Category: Traders’ Secrets

Traders’ Secrets is something that everyone would like to know, right?
How is it possible that some traders are successful all the time while others fail to make a profit all the time?
That is exactly what Traders’ Secrets will show you.
Traders-Paradise’s team reveal all trading and investing secrets to you, our visitors.

What will you find here?

How to find, buy, trade stocks, currencies, cryptos. You’ll find here what are the best strategies you can use, all with full explanation and examples.
Traders-Paradise gives you, our readers, this unique chance to uncover and fully understand everything and anything about trading and investing. The material presented here is originated from the experience of many executed trades, many mistakes made by traders and investors but written on the way that teaches you how to avoid these mistakes.

Moreover, here you’ll find some rare techniques and strategies that are successful forever, for any market condition. Also, how to trade with a little money and gain consistent returns. By following these posts you’ll e able to trade with greater success. You’ll increase your profits and your wealth, of course.

The main secret of Traders’ Secrets is that there shouldn’t be any secret for traders and investors. Rise up your trade by reading these posts, articles, and analyses!

You’ll enjoy every word written here. Moreover, after all, your trading and investing knowledge will be more extensive and effective.

Traders’ Secrets will arm you with those skills, so you’ll never have a losing trade again.

Momentum trading
3 min read
- Momentum stocks are among the most exciting stocks to trade.
Momentum trading refers to the tendency of stock prices to continue moving in the same direction for several months after an initial impulse. The most basic form of momentum is price momentum, where the initial impulse is simply a change in the price itself.

Momentum has been defined as a force that sustains the movement and increases the strength of that movement. This two-fold nature of momentum is seen in what traders and investors call “momentum stocks”. A momentum stock is a stock that is trading in a sustained trend, either up or down, the strength of which is expected to increase over the near term.

Momentum stocks are among the most exciting stocks to trade.

Momentum trading is inherently challenging to explain within a traditional asset pricing model. Such a model requires that high average returns are simply compensation for some form of risk. But stocks that have risen recently, or have had positive earnings surprises. Hence, typically seem to have lower risk, not higher risk as would be required for risk to explain momentum.

What is momentum trading?

Momentum trading is a technique in which traders buy and sell according to the strength of recent price trends. Price momentum is similar to momentum in physics. The mass multiplied by velocity determines the likelihood that an object will continue on its path. In financial markets, however, momentum is determined by other factors. Like trading volume and the rate of price changes. Momentum traders bet that an asset price that is moving strongly in a given direction. And it will continue to move in that direction until the trend loses strength.

British economist and investor David Ricardo used momentum-based strategies successfully in trading. He was well known in this field. How he did it? He bought stocks with strong performing price trends. And then sold stocks whose prices were performing poorly. He characterized the method with the phrase: “Cut short your losses; let your profits run on.”

Momentum trading can be classified into two categories:

Relative momentum and absolute momentum.

The Relative momentum strategy is where the performance of different securities within a particular asset class are compared against one another. Investors will favor buying strong performing securities and selling weak performing securities.

The Absolute momentum strategy is where the behavior of the price of a security is compared against its previous performance in a historical time series.

In currency trading, either relative or absolute momentum can be used. But you have to know that momentum trading strategies are more frequently associated with absolute momentum.

How to employ momentum strategy?

Momentum can be determined over longer periods of weeks or months, or within day-trading time frames of minutes or hours.

The first step traders usually take is to regulate the direction of the trend in which they want to trade. The trader can use one of several momentum indicators. Then such trader may establish an entry point to buy (or sell) the asset they are trading. After that trader has to determine a profitable and reasonable exit point for a trade. The trade must be based on the projections. And previously observed levels of support and resistance within the market.

Besides that, it is highly recommended to set stop-loss orders above or below their trade entry point. That depends on the direction of the trade. This is in order to avoid the possibility of an unexpected price-trend reversal and undesired losses.

Momentum indicators

A momentum indicator is a tool used for determining the momentum of a particular asset. They are graphics devices. Often in the form of oscillators. That can show how rapidly the price of a given asset is moving in a particular direction. Also to whether the price movement is probably to continue on its course.

The idea behind the tool is that as an asset is traded, the rate of the price movement reaches a maximum. In the moment when the entrance of new investors or money into a particular trade nears its maximum. When there is less new investment available, the tendency after the maximum is for the price trend to devastate or reverse direction.

The trader can determine the direction of momentum. The trader has to subtract a previous price out of a current price. That’s all. A positive result is a signal of positive momentum. The negative result is a signal of negative momentum.

Momentum tools typically appear as rate-of-change (ROC) indicators, which divide the momentum result by an earlier price. Multiplying this total by 100, traders can find a percentage ROC to plot highs and lows in trends on a chart. Say the ROC approaches one of these extremes. You can see an increasing chance the price trend will weaken and reverse directions.

Other momentum tools

Here are a few of the technical indicator tools that traders commonly use to track momentum. They may provide you to know whether it’s a good time to enter or exit a trade within a trend.

Moving average: It can help to identify overall price trends and momentum. How to calculate the moving average? The trader should add the closing prices over a certain number of periods. And by dividing the result by the number of periods considered.

Relative strength index (RSI): It measures the strength of the current price movement over recent periods. The aim is to show the probability if the current trend is strong. Of course, in comparison to previous performance.

Stochastic oscillator: It compares the current price of an asset with its range over a defined period of time. What we can see when the trend lines in the oscillator reach oversold conditions? They indicate an upward price momentum is at hand. And when they reach overbought conditions they indicate that sinking price momentum is ahead.

Moving average convergence divergence (MACD): It is an indicator that reveals both price momentum and possible price trend reversal points. When the lines are farther apart, momentum is strong. Therefore, when they are converging, momentum is slowing. That means the price is likely moving toward a reversal.

There are also other indicators like the commodity channel index (CCI), on balance volume (OBV), stochastic momentum index (SMI), average directional index (ADX), building block.

Is momentum trading risky?

Like any style of trading, momentum trading is risky. It’s normal to be successful when prices follow on a trend. But the problem is that momentum traders can be caught off guard. It is happening when trends go into unexpected reversals. Hence, traders should remember a few things and adopt them:

Technical analysis bases its projections of the probability of price movements on past price trends.

Prices in the market can move in an unforeseen manner at any time due to unexpected news events. Moreover, because of fears and changes in sentiment in the market.

The bottom line

Momentum is a key concept that has proven valuable for determining the chances of a profitable trade. The trader may use measurements of momentum in the short and long term. They are useful in all types of trading strategies. Several technical trading tools are available to reveal the strength of trends. Also, whether a trade on a particular asset may be a good bet.

Traders should know that momentum projections are calculated using measurements of past price trends. Actual momentum and price can change at any moment. So, it’s important to take preventative measures, such as setting stop-losses.

Risk Disclosure (read carefully!)
19th November 2018
Margin Trading Definition

2 min read

Margin trading isn’t without risks involved, so pay more attention to it

Margin trading is simply the process where investors buy more stocks than they can afford to. It also refers to intraday trading in India and various stockbrokers provide this service. It can increase your profits on the upside, but also expand your losses on the downside. Margin trading means buying and selling stocks or some other assets in one single session. This process requires a trader to guess the stock change in a particular session. It is an easy way of making a fast buck. It is now accessible to even small traders.

What is margin trading?

Margin trading is also called buying on margin. It is a method of buying shares that involves borrowing a part of the sum needed from the broker executing the transaction. The collateral for the loan is normally securities in the investor’s account. The trader has to deposit an initial amount of cash or securities into a margin account with the broker. And has to keep a minimum amount of cash or securities in the account as collateral. If the balance of a margin account falls below the minimum maintenance amount, the broker makes a margin call to the trader for the funds needed. Margin balances can be adapted to follow market values by adding or subtracting variation margins.

What is buying on margin?

Buying on margin gives the investor leverage as any capital appreciation or dividend income is on the total amount purchased. Even after the amount borrowed has been repaid to the broker, with interest, the investor could still be better off than if he/she had personally financed the purchase of a smaller amount of shares. That depends on how much the shares gain and how much they yield. There are some risks with margin trading – if the shares fall in value, the investor suffers a capital loss while also facing potential margin calls from the broker.

An example of margin trading

Margin trading is meant for traders who are looking for a simple way to increase their earnings. And also, they have a reasonable level of risk appetite but do not have enough capital.
Let’s say you are 100% bullish for the big company and believe the stock is going to pick up. You want to buy 1000 shares of that company and each share is priced at $200. You would need a capital amount of $200,000 to enter that position.
Assuming you have $150,000 and want to borrow the rest of the capital. With margin trading, your broker can help you with the rest of the funds while charging you a specific interest percentage.

How does margin trading work?

The whole process is quite simple. Margin trading is legal buying stocks or other securities, but instead of your own money, you borrow it from your broker.
Think about buying stock on margin as buying a house with a mortgage. A margin account provides you the financial support to buy more stocks than you can currently afford. For this purpose, the broker will lend you money to buy shares and keep some amount as collateral.
If a trader wants to trade with a margin account, the first requirement will be to request a broker to open a margin account. This requires paying a specified amount of money upfront and in cash. That is so-called the minimum margin. If a trader has a losing bet and ends in losses, and fail to pay the debt, the broker will get it out from the margin account.
When you open the margin account, you’ll have to pay an initial. This is a specific percentage of the total traded value and pre-determined by the broker. Before you start margin trading, you need to keep in mind these important steps.
First, you need to secure the minimum margin (MM) through the trading session. The reason behind this: if the stock is very volatile, the price can fall more than you had expected.
Second, the broker has the right to ask you to increase the amount of capital you have in your margin account. Also, the broker has the right to sell any of your securities if feels its own funds are at risk. The broker can even sue you if you don’t fulfill a margin call or if you are carrying a negative balance in your margin account.

Margin trading if the stock price goes up

This is the best outcome for you. Let’s do some math (I adore math).

Say you bought 100 shares for $4000. But you had $2000 and broker loans $2000. If the price goes to $50 per share, your investment will be worth $5,000. Your outstanding margin loan will be $2,000. If you sell, the total proceeds will pay off the loan and leave you with $3,000. Because your initial investment was $2,000, your profit is a solid 50%. Your $2,000 principal amount generated a $1,000 profit. However, if you pay the entire $4,000 upfront without the margin loan your $4,000 investment will generate a profit of $1,000, or 25 percent. By using a margin, you could double the returns.

The stock price fails to rise

If the stock stays at the same price, you still have to pay interest on that margin loan. You are in a better situation if the stock pays dividends because that money can pay some of the costs of the margin loan if not all. In other words, dividends can help you pay off what you borrow from the broker.

When the stock doesn’t change in price it is a neutral situation, but you’ll pay interest on your margin loan for each day. Margin trading can be a good plan for traditional investors if the stock pays a high dividend. Many times, a high-payed dividend, for example, $5,000 worth stock, can exceed the margin interest you have to pay. For example, if you had $2.500 and you borrowed the other $2,500, which is 50% of stock’s value. But you expect to receive $3.000 as a dividend, so you’re safe.

Margin trading when the stock price goes down

If the stock price drops, buying on margin could work against you. What if the price in our example goes to $38 per share?
The market value of 100 shares will be $3.800. So, your capital will shrink to just $1,800 because you have to pay your $2,000 margin loan to your broker. This isn’t real trouble at this point, but you should be cautious. The margin loan is 50% of your investment. If it goes lower, you may get the margin call. The broker will demand you to keep the ratio between the margin loan and the value of the securities the same as it was when he lends you money. That’s why margin trading can be very dangerous.

How to maintain the balance in margin trading?

When you buy stock on margin, you must maintain a balanced ratio of margin debt to equity of at least 50 percent. If the debt portion exceeds this limit, you’ll be required to restore that ratio by depositing either more stock or more cash into your brokerage account. The additional stock you deposit can be from another account. If you can’t come up with more stock, other securities, or cash, you have to sell stock from the account and pay off the margin loan. For any trader, it means having a capital loss. For you also, because you lost money on your investment.

The bottom line

As you can see, the margin can increase your profits on the upside but also increase your losses on the downside. If your stock drops drastically, you can end up with a margin loan that exceeds the market value of the stock you used the loan to buy. In the bear market of 2000, for example, many people realized stock losses. The majority of these losses came as a consequence because traders did not manage properly the obligations associated with margin trading. To avoid this kind of problems you must have sufficient reserves of cash or marginable securities in your account.
For example, buying dividend yields that exceed the margin interest rate could be the right choice so the stock could pay for its own margin loan. Just keep in mind to set up your stop-loss orders. Your goal is to make money, and paying interest could eat your profits.

14th November 2018
What is a Trade and how to Trade

To understand what is the trade we must have some historical and economic facts in our minds.

By Guy Avtalyon

What is trade? For some of you, this question may seem like nonsense. But, do we all know what is a trade for sure? So, let me explain this. Trade is a basic economic concept that involves the buying and selling of goods and services. Trading points to the buying and selling of securities, for example, buying and selling stock.
Answer to this question could be: Trade is a transfer of goods or services in return for money, services or goods. In other words, trade refers to give and take. In the old days, trade took place with the exchange of goods without the exchange of money. With the invention of money, the trade appeared as an exchange of things for money.

Trade is buying and selling on stock market transactions with the help of stock market brokerage houses. To trade in capital markets, one has to learn technical analysis first. Then apply those learned technical analysis concepts through paper-trading for a few weeks then open a trading account thru a broker and slow start the first real trade.

Everybody knows what the term “trade” means. We are trading in our everyday life, while we may not even register that we have done so. Basically, everything we buy in a market is trading money for the goods we need.

So, what is the trade?

The word “trade” simply means “exchange one thing for another”. We normally get this to be the changing of goods for money or in other words, simply buying something. The same principle is applied when we trade in the financial markets. Let’s say someone trades shares. What traders and investors are really doing is buying shares of some companies. When the value of the shares rises, they will make money if sell them at a higher price. This is trade. You buy something for one price and sell it again for another, hence making a profit or loss.

Why traders trade

Every single trader is buying the shares in the hope that the price will rise. But why would the value of the shares go up? The answer is simple: the value changes due to supply and demand, meaning the more demand there is for something, the more people are willing to pay for it.

Trade is conducted not only for the sake of earning a profit; it also provides service to the consumers. Trade is an important social activity because society needs an uninterrupted supply of goods forever increasing and ever-changing but never-ending human wants. Trade exists from the beginning of human life and will obviously last as long as human life exists on the globe. It enhances the standard of living of consumers. Thus we can say, answering the question of what is the trade, that trade is a very important social activity.

The examples of what is a trade

Trade is when two parties agree on the price of a financial instrument but they perceive it’s valued differently.

For example, say, trader A wants to buy stock with the current market price of $800. So, when trader A buys a stock at $800 there is a seller trader B at the same price. Hence, both of them have an agreement at the price of $800. But the buyer, trader A values is higher than the seller, trader B at that point.

Let’s say that suddenly the owner of another stock comes into the market and has even more stocks to sell. The supply of stocks has now increased dramatically. Now, it’s reasonable to expect the second trader will want to sell that stock at a lower price than the first one to attract the other traders to buy that stock. And such will be right. The other traders would reasonably want to buy at the lower price, why not. Let’s see what happened with the first trader. The first trader will lower the stock price also.
Can you see how the sudden increase in supply has brought the price of the stocks down?
When the asset’s price at which demand matches supply is known as the “market price”. In other words, that is the price at which traders agree on both sides, sellers and buyers both.
Trade is executed with the payment of money, the transaction of goods and services, or virtual currency.

What is the trade of virtual currencies

Those who want to trade cryptocurrency should start by picking a company with a good status that gives an exchange and wallet. The beginners should start by trading leading coins. Currently, we are referring to coins like Bitcoin (BTC) and Ethereum (ETH). In the future, this could change.

Cryptocurrencies are still new to some people, so trading in this novelty can certainly generate good outcomes. But it is important that you know very well what any virtual currency gives and know the features of each coin. It is necessary for you to make trading informed decisions, evaluating carefully the risks/benefits of each coin. Using a reputable cryptocurrency exchange platform could support you in order to take the best possible of cryptocurrency trading.

Virtual currencies

Virtual currencies do not expose holders to foreign exchange risks and provide anonymity between trading partners. Some online resellers provide buyers to conduct their transactions using virtual currencies. If you want to trade cryptos you can also find platforms that convert virtual currencies into gift cards. Virtual currencies are often popular with small businesses, because of the lack of processing fees.

Trading cryptocurrency isn’t hard to start, but there are some basic aspects to understand before you start trading with a wallet-exchange.

The main thing to note is that there are countless options for setting up wallets and trading currency.

The bottom line

When we ask what is the trade we should have some historical and economic facts in our minds. The process of economic specialization and trade leads to much higher levels of production of goods and services. It is this process that creates and sustains the markets of the “free market” system. The development of this system brought about the dramatic and revolutionary improvements in living standards that characterize the modern age.
Free and open trade has fired competition, innovation, and economies. It allows individuals and businesses to take advantage of lower prices and increased choice. As a consequence, millions of people all over the world have overcome the restrictions of subsistence farming and severe poverty that defined the lives of most of humankind during history.

14th November 2018
What Is Margin and How to Use

Trading on margin can be profitable but also, extremely risky.

By Guy Avtalyon

The simple answer on question what is margin could be: it is a loan from your brokerage to buy more stocks than you otherwise would be able to purchase using the amount of cash you have on hand.

The dictionary defines margin as an extra amount of something (such as time or space) that can be used if needed. Two key things are important to us in that definition: extra and if needed.

It is the difference between the full value of your position and the funds lent to you by a broker or leverage provider. It is an amount of money needed to open a leveraged trading position.

There are two types: initial and maintenance margin. The initial is the deposit required to open the position, often called just the deposit. When you open your position, you might need to add more money if your trade starts to make a loss and your deposit is no longer enough to keep the position open. If this happens, your provider will place you on a margin call, and you’ll be required to top up the funds in your account. This additional capital is known as the maintenance margin.

What is the margin?

It is the deposit necessary to use leveraged products. Using leverage can provide you to get full market exposure by putting up just a fraction of a trade’s full value. The amount of margin ordered will usually be presented as a percentage.

All of the assets in your account, as well as your personal guarantee, are held as assurance that you will repay the debt. There is no matter what happens in the trading account itself. Even if the account blasts, you are obliged to pay. No payment plan. Or negotiating terms. If you don’t pay, the broker can tow you into court. You will start getting verdicts to confiscate your other holdings. Your destiny will depend on the mercy of a bankruptcy judge. Meanwhile, your credit score plummets. Well, not always but it can happen.

What is the margin in Forex?

It is one of the most important concepts of Forex trading. In Forex it is basically a good faith deposit that is needed to maintain open positions. It is not a fee or a transaction cost, but instead, a portion of your account equity set aside and assigned as a margin deposit.

Trading on a margin can influence your trading experience both positively and negatively, with both profits and losses potentially. Your broker takes your deposit and then pools it with someone else’s margin Forex deposits. Brokers do this in order to be able to place trades within the whole interbank network.

It is often expressed as a percentage of the full amount of the chosen position. The most Forex margin requirements are estimated to be around: 2%, 1%, 0.5%, 0.25%. You can calculate the maximum leverage you can use in your trading account.

How does margin work?

In the same way that a bank can lend you money if you have equity in your house, your brokerage firm can lend you money against the value of certain assets in your portfolio. The borrowed money is known as a margin loan. It can be used to purchase additional securities or to meet short-term financial needs.

Each brokerage company can define, within certain guidelines, which stocks, bonds, and mutual funds are marginable. The list usually includes securities traded on the major stock exchanges. Hence, keep in mind that you can not borrow funds in retirement accounts or custodial accounts. Investors can use margin to purchase potentially double the amount of marginable stocks than they could use cash. Few investors borrow to that extreme. The more you borrow, the more risk you’ll take on. Margin uses the value of your marginable securities as collateral in your portfolio. If your portfolio goes up, your buying power increases. If your portfolio falls in value, your buying power decreases.

Which securities can trade?

Almost every security can be traded on margin. It may be stocks, futures, commodities, or currency. For the cash market, generally, brokers provide and charge nominal interest for the same. While for the Futures market, the exchange provides the margin and there is no interest charged. Every broker has a different margin policy.

Short-term stock traders often use it in the hope of improving their stock market returns. But, it is usually avoided by long-term investors as over an extended period, a greater return would be necessary just to break even.

Traders often target stocks with more volatile price swings. As they focus on shorter time spans than investors, short-term traders need to use margin to magnify the size of those price swings to try and make a profit.

Trading is risky

Frankly speaking, when someone asks what is margin, the first thought is – it is the risk. Because it can be a dangerous beast. Of course, it can’t ever turn a bad investment good, but it can turn a good investment bad. Simply piling margin onto an investment with a small return doesn’t transform it into a good idea. It has a darker side from a value perspective as well: it has the potential to turn a good investment into a bad one! It can limit your staying power and transform a temporary impairment into a permanent impairment of capital.

A margin loan can be used to meet short-term lending needs not related to investing. Moreover, margin can also be used for investment purposes to magnify your profits as well as your losses.

This strategy can be profitable when your stocks are going up. But, the increasing effect works the other way as well. Buying stock on margin is only successful if your stocks increase enough to pay back the loan with interest. Contrary, you could lose your major capital if your stocks go down too much. However, used wisely and prudently, a margin loan can be a valuable tool in the right circumstances. If you decide it is right for your investing strategy, consider starting slow and learning by experience.

13th November 2018
Stock Options Everything You Need to Know

The stock options give the holder the right, but not the obligation, to buy (or sell) 100 shares on or before the options expiration date.

By Guy Avtalyon

Stock options are financial instruments. That can provide the investor with the flexibility need in almost any investment situation.

Stock options are contracts that convey to its holder the right, but not the obligation, to buy or sell shares of the underlying security at a specified price on or before a given date. After this specified date, the option stops to exist. The seller of an option is, in turn, obligated to sell (or buy) the shares to the buyer of the option at the specified price upon the buyer’s request.

The stock options give the holder the right, but not the obligation, to purchase (or sell) 100 shares of a particular underlying stock at a specified strike price on or before the option’s expiration date. The seller of the option is one who grants this right.

You can recognize two kinds of stock options: American and European. American options are different from European options. The European options permit the holder to exercise the option only on the date of expiry.

How do stock options work?

All options are derivative instruments. That means that their prices are derived from the price of another security. More precisely, the underlying stock price will determine the options price, it is derived from the stock price.

As an example, let’s say you purchase a call option on shares of Intel (Nasdaq: INTC) with a strike price of $40 and an expiration date of April 16. This option gives you the right to purchase 100 shares of Intel at a price of $40 on or before April 16th. Of course, the right to do this will only be valuable if Intel is trading above $40 per share at that point in time.

Every stock option represents a contract between a buyer and a seller. The seller has the obligation to either buy or sell stock to the buyer. Of course, at a specified price by a specified date. The buyer, on the other hand, has the right but not the obligation, to execute the transaction. On or before a specified date. If it isn’t in the best interest of the buyer to exercise the option when it expires, the buyer has no further obligations. The buyer has bought the option to execute a transaction in the future. Hence the name – option.

What is underlying security?

The particular stock on which an option contract is based is usually known as the underlying security. Stock options are categorized as derivative securities because their value is derived in part from the value and characteristics of the underlying security. A stock option contract’s unit of trade represents the number of shares of underlying stock which are covered by that option. The stock options unit of trade is 100 shares. This indicates that one option contract signifies the right to buy or sell 100 shares of the underlying asset.

What is the strike price?

The strike price, or exercise price, of stock options, is the specified share price at which the shares of stock can be bought or sold by the holder, or buyer, of the option contract. To exercise your option is to exercise your right to buy or sell the underlying shares at the specified strike price of the option.

The strike price for an option is initially set at a price that is reasonably close to the current share price of the underlying security.

What is the stock options contract?

A stock options contract is defined by the following elements: type (put or call), style (American, European and Capped), underlying security, a unit of trade (number of shares), strike price, and expiration date. All stock options contracts that are of the same type and style and cover the same underlying security are referred to as a class of options. All stock options of the same class are referred to as an option series. They have the same unit of trade at the same strike price and expiration date

Stock vs stock options

The difference between stocks and stock options is that stocks give you a small piece of ownership in the company, while stock options are contracts that give you the right to buy or sell the stock at a definite price by a particular date. There are always two sides to every option transaction: a buyer and a seller. For every call or put option bought, there is always someone else who is selling it. Many traders think of a position in stock options as a stock surrogate that has a higher leverage and less required capital. They can be used to bet on the direction of a stock’s price, just like the stock itself. But stock options have different characteristics than stocks. And there is a lot of terminologies that options traders must learn.

What are Put and Call?

A call is the option to buy the underlying stock at a predetermined price by a predetermined date. The buyer has the right I explained above. The seller of the call who is also known as the call “writer” is the one who has the obligation. If the call buyer decides to buy, the call writer is obliged to sell shares to the call buyer at the strike price. A call option contract grants its holder the right to buy a certain but specified number of shares of the underlying stock. That right has to be executed at the settled strike price on or before the date of the expiry of the contract.

For example, you bought a call option on ABC company with a strike price of $40, expiring in two months. That call buyer has the right to exercise that option, paying $40 per share, and receiving the shares. The writer of the call would have the obligation to deliver those shares and receive $40 for them.

Put options are the options to sell the underlying stock at a predetermined strike price. Until a fixed expiry date. That put buyer has the right to sell shares at the strike price. And the put writer is obliged to buy at that price.

Calls and puts, individual, or in combination, can provide different levels of leverage or protection to a portfolio.

What are employee stock options?

Many companies issue them for their employees. When used appropriately, these options can be worth a lot of money for you. With an employee stock options plan, you are offered the right to buy a specific number of shares of company stock.

All employees’ options have a vesting date and the expiration date. It’s impossible to exercise these options before the vesting date or after the expiration date.
You’ll recognize two types of stock options companies issue to employees:

NQs – Non-Qualified Stock Options
ISOs – Incentive Stock Options

With a non-qualified type, taxes are taken from your gains after you exercise the options. However, keeping too much company stock is considered risky. For example, if the company has financial problems, your future financial security could be in danger.

When long-term investors want to invest in a stock, they usually buy the stock at the current market price and pay full price for the stock. An alternative is to use stock options. Buying them allows you to leverage your purchases. Far more than is possible in even a margined stock purchase. In several investment situations, it might make sense to invest in stock options. Hence, rather than the underlying stock. Note, the basic fact of stock options trading. You are highly leveraging your investment. And it means your investment risk is also substantially increased.

12th November 2018
Types of Trade
3 min read
- Study your previous trades and recognize the types of trade you were entering.
Regardless of personal experience in trading, conversations and exchange of views with other traders are valuable. In one of such conversations, the topic was the types of trade. After many hours and a lot of coffee, we had one conclusion: There are 3 types of trade.

I need your attention for a minute. Let me explain this.

True is, whatever measure, guide or indicator you are looking for, whatever the time frame, there are only 3 types of trade.
I meet a lot of people thinking they’ve mastered trading. The problem is they didn’t understand the differences between the trades they took.

Sure thing is, it will be easier for you if you know the ultimate goal and what can you expect from the trade you took. And it is possible if you know the type of trade you just implemented. This is very important because your knowledge is what determinate where to place your stop loss and your take profit.

When a professional trader enters a trade, he knows exactly what he’s trading. And my trading friends and me, we can recognize 3 types of trade.
1. Reversal trade
2. Breakout trade
3. Pullback trade
Each of those trades has some special characteristics (I’ll tell you more about each of them). Depending on the market you’re trading, the success of each type of trades may be different. In Forex trading, the 3 types of trade work good.

Some traders are attracted to trade all of those types for a limited number of currency pairs. But others are specialized in only one of those trades. When a professional trader enters some trade, he must know what he is trading.

REVERSAL TRADE as the type of trade

A lot of traders think that implementing Reversal trades is composed of “calling a top” or “calling a bottom”. This isn’t quite true. Actually, the entry price of a reversal trade is often in a previous zone of support or resistance. Reversal trades are among the most popular types of trade because of their ability to be easily spotted. They take place in a ranging market.

As you can see the buyers were very aggressive on the chart above because they pushed the price up all the way to point 1 from an original support zone.

But, once the price hit a resistance zone (marked as 1), buyers started to take profit. And several traders began to short the currency pair and got more aggressive. They took control of the market. This had for the result to create a strong rapid decrease in price.

At point 2, the same result came, which was a good opportunity to enter a Reversal trade. The sellers placed their orders at that level and the buyers began to take profit because they knew the price had reversed in the past at the same level.

The stop loss would usually be placed above the highest point (A) and the take profit somewhere below the resistance zone. It is tolerable to expect a risk-to-reward of 1:2.

BREAKOUT TRADE as the type of trade

Breakouts trades as one of the types of trade are usually made by a strong continuous movement in a direction. Some traders call it an acceleration because the movement is fast.

As you can see, the main resistance zone is marked by green.

This is a typical example of Breakout trade.

Take a look, the bulls were confident and kept pushing the price higher and higher to point 1. At that price, the sellers became more aggressive and took control of the market until the buyers showed even more power. The level pointed with a 2 shows a price at which bears are known to get more aggressive in the market. But, they were not aggressive when the price reached that level.

Because there were no traders wanting to sell the currency pair aggressively, more and more traders went long, thus pushing the price higher and breaking through the resistance level.

The stop loss on that trade would usually go slightly below the resistance zone that was broken and the take profit somewhere above the zone. It is tolerable to expect a risk-to-reward of 1:2.

PULLBACK TRADE as one of the types of trade

Pullback trades are usually more solid because the retracement back to a previous price level represents a certain confirmation. ( Retracement is a temporary reversal in the direction of a stock’s price that goes against the prevailing trend. A retracement does not signify a change in the larger trend.)

As you can see, a pullback trade is characterized by a retracement, often to the previous support or resistance zone.

Take a look to the chart above, the price kept ranging between a support and resistance zone. At point 2, no one was aggressive enough to move the price significantly higher or lower.

Once the price broke above the resistance zone at point 3, several traders began to feel excited about their profit so far. Most of them thought that this high price might be a good opportunity to take a profit. But, as more and more people took profit on long trades, the price slowly decreased.

When the price got back to the previous resistance zone, some traders began to feel that this price was too low. Those traders then bought the currency pair once again (at point 4) to push the price up.

The stop loss on that trade would usually go slightly below the resistance zone that was broken and the take profit somewhere above the zone. It is tolerable to expect a risk-to-reward of 1:2.

But there are some other styles of trade speaking about styles of trade.

RUNAWAYS

A stock that goes up or down too fast has a greater potential for a short counter-trend. This is caused by investors who take profits. If you bought a stock and make a very good return in a short amount of time, you will likely want to exit the trade to lock in profits.

One type of trade is to play this process, shorting a stock that goes up too quickly or buying a stock that goes down too fast. This trade goes against the longer term momentum of the stock and is only a short-term trade. For savvy traders, it can be a lucrative move.

ANTICIPATIONS

Some chart patterns show a mood but lack a trend. For example, those familiar with charts will know that ascending triangles show optimism and descending triangles pessimism. However, they are consolidation patterns, which means the price, in general, is going sideways over time.

One of the types of trade is to anticipate a breakout by buying stocks in ascending triangles or shorting stocks in descending triangles. Since price volatility is low, the risk of the trade is less and the upside greater if the stock does what we expect of stocks in these patterns, breakout. This is for advanced traders.

How to use all these types of trades?

Look at the top of this post. When a professional trader enters a trade, he knows exactly what he’s trading.
But do you know too?

Study your previous trades and recognize the types of trades you were entering. Then ask yourself this simple question:
”Did I make this as well as I could?”

If you get YES as the answer, you are a very good trader. But if your answer is NO this will help you to make progress.

Risk Disclosure (read carefully!)
11th November 2018
Tricks of The Trade

Don’t eve try to find or use tricks in the trade, here is why.

By Guy Avtalyon

There are no tricks of the trade. You will find no hacks or cheat-sheets. All you can find are countless strategies to choose from depending on your trading style and many wise practices to follow.

In short: Learn before earn. Whenever it seems something is very obvious, first see how the market is behaving before making up your mind to go long or short. Start with paper trading. Learn Technical and Fundamental analysis. Access your risk ability and only take positions in which you are comfortable with possible loss.

After many hours and a lot of coffee, we had one conclusion: There are 3 types of trade. You have to choose your strategy. If you make the right pick and learn a lot you have a chance to become a master in it.

At first, you should get theoretical knowledge about the market.

Educate yourself and read special books. Read blogs. You can find a good piece of advice there. Make out a trading strategy or taking an already working one (find it on the Internet), test it, and see how it works. Try to master it. But don’t go away from its rules (you can change the rules, of course).

Practice. You need practice. Start with a demo account. All of them are free and you can get even several accounts from different brokers to compare them and find the best one for you. Then continue with trading real money, decide what strategy is yours, and start making money!

Remember, that you should keep in mind all the tips or tricks of the trade which you will learn from literature. You will have to make all your decisions logic and automatic. After some time, when you’ll be experienced enough, you should feel the ground. Meet your losses and wins as a lesson.

Define your goals and choose a trading style

It is important to have some idea about where are you going. You have to have clear goals. Then check your trading method is capable to achieve these goals. Each trading style has a different risk profile. That requires a certain attitude and approach to trade successfully.

You have to be sure your character fits the style of trading you deal with. The mismatch will lead to stress and definite losses. Learn and practice.

It is better than trying to find tricks of the trade.

Take this small tip regarding calculating expectancy:

Expectancy is the formula you use to determine how reliable your system is. You should go back in time and measure all your trades that were winners versus losers. Then determine how profitable your winning trades were versus how much your losing trades lost.

Take a look at your last 10 trades. If you haven’t made actual trades yet, go back on your chart to where your system would have indicated that you should enter and exit a trade. Determine if you would have made a profit or a loss. Write these results down. Total all your winning trades and divide the answer by the number of winning trades you made.

Choose an appropriate trading platform

Choosing an online broker seems like a simple process. But in reality, it can be a nightmare because finding the right broker is not easy. In the very beginning, you want to be sure that the broker has the right credentials, understands the market, has similar wealth-building beliefs as you do. The most important question is about what type of trader you want to be. Are you an active trader or buy-and-hold investor? Whatever you are, it will affect your choice of broker. If you are a buy-and-hold investor and invest in index funds, making a few trades per year, fund selection may be more important to you than low transaction fees. If you like to trade off of Fibonacci numbers, be sure the broker’s platform can draw Fibonacci lines. These are the best tricks of the trade.

Choosing a respected broker is of main importance. Researching the differences between brokers will be very helpful. You must know each broker’s policies.

Have a plan before executing a trade

You don’t need a million bells and whistles to make money, just one simple tactic that works. One of the biggest problems a trader faces is bridging the gap between trade planning and execution. Getting from a strategy looking good on paper to real-world trading performance is what it’s really all about. Without question, all the planning in the world will not do you any good if you can’t execute and reap the benefits of your work. Wins and losses come in a random distribution. It is not unreasonable to sit through a series of losing trades even if you did everything according to plan. One issue to consider is that people aren’t particularly confident in what they’re doing and this can be rectified with a little guidance.

Understanding what it is that you are trying to achieve and what constitutes reasonable results can go a long way towards settling nerves and allowing a trader to execute how they have planned to do so. Clarity of mind and consistency of approach will help you to start to realize the potential of your strategy.

OK, there is one trick of the trade: “one punch, one kick.”

The idea is to accomplish the job as quickly as possible with very minimal effort. Find your edge in the market, a technique that works and sticks to your plan. If you don’t have a strategy then you shouldn’t be on the battlefield. Traders who execute random orders without a plan usually lose their money. Who needs a flying roundhouse kick, when a straight stomp to the knee will incapacitate your opponent with one simple move.

Trade quality over quantity

One general mistake is the need to always be in a trade. Some traders get whiplash by chasing the market during choppy conditions. Advanced traders are very picky about when to pull the trigger.

Most of the time the markets produce a 50/50 possibility for success. You want to be patient and wait for trades that have a higher probability than a coin toss. The trick of the trade is to find good trade setups not treat the markets as a roulette table.

That said, even quality trades have an element of chance, therefore you always need to have an exit strategy to manage risk.

Traders tend to make money when the markets are inefficient unless you’re running an algorithm that scalps a flat market, stay away from choppy or stable price action. Only trade in market conditions that are conducive to your particular trading strategy.

As we said before, there are no tricks of the trade. Trading is an art. The only way to become skilled is through consistent and disciplined practice. That’s the trick of the trade.

9th November 2018
Stop Loss Order – What is It?

2 min read

A Stop Loss is a type of closing order to automatically close a trade once prices hit a specific level in the market, normally for a loss It is one of the most popular tools for traders to minimize their risk

A Stop Loss order is automatic – so you don’t have to manually monitor your positions. This provides a certain level of control and comfort.

Experienced traders will testify that one of the keys to achieving success in financial markets over the long term is prudent risk management. Utilizing a stop loss is one of the most popular ways for a trader to manage their risk, around the clock.

What is a Stop Loss order?

A stop loss is a type of closing order. It allows the trader to specify a specific level in the market where if prices were to hit. The trade would be closed out by systems automatically, typically for a loss. This is where the name Stop Loss appears because the order effectively stops your losses.

In simple terms, Stop-Loss is an automatic order to buy or sell an instrument once its price reaches a specified level, commonly known as ‘the Stop Price’. The order is executed automatically, which saves you having to constantly monitor your deals. It also serves as protection from excessive losses.

When it comes to a market as volatile as a cryptocurrency, the hardest part is to reduce your losses. Many novice investors have quickly learned the importance of controlling losses. Some may have, sadly, had to learn it the hard way.

A stop-loss order is an order placed with a broker to sell a security when it reaches a certain price. They are designed to limit an investor’s loss on a position in a security. Most investors associate a stop-loss order with a long position. But it can also protect a short position. In this case, the security gets bought if it trades above a defined price.

How does a Stop Loss order work in practice?

The concept of a stop loss is quite flexible in terms of application in practice. In fact, there are a variety of applications to the concept of stop loss. Firstly, you can use it to keep a check on the risk of your trading positions. This is the basic role of a stop loss. Secondly, you can also apply this concept when the stock price is rising and use the concept of stop-profit or trailing stop losses to constantly keep upping your targets with inbuilt risk management.

The price at which a stop loss order is placed is a personal decision and depends on the trader’s risk tolerance. Traders should consider not setting their limit too low. Doing so would result in the orders getting filled too fast, even with normal market volatility. The price at which stop orders are placed should allow room for a currency pair to rebound in a favorable direction while providing protection from excessive loss.

What this means is that stop loss is not meant to eliminate all risk. The price should be set far enough into the ”loss” territory or at a place from where a return to profitability for that trade seems unlikely. A Stop Loss helps to manage your risk and keep your losses to an acceptable and controlled minimum amount.

How to set up a Stop Loss order

Setting a Stop Loss order is very easy. When you open a deal, you will see an option to ‘Add Stop-Loss’. Simply choose an amount you are willing to lose on the specific deal. Alternatively, set an exact in which the deal will automatically close.

The real challenge with Stop Loss is figuring out which rate to set, but with a bit of practice, you will discover that automatic orders are extremely useful.

Do stop losses provide complete protection?

They are one of the best ways to ensure your risk is managed and potential losses are kept to acceptable levels. Stop losses orders are great and can assist in a variety of ways including preserving your money, preventing your position to become worse or for guaranteeing profits. But they don’t provide 100% security.

They protect your account against adverse market moves, but they cannot guarantee your position every time. If the market becomes suddenly volatile and gaps beyond your stop level it’s possible your position could be closed at a worse level than requested. This is known as price slippage.

The advantages and disadvantages of the Stop Loss order

Novices will just bump the keyboard and hope their money is still there tomorrow. But not you. You’re ready to make some smooth love to the charts. Stop Loss order is an extremely important tool for traders. Experienced traders understand that Stop Loss orders are not a perfect solution. They should be used carefully because they can also limit potential profits by effectively closing a deal too soon.

The advantages: Stop order offers protection from excessive losses and enables better control of your account. It helps monitor multiple deals. Stop order is executed automatically, at any time and it’s easy to implement. And allows you to decide what amount you are willing to risk.

The disadvantages: Stop Loss order could result in deals closing too soon, hence limiting profit potential. Traders need to decide which rate to set, which could be tricky.

The bottom line

Having a losing position is certain, but you can control what you do when you are caught in that situation. The ultimate goal for online traders is to take advantage of price changes in order to profit. By carefully using Stop Loss order you can both minimize risks and maximize your profit potential.

Risk Disclosure (read carefully!)

8th November 2018
Fibonacci retracement – Know When to Buy and sell

2 min read

Fibonacci numbers are 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, etc. The sequence occurs by adding the previous two numbers (i.e. 1+1=2, 2+3=5). The main ratio used is .618. This is found by dividing one Fibonacci number into the next in sequence Fibonacci number (55/89=0.618).

The logic by Fibonacci based traders is that Fibonacci numbers occur in nature. And the stock, futures, and currency markets are creations of nature – humans. Therefore, traders can apply the Fibonacci sequence to the financial markets.

There are many Fibonacci tools such as Fibonacci Retracements used by traders.

In finance, Fibonacci retracement is a method of technical analysis for determining support and resistance levels. They are named after their use of the Fibonacci sequence. Fibonacci retracement is based on the idea that markets will retrace a predictable portion of a move. After which they will continue to move in the original direction.

Use Fibonacci Retracements to Enter a Trade

First of all, no indicator should be used in isolation. But by combining it with trend analysis it helps highlight logical areas for entering trades.

Fibonacci Retracements are considered a predictive technical indicator as they attempt to identify a future exchange rate. The theory is that after a rate spike in either direction, the rate will often return or retrace. Part way back to the previous price level. Before resuming in the original direction.

When the price of an asset pulls back, it typically has a mathematical relationship to the price wave that preceded it.

Moves lower off a recent high, or moves higher off a recent low.

This relationship is based on the “Golden Ratio” and a series of “Fibonacci Numbers” that help define the numerical relationship of one thing to another.

Interpreting Fibonacci Retracements

Given their popularity and widespread usage by technical analysts, it is good to know how to interpret Fibonacci retracements. However, as with any indicator, it is wise to seek confirmation from additional sources. Just to bolster Fibonacci analysis before basing a large trade.

Once an impulse wave has occurred, the price will quite often move to and stall at one of the Fibonacci Retracement levels. If the price falls through one level it will likely proceed to the next level. Sometimes, a price may stall at one level, then proceed to the next, stall and proceed to the next and so on.

During such periods it is important to have some guidelines. To know on which levels are likely to be most important in certain market conditions. This will require a lot of practice reading price action.

When there are strong trends, what to do?

In a very strong trend, you should expect shallow pullbacks, to 23.6, 38.2 and sometimes 50. In regular trends, or during the middle of a trend expect a pullback to the 50 or 61.8 levels. Early in the trend, late in the trend or during weak trends expect retracements/pullbacks to reach the 61.8 or 78.6 levels.

We can’t know in advance which Fibonacci level will reverse the pullback. Since there are multiple levels, which one it stops can be random. This is why we need some other tools to help make trading decisions. If we opt to use retracement levels.

When it comes to using Fibonacci Retracements as a technical indicator, trader discretion is advised.

The Fibonacci tool works best when the forex market is trending.

Fibonacci retracements provide some areas of interest to watch on pullbacks. They can act as a confirmation if you get a trade signal in the area of a Fibonacci level.

The idea is to go long (or buy) on a retracement at a Fibonacci support level when the market is trending up. And to go short (or sell) on a retracement at a Fibonacci resistance level when the market is trending down.

Fibonacci Retracements are ratios used to identify potential reversal levels. These ratios are found in the Fibonacci sequence.

The most popular Fibonacci Retracements are 61.8% and 38.2%. Note that 38.2% is often rounded to 38% and 61.8 is rounded to 62%. After an advance, chartists apply Fibonacci ratios to define retracement levels and forecast the extent of a correction or pullback. Fibonacci Retracements can also be applied after a decline to forecast the length of a counter-trend bounce.

These retracements can be combined with other indicators and price patterns to create an overall strategy.

Unlike moving averages, Fibonacci retracement levels are static prices. They do not change. This allows for quick and simple identification. And allows traders and investors to react when price levels are tested.

Because these levels are inflection points, traders expect some type of price action, either a break or a rejection. The 0.618 Fibonacci retracement, that stock analysts like to use, approximates to the “golden ratio”.

Basic Fibonacci Retracement Strategy

Fibonacci Retracements are a guide; don’t expect the price to stop exactly at a certain level. For example, the price slightly overshoots at the 61.8 level. It is typical for the price to stall just above or below a Fibonacci level.

Buy when the price pulls back and stalls near one of the Fibonacci retracement levels. And then begins to move back to the upside. Place a stop loss below the price low that was just created. Or below the lower Fibonacci retracement level to give more room. In perfect position, the retracement level you buy at is one that the asset has a tendency to reverse it.

Look for some sort of trade trigger to occur near the Fibonacci level. For example, the price is up and the price has pulled to near a key Fibonacci level. You should wait for the price to consolidate. And then break out of that consolidation to the upside. This adds a second layer of confirmation. Also, you can watch patterns to trigger a trade.

Without this trigger itis hard to trade Fibo levels on your own.

How to apply

In a downtrend, sell when the price pulls up and stalls near one of the Fibonacci retracement levels. And then it begins to move back to the downside. Place a stop loss just above the price high that was just created. Or above the higher Fibonacci retracement level to give a bit more room.

Again, add in a trade trigger or some other element of confirmation.

Looking at how strong the trend is can help determine which Fibonacci levels are most likely to stall and hopefully reverse the pullback.

The bottom line

You can apply Fibo to any time frame, including ticks charts, 1-minute charts or weekly charts. Also, you can use retracement levels on any liquid market. And can be applied to individual price waves or multiple price waves.

You might also like:

>>> Best Trading Strategy Without Indicators In Forex

>>> How to Use Technical Indicators to Analyze Stocks?

>>> MACD Indicator – Moving Average Convergence Divergence

>>> Indicator Trading And How To Use It

>>> P/E Ratio An Quick Method to Value a Stock

2nd November 2018
What is Bitcoin Wallet and How to Open It?

The bitcoin wallet is a collection of private keys

By Guy Avtalyon

The answer is simple, a Bitcoin wallet is a collection of private keys. It may also refer to client software used to manage those keys and to make transactions on the Bitcoin network.

But there is also the technical definition. The Bitcoin wallet is a software program that stores your private and public keys (they come in pairs). It enables you to send and receive coins through the blockchain, as well as monitoring your balance.

How to open a Bitcoin wallet?

The exchanges automatically create a bitcoin wallet for new accounts, almost all of them. All you’ll have to do to be able to use a bitcoin wallet is to load it with bitcoin or some altcoins. However, as wallet providers will charge fees for any outside transaction, it may be cheaper to examine the benefits of a non-managed opportunity.

It’s easy to find plenty of free wallet options. When using a web-based wallet that means, you’ll have to share your private key with a third party. For the new users of crypto, this is maybe the easiest way to start using a bitcoin wallet. On the other hand, this isn’t suitable for privacy-minded users.
Keeping your coins in an exchange can be risky. There is a potential of losing them all. Why? Simply because you do not technically “own” the coins you’ve bought in exchange. Exchanges operate like a bank. It represents a third-party service provider and you must trust they are able to keep your coins safe. Still, there is always a chance that exchange can be shutting down or be hacked. The result could be you end up in a loss of your coins. Given the lack of regulatory frameworks on exchanges and cryptocurrencies as a whole as well as the infancy of the industry, the best way to keep your coins safe is to have total control of your coins.

How does the Bitcoin wallet work?

Ownership of your private keys gives you total control over the funds associated with your matching public keys. That’s why it is vital to make sure you keep your private keys secretly hidden so that only you know your private keys. It is important to have a back-up of your private keys.

Digital, and in the same way bitcoin wallets are different as compared to your physical wallet. Digital wallets don’t store real money, instead, they store private and public keys. Private keys are like your PIN number to access your bank account, while public keys are similar to your bank account number. When you send Bitcoin, you’re sending a value in the form of a transaction, transferring the ownership of your coin to the recipient. For recipient is important that his/her private keys must match the public address you used to send Bitcoin. Of course, if that one wants to spend transferred Bitcoin.

Why would you need a Bitcoin wallet?

Bitcoin, as a difference from traditional money, is digital money. Hence, access to this currency is totally different. Especially when it comes to receiving and storing it. To be clear, Bitcoin doesn’t live in any tangible form, it can’t be stored anywhere. What owners can store is the private keys to have access to the public Bitcoin address. Key is also necessary to sign the transactions that need to be securely kept.
Only with this combination of recipient’s public key and your private key a Bitcoin transaction possible.

You’ll find several different kinds of Bitcoin wallets, that fit different requirements and differing in means of safety and security, comfort, or convenience.

By using the wallet software, you are able to send and receive Bitcoin. If you want to receive Bitcoin, a wallet is all you need. This means that you personally can send the Bitcoin to the address of your wallet.

In case you want to send Bitcoins, you will need to have them first. To buy Bitcoin you’ll need to subscribe to one of the online exchanges. to authenticate yourself, you’ll need some ID card and proof of residence. When it is done, you can start to send money to that exchange and in return to receive Bitcoin for fiat money. The rest is simple. Just send the bought Bitcoin to your digital wallet. Never keep Bitcoin or any other digital currency for a long time. In fact, as long as your Bitcoin is stored on exchange it isn’t really yours. The exchange could be hacked or closed. Well, you’ll lose all your funds.

What is needed to open it?

Because Bitcoin is decentralized, you cannot just open an account and put money in and out. To put your digital coins somewhere, you’ll need a wallet or at least a Bitcoin address and a private key. On an elementary level, the address operates like a bank account number. The private key is actually similar to your signature or password to a netbank. To confirm the possession of your digital money you need a private key. Never ever share it with anyone!

Okay, but how will you access your coins? You have to download a digital wallet on your computer/phone. Cryptocurrency wallets store your address and private key, they’re functioning like a netbank. You can receive and send amounts.

It’s difficult to choose from the millions of Bitcoin wallets. Do some research and find the best for you. Maybe the most comfortable way is to add a wallet extension to your browser.

1st November 2018