Year: 2019

Brexit deal, is it to be or not to be?

4 min read

Theresa May, the British PM, looks for a compromise with her political opponents that will deliver a Brexit deal. She is entering the most delicate and dangerous negotiations of the country’s split from the European Union.

On Wednesday night, there was an attempt in Parliament of opposition to oust her government in a vote of no-confidence 24 hours after her agreement with the EU was emphatically rejected by the historical margin for any sitting government of 230 votes.

But May survived and opened talks in an effort to break the deadlock. Now she must return to Parliament to set out her Plan B by Monday.

Point is that the UK has just 10 weeks left before the departure deadline.

According to Bloomberg, “May is prepared to blur her red lines to find a plan that will get through Parliament, according to a person familiar with the matter. That could mean keeping close ties to the EU, an outcome backed by opposition parties.”

On the other side, the European Union demand she radically rethinks the UK’s red lines. The bloc signaled its willingness to delay Britain’s withdrawal for a longer time.

That means, the EU had been preparing to make limited concessions over the much-loathed Irish border backstop to help May convince Parliament to back her deal.

But the after Tuesday night it is changed: European governments now believe a more fundamental shift is needed and the move has to come from the UK side, three diplomats said.

“The government approaches these meetings in a constructive spirit and I urge others to do the same,” May told the House of Commons after winning the confidence vote. “But we must find solutions that are non-negotiable and command sufficient support in this House.”

Economic consequences of Brexit deal

The pound initially rose after the historic vote on the Brexit deal. There were some expectations a cross-party approach would yield a Brexit plan that protects the trading connection with the bloc.

But the Theresa May discovered that the price of her opponents’ cooperation could be too high.

Rival party leaders promptly began to establish their conditions for taking part in talks to rescue May’s Brexit strategy. On the table is the option of delaying Brexit and even staging a second referendum on the membership of the EU.

The leader of the main opposition Labour party, Jeremy Corbyn refused to take part at all in talks about the government’s new Brexit plan.

Corbyn, the Labour leader, said May must rule out a no-deal Brexit as a precondition for discussions. After a spokesman for the prime minister later told reporters she was not doing so, Corbyn’s camp said no deal was “blackmail.”

A “no-deal” Brexit is where the UK would cut all ties with the European Union overnight.

Labour party, Scottish National Party, and Liberal Democrat members of Parliament favor closer trading ties with the EU. More than May has proposed. Labour party, for example, is advocating full, permanent membership of a customs union with the bloc.
That sound as anathema to many pro-Brexit members of May’s Conservative party.

British authorities warn that leaving the EU without a deal could lead to a recession, with the pound falling as much as 25 percent and house prices taking as much as a 30 percent hit. Already, suppliers to manufacturers are stockpiling just in case.

Time is running short, and the prime minister has urgently scheduled calls with EU leaders to discuss the next steps.

It’s unclear how much the EU can help.

The bloc is willing to extend the Article 50 negotiating period beyond the summer. In order to find a deal if necessary, according to some diplomats. But on Wednesday, the EU’s chief Brexit negotiator, Michel Barnier said there’s no way to remove the need for the most contentious part of the agreement, the so-called backstop plan for the Irish border.

According to some diplomats, European governments are willing to delay Britain’s departure well into the second half of the year.

So, there is a chance for Brexit to not happen on the long-ago scheduled date of March 29.

The economic exodus because of Brexit deal

The increasing likelihood of a no-deal split is pushing wealthy Europeans, who have made their homes in the UK, to move out. According to Anthony Ward Thomas, founder of a firm of the same name that specializes in overseas relocation.

He confirmed 296 moves away from Britain in 2018. That is an increase of 82 percent. Favored destinations are Paris, Brussels, Zurich, and Geneva, as well as southern France and Spanish locations such as Majorca. In other words the territories of EU countries.

Popular destinations also include the Channel Islands, which don’t apply capital gains or inheritance taxes. Relocation inquiries increased more than 50 percent in the second half last year compared to the first six months.

Customers are typically wealthy, having at least 5 million pounds ($6.4 million) at their disposal. They are European Union citizens moving with their families. There are some retirees seeking warmer weather but also favoring “more stable” political climate.

It pretty much looks that the people are abandoning the ship because it is sinking.

And the exodus may accelerate after the rejection of Theresa May’s Brexit deal.

You would like to read: What makes the Swedish economy unique and should the world follow its economic model?

Italy has also emerged as a magnet for moves, spurred by Brexit and the introduction of a new tax regime two years ago. This country was previously a focus mainly of the second-home owners. But these days, a new home buyer in Italy is, for example, entrepreneur or hedge-fund manager. They moved their families, bought homes, and started to work remotely.

Financial consequences

The pound drifted on Wednesday and gilts sold off even though the margin of the Prime Minister’s loss was way above the threshold many analysts feared would trigger panic. The prospect of a no-confidence vote in May later that evening has also failed to disrupt assets amid a general assumption she will prevail.

The one soft spot was the FTSE 100 Index of shares, which tends to fall when the currency performs well.

The key to the robust showing from UK assets appears to be in the scale of May’s defeat. A belief is growing among many financial professionals that there’s an increasing chance of a so-called soft-Brexit or even no Brexit at all. Those are outcomes many investors would cheer.

It looks that the chances of a no-deal Brexit are so slim now it’s not even really worth considering anymore. It looks that the resolution will be an even softer version than May’s proposal or a new referendum.

You would like to read Investment prediction for 2019 – Traders Paradise prediction

That’s a view shared by a host of analysts who expected May to survive the no-confidence vote called by the opposition.

The markets offer evidence of a pickup in confidence among traders. The cost of insuring UK banks’ subordinated debt fell, while volatility on pound options has slumped.

So, we can say that Prime Minister Theresa May’s record defeat in Parliament over her Brexit divorce deal caused a curious response from markets: Optimism.

The pound drifted on Wednesday and gilts, which is a traditionally safe investment, sold off even though the margin fell way below the threshold. And many analysts feared it would trigger panic. The prospect of a no-confidence vote in May later that evening has also failed to disrupt asset prices amid a general assumption she will prevail.

Not everyone sees the glass as half full

One undeniable outcome of the defeat of May’s deal is a further delay to the Brexit process and yet more uncertainty for traders. Dean Turner of UBS Global Wealth Management is among those recommending caution.

Fidelity International Leigh Himsworth is also wary. He’s reminding investors that a no-deal Brexit remains the default option. And that the mechanics of any other possibilities are difficult. He recommends investing in liquid assets and hedging against the various outcomes.

Brussels’ chief negotiator, Michel Barnier stated Brexit is at a standstill after the crushing rejection of Theresa May’s deal by MPs but offered to return to the negotiating table if parliament forces her to shift the “red lines”.

So, we will see. Monday is coming very soon.

Risk Disclosure (read carefully!)

17th January 2019
Swedish Economy – HOW SWEDEN CREATED A MODEL ECONOMY

3 min read

photo source Jonathan-Brunkhorst unsplash
Nearly half of millennials say they prefer socialism to capitalism, but what do they mean?

“My policies most closely resemble what we see in the U.K., in Norway, in Finland, in Sweden,” Rep. Alexandria Ocasio-Cortez told “60 Minutes.”

Yet Sweden’s experiment with socialist policies was disastrous, and its economic success in recent decades as a result of market-based reforms.

The Swedish economy continues to outperform other advanced economies.

Sweden is an amazing country. It is the country where Ikea, Skype, Spotify, Ericsson, Mojang (of the Minecraft fame) were founded and the country of the world’s oldest Central bank Sveriges Riksbank.

In the past, the Nordic nation has been criticized over state intervention. But now it tends to be presented as an example of how to optimize market capitalism.

What’s the secret?

Stability through reform

Sweden’s gross domestic product (GDP) per capita is among the highest in the EU. It has low inflation and a healthy banking system. But this has not always been the case. Historically, the Swedish economy suffered from low growth and high inflation, and the Swedish krona was repeatedly devalued.

Also, Sweden was hit by a violent financial crisis in the early 1990s. Banks became unstable. Two were nationalized, unemployment rose sharply, government spending soared, as did national debt.

photo source chuttersnap

The path back to stability and success was not easy for Sweden. But by pursuing inventive and courageous reforms, and sticking to them, Sweden has transformed its economy. They manage to pave the way for robust growth in the face of global economic uncertainty.

The balanced budget

According to the International Monetary Fund, Sweden’s national debt to GDP ratio fell from 80% in 1995 to 41% in 2017. All three leading credit agencies give Sweden an ‘AAA’ rating. That is a rare distinction, even among developed economies.

Since the crisis of the 1990s, successive Swedish governments have succeeded in maintaining control over public spending and continued to do so even in the wake of the 2007–2008 global financial crisis.

How was this achieved?

Sweden reinvented its economic governance with a series of innovative regulations. First, in 1996, a limit for public spending was introduced. This was followed by the addition of the ‘surplus goal’ for the government budget. These measures remain largely intact.

These reforms were met with broad support from across the political spectrum in Sweden, where political consensus is often the norm. These measures help prevent the accumulation of debt, and ensure that the national debt is kept in check.

The Swedish Fiscal Policy Council (Finanspolitiska rådet) was established in 2007. This committee of experts audits the government’s policy decisions regarding public finances. It aims to ensure that they remain consistent with the goals of growth, employment, and long-term financial sustainability.

The Swedish government’s credible management of public finances has meant that Sweden remains among the most fiscally responsible countries in Europe.

While governments with large budget deficits carry out austerity measures by increasing taxes and cutting public spending, Sweden has broadly avoided these difficulties. While Sweden remains a relatively highly taxed economy, the center-right coalition government of 2006–2014 scrapped inheritance tax in 2005 and a wealth tax in 2007.

The dynamic Swedish economy

Today, Sweden has a diverse and highly competitive and successful economy. The World Economic Forum ranks Sweden among the top ten most competitive countries in the world.

Sweden is also one of the easiest countries in the world to do business with, according to the World Bank.

A key feature of the Swedish economy is its openness and liberal approach to trade and doing business. Sweden has traditionally been an export-orientated nation, and typically maintains a trade surplus. The value of goods and services it exports is greater than the value of imports.

In addition to maintaining competitiveness in goods and manufacturing, growth in contemporary service sectors such as information and communications technology (ICT) has been strong in Sweden.

Sweden has produced a number of unicorns, including video game developers King and Mojang, fintech company Klarna, and music streaming service Spotify, and video call platform Skype.

Photo by John Arano on Unsplash

Sweden’s present economic and social prosperity was built on the lessons learned from the financial crisis in the early 1990s.

Governments pursued reforms and fiscal sustainability became institutionalized. Stable economic policies combine with competitiveness, innovation and an open approach to trade to make Sweden a model for economic success.

Cashless economy

Sweden is the most cashless society in the world with less than 1% of the value of all payments made using coins or notes in 2017.

Across the country, cash is now present in less than 20% of transactions in stores – half the number five years ago, according to the Riksbank.

Stockholm metro does not accept cash neither does most public transport. Most retailers only accept card payments and street vendors accept cards too. Even smaller payments are cashless with widespread card acceptance. iZettle – one of the most popular small retail payment processors is actually a homegrown company from Sweden.

Retailers are legally entitled to refuse coins and notes.

About 65% of Sweden’s 1500 odd bank branches no longer handle cash. Further many no longer even have ATMs.
Riksbank figures reveal that the average value of Swedish krona in circulation fell from around 106 billion in 2009 to 65 billion in 2016.

Let’s go back to the beginning of this article.

Ocasio-Cortez, like Senator Bernie Sanders before her, knows not to claim an actual socialist country as an exemplary.

During the primary season of the election of 2016, Sanders said, “I’m not looking at Venezuela. I’m not looking at Cuba. I’m looking at countries like Denmark and Sweden.”

Their opponents have the argument against. According to the latest edition of Economic Freedom in the World, Norway is the 25. a country in the world and Sweden 43. out of 162; while Singapore and Hong Kong first and second.

But, neither AOC or Sanders wanted to say that Nordic countries, even Sweden is the example of a free economy.

This was just a short picture of the Swedish economy.

The bottom line

Sweden and the Swedish economy is an example of how the government has to work for the benefits of citizens.

Sweden maybe is ranked lower than some other prosperous countries. But it isn’t the point. The point is: do citizens have opportunities, does government protects their rights and how they really treat them in regard to the living standards.

Risk Disclosure (read carefully!)

15th January 2019
The best stocks to invest during the inflation

Investing in stocks can be the best move during inflation. What are the best stocks for such an environment?

By Guy Avtalyon

So, stock markets aren’t going away anytime soon. But let see how stocks act in the period of inflation. They remain a driving economic force in every country in the world. Analysts aren’t quite sure what the future holds for the stock market.

We will likely see stock markets continue to merge over the coming years. Some have even thought that we’ll see a single global stock market. This appears to be unlikely. Frankly, stocks are not good short-term protection against rapidly increasing inflation, but bonds are worse. But for long-term investors, stocks can be an excellent hedge against rising prices.

Inflation has been creeping up on the world economy. It isn’t the first time. During the history, we had so many inflations.

Inflation tracks the rise in the price of goods and services, which in turn shrinks the money’s purchasing power. When inflation rises, people can buy fewer goods, input prices go up, and revenues and profits go down. The result is, the economy slows down.

But the good news is that you can make money on the market by investing in stocks. Earnings come even in times of inflation.

How?

Well, the truth is that too much money chasing too few goods is one classic definition of inflation. Many studies have looked at the impact of inflation on stock returns. Most studies conclude that inflation can positively or negatively impact stocks. That depends on the investor’s ability to hedge. Also, it depends on the government’s monetary policy.

The most important is knowing how to invest in that environment.

Should you be concerned about inflation and your investments? If you have a substantial portion of your portfolio in fixed income securities, the answer is a definite yes.

Inflation erodes your purchasing power, and retirees on fixed incomes suffer when they can buy less each passing year. This is why financial advisers caution even retirees to keep some percentage of their assets in the stock market as a hedge against inflation.

The consumers will not hold cash because their value over time decreases with inflation. For investors, this can cause confusion.

High inflation can be good, as it can stimulate some job growth.

What can you do in periods of inflation? You can stay invested and not pay attention to the short-term fluctuations. Sometimes this can be hard.

One common misconception about a buy-and-hold strategy is that holding a stock for 20 years is what will make you money. Long-term investing still requires homework because markets are driven by corporate fundamentals. If you find a company with a strong balance sheet and consistent earnings, the short-term fluctuations won’t affect the long-term value of the company.

In fact, periods of volatility could be a great time to buy if you believe a company is good for the long-term.

Companies that raise their prices in line with inflation tend to fare better than others when the cost of living is increasing.

Energy companies, for example, may perform well in an inflationary environment as they can raise their prices in line with inflation. Infrastructure companies such as those responsible for toll roads, or hospitals, may also do well. They often have long-term government contracts in place with payments linked to inflation, which encourages private-sector investment.

Generally speaking, cash would be the worst asset class to hold in a high inflationary environment. However, stocks would be a better choice. This is because a company’s revenue and earnings should grow at the same time as inflation. Companies usually pass rising costs to the consumer to maintain their profit margin.

The concern of rising inflation has recently surfaced as strong employment numbers have caused fears of wage growth. In January, the average hourly pay, for example, in the US jumped 2.9 percent in a year. This is the largest jump in 8 years.

Companies may increase the prices for goods and services in order to pay for these increased salaries. This element is causing concern for investors. Higher salaries for some can bring a higher cost of living.

So, what can you do, where to invest, which stock to buy in the period of inflations?

Oil Stocks

There is a positive connection between the price of oil and inflation. The consumer price index helps measure inflation in the economy by tracking a basket of goods and services by households. Energy costs in households are part of the consumer price index. When the oil prices increase, it directly affects the energy costs spent by consumers. This leads to an increase in the CPI index and then inflation. Oil stocks always do well in high inflation environments.

Utilities

Utilities are defensive stocks. People will need utilities even in a high inflation environment. When operating costs rise for energy companies, in the final instance the consumers will pay them.

So, the companies will maintain their profit margin. Consumers will have no choice. They have to pay for the newly inflated cost if they want to receive electricity, for example. Demand in utility companies will still be strong even in high inflation periods.

Healthcare as best stocks

Healthcare is also a defensive stock. They are considered safer investments as people will always need healthcare. Even when consumer budgets are poor. During the inflationary period, investors will sell out high-risk stocks. They will prefer to buy into low-risk stocks because these are considered safer. People will always need medicine and medical treatment. They will give priority in spending on healthcare as opposed to less crucial goods and services.

Gold Stocks

When investors notice high inflation in the economy they want to turn to safe-haven investments such as gold stocks.

Gold traditionally is an investment held during the economic instability. High inflation causes investors to want to safeguard their investments by buying gold stocks.

Of course, holding cash in bank accounts is a bad idea in a high inflation environment. Because the purchasing power of cash is eroded by inflation.

Basic goods/consumer staples

For instance, companies with higher energy costs from increased transportation costs or higher operating costs will pass these costs to the consumer. Good and services will become more expensive. Consumers will become more selectable when purchasing goods and services because they have less buying power. But, basic goods or consumer staples will still be in demand in a high inflation environment. Even if the costs increase, people will still buy bread and milk. Even if such companies increase the price of their goods, consumers will need to buy it. Consumers will not buy non-essential goods and services such as a new car or furniture. They will only spend what is necessary. That kind of company is a good opportunity.

During the period of inflation never invest in discretionary stocks.

Material Stocks

Basic materials companies are involved in the exploration, development, and processing of raw materials. Hence, many times target specific resources, such as gold, silver, and crude oil. This sector also includes companies that run refineries and plants to develop refined materials. The dividend yields within this sector are above average in comparison to the wider market.

If you’re looking to invest in dividend-paying basic materials stocks, you may also be interested in dividend-paying basic materials exchange-traded funds (ETFs). These funds offer a diversified dividend payment based on a basket of basic materials stock holdings.

What we want to show is that there is no solution to inflation, but there’s the reason for hope. And for profits and returns of course.

You might find these interesting too:

>>> Cryptocurrencies a Powerful Tool Against Hyperinflation?

>>> Are we in an overpriced market?

>>> How to improve risk management in trading?

>>> How to trade stocks during recession

>>> How to Find a Stock Worth Trading?

14th January 2019
Alexandria Ocasio-Cortez – is she right?

2 min read

Alexandria Ocasio-Cortez, who just took her House seat to represent the Bronx, has sparked headlines by suggesting tax rates as high as 70 percent to finance a “Green New Deal.”

Alexandria Ocasio-Cortez, said in an interview with Anderson Cooper on Sunday’s 60 Minutes, “There’s an element where, yeah, people are going to have to start paying their fair share in taxes,” she said. “Once you get to the tippy-tops, on your 10-millionth dollar, sometimes you see tax rates as high as 60% or 70%. That doesn’t mean all $10 million are taxed at an extremely high rate. But it means that as you climb up this ladder, you should be contributing more.”

On Friday morning, Politico reported that “exasperated” Democratic leaders on the Hill were striving to control Alexandria Ocasio-Cortez, U.S. Congresswoman and Bronx-native.

Alexandria Ocasio-Cortez proposed higher tax rate

She proposed a higher tax on the super-wealthy as part of a plan to finance the Green New Deal program.

AOC is proposing to lift the top marginal tax rate to 70 percent on incomes starting at $10 million. This idea has drawn both praise and mockery from the whole the political spectrum.

The opponents’ argument is that high taxes can make people work less. For example, if a well-to-do person takes home only $5,000 per hour instead of $7,000, he might cut back on the number of hours he works. But in real life, the effect is minimal.

Truth is that higher taxes are unlikely to reduce incentives, as the incentives to work are governed by the marginal utility of lost or gained income. Simply put when the wage of someone earning $22.000 per year can go up or down by $1.000 that person is well incentivized to make a decision about cutting back work hours. But when a person earning $10 mill a year, $1.000 of lost or gained income makes no change of the standard of living.

In support of this thesis, the Nobel Prize-winning Paul Krugman speaks.

Paul Krugman, in full Paul Robin Krugman, (born February 28, 1953, Albany, New York, U.S.), American economist and journalist who received the 2008 Nobel Prize for Economics for his work in economic geography and in identifying international trade patterns.

A few days ago he asked one simple question in his column for the New York Times:

“What does Alexandria Ocasio-Cortez know about tax policy?’‘

And he gave the answer:

”A lot.”

Detractors try to discredit this young woman by publishing allegedly, compromising photos and videos. AOC was dancing in college. What?

That’s the right’s hysterics! Also, some of them try to show that her policy is insane.

Paul Krugman wrote:

”The controversy of the moment involves AOC’s advocacy of a tax rate of 70-80 percent on very high incomes, which is obviously crazy, right? I mean, who thinks that makes sense? Only ignorant people like … um, Peter Diamond, Nobel laureate in economics and arguably the world’s leading expert on public finance. (Although Republicans blocked him from an appointment to the Federal Reserve Board with claims that he was unqualified. Really.) And it’s a policy nobody has ever implemented, aside from … the United States, for 35 years after World War II — including the most successful period of economic growth in our history.”

And Krugman added:

“A policy that makes the rich a bit poorer will affect only a handful of people, and will barely affect their life satisfaction since they will still be able to buy whatever they want.”

and

“In other words, tax policy toward the rich should have nothing to do with the interests of the rich, per se, but should only be concerned with how incentive effects change the behavior of the rich, and how this affects the rest of the population.”

Alexandria Ocasio-Cortez belongs to millennials generation

Almost half of the millennials say they prefer socialism to capitalism. What do they mean?

“My policies most closely resemble what we see in the UK, in Norway, in Finland, in Sweden,” Alexandria Ocasio-Cortez told “60 Minutes.”

On the other side, critics of high taxes claim the policy stifles economic growth by reducing the incentive for people to work. But Sweden’s employment rate is 77.5%, beating the U.S.’s 71%. In terms of economic growth this decade, expanding 2.7% a year in Nordic countries, on average, compared with 2.2% for the U.S.

For a real-world example, critics and fans alike should look to Sweden. This Nordic country has a marginal tax rate of 69.7% on salaries above $79,000. That’s almost 30 percents higher than in the U.S.

It is fantastic how many people don’t understand progressive taxation and marginal rates.

YOU WOULD LIKE TO READ THIS: Embarrassingly algorithms make fails more often than you expect.

Most interesting, it shows how few people understand that without progressive tax, you don’t get the infrastructure which allows people and businesses to prosper.

On the other side, some do.

Soak the rich. They should be happy we are not moving for a wealth tax.
Indeed. High marginal tax rates or guillotines. Seems like an easy choice for me.

So, we can say that Ocasio-Cortez’s tax plan isn’t radical at all.

And it certainly won’t damage the economy in any significant way. But will the plan to yield a bounty of tax revenue for a Green New Deal or other major spending programs?

This question is more about maximizing revenues than about the marginal rates.

Krugman pointed:

“Or to put it a bit more succinctly, when taxing the rich, all we should care about is how much revenue we raise. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue.”

Wealthy people have eye-popping incomes. But there really aren’t that many of them.

The amount of money the tax would raise would yield roughly $72 billion a year. That would increase federal personal income tax revenue by about 3.9%. It would certainly not be nearly enough to pay for Ocasio-Cortez’s Green New Deal.

Chart: The Balance Source: The Office of Management and Budget

But the point is, why wealthy people don’t like to share or, more important, to invest in their country’s progress.

Survey shows

According to a Pew Research Center survey conducted Aug. 15-21 among 1,893 adults, more Americans say tax rates on corporations and higher-income households should be raised rather than lowered.

The result is: 24% say taxes on incomes over $250,000 should be reduced; 43% say they should be raised, while 29% favor keeping them the same as they are currently.

According to the same survey, majorities of Democrats and Democrat-leaning independents favor raising tax rates on both corporations (69%) and high incomes (57%), while Republicans are more divided.

YOU WOULD LIKE TO READ THIS: Traders Paradise wants to present you how rich is this world of scammers.

But while 70% of liberal Democrats say tax rates on household incomes over $250,000 should be raised, fewer than half of conservative and moderate Democrats (46%) say the same.

The bottom line

Historically, America used to have very high tax rates on the rich, even higher than AOC is proposing. The highest growth rate period was when the top marginal tax rate was 90%. That was the golden era of the post-WWII U.S. economy.

Let’s conclude this article with Krugman’s quote:

“Well, on the tax issue she’s just saying what good economists say; and she definitely knows more economics than almost everyone in the G.O.P. caucus, not least because she doesn’t ‘know’ things that aren’t true.”

Risk Disclosure (read carefully!)

13th January 2019
The algorithms make fails

Algorithmic errors that could cost us a lot. Embarrassingly algorithms make fails more often than you expect.

3 min read

Yes, algorithms make fails. Technology is not just for geeks, but for all of us. That’s a lot of people. Only a few companies such as Apple, Amazon, Microsoft, and Google have control over our wallet.

Do they make decisions by themselves or it is an algorithm involved in the whole process that helps them to make important decisions?

Big companies increasingly rely on algorithms. It doesn’t always work out.

Vignettes that tell tales of companies pushing their technologies forward, ignoring conventional wisdom and social norms fill modern history.

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But what happens in today’s modern machine learning, AI-driven world when the algorithms fail?

What happens when the machine isn’t offering advice, but provide a decision? And do it wrong. What to do when the machines are wrong? Who’s liable? Does liability now move from the user to the provider of solutions?

Social media relies on algorithms to match their users with content that might interest them.

But what happens when that process goes messy? When algorithms make fails?

Over the past several years, there have been some serious fails with algorithms. Algos are the formulas or sets of rules used in digital decision-making processes. Now, the question is, do we put too much trust in the digital systems.

There’s one clear standout: the algorithms making the automated decisions that shape our online experiences require more human oversight.

A perfect example is the Facebook News Feed. No one knows how it works that some of your posts show up on some people’s News Feeds or not, but Facebook does.

The first case in a string of incidents involved Facebook’s advertising back end. After it was revealed that people who bought ads on the social network were able to target them at self-described anti-Semites.

Disturbingly, the social media’s ad-targeting tool allowed companies to show ads specifically to people whose Facebook profiles used words like “Jew hater” or “How to burn Jews.”

The website paid $30 for an ad that targets an audience that would respond positively to things like “why Jews ruin the world” and “Hitler did nothing wrong.”

It was approved within 15 minutes.

But Facebook’s racist ad-targeting didn’t cause enough for concern.

Instagram was caught using a post that included a rape threat to promote itself.

After a female Guardian reporter received a threatening email, “I will rape you before I kill you, you filthy whore!” she took a screen grab of the message and posted it to her Instagram account. The image-sharing platform then turned the screenshot into an advertisement, targeted to her friends and family members.

Scary and unethical. But it’s an algorithm that makes fails.

Try to tell that to the people that were targeted.

And, how about Amazon showing you related books? Related searches on Google? All of these are closely guarded secrets that do a lot of work for the company and can have a big impact on your life.

It’s logical to ask ourselves, what are the ethics of liability, and who will be responsible if and when algorithms take over?

Human beings have an explanation, no matter how imperfectly, why they took the actions that they did. Simple rule-based computer programs leave a trail. But the cognitive systems cannot explain or justify their decisions.

YOU WOULD LIKE TO READ: Artificial intelligence and machine learning we can apply to the financial markets

For example, why did the autonomous vehicle behave the way it did when its brakes failed?

Who is responsible when it is hacked?

Will data companies need insurance coverage for forwarding forecasts or will the usual legalese in marketing and delivery footnotes suffice?

Will they need to advise customers that they should not rely, for business purposes, on the expensive systems they have just purchased?

There are so many questions, but we want to point some algo fails from the recent past.

Algorithms aren’t perfect.

Algo fails and some fail spectacularly. Speaking about social media, a small glitch can turn into a PR nightmare real quick. It’s rarely malicious. This is something that the New York Times calls “Frankenstein Moments.” The situation where the creature someone created turns into a monster.

There are so many examples of how the algorithms make fails.

Everyone who has the profile on Facebook, with no doubt can see its end-of-year, algorithm-generated videos with highlights from the last 12 months.

This example happened in 2014. One father saw a picture of his late daughter. Another man saw snapshots of his home in flames. Other examples show people seeing their late pets, urns full of a parent’s ashes, and deceased friends. By 2015, Facebook promised to filter out sad memories.

The truth is that most of the algorithms fail are far from fatal.

But the world of self-driving cars brings in a whole new level of danger. That’s already happened at least once. A Tesla owner on a Florida highway used the semi-autonomous mode (Autopilot) and crashed into a tractor-trailer that cut him off.

Yes, Tesla quickly issued upgrades. But we have to ask, was it really the Autopilot mode fault? The National Highway Traffic Safety Administration says maybe not since the system requires the driver to stay alert for problems. Now, Tesla prevents Autopilot from even being engaged if the driver doesn’t respond to visual cues first.

One of the examples is the case from Twitter.

There is another example of algorithms make fails. A couple of years ago, chatbots were supposed to replace customer service reps. The aim was to make the online world a chatty place to get info.

Microsoft responded in March 2016 by promoting an AI named Tay. It should provide that people, specifically 18- to 24-year-olds, may interact with on Twitter. Tay, in turn, would make public tweets for the masses.

But in less than 24 hours, Tay became a full-blown racist. She learned from the foul-mouthed masses, obviously.

Microsoft pulled Tay down instantly. She returned as a new AI named Zo in December 2016. But now with “strong checks and balances in place to protect her from exploitation.”

The social media companies are not the only ones afflicted by these algorithms fails. It seems that Amazon’s recommendation engine may have been helping people buy bomb-making ingredients together.

The online retailer’s “frequently bought together” feature might suggest you purchase sugar after you’ve put an order of powder. But, when users buy household items used in homemade bomb building, the site suggested they might be interested in buying other bomb ingredients.

What do these mishaps have to do with algorithms?

The common element in all the algorithms fails is that the decision-making was done by machines. It highlights the problems that can arise when major tech firms rely so heavily on automated systems.

There are legal issues here. And there are ethic issues. There might be basic training in “use the algorithm as input” but the final decision is a human one. And one day, some human is going to make the wrong “human decision.” When an algorithm says “no” and a person cancel it, we all know that the shit is going to hit the fan.

The tide is changing in this area. It comes with increased demands for algorithmic transparency and bigger human involvement. It is necessary to avoid the problematic outcomes we’ve seen in recent years.

But real change is going to require a philosophical shift.

The bottom line

The companies have a focus on growth and scaling. And to fit the massive sizes, they have turned to algorithms. But, algorithms make fails, as we can see.

But algorithms do not exist in isolation. As long as we rely solely on algorithmic oversight of things like ad targeting, ad placement and suggested purchases, we’ll see more of these disturbing scenarios. While algorithms might be good at managing decision-making on a massive scale, they lack the human understanding of context and gradation. And ethic too.

Risk Disclosure (read carefully!)

11th January 2019
Leading Stock Exchanges In The World
3 min read

There are two basic types of stock markets:
1. physical location exchanges, which include the New York Stock Exchange (NYSE), and
2. electronic dealer-based markets that include the Nasdaq stock market, the less formal over-the-counter market, and the recently developed electronic communications networks (ECNs)
They are the world’s two leading stock exchanges.

A Stock market or exchange is a facility where people can buy or sell stocks, bonds, and securities through brokers and traders. Most often the traditional Exchange floor is where the selling and buying take place.

However, modern trading is now also done through electronic networks for its speed and lesser cost.

But there is the place where we can be faced with some problems.

The dark pools, electronic communication networks, and alternative trading systems are also using as trading locales.
Buyers and sellers are stock investors who may profit or lose capital depending on whether there is a bull or bear market, respectively. The stock market is usually preferred by investors for transparency.

As of April 2018, the New York Stock Exchange ranked as the largest by market capitalization with a value of tradable shares amounting to 23.14 trillion U.S. dollars.

Let’s say several words about each type of markets.

The physical location exchanges are formal organizations. They have tangible, physical locations and trading in designated securities.

There are exchanges for stocks, bonds, commodities, futures, and options.

The physical location exchanges are auction markets with securities going to the highest bidder. Buyers and sellers place orders with their brokers who then execute those orders by matching buyers and sellers.

Although specialists assist in providing continuity to the markets.

The electronic dealer-based market is consists of hundreds of brokers and dealers who are connected electronically by telephones and computers.

The dealer-based market facilitates the trading of securities that are not listed on a physical location exchange.

A dealer market includes all facilities to conduct security transactions not made on the physical location exchanges.

These facilities include:
1. the relatively few dealers who hold inventories of these securities and who are said to make a market in these securities;
2. the thousands of brokers who act as agents in bringing the dealers together with investors;
3. The computers, and networks that provide a communication link between dealers and brokers. Dealers continuously post a price at which they are willing to buy the stock (the bid price. Also, a price at which they are willing to sell the stock (the ask price). The ask price is always higher than the bid price. The difference (or “bid-ask spread”) represents the dealer’s markup or profit.
More about the leading stock exchanges

At the end of April 2018, the NYSE is the largest stock exchange operator by market capitalization. The total value of tradable shares amounting to 23.14 trillion U.S. dollars.

That is three times larger than the second largest operator, NASDAQ.

NASDAQ was the first stock market to start trading online. But NYSE is the first global equities exchange.

NYSE exchange has successfully grown into the powerhouse that it is today, due to a series of international mergers. The

NYSE merged with Euronext. That was the first integrated cross-border exchange. Now, NYSE trades almost twice as many foreign companies than NASDAQ.

The interesting fact is that the world’s two largest stock exchanges lie only a few minutes apart in New York City, United States.
The New York Stock Exchange founded on May 17, 1792, is the world’s biggest stock exchange in trade value and has a capitalization of $19.223 Trillion USD. Notable market events have included the 1929 Wall Street Crash, the 1987 Black Tuesday, and the 1997 mini-crash.

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The second one on this the list is the tech-heavy NASDAQ. It is founded on February 4, 1971, also in New York, with a market capitalization of $6.831 Trillion. It is owned by NASDAQ, Inc, as the first exchange to use the electronic system in trading.

The other leading stock exchanges are the following:

Third on the list is the London Stock Exchange Group in the United Kingdom and Italy founded in 1801 and has a capitalization of $6.187 Trillion.

Notable market events have included the 2007 acquisition of Borsa Italiana, the 2009 acquisition of Millennium Information Technologies, Ltd., and the 2011 merger with TMX Group.

Asian leading stock exchanges

There is also the Japan Exchange Group in Japan founded on January 1, 2013, with a market capitalization of $4.485 Trillion.

It was formed with the merger of the Osaka Securities Stock Exchange and the Tokyo Stock Exchange. Notable market events have included the 2013 JPX was launched.

Fifth on the list can be the Shanghai Stock Exchange in China re-established on November 26, 1990, after a 41-year hiatus. With a market capitalization of $3.986 Trillion.

Memorable market events have included the 1891 founding of the first Chinese stock exchange. At the year 1904 registering of it as Shanghai Stock Exchange. In 1941 it stopped operations due to Japanese occupation and the 1949 closing during the Chinese Revolution.

Also, there is the Hong Kong Stock Exchange in Hong Kong (SAR China founded in 1891 with a market capitalization of $3.325 Trillion. It is owned by Hong Kong Exchanges and Clearing.

In 1914 renaming of it as the Hong Kong Stock Exchange, and the 2000 HK Exchanges and Clearing acquisition of the HK Stock Exchange.

And the Shenzhen Stock Exchange in China founded on December 1, 1990, with a market capitalization of $2.285 Trillion. It also owns a tech exchange, ChiNext, founded on October 23rd, 2009.

Canadian leading stock exchanges

Also, TMX Group in Canada founded on May 1, 2008, with a market capitalization of $1.939 Trillion.

It also owns the Montreal Exchange, NGX, TSX Alpha Exchange, and several other exchanges. The TMX Group is founded after the acquisition of Montreal Exchange by TSX Group.

European leading stock exchanges

Of course, the first is the London Stock Exchange Group. But, there are also the Euronext, United Kingdom, Belgium, Portugal, France, and the Netherlands with a market capitalization of $3.321 Trillion.

Notable market events have included the 2007 merger with NYSE, the 2013 International Exchange acquisition of NYSE Euronext, and the 2014 Euronext IPO.

The Tenth is the Deutsche Borse AG in Germany came in 1992 with a market capitalization of $1.762 Trillion. It runs the Frankfurt Stock Exchange and the Scoach. It is located in Frankfurt.

You would also like to know more about the Australian Stock Market

The bottom line

The stock exchanges in developed countries, as well as those exchanges in developing countries, serve as measurements of where the national economy is headed.

YOU WOULD LIKE TO READ How to research and choose stock?

Moreover, the largest stock exchanges play an important part in the world economy. The stock exchanges are A dealer market includes all facilities to conduct security transactions not made on the physical location exchanges. for the economic development of many developing countries.

In developing countries, there are also stock exchanges.

And the stock exchanges in the developed countries are mature and are the major backbones of that country’s economy.

Financial market growth equals higher standards of living as well as create more jobs. Mature financial markets support funding international projects. This funding mitigates poverty.

Risk Disclosure (read carefully!)
10th January 2019
Why you should not invest in bitcoin under any circumstances

2 min read

Since, yet un-identified, Satoshi Nakamoto published the bitcoin white paper, back in 2008 his brain-child has traveled the road of both successes and tribulations. From the all-time high price of $19,666 to being singled out as a vehicle for the expansion of criminal empires.

But why is that? Why Bitcoin’s price so volatile?

Through all that time it has attracted both adulations of proponents and critique of detractors.

The ups of bitcoin have been high and fuelled the growth of wealth of the number of investors. But its lows and flaws have been such that they seem like a deal-breaker for many.

Before you commit your money to an investment, you must as a rule of thumb first investigate what is the thing they are pouring their money in.

One bitcoin is in simplest terms an encrypted part of the list of all ownership changes of all bitcoins in circulation.

Bitcoin has no intrinsic value

The proponents of it claim that it is nothing similar to fiat currencies.

But it has no intrinsic value to draw. It functions as a store of value from the consensus of its user. That is one of three defining characteristics of fiat currencies.

In other words, the bitcoin is currency only because miners accept it as payment for encrypting the transactions. Same as the US dollar is the currency of the USA because the US Treasury and IRS will accept only dollars as payment of taxes.

This point of contention is the obvious example of myopic attitudes of its proponents.

They often make outlandish claims that it could cure all ills and ailments of modern civilization. From hunger in Southeast Asia to predatory practices of large financial institutions in North America.

The reality of bitcoin is much less rosy. In truth, it just exacerbates some of the worst economic inequalities which are plaguing human civilizations for ages.

In other words – Bitcoin doesn’t have real value, but we do know that it’s worth more than $0. That’s why you shouldn’t invest in bitcoin.

The first obvious problem with bitcoin

As time passes the difficulty rate of mining is going evermore up. It becomes more and more expensive to enter the mining game for your average Joe.

Because the availability of bitcoin supply is finite, this also spells ever-growing price of bitcoins. That is certain to price-out your same average Joe from investing in trade of it.

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Thus, as a source of income and wealth, bitcoin has become inaccessible to anyone but the rich and powerful.

Because of the underlying technology of bitcoin, the only way to invest in it is to invest in trading.

Many critics, such as Paul Krugman, compare it with the reimplementation of the gold standard because of finite supply.

Compared to bitcoin gold has two saving graces.

First, gold is also used in many industries and medicine. Thus, in case of a market crash, it can still be sold for a certain price as raw material.

While contrary, bitcoins cannot.

Second, if investing in gold mining, i.e. mining equipment, such investment, in the case of depletion of gold deposits, could be repurposed for other activities.

On the other hand bitcoin mining equipment, due to technological advancements, becomes obsolete in two-year cycles. Hence, it can become thousands of dollars paid for a paperweight.

Bitcoin is also very susceptible to speculative bubbles.

Do you remember the incidents since 2013, when a single person managed to manipulate the price to rise from $150 to almost $1,000? And many subsequent price manipulation?

That showed that the price can be easily inflated leading to financial losses to many and gains for few.

After the bitcoin crash from its peak, many economists have spoken loudly about the speculative nature of it.

Some even went as far as saying that scammers and charlatans had exploited retail investors’ fear of missing out. That combined with a relative lack of knowledge about cryptocurrencies to fuel the bubble and scam the investors.

Proponents of Bitcoin point out that it is anonymous and not controlled by any central body.

But these are not features, but built in bugs. Because there is no central authority which governs the authentication of ownership, bitcoin is not only susceptible to theft and fraud, such as the infamous Mt Gox case.

But also to hacking attacks, such as the recent 51-percent attack on Ethereum Cash which resulted in many exchanges blocking it for trade and theft of around $450,000 from legitimate owners.

If one individual or group of miners has control of more than half the mining capacity, they can rewrite the whole ledger of historical transactions of bitcoins, the blockchain. And hence, very quickly become owners of any bitcoin currently in circulation.

Does it mean that actually, we are investing in their wealth instead of in our own? This can be a very strong reason why you shouldn’t invest in bitcoin.

Though this scenario is very unlikely in the case of bitcoin, it is not impossible.

Only the willingness of people to pay for it defines both the highest and lowest price of bitcoin. Also, there are the aggressive efforts of its proponents to advertise it as the cure for all the ills. That’s why many notable economists have gone as far to call it affinity fraud and that is for some people the reason why you shouldn’t invest in bitcoin.

And any potential investor needs to be wary of how much growth of bitcoin price is fuelled by news of its growth.

And the fact that cryptocurrency related exchange traded funds has the highest industry-wide premiums and expenses ratios.

In some cases going as high as 50% and 2%, respectively.

For the end, it must be noted that many proponents falsely proclaim that bitcoin is the solution for the alleged problem of evil central banks steals money from people by debt creation and similar ways.

In reality, because of the non-existent central regulatory body, bitcoins are by design unsafe and almost fraudulent in nature.

Because they are assets similar to currency, it is almost impossible to distinguish them from reimplementation of the gold standard.

And the fact is that techniques of financial and cryptographic attacks do not get less, but more effective with time.

The bottom line

In essence, Bitcoin is taking the financial system some hundred and fifty years back in time while removing all regulatory protections that were evolved in that time.

It was a division of such regulatory protections in a Red Queen’s race of a sort, with equal overall gains but very small relative ones.

Some say that only automatic trading software (like this) can trade successfully in the Bitcoin industry, and it’s only for a limited time.

So without them, any investor is absolutely at mercy of very wealthy and unscrupulous actors, who historically had a tendency to both manipulate bitcoin price and even outright steal them. Do you need a stronger reason why you shouldn’t invest in bitcoin?

Risk Disclosure (read carefully!)

9th January 2019
The minimum amount of money you need to start investing in the stock market

2 min read

There are no rules that tell the minimum or maximum amount of money you need to start investing.

It may be less than you think.

Let’s say you have $1000 aside.

Is that amount enough to enter the world of stock investing?

Yes. Even $5 is enough to start investing.

But if you can invest more it is better. For you.

But before you jump head first into the world of stocks and bonds, there are a few things you need to consider.

One of the biggest considerations for investors with a minimal amount of funds is how to go about investing.

Here are some questions to answer before hitting the “buy” button.

First of all, what are your goals?

You have to define what you want your investments to accomplish. It will help guide you in the right direction. That’s advice from investors and experts.

What does it mean? You have to create a kind of road map. Like you are traveling to some unknown area and you need Google maps to show you the road.

So, let’s go back to the main question.

Do you want to save for retirement? For a new home? Or for a kids college fund? The answer will determine how risky you want to be with your money.

There are some very low priced stocks available.

You can begin investing in the stock market with a lot less money than many people think.

Here’s how much you need.

The minimum amount of money you need to open an account

Some online discount trading platforms have account minimum requirements. Minimums for several popular ones range from as little as $0 to $2,500.

It is for the self-directed account.

If you want to open a traditional full-service, broker-assisted account, you will need several thousand dollars.

However, all financial institutions have minimum deposit requirements. In other words, they won’t accept your account application unless you deposit a certain amount of money. With a sum as small as $1,000, some firms won’t allow you to open an account.

If you really want to start with the small, minimum amount of money you can use an app.

They will allow you to begin investing with just $5. Some apps offer you a choice of several funds to invest in. You basically end up owning part of the stock.

When you get to $5, the app invests that money for you into a diversified portfolio. In essence, it is a mix of stocks and bonds.

The other question is the minimum amount of money you need to buy stocks.

The minimum amount of money to buy stocks

If you want to buy a stock, you’ll need enough money to buy one or more shares of that stock. And you have to add the cost of brokerage commission.

Yes, we know you would like to start your investing with little money. But you must be aware. Stocks trading below $5 per share can be extremely speculative and dangerous. Usually, it is not worth dabbling with them.

Truth is that a single share can trade from pennies for some companies to hundreds of thousands of dollars for an A-class share.

But many companies’ shares cost, say, between $10 and $100 individually.

There are some very low priced stocks available. But before investing in the share market you should know some basic financial ratios.

Check valuation of stock’s price

It is equally important to buy shares at the right price points.

To earn money in share market, buying stocks at its right price is necessary.
What does it mean by the right price?

Estimating the intrinsic value of stocks requires a special skill. It isn’t quite as simple as it sounds.

There are several methods you can use to estimate the intrinsic value of stocks. Different methods will give different values of intrinsic value.

This itself is enough proof that how complicated it is to estimate the intrinsic value of stocks.

People who have the real art of estimating the right intrinsic value of stocks has become Warren Buffett’s.

You have to use financial ratios to value stocks

You can start by checking how the stock price has behaved in the last 2-3 years.

Suppose in the year 2012 the stock price was $35. After three years it has climbed to $50. That means the company has a growing tendency.

But it is also important to check if the stock price has touched overvalued levels?

You can know this in a variety of ways.

Start by comparing the stock price with its book value. If the Price to Book Value ratio is less than 1.5, we can say that stock has not touched overvalued levels.

If the book value of a stock is $100 and it is the market price is $160, it means its P/B ratio is 1.6.

This is a hint that stock price has touched its overvalued levels.

The amount of money a broker requires to open an account is the answer to the minimum amount. For a host of reasons consider opening an account with one that has a local office.

Here is a more expansive look at things to consider when beginning investing.

If you want to begin investing, consider reviewing at least some of the major tenets of personal finance.

For example a multiple-month living expense safety net and paying off high-interest debt, e.g., credit cards, before beginning investing.

You don’t have to invest all amount at once or in one stock. Rather diversify your money in different companies and different time of purchasing stocks.

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How to collect the minimum amount of money

Begin to set aside a sufficient amount of money to open a brokerage account. Consider $1,000 or more as a minimum amount of money to do so. Lesser amounts, e.g., $100, 500, are insufficient to invest effectively.

Investing is a lifelong learning experience.

Consider investing only the money you can afford to lose.

Consider investing in stocks as part of an overall strategy that may include participation in employee retirement plans, payroll savings plans, and IRAs. There may be tax advantages to be had.

You have to recognize the differences in philosophies and approaches to investing versus trading.

Investing means long-term, but trading is short-term.

Be aware that trading stocks as a novice are most likely a recipe for disaster. Day trading is not recommended.

The literature is filled with evidence that the vast majority of those new to the market quickly lose significant money.

Do take the time to read and study first.

Risk Disclosure (read carefully!)

9th January 2019
Forex Trading – Simple Tricks to Master it

4 min read

Forex trading could lead to high returns of investment. This article will explain how

Forex trading – the CONCEPT:

Forex represents the foreign exchange/currency market. The word forex itself is made of two English words: foreign and exchange and signifies the purchase of currencies from different countries.

Unlike other stock exchanges, Forex does not have its physical seat in a city. It exists in an electronic network consisting of large financial institutions.

Also unlike other financial assets – Currency needs to be at a balance point!

Why Forex industry has to be at a balance point (UNLIKE STOCKS for example)?

Because let’s think about a country, like the USA. Its currency is USD and you can invest your money on USD comparing, say, Euro. So if the USD is increased (or Euro is decreased) you gain a profit.

But inside the USA – the interests are different.

Forex trading is an industry of importers and industry of exporters.

Let’s say I’m an importer that lives in the USA, and I import apples from Mexico. And just for the explanation, we say that 1USD (US Dollar) = 2 MXN (Mexico’s currency).

Now I make a deal with my fellow Mexican that I buy apples for the worth of 2 million MXN (and it costs me 1 million USD).

Now, if the USD will get stronger, and now we say that 1 USD = 3 MXN.

See? I’m losing money because I could have bought my goods for a lot more money at the same price I spend (1 million Dollars).

But let’s say it’s the opposite – I’m the exporter. My fellow Mexican buy from me apples at the same original deal. This means he buys from me at 2 million MXN and I get 1 million Dollar. But then, the Dollar is rising and now it’s worth 1 USD = 3 MXN. He still buys at 2 million, right? So now those 2 million worth approx. 0.67 million USD. Now I’m LOSING money because of MY OWN currency worth more. That’s Forex. It has to have a balance point because if not we’ll have our own people losing.

Today, Forex is the largest financial market, which has a daily turnover of around $ 5.5 trillion a day. You can complete this whole process online.

The term currency market means the sale of one currency with the simultaneous purchase of the other.

As currency pairs are traded, in order to profit from the shift in the exchange rate, you need to buy the currency that you think will strengthen and sell the other.

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There is no need to wait for a growing market to profit. At any moment, one currency will strengthen in relation to the other.

The Forex market is constantly creating opportunities for investment.

Since nothing concrete and tangible anything is bought and sold, this type of trade can be a little confusing. You should think that you are buying a part of the value of a country.

If you buy a Japanese yen, you are buying a part of the Japanese economy that is in direct correlation with what the market thinks about the current and future health of the Japanese economy.

Generally, the established exchange rate of the two currencies is a ratio that reflects the state of one economy in relation to the state of another economy (the state, the currency).

Forex is opened 24 hours a day, except on weekends, so that Sunday trading starts on Sunday from 21:15 CET and runs until Friday at 23:00 CET. During the day there are several time intervals that coincide with the working hours of the world’s largest stock markets.

Who trades on the FX market?

Forex traders can be classified into two groups, hedgers and speculators.

Hedgers: governments, companies (importers and exporters) and some investors who are exposed to exchange rate changes.

Speculators: This group, which includes banks, funds, corporations, and individuals, creates artificial pressure on the course in order to profit from variations or price movements.

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Basic terms of Forex trading

Pip – Represents a change in the ratio of the currency by one decimal. It is the smallest unit change course. Pip is the last decimal in a currency relationship

Stop and Limit – Orders – Often the trader wants to limit the loss in the position he has opened (in that case he sets the “stop” order). Or the trader wants to take profit at a certain level, which is acceptable to him/she (in this case he sets a “limit” order).

Long – Used for the purchase order

Short – Tension used for a sales order

Bid – Bid price

Ask – The price that is claimed

Buy – Shopping

Sell – Sale

Spread – The difference between the sale and purchase price

Chart – Graph

Timeframe – Time period

Leverage – Multiplies the amount of money you invest

Candlestick – Candlesticks show that emotion by visually representing the size of price moves with different colors. Red means the starting price was higher than the closing price at a certain time. Green means it ended higher than the starting point.

How to read candlestick graph: To every time period

Open – The price of an asset at the start of a time period
Close – The price of the same asset at the END of the same time period
High – The highest price the asset reached during that time period
Low – The lowest price the asset reached at the same time
Time period – Can be from 1 minute to one year

What is needed to trade on Forex?

Before you start trading the currency, you need to open an account with a Forex broker. Our recommendation is that before you decide on trading on Forex, open a demo account with one of the brokers.

You can use a trustworthy Forex broker.

So that through the use of the platform, you will be able to monitor market activities and learn more.

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Conditions for Success Forex trading

You must have a good knowledge of technical and fundamental analysis, as well as managing your account. You should also know the psychological aspect of the trade and that you are disciplined. Also, in Forex trading, you should learn about the country you’re betting on or against.

To be able to trade Forex successfully, there is a whole world of education, really extensive analysis. Also, the countless hours of tracking a very large number of relevant and potentially relevant information.

YOU WOULD LIKE TO READ How To Choose The Best Forex Program

All without any guarantee that the right decision will be made.

So once again, the investment rule has been confirmed: high risk must be taken to achieve high income.

Risk Disclosure (read carefully!)

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether
you can afford to take the high risk of losing your money.

8th January 2019
Forex Trading Program – How To Choose The Best
2 min read

Forex trading program must help you to raise your trading results to a higher level. How to choose the most useful Forex trading program can be very tricky.

Hence, we will talk about tools with which you can raise your trading results to a higher level. You will find out how to make the information more efficient, how not to forget anything, how to quickly learn and how to not spend too much time solving the simplest tasks that the trader faces daily.

Forex trading program – Forex Expert Advisor (FEA)

It is the Forex trading program for analyzing testing advisor results.

First, we will talk about programs that make it possible to better understand the results of testing advisor, Expert Advisor.

The Forex Expert Advisors program for the MetaTrader 4 platform, for example, is written in the MQL4 programming language. This programming language is specially developed for writing an “expert advisor” program.

Expert Advisors are very flexible pieces of software that can take any information into account that is available on the MetaTrader platform. They are written in their proprietary programming language called MetaQuotes Language Version 4.

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So, a trader can easily and simply use the program in his trading system, in online mode 24 hours a day.

If you are a beginner, you can think that trading with software programs is a sophisticated thing. However, it is not. Try to use FEA for a month, and for the trading system you’ve previously developed. It will be quite enough to get expert consultants experience.

Where do I get the FEA?

Well, there is more than enough choice on the Internet, but it’s best to seek advice from your consultants because they will have the best solution for you.

Forex trading program – SQ EA Analyzer

First of all, let’s emphasize that this Forex trading program is not free, it costs and is called QuantAnalyzer. However, there is a demo version that does not, of course, have some of the “most sophisticated” features. But allows a detailed analysis of the results of the adviser you received through the terminal, as well as the creation of portfolios from them. Also, the program enables various tests of stability and reliability.

They do have a visual interface. With StrategyQuant you run a generator for strategies, and it comes with some entry rules such as RSI7*MACD/MA13, or any other combination that it found.

StrategyQuant is one of many algorithmic trading software.

Algo trading is the only programmatic version of your strategy of trading. If you have a strategy, you can create your own EA or hire somebody to develop a strategy for you.

However, High-Frequency trading is the strategies which human could not perform or computer program perform better.

Forex trading program – Report Manager

This is a completely free trading program, with extremely simple features. In fact, this program can only combine several test files EA into one resulting file.

No additional parameters, no tests!

It is suitable for those who want to see the ultimate balance of adversarial work on all couples together or can serve as a quick test adviser for all tools!

Good, isn’t it?

Report Manager is the web-based application included with Reporting Services that handles all aspects of managing reports.
Why bother with using Report Manager?

The best answer is that those who develop reports may not have the necessary permissions to deploy all reports to the production server. When a report is ready for deployment, you may need to hand it off to a person who has the permissions to deploy to the production server and that person doesn’t want to use BIDS. Most admins are not developers and what they want is the ability to script out deployments or at least use a tool that isn’t developer-centric.

Report Manager provides the capability to deploy data sources and reports by using a simple browser-based interface.

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Information technology and management science staff members often are key partners with financial managers and financial analysts in the development and maintenance of management reporting systems.

In many cases, however, management reporting systems are constructed and maintained strictly using desktop computing.

They have built-in Excel spreadsheets and running on personal computers. Rather than programming in mainframe environments.

The development of management reporting systems often faces hurdles related to key analytical issues, such as:
- Internal transfer pricing methodologies
- The attribution of corporate overheads to individual products or clients
- Disaggregating changes in client assets into the separate impacts of changes in market prices (i.e., investment performance) and of net deposits and withdrawals
In most cases, these analytical challenges are amenable to multiple methods, each of which has drawbacks of its own, and is not demonstrably superior in all situations.

Forex trading program for manual testing strategies

We can say that it is generally accepted that traders in financial markets can be divided into two groups: supporters of good old-fashioned manual testing and amateurs – fans of automatic trading. However, although when traders know their trade strategies, they must first test by hand.

Luckily, for manual testing supporters, there is the Forex trading program that allows testing their systems on historical data.
Also, programs of this type work perfectly as simulators for the rapid development of trading skills.

Manual testing has to be exploratory. A lot of teams prefer to script manual testing so testers follow a set of steps and work their way through a set of tasks that are predefined for software testing. This misses the point of manual testing. If something could be written down or scripted in exact terms, it could be automated and belongs in the automated test suite.

Real-world use of the software will not be scripted, thus testers must be free to probe and break things without a script.
Software testers are always learning but we cannot always quantify it.

There are many aspects to software testing. It does not always involve using the product. It is not just about finding bugs. Testing can start around the requirements stage.

Thinking about what the product should do, where risks could be is all part of testing.

Forex Tester

This brilliant program is very similar to the MT4 terminal. It allows the manual test system to run. If you are just trading online – in that case, press a couple of buttons, place the commands and proceed further. In that case, you can stop, accelerate or slow down the timeline. At the end of the test, you will get the result of your store.

The only disadvantage of this program is the complexity of using copyright indicators.

The fact is, there are classic indicators, different graphical setting tools. But if you use an external indicator, you need to overwrite it in the programming language.

Another disadvantage is that this Forex trading program is not free – it costs about $ 100. But it isn’t too much.

How does it work?

Forex Tester simulates the Forex market with unequaled realism. You can test strategies and train your trading skills on years of data in just a few hours. This strategy tester works with the recorded price movement of the real Forex market. Like a recording of music, you can jump forward, pause or jump right to the interesting moments. You can go back to any point in time.

Also, you can restore all your open trades, trade history, and account balance in this simulation.

You can keep a trade journal and export your trade log for analysis on Excel or other programs.

There’s no need to rely on estimations.

One important note, amateurs have to rely on assumptions and believe what others tell them. Professionals, however, make their decisions based on facts. Forex Tester delivers the hard facts about your strategies. If a strategy is not profitable, you will find that out quickly with Forex Tester.

Remote Management Software

Nowadays, watching market movements over a tablet or phone is not at all difficult. These devices have enough memory and processing power to install special applications or use web accounts that are used by virtually all brokers.

Remote desktop software is really useful for lots of situations.

Generally, remotely accessing a computer requires that a piece of software be installed on the computer you want to connect to, called the host. Once that’s done, another computer or device with the right credentials, called the client, can connect to the host and control it.

Don’t let the technical aspects of remote desktop software scare you away. The better free remote access programs require nothing more than a few clicks to get started. No special computer knowledge required.

However, this is not always the most appropriate.

For example, sometimes you must have instant access to your home computer to disconnect automatic trading due to instability on the stock market. In this case, salvation lies in a program called TeamViewer.

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This Forex trading program is available both on PCs and on smartphones. You need to install the program on all your preferred devices and get something like a network of work machines with the ability to access each of them via your smartphone.

The bottom line

If you want to succeed in a tough business such as trade in financial markets, you will have to spend a lot of time, among other things. It increases the chances that you will finish the race successfully. For this very reason, we suggest you pay attention to the presented Forex trading program and consider them in order to choose the one that suits you best and with which you feel the most comfortable.

Risk Disclosure (read carefully!)
7th January 2019