Tag: trading

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How to Calculate the Loss and Profit
2 min read

(Updated October 2021)

It is always useful to discover the percentage rise or drop. That is called profit and loss.
To calculate profit and loss we have to make clear some terms involved in the calculation.

We will use the stock as an example.

* Cost Price ( CP): The price at which you buy a stock is the cost price. That is the amount paid for purchasing stock.

* Selling price (SP): The Price at which you sell a stock is the sales price. That is the amount received when a stock is sold.

* Profit (also the gain): You get a profit when you sell a stock at a price higher than its cost price. You will like to sell your stock at a higher price. CP < SP

* Loss: If you sell a stock at a price lower than buying price, then you caught a loss. CP > SP

The percentage of profit or loss is always calculated on the cost price.

The formula for profit is

Profit = SP – CP

The formula for loss is

Loss = CP – SP

Let’s calculate the percentage of loss and the percentage profit. Percentage Loss and Percentage Profit are calculated based on CP

Profit% = (Profit/CP) × 100

Loss% = (Loss/CP) × 100

For example, one trader purchased a share of stocks for $1.000 and then sold it or $1.250.

What is the profit and profit in percentages? Is it 3%, 15%, 18%, 20%, 25%?

OK, this is basic.

The words “purchasing” or “buying” are indicated as CP, cost price.

In our case, CP is $1,000.

The trader sold the stock at $1.250.

The word “sell” is indicated as SP, selling price.

In our case, SP is $1.250.

We can easily find the profit. It is SP – CP, so

profit = $1.250 – $1.000 = $250

Don’t miss this What Is APY and How to Calculate it

Now, we have to find the profit percentage.

The formula is

[(profit)/CPx100]

so

[(250/1000)x100] = 25%

Our trader made a 25% profit in this transaction.

But what would happen if our trader sold the stock at $800?

CP is $1.000

SP is $800

loss = CP – SP

loss = $1000 – $800 = $200

or

[(200/1000)x100] = 20%

The trader’s loss is 20%.

Calculate the Loss and Profit in Percentages
- Divide the amount that you have profited on the investment by the amount invested. To calculate the profit, subtract from the price for which you sold the price that you initially paid for it.
- Now that you have your profit, divide the profit by the initial amount of the investment.
- The last step, multiply the number you got by 100 to see the percentage difference in the investment.
If the percentage is negative, you have lost on your trading. If the percentage is positive, you made a profit on your trade.

By calculating the profit or loss you are actually estimating the change. Our calculation is based on the relationship between the selling price, and cost price. The difference shows if we are making a profit from the transaction or will we have a loss.

You would like to READ: Gordon Growth Model – Mathematics of Trading
6th September 2019
Short Selling For Profit

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

By Guy Avtalyon

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

How does short selling for profit work?

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

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

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

(100x$10) – (100x$6) = $400

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

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

Example of making loss while using short selling.

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

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

$1,000 – $1,400 = – $400

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

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

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

Is short selling for profit risky?

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

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

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

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

Risks of short selling

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

Just be careful when you bet against stock price.

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

Why this question about the Bitcoin dominance rate now?

By Guy Avtalyon

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

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

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

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

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

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

Why increasing dominance rate isn’t good news?

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

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

Bitcoin’s high dominance

It could be a double sword.

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

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

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

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

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

Why is that?

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

But nothing would last forever.

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

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

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

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

15th August 2019
Cannabis earnings – the countdown started

The cannabis industry is more than ever in investors focus

by Gorica Gligorijevic

Cannabis earnings is promising. This week can be very important for the cannabis industry. The time to post financial results is near. So, we will see their records for the last quarter. Aurora Cannabis is a top producer, but maybe some other marijuana stocks can generate more next year.

First in line to show the last quarter result are:

Greenlane Holdings Inc (NASDAQ: GNLN), Medipharm Labs Corp (OTC: MEDIF), and Village Farms International Inc (NASDAQ: VFF) they did it on Monday after the closing bell.

Today, the results from Tilray Inc (NASDAQ: TLRY) will be shown. It is expected Tilray to record a net loss of 25 cents per share and its revenue to be of $41.11 million. Today also, earnings result from Green Organic Dutchman Holdings Ltd (OTC: TGODF), Acreage Holdings Inc (OTC: ACRGF), and Flower One Holdings Inc (OTC: FLOOF) are coming after the market close.

On Wednesday, Aug. 14, Aleafia Health Inc (OTC: ALEAF), Jushi Holdings Inc (OTC: JUSHF), and Helix TCS Inc (OTC: HLIX) have to post their earnings reports. They are followed by Canopy Growth Corp (NYSE: CGC) and Trulieve Cannabis Corp (OTC: TCNNF) after the closing bell.

This is a busy week for cannabis companies. Investors seem ready to reward good companies. The main criterion among investors is the company can gain a profit. But, they are more than ready to punish the ones that don’t.

Cannabis earnings will rise

The cannabis industry is a big-money market. With legalization in more countries than it is now the case, it can be one of the most valued markets. I know there will still be the black market and a lot of money will go there, frankly more than in the legal markets. But still, this market could produce more than $250 billion in the next 10 or 12 years, counting the annual average sales, of course.

That sounds pretty good for long-term investors. So, I feel free to suggest to you some companies to watch in the future.

As the first Aurora Cannabis as a top producer.

It is the most trustworthy cannabis company among millennial investors. This data comes from Robinhood, an online app for investing with over 6 million users. The majority of millennial investors are Robinhood users. That put Aurora to the most-held stock online investment. It is reasonable to expect that millennials will take a bigger part in the world of investment in the future and support legal cannabis growth. It is easy to evaluate the reasons behind investors’ decision to invest in this company.

Aurora is leading the world production of cannabis with an annual production of 150,000 kilos. It plans to reach 625,000 kilos of annual output in 2020. And it isn’t unreasonable. By engaging the full production capacity, Aurora can produce 700,000 kilos of marijuana on the annual range.

Wall Street anticipates Aurora can be one of the best revenue generators in 2020 and capable to deliver about $518 million in sales per year.

The potential of cannabis earnings

There are not too many pot stocks in the arena that could hit this expectation. But, Wall Street predicted three cannabis stocks able to surpass Aurora Cannabis in 2020.

Curaleaf Holdings is expected cannabis earnings at $900 million in 2020 sales but with a cash-and-stock deal for Grassroots, which will bring to it about $350 million, let’s say Curaleaf Holdings may generate about $1,250 million.
Also, pay attention to Cresco Labs, the potential of $715 million sounds good as Canopy Growth with $521 million.

14th August 2019
Gordon Growth Model – Mathematics of Trading

5 min read

by Gorica Gligorijevic

The Gordon Growth Model is useful to determine the intrinsic value of a stock and you will see how. It is all math.
Anyone who wants to be a profitable trader has to know math. Profitable trading is not about feelings, or prophecy and stock advice or picks. It is all about math. Yes, the main goal is to earn money more than lose.

But trading guessing is not a good idea. The math generates success and luck in your trading. Do you want to know how the math works in your attempts to profit and be a successful trader?

If you want to act like a pro you have to be able to explain and make the math behind your trading. Anyway, you might benefit from understanding the math behind the stock market.

At least, you have to know the basic calculations.

Traders-paradise wants to show you some simple to understand. It will help you to pick the right stock and keep your hopes of future returns more realistic.

Let’s first determine the intrinsic value of stocks. How to do that? Just use of the Gordon Growth Model. Oh, yes. You will need more explanation.

The Gordon Growth Model is known as the dividend discount model or DDM but without the current market stipulations, meaning the factors that influence the market, such as competitors, business challenges, etc.

The point of this Gordon Growth model is to relate the current intrinsic value of stocks to the value of a stock’s future dividends. This is a very old model but still actual and popular. The equation shows that the long-term real return from the market should be almost equal to the inflation, modified by the compound yearly growth rate in dividends and increased by the current dividend yield.

Let’s view this complex definition in a simple example.

The S&P 500 real growth rate in dividends has been around 1.3% per year over almost a hundred years. At the same period, the dividend yield was 5% annual. What you have to do is to sum these both. The sum you get is a bit less than actual 6,5% compound annual return from stocks for that period.

This is defined by an almost doubling of the PE ratio, called a speculative return. That was exactly what did add the stock returns.

Let’s see Gordon Growth Model and how to calculate it.

As we said the value of a stock is shown as

Stock’s value = D1 / (k – g)

where D1 represents the expected annual dividend per share for the next year k is the investor’s discount rate of return. You can estimate this using the Capital Asset Pricing Model, for example.

and g is the anticipated dividend growth rate. We take this as a constant.

When you have all these parameters, it is so easy to calculate the intrinsic value of the stock. For example, the S&P 500 dividend yield is about 2 %, 4.5% is how much you can expect dividends to grow due to the historical performances. So you can expect a long-run return at 6.5%.

To show you how this model is true whether or not a company pays a dividend or reinvests it let’s show you this real example.

Suppose your preferred company plans to pay a $2 dividend per share next year (D1). Also, you expect an increase of 10% per year following (g). Also, suppose you are expecting a rate of return on the stock to be 20% (k). Let’s say, the stock is trading at $20 per share now. Using the Gordon Growth formula, you can determine that the intrinsic value of one share of the stock is:

$2.00/(0.20-0.10) = $20

When you have all these parameters, it is so easy to calculate the intrinsic value of the stock.

You will very often find the Gordon Growth Model formula calculated:

P = D1/(r-g)

The stock price (P) is equal to the anticipated value of the dividend (D1) divided by the difference in the investor’s rate of return (r) minus the constant growth rate of the dividend (g).

In essence, the Dividend Growth Model utilizes the investor’s required RoR and the dividend growth rate to calculate the value of the stock.

But dividends will increase at different percentages. For example, dividends will grow quickly and then reach a steady rate. The dividend is still supposed to be $2 per share next year, but dividends will progress yearly by 14%, then 20%, then 24%, and then stable rise by 10%.

By using components of this formula, but examining every year the recent dividend growth individually, we can determine the current value of the stock.

Following the inputs for our example Gordon Growth Model formula shows:

D1 = $2.00
k = 10%
g1 (dividend growth rate, first year ) = 14%
g2 (dividend growth rate, second year) = 20%
g3 (dividend growth rate, third year) = 24%
gn (dividend growth rate every year after) = 10%

Let’s calculate the fair dividends for those years (we already find the dividend growth rate):

D1 = $2.00
D2 = $2.00 * 1,14= $2,28
D3 = $2,28 * 1,20 = $2,74
D4 = $2,74 * 1,24 = $3,40

The next step is to calculate the current value of every single dividend during the extraordinary growth period:

$2,00 / (1,20) = $1.67
$2,28 / (1,20)^2 = $1.58
$2,74 / (1,20)^3 = $1.59
$3,40 / (1,20)^4 = $1.64

Now we can calculate the dividend in the year of stable growth of 10%:

D5 = $3.40 * 1.10 = $3.74

Further, we can use the Gordon Growth Model’s formula to calculate the value of dividends in the 5th year:

$3.74/(0.2-0.1) = $37.40

This allows us to calculate the present value of the dividend’s growth in this 5th year, or how much that future growth is worth to us today:

$37.40/(1.10)^5 = $23.22

The final step is to calculate the current intrinsic value of stocks by summing up the present value of dividends in the first four years and the value of dividends in the fifth year.

1.67+1.58+1.59+1.64+23.22=$29.7

The main benefit of this formula is that it may cool down your emotions when trading. Calculating this can bring you down to the ground in growth periods, and also can support you when the market is falling.

So, can the Gordon Growth Model’s formula predict the future market returns? In short, yes.

But the weakness of the Gordon growth model is its hypothesis that there will be a constant growth in dividends which is rare. So, you can use this formula for companies with stable growth rates.

12th August 2019
Passive Investing is a Good Choice

Passive investing is the way to force your money to work for you.

By Guy Avtalyon

Passive investing has become a significant part of the market. Finally! The low-cost index funds or exchange-traded funds are popular. However, there are still a lot of investors who are trying to achieve an excellent return through active investing. The question is why they are doing that when passive investing provides a better alternative.

What is passive investing?

It is investing your assets in funds that mimic a market. The main task of fund managers is to purchase the security in the precise proportion of a particular index to copy it. It is a passive investment. Sometimes you will hear the term “indexed investing.” It is the same.

Let’s consider a bit more the act of active and passive investing strategies. Three years ago, the S&P500 had a total return of 9.54%. What did every passive investor make? Precisely 9.54%. On the other hand, an active investor gained 12,5%, but the other made just a 1,9%, or some made losses of -27%.

How is that possible?

The passive portion returned 9.54% and the total market returned 9.54%. But returns before the cost is not what should be counted. You should count what you actually earn. And what is that? The returns after cost and after-tax.

So, where is the catch?

Passive management is cheaper than active. Active management is more costly. If you know that the cost of managing an index fund is between 0,15% and 0,50% rely on the market replicates, you will find that an active investing will have a minimum of 1% higher costs than passive investing.

That 1% is 100 basis points and may not sound a lot.

But let’s consider the following situation.

Let’s say you put your money in the bank account instead of buying stocks because you don’t want to pay that 1% of costs. You are short immediately 5-6%. Your wealth is worthless. Actually, if you invest that amount in stocks there is a chance to gain more. With putting money in the bank account you will lose 15-16% of your net profit from potential investments in the stock market. In only one year. Over time this difference could considerably decrease your wealth. It will surely lower your standard when retirement.

The costs of active investing are not only fees. The activity by nature adds more costs. The active trades create capital gains more often than passive investing. So, why wouldn’t you avoid them entirely? It is simple math. If you want active investing you would pay more. Just take into account the taxes and costs.

So, we have to say, index funds and passive investing can be a better option than actively managed funds.

Passive investing in index funds has changed the investment world.

In 1975, Jack Bogle, the father of passive investing, introduced the index fund. His radical idea showed the financial sector regularly cheated the individual investor with the unknown and opposed fees.

This doesn’t mean that everyone should be indexed. Of course not. Active managers’ choices hold prices closer to values. That allows indexing to operate. Index investing means to leverage their trade without paying the costs. The majority of investors decide to index part of their money, some do it with all of them. But the others want to explore the less-priced securities.

Let’s consult the statistic, in 2017, the percentage of securities owned by passive fund portfolios was about 5% of the total in the global market. The biggest part it took in the US where it was 15 %.

When it comes to investing, you can choose between active and passive investing.

Picking the right is crucial to your investing profit. If you make a mistake, you can end up with money loss. With the right one, you are the winner and you can make a big success in the stock market.

How to find the right passive investing opportunity?

Passive management requires buying investments that track an underlying index or making asset allocation and holding to it for the long term.

One form of passive investing is the mutual fund investment because the mutual fund’s purpose is to return what the S&P 500 returns every year. The advantages of passive investing are numerous.

Passive funds don’t require you to make trades and adjust holdings daily. The management fees are much cheaper, which is a benefit in the long run. You will always get the same percentage as the market returns. Good or bad, but the same.

Passive investing is easy. You just have to pick some investments and that’s all. There is no need to monitor the market every second and make changes or to try to catch price swings. But passive investing is not for investors who want to beat the market. Yes, you can do it from time to time, but all the time. So, probably, if you are not a professional you will make big losses.

Passive investing is more than set up your portfolio and don’t touch it anymore. You have to monitor your portfolio and make corrections as the market moves. You have to rebalance.

Say the stocks increase in price, bonds are falling. If you have a 60% stock and 40% bond in your portfolio, this price movement requires an adjustment to 70% stock and30% bond in the portfolio. In case you never make these changes in your portfolio you will take on too much or too little risk. You will not achieve your targets. So, some monitoring has to be done. In the first place, you have to think about your money. The money is not just a piece of paper. Having money means that you are free and safe.

You have to force your money to work for you. Passive investing is for sure a good way.

22nd July 2019
The Questions You Want to Ask Your Broker about Start Trading

This is the full explanation of what you have to do in your first contact with the broker.

By Guy Avtalyon

We assume you already made your decision to start investing or trading but you don’t know how to start and what to ask a broker. That is the situation where you would need a broker’s help. You already examine and find several and it is time to contact them.

What you have to do that before you open an account.

Before you open an account, you should use the internet browser. Traders-Paradise’s advice is to visit the web pages of every brokerage company you want to analyze. That first feeling about the brokerage’ site will be maybe the most important part if you want to start trading online. You must feel comfortable while you are checking section after section and it has to be user-friendly for you and you will find if the broker has a free demo account and how long you can use it before the switch to the real.

Some websites may be slower at the first visit but try them again, maybe when you first visited them the traffic was high. A large number of visitors can make the website operate slower sometimes. This doesn’t mean the broker isn’t good.

OK, you picked several brokers. So what is the next step?

First of all, you have to make the first contact. The best way is to make some phone calls or to fill a contact form and let them call you.

Be prepared, on the first call, they will tell you precisely what you like to hear. It will be so good but also, it might not be a truth. You must be aware. So, never play on the first hint. Try them more.

Always keep in mind, you need to find the right broker for you. So, you have to talk.

What to ask the broker?

You will pay for financial advice, and you will entrust your hard-earned money to some person who will act as a genuine servant of your financial future. So, you have to ask, you have to talk.

Ask if the firm has possible conflicts of interest regarding reasons to sell particular funds or products. Just ask. If you get a precise response, then the answer will satisfy many of the next questions.

Ask the broker about trading commissions.

It might be surprising but lower commissions are not always the better.

Take care of it and examine all the information you can get.

The price per trade may explain the level of customer service. If you don’t want to trade so often it shouldn’t be the subject of your consideration. In such a case it isn’t the primary if you need 30 seconds or 3 minutes to execute your trade, so the difference in commissions isn’t important too much. Will it be $5 or $25 per trade isn’t important if you don’t plan to trade very often, for example, 15-20 trades per year. But if you plan to trade on a daily base it is important.

Training and education

Also, you would like to know what kinds of training and education do they provide.

Traders and investors, both advanced and novice need constant training and education to stay up to date with the laws and practices in the trade. This includes mentorship and copy trading. Mentorship is extremely important. The legal field is changing and you would need a good mentorship to follow the best practices in order to keep mistakes minimal. On the other hand, copy trading is good for novice traders and investors but leading traders may make mistakes too. At the beginning level, they are good. After you master the trading, you should build your own strategy and approach to the trade. That will depend on your personal goals, risk tolerance, and character.

Also, important information is about other fees.

Ask the broker about them. That is information about costs of account-maintenance and inactivity fees. So, it is good to make a list of services and transactions you might need before you start the conversation with the broker. Ask them how much all of them will be a charge.

Ask a broker about the minimum initial deposit

Minimum initial deposit is something you should know before you open the trading account. We assume you know how much you can invest but does it meet the broker’s regulation? Some brokers have account minimum and you have to know is it adequate for you. This minimum has to matches your budget.

Withdrawals

You need to know how much you can withdraw and how much time it will take. On some websites, you will find wonderful information about it but once when you talk with a live person you might find there are so many differences for almost every case. For example, on the website brokerage can write the withdrawals take a few days. That is true but sometimes it isn’t. Very often it depends on how big withdrawal is or in which circumstances you want to withdraw. Ask for every single detail about it.

Customer support

This is a huge question. Ask a broker’s about customer support and services before you sign up. Is it easy to find what you want on their website or you will need to spend the whole day and click through 100 pages? Can you access to their customer support fast? Does your broker have live chat? Is there any possibility to talk face-to-face?

Banking services

Maybe this isn’t a big deal but still, you have to know all about payment methods.

The best choice is a brokerage account that can serve your banking need. The brokers now offer Visa or Master cards, direct deposit, ATM cards, etc.

Ask a broker about investment assets selection

All brokerages offer stocks traded on the major exchanges. But if you’re interested in options, bonds, currencies, cryptos ask if certain brokerages offer them. They’re not available in all brokerage.

A good broker will set realistic expectations in front of you. They will provide some valid information from their experience. They will be based on the current market and on details about your goals.

Beating the market is hard but at the same time exciting. Since it is hard for the majority, you need to add some weights to your portfolio. Without a broker, it is even harder. Statistics show that only 5% of market participants are successful. It is smart to use the best brokerage to be one of them.

Traders-Paradise recommends you to ask these questions as far as possible. Your broker has to truly serve you well. So, they should have no problem to give you honest answers.

To get started on your broker research, use our Walls

Traders-Paradise Team wishes you successful trading and investing.

24th June 2019
Question everything, it is a vital part for your trading

Forex Education Part 5

by Hans Stam – Trader, Mentor, Author

Interview

You must question everything.

Recently I received a request for an interview.

This was a rare invitation going out to the best traders available to share some wisdom.

Most of the questions were easy for me to answer, but there was one I had to think about for a while, and I would like to share it with you as this might be useful to you.

You see, I’m not a wealthy man at the time of this writing, so let me be an inspiration to you.

Patience is better than a quick fix, experience and knowledge are greater than gambling your way to success.

Best advice

One Question that stood out for me was,

What is the best advice you gave give to other traders?

My answer was…

Question Everything, then make up your own mind!

This may not be advice about how to spot a trend, or how to manage funds, but it really is an answer I like to explain.

You see, in my years of trading, I have tried a lot of ways to make a decent profit.

You may recognize yourself trying to make it all work for you.

As in many cases, the most talented people are also the ones that have made a lot if not all mistakes possible.

The thing that stands out is the way they solved those problems.

Question Everything...

Especially in trading, you can’t just accept what you are being told without any credentials.

There is a lot of misleading going on in the Forex Industry, I rather see proof.

Of course, there are many ways to trade, but even the fancy guru’s don’t always provide you the insight on how to do it yourself.

What I’ve learned in my years of trading is to question everything, and to make up my own mind.

I suggest you do the same.

Example

I’ll give you an example of how to apply this to your trading.

Let’s pick a random scenario.

Some guy tells you he found a great strategy but conditions apply.

And every time it fails, you didn’t understand the conditions or this was a rare case of where you had to take a loss.

Let’s say he claims to win by watching a combination of candlesticks, and whenever that pattern emerges, you have to buy or sell.

When you investigate the claim, and compare it to a monkey pressing buttons, who would win?

Then, I don’t care about the times it works, I’m more concerned about when it fails.

What happens when it fails and why? Is it really worth it or could I just as easy trade the other way around and get the same results?

Does it make any sense to you and are you willing to lose your money on that claim?

It’s up to you to decide.

Make up your mind

Keep in mind, no one on the other side of your trading cares when you lose.

Also, keep in mind, there are people ready to take your money and even might provide you with false signals just because they have to give signals they are selling.

Whatever signals or tools you are being given to work with, ask yourself the question, is this really benefitting me?!

Can this tool cause me to lose? Can this signal be explained and what causes the failing trades?

You have to be very skeptical about everything you hear or read.

Does it make sense to you, does your own trading make any sense to you.

I have provided some serious advice to some people around me, and even though they knew it was working, they still used their gain to waste it on trying something else.

To me, that was frustrating to see, but on the other hand, it’s their money and they too can try and question everything, including what I tell them.

Success ratio 1:5

I had a question earlier by someone who asked how to get a 1:5 success ratio.

While understanding what he was trying to achieve, this question also was a bit silly to me.

Why would you want to have 20% failure in your trading?

Wouldn’t you rather have less losing trades than that?

What causes the 20% losing trades?

Why would you take those trades anyway?

No one can predict the market?

If that would be true, then why are some more successful than others?

Don’t you think that when other traders are consistently winning their trades, they have another mindset?

In this article, I’m asking a lot of questions rather than give you the answers right away.

I do that to make you think for yourself, to question everything and to let you make up your own mind.

To me, this is the basis of becoming successful.

This has to work for you because You will need to make the decisions which trade to pick.

Something to think about

Hopefully, this has given you something to think about, because nothing will change if you stick to being ignorant.

You could read all the articles in the world, pay for whatever service, or follow a stock picking money,

as long as you don’t start to Question Everything and make up your own mind, it will lead nowhere, and nothing changes for you.

Dedication

The chapter most of you will want to read has come.

How do I make money?!

I hear a lot of people telling me, this is my dream, I really want to do this, etc.

Unfortunately, statistics show dedication sticks to words and not often become a reality.

Some people seem to forget it took me about 30 years to figure out what works and what doesn’t.

Also, a lot of people think they can start at $100 and hopefully be rich next week.

Their way of doing that is gambling which most likely will blow their account.

Be smarter than that, do whatever it takes and make educated decisions.

As mentioned before, this really is a career, and you can decide to do it or not.

But it does take action and patience, that seems contradictory but it is what you will need to do.

OPM

Other People’s Money (OPM) is a way to make money faster, once you built your track as mentioned before, you will want to use your talent to make money using OPM.

The way to do that can vary, and usually is done by attracting investors and trade through a MAM or PAMM, which are basically the same technically speaking.

How does that work?

You have your own trading account, and the software will copy your trading to sub accounts.

These subaccounts are in the investors’ name and you have agreed on a fee or commission.

After both have signed all legal documents, the investor funds his account and trading will be done as you trade your own money.

The agreed earnings are then automatically transferred directly into your trading account.

How to get Investors

You might think to yourself, I don’t have any investors, so now what?!

There’s good news for you if you really are talented or educated.

If you are prepared to deposit a fair amount on your trading account and let your results being tracked by A.I. you can get a Track that can be used by a Broker linked to that specific software, and it will make it possible for you to get funded.

How to get funded?

I will go through this simple process step by step.

Step 1. First, sign up for a Live Trading account by clicking here

Step 2. Then sign up for the Free Tracking software by clicking here

Step 3. You keep on trading the way it works for you, and you will automatically be funded once you have gone through the process of 6 months and if your score is 75 or higher.

Step 4. Progress through the system, and 4 months later you are a Pro Trader if you are doing well.

Step 5. Once you already received funding from the Broker, you are now ready to be introduced to the Investors market. No way to tell where that will lead you but it is Free money for doing the same thing.

If you have questions or need help, then Click Here and I’ll help you the best I can.

Experience

Since I’ve been in the market, this really is the best way I have found to start making money while trading the Forex market.

There are other similar programs, and I have had many discussions with several others, but I couldn’t manage to come to a fair arrangement.

Another reason why I promote this one is that there are a lot of options here to make a solid income.

Sounds like a big commercial but this is my experience, the choice is yours.

If you are serious about making Forex trading your career, these are some good tips to your benefit.

If you like to ask me any other questions, I’m here for you.

Click here to contact me

Best Regards,

Hans Stam

5th June 2019
Bitcoin is ready for the next big move

3 min read

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

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

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

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

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

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

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

That was in any sense the golden era for crypto.

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

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

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

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

Will this word become another buzzword?

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

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

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

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

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

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

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

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

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

Loving eBay formally denied such news.

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

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

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

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

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

And Microsoft uses Bitcoin, as we heard.

Okay, Bitcoin owners use Microsoft, right?

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

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

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

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

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

But we are still a far away from that.

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

The future is interesting and promising.

risk disclosure

16th May 2019
HFT Strategies – The Tips and Secrets

3 min read

HFT uses practically basic and simple strategies. High-frequency trading is not about implementing the strategy, it is all about speed of execution and flexibility.

Well, the main strategy of HFT is to run faster than others. Of course, the principles of high-frequency trading (HFT) firms are secrecy, strategy, and speed.

Algo trading is linked with the execution of trade orders. But HFT refers to the implementation of proprietary trading strategies.

High-frequency trading consists of a variety of AT.

Yes, both enable traders and investors to speed up the response on market data.

The society of market participants using HFT is extremely mixed.

There is a crowd of various organizations with various business forms that use HFT and there are many hybrid models.

For example, some brokers and exchanges are utilizing HFT systems. So, in the estimation of HFT, it is essential to consider a practical perspective.

It doesn’t matter if HFT is just an add-on technology to realize trading strategies.

Liquidity providing is one of the HFT strategies.

Well, the most frequent HFT strategies are to serve as a liquidity provider.

How does HTF provide it?

HFT liquidity providers have two primary reservoirs: when they provide markets with the liquidity they pocket the spread between the bid and ask limits. Also, there is a trading income by granting discounts or lowered transaction fees. The aim is to increase market quality and attractiveness.

HFT firms will never discover their ways of acting. The significant experts linked with HFT are undercover. Well, this is not quite true. Maybe we could say they want to be in front of the public eyes less than others.

Those firms operate with various strategies to trade and earn money. The strategies are often many kinds of arbitrage. For example, volatility arbitrage, or index arbitrage.

HFT employs software that is incredibly fast. They have access to all market data and can make connections with minimum latency.

HFT firms regularly use own money, own technology and a number of special strategies to produce profits.
There are numerous strategies applied by traders to earn money for their firms.

Even the controversial strategies.

For example, HFT firms may trade from both parties.

Hence, they can place orders to sell using a limit order above the market price. Also, they can place the buy order a little bit below the market price.

And, voila! There is a profit for them. The difference between the two prices. They are market makers. All these transactions are very fast, in a millisecond by using algorithms and robust computers.

Spread capturing as HFT strategy

HFT firms are liquidity providers. They profit from the spread between the bid and ask prices.

How?

They are buying and selling securities all the time.

With each trade, they receive the spread between the price at which shareholders buy contracts and the other at which they can sell contracts.

Rebate driven strategies

The liquidity provision strategies are developed on particular stimulus systems.

In order to encourage liquidity providers, some trading venues use unsymmetric pricing. They charge a lower fee or give a rebate for market makers or passive trading.

Why?

Such traders bring liquidity to the market.

On the other side, for more aggressive tradings they charge a higher fee. Why? Such traders remove liquidity from the market.

An unsymmetric fee arrangement aims to boost liquidity provision.

Point is: traders supplying liquidity earn their profits from the market spread. Fee discounts or rebates stimulate a market‘s liquidity.

On this way, those markets look promising comparing to their rivals.

Arbitrage

Chances to perform arbitrage strategies generally survive only for fractions of a second.

But computers mission is to examine the markets in a millisecond. That feature causes the arbitrage to become the main strategy employed by HFTs.

To conduct arbitrage HFT use the same method as traditional traders. But they use an algorithm to profit from short-lived differences between securities. The other types of arbitrage are not restricted to HFT and such, they are not the subject of this post.

Latency arbitrage

The latency arbitrage is the ability of HFTs to recognize new market information before other market participants even get it.

The latency arbitrage uses direct data feeds and co-located servers to short the reaction time. Latency arbitrageurs profit from speed power. Such market participants can reduce the prices at which other traders are able to trade. That’s why you can find them under the name of predatory.

Liquidity detection

HFTs try to recognize the patterns other traders leave and adjust their actions accord to them. The focus of liquidity detectors is large orders.

Liquidity detectors are getting information about algorithmic traders is usually called sniffing out the other algos.

The bottom line

HFT is not a trading strategy. It is the usage of advanced technology that performs traditional trading strategies. The individual trading strategies need to be assessed rather than HFT as such.

HFT should never be banned. It would be contrary to market efficiency. High-frequency trading contributes to market liquidity and to the ability of the price creation.

However, any strategies that have a contradictory influence on market integrity or enable market abuse, has to be are completely reviewed.

This is particularly important for HFT. If anyone believes this technology promotes the implementation of abusing strategies, moreover, makes them more profitable and creates unfair circumstances on the market, should check the other participants too.

Our confidence in technology is huge, but we are very cautious when it comes to the people.

Technology by itself is without morality. The people are those who can add it to high-tech.

Fortunately, we, ordinary people, don’t have any access to HFT.

Don’t waste your money!

risk disclosure

21st April 2019