Year: 2019

The Truth About Forex Trading

4 min read

(Updated November 2021)

Traders-Paradise got (and still get) a lot of emails with the questions: What is the truth about Forex trading? or Can you tell me the truth about Forex? or Tell me, please, is Forex profitable or it is a myth?

Okay, people, it’s time to tell you things that nobody will ever tell in one place.

First of all, the vast websites you visited searching for the answer to the question above, are sites with some Forex offers. Doesn’t matter if it is a brokerage, exchanges, system, signal providers, strategies, platforms. They all have one common interest: to present you only THE BEST. Their goal is to sell you their products. There is nothing bad in their goals and intentions, but you must be aware that some things will always stay covered and hidden from you. Until you build your own experiences.

We are giving you the shortcuts because all of us were struggling while we were novices in Forex trading. Actually, our struggle begins before we enter the Forex trading. Just thinking, measuring, asking, searching is struggle itself. And, still, you will find several sites or people ready to tell you the truth about Forex trading. Just because there are some characteristics to trading that the majority will never like to talk about.

And yes, those features of Forex trading are ugly. Some are evil and scary. But Traders-Paradise’s opinion is that we have to talk about everything, doesn’t matter if it is nice and affirmative or ugly and not-so-nice subjects.

We will share what we know to answer you what is the truth about Forex trading.

Just to give you a clear path to decide if Forex trading is for you or not. The benefits you already know, you can make a fortune trading Forex but we want to show you the other side of the same medal. One thing you must keep in your mind: none of us is going to tell you to give up.

Based on our personal experiences, the most common misconception is that you have to be some math geek if you want to trade Forex. Yes, it is beneficial if you can understand the math behind your trades but you don’t need to be genius for that. This has to be said, a lot of very successful traders never even started high education. Have you ever heard about some Forex trading college or university? Of course not. Because if you want to be a successful Forex trader you must have particular skills. You don’t need a diploma. Speaking about those skills, for the profitable Forex trader is more useful to be a strong personality, not to get panicked when trades go in an unexpected direction. If you are nervous and without self-confidence, then Forex trading isn’t for you.

Yes, numerous and complex trading strategies are out there.

And indicators, charts. OMG, Forex is for Nikola Tesla, not for me!

Just stay calm! The ability of self-control is more important. Forex markets are endless tension. Your nerves are what is really in a count, not your math knowledge.

Traders-Paradise will reveal you a secret. The winning traders very often practice one trading system. They learned that system, tested it on some demo account for several months, started the real Forex trades and VOILA! Their result is verified, the system is working, they have profit, so why change anything?

The other thing we would like to share with you is the fact that in Forex trading your entry and exit points are irrelevant. Sound like a blasphemy, right? Imagine us, we are laughing! Because it is the truth about Forex trading. How the mentioned points are important if you can place your trade while sitting in a restaurant with your friends or walking. All you have to do is to take your phone in your hand and start to trade, whenever you want. Sound crazy?

Wait, there are more!

We have heard so many times that humans generally are not good at trading.

The truth is that some are better.

Being a successful trader doesn’t mean that someone is naturally predisposed for that. That isn’t something the mother will give you with a birth.

What you have to do is to start thinking that you have to fight with the market. Just like in flight or fight situation. Imagine that the market wants to still all the money you placed there.

What does your brain tell you? Flight!

No, never if the Forex trading is for you. Your brain should command you – FIGHT! While you are sitting in front of your computer, you have to be the fighter. Or you will gain the loss. Whoever loses a profit, gets a loss. (That is wise, we should spread this sentence all over the world.)

When we are pushing the buttons to place our trades, actually we are pulling the triggers. On our brain’s command. And here is the trick. Our brains will send us variously commands. That’s why you must have a plan. It is a battlefield, you cannot just run around and shoot. That’s when you are afraid or you are disoriented.

To have winning trades you must have a logical plan while trading Forex. If you don’t, you are 100% losers.

One of the biggest lies about Forex trading is that some traders keep 100% successful trades.

No one can ever guarantee 100% success rate, no person and no algorithmic application

This truth about Forex trading you will find nowhere else:

Do you know how some brokers or signal providers, or strategy sellers want you to believe that they have a magic weapon for the markets? That’s a lie. They are lying to you. Trading isn’t so easy.

It may take years until you be able to gain a permanent profit from trading. Our aim is not to frighten you, but this is the truth. You will need months and years of analysis, testing and error corrections to be professional traders.

The biggest truth about Forex trading is that you don’t need superior software or multiple trading screen setups to be a prosperous trader. This is something that no one will tell you. Especially trading websites. All you need is a device with full access to some free charting app.

Remember, the most powerful tool in your trading armory is your brain, not trading software. Some very simple and cheap but user-friendly software can provide you more benefits than a robust one. Remember this.

Traders-Paradise revealed you the most hidden secrets about Forex trading and told you the whole truth and nothing but the truth.

Happy trading from Traders-Paradise Team!

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19th August 2019
Tom next what is it – explanation with examples

3 min read

by Gorica Gligorijevic

Tom next is a short-term transaction in foreign exchange when you buy and sell currency together over two separate days. Actually, it is a business day we are talking about. One day is tomorrow in the sense of one business day. The following day in sense of two business days from today is known as the spot date.

The main aim of this transaction is the traders and investors keep their position and are not forced to exercise real delivery.

So, suppose you already know that in the Forex market, each transaction carries an attached value date. That is the date when buying or selling activities will hit their value. The value date happens 2 business days after the transaction is executed. The profit or loss generated by the buying and selling is settled into a particular account.

To be more clear, when you take a position in a currency it is expected that you will deliver the currency in two days. But, a lot of Forex traders are gambling and don’t even think of taking delivery on the currency.

That is the point where tom next comes to the scene.

If you open and close a position in the same business day, the value dates will be identical for every transaction. Your positions will not be carried over into the next day. Your payment has already been accomplished and will complete on the same value date.

In currency trade, delivery happens two days after the date of the transaction. Tom next trade occurs because the majority of currency traders want their positions to be rolled-over daily. Their goal is not taking delivery.

The purpose of tom next is to restrict traders from having to take delivery of currency and keep their forex positions open to the next day.

Like stocks, forex trades end when the trader takes delivery of the asset. In forex, the delivery day is two days after any transaction. That is the spot date, but tom-next can be applied to prolong the trade after this date. So, the position will be extended by using tom next and you’ll be able to swap any overnight positions for an equal contract that begins the next day. The difference between these two arrangements is the tom next adjustment rate.

So, this simultaneous transaction is a Forex swap.

Depending on what currency you hold, you’ll be charged or earn a premium. If you are holding high yielding currencies you will roll it over at a more pleasant rate (minimum is the best) because of the interest rate differential. This differential is the cost of “carry”.

For example, if two currencies have the same interest rates, they will be swapped at an identical rate.

If you choose not to roll over your position you will be forced to take delivery of that currency. Well, this is unusual, so the tom next transaction is basically the prolongation of your position.

The policy of rolling a position over is more valuable in commodities trading. If it is not finished, you will be left with the delivery of the underlying assets.

How does it work?

Your broker will swap or rollover your position for a new deal that starts the next day. The final result is an adjustment, higher or under, to the opening price for your position on the next day. You will see a tiny difference in the opening price from one day to another day.

Your broker will debit or credit your trading account depending on the change in interest rate. Let’s say you are long with a currency with a higher interest rate.

What your broker will do?

Your broker may credit your account with interest payments. However, if you are long with a currency with a lower interest rate, your broker will pay interest payments from your account.

A tom next will not be applied if you close the position the same day before 17:00 EST. How? There is no overnight delivery involved.

How do you calculate tom next?

The calculation is based on the closing level of the former position, and the change in interest. Swap points plus any interest on your unrealized profit or loss will produce the change on your account.

Rollovers that appear on Wednesday will have an added two days worth of interest. You know, for the weekends the banks are not working, so the broker will automatically credit or debit your account.

Tom next example

For example, you are long USD/EUR at rollover and the average entry price is 120.00. In this case, you select to hold your position. Let’s say, just for the purpose of this example, the quote for the tom next swap points received from the bank is 0.025 – 0.012.

What will happen? Do you remember, this is a simultaneous transaction?

A rollover, your broker will sell and buy USD, and at the same time buy and sell EUR. The final result is that you get a bid rate of 0.012 in your favor. The average price of your position will diminish by the number of Tom-next swap points.

The adjusted price of your position will be

120.00-0.012 =119.988

Tom next adjustment is used to calculating the overnight funding charge on your trading position. You have to pay it if you want to keep your trade open for more than one business day.

The rates can be changed on a daily basis because they are based on the underlying market price.

If you want to buy a currency with a higher interest rate, you will get an interest payment. Hence, if you choose to buy a currency with a lower interest rate, you will pay interest. This payment is known as the cost of carry.

You might also like:

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18th August 2019
Satoshi Nakamoto to Reveal Identity

Who is a real Satoshi Nakamoto?

By Traders-Paradise Team

Who is Satoshi Nakamoto? What is the origin of the iconic pseudonym? Who is behind it? How Bitcoin got this name?

Curiosity will probably be satisfied soon. All we have to do is to wait for the next several hours. And to check www.SatoshiNRH.com where Nakamoto plans to reveal his/her or group’s identity under the topic “My reveal”. Also, the address where you can check it and read it is www.ivymclemore.com.

Satoshi Nakamoto’s silence will be broken on Sunday, August 18, at 4 pm EDT (Eastern time zone).
The promise or decision came after 10 years of anonymity and creating one of the biggest mysteries in the past decade.

Our source claims that Nakamoto will reveal his real identity but in this three-part series he will reveal his education, origins, professional education. Also, it will be interesting to find out why his 980,000 bitcoins are still untouched.

All about Satoshi Nakamoto

Nakamoto will explain the role of his dedication to Chaldean numerology and how that influenced his decision to create Bitcoin.

The enigma is why he decided to reveal all these things including his identity today, August 18, on the day when he registered bitcoin.org through AnonymousSpeech.com. But he promised he will explain
The grand finale or culmination of the revelation of this secretiveness should happen on Tuesday in the third part. That will be an introduction of Tabula Rasa, Nakamoto’s vision for Bitcoin’s rebirth all along with the full announcement of his identity.

So, let’s say the first two parts on Sunday and Monday, are for warming the curiosity.

According to Ivy McLemore & Associates:

“Indicative of the compelling evidence he presents in each part of the series, Nakamoto will illustrate the role that ciphers and encryption-related to his devotion to Chaldean numerology played in many decisions in his creation of Bitcoin.”

Bitcoin code

So, we will see.

We found interesting reactions to this news. Forums are burning, social networks too. Everyone has some top secret info. We will point just a few of them:

“Satoshi” is most likely a state, intel or oligarch level private entity that will never be revealed and is likely not just one individual considering the bitcoin paper release coincided with the Great Recession.
Great Recession cliff was 15 Sept 2008.

Bitcoin paper was first published on 31 October 2008.

Even if “Satoshi” was to do a transaction I’d figure the person would be a front person for that entity anyways. The engineers that built it for this entity are already probably suicided or intel themselves.”

“The fact the entity hired a PR firm and has the sole goal of pushing a new company/product, even if it were the real person, means it is not the real person.”

BTW, this is clever, “Ivy McLemore & Associates” is a marketing agency.

Never mind, the only several hours are between our questions and his answers.

Traders-Paradise will also follow @SatoshiNRH on Twitter.

And we will all know if this is a marketing trick or real reveal of a mysterious identity the father of Bitcoin.

18th August 2019
Crypto Hacker, Decline – Crypto Market is Facing Difficulties

2 min read

According to News BTC: “the total crypto market cap declined to $242.0B and is currently correcting higher. Bitcoin price is currently correcting higher and is trading above the $10,200 level. BCH price stayed above the $300 support and it is currently near the $310 level. The EOS price is currently consolidating above the key $3.500 support area. Stellar (XLM) price is slowly recovering higher towards the $0.0700 and $0.0720 resistance levels. Tron (TRX) price is trading in a strong downtrend below $0.0200 and $0.0180.”

Bitcoin and the crypto market cap are recovering towards key resistances. Almost all cryptocurrencies are trading in a major downtrend.

But our attention is on hacking the cryptocurrency exchange Binance.

The crypto hacker behind personal user data supposedly stolen from crypto exchange Binance is planning to publish additional material. So, we can expect a new wave of leaking data.

Crypto hacker was playing his abnormal game in a series of tweets today, on August 16. A Twitter profile is known as Bnatov Platon tweeted an outline of Binance Know-Your-Customer (KYC) data supposedly he or she holds.

This was followed by other tweets.

Crypto hacker is making jokes

You will notice there is no timeframe for these screenshots but hacker or someone in his beneath showed Telegram chats with the person named as a member of Binance’s customer service team. There is no evidence that KYC images are collected from Binance.

The tone and arrogance in crypto hacker’s tweets are impressive. Bnatov Platon with handle @BnatovP joined the Twitter this month. With one purpose, obviously. To show how vulnerable private data is in some crypto exchange. Or on the internet overall.

But speaking about this particular case, as Cointelegraph reported at the beginning of August, Binance rejected any agreement to its user data. They were arguing the person behind the alleged robbery was a scam.

The Binance had one statement at that time:

“At the present time, no evidence has been supplied that indicates any KYC images have been obtained from Binance, as these images do not contain the digital watermark imprinted by our system.”

The Binance also noticed that the images all seem to be dated from February of 2018. Why is this important? At that time Binance had engaged a third-party KYC service provider to handle requests at that time.

Among other problems with hackers and scammers, this one is especially rude. Well, guys, someday, someone will catch you! As always do.

16th August 2019
Short Selling For Profit

What to do with stocks when the price starts to decline? Bet that a stock will fall more.

By Guy Avtalyon

Short selling for profit is a trading strategy that attempts to profit from an expected decrease in the price of a security. Basically, a short-seller wants to sell at a higher price and buy at lower.

How does short selling for profit work?

Let’s you are a trader and you have some information that some stock will decrease in value by the expiration date. Ofc, you don’t hold that stock but you can borrow it from a broker. For example, you borrow 100 stocks at $10 market price. And you open the position, meaning you want to sell them at market price by their expiration date. And you succeed. Then you close your short position and sell your borrowed stocks for $1,000. But before you give back that 100 stocks to your broker you are betting that their price will decrease in value before the expiration day. That happens. Now, you are buying these stocks at a lower price, it is called covering the short position.

Let’s say, the price of your borrowed stocks declines at $6 each.

You sold them at $1,000, bought them at $600. Return 100 stocks to the broker and you pocket $400.

(100x$10) – (100x$6) = $400

The risk in this kind of trading is literally unlimited because the price may rise and rise to infinity.

But, the profit can be huge, also. The previous example showed a short-selling for profit. Well, by using short selling you may gain loss too.

Example of making loss while using short selling.

The vice versa case is when stock price increase in value during the time while you are holding them.

Let’s say their market price rose at $14 each and you are holding 1oo stocks. The equitation will be

$1,000 – $1,400 = – $400

You borrowed those stocks at a $10 market price. But despite your expectations, the price increased which means you made a wrong bet. But you have an obligation to return those to the broker, hence you have to buy them back at that higher price. In this transaction, your loss is $400.

Short selling for profit is a method for traders to benefit from a drop in a stock’s price.

Short selling is only possible by borrowing stocks. The problem is they are not always available because when they are you may be faced with a crowd of other traders that already massively trade them.

Is short selling for profit risky?

The short-selling for profit can be risky and questionable. When a huge number of traders choose to short some stocks, their actions will make a great influence on the stock price. With such big traders’ interest, the price will decline sharply. That is not a good situation for companies. Their market value decreases. Sometimes the markets forbid short-selling, especially during the economic crisis.

As I said, short selling is risky for plenty of reasons. You can make a great loss if the stock price increases instead to decrease.

The other reason is that the sharp increase in selected stock may cause traders to cover the position all at once. Moreover, short-covering usually force the price to go up. Then you have a situation that more and more short-sellers are covering their positions and such stock is grasped in a so-called short squeeze. So, like a chain of unfortunate events, right?

The main purpose of short selling for profit is when you borrow the stocks from the broker to sell them instantly and buy them back at a lower price. And return them to the broker. When the whole process is finished you should profit from the difference in stock price.

Risks of short selling

Short selling involves a magnified risk. When you buy a stock you can lose only the money that you have invested. For example, if you bought one share at $300, the maximum you could lose is $300. Stocks can fall to $0 and that is the maximum, there is no stock that may fall below zero. The maximum in your potential loss will stop at your initial capital invested.
In short selling, you can potentially lose an infinite amount of money. Stock can increase its value for an infinite time to an inconstant price. So, you’ll have an infinite loss.
For example, let’s say you enter a short-selling at $200, and suddenly the stock price increases by 300% to $800. You’re obliged to buy the stock back and return them at $800, essentially losing 400% of your capital. actually, you are in incredible debt.

Just be careful when you bet against stock price.

16th August 2019
PlusToken The Biggest Scam In The Second Part of 2019

3 min read

PlusToken was a classic Ponzi Scheme. Its operations were held in Korea, but also in the Chinese market. How Traders-Paradise is sure it was a Ponzi scheme?

PlusToken was founded in 2018 and announced high returns at various discount percentages for most active members. What does it mean? To really have the right on rebate, members were obliged to bring more and more newcomers and then would climb to the higher levels. A classic Ponzi.

At the beginning of this year, those criminals declared to have more than 10 million members.

OMG, how many naive people! Greedy? Just a false number? Everything is possible. The fact is that those scammers snatched $3 billion from their members. But despite the fact they escaped from the law, their website is still alive as much as their social networks accounts.

Okay, they didn’t have enough time to wipe off everything. More important is to save the neck and fat wallet.

“Mr. Leo”, the co-founder of PlusToken

PlusToken scammed about 10 million investors of $3 billion.

Actually, withdrawals on PlusToken started to stumble in June.

The scammers declared some technical problems as the reason. For everyone with less greed, promises given from these scammers should sound impossible to be executed. What did they promise? Nothing! No investment strategy, no valuable information, only 6 to 18% returns per month plus referral commission.

Recent research exposed PlusToken as scammers, who were acting outside the internationally used crypto social media. They were a lonely player succeeded to raise billions. On the illegal way. The police in China took some action but it wasn’t finished with arrests or investigation.

The criminals with an offer of exceptional earnings succeeded to fill their own wallets with a Bitcoins.

Dovey Wan, the co-founder of Primitive Crypto and one of the more influential Twitter accounts, brought the PlusToken story to the attention of a wider audience.

How do they stay so long unrevealed?

The essential reason is lack of communication and the existence of rivalry between Western and Chinese crypto-fans and exchanges.

The PlusToken actions were mostly ignored. The other reasons could be using different social media or the presence of language barriers. That held Asian investors to the hell.

These scammers were not modest.

Only a few weeks ago just a few days before their escape, PlusToken announced that it’s expecting to have over 10 million members to the end of 2019. Two or three months earlier they said to have 3 million users. It is obvious that they boosted those numbers because they never showed any relevant evidence for those words. Moreover, they operated under the radar, you cannot find so many details or information about the people behind this scam. As we mentioned, at the beginning of this article, some co-founder is mysterious Mr. Lee.

Take a look at the image above again.

When the scam was revealed messaging platforms reveals members who said they’ve lost up to $5,000. If you take a look at some tweets you will find some members from China who had contacted Hunan province police. How all of this will end is still unclear, but something has to be said: never be greed, use the proven exchanges and wallets with an excellent reputation. Every time when you notice that someone is offering you enormous returns, run away from such.

At any time you can check if some exchange is good in Traders-Paradise’s WALL OF FAME
The scammers are in our WALL OF SHAME

16th August 2019
Bitcoin dominance rate – Why some are concerned?

Why this question about the Bitcoin dominance rate now?

By Guy Avtalyon

The bitcoin dominance rate is a very important indicator of crypto market preferences. It is the measure of how Bitcoin is important in the crypto world. To know the Bitcoin dominance rate observe its market cap as a percentage of the entire market cap for all cryptos. The traders and investors pay a lot of attention to it.

Okay, it isn’t shocking news that Bitcoin is dominant. Everyone knows that. It is here for a long time, it was the first, it has attention like a rock-star.

So, why this question about the Bitcoin dominance rate now? The alarms are a turned-on because of Bitcoin’s current climbing.

In the crypto markets, it covers about 70% of the market cap as a whole. The same level was seen in April 2017.
So, there we have a concern on the scene!

Some are afraid that this is a sign that the bull run is close. That will accelerate bitcoin’s dominance to over 90%. The existence of any other crypto would be doubtful. That high dominance rate would destroy the others.

The altcoins are on the edge of return, think others. Or no-return, the opponents are kidding. As always, when it comes to data interpretation you can see and hear literally everything and anything. But to be serious, the bitcoin dominance rate may show us many things. Even the increase isn’t always good news.

Why increasing dominance rate isn’t good news?

Well, Bitcoin’s dominance rate is not an independent measure. It is related to momentum, inclination, confidence. In one word – popularity. Bitcoin is the most popular cryptocurrency without a doubt.

The price of Bitcoin is the measure of its reputation. On the other hand, dominance is related to bitcoin’s relationship to other cryptos. There is one trick: the dominance may increase when the price is going down and vice versa. To repeat, it isn’t an absolute measure.

Bitcoin’s high dominance

It could be a double sword.

Bitcoin is an extremely volatile asset and risky this attribute often led investors to less risky assets and, can we say, safer. But, on the other hand, thanks to its popularity the whole sector of crypto assets may benefit if there are more investors in Bitcoin.

This new increasing Bitcoin dominance is proof that investors’ sentiment that this crypto is relatively safe to invest in. The sentiment indicator is just a current opinion, be careful with that.

How can you be sure the trend will continue? With what energy? What sentiments do is give power, to push things to go further, to build a chain of very convinced investors and traders who are buying bitcoin.

The added importance is market trust, particularly at the initial steps of institutional engagement.

Big traditional funds are not worried about the relative value of one token related to another. Their consideration is their portfolio. They will decide what is better to invest in, crypto, or some other asset. Having that in mind, it is more likely they will invest in Bitcoin if they want to have crypto in their portfolios.

Why is that?

Bitcoin has the liquidity, active derivatives market and is registered in most jurisdictions. With the rising dominance rate, Bitcoin has the opportunity to boost investors’ trust in the overall crypto market.

But nothing would last forever.

Prior run-ups in the dominance rate were followed with a change altogether with investors’ attention to new choices. That is a calculation. When market leaders grow extremely, wise investors take profits and re-invest in other winning assets. The last bull market noticed bitcoin’s dominance decline from above 85% to under 40%. This time it is something else.

How? During the previous bull market, we had plenty of new tokens. Where are they now? They are not exciting anymore? No, they are not existing anymore.

Moreover, the interest of institutional investors with a focus on bitcoin will launch bitcoin’s dominance to jump even more.

Stay tuned and keep your eye on what is happening behind the stage. Traders-Paradise has a fantastic example of how to MONETIZE BITCOIN

15th August 2019
The German market is overflowed by fears of a slowdown

2 min read

by Gorica Gligorijevic

German fears of stock markets’ slowdown rose causes the fear, that the whole country may slip into a recession. The day before the US announced its decision to delay part of tariffs on Chinese imports.

The trigger in the German’s markets was news that the country’s economy declined 0.1% in the second quarter of this year in comparison with the prior quarter. According to some analysts, the fears are caused due to global trade conflicts coupled with difficulties in the auto industry. The decline of 0.1% was just a trigger to show them.

“Data showing that the German economy contracted in the second quarter reignited fears of a global recession, dampening demand for riskier assets such as equities,” said Fiona Cincotta, market analyst at City Index

Many European markets are down.

Germany’s DAX was down 1.5% at 11,575. The CAC 40 in France dropped 1.4% to 5,288. The FTSE 100 index of leading British shares was 1% below at 7,181.

The US Wall Street was ready for similar drops at the bell end with Dow futures and the wider S&P 500 futures falling 0.9%.

Tuesday was one of the better days in the markets. The US Office of the U.S. Trade Representative announced that the US will delay the tariffs on some of China’s products like consumers goods. But some sorts of fish or baby seats are entirely removed. The new trade policy will be on scene until December 15.

European shares stabilized on Thursday

But prior there was a brutal sell-off. It was fired by overall fears of a recession. The investors were expecting central banks would relax monetary policy and calm nervous markets.

The pan-European STOXX 600 index dropped at 0828 GMT hitting the point very close to six-month lows.

The trading volumes in Italy, Austria and Greece were closed for a holiday. Almost all European markets moved to the negative area.

London’s FTSE 100. underperformed its European rivals, burdened down by oil main and some stocks that traded out of dividend right.

In profits news, strong numbers from beer maker Carlsberg In Denmark (CARLb.CO) and shipping group A.P. Moller-Maersk (MAERSKb.CO) pushed stocks of these Danish companies to more high-priced.

Drillisch and United Internet slipped below after the German telecom company lessened its profit outlook.

Here is a short summary of EU markets:

UK FTSE 100 -1.7% hits two month low
German DAX -2.3% hits a four-month low
French CAC -2.2% hits one week low
Italy MIB -2.8% hits two month low
Spain IBEX -2.2% hits two month low

The German DAX again broke the 200-day moving average, the last low was in June. It stopped at the 50% retracement of the rally in December. DAX primarily have to survive on that level. If don’t, the market may be very violent. But if Angela Merkel announces a 180 on deficit spending, the investors on the German stock market will have hope.

15th August 2019
Don’t buy stocks on a dip

Many say the strategy is to “buy a dip”, but can it really lead to success? There are so many opposing opinions.

By Guy Avtalyon

Don’t buy stocks on the dip says UBS Group AG. It is a Swiss multinational investment bank. While analysts at Goldman Sachs Securities Division advised: “Buy bitcoin on the dip” for stocks it is a straight way to a loss.

“Buy the dip” was a good plan for the bull market, but analysts at UBS addressed to stock investors:

“A world where leading indicators are accelerating is generally one where a correction in equities is an opportunity for investors and ‘buying the dip’ gets rewarded. In contrast, today’s backdrop with PMIs (purchasing managers indexes) in the low 50s and rates arguing for further declines often results in buying the dip being a losing proposition,” addressed strategists Francois Trahan and Samuel Blackman, in a Tuesday.

This announcement is quite strange because dip buyers are still making a profit.

The Dow Jones Industrial Average DJIA, +1.44% increased more above 370 points Tuesday. This increment came after the U.S. said it would pause imposing tariffs on some imports from China.

The S&P 500 SPX, +1.48% climbed 1.5%. The Dow is depressed 2.2% for the month, and the S&P 500 is 1.8% below in comparison to the previous month.

Trahan and Blackman have a different interpretation of the current market conditions.

What is buying on a dip

It is a losing proposition.

They said the historical records covering the last nine economic cycles, reveals that buy-the-dip works the best when leading economic indicators, like PMIs (private mortgage insurance), are accelerating.

The analysts said that buying-the-dip had a virtually excellent history. They call it the “risk-on” period. However, it is followed by the “risk-off” period. When PMIs fell under 50, labeled the “risk-aversion” period, dip-buying has poor benefits, they said.

Don’t buy stocks on a dip the analysts said

They said that defining the period of the cycle is just one piece of a three-item checklist. They also explained the perfect risk-reward scenario. It happens when the “risk-on” period is followed by interest rates, that carries an increase in the price/earnings ratio, so the earnings opportunity is promising.

Today, the potential dip buyers are 0-for-3, they explained. In other words, we are witnesses of the “risk-off” period, but the companies earnings opportunity has declined.

They also estimated interest rates.

They were looking at yields with an 18-month lag.

Their conclusion is: “the path laid by interest rates 18 months prior to today shows that there is now tightening in the pipeline, and it’s more likely we experience multiple contractions than expansion in the months ahead.”

Multiple expansion points the readiness of investors to pay more for a dollar of earnings. And they pointed out that the risk/reward for buying the dip “extremely poor”.

As you can see, analysts from Investment bank Goldman Sachs has advised investors to capitalize on the new dip and buy bitcoin.

The bank stated that its short-term target for bitcoin is $13,971. It also suggested to investors to buy Bitcoin on any dips in the current situation. But, don’t buy stocks on the dip, says UBS Group AG.

There is a difference.

15th August 2019
Morgan Stanley Claims We Are In A Bear Market

2 min read

The analysts from Morgan Stanley claim that we are in a bear market.

Any proof? Don’t tell me you missed it!

The US S&P 500 Index was closed on Friday down by 3% compared with the highest level in late July, 26, registered in intraday trading. Bear market means the stock prices drop 20% or more but the corrections include price falls about 10%.

So, you may ask how we already enter the bear market if prices dropped by 3%, it so far away from 10%.
Morgan Stanley anyway claims that “we are still mired in a cyclical bear market” pointing three spots in this estimation.

The proofs of the bear market

First, compared to the beginning of 2018. the S&P 500 is “roughly flat”, but Friday’s closing was less than 1% over the intraday high noticed on January 26, 2018.

The other evidence is the fact that 80% overall equity markets dropped by 10% already.

And third, the other US market indices are down by approximately 10%.

Morgan Stanly further noticed that during the past year and a half, a majority of global stock market indices dropped notably from their highs. Actually, all stock markets were more volatile than during the previous two years when we had the bull market profits.

“At this point, we would view our call in January 2018 for a multi-year consolidation and cyclical bear market as well established and documented,” said Morgan Stanly in conclusion.

The Morgan Stanly report notes that both the small-cap S&P 600 and the mid-cap S&P 400 didn’t reach new highs in 2019. Also, both dropped by more than 10% from prior highs noticed set in September. 2018.

The statistics

The statistics show, among eleven S&P 500 sectors, five have reached new highs this year with consumer staples, utilities, and REITs as leading. The two others are consumer discretionary and the IT sector.

Morgan Stanley states “…the fact that long-term Treasury bonds have defeated the best equity market in the world over the past 18 months, especially since September [2018].”

So, according to Morgan Stanley, we are in the middle of the bear market.

The previous bear markets

But there is no difference from the first four months of this year. We had a bear market rally. Yes, it came like a storm but a very long one. It was Christmas when the 25% rally started and ended on May 1 when the all-time highs were recorded. But all benefits from that short bull market period was gone with the wind. The bulls were so close, but still incapable to make a change.

Morgan Stanley is right. Since October 2018 we are in a bear market. At the time of the mentioned rally, all had some hope based on historical performances. The fact is that some of the biggest rallies have happened throughout bear markets. But not now.

The bottom line

What you have to pay attention to is the overall trend. It will show you the right spot. The best way to do that is to use the long-term charts to set your trading correctly. Anyway, there is no good or positive prediction. Be ready to see the large bear rallies, there will be a tremendous loss. Having this information in your minds, you will know what to do and how to stay objective. Over one century, we had 32 bear markets and 123 market corrections.

The bear market lasts shorter than bull markets. So, this one will pass.

14th August 2019