to the concurrent buying of one currency and the selling of another.

Fundamental Analysis

It is an analysis of the political and economic conditions of a country which can, in turn, affect the price(s) of different currencies.

Leverage or Margin

The ratio which represents the value of a trading transaction, taking into account the required deposit, the common margin for Forex trading is 100:1, which means you can trade a currency which is worth 100 times more than your deposit.

Limit Order

An order to buy or sell when the price reaches a specified level is known as a limit order.

LOT

The size of a Forex transaction, standard lots are worth about $100,000.

Major Currency

The Euro, German Mark, Swiss Franc, British Pound, and the Japanese Yen are all major currencies.

Minor Currency

The Canadian dollar, the Australian dollar, and the New Zealand dollar are all minor currencies.

One Cancels the Other (OCO)

Two orders placed simultaneously with instructions to cancel the second order upon execution of the first.

Open Position

An active trade which has not been closed is referred to as an ‘Open Position’.

Pips or Points

The smallest unit a currency can be traded in.

Quote Currency

The second currency in a currency pair, for example, in the currency pair USD/EUR, the Euro is the quote currency.

Rollover

Lengthening the settlement time of spot deals to the existing delivery date, rollover costs are calculated using swap points based on interest rate differentials.

Technical Analysis

Analysis of historical market data to predict future movements in the market is referred to as technical analysis.

Tick

The minimum change in price is called a tick.

Transaction Cost

The cost of a Forex transaction, typically the spread between bid and ask prices.

Volatility

A statistical measure indicating the tendency of sharp price movements within a period of time is known as market volatility.

Trader Personality: Paul Tudor Jones

Market Place

27/09/2014

Born on the 28^th of September, 1954, in Memphis, Tennessee, Paul Tudor Jones II is the founder and owner of the Tudor Investment Corporation. The management of his other private investment partnerships is done through his own corporation, which you can refer to as hedge funds. Tudor Jones had an estimated net value of $3.2 billion in 2010 and as of now, it stands at $4.3 billion.

He studied and attained an undergraduate degree in economics from the University of Virginia in 1976 and was also a welterweight boxing champ. He began working on the trading floors in 1976 as a clerk and gradually became a broker for the famous firm E.F. Hutton four years after. In 1980, he was adamant on earning on his own and made a lot of profitable deals for almost two and half years before he started to get particularly ‘bored’ with his work.

After realizing that he has to do something else, he then successfully applied to the Harvard Business School, and to the surprise of many did not join because he realized the skill set he really wanted to capitalize on wasn’t going to be taught to him by anyone and decided to take another approach. He went to William Dunavant Jr. for career advice. Dunavant, who is the founder of one of the globe’s foremost and biggest cotton merchant company, sent him to meet another commodities broker by the name of Eli Tullis, who was in New Orleans.

It was Tullis who took him in and began to mentor him, showing him the ropes of cotton trades and painted the future of the cotton industry on the New York Stock Exchange.

The Early Success of Paul Tudor Jones

In 1980, Jones proceeded towards establishing his own company, the Tudor Investment Corporation, which is regarded as today’s foremost organization in asset management companies and has its headquarters in Greenwich, Connecticut. The corporation consists of affiliations tied to leading active trading, investing and research in global equity, venture capitalism, currency, debt, and the commodities markets.

Jones became really popular following the events of Black Monday in 1987, when he accurately predicted the markets, earning massive profits due to large short trade positions. He, along with his colleague and friend, Hunt Taylor went on to successfully create FINEX, the financial futures’ section of the New Board of Trade and were also instrumental in the making of US dollar index futures contracts.

Paul Tudor Jones also went on to becoming the Chairman of the New York Cotton Exchange from 1992 to 1995.

The Futures Trading Strategies of Paul Tudor Jones

Paul Tudor Jones is a contrarian investor. He keeps going for single trades until an idea essentially changes his mind. Most of the times he works on keeping his position in the markets cut down. Then he attempts to trade in small amounts when he has trouble hauling in good trades. Jones also considers himself as the best when it comes to identifying and taking advantage of market opportunities. When he thinks up of a brilliant idea, he initiates the pursuit of its implementation from a low risk perspective until he is deemed and proved wrong or at least till another idea befalls him.

He is also a swing trader and believes that considerable money can be made at different market turns. Although he has missed quite a bit of meat all around the middle, he always managed to catch a good share of tops and bottoms. He is by the far the calmest investor and trader of all and is always relaxed, thinks coolly and always exits the market swiftly whenever his losing position in the market starts to get to him.

Jones has the habit to decrease his trading mass when he sees he might lose and increases it as his trades get successful. Plus, he also tracks his whole portfolio equity in real-time and believes that prices always move first, the fundamentals should always be a secondary concern. He always looks at the bigger picture and does not even think about the losses he incurred moments ago. Jones also emphasizes deeply on not involving your ego in the game. He says that a good trader always questions his ability and form at every turn, always yearning to improve. If you think you are better than the rest, you will fail.

Contributions

Paul Tudor Jones has also made sizeable donations to the University of Virginia, his Alma mater, and has contributed $35 million for the development of a brand new basketball arena which he named after his father, John Paul Jones.

Married to a former Australian model Sonia since 1988, Jones and his wife have four children together.

Trader Personality: Jim Rogers

Market Place

26/09/2014

Which trader doesn’t dream of making millions and conveniently retire at the age of 30? Surely, it is every investor’s sole purpose and their dream. But for market guru and legend Jim Rogers, a commodities trader, it was just the dawn of an illustrious career on Wall Street that has lasted for over 60 years and has helped him make millions of dollars.

Jim Rogers amassed his wealth and grew his business empire using his phenomenal ability to monitor and pinpoint long-term trends long before anyone else could which blissfully ended up building him a reputation as a sharp contrarian. Rogers retired at the age of 38 to pursue his love of motorbike riding around the globe, and since his retirement he has also been a treasured guest professor of finance at Columbia Business School.

Rogers is known for the huge gains in commodity he made back in the early 2000’s, but he really became a living legend after correctly forecasting the collapse of the housing market, ending up making millions.

A Look into the Early Life of the Rogers

Rogers always had a fondness or affinity rather, for business, beginning from an early age. In fact, Rogers first started stepping on the trading floor in the financial world at the age of 5 and used to sell peanuts and gather empty bottles that were left behind by baseball fans in Alabama. Rogers graduated from Yale University back in 1964 and has a Bachelor’s degree in history. After his studies, he went on working as an investment banker on Wall Street which eventually led him to meeting another billionaire stock market legend, George Soros.

It was him and Soros that founded the exceptional Quantum Fund in 1973 which made a stupendous amount of money in its first 10 years, enjoying up to 4200% in returns. His early success allowed him to retire earlier than most traders. But that wasn’t the end of his career. Rogers still trades as a private trader and an astute investor, securing massive gains on the way. Moreover, he is also the author of the book “Investment Biker”, published in 1990, and is about his trip around the world on his motorbike.

Rogers’ Investment Methodologies and Massive Gains

Rogers has a timely approach to investing and employs a top-down model when analyzing the economy, which according to him is instrumental in guiding his investment methods and style. Rogers also said he has never been able to time the markets. So, instead he has adopted a long-term approach to investing.

Jim is a popular contrarian investor and his eagerness and assertiveness has led him to always go against the tide of the buck and grain and has allowed him to form some diligent ideas. He is also well-known for his ability to spot particularly long-term trends faster than any other trader or investor. After being instrumental in the success of Quantum Fund in the early 70’s and 80’s, he was able to call the commodities boom a decade later allowing him to establish the Rogers International Commodity Index in 1998 before the boom of the commodities market in the 2000’s.

The key feature in the way Rogers invests and trades is nothing but patience. Irrespective of whether he was predicting the early boom of the commodities market in the 2000’s or shorting the market in the 2008 stock market collapse, he has always focused on being patient and has emphasized its importance to follow through a successful investment. To sum it all up, this is what Jim Rogers said about being patient in the market, “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.”

Jim Roger’s Investment Portfolio: What Does He Hold Now?

Rogers has his target set on what he believes to be the greatest of all opportunities that happened to have landed on his lap: the food and agriculture industry. He is also big on bullish commodities and analyzes that the ceasing process of the central bank will sustain hard assets. He also invests in precious metals like gold and silver and is particularly fond of these metals. Back in 2011, he mentioned that in 1987, gold and silver stock fluctuated from 40% to 80%, but compared to what’s going to happen now, that era seems like a blip.

In 2007, Rogers moved to Singapore with his family to further take advantage of the growth of the nation’s economy. Rogers even started his the Rogers Global Resources Equity Index, an index primarily designed to capitalize on the most liquid companies pertaining to agriculture, mining and metals and alternative energy industries in 2011.

Top 10 Successful Traders Ever

Market Place

25/09/2014

There are a number of fundamental differences between a trader and an investor. The only similarity they may share is that both investors and traders can lose money just as easily as they make it. We can learn from the successful traders.

To start trading though, you don’t need an investment or apply for a loan. You’d be surprised to know some of the world’s most brilliant and legendary traders themselves went through a lot of trial and tribulations before they became what they are today and before their names were immortalized in the history of trading.

Mentioned below are the names of the top successful traders who managed to beat others in the market through their skill, their diligence, tenacity and instincts. So, get ready to get some inspiration.

Top Ten Successful Traders of the World

1. Jesse Livermore – The Master of Speculation

The skill of speculation that Jesse possessed thrived when he accurately predicted the 1929 stock market collapse. Livermore began trading as a 15-year old, trading at various gambling houses and through his studies and research he rose to fame and power when forecasted the 1907 and the 1929 markets collapses and made $100 million (which in today’s terms amounts up to $6 billion), in the blink of an eye. Having been associated with various industrialists at the time, Jesse proved to be instrumental in contributing towards America’s industrial revolution.

2. Paul Tudor Jones – Understanding the Core Dynamics of Trading

Paul Tudor Jones, another trading genius, called on the 1987 stock market crash because of that the day became labelled as Black Monday. Tudor accurately predicted the fall of the market by recognizing and understanding a series of events that led him to success. He understood at the time if the market started to descend rather than dry up, selling in the market would actually cascade. Jones understood an overvalued market would definitely give birth to more selling. Gambling on this, Paul went on making $100 million faster than you could say ‘I want to be rich!’

3. George Soros – Defeating the Bank of England

As if this man needs any introduction at all, George Soros is the trader who broke the Bank of England without breaking a sweat. He predicted that the pound was going to fall and shorted it, making an easy $1 billion. Although many other traders deemed this gamble as nothing short of reckless, Soros was pleased about it. Well, of course, he would be. It was a ridiculously rewarding gamble! George forced the Bank of England to withdraw from the ERM (European Exchange Rate Mechanism).

4. John Templeton – Betting on Japanese Assets and Winning

Templeton was the master of mutual funds. He invested $100,000 in Japanese assets when Japan was undergoing an economic change for the better, Templeton ended up making $55 million on a $100,000 investment. And in 1999, when Japan was starting to achieve it economic goals, Templeton decided to invest 60% of his funds into Japanese assets, which was again a spectacular success.

5. Andrew Hall – Predicting the Oil Prices

In 2003, a barrel of oil was traded at $30. At the time, Andrew Hall predicted the price per barrel of oil is going to reach $100 within the next 5 years. Turned out his gamble was spot-on. He worked for Citigroup, making a ton of money for his employer. The trader made about $100 million.

6. Paul Rotter – The Master Flipper

An expert in gauging the market’s psychology, his techniques were impeccable and significantly aided him in becoming a master of the markets. Paul being the initiator, his ideas and strategies proved to be instrumental in conducting trades on the Eurex exchange (Bund, Bobl and Schatz) markets.

7. John Paulson – Shorting Real Estate

John Paulson is known for successfully executing what is known as the ‘greatest trade ever’. Paulson accurately predicted the asset bubble in the real estate market which had the potential for bringing in billions of dollars into Wall Street. Paulson ended up making $15 billion for his employers in 2007 for which he got a dizzying $3.7 billion.

8. Jim Chanos – The Perceptive Short Seller

Jim Chanos rose to fame in October 2001 shortly after the downfall of Enron. Chanos was a master when it coming to shorting trades and made heavy profits by selling commodity currency and security. His most popular shorts include Baldwin-United and as of late, homebuilders like KB Home.

9. Louis Bacon – The Gamble on Geopolitical Factors

Bacon is one of successful traders and ended up rightly predicting that Saddam Hussein would invade Kuwait. Just a year after that, he also predicted and gambled on the fact that the US would defeat Iraq when the oil markets were beginning to recover. He was a master at trading using geopolitical motivators and aspects and has made a lot of money doing so.

10. David Tepper – Investing Money in Diminishing Assets

The last on the list, another successful traders is Tepper has a record for investing in distressed assets and has made a lot of money doing so. He predicted the Bank of America along with Citigroup will not be nationalized and he made a fortune. David bought extremely depreciated shares and saw them grow tremendously in value towards the end of 2009.

So, these are the best traders you can learn from and be inspired by.

The Power of Social Media: Influencing Trading and the Markets

Market Place

24/09/2014

It is no surprise that social media is expanding exponentially and it’s influencing trading. Just look at how Facebook has turned out since it was created in 2004. It now has over 1.3 billion users worldwide. Twitter generates over 500 million tweets every day and LinkedIn has over 260 million active users, trying to make new connections and to find jobs every day. If you look at social media from a broader perspective, you will see that it has come a long way and has significantly aided people in accomplishing things that otherwise would not have been easily possible. It has become a vital pipeline for thoughts and actions, and words and decisions pertaining to everything.

As a result of such growth, there are some bullet points that might be important for a trader in order to understand the scale of potential information flow:

Looking at it from another point of view, you will notice that social media has become the combined load and barometer of ideas, thoughts, and impulses in regards to the entire world. It has also served to be a combined source of wisdom, observation, and emotional reactions for those in the financial markets, such as asset managers, traders, investors, and equity analysts.

The Extenuating Effect of Social Media on Daily Trading

Social media has allowed traders to conduct trades privately without being influenced by anything. The main difference between social media platforms for trading and a traditional offline social surrounding is that in the latter, you are more exposed to the decisions and the influence of other traders. Social media saves you from conducting misinformed or ‘low information’ trades or from following bad investment advice and decisions. For example, it helps you not to make rash decisions based on what your friends say about a particular stock, and how you should invest in it.

Social networking platforms provide traders with a complete net of streamlined information, which allows you to analytically consider a wider range of possible trading scenarios. For example, while a couple of your friends made money by investing in a certain stock, the majority of your friends and colleagues lost money investing in the very same stock. So it is likely that this information will suppress your immediate emotional response, which is to buy those shares, and instead, you will decide to forgo this opportunity, which is a considerably better option.

High End Investors Seek to Utilize the Benefits of Social Media

According to a study which was a made a couple of years ago by LinkedIn, with the help of the Cogent Research Group, it was identified that various social media platforms were being used by high trading net worth traders of about $5 million belonging to North America. It was discovered that they used social media to help them with make critical trading decisions. It was also realized that those investors have made social media their prime tool for decision making.

Retail Trading: Becoming One with the Global Investors

While using different social media instruments to predict various market trends, retail investors can depend on various resources for accurate information pertaining to the market. The goals of individual retail traders totally differ from those of professional investors and traders. Retail traders thrive by working as a network which helps share and spread market related information and ideas. And, what better platform is there to share and gather ideas than social media? Thus, it makes for a natural breeding place for retail traders to become an integral part of the trading community.

Just look at Facebook’s trading application for potential investors, called Zecco’s Wall. The application is streamlined to allow investors and traders to monitor their stocks and to buy them via the application anytime they want to. The application has made access to a much larger network of information very easy for all traders.

Also, via social media, there are many online traders who can interact with other online traders with similar trading portfolios. This allows them to improve their trading together while participating in collaborative successes.

No trader in this day and age can say that social media has not helped them attain financial prosperity in one way or another. Social media has had an extremely powerful influence on the way traders choose to analyze and assess potential investment opportunities. With that being said, it is important to realize that one has to iron out the disorganized nature of the trading information available on and attained via social media networks carefully. In order to make effective use of it, it has to be diligently filtered because of the massive amount of information present, which can prove to be misleading if not analyzed properly.

The Best Traders Alive

Market Place

23/09/2014

While it is true that investors trade to make money, a trade, strictly in technical terms, does not necessarily have to be an investment in anything. Let’s consider the best traders alive. Do you know why? The answer to this question lies in the explanation of value investing given by Benjamin Graham, who is known to be the father of all value investment and movements. According to Benjamin Graham, an investment should always guarantee one thing, and that is the “safety of principal and a lucrative return”. In light of this information, the difference between a ‘trader’ and an ‘investor’ becomes significantly clear.

An investor takes their time to put in their money, and is in the habit of making informed and diligent decisions after a thorough evaluation of a particular set of business fundamentals of a specific company or organization. A trader, on the other hand, applies the use of careful evaluation and technical analysis to focus on the core aspects of the trading market, and then bets on which of them have the potential to provide a hefty profit with limited market volatility.

Exactly fourteen years ago, it was very common for people to terminate their employment, get the cash out of their 401k plan and start down the line of trading, and that too from the ease of their homes. Fuelled by a large and volatile stock market with real estate bubbles, it was easy to throw away investments, but it was easy to make money as well. However, things have changed over the past couple of years. The recession that crippled the economy in 2007, for example, also resulted in the consistent proliferation of financial regulations.

Moreover, who can ignore the significant advancements in technology which allow trading to be carried out by powerful software and sophisticated algorithms. Did you know that today, 50% to 70% of all trading is done through complex algorithms every given day?

Losing money in today’s financial markets is routine and there are many traders and investors who lose massive amounts of money in the span of a single trading day. On top of this, these traders hope their gains will fill in for the losses they have experienced. And in order to gain more money, traders have to incur substantial expenses to pay for rising transaction and trading costs, and to pay for keeping up with traders who use state of the art trading software and platforms.

With all of this being said, there is still a selective number of traders who possess the diligence, the grit, the boldness, and the heart to go against the odds and make money along the way. Here are a few of those people:

Paul Tudor Jones (1954-Present)

Paul Tudor Jones is the founder of the Tudor Investment Corporation, which consists of a $12 billion hedge fund. Tudor is famous for short selling his stocks in the 1987 stock market crash which ended up making him $100 million. He did this by predicting a massive multiplier effect on the portfolio insurance on the bear market.

Portfolio insurance is a risk management instrument popularly used by traders around the world. Investors and traders use portfolio insurance to reduce the investment risks which could threaten their portfolio. Jones’ brilliant analytical insight led to this prediction which in turn helped him become a very rich trader in 1987. He has an estimated net worth of $3.6 billion and still heads his own hedge fund.

George Soros (1930-Present)

Soros is by far the most popular trader of all time. In fact, he is known as “The Man Who Broke the Bank of England”. George Soros made a well calculated bet in 1992 that the British pound would deflate in value. The British pound at that time was on an ERM – the European Exchange Rate Mechanism – which was introduced to keep the currencies held together in a defined boundary to maximize financial stability. George Soros, along with his partners from the Quantum Investment Fund, found a pattern which led him to believe the pound would become weak and thus would not be able to survive in the ERM.

He then made a short position, borrowed a substantial amount of money from the fund, and made $1 billion.

John Paulson (1955-Present)

John Paulson is renowned for carrying out what is known as the ‘greatest trade ever’. Paulson became a wealthy trader in 2007, when he shorted the real estate market via the collateralized-debt market. He was the founding member of Paulson & Co., which was established in 1994. Although being a brilliant trader, Paulson was not very popular in Wall Street, at least not until the crippling of the economy in 2007.

John Paulson

Successfully forecasting a massive asset bubble in the real estate market, he helped his funds make a massive $15 billion, out which he got a cool $3.7 billion. Paul still manages his companies and is worth an estimated $11 billion.

Come to think of it, all three super traders shared one thing in common: each of their brilliant and high paying ideas was based on leveraged shorts. What does that tell you? It tells you that all traders have clear conflicts of interest, and each trader is motivated to make profits from a fluctuating market.

Best Bitcoin Trading Platforms

Market Place

22/09/2014

Bitcoin trading can be very enjoyable and lucrative at the same time. So let’s consider the best bitcoin trading platforms. It offers a variety of benefits in comparison to other trading markets. Peer-to-peer markets offer traders low priced trading with the freedom to trade very securely, and on top of that, you will know that the odds are not heavily stacked against you because of the advantages enjoyed by larger financial institutions. It is very difficult for regular retail traders to trade via traditional trading markets and the investments they tend to make or plan can often feel like they are gambling everything away at a casino – and we all know what happens most of the time at casinos: the house wins.

However, when you talk about Bitcoin trading, the tables can be turned to benefit all regular traders. How, you ask? Well, mainly because of the volatility in Bitcoin trading. Although the volatility levels associated with Bitcoin trading are potentially risky, the rewards are considerably bigger than the risks. This is the only reason why most people choose to trade on Bitcoin and many have prospered financially in the Bitcoin market.

So, if you have decided to indulge in Bitcoin trading, and have completely understood the risks you will be taking, then the next phase of business is to learn about the various platforms through which you can trade Bitcoin:

Bitfinex

Bitfinex is one of the very few Bitcoin platforms which allow traders to have complete access to ‘leverage’ using marginal trading, and it also offers you the opportunity to use your funds in order to liquidate other traders with a set amount of interest fee. The Bitfinex trading tool permits traders to efficiently trade using more money than they actually have, which gives you the advantage to collect profits made on your investment, but it also increases your losses if you happen to make a bad call.

For example, if you have invested $100 to take a ‘long’ stance on Bitcoin with 10 times the leverage, and you see that the price of the Bitcoin increased by 5%, then instead of making a $5 profit off your $100, you can actually make $50. Sounds implausible? Well, it really is not, because Bitfinex borrows an additional sum of money from liquidity providers and utilizes it to purchase the Bitcoin. What this does is increase your potential profits, but at a cost, of course.

Kraken

Kraken provided Bitcoin traders with a variety of trading options, all associated with Bitcoin. For example, it offers Litecoin, Dogecoin, Ripples, and various other digital currencies which you can trade with, and make a profit in USD OR Euros. Moreover, with Kraken, you are not limited to trading Bitcoin in limited orders. You can set up or automatically purchase or sell Bitcoins and other digital currencies at a percentage above or below the set market price. Your trades can also be automatically closed at a specific profit range, which you can set either as percentage or as a fixed amount.

Traders can also automatically set trailing close, stop, and a number of other options.

This revolutionary trading platform also has a sliding scale fee system. This means regular Bitcoin traders who do enough trading and make substantial profits to meet their targets will get gradual reductions in their trading costs. With most platforms offering trading fee up of to 0.1%, Kraken offers investors free trading options.

Coinsetter

Coinsetter allows you to trade with specific institutional investors who have the ability to spend substantial amounts of money. This is a feature offered only by Coinsetter, which makes it the first of its kind. Coinsetter offers its traders a deep order book, which means that investors can trade big sums of money without buying or selling above or below the market price. This is done through an amalgamation of the native order book with various exchanges allowing traders complete and quick access to the most popularly traded exchanges.

BTX Trader

BTX Trader specializes in providing traders with a multitude of different and advanced order types, which include stop loss orders and trailing stop orders. However, BTX Trader also has another very beneficial trading feature, one which very few Bitcoin platforms have, and that is its ‘hidden orders’ feature. The hidden orders feature allows a trader to make a limit order on the Bitcoin market which other traders will not be able to detect. This is particularly advantageous in thin market settings or markets which have considerably limited liquidity and volume, such as the Bitcoin market itself. However, you can use this hidden feature to make larger trades which have the power to swing the volatility of the Bitcoin market.

The best part about this feature is the fact that your offer will never be able to influence another trader, because they will not be able to see it.

So, these are some of the more popular Bitcoin trading platforms that you can trade on effectively.

The Gamification of Online Trading

Market Place

20/09/2014

The consistent rise in the popularity of online trading and investment has been matched by the excitement of the general population displayed in using instant messengers and social media platforms. It is important to realize that both online trading, the gamification of online trading and social media function hand in hand with complete synchronicity. How? Well, the simultaneous and immediate messaging functionality of online platforms and networks allows traders and investors to discuss and exchange relevant and new information with each other right up until the second they initiate a trade.

The internet has been around for a long time now, right? You would be surprised to know that many trading enthusiasts have been using chat rooms and other forms of online messaging to stay in the loop, sharing tips, chewing over which stocks are likely to make them money, and which ones they should stay away from.

On the other hand, online brokers have started to increase their target audiences beyond the traditional day trader setting and have begun reaching into a segment of the population which hasn’t yet been exposed to the share market past the odd bank stock or managed fund investment.

In trying to interact with this huge market, online trading has started to resemble an extension of role playing games. This is due to the nature of online trading as it entails making real life decisions to change something, for example life savings, incurring loss, and increasing wealth.

There are more than half a million Australians who actively use online trading platforms to trade shares and several of those online trading platforms expect the number to increase exponentially in Australia, as well as in the US. According to a recent report by the Common Wealth Bank of Australia (CBA), it was identified that the Australian share market might grow to three million traders.

Gamification & Trading

Mike Hamm, a frequent online trader, has experienced the rise of gamification of online trading over the preceding five years. Hamm is mostly engaged in active online trading and has a trading portfolio of over $100,000. His trading experience and the knowledge that he has gained over the years has also led him to creating his own trading blog named 5000trades.com

According to Hamm, social media networking has played an instrumental role in helping people interact with the stock markets in a more reserved and shallower way. In the past, vital trading tools consisted of exclusive access into the Bloomberg terminal or in the least, subscribed access to different broker reviews and reports.

But things have changed considerably, and now most trading decisions are made online via different articles posted on Facebook and Twitter.

According to the chief executive of Bell Direct, Arnie Selvarajah, steps are being considered for the gradual gamification of the entire world of online trading. However, Arnie has his reservations pertaining to the idea of making it too easy or too game like for traders because there is a potential for clients to lose money.

Stephen Karpin, who is the general manager of equities and margin lending of CommSec, says that bringing together the tools for effective trading and infusing the power of social media to make disparate information viable to daily traders could be very useful. In attempting to harvest all the tools of the ‘trade’ together, many people who have never traded in the share market will also do so actively.

However, there is also a growing need to facilitate part time traders with valid information from the stock market. Good online trade forums should have a reliable method of rating the viability and the quality of good trading information. For example, take Hotcopper, which has a thumb up and thumb down feature, allowing traders to go through good and bad trading information.

Websites have to consistently do well in search engine rankings and have to make it to the top so that more traders could enjoy viewing credible information, basing their trade decision on the news they read.

However, it is important to realize that online trading still functions with the same rules. Trading and investment decisions are still being made based on either signals or noise in the market.

The Bottom Line

The gamification of online trading is a gradual process, but with that being said, it is also important to note that social media networking has laid a powerful foundation for it to commence and spread quickly in the near future.

The Greatest Traders in History

Market Place

19/09/2014

Every day, there are thousands upon thousands of trades and transactions which are conducted between investors all across the globe. However, if you come to think of it, many of those investors will not be remembered for anything. And in this regard, the legendary trades which have become a memorable part of financial history have to be absolutely amazing indeed.

If you are thinking the guys who made it into the history books simply landed there through making tons of money in the market, then you are wrong. Some of the greatest trades ever made have been made by people who used their intellect, their gut feeling, and cunning and intuition to determine the right moment to strike and to make it big, even when everybody else thought they were simply nuts for making such trades.

Just pause and think for a second. The famous John Paulson shorted the housing market of the US when every trader on Wall Street deemed the market bullish. Jim Chanos kept his Enron shares short even though he knew the stocks were going to shoot up. Now, moves like those require critical analysis, thorough knowledge, and above all, they require grit.

Listed below are some of the greatest traders who have made history, by making some of the greatest trades in the world through their diligence, and their feats still stand unmatched:

Jesse Livermore – The Man Who Shorted the Market Collapse in 1929 and made $100 million

jesse livermore quote

Jesse Livermore is regarded as the most famous short seller in US stock market history. He began shorting stock purely on gut instinct just before the San Francisco earthquake hit. Although there was no way he could have predicted the earthquake, the trade did make him $250,000, which led to him consistently short selling stocks in the market. Shortly after, in 1907, he went on to make millions when he shorted the market collapse.

However, it wasn’t until 1929 that he made it into the big leagues. It was when he shorted the whole stock market and made a cool $100 million in the process. Imagine that! He is deemed as the pioneer of short sell trading and was the inspiration for the book, Reminiscences of a Stock Operator, which is a fictional account of a trader.

Paul Tudor James – The Man who Made $100 million by accurately Predicting Black Monday in 1987 and Shorting the Entire Stock Market

paul tudor jones quote

Utilizing the analysis from technical reports, various evaluations, and the historical information of S&P, Paul Tudor Jones accurately predicted that the market will collapse in 1987, and followed through by short selling his stock in huge quantities. And as he predicted, the Dow dropped by 22%, which made him an estimated $100 million.

Subsequently, PBS made a documentary about Paul Tudor Jones, which was named Trader, and just after its release, Jones went out and bought all the copies so that no one else could see the documentary. He was concerned it could reveal his trading secrets.

Andy Krieger – The Man who shorted the Kiwi in the 1980’s and Ended Up Making $300 million

Back in 1987, when the market crashed on Black Monday, a majority of the investors discarded the US dollar and began to look for other currencies. 32 at the time, Krieger was a currency trader working for Banker’s Trust. He analyzed that the New Zealand dollar, which is also known as the Kiwi, was ridiculously overvalued. Using financial trading instruments which were new at the time, he shorted his position against the Kiwi, which was worth millions of dollars. His short sell order exceeded the entire New Zealand supply at the time.

And just like he had anticipated, the Kiwi fluctuated between a 3 to 5% loss, which made his company $300 million. Krieger himself ended up making $3 million from the trade.

George Soros – The Man who Made $1 billion by Shorting the British Pound

george soros quote

Back in the 1990’s, when the British economy was doing very well, the legendary George Soros proceeded to short the pound, and he borrowed massive amounts to accomplish this harrowing feat. Soros shorted the pound when the currency was traded on a fixed rate of exchange.

After Soros made the bet, the government of Britain realized it could end up losing billions if they consistently and artificially piled up the pound. Soon after, they moved away from the European Rate Mechanism, which resulted in a massive plummet of the pound’s value. This made Soros $1 billion, giving him the status: brilliant billionaire investor.

So, what do you think now? Some of the major traders and investors of today have been inspired by these great men who took trading to an entirely new level.

The Framework for Predicting Failure in Trading

Market Place

17/09/2014

You might have read or heard someone envisage or forecast that a particular retail organization or a chain of stores is going shut down due to being on the verge of bankruptcy. Can you remember how many times it did not happen the way you heard about it? Well, it might have happened a few times. Maybe you have also predicted that a store will shut down in the near future because of so and so reasons. Most people think like that.

If you take a look over recent years, you will notice there have been plenty of stores that closed down because of the super ecommerce retailer, Amazon. After the juggernaut was formed, the first ones to be crushed under it because of the financial crisis were Borders, Circuit City and Linen’ n Things. And now economic analysts have identified there could be a next wave of victims that could be destroyed by Amazon, namely Barnes & Nobel, Best Buy and RadioShack. Even Wal-Mart is showing signs of decreased store sales in the domestic division.

So, being an investor, what is the first question that pops into your mind? Of course, you will be asking yourself is it a good to differentiate an actual crisis at a brick and mortar retailer from that of a threatening one, but one that can be survivable? If you can distinguish the threat, you can avert a potentially dangerous investment but also make a profit on the consistent drop or a rebound in the company’s primary stocks.

Why Is It So Complicated To Forecast Failure?

The main reason why predicting failure can be overly complicated or calculating when a company will sink under is because bankruptcy is not just an issue of solvency (having more assets than liabilities), and if things were that simple, even a rookie investor would be able to foresee the downfall of a publicly traded company. Because all that would take is to review and evaluate the company’s shareholder equity portion in the balance sheet.

However, this doesn’t mean that solvency is of no importance, because it does matter. The thing to understand here is that solvency is not the leading cause of failure among companies. Let’s look at a textbook example. Consider the downfall of Circuit City which was a former electronics giant. When Circuit City filed for bankruptcy less than 6 years, it was deemed America’s second biggest electronics retailer and vendor. It had 700 superstores in different shopping malls and centres across the US. And on top of that, before it filed for bankruptcy, the ending balance sheet indicated that the company had $3.4 billion in assets in comparison to their liabilities which amounted to $2.3 billion.

This tells you that the company was not just solvency but it had a book value of over $1 billion. So, if solvency is not the problem here then what is? Quite simply, the answer to the question is liquidity. When an organization or company is in its final struggle, the first and most immediate problem it faces is the failure of converting assets into liquid cash, cash that can be used to pay off expenses such as rent and wages, etc.

This problem occurs when creditors begin to give up hope in the company and stop taking the company’s assets as collateral in order to be paid off. So, basically it is the inability to pay creditors what causes the entire problem, leading to the demise of a particular company and this is what exactly happened with Circuit City.

The Framework for Evaluating Liquidity

When liquidity becomes a problem, the traditional move should be towards the analysis of a company’s current assets, like cash, inventory and accounts receivable, and comparing it with its current liabilities, which could be debts and further obligations to be carried out. However, this method, referred to as the current ratio analysis, can be both effective and misleading because of the fact that it includes assets which cannot be turned into cash, namely accounts receivable and the inventory, at short notice.

Current ratio also ignores cash flow which is the core of liquidity. Moreover there is also a one-sided aspect to liquidity that cannot be recorded in the financial statements. In essence, everything points towards the creditors of a company. Liquidity depends on the company’s creditors. Because of the fact that creditors are not interested in shorthand measures pertaining to the fiscal prosperity of company, like the current ratio, they are more worried about how they can topple competing creditors, thereby getting their repayments before time runs out.

Predicting Failure: The Bottom-Line

The point of what is explained here is to help you realize it is hard to pinpoint the failure of the companies which are on the brink of shutting down. There are immense complications because the analysis entails more elements than just solvency.

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