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.

  • Bear Market profit! How to Make the Profit on the Bear Market?

    Bear Market profit! How to Make the Profit on the Bear Market?

    2 min read

    The Bear Market Is Here, But Still, You Can Make The profit 1
    The bear market is here. Now is the time to focus on how bad this bear market can be.  But also, how can you make a profit during the Bear market period. The questions exploded, and negative consequences are extensive and serious. But it isn’t impossible to make the profit over the bear market.

    The investors and advisers are still focused on holding stocks. That means they are not prepared for the destructive emotions that come from this panic-crash. 

    How they could be when is the time of the bear market and their goal is to make the profit?

    Hopefully, the market does not drop.

    But there is a considerable risk now. Maybe the best philosophy is to be prepared for a disaster than to count that the worst will not happen.

    Yes, we know. The Bear markets are brutal when they hit. That know any stock investor who was invested in stocks during 1973–1975, 2000–2002, or 2008.

    The very first fact is that fortunately, bear markets tend to be much shorter than bull markets. If you’re properly diversified your portfolio, you can get through this period. And not to have much damage.

    How?

    If you are an agile investor, bear markets can provide opportunities to boost your portfolio. It can lay the base for long-term wealth.

    Here are some ways to make bear markets very profitable.

    First of all, don’t let yourself down, even when the market is down. Stay calm and focused.

    The big truth is that in the bear market, the stocks of all companies tend to go down. Where is the catch? How to make some profit from this? 

    Bad stocks tend to stay down. Yes?

    But good stocks tend to recover and back on the growth path.

    So, the strategy is clear.

    If the stock of a profitable company goes down, that is a buying opportunity.

    Remember this!

    Let’s say a few words about the second opportunity during the Bear market.

    Bear Market profit! How to Make the Profit on the Bear Market?

    You have to look at the dividends! A dividend comes from a company’s net income. It is an important fact. Contrary, the stock’s price is determined by buying and selling in the stock market.

    Say the some company’s stock price goes down but the company is strong yet, still earning a profit, and still paying a dividend.

    It is a good opportunity for those seeking dividend income.

    If you are one of them, you have to buy. 

    A bear market comes in tough economic times. It reveals who has too much debt to deal with. But also, who is doing a good job of managing their debt.

    We are talking about the bond rating.

    In this circumstance, the bond rating becomes valuable. The bond rating is a picture of a company’s creditworthiness.

    The ratings of AAA, AA, and A are considered kind of investment-grade. The lower ratings are Bs or Cs.

    A rating of AAA is the highest rating. This mark signifies that the agency believes that the company has achieved the highest level of creditworthiness. Therefore, it is the least risky to invest in.

    If you find a stock whose company has a bond rating of AAA, that is good to buy!

    Using ETFs with your stocks can be a good way to add diversification and use a sector rotation approach. Different sectors perform well during different times of the slump and flow of the economic or business cycle.

    Do you remember the rule: Never put all eggs in one basket.

    So, rotate your sector.

    Bear markets are tough for good stocks. But they’re brutal to bad stocks.

    When a bad stock goes down, it often goes into a more critical decline. Because more and more investors look into it and discover the company’s shaky finances.

    What you have to do?

    Short it?

    Going short is a risky way to bet on a stock going down. If you’re wrong and the stock goes up, you have the potential for unlimited losses.

    A better way to speculate on a stock falling is to buy long-dated put options. That gives you the potential to profit if you’re right but limits your losses if you’re wrong.

    During the bear market, you can make the profit by using the margin. It can be useful. Using the margin is wisely, it can be a powerful tool. The great tactic is o acquire dividend-paying stocks after they’ve corrected.

    A margin is using borrowed funds from your broker to buy securities.

    Keep in mind, you don’t like to use margin before the stock corrected or declined.

    Using margin when the stock is high and it subsequently falls, can be dangerous. But using margin to buy the stock after a notable fall is less risky.

    Buy call option if you want to make the profit during the bear market!

    Well, it is about speculating, not investing. Remember, a call option is a derivative, and it has a finite shelf life; it can expire worthless if you’re not careful.

    The good side of a call option is that it can be low-cost to buy. And it tends to be a very cheap vehicle at the bottom, when is a bear market. This is your chance!

    Bear Market profit! How to Make the Profit on the Bear Market? 2

    If the stock price sink, but the company is in good condition, betting on a rebound can be profitable.

    How can you still make the profit?

    For example, you can write a covered call option. Also, you can write a put option to generate income.

    But the most important is to stay calm when the bear market starts. That will provide you with more chances to make the profit.

    If you don’t plan to retire ten years from now or even more, a bear market shouldn’t make you nervous.

    Good stocks will survive bear markets. After that period, they’re ready for the next bull market.

    So, try not to get quickly out of stock. If you want to make the profit on the bear market territory.

    Just keep monitoring the company performance for growing sales and profits. If the company looks fine, then hang on. Keep collecting your dividend and hold the stock.

    This bear market had a fairly recognizable trading picture. We had the opportunity to see it before.

    So, be patient and take your advantages!

    Risk Disclosure (read carefully!)

  • Automated Trading Systems Can Increase Your Trading Profits

    Automated Trading Systems Can Increase Your Trading Profits

    Automated Trading Systems Can Increase Your Trading Profits 1This is not something you can do over the weekend and let run happily ever after.

    By Guy Avtalyon

    People maybe get automated trading wrong. I’ll explain this. But first comes first.

    Wouldn’t it be great to have a robot trade on your behalf and earn guaranteed profits? It’s everyone’s dream is to find the perfect computerized trading system for automated trading. The one which guarantees profits and requires little input from the trader themselves.

    There are many automated trading systems available. But there are still a few burning questions that need to be answered.

    First of all, what is the automated trading?

    They are computer programs designed by expert developers to follow a given market algorithm, every minute of the day.

    You should consider automation if you want to participate in the futures market but lack the time to monitor, formulate, and implement your own trading plan.

    Automated Systems are programmed to look for trends, analyze market data, and apply specific mathematical/technical formulas which in turn generates signals: buy and sell orders – to go long or short.

    The performance – whether hypothetical or live- is tracked in real-time and you can subscribe, activate, and deactivate any system at any time.

    Automated Trading is comfortable

    They are programs that place orders on behalf of the trader. A trader sets the essential condition for order placement based on technical analysis principles.

    The system will place orders automatically based on the necessary conditions.

    The automated trading system facilitates backtesting on a demo account which gives a fair idea of the efficiency of the strategy.
    Nice!!!

    But you need more about how an automated system can increase your trading profit.

    In other words, can trading strategies that are automatically executed in financial markets be profitable?

    The investment is a process, so automation is a logical conclusion. To be honest, auto-trade is like a driverless car. It can go fast or slow.

    It all depends on the robustness of your design. People maybe get automated trading wrong. This is not something you can do over the weekend and let run happily ever after.

    If you believe that manual trading is highly competitive and intense, then imagine sitting in a fast car without a steering wheel, accelerator or brake pedals.

    So, why people fail?

    The way to design a profitable trading system is counter-intuitive. It must be built to withstand erosion. People think of the best possible outcome when they design a strategy.

    Wrong.

    You can’t design and test drive snow tires in Sahara. There are some reasons for that, don’t you think?

    You need to design automated strategies with failure in your mind. Always.

    Take care of the bad scenarios and the good ones will take care of themselves.

    That is not sexy,  but you wouldn’t take some luxury car for a spin if you knew that brakes are porous?

    When people think about failures, they think about stop losses or blow-ups. This is not the main issue, really.

    The problem is transforming near misses into near losses.

    Like you know, the market flip-flops all the time and does not care about your feelings.

    The whole game is about:

    1. a) moving the peak of profitable trades from small losses into small profits. In order to achieve a compounding system. That can only be achieved by having a solid exit policy
    2. b) elongating the right tail: ride your winners and cut your losers short. Profits look big as long as losses look small

    But as always, simple is not easy.

    The privilege of simplicity is that it imposes itself, even to those who do not understand its sophistication.
    Automated trading is a great tool to have in your trading toolkit.

    We would say the hardest thing about it is codifying your strategy. Converting your strategy into code that a computer can interpret can be very difficult, but totally doable if you put your mind to it.

    So if market conditions cause it to enter losing positions, it’s gonna enter losing positions, and quickly!

    These losses can mount up so have proper risk management systems in place:

    – Set a max drawdown limit that’ll kill the bot if it’s triggered
    – Use stop losses on every trade

    The strange thing is that it works and frankly speaking, no one would never be able to achieve the same results manually. You do not want to sit in front of a monitor and contemplate all the time.

    Computer trades are like a psychopath.

    It has no emotion and can do many more markets.

    The algo makes better decisions quantified as a higher gain expectancy/trading edge than you would.

    There is no question about it. It takes trades to makes money.

    The mindset of an autotrader is different than a manual trader. You have to trust the system.

    Once you auto trade, you have to let the machine take the trade even if your guts scream NO.

    The good news is you can monitor multiple markets on your own time.

    The machine keeps trading away and that is an incomparable feeling of freedom.

    You can spend that time with your friends.

    Isn’t it amazing?

     

  • Position Trading

    Position Trading

    Position TradingWhat are the benefits and disadvantages of this trading style? All explained.

    By Guy Avtalyon

    The position trading is an approach to trading in which the trader either buys or sells contracts and holds them for an extended period of time. It also refers to the longest term trading. You can have trades that last for several months to several years. This kind of Forex trading requires a good understanding of the fundamentals. Let’s say it isn’t for traders without patience. So, why is that?

    What does Position trading require?

    Patience. Fundamentals force the long-term trends of currency pairs. Hence, it is very important that every new trader understand how economic details can affect the domestic financial outlook. In this kind of trading, the trader has to hold the trade for a long time. Stop losses will be very large.

    That indicates that the trader must have stable capital. Otherwise, the trader will get a margin.

     

    What does taking a position trading mean?

    Taking position trading means a position you take when you buy or sell securities. If you buy  a stock, future or option, it refers to a Long Position

    But if you sell-short a stock, future, or option, it is Short Position. In short, the word position describes your action and view on security/shares/futures, etc.

    By taking the position in the stock is something you do to earn money from the stock market.

    Very simple.

    How to earn money in the stock market?

    By purchasing a stock (called taking the position) and then selling that stock (closing the position).

    Or by selling the stock (called taking the position) and then buying that stock (closing the position).

    However, the duration of your position can fluctuate depending upon your strategy.

    It could be for a few seconds, or a few minutes, or a few years, or 20 years. It depends on your personal psychology and goals you want to achieve.

    What is the basic analysis of this trading method? 

    Read the charts or use some fundamental analysis before trading.

    When you buy a particular stock always lookout for high volumes.

    Of course, don’t buy all the shares at once. Buy it in installments. You have to buy at a lower price. So averaging can helps a lot and don’t forget to put stop loss.

    Sometimes market swings beyond our expectations and things may not go well. In that case, you need to exit on time and always make a substantial profit and move on.

    You are not married to the stock, so you can always buy it when it corrects.

    What is position trading?

    Let’s say it again, the position trading, also known as ‘trend trading’, can best be described as a ‘buy and hold’ method.

    If you want to become a forex position trader you must be the independent brain. Sometime you must ignore popular views and make your own presumes like, to where the market is going.

    You must understand fundamentals and have good vision into how they affect your currency pair in the long run. First of all, actually, you must have enough capital to withstand several hundred pips if the market goes against you.

    Long-term Forex trading can net you several hundred to several thousands of pips. If you are too excited being up 50 pips and already want to exit your trade, examine moving to a shorter-term trading style.

    You have to be very patient for this trading style.

    For position trading, historical points of support and resistance are maybe more important than indicators. The most important is to draw straight horizontal lines and use different time frames. The longer the time frame, the more important level. For this trading style, once again, you must have enough starting capital, you must be patient.

    So, what might entice you to try this style?

    Firstly, position trading is very convenient for new traders. The speed isn’t as wild as day trading or swing trading. Hence, you have a bit more time to plan your activities and create a trading plan. On a wider level, position trading can also be more attractive in different types of markets.

    For example: If you are in a bull market where there are strong emerging trends, it can be a good time to engage in position trading.

    You will not see the result fast, it will take time. We are speaking about months and years, not hours or days.

  • Trade Crypto And Stocks / Forex – How To Do That

    Trade Crypto And Stocks / Forex – How To Do That

    4 min read

    Trade Crypto And Stocks / Forex - How To Do That

    • If you understand how the financial markets are structured you can use the same skill and experience to profit in all three.

    At first, we have to define the difference between crypto and Forex/Stock trading because you have to have theoretical knowledge.

    – Crypto trading, or cryptocurrency trading, is simply the exchange of cryptocurrencies. Like in Forex, you can also buy and sell a cryptocurrency for another, like Bitcoin or altcoin for USD and Euro.

    – The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This includes all aspects of buying, selling and exchanging currencies at current or determined prices.

    – Stocks trading is the buying and selling of company stock – or derivative products based on company stock – in the hope of making a profit.

    Let’s go further!

    HOW TO TRADE CRYPTO

    Crypto shows bigger growth than stocks or forex. Honestly, all of these types of investment are risky.

    While Bitcoin is not the only digital currency on the market, it is indeed the first and most popular one and stands as the digital gold within the industry. The technology behind cryptocurrency holds a large part of its value. The secure way to identify a transaction and the way to transfer funds.

    If you want to trade cryptocurrency you need:
    1) A cryptocurrency wallet (or two).
    2) A cryptocurrency exchange (or two) to trade on.

    There are only a few things to know about trading cryptocurrency.

    Trading cryptocurrency is simple to start. Yeah, it’s easy. 

    But there are some essential aspects to understand before you start trading. And this is basic friendly advice to mull over. This not professional investment advice.

    Bitcoin mining, is it profitable

    I’ll explain on the example of Bitcoin.

    There are three ways you can trade Bitcoin:

    1 Buy the underlying from an exchange or online cryptocurrency broker

    For those who are willing to actively safeguard their Bitcoin, owning the underlying is clearly the way to go.

    But prudent steps must be taken to mitigate the risk of Bitcoin theft or loss of private keys.

    Diversifying holdings across wallet types, using two-factor authentication and strong passphrases, can be helpful.

    2 Trade (buy/sell) a CFD (Contract for Difference) derivative and hold cash margin with an online forex broker or multi-asset broker.

    Active traders looking to speculate on Bitcoin over the short or medium term can count that using an online forex broker will provide them with 24-hour trading. And potentially lower margin, and the ability to go either long or short.

    So, it is good!

    Because of counterparty risk, choosing a broker is just as important as finding one with the best trading tools or commission rates.

    3 Buy a publicly listed security related to Bitcoin and hold shares with an online stockbroker.

    For stock market investors, investing in Bitcoin indirectly through a listed security such as an ETF, ETP, or trust may be suitable for those looking at taking a passive position.

    Active traders might find the limited trading hours and potential lack of volume a limiting factor that could hinder their trading.

    Overall, using listed securities that invest, track, or hold Bitcoin can be a viable alternative to diversify away from the risks of margin trading. Or safeguarding private keys when buying the underlying.

    HOW TO TRADE FOREX

    Forex, also known as foreign exchange, FX or currency trading, is a decentralized global market where all the world’s currencies trade.

    You can trade currency based on what you think its value is. Like, for instance, you think a currency will increase in value, you can buy it. But, if you think it will decrease, you can sell it

    Trade Crypto And Stocks / Forex - How To Do That 2
    All forex trades involve two currencies because you’re betting on the value of a currency against another. Think of EUR/USD, the most-traded currency pair in the world.

    EUR, the first currency in the pair, is the base, and USD, the second, is the counter.

    When you see a price quoted on your platform, that price is how much one euro is worth in US dollars. You always see two prices because one is the buy price and one is the sell.

    The difference between the two is the spread. When you click to buy or sell, you are buying or selling the first currency in the pair.

    Since the euro is first, and you think it will go up, you buy EUR/USD. If you think the euro will drop in value against the US dollar, you sell EUR/USD.

    If prices are quoted to the hundredths of cents, how can you see any return on your investment when you trade forex? Leverage!

    When you trade forex you’re borrowing the first currency in the pair to buy or sell the second currency.

    To trade with leverage, you simply set aside the required margin for your trade size. If you’re trading 200:1 leverage, for example, you can trade $2,000 in the market while only setting aside $10 in the margin in your trading account.

    However, leverage doesn’t just increase your profit potential. It can also increase your losses. If you are new to forex, you should always start trading with lower leverage ratios, until you feel comfortable in the market.

    HOW TO TRADE STOCKS

    Stock markets are places where buyers and sellers of shares meet and decide on a price to trade.

    It is important to know that the corporations listed on stock markets do not buy and sell their own shares on a regular basis. When you buy a share of stock on the stock market, you are not buying it from the company, you are buying it from some other existing shareholder.

    There are many stock exchanges, many of which are linked together electronically which means markets are more efficient.

    The prices of shares on a stock market can be set in a number of ways, but most the most common way is through an auction process where buyers and sellers place bids and offer to buy or sell.

    A bid is a price at which somebody wishes to buy, and an offer (or ask) is the price at which somebody wishes to sell. When the bid and ask coincide, a trade is made.

    If there are many buyers and sellers at sequentially higher and lower prices, the market is said to have good depth.

    Stocks are quoted by their ticker symbol, represented by between one and four capital letters. They are often loosely representative of the company name.

    Let’s break down what is the market order!

    A market order is simply an order that instructs the broker to buy or sell shares at the best available price. The market order does not guarantee the price you will get. But it does guarantee that you will get the number of shares that you want.

    When an order is completed, it is said to be filled.

    Stop orders are contingent on a certain price level being attained to activate the trade and your trade will be executed only when what you want to buy or sell reaches a particular price.

    If you understand how the financial markets are structured you can use the same skill and experience to profit in all three.

    In all three you have to buy low and sell high against the crowd.

    There is no difference.

    Risk Disclosure (read carefully!)

  • Forex trading – Thank you internet!

    Forex trading – Thank you internet!

    Forex trading - Thank you internet!Hello, world! So, each of us would yell when the Internet appeared! And the internet brought us forex. The rest is in this post.

    By Guy Avtalyon

    Let’s see what is Forex trading. Well, some can say that it is basic stuff and belongs to ancient times. Lucky you, if you are one of them. Opposed to the majority of forex participants, ordinary people don’t know what the ForEx exactly is.

    So, let try to explain it. This article is for you who don’t know what Forex is.

    A word – the internet. It is crucial. But, it isn’t quite true. In this endeavor, in trying to explain what is a forex, we should start from the beginning. If you have traveled, you probably already have a forex trading experience.

    What? When? When you buy the currency of your destination country while paying with your own currency.

    That is forex trading. The world of trading.

    It is basically about Forex trading: Forex traders buy and sell currencies for profit or to protect investments. The forex market is the world’s largest financial market. And since trading is between market participants, there is no “open” or “close” of the market except on weekends.

    Some opportunities present themselves to people who keep up with news and events, while others require patient analysis. You might like trading the major currency pair or even you might have knowledge about the exotic currencies.
    Traders create their own power and decisions to their trading and, over time, build their own trading style.

    That is one of the advantages of Forex. Even more, you can sit in front of your computer but, at the same time, you are present all over the world. The forex market, or simply the FX market is the most traded on the financial market in the world. Some like to think of the forex market as the “Big Kahuna” of financial markets. The forex market is, from a certain point of view, a crossroad for international capital. The intersection through which global commercial and investment flows must move.

    This is the place where all international trade flows. Let’s break down the Forex trading!

    What is Forex trading?

    It is similar to your vacation pocket money. Forex trading always involves two currencies. The base currency is the one you are buying or selling, and its price is given in the quote currency:

    Base currency/Quote currency

    EUR/USD

    1/1.136512

    One Euro costs $1.136512 (the date is December 12, 2018, in my example).

     

    This is the point where trading begins.

    Let’s say that you believe the EUR will rise in value relative to the USD. You buy EUR 100,000, paying $136,512 from your trading account. And the EUR indeed rises a great deal, to 1.500000 at the end of the day. Therefore, when you close your position by selling the EUR 100,000, you receive $150,000 earning $13,488. What do you think?

    This is impossible? Well, yes and no.

    Is possible to earn a lot in Forex trading?

    Of course, this kind of price jumping is pretty impossible. But smaller rises are very possible. Maybe not in the case above, but on some other currency. You might ask, where can you get $136,512 n the first place? The answer might be that you have $3,000 in your trading account and your broker enables you to borrow $100 for each US dollars in your account.

    That is margin, 100:1. With this margin, you can enter forex positions with values of up to $300,000. But, what happens if the Euros didn’t rise? And instead, it fell to 1.050000 at the end of the day?

    Therefore, when you close your position by selling the EUR 100,000, you receive $105,000. Well, you lost $31,512.

    How to access to Forex market?

    You access this market using a trading platform provided by a broker.  Most of the investors can trade Forex with the proprietary platform Advanced Trader or with the popular MetaTrader 4 or 5. Or some other platform, as the broker can develop their own software.

    When you have selected your trading platform, familiarize yourself with the available spreads and tools.

    You’ll have to find some trustworthy broker that has a free demo account. That enables you to try everything using virtual money. Try the charts and indicators, and explore orders, which are automatic trades based on your expectations, used to open or close positions at predefined price points.

    What to pay attention to in the Forex trading?

    There is one thing you have to be aware of. We, in Traders Paradise, have some suggestions for you.

    Trading Forex can be extremely risky. However, you can take precautions to try to minimize those risks and their impact. In forex, there are three important skills you must develop to help you manage your trading risk. That is: analyzing, anticipating, planning In the first place, you have to protect your account with stops, limits, and other order types.

    There are a number of order types, such as the trailing stop, if/then, and order cancels.

    Set the proper levels

    Some could say that setting a stop is an art and they are probably right. But you need to be sure that your stop is set. So that your trade can handle smaller jumps and drops in price while protecting you from loss if the market doesn’t go your way. A stop that’s too tight could lead you to reenter the market. That could cause you to get stopped out again.

    That may cause more damage to your account balance than if you entered a stop that was too wide or if you had no stop at all. You must know how to handle your emotions. Sometimes, your mindset at the time can cause more damage than research you didn’t do.

    You are a trader, so try to stay objective and calm. Even if you have a losing trade, resist the urge to enter another trade outside of your trading plan. Never attempt to win your earnings back.

  • How to Use Stop Loss Order?

    How to Use Stop Loss Order?

    Stop Loss Order and How to Use It
    Use stop-loss orders whenever you enter a trade to limit the risk and avoid a potentially great loss

    By Guy Avtalyon

    A stop loss order is an order to sell a security when it reaches a given price. Put simply, the stop-loss sell order is designed to limit an investor’s loss on a particular stock. Stop-loss orders appear in four classes. But some brokers may offer products that vary in their structure and complexity. Some classes are more commonly used than others and dealers do not typically offer all classes of stop-loss orders.

    To some degree, each type of this order poises protection against the risk of “slippage” and the risk of an early exit from the position. Slippage points to the difference between the order level and the current trade price. It may be increased or decreased depending on the type of stop-loss order trader uses. All of these definitions fit the normal market conditions. Counterparties should ensure that they have an independent understanding of the parameters of normal market conditions. It is important for each currency market to effectively recognize risks during the abnormal market condition

    Why use Stop Loss Order

    When trading on an asset, investors are exposed to potentially high risk if the price moves towards a direction which is the opposite of the one they had anticipated. This could result in considerable losses in the investment unless action is taken to exit the non-profitable position as soon as possible. When the price moves in a direction that provides the current position profitable, a trader might want to close the position in the profits earned so far. But, the possibility of turning winning trades into losing positions is always present. Also, it could lead to abnormal losses. Stop Loss usually involving the prices at which a position was opened, and are frequently used by traders, as well as automated trading systems. Trading is almost exclusively conducted electronically through a computer.

    In addition to that, investors have replaced the broker with a platform for automated trading called algorithmic trading. There is a lot of proof that can confirm the increased algorithmic trades can decrease wrong price choices and reduce the balance of offer risk over different price levels of an asset correlated with the trades. These results show that algorithmic trading lowers the cost of trades and enhances the informativeness of quotes. Today more and more brokers use electronic trading platforms, and more individual investors opt for algorithmic trading. So this order is calculated for every trade in a few seconds.

    Take Profit

    Returns can be either absolute or relative. The price is within the price range x ∈ (L, b × L), or the investor, if x is the entering price, can simply set a constant I (proportional to the fluctuation we add), where x−I is the stop-loss price.

    The returns change over seasons and periods, according to the influences an asset undergoes as a result of outside or inside factors. The orders with stop loss and take profit, when activated, oppose the market trend (take profit) or intensify the movement (stop loss). They have great influence even over the liquidity during a flash crash. The use of stop-loss orders and take profit orders and the range of these orders reflect the risk-taking desire of the investor. Taking profit and stop-loss functions display the flexibility of profitability adjusted on each asset.

    The Stop Loss order protects the trader from holding a position that is not profitable for a long time. Contrary, that could result in big losses of capital. On the other hand, there is a distinction between the profits’ enhancement and risk reduction. The Stop Loss order has an influence on the fall of prices. In forex, the variance in exchange rates is faster when the prices hit levels at which Stop Loss order is usually set. Secondly, the influence of the Stop Loss order is bigger than the effect of the take profit order. It also helps the fast changes in prices by creating an opposite trend. Thirdly, the impact of stop-loss orders has an extended duration than that of the take profit orders.

    How Stop Loss order works

    Stop-loss orders work based on a trigger price. We can recognize two types of stop-loss orders: stop-loss limit (SL) and stop-loss market (SLM) orders.

    SL orders consist of a price plus trigger price. When the trigger price is reached, your Stop Loss order is triggered and a limit order is will be sent to the market. The limit order executes between your price and trigger price range only.

    For example, you buy a stock at $100 and place a sell stop-loss order with the price at $98 and trigger a price of $98.50. When the price of the stock reaches or goes below $98.50, your stop-loss order is triggered. A sell limit order with a limit price of $98 is sent to the exchange order queue. Since a limit order is executed at the best available price. If the price of the stock is at $98 or above, your sell limit order of price $98 will execute.

    Is possible a stop-loss order not work?

    Of course, it is possible.

    A sell limit order is sent to the exchange only when the sell stop-loss order is triggered. When the price of $98.50 is triggered, a sell limit order with a price of $98 is sent to the exchange order queue. But if the price of the stock falls below $98 before your order reaches the queue? The sell limit order will stay open and your stop-loss order will not be executed yet. This possible scenario can be overcome by a stop loss market order.

    The stop-loss market order consists of a trigger price. When the trigger price is touched or passed, your stop-loss market order is triggered and a market order is sent to the exchange. The market order is executed at the market price.

    For example, you buy a stock at $100 and place a sell stop loss market order with a trigger price of $98.50. When the price of the stock reaches or goes below $98.50, your stop loss market order is triggered. A sell market order is sent to the exchange order queue and will execute at whatever is the available market price. The point is that a market order always goes through and your stop-loss order will be executed at any moment happens.

    Stop Los orders do they work?

    These orders can also be used to lock in a profit. It’s important to understand that stop-loss orders are different from limit orders. Limit orders can be executed if you can buy, for example, stock at a specified price or more beneficial. What will happen when the markets are fast-moving. In that case, your stop-loss orders may not be filled precisely at the specified stop price level. But it will be filled reasonably close to the specified stop price. Traders should understand that in some extreme cases stop-loss orders may not provide much protection.

    The main goals of this order are to low the risk exposure and to make trading easier. Traders are urged to always use them whenever they enter a trade, in order to limit their risk and avoid a potentially catastrophic loss. Stop-loss orders help to make trading less risky when limiting the amount of capital at risk on any trade.

     

  • Cryptocurrency Market – How It Works

    Cryptocurrency Market – How It Works

    Cryptocurrency Market
    This market is in permanent growth, its volatility and unpredictable liquidity are a reality.

    By Guy Avtalyon

    The cryptocurrency market has been segmented into mining and transaction, based on the process. In the mining process, there is a greater necessity for hardware than it is a case in the transaction process. Therefore, the market for hardware for the mining process is larger than that for software. Furthermore, a miner can take part in this process with a small investment.

    Cryptocurrency is used for various applications, such as trading, remittance, and payment. These applications drive the market for cryptocurrencies.

    Trading the cryptocurrency market

    Cryptocurrency trading cover exchanging fiat currency with crypto. Also, it refers to exchanging, buying, and selling of cryptocurrencies. It meets some similarities of foreign exchange or forex wherein fiat currencies we can trade 24 hours a day. The number of cryptocurrencies has increased exponentially; currently, there are more than 1,500 cryptocurrencies available. Some of these coins can only be vested using major cryptocurrencies such as Bitcoin or Ethereum. To contribute to initial coin offerings (ICOs), one needs to perform trades or use a blockchain company’s services.

    A large number of players are investing in developing payment gateways and platforms for the payment process of their currencies. When a customer makes a purchase using a cryptocurrency as payment, the transaction often goes through the payment gateway at a fixed exchange rate. It automatically converts to traditionally recognized fiat currency so the merchant can avoid the volatility of the cryptocurrency markets. The payment through cryptocurrency has several advantages. Enhanced transactional security, protection from fraud, decentralized system, low fees, quick international transfers.

    Why invest in the cryptocurrency market?

    Volatility and unpredictable liquidity are a reality of the cryptocurrencies market. You could have made tons of money if you had invested in bitcoin earlier but you would’ve lost a lot of money if you had started investing in the last few months. Because when investing in cryptocurrencies, many traditional assumptions fall flat. Managing risk in financial markets is a well-established discipline. Whether investing in equities, bonds, or currencies usually practices protect market practitioners when they are buying, selling, or intimidating. Risks are typically aligned into different categories. Market risk, credit risk, and operational risk, and complex formula are used to determine how much capital should be kept in reserve to absorb losses. The historical progress in bitcoin has increased risk appetite both for existing and newer traders. It comes with the realization that even a small exposure to cryptocurrencies could turn out to be lucrative.

     

    The cryptocurrencies market is still developing. There are concerns about the potential for fraud and market manipulation. So, investors must take the necessary precautions. These individual risks are much more difficult to measure and manage when investing in cryptocurrencies.

    Institutional demand for digital currencies 

    So far, most institutional investors, including banks, insurance companies, pensions, and hedge funds, have avoided cryptocurrencies. But, that attitude is beginning to change and institutional investors will soon be entering the market in a major way.

    This year (2018) has been challenging for crypto investors. Global market capitalization fell amidst worries over fraud risk, escalating token issuance, and ever-shifting cyber-security threats. Accusations of market manipulation and concerns around potential naked short selling are also doing little to lessen institutional investors’ concerns about cryptocurrencies.

    The effect in the market

    Every big trader can exploit market illiquidity and shifting margin rules and contract limits at inexperienced cryptocurrencies exchanges. This causes a domino effect in the market and institutional investors rather stay away. The complexities and shy institutional uptake for the new cash-settled bitcoin futures products demonstrate that. But the industry must move towards a futures contract that is settled with proper warehousing standards.

    Counterparty risk and custody provisions are even bigger worries for institutional investors. Although cryptocurrency exchanges are significant new platforms, they have been largely designed by the younger generation of developers. Financial institutions care more about the return of capital rather than return on capital. They are wary of the professional indemnity behind these platforms. We believe that now’s the right time for institutional investors to look seriously at making investments into cryptocurrencies. They should take part in the cryptocurrencies market.

    Cryptocurrency market – potentially unlimited upside

    The unpredictability of risk and the potential for high returns is the main characteristic of cryptocurrencies market. The most intelligent approach for new investors might be to hold a very small proportion of their portfolio in cryptocurrencies. This would give some exposure without excessive risk as the market continues to mature.

    By the end of 2017, a lot of portfolio managers had to explain to their clients why they had only achieved single-digit returns in traditional asset classes. At the same time, some crypto funds had earned up to 2,000 percent from volatility. This shows, there is a little downside from investing 1% of the portfolio in cryptocurrencies, but the potential upside is almost unlimited.

    The cryptocurrency market continues to attract new participants and liquidity should improve. This will take the time that’s the truth. Within a couple of years, cryptocurrencies will become a standard part of a diversified portfolio.

    The stock market has a rich and mature history. It has seen many bubbles, market crashes, and economic recoveries. The growth of the cryptocurrencies market continues. If traditional stock exchanges continue to keep away from cryptocurrencies, they’ll miss out on a growing and profitable market.

    Finally, the financial crisis of 2008  actually gave birth to Bitcoin.

  • Momentum trading

    Momentum trading

    3 min read

    Momentum trading

    • 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.

    Momentum trading 1
    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.

    Momentum trading 2
    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!)

  • Margin Trading Definition

    Margin Trading Definition

    2 min read

    Margin Trading Definition
    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.

    Margin Trading 1
    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.

     

  • What is a Trade and how to Trade

    What is 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.