Tag: trading

All trading related articles are found here. Educative, informative and written clearly.

What is a Trade and how to Trade

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

By Guy Avtalyon

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

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

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

So, what is the trade?

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

Why traders trade

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

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

The examples of what is a trade

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

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

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

What is the trade of virtual currencies

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

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

Virtual currencies

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

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

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

The bottom line

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

14th November 2018
Stock Options Everything You Need to Know

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

By Guy Avtalyon

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

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

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

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

How do stock options work?

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

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

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

What is underlying security?

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

What is the strike price?

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

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

What is the stock options contract?

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

Stock vs stock options

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

What are Put and Call?

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

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

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

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

What are employee stock options?

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

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

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

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

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

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

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

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

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

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

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

REVERSAL TRADE as the type of trade

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

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

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

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

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

BREAKOUT TRADE as the type of trade

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

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

This is a typical example of Breakout trade.

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

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

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

PULLBACK TRADE as one of the types of trade

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

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

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

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

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

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

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

RUNAWAYS

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

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

ANTICIPATIONS

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

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

How to use all these types of trades?

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

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

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

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

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

By Guy Avtalyon

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

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

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

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

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

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

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

Define your goals and choose a trading style

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

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

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

Take this small tip regarding calculating expectancy:

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

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

Choose an appropriate trading platform

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

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

Have a plan before executing a trade

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

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

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

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

Trade quality over quantity

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

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

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

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

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

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

2 min read

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

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

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

What is a Stop Loss order?

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

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

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

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

How does a Stop Loss order work in practice?

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

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

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

How to set up a Stop Loss order

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

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

Do stop losses provide complete protection?

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

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

The advantages and disadvantages of the Stop Loss order

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

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

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

The bottom line

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

Risk Disclosure (read carefully!)

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

2 min read

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

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

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

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

Use Fibonacci Retracements to Enter a Trade

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

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

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

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

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

Interpreting Fibonacci Retracements

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

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

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

When there are strong trends, what to do?

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

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

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

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

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

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

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

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

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

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

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

Basic Fibonacci Retracement Strategy

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

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

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

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

How to apply

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

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

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

The bottom line

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

You might also like:

>>> Best Trading Strategy Without Indicators In Forex

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

>>> MACD Indicator – Moving Average Convergence Divergence

>>> Indicator Trading And How To Use It

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

2nd November 2018
Blockchain Technology – Is There Future For It

2 min read

Blockchain technology provides transactions and transfers online without the use of an intermediary.

The Blockchain is a new name in the world of technologies but it is definitely the one to last. Even in the early stages, the technology has gained huge popularity starting with their very first application of cryptocurrencies. More areas of applications are being discovered and tested with each passing day. Once the technology is adopted and accepted on a global level, it’ll transform the way we live today.

Blockchain technology simply means a decentralized trusty network. It works by having a native asset, a decentralized ledger and some algorithms based around a game theory model. It allows everyone on the network to reach consensus.

Let me try to explain what blockchain technology is

The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient and ask them to make revisions to it.

The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes. This because you are locked out of editing it until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once.

That’s how banks maintain money balances and transfers. They briefly lock access (or decrease the balance) while they make a transfer. Then update the other side, then re-open access (or update again).

With Google Docs (or Google Sheets), both parties have access to the same document at the same time. And the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.

Efficiency and effectiveness

Imagine the number of legal documents that you can use that way. Instead of passing them to each other, losing track of versions. And also not being in sync with the other version. So, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow.

You don’t need a blockchain technology to share documents, but the shared documents analogy is a powerful example.

Far from a short-term trend, blockchain technology is revolutionary. It is a new approach to transactions that major companies are beginning to implement.

In a market saturated with new and innovative business strategies, it can be difficult to decide which to adopt. On one side you don’t want to fall behind when it comes to the latest technology.

On the other, you don’t want to waste your money on a “cutting-edge” fluke. If you’re looking for a new, efficient way to carry out transactions, blockchain is a technology that your company might find helpful.

What Blockchain technology requires

You might ask why blockchain technology seems so cryptic. The challenge is that it used to be almost exclusively connected to tech circles. And was not widely used by the general public and non-tech businesses. This history is part of why it seems so mysterious today. Because it’s relatively new to most of us, and the way it works can be difficult to explain without going into confusing and complex concepts.

Blockchain technology was originally developed for bitcoin, the base of other cryptocurrencies. But the blocks in a blockchain might contain information about identity, dates, or most anything.

Marc Andreessen from VC firm Andreessen Horowitz and American entrepreneur, investor, and software engineer called Bitcoin and the underlying blockchain technology a “breakthrough in computer science”.

“The practical consequence (…is…) for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.”

Comparisons

In a 2014 New York Times op-ed, Marc Andreessen, likened Bitcoin to personal computers and the Internet in their early days. Each of which depended on the high expectations of their success to make them actually successful.

“This is the classic ‘chicken and egg’ problem with new technology: new technology is not worth much until it’s worth a lot,” he wrote about blockchain technology.

By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. It is originally developed for the digital currency, Bitcoin. But the tech community is now finding other potential uses for the technology.

The short version of it:

Blockchain technology provides a way to make transactions and transfers online without the use of an intermediary. Instead of trusting a third party to keep the transaction history safe and accurate, blockchain technology lets you seal “pages” of transactions with a key code for security.

With blockchain technology, many people can write entries into a record of information. And a community of users can control how the record of information is amended and updated. Likewise, Wikipedia entries are not the product of a single publisher. No one person controls the information.

But a feature that Wikipedia does not share with the classical blockchain is encryption. Because ownership and anonymity is an important feature of blockchain technology. Encryption of information is necessary so that no one can steal data or duplicate them.

Individuals and businesses use blockchain technology for a variety of reasons. Though some “shady businesses” might use blockchain technology to avoid leaving a paper trail, it’s more often employed to gain improved assurance and privacy. It also allows users to exchange money without the backing of physical currency. This is one of the qualities that has made Bitcoin famous and makes it sometimes controversial.

Bottom line

There’s a wide variety of blockchain technology-based services on the market.

One of the most relevant reasons that many companies are adopting blockchain technology is efficiency. We can all realize how exchanges can become quicker. And simpler too, when they don’t have to go through a third party. It’s also beginning to move document authentication toward obsolescence, removing a step in the transactional process.

Blockchain technology can also make companies feel like their information is safer and more secure. In an age where hacking banks cannot always resist off attempts to attack people’s financial privacy. Therefore, blockchain technology is a way to feel a greater sense of control over transactions.

Major companies are adopting blockchain technology because they don’t want to miss out on what could become. And it is already extremely popular and efficiently.

“In the mid-to-late 2000’s, big companies missed the social media train,” marketing and business strategist Clay Hebert said. “They couldn’t see how Twitter or Facebook would immediately impact their business, so they were slow to adopt these technologies. They don’t want to play catch-up again.”

Risk Disclosure (read carefully!)

25th October 2018
Who are the most successful investors in India?

2 min read

All those who enter the stock market in India has the same dreams. They all want to become absurdly wealthy like few of the known richest investors in the world. These guys made a success! It is never easy to make money by investing or trading in stock markets. The stock markets are highly volatile and your investments can be at high risks. Many people have lost all their savings in this market. Yes, the rules are the same for all, but the story is not the same for all. Many have gathered good wealth. In India too. We found some beautiful stories about successful investors in Indian stock market.

We want to introduce some of the most successful investors in India. How was their journey, what principles they follow, how long they have been investing? Who knows, maybe these examples could be an inspiration to all of us. For you too!

Rakesh Jhunjhunwala – Stock market investor

He is one of the most successful investors in India. His portfolio is worth over Rs. 20,000 crores / 3.2 billion dollars. His top holding is CRILIS but he holds stocks of Titan and Lupin too. He is known as Indian Warren Buffet.

Rakesh Jhunjhunwala entered the Indian market in 1985. His father was interested in the stock market and boy-Rakesh was very carefully listener during the long conversations among his father and his friends. He attended the Chartered Accountancy course to gain a professional degree and completed in 1985.

After that, he joined the Stock Market and started trading. His first biggest bet was 5000 shares of Tata Tea which he got for Rs 43 and sold for Rs143 in just 3 months. This gave him Rs. 5 Lakh which was a big deal at that time. His next big hit was Sesa Goa. He bought 4 lakh shares and gathered huge profits on it. After that first successes, a lot of stocks made large sums of money for him like Lupin, Crisil, etc.

Porinju Veliyath – CEO of Equity Intelligence

He is one of the most well-known investors and fund manager. Equity Intelligence stock picks like Emkay Global Financial Services and BCL Industries has raised by 200% in their share prices and IZMO and Vista Pharma raised by 100% at their share prices under his hand. But it wasn’t so easy in the beginning.

The story of his life isn’t exactly ‘Slumdog Millionaire’ but he had a lot of struggles in his early days. Porinju Veliyath was born in the lower-middle-class family in Kochi. During his student days, he had to work many different and hard jobs to support his family.

When he moved to Mumbai in 1990 in search of a job, he became a floor trader at Kotak Securities there. He was clever, learned quickly and he became an expert trader. He worked for 4 years there and got a lot of knowledge. In 1994, he joined Parag Parikh Securities as a Research Analyst and fund manager. In 1999, he returned to his hometown Kochi and decided to make money on his own from the stock market. He made his first major investment in ‘Geojit Financial Services’. The stock was trading at a very low value at that time. Proving everybody wrong, this investment gave him multiple returns. In 2002, he started his own portfolio management service firm in the name of ‘Equity Intelligence’.

Vijay Kedia – a successful investor with the origin

He describes success on the stock market: ‘knowledge to find out quality stocks which one can acquire only by reading. If one doesn’t have reading habits, he can’t be a good investor.’

Vijay Kedia was born in the family of stock-brokers. He started his career in the stock market in 1978 not by his own choice but by force after his father died.

He joined the family business of trading and stock-broking. At the start, he was not doing well. But, he did not lose hope. He realized that trading didn’t suit him well and decided to start with investing. But learned a lot about the fundamentals of companies. In the beginning, he owned Rs 35,000 and by his own study, he invested the entire amount in a stock named Punjab Tractor. In 3 years, the stock multiplied 6 times and his Rs 35,000 grew into Rs. 2.1 Lakhs. Then, he invested in ACC at the rate of Rs. 300. After a year, the stock multiplied 10 times and moved to Rs. 3,000 in the second year. He continued to make successful investments in various stocks to create a wealth of 500 crores.

Vijay Kedia is betting now on Everest Industries and Vaibhav Global as multi-bagger stocks for 2018. And still is one of the most successful investors in India.

Nemish Shah – top 10 retail investor

His net worth is Rs 1,300 crore.

Nemish Shah is the co-founder of ENAM, one of the most reputed and respectable investment houses. He keeps himself away from media and publicity. His investment ideas are most sought after. He invested in Asahi India and multiplied his funds to 3.4 times in 3 years. He does not invest in too many stocks. His focus is on limited stocks and highly sector-driven.

Ramesh Damani – well-known investor

Ramesh Dhamani is well-known as Warren Buffet follower as much as because of his investments in listed and unlisted companies. He is picking high-quality stocks and retaining them for a long time. He follows the model for investing that favors companies with strong management credentials and processes. And it is Warren Buffet’s model. That affords him millions of rupee. Also, one of the most successful investors in India.

Raamdeo Agrawal – Founder of Motilal Oswal Group

Raamdeo Agrawal is one of the founder members of Motilal Oswal Group and MD and co-founder of Motilal Oswal Financial Services. He started buying stocks in 1980 and till 1994; he made a portfolio of about Rs. 10 crores. Then, he read Warren Buffet’s tips and worked upon his portfolio to pick quality stocks instead of accumulating bad sticks. In a span of one year time, his portfolio doubled. He has amassed a net worth of over Rs. 6,500 Crore /1 Bn dollars.

Dolly Khanna – the Value investor

Women in the top 7 the most successful investors in India. Value investor Dolly Khanna has been investing in the Indian stock market since 1996. Her portfolio is managed by her husband Rajiv Khanna. She made debut through the fertilizer sector by homing in on a top-quality small-cap stock which enjoys a monopoly position. She has a knack of spotting multi-bagger stocks and knows exactly when to book profits. Emkay Global Financials, PPAP Automotives, IFB Industries, Thirumalai Chemicals are some of the picks form her portfolio.

Bottom line:

If you want to become successful in the stock market, then you should learn from the lives of these iconic stock market investors. How was their journey, what principles they follow, how long they have been investing?

Everyone who enters the stock market world knows about Warren Buffet. The greatest investor of all time and one of the richest person in this world who made his fortune by investing in stocks. But you have to know these guys and their life path.

Both you and they deserve this to know.

Risk Disclosure (read carefully!)

22nd October 2018
Cannabis VS Bitcoin Both Are the Two “Sexiest” Plays.

Cannabis stocks just like bitcoin stock can be hot investment choice these days

By Guy Avtalyon

If you have a dilemma in selecting the stocks, cannabis vs bitcoin, this exactly you have to read. Cannabis shares are a temporary hum. Wait! Didn’t they say exactly the same about Bitcoin?

Traditional Wall Street and media gatekeepers are late.

The fact is that Bitcoin lacks a time-tested business model and fundamental backing, and it pays no dividend. The other fact, marijuana is illegal in almost every country, putting the business model in jeopardy.

Pot stocks are more tangible speculative investments, traded and regulated on recognized stock exchanges, but still subject to a variety of market and regulatory risks. We know that advisors can caution their clients on the risks of investing in cannabis stocks, and the risks are there at current merits. It was the same in the case of Bitcoin.

Cannabis industry

But the cannabis industry may offer trace to the future of Bitcoin. Because despite their different paths, the crypto and cannabis are siblings. Why? Just spend a few minutes on Reddit pages committed to trading, Bitcoin, and cannabis and you will see similarities of the group. According to TD Ameritrade Inc., trading in pot stocks is superiorly done by millennial-aged males. The stats for crypto look almost the same.

We are witnessing an explosion of interest in cryptocurrencies, cannabis stocks, and ETFs. And particularly from millennials. What do younger clients need? They love technology. They want to be educated investors, that’s why they are in need of education. They’re younger in their investing and trading careers. But they know what they want. They want to trade 100 shares of stocks at the table in the restaurant using some bot. They don’t want to miss the boat.

Cannabis vs Bitcoin

If you’re a long-term investor type who’s not at all interested in trading, then you’re on the right track to becoming a wealthy investor over the long term. Sticking with such a reasonable investment strategy can be tough, however, especially if you constantly hear about how a friend of a friend of yours got rich overnight by investing in Bitcoin or Canopy Growth (TSX:WEED) (NYSE:CGC) stock.

You can ignore the hype, as it has nothing to do with you. It’s difficult to tell the difference between a bubble and an actual paradigm shift that could lead to massive riches over the near term.

Today, cannabis stocks and Bitcoin are the two “sexiest” plays.

While the word “bubble” has been thrown by some experts, other equally qualified, are on the other side and are thinking “opportunity of a lifetime.” Being on the right side isn’t a matter of how clever you are. You can find a lot of examples of how some very smart guy has fallen as a victim on the wrong side of the “sexy play” of his time.

When it comes to subjects like the rapidly emerging rising cannabis market or blockchain-based cryptocurrencies, it’s hard to know what you’re dealing with as an investor. Nobody really knows how much new entities will act in the public markets over a long period. Attempts to make comparisons to events that happened in the past can make some sense but can’t help a lot.

Neither cryptocurrencies nor cannabis are suitable for conservative investors. It is for visionaries, for those who can perceive the future and recognize the chances. Set a limit and stay within it.

There are many people in the crypto industry believing in a bright future. As well as there are supporters of the legalization of cannabis. Technology companies, for example, SinglePoint and POSaBIT, are working to create a payment method for dispensaries and consumers using bitcoin. Recently, some cryptos emerge specifically for cannabis transactions.
This isn’t the first time that stocks in a hot niche have risen. We all know what happened with bitcoin stock a year ago. The companies specializing in the crypto have had fantastic gains.

Some investors never look back at overhyped fields once they aren’t trending, but investors who invested hard-earned money into most popular stocks usually learn the harder way what results can be.

Currently, a limited number of marijuana stocks is accessible to most investors. We’ve seen some massive moves in marijuana stocks. Those gains stem from the fact that investors who want to invest in marijuana have limited options available to them.

Why cannabis vs bitcoin?

The same case we already saw with many Bitcoin stocks.

In 2017, the top-performing Bitcoin stocks have less liquidity than many others. They stood very low on that list. But it reversed. In 2018, bitcoin declined in its volatility.
Of course, speaking about cannabis stocks we can expect winners, but we can’t be sure where to expect. Maybe cannabis investors could learn something from the bitcoin incredible boost in the past. Perhaps the same could occur. Sometimes, success may occur in unexpected places. As an investor in cannabis stocks, just be ready to see the secondary effects. Try to recognize how they can influence the companies that are not always obviously related.

Investors want to get rich from cannabis stocks, but past investing crazes and experience with cryptos have often left people wishing they hadn’t fallen for the allure of these markets. You can avoid repeating those mistakes and improve your chances of being successful with your investments in the long run. Just get more knowledge, learn permanent, test, and measure everything twice.

21st October 2018
Should You Leave Crypto, Get into Cannabis and ‘ Buy high’?

This topic is a small semantic game with words. But it seems to be a serious business.

By Guy Avtalyon

I want to be a clear, cannabis business is serious business.

Marijuana is a commodity, and commodities markets are subject to boom and bust, amazing and caught.

Canadian marijuana company Aurora Cannabis Inc.’s shares rose about 4% Thursday, October 18, after it said shares have been approved for trading on the New York Stock Exchange starting October 23. Even earlier, the hype around cannabis stocks was catching up to the crypto craze.

There’s a huge new trend that is sweeping the investment world. The rise in the legalization of marijuana caused the development of a new investment opportunity. Cannabis Shares, for example, allows investors to buy shares in many legal cannabis-based projects, including the sale of cannabis itself, or products of cannabis.

Merida Captial Partners, a New York investment firm, said its cannabis fund had been approached by around 50 cryptocurrency investors. “They are looking at cannabis and crypto as an emerging sector,” said Merida managing partner Mitch Baruchowitz, “they might not be connected as industries but they are seen as outside the traditional investment field. High risk and high reward.”

On the market, the stock ACB ( Aurora Cannabis Inc.), +1.40% ACB, +1.40%, will trade under the ticker symbol “ACB”. The shares are also traded on the Toronto Stock Exchange. This news came one day after Canada fully legalized cannabis for adult recreational use, the first G-7 country to do so, and only the second in the world to do so after Uruguay.

Canada changes the world following the passage of the Cannabis Act on June 19.

Which country first legalize recreational marijuana?

Canada became the first industrialized country in the world to legalize recreational marijuana.

In the process, it opens the door to possibly $5 billion in added annual sales. This industry is already generating from domestic medical weed and exports to foreign countries where medicinal cannabis has been given the green light.

Finance barons like to turn any commodity into an investment opportunity. This move was inevitable with the international changes in cannabis legislation. But, many are willing to see similarities between cannabis shares and cryptocurrencies. And they starting to worry that the cannabis industry could wipe out the need for crypto-investment.

Within the stock market, no asset class has been hotter than pot stocks over the past few years. Many of the largest marijuana stocks by market cap have doubled or tripled in value over the past year, and are up by more than 1,000% over the trailing two-year period.

Why cannabis stocks are so interesting?

The fundamental lure of marijuana stocks is its impressive sales growth potential. ArcView, a leading cannabis research firm, suggests that North American legal weed sales could grow by 28% between 2018 and 2021. That would lead to almost $25 billion in annual legal cannabis sales.

And the public all over the world is in favor of marijuana legalization. All major marijuana polls demonstrate strong favorability toward legalization.

All six-pot stocks have enjoyed outsized gains in the last few months as Canada legalization appears. These pot stocks generate quarterly and annual profit: Aurora Cannabis Inc. ACB, +1.40% , Cronos Group Inc. CRON, +0.66% was up 3.8%, Canopy Growth Corp. CGC, -3.51% WEED, -2.77% was up 2.1% and Tilray Inc. TLRY, +2.89% was up 3.2%. GW Pharmaceuticals Plc GWPH, -1.30% was down 0.7% and Aphria Health Inc. APH, +0.26% was up about 2%.

Why people love cannabis stocks?

Tilray is a Canadian cannabis firm, one that announced in September that they traded around $6.5 billion worth of shares on United States exchanges, at the same period Amazon, traded around $7.6 billion on the same exchanges. Amazon has a stock 47 times the size of Tilray, therefore, we can truly appreciate the full scale of this as an investment opportunity.

Some skepticists are suggesting that the crypto craze is coming to an end, but we know that this isn’t the case. Markets are stagnant because of a transition period. Frankly, they should know that the crypto craze hasn’t yet begun. Cannabis shares are more like traditional commodities and traditional stocks, therefore they are more attractive to a high level and institutional investors. Because institutions are investing in them, the level of cash flowing into Cannabis shares is such. Cryptocurrency has not yet penetrated the mainstream and therefore, there can’t be a threat from Cannabis Shares.

Investment advice website. Proactive Investors has started a dedicated Telegram channel for investors interested in cryptocurrency, the blockchain, and cannabis. The SEC stated: “Fraudsters may try to use media coverage about the legalization of marijuana to promote an investment scam.”

On the social messaging app Telegram, some cryptocurrency forums, where users trade investing tips and advice on the anonymous network, have now turned their attention to shares in cannabis growers.

Cannabis Stocks vs Bitcoin

Why should anybody go to think that individual and personal Cannabis Shares investors, couldn’t also invest in cryptocurrencies as both are new and exciting ventures? Overall, it’s not fair to compare the two. They aren’t a threat to each other. A lot of investments can exist side by side. Because Cannabis Shares are big and popular for many reasons, it doesn’t mean people will stop investing in Bitcoin. Yes, their attention may be rerouted, but this will constantly change.

“Crypto traders I know are getting into pot stocks,” Jeffrey Van de Leemput, founder of investing-education platform Cryptocampus, said in a message, reported Bloomberg. “But I don’t know if that’s a pattern or just coincidence.”

Who’s been behind the buying of pot stocks? I have a hunch that its investors tend to be young. It’s the millennials.
There is the potential for marijuana to be traded as a commodity, similar to how corn and other agricultural products are now bought and sold, or as asset-based security, similar to the way mortgages have long been bundled and sold to investors. Who knows, the cannabis futures market might be the largest futures market in the world.

But Bitcoin has no plan to become mainstream on the market, it isn’t in its nature.

Going in bitcoin’s favor, retail investors predominantly control the show. The most bitcoin trading occurs on decentralized cryptocurrency exchanges, and institutional investors usually want nothing to do with these decentralized exchanges, bitcoin is driven by the emotions of retail investors, rather than by fundamental reason. And emotions can be the most powerful tool in pushing Bitcoin’s valuations higher.

Which investment should you buy with your last $50? Cryptocurrency or marijuana stock? Both of these investment opportunities are like a plane, they are getting everyone on board and they are ready to fly with or without you.

19th October 2018