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  • Forex is the area to focus on

    Forex is the area to focus on

    Forex Educational Series – Part 2

    6 min read

    Forex Trading Program - How To Choose The Best

    Trading Forex is the area to focus on

    by Hans Stam, A Forex trader

    The terminology of trading Forex

    When I first started showing interest in trading, I might have been where you are now, so I will go back a long way to put myself in that place again and try to help you.

    The first obvious attempt was going for stock trading and I didn’t have a clue what I was looking at.

    After I had done a course on stock trading I soon got stuck on terminology.

    Also, I figured out very quickly, stock trading was not for me.

    At the end of the course I was getting really good grades, but in real life that didn’t do much for me as I simply did not have the money to buy stocks in masses and get something of real value back. Back then I had to go to the bank and buy stocks, but the commissions were very high and it wasn’t really worth the effort.

    The other problem I had was I did not understand the language traders used, so in my writing, I will try to explain every step so you can follow this series with ease.

    First, I will try to explain trading to you, before going to set up an account and trading platform, as that is a totally different story.

    Options vs Forex

    When I figured out stock trading was not for me simply because I did not have the money, I soon found out about trading options.

    The big plus of trading options was that you didn’t actually buy the stocks, but you bought a contract to buy these stocks at a certain price.

    Think of it as getting an option to buy a house, it simply means the house is being taken off the market for a while because there is a potential buyer.

    Now I was able to trade at leverage. Instead of buying 100.000 shares hoping they would go up to sell them again against a profit, I could buy a contract to buy at current price and keep that option for say 3 months, if the price went up I could still buy these shares at the previous price and make an instant profit.

    Instead of actually buying and selling these stocks or commodities like oil etc. the put and call options that were being traded.

    The contracts were much cheaper than buying the actual stocks or commodities, but the negative to me was that if the stock went against the option, the option was worthless.

    Why would anyone buy a contract that would allow them to buy a stock at a higher price than they could at the current price? If that happened, the money to buy the option was gone.

    So back to Forex. Again, forex trading is being done using leverage. But this time, although you may lose some of your money, it’s always worth something.

    Closing out your position (your trade) will still have some value even if the other currency went down. That’s when I knew, Forex will be the area to focus on. 

    Bull and Bear Market

    You might have seen this before, and you probably have.

    Think of the bull of Wall Street, or the phrase bullish or bearish markets.

    Maybe it seems irrelevant to write about this, but once you are looking at a chart, it’s good to see of the Pairs go up or down.

    When the market is heading upwards, we call that a bullish market. When it’s heading down, it’s called a bearish market.

    The way to see this clearly, think of it like a bull that takes you on his horns and throws you up in the air, as where the claw of a bear crashes you down.

    Explaining Pairs

    Forex is the area to focus on 2

    In our previous example, I used the pair EUR/USD.

    But how about Base and counter currency?

    In this example, it’s simple to understand you can buy the Euro against the Dollar.

    But what if I want to buy the Dollar against the Euro, I don’t see that pair anywhere?

    That’s correct, so instead of buying the Dollar, you will now Sell the Base currency, the Euro.

    That also explains the next bit of terminology, Buying the Euro (EUR/USD) now becomes going LONG, and buying the Dollar now becomes going SHORT on the pair EUR/USD.

    Simply put, Long is buying, and Short is selling the Euro against the Dollar pair (Where in fact you are buying the Dollar as the counter Currency of the pair)

    Analyzing the market

    As you may have read in the previous article, there is a difference between trading and gambling.

    So what makes the difference? And why are traders not agreeing with each other on where prices will go?

    The final judge is the market itself, and sometimes you are right and sometimes you’re wrong.

    To make sure you are more right than wrong, you would want to try to analyze what the market is going to do based upon what other people think.

    Although, there are analyses of the market, even so, if everyone would disagree with the projections and still went another way, the market as the judge would rule that the price would head towards supply and demand.

    Unfortunately, that doesn’t happen often in real life. If you’re interested in reading more about this, Google George Soros and see what he did.

    The majority of traders will try to analyze based upon two different types of analyses, Fundamental or Technical.

    Knowing that other traders have the same information, they will very likely try to figure out what most others decide to do based on the presented information and go along with the flow.

    Fundamental vs Technical in Forex

    Fundamental analyses, in a nutshell, are more or less analyzing where the market will go based upon the news and events that happen around the world.

    It’s possible the influence of these analyses are very high, high enough to even close the markets temporarily. Think of an event like 9-11 or a war for example.

    More common in this type of analyses are reports that are presented publicly like unemployment rates or elections etc.

    Whatever the news is, usually this is affecting the market greatly and prices will go up or down rapidly, sometimes in seconds.

    Once the move happens, you probably are too late already because of the speed, so many will preset orders in case the market goes up or down fast, others will already have the trade open based upon their expectations of what will happen with certain rates like unemployment.

    Technical trading Forex

    …is something completely different.

    When trading based upon technical indicators, many will look for patterns in all kinds of shapes and sizes.

    There are many tools to use, think of moving average price waves based on the last X numbers of price values.
    Others are Elliott waves or Fibonacci for example.

    Also, support and resistance levels are used a lot. When a price is trying to go upwards, it often happens it will try to break a ceiling, bounce back, and have another attempt to breakthrough. Once that happens often, a resistance level is forming. Other traders will see that too, and will most likely trigger a lot of buying orders once that level is broken which is a self-fulfilling prophecy as it will go up because others will buy in that direction which supports the move.

    The support level works the same, the difference here is that it supports the lower side of a move.

    So the difference between Gambling and Trading basically is that you can try to analyze what most traders will do and go along with that direction.

    If you made it this far, you really seem dedicated to learning! Well done!

    When you need mentorship, please contact me by clicking here.

    Is there another way?

    In short, Yes.

    We’ve been over Emotions, we’ve been over Analyses. So basically I need to be a robot?

    No, you don’t, you can be a vibrant human being and still get very good results.

    In fact, it doesn’t have to be difficult at all, but it does require a bit of money to do it right.

    I’ll say it out loud, it will take between $5.000 – $10.000 to get started, so a few hundred doesn’t really get you very far with this option.

    If you want to know more about this option, please contact me here and I’ll set it up for you.

    What is  PIP?

    pip
    For consumers, the best-known decimal is in cents.

    For example, if the rate EUR/USD is 1,12 it means that 1 Euro is worth 1,12 Dollar.

    It would be very difficult to trade on that decimal.

    So in trading, we add a few numbers behind the comma and start trading in PIPs.

    PIP (Price Interest Point) Although some have other versions, it’s the point on the market.

    1 PIP equals 1/100 cent on the dollar.

    Example:

    1.1200 to 1.1300 equals a price change of 100 PIP’s and that equals 1 cen

    1.1200 to 1.1201 equals a price change of 1 PIP…

    But wait, there are more digits when I’m trading?

    Correct…

    When you see 1.12000 to 1.12001 that’s 1/10 PIP So we call that a Pipette.

    Hopefully, this is a simple way to understand how that works.

    Demo Trading

    The best way to start learning is to open an account and start demo trading. You can do that by clicking here.

    Those account with real live numbers are FREE to use, and most will be temporarily but on request, most brokers will extend the trial period.

    It might be overwhelming at first, but the good part is, you can get to learn how it works, and you can see directly if you make or lose money.

    By the time you are ready, you can open a live account, and start trading for real.

    Be aware, going live is really different!

    The main difference is, you can refresh your demo, where on a real account your money is gone when you lose.

    I have seen people trade on a demo and all seemed reasonable, but when they switched to a real account their balance went south.

    The most common difference I noticed was the demos were being traded without much stress in comparison to live-accounts.

    It didn’t really matter if this was about thousands of dollars or a few dollars; the tension was just making traders fail a lot quicker on the live account.

    Most common mistakes were taking profits way too early, and experiencing fear of loss which totally ruined their trades.

    Although some brokers do have their tricks, it’s usually something you can figure out and workaround, but the human factor makes trading more difficult than you may think for most people.

    Many also think it will not affect them until they realize they too are human.

    Artificial Intelligence (A.I.)

    Many of us are aware of Alexa, Siri, and other A.I. which to a lot of us is very intriguing.

    For us Forex Traders this is the future.

    If you want to experience A.I. which checks your trading and gives you advice on where to focus, you can try that out for free by clicking here.

    What you will need is a Free demo account or set up a live-account by clicking here.

    This A.I. does not give you strategies, but it makes you aware of the risks you are taking, and if you are doing well or where you need to improve.

    If you are struggling to get a good score, and need to perfect your strategy, wait until upcoming articles where I will explain how to create a strategy of your own.

    This is not like the trading robots you may have heard about, as I believe you always will have to keep a close eye on your trading instead of letting whatever robot take your decision from you because to a robot it doesn’t matter if it is blowing your money away or not. And of course, we don’t want that to happen.

    We will go through more valuable information coming very soon!

    Hopefully, you appreciate the value offered to you on this website, stay tuned!

    Best Regards,

    Hans Stam

    risk disclosure

  • Tesla shares drop but it could a 50% grow within a month

    Tesla shares drop but it could a 50% grow within a month

    3 min read

    Tesla shares were higher 2%, floating around the $200 mark on Thursday.

    The day before, Tesla CEO Elon Musk had sent an email to employees, saying that Tesla could gain a new delivery record and had above 50,000 net new orders for the next quarter.

    “Based on current trends, we have a good chance of exceeding the record 90,700 deliveries of Q4 last year and making this the highest deliveries/sales quarter in Tesla history!” Musk wrote in the mentioned email.

    Tesla last report for the first-quarter was disappointing for Wall Street.

    The company missed Wall Street expectations.

    And the worries about Tesla short term arose immediately.

    Tesla last month announced first-quarter deliveries missed Wall Street expectations. The worries about the company’s short term bloomed.

    The consequence was, some Wall Street experts have decreased their expectations for the company.

    They expressed their concern, frequently focusing on sale worries and liquidity. The negative criticism arose.

    Tesla shares have dropped 30% in the past 12 months and 42% this year.

    The big turn over of Tesla’s shares

    Shares of the electric-car maker drop at $190. It is for the first time in two years.

    Tesla shares grew but it could a 50% drop within a monthImage source: Yahoo Finance

    The company got thrashed by a range of negative analyst predictions.

    Also, Elon Musk warned the stuff the “hardcore” cost cuts are necessary because the company would be out of cash in 10 months if not doing so.

    For analysts, the bad sign was recently price cut on its cars. The demand is lower and there are so many reasons for experts concerns.

    But still, some of the analysts claim that Wall Street is “misunderstanding the Tesla story”.

    Musk’s successes are internationally recognized. Also, it isn’t a secret that he put himself and Tesla into trouble. All because of a tweet on August where Musk claimed there is a possibility to the company to be taken private with “funding secured”. That caused problems with the government.

    According to Yahoo Finance, an analyst for a firm “with a major investment in Tesla said Friday that recent drastic price-target cuts on the stock by others on Wall Street are missing the big picture.”

    That firm is Ark Invest. Last year its founder forecasted on CNBC that Tesla could score $4,000 per share. They still stand by that call, even now when Tesla’s stock lost almost 40% of its value.

    To buy or to sell Tesla shares?

    Tasha Keeney, Ark analyst, stated Ark hold so firmly in Tesla that its five-year, bear-case scenario is $560 per share.

    That would be almost triple the value of the price where the stock closed, at $195.

    Also, the fact is the company raised $2.7 billion. The first quarter was finished with $2.2 billion in cash.

    So, bankruptcy appears very doubtful. Almost impossible. The opinion that Tesla will easily run out of money in the next period and close its complete business looks a bit absurd.

    The company could raise more capital as Musk already showed they are able to do so.

    Also, they could change its business model and sell battery packs to some other carmakers. Or something else, Elon Musk is able to do very unexpectable things to maintain Tesla and exits as a winner.

    Tesla could also sell more stock and convertible debt. The last has a lower interest rate than regular loans. Tesla recently raised a convertible debt with an interest rate of 2%. So, who says they cannot do it again?

    Tesla is a global leader in two businesses: cars and renewable energy.

    Tesla has a really great opportunity in the sector of electric cars. Especially in China, for example.  

    Its stock could easily produce a return of more than 100% in the future.

    Okay, there was some disturbing situation with their autopilot when one man was killed in a traffic accident while using autopilot. He simply and sadly hit the truck. But the company announced that their new cars have the hardware for full self-driving abilities and the software is ready.

    Tesla can meet its near-term production goals, that is for sure. It can manage the cash crisis. So it is more realistic to expect it will have a good future. This brand is not going to easily disappear.

    Yes, its CEO Elon Musk can be questionable but at the same time, no one can say he isn’t a very capable man. Controversial but capable.

    So, Tesla stock can be attractive for risk-tolerant investors.

    risk disclosure

  • Forex – What is it – The Differences and Similarities With Other Tradings

    Forex – What is it – The Differences and Similarities With Other Tradings

    Forex Educational Series

    Trading Forex is the area to focus on

    by Hans Stam  

    Forex trading

    As a Forex Trader, I would like to create a series of short explanations about how this market works. What are the pros and cons etc?  

    My aim is to make this as clear as possible, so you can follow the process step by step.

    What is Forex?

    Forex (FX) is the abbreviation for Foreign Exchange.

    When you travel to another country, you may want to exchange your local currency to the currency of the country you’re traveling to.

    At the bank or airport, you can exchange your money into the currency used in the country you are heading.

    The exchange office works with an exchange rate, depending on the current value of both currencies of a “pair”.

    A Pair is, for example, a euro against a US dollar which would be the EUR/USD pair, where the EUR is the base currency, and the USD the quote or counter currency.

    EUR/USD – Base / Counter

    At the end of your trip, you like to exchange the remaining funds again, back to your currency.

    Again, the exchange rate can be changed as it is constantly changing.

    So it could be very possible that you will get more value back compared to when you first exchanged it, or a lot less value.

    The excitement of Forex trading

    This exchange can make or lose you money, and that is very interesting to investors, especially the part where the trader can make money of course.

    Just like stocks, currency can be traded on the Market, and you don’t have to go to an exchange office to do it.

    So what makes Forex different from trading stocks?

    First of all, you don’t have to find a buyer for the trade you are holding, you can close the trade any time you want and instantly get the current value credited back to your trading account.

    The second main difference is, leverage!

    For instance, the broker gives the trader a 1:100 Ratio with your broker, which means you can trade 100 times the value you pay for.

    An example would be trading the Pair EUR/USD and you would buy 10.000 Euro’s, the broker will then take 100 Euro’s locked in your account while you trade the exchange rate over 10.000 euro.

    It’s easy to understand you can make far more profit over 10.000 euro, than over 100 euro.

    When the market goes your way

    Now, when the market goes your way, and close the trade to take the profit, you get the initial 100 euro credited back into your account. So all that happened was that you win or lose the price difference from where you entered the trade to where you closed the trade over 10.000 euro.

    It’s logical that when you take profits over 10.000, you make a high percentage on 100 initial deposit.

    This goes both ways, so it can be risky, but the rewards can also be a very nice ROI (Return on Investment)

    If you like to find out more about how you can enter this market, please visit my page.

    Can you really make a living trading the Forex Market?

    That is a question I’m getting a lot, so I will try to give some clarity.

    The exact percentage of the people who really make a consistent profit is low.

    Some speak of a top 5% and that is going as low as a top 1%.

    What most traders will agree on is that the number is low whatever that percentage might be.

    So how come many people are still trading this market and how come so many are struggling?

    The first answer on to why so many people still have an attraction to this market is that it’s possible to make a lot of money really quick, on the other hand, they can lose it just as fast.

    But in the end it is very simple, you either are right in the direction your trade will go, or not.

    I will elaborate in later articles some more about market directions, but this is the basis of all trading.

    The trader buys or sells at a specific price, hoping the counter currency will have a positive price change for their trade.

    Forex isn’t the same as gambling

    Some traders are hooked on the possibility of great profits, and you could compare it to Las Vegas Casinos, and it can be very addictive.

    So that it the why people keep on trying, it’s like gold fever or putting your money on Black or Red in a Casino.

    Second, why are so many people struggling with this fairly simple way of trading?

    The biggest reasons are emotions and lack of knowledge which basically makes it like gambling.

    The lack of knowledge speaks for itself, but how about emotions?

    Many struggling traders have fear of loss and get excited too quickly when they are winning.

    It’s usually when people are doubting a strategy they bought or came up with themselves and experience fear of losing.

    When they see the trade going against them, they let the trade go really deep, but when the trade finally goes their way, they can’t wait to take the profit and have that excitement produce an adrenaline kick.

    The strategies can be altered

    Often strategies are altered, without really knowing why, but if they had that strategy a bit different on the last trade, then their loss would have been profitable in their mind, forgetting the trade would probably have been closed well before it matured.

    Hindsight trading has been used a lot with this type of trader, and that doesn’t count.

    The top percentage of the traders who make a consistent profit have learned to do things differently, and it would be wise for traders to have a mentor who knows where the pitfalls are.

    Also, it is typical for this kind of gambling trader to put in a few hundred dollars, while in reality, the minimum should be at least $5.000 just to have a buffer.

    Once a trade goes against the direction desired, it will need some breathing space. The bigger the buffer, the longer you can keep the trade open.

    Fact is, you will not lose a trade until you take the loss, or when you run out of margin. So part of that is a decision, the other part financial.

    If you like to find out more about strategies or have specific questions, please visit my page.

    I hope this short explanation has your peaked interest, and it is clear to you how the basics work.

    In the next article, I will go deeper into some facets of trading the FX Market and its terminology.

    Make sure to bookmark this page, and come back to read more soon.

  • Tesla’s stock hit a new 52-week low

    Tesla’s stock hit a new 52-week low

    2 min read

    Tesla's stock hit a new 52-week low 1

    Tesla’s stock has fallen another 6% yesterday. It is now down 40% in comparison with last year, according to CCN.

    Tesla’s stock is falling more and more every day and Wall Street predicts a total disaster.

    Tesla's stock hit a new 52-week lowImage source: Yahoo Finance

    At the same time, Tesla’s car price is falling down too.  

    The company announced that it is going to lower prices on older model S and X cars. Merrill Lynch announced that selling on those models is lower than ever.

    Critics have the opinion that Tesla’s stock has always been a bet for naive traders.

    Morgan Stanley reduced its lowest-case scenario price target to $10:

    “Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention.”

    The Tesla golden era is likely over

    Tesla’s stock had confronted pressure for a long time. It had problems with the installations of its car. It had delays and deficits of components. But Tesla and Elon Musk somehow managed to cover all of these problems.

    The company had to report a huge loss of $702 million in the first quarter this year, just a few weeks ago. The consequences were they had to draw extra funding. This loss was caused by a decrease of 30% in selling cars.

    Also, their tax credit of $7,500 was cut in half meaning the government subsidies are lower. That’s really the bad position for the company and Elon Musk itself.

    Tesla rivals are more powerful than ever

    For example, BMW progress the development of their own electric cars.

    Tesla shares continued the slump falling 6% to close at $192,73.

    Citigroup analyst Itay Michaeli lowered the price target on the clean-energy carmaker’s plans by nearly 20% to $191 per share.

    Michaeli stated the company’s recent capital growth of $2.7 billion provides the balance sheet defense against a 2019 downturn.

    “The recent capital raise was a positive step but won’t necessarily get the balance sheet out of the woods if Tesla cannot achieve FCF targets,” Michaeli formulated.

    But, at the same time, he said the company has to solve its serious cash spending rate.

    Tesla and Elon Musk tried to guarantee the investors their investments are safe. They claimed the company developed a new driving automation system and self-driving vehicles which should increase the safety. Obviously, the investors have no trust as the consumers don’t have.

    Tesla’s claims are not supported by the data, they look more just hollow promises.

    Musk tries to avoid criticism and keep a good status, it is obvious.

    But it looks the Teflon chief position doesn’t belong to him anymore since his reputation likely not stays intact.

    Moreover, he and Tesla seem will have more problems in the future.

    With competition and investors both.

    Elon Musk was putting all of Tesla’s difficulties under the rug.

    Declarations on how Tesla should be prized as a tech stock and not as a business with unlimited problems fall into the water.

    Banks warned to a Tesla’s disaster

    Bank of America Merrill Lynch and Citi analysts each declared critical statements evaluating the stock’s recent pull-backs by investors. They both concluded it is a sign that should concern.

    Their analysis is based on intense selling pressure, with shares falling 16% during the past week.

    And also, there is a leaked email from Elon Musk that refers to employee expenses.

    All of this was very important for BAML and Citi.

    “With fundamentals deteriorating, specifically deliveries/production that are starting to stall as well as losses/cash burn that are not turning a corner on a sustainable basis, some of these optimists now appear to be taking a much more pessimistic stance, with the stock breaking down in recent days,” BAML analysts headed by John Murphy addressed to clients on Wednesday.

    The analysts told the current tension on the stock seems to be inspired by “shorts pressing aggressively, as the stock (and story, to some extent) was already breaking down.”

    risk disclosure

  • Huawei is Riding Again in the US market

    Huawei is Riding Again in the US market

    2 min read

    After The White House Has Fired Shots, Commerce Department Seemingly Walks Back On It

    On May 15 after the US President has signed the executive order declaring a national emergency and giving to the US Commerce Department power to create a blacklist for foreign companies which are barred from procuring the US-made products and selling their products in the US.

    On May 20 the Commerce Department has issued a special 90-days authorization for Huawei.

    After the US has blacklisted Huawei and another 68 Chinese companies from purchasing the US made products and services stock markets around the world had their say. This latest “broadside” in the US-China trade war has sent shockwave around the globe which caused stocks of many involved companies to the tank.

    Alphabet, owner of software giant Google; Qualcomm, mobile chip maker; Micron Technology, NAND memory chip producer; Huawei, mobile phones and telecommunication equipment manufacturer; are some of the largest companies whose stock prices were impacted.

    In the unexpected move on May 20, the US Commerce Department has issued a special dispensation in the form of a general license which will allow Huawei to continue purchasing the US made goods and services.

    The special general license has a 90-day period and will be reviewed before August 19.

    The talk on the street was dominated by security concerns for customers who have already purchased Huawei phones. With Google confirming that it will not continue providing its services to Huawei, this concern seemed founded in facts.

    With these new developments, there are indications that Google has reversed their decision, or at least stayed it for the next 90 days. For Huawei’s customers, which are not only smartphone owners, it means that Huawei will be able to receive security updates and advisories from Google and distribute them to their customers until August 19.

    But that is just half of the story about Huawei and US 

    Huawei is striving to become the largest smartphone maker by the year 2020, and currently the largest telecommunication equipment maker in the world, which describe itself as the “unparalleled leader in 5G”.

    The US has already attempted to pressure its allies to stop using Chinese made telecommunication equipment in their infrastructures. In a statement a Huawei spokesperson said that imposed restrictions “will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.”

    And these words are not without merit, as many American rural internets and phone operators rely on affordable Chinese made equipment to provide their services in their markets. Replacement of which could have a large economic impact and take several years according to the January filling to FCC by the Rural Wireless Association, an association of small communication and internet providers.

    “The Temporary General License grants operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” Secretary of Commerce Wilbur Ross said in a statement.

    The US underestimating Huawei

    In one of the rare interviews for Chinese media on May 21, the Huawei founder, Ren Zhengfei has said that the US is underestimating his company.

    “Huawei’s 5G will absolutely not be affected. In terms of 5G technologies, others won’t be able to catch up with Huawei in two or three years. We have sacrificed ourselves and our families for our ideal, to stand on top of the world. To reach this ideal, sooner or later there will be a conflict with the US.”

    With the development of this situation reminiscent of the last year’s ban on ZTE equipment, Ren’s defiant words sound like a promise to not cave in the way their competitor did.

    While the unilateral decision of the US to ease the trade limits indicates awareness of how far-reaching consequences these bans can have, and desire to avoid the repeat of fiasco caused in Europe and South Asia last year.

    risk disclosure

  • Huawei is banned from the US market

    Huawei is banned from the US market

    3 min read

    Huawei is banned from the US market

    Huawei is banned. Last week the global markets dropped as trade pressures promptly increased between the U.S. and China.

    There is an expectation that the trade communications between the US and China will be settled positively. But putting on the blacklist Huawei by the US could indicate even extra market volatility advance.

    Wall Street shares have closed lower.

    The Dow Jones Industrial Average fell 0.33% to 25,679.76, the S&P 500 lost 0.68% to 2,840.09 and the Nasdaq Composite dropped 1.46% to 7,702.38.

    Thanks to Huawei ban, the tech stocks dropping, beginning another week of losses.

    Broadcom and Qualcomm, which gets at least half their income from China, stocks dropped Monday. They are big Huawei’s suppliers.

    The same was with  Micron Technology and Xilinx.

    The U.S. choice to ban technology sales to Huawei caused the tech companies stock losses. Investors are disturbed the move against Huawei could decrease selling for companies, particularly chipmakers. Their income is extremely attached to China.

    Amazon, Nike, and Starbucks are hit too. Their stocks dropped yesterday.

    But T-Mobile and Sprint are between the few businesses to make profits. Those two companies are expecting the merger worth $26,5 billion.

    The investors moved to less-risky holdings.

    For example, utilities and energy are the sectors where you can see gains.

    It is so natural because the investors typically in circumstances like this, want to invest their money into the safer field.

    Chipmakers have sunk because of U.S. ban on technology sales to Huawei.

    The U.S. government states that Chinese suppliers, meaning Huawei and its rival, ZTE Corp., are an espionage peril.

    The reason behind is they are indebted to China’s ruling Communist Party.

    And Google bans Huawei phones, strengthening U.S. consumers’ dependence on Apple and Samsung.

    But what will happen with users?

    Google confirmed that it had canceled Huawei’s Android license, as Reuters reported. Huawei devices 002502, +2.20%  will only be able to use an open-source version of the Android platform.

    Access to Google services such as Gmail and YouTube and Google Play app store for third-party apps are restricting.

    Google did this to comply with a Trump administration policy.

    Trump’s administration policy requires federal-government approval for all purchases made by Huawei.
    Also for affiliated businesses of U.S.-made microchips, software, and other parts.

    Government officials became suspicious of Huawei. They worry that the Chinese government could use the phones to spy on US citizens.

    “For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices,” said a Google spokesperson.

    But the U.S.users could stay with fewer smartphone options.

    Apple and Samsung rule the smartphone market in the U.S. The two companies control approximately 80% of the mobile market, according to data from GlobalStats.

    Huawei tried to break the U.S. market. According to GlobalStats, the company’s market share in the US is less than 1%. And Huawei had retreated from the U.S. market in expectation of a confrontation with the US government.

    For example, Huawei doesn’t sell its leading Mate 20 models directly in the U.S., but the phones are accessible from third-party retailers.

    Market will recover

    Despite the new blast of market volatility,  Edward Yardeni marks a return to all-time highs this year.

    He believes U.S. multinational companies, which are endangered to the trade war, will eventually provide the market increase.

    “I think it moves higher partly because there’s a recognition that even companies that do business with China are going to find ways to deal with this escalating trade tension like moving some of their supply chains to other countries,” said the Yardeni Research president Friday for CNBC.

    The last UPDATE Huawei is Riding Again in the US market

    Risk Disclosure

  • How to invest in a mutual fund

    How to invest in a mutual fund

    4 min read

    How to invest in a mutual fund

    To invest in a mutual fund, you can buy into a mutual fund through a mutual fund company, bank, or brokerage firm (similar to stocks).

    Typically, funds are either equity funds (investment in stocks), fixed income funds (investment in bonds), or money markets (kind of like cash).

    You will have to consider what is the minimum threshold for investing in the mutual fund. Because different funds have different investment minimums.

    Also, you will have to decide if you want to invest in a load or no-load fund.

    This means you will either be paying commission or not. But regardless of if you invest in a load or no-load fund, you’ll still be paying some fees. So, you have to factor that in when deciding.

    And, it is really simple to invest in a mutual fund.

    You simply determine the amount of money you’d like to invest in a mutual fund over the phone, online, or in person. There are so many options today.

    Online brokers generally often offer more diverse selections. However, you will have to open an individual retirement account.

    There are several expenses to account for. Like, transaction fees accumulated when investing in a mutual fund, early redemption fees if you wish to sell a fund in the first 60 to 90 days, and expense ratios that are a percentage of your investment.

    You can make money off of your mutual fund by selling it for more than you paid for it. Or through a variety of distributions like dividends or interest that can be paid out throughout your investment. However, most mutual funds will reinvest dividends for you unless you specify otherwise.

    Can money invested in mutual funds be lost?

    We will try to keep it simple. If you have invested only in mutual funds, theoretically the money can be lost.

    Reasonably – it depends.

    Well, investments are time unstable. So, at some period, your portfolio can hit the loss.

    But over the long period in time, the odds of losing your money are close to null.

    Yes, there might be accidents like some major market breakdown which could destroy your collected profits notably. But, in most cases, it is for a short time and markets would recover and your investment too.

    Let us explain.

    During the 2008 financial crisis, the fall in stock prices led to near 50% decline in the portfolio value of many people nearly throughout the world. Many people had panicked because this was a huge story. But, inside a one year, the portfolio value jumped back to its 100%. So, if some investor was really holding till today, it would be extra up 50–60% at least. In short, the possibilities of losing in the long-term are very small when investing in mutual funds.

    Take a look at this chart:

    Why Mutual fund is opportunity 

    Let’s do some math.

    You invested $100 and holding it for 10 years earning 15% CAGR = $404.5.
    You remember from the previous lessons: CAGR is the compound annual growth rate (CAGR).

    Some breakdown in the 11th year decreased prices by half – $202. But, this is still a return of 7.3%.

    The risk, if you are forced to sell here is not reaching your financial intentions and considerably it will influence your habits if you are retired.

    But what we can learn from the history of the present business world? The value of assets has jumped back to healthy from the critical after the great depressions.

    One note more. Instead of focusing on the systematic investment plan (SIP) a better choice is a focus on the systematic withdrawal plan (SWP). That’s the point where you begin to take out your money from risky assets. You are close to your goal and place in secured assets.

    So, the chances of not reaching your financial aims are reduced.

    The note: Mutual fund investments are subject to market risk.

    You have to keep this in your mind forever when investing in mutual funds. There are no investments without some risk associated with it.

    Missing or getting the money depends completely on the investment period an investor picks.

    We will show you how it looks in one more chart. We aimed out the period of big crisis 2008, in the red circle.

    Why Mutual fund is opportunity  1

    For example, you invest $1,000 for a day or two. If the stock market slips the preceding day, the value of your $1,000 will surely not appreciate.

    Also, if you invest the same amount for a week and the market is in a downtrend throughout that week, the invested money will not yield any profit.

    If you choose to stay invested for a year or more than that, though there is no guarantee, there is a possibility that your $1,000 may go up as a long-term investment horizon is always likely to give better results.

    In other words, you won’t lose all your money.

    Money can be lost mostly due to wrong timing.

    When the market is bullish, people invest aggressively. When the market corrects, people get scared and they take out money when the market is down or sideways.

    Say, investing in stocks through mutual fund route is a safer way to putting in money in the ever-volatile stock market. In a mutual fund, your investments are managed by professionals, who ensure the protection of your capital.

    Past trends have shown that usually mutual funds are profitable giving an average return of around 10-12%.

    Mutual fund investments become even safer and convenient if done via SIP (Systematic Investment Plan) route. SIP is a type of investment set up whereby rather than putting in a lump sum, you put in small amounts of money either in monthly, quarterly or annual installments. This, in turn, enables the fund to benefit from the power of compounding and also isn’t too much of a burden on the investor.

    risk disclosure

  • Mutual funds are an opportunity to make wealth

    Mutual funds are an opportunity to make wealth

    3 min read

    Mutual funds are an opportunity to make wealth 1

    What are the benefits of mutual funds? How much do they cost? Which funds are right for you? What should you consider before investing?

    These are just a few of the questions we’ll answer here.

    Mutual funds are not bank deposits and are not guaranteed by any government agency.

    They involve risks, including the potential loss of some or all of your investment. Past performance is not a solid sign of future performance.

    However, it can help you evaluate a fund’s volatility and how it operates in various market circumstances.

    WHY INVEST IN MUTUAL FUNDS?

    Mutual funds are an opportunity to make wealth

    Advantages

    As an example, more than 100 million Americans use mutual funds to invest in their long-term goals. Here are some of the benefits they offer:

    Professional management

    When you invest in a mutual fund, your money is managed by full-time professionals. They research and select investments that are appropriate for the goals of each fund, and monitor the fund’s performance so they can change the portfolio when needed.

    Diversification

    Buying shares in a mutual fund make it comfortable for you to spread your investment over many different companies and industries. This may help to protect your assets over market volatility. Nevertheless, diversification doesn’t ensure a profit or defend against a loss.

    Choice

    Mutual funds give you a wide variety of choices to help meet your financial goals. You can invest for different objectives, at different levels of risk and in different kinds of securities.

    Affordability

    Mutual funds allow you to invest with a nearly small amount of money. Without a fund, it would usually demand a much considerable investment to build such a diversified portfolio.

    Liquidity

    You can ordinarily sell your shares at any moment and for any cause. Anyway, there may be exceptional moments when fund purchases are limited because of some extreme market requirements.

    Automatic Reinvestment

    Mutual funds give you the choice of reinvesting your yields and capital gains in new shares of the fund, without being indebted a sales charge.

    A mutual fund is when a group of investors gives money to managers to invest in diversified securities. It can be stocks and bonds, for example. Because it’s group, every part-owner as the investor is, profits and loses an equivalent piece. The costs of the mutual fund are divided according to the cost proportion. And, because the funds are diversified among stocks or bonds and other securities, they are regularly lower risk than individual stocks or bonds.

    To some investors, choosing individual securities to invest in and guide can be a risky task.

    Access mutual funds. With benefits like added assurance and lower risk, mutual funds are one of the best investment opportunities to enter the market. But before you take your place into the group funds, you need to know the tricks.

    Mutual funds are under the control of money managers.

    What is Mutual Fund Investment? 5

    They create portfolios for investment with a pool of money. Often, they have different kinds of investment goals. Some managers, like fixed-income managers, focus on generating low-risk, high pay-off investments for their funds, while long-term growth managers try to beat the Nasdaq or S&P 500 during the fiscal year.

    Shares in a mutual fund are typically bought at the fund’s current net asset value (NAV, or sometimes NAVPS) per share. This figure is determined by dividing the total value of all the securities in the fund by the number of outstanding shares.

    Mutual funds are actually investments like buying stock in companies.

    Investors purchase shares into the mutual fund. That, in turn, provides them a right to the fund’s assets. Hence, the value of the mutual fund represents the value of its portfolio.

    Let’s say you invest in a mutual fund. Well, not you but a manager will invest the public funds added to the fund. A manager will invest them in several securities, for example in stocks and bonds.

    The manager is ordinarily selected by a board of directors and is frequently an owner of the part in the fund.

    Such a fund manager will pick analysts to help in making investment decisions. Majority of funds will engage some accountant who’s task is to measure the net asset value of the fund every day. That will define the price of the share in the fund.

    Most mutual funds also have compliance officers who keep up-to-date on regulations.

    When investors purchase into a mutual fund, their money is managed by the fund manager. Such professionalist invests that money in different assets with specific intentions for risk and returns in judgment: like long-term increase or fixed-profit.

    Some funds may be more dangerous than others, that’s true. But usually, the composition of a mutual fund manages risks well-known low.

    Mutual funds only trade once daily and are often part of a 401(k) or an individual retirement account, IRA.

    The biggest benefit of mutual funds is, they are handled by someone other than the individual investor. You just have to put the hard decisions in an expert’s hands. The fund manager is more prepared for reasonably allocating our funds than we could do it by ourselves.

    The mutual funds regularly submit several portfolios with a group supply of money. So the personal risk to all investors is lessened. So we can say that mutual funds are honestly low-risk and high-reward.

    But, mutual funds include some fees in the kind of annual fees and stockholder fees.

    Annual running fees usually are 1%-3% of the annual funds under control. The stockholder fees are in line with the commissions paid by when buy or sell funds.

    Besides that, an obvious lack of mutual funds is that you don’t have constant control of stocks you’re investing in. Hence, for some traders, this may produce some difficulty, particularly if your fund begins dropping.

    Don’t waste your money!

    risk disclosure

  • Nobel Laureate is a senior adviser at Pimco

    Nobel Laureate is a senior adviser at Pimco

    2 min read

    Nobel Laureate is a senior adviser at Primco 3

    Pimco wants to understand the retirement patterns and it selected Nobel Laureate, Richard Thaler as a senior adviser.

    Nobel Laureate Dr. Thaler is a professor of behavioral science and economics. He is teaching at the University of Chicago Booth School of Business.

    Two years ago, in 2017, he got a Nobel Prize for his “contribution to behavioral economics”.

    Pimco, Pacific Investment Management Company, plans to use Thaler’s expert help in order to serve clients.
    The main goal is to help them to allocate assets in a “thoughtful way”.

    That includes even retirement in unpredictable circumstances.

    The chief executive of Pimco Emmanuel Roman said:

    “We know that understanding how we behave and the decisions we make are critical inputs to help make us better investors and better managers. Dr. Thaler’s insights will help enhance our ability to make the best possible decisions for our portfolios, our clients and our employees worldwide.”

    Pimco also freshly stated long-term cooperation with the Center for Decision Research at the Booth School. The goal here is to help “deliver the best possible outcome for investors”.

    Who is Nobel Laureate, Dr. Richard Thaler?

    Nobel Laureate Richerd Tahler PIMCO advisorNobel Laureate, Richard Thaler

    Thaler studies behavioral economics and finance, and the psychology of decision-making.

    A very interesting subject that fills in the slot between economics and psychology.

    Thaler examines the hint of the conventional economic theory that everyone in the economy is rational and selfish, instead of considering the chance that some of the factors in the economy are occasionally mortal beings.
    In other words, we’re not excellent.

    We all like to suppose that we are intelligent, rational beings, constantly performing in best ends. Actuality, it is the ruling economic theory.

    What was left of this myth was further ruined by Nobel Laureate Richard Thaler.

    And The Royal Swedish Academy of Sciences, when gave him the Nobel prize in economics.

    Nobel Laureate Thaler is a pioneer in the field of behavioral economics, which studies humanity’s defects, say that.

    He is seeking for the answer, why we don’t make reasonable economic decisions.

    He is the co-author of bestseller “Nudge: Improving Decisions about Health, Wealth and Happiness with Cass Sunstein”.  In this book, and in many other studies, Nobel LaureateThaler reveals the faults and prejudices that determine our behaviors.

    The point of this theory is that you can employ mental nudges to encourage people to make better judgments.

    It is particularly preferred when planning, for example, saving for retirement.

    People can perform poor economic decisions based on the “endowment effect”, as Thaler described it.

    It is the theory that people appreciate and value something more when they own it.

    To be more exact, if we are selling something we would like to get more money than in the situation we are buying the same thing.

    This correlates to another theory, identified as loss aversion.

    People have a negative perception of loss more heavily than they have the positive feeling of a profit of the same volume.

    For instance, when we are selling some object, our reference value is the price we paid for it.

    Even if the value of that item is evincible decreased, we are anchored to the buying price. The reason is we want to bypass that feeling of loss.

    This effect, called anchoring, can lead to injury in financial markets, in particular.

    Sound logical and we all have been experienced this effect.

    Thaler established the idea of using nudges to build alternative routes of actions.

    Making good long-term decision but keep freedom of choice.

    How to do that? Simply.

    One method is changing the default option, switching users from opt-in to opt-out. This has been used in case of “nudge units” in the US and UK, to increase retirement savings and organ donation, for example.

    So, we will see how this theory will going on practice with Pimco.

    risk disclosure

  • Bitcoin is ready for the next big move

    Bitcoin is ready for the next big move

    3 min read

    Buying Bitcoin with bank account

    The Bitcoin price is $7.979, at the moment of writing this post. That is lower for 0,593842%  than the opening price this day.

    The furious rise in Bitcoin price in the past few weeks was exciting for the majority of the crypto world. But at the same time confusing also.

    Bitcoin is ready for the next big move

    For many of them, Bitcoin awakes memories on its fantastic heights at the end of 2017 when Bitcoin hit its record high of $19,783.21 on December 17.

    This new Bitcoin rally brings new peaks level to many companies. For example, several crypto-tied penny stocks recorded new peaks too.

    For example, the shares of MGT Capital Investments Inc. rose by 15% on Tuesday 9, May. This company is ranked as one of the biggest U.S. based Bitcoin miners.

    On Tuesday the company stated that it is thinking to give its cryptocurrency mining sector extra chance. The statement came after Bitcoin’s price increased expanded the mining profitability.

    Bitcoin mining, is it profitable 2

    This company had its highest market cap in December 2017 when it reached $350 million.

    That was in any sense the golden era for crypto.

    Almost at the same time, one UK company added the word ‘blockchain’ in its name rose its shares for nearly 400%.

    With the hope that such time is coming, traders and investors gave a chance to other similar companies such as Grayscale Bitcoin Trust BTC or Riot Blockchain Inc.

    The price of their shares rose in the past few weeks.

    The Bitcoin price is likely to go far up from $8,000 and it will come very fast.

    Will this word become another buzzword?

    The word that can increase importance and market value? That will be interesting to see.

    Anyway, Bitcoin increased by 60% in only two weeks.

    Nevertheless, many investors are not convinced that this rally has both legs. This price climb seems to fast for them.

    On the other side of the expert’s opinion are the other group of investors. Bulls! They insist that BTC has already reached its bottom price and all we can expect is this ‘çrypto-king’ is going to rise.

    Bitcoin touched the bottom when it fell below $6,000. The crypto expert Dave the Wave called it the “ideal buying zone”.

    However, traders were panicked and we saw a violent selloff. For smart people, it was time to buy.

    Previously, Bitcoin was in that buy zone for two years. It was 2014 and 2015, and almost one year between 2012 – 2013.

    The penny-stock companies recognized an open space to conquer.

    On the other side, the rumors about the possibility the biggest companies to adopt crypto fell in the water after the Consensus 2019 conference.

    Loving eBay formally denied such news.

    But Facebook hired two ex-Coinbase experts. At least one of them is connected with Facebook’s blockchain venture.

    Jeff Cartwright moved from Coinbase in March after five years at the cryptocurrency exchange. According to Cartwright’s LinkedIn profile, he entered Facebook this month. He will serve as a policy and compliance manager.

    It isn’t a secret anymore that Facebook has plans about blockchain and cryptocurrency. The details are secret, of course. As the secret is the true role of Cartwright because Facebook spokesperson Elka Looks refused to comment ” on personnel’.

    And, however, there is the third part – the media.

    Just to illustrate, for example, CNBC removed Bitcoin widget last month. But now, the situation is totally twisted. They have almost in every single show a segment about Bitcoin. Weird!

    And Microsoft uses Bitcoin, as we heard.

    Okay, Bitcoin owners use Microsoft, right?

    So, on Monday 14, May, the company revealed a project that, would give you the possibility to control your own credentials, autonomous of all companies. The new project is based on the technology that supports Bitcoin, blockchain.

    That will be interesting to see, of course, if you like to take such responsibility.

    Digital identity is the most exciting dream for every blockchain fans. The idea behind is that we all could have absolute, faultless access to all kinds of apps by creating mobile credentials. For now, the keys are in the hands of Facebook or Microsoft.

    Enthusiasts support this idea because it can be a blessing for privacy. No one could track your activity on the internet. And that is the core of blockchain and Bitcoin as well.

    Proponents also say it would help to stop hackers. Honestly, it would be harder for hackers to approach users data because all of them would be stored in one place or in a decentralized digital configuration.

    But we are still a far away from that.

    Until then, keep your eyes on the growth of Bitcoin.

    The future is interesting and promising.

     risk disclosure