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December 16, 2019, 2:53 pm

How the Markets Are Reacting as Politics Rages On

by: The Financial Blogger    Category: Investment, Market and Risk

Despite global turmoil, implied EUR/USD volatility at all-time low.

If you haven’t noticed, the world is in a pretty turbulent state right now—one of the highest, according to geopolitical think-tank Policy Uncertainty, whose gauge places the current global economic uncertainty is at its highest point in 22 years—basically since the gauge was invented back in 1997. To gain a better understanding, just look at the daily headlines: Brexit, ongoing trade wars, ambivalent parliaments and sudden rises in power of populist politicians. The financially-minded are interested in how such times play out on the financial markets, which brings us to an interesting revelation: despite all the turmoil going on around the world, implied EUR/USD volatility is trading at its lowest since the euro was introduced 20 years ago. In fact, certain analysts have claimed info obtained from derivative contracts suggests that EUR/USD—the most traded currency pair on the markets ($400 trillion annually)—could move less than 6% in 2020.*

Trade ranges between the EUR/USD hit the narrowest point in 20 years, coming in at around 20 pips as of 25th November and placing implied volatility trading at 4.27%–the lowest on record, taken from option prices on a 3-month horizon.** What’s more, as of 14th November, the volatility implied by the cost of certain future contracts dropped below the rates of the otherwise tranquil days preceding the 2007 financial crisis. To borrow a phrase from the British, investors are generally keeping calm and carrying on.*

What’s the reason?

Well, there’s no hard and fast answer, but there are two possible explanations. The first is due to the monetary policies on both sides of the EUR/USD coin. In the US, response to global uncertainty saw the Fed tightening its purse strings back in 2013 and raising interest rates in 2015—then making a 180-degree turn by cutting rates for the first time since 2008 this past July. And in September of 2019, the European Central Bank slashed interest rates by half a percent. The end result saw the dollar go up and the euro go down, however now both the euro and the US dollar share a similar direction, which is what’s catching all the attention.*

The other explanation could be that investors don’t see things as all that bad by comparison to such events. Compared to what? Well, try the European sovereign-debt crisis—beginning in 2010—that caused some to fear that the euro would break up and which, by 2012, had even more thinking that there was a 70% chance a euro-zone member would leave as a result. The mere thought of such a collapse sent implied volatility skyrocketing.*

What could happen next?

The first thing some wonder is, will it stay this way? While the uncertainty caused by Brexit, the Hong Kong protests and various trade wars certainly isn’t going anywhere, there is additional reassurance in observing other signs of market progress. For example, talks of a euro break-up aren’t as prevalent or threatening as they once were. Also, the yield for Italy’s ten-year government bonds went from upwards of 7% in 2011 to just about 1%. Yet to quote The Economist, “As in the financial crisis, even when markets seem calm, volatility may come roaring back.”* while some regard this volatility in a positive light, all traders should remain vigilant and gather as much info on their chosen instrument as they can at financial sites like Vestle, where you can access live market rates and a real-time economic calendar, both on the desktop version as well as on-the-go via the Vestle IOS and Android app for mobile.

Vestle offers an innovative and intuitive online trading platform where you can trade popular currency pairs like EUR/USD as Contracts for Difference (CFDs) as well as hundreds of other instruments. We also provide free educational materials to help enhance your trading skills. Access the Vestle platform on our website, or trade anytime, anywhere with the Vestle IOS and Android app, giving you the entire range of tools and features at your fingertips.

Vestle (formerly known as ‘iFOREX’) is the trading name of iCFD Limited, licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license # 143/11. The materials contained on this document have been created in cooperation with Vestle and should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results.

Full disclaimer: https://www.vestle.com/legal/analysis-disclaimer.html

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November 5, 2019, 9:52 am

Advantages and Disadvantages of Options Trading

by: The Financial Blogger    Category: Investment, Market and Risk

Image by Gino Crescoli from Pixabay

When engaged in strategically, options provide traders with a profitable opportunity to engage in buying and selling of stocks. Options can also be used to reduce the risks of losses occurring. In this article, we will be looking at some of the benefits of engaging in this trade. We will also look at some of the drawbacks.

Let’s kick off with the advantages.

Benefits of Trading Options

  • Options trade require a low financial commitment

This is just one of the many advantages of options trading over stocks trading. The cost of purchasing an option is way lower than the amount that would be required to pay for shares. Traders who have invested in options make payments that are way lower compared to stocks but if the trade works in their way, both traders stand a chance to reap equal benefits. 

  • Options Investors are allowed to fix stock prices

Options contracts give the trader the freedom to fix stock prices at a certain level for a specified duration. This allows the traders to be able to buy/sell contracts at the desired price before the contract expires.

  • Flexibility for traders

Options traders benefit from the flexibility that the trade offers. Before the expiration of a contract, the traders are given several strategies which they can put to use. The strategic moves include; buying shares and adding onto them into your portfolio or buying shares and later sell part or all of them. This and other moves can help you to reduce the possible risks of an options trade.

  • Losses are limited to whatever is paid for

Whenever you call or put an option, you are not compelled to follow the trade through to the end. The case is different while trading in stocks. If your predictions in an options contract are incorrect and a loss occurs, you only make losses on the contract and the trading fee.

Downsides of Trading Options

  • Traders must meet set requirements

Some set requirements must be met before traders can start this trade. Options traders must maintain a minimum balance of $2,000 in their accounts. The first requirement is that you apply for approval from your options broker. To grant you this approval, the broker will ask several questions aimed at verifying your financial and investment experience. 

Choose a broker whose terms are favourable to you.

  • Limited time to make the next move

Although it has many alternative strategies, options trade is short term in nature. Trades normally take place within days or months and investors have to capitalize on the prevailing price movements. Traders have to study the trends and make the important decision of whether to buy, sell or walk away from a trade before the contract reaches the expiry. 

Things to Do That Can Help Minimize the Drawbacks of Options Trading

  • Never stop learning.

Keep doing your research on trading as you wait for the trade hours to clock in. This will expose you to new techniques and tricks. It will also prevent you from making uncalculated trade decisions. Learn from trade webinars and read informative trading media.

  • Delve deeper into specific patterns

Note down all indicators and all the elements that come with it. Scroll through past charts to see how the two affect each other.

  • Initiate trading chats

Got some questions? Consider discussing them with fellow options traders or your broker. There is a lot that you can learn from other traders. Use this as a chance to educate yourself and to develop your skills further.

Summing It Up

It is important to choose an options broker. Apart from offering you a platform where you can trade in options, a broker offers you the professional advice that is required until you can make trade decisions independently.

The broker will give such advice like which trades to place and setting the appropriate expiry time. He will also give you a breakdown of the potential gains.

To make sure you develop your skills, the brokers have a platform where you can gain experience by practising trading on a demo account.

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October 28, 2019, 9:29 am

Venture Funding: Weighing the Pros and Cons

by: The Financial Blogger    Category: Investment, Market and Risk

Image source: Pixabay

Venture capital financing sometimes allows small businesses to grow quickly, especially if they were successful early on. Many different types of companies use venture capital to expand, although not all are successful. This type of funding can be difficult to obtain, as it is not a loan and using it wisely may require some guidance; however, whether you are accepting venture capital or offering it, there are some pros and cons you may want to be aware of before you begin. 

Pro: You May Struggle Less 

When you accept venture capital, it can give you the means to cover expenses right away instead of having to depend on profit. As a result, you may struggle less when it comes to growing your company. You can purchase resources, pay vendors, and hire as many employees as you need without the burden of a bank loan or tightening your budget simply to meet these necessities. This may result in quicker company growth. 

Pro: Increased Networking 

Once you find venture capital financing, your investors will probably introduce you to other investors and people in his or her circle that may be interested in your company. This can help you build a network you can turn to when you need additional financing or want to reach out about finding new talent. The more individuals you have in your networking circle, the more potential resources you may have at your fingertips. 

Pro: Venture Capital Financing Is Not a Loan 

One major advantage of securing venture capital financing is that you do not have to pay any of the money back if your company fails to grow. This can have a variety of advantages for you as a business owner, including: 

  • No negative impact on your credit score 
  • No hefty interest fees 
  • No prequalification restrictions 

While your investors likely understand the risks of venture capital financing, it is wise to discuss all aspects of the process before you accept the funding, such as whether you plan to take your company to direct listing and which resources are needed for fast growth. This may help you and your investors maintain better communication, especially during periods of rapid expansion. 

Pro: You May Attract Better Talent 

Once you obtain financial backing via venture capital, you may be able to hire highly-qualified individuals and offer them the kind of salary that will keep them loyal to the company. This could result in reduced employee turnover and training costs, both of which can be a drain on company resources. Competitive salaries may also raise employee morale and maintain consistent quality control for product output and customer service. 

Con: Shareholder Interference 

Owning a business can be liberating, as you become your own boss and make all the major decisions regarding the operation and growth of your company. However, when you agree to accept venture capital financing, you are also allowing others to own a share of your business and perhaps take some control out of your hands. If this type of power shift concerns you, then accepting venture financing may not be the best choice and you might want to explore other options. 

Once you have more than several shareholders, they may vote to change certain aspects of your business and since majority rules, you may have to tolerate these changes. If you want to limit these actions, it is wise to do so when shareholders are first informed of their rights and limitations. 

Con: Investments Are High Risk 

While some individuals like Mark Stevens have made billions by investing in venture capital, being on the investment end does have its risks. A supported company may fail without warning, and since this capital is not loaned money, any investor in this position would stand to lose his or her investment. Some ventures might be riskier than others, but overall, investing in any startup this way may result in a financial loss. 

Cons: Your Salary May Be Reduced 

Receiving venture capital financing can allow you to purchase resources, hire talented workers, and obtain the tools and machinery you may need for growing your business. However, your shareholders may ask you to take a pay cut so financial resources can be spread through the company. If majority rules on a decision like this, you may find yourself with plenty of cash for the business but significantly less for yourself. 

Con: Venture Capital Can Be Difficult to Obtain

Venture capital financing has a variety of advantages that could give your startup a boost, but it is not something you can obtain easily. Many small companies are seeking this type of funding instead of opting for a traditional bank loan, so you may find the market crowded. Savvy networking may help you find an investor that suits your needs, but it may take months to work out a deal that is beneficial to you both. 

Venture capital financing has a number of pros and cons for both business owners and investors. Understanding the impact of these factors may help you make better investment choices, no matter which side you are playing.

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August 29, 2019, 8:43 am

Things you need to know to develop your risk management skills

by: The Financial Blogger    Category: Investment, Market and Risk

Are you making a consistent profit in the Forex market? Do you want to become a profitable trader? If so, you must learn to trade the market with proper risk management policy. Becoming a successful trader is not all hard. If you learn to trade the market with managed risk, it won’t take much time to develop your trading skills. Instead of executing random trades, you need to develop a balanced trading strategy. Even after having the perfect trading system, the rookie traders in Singapore often find it hard to make a profit from this market. This is where the term risk management policy comes into action. In this article, we will highlight some of the major issues which will help you to master the art of risk management policy.

You are not in war

The first thing which you need to understand trading is nothing but a business. If you declare war against the currency market, it won’t take much time to blow up your trading account. Being a rookie trader you have to follow the proper rules and trade the market with discipline. Instead of trading the market against the major trend, you need to trade the market along with the trend. Trend trading strategy is one of the most effective ways to reduce your risk exposure. To trade the trend reversal, you need to have extreme knowledge of the technical and fundamental sections of this market. So, trade with the major trend if you want to make a profit from this market.

Reduce your risk exposure

Managing the losing trades in the exchange traded funds industry is one of the most complex tasks you will ever face. It’s very hard for human beings to embrace losing trades. Most of the time the rookie traders start taking excessive risk after losing a decent portion of their investment. Being a currency trader, you should have zero emotional attachment. Try to trade the market with proper logic so that you can make the right decision. Forget about the aggressive trading strategy and focus on conservative trading technique. No matter which trading strategy you follow, never risk more than 2% of your account balance. Push yourself to the edge so that you get better at trading over the period.

Be prepare to lose trades

To follow the risk management policy, you must learn to embrace the losing trades. Losing trades are inevitable. So, if you trade the market intending to embrace the losing orders, trading will be easier. Things are not all complex but the novice traders always find a way to make things complex. To master the art of trading, you must trade the market with logic. Write down your trading rules and follow the things properly. After doing all the math, you will still have to lose money. Consider the losing trades as your business cost and you will eventually get better at trading.

Trade with a high-end broker

Those who are trading the market with a low-end broker will have a tough time to manage the associated risk factors in trading. Being a rookie trader, you have to understand the fact, trading is more like finding a needle in the hay. So, without having access to a premium broker like Saxo, chances are very low you will become a successful trader. Learn the use of SaxoTraderPro platform so that you can make the best decision in each trade. Forget about the complex trading strategy and try to create a simple method to find the best trades. Become a student of this market so that you can keep yourself tuned with the latest market dynamics. No matter what, never risk any amount which you can’t afford to lose. And never break your trading rules to recover the loss.

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June 13, 2019, 4:06 pm

Think about the actual trades mostly

by: The Financial Blogger    Category: Investment, Market and Risk

It is necessary for most of the traders to take good care with the trades. There is no way to deal with the Forex system without it. We will have to think about some good performance in the business. All of the traders will have to be right with the most proper thinking. There are ways for the traders to manage some good income. Most concentration will have to be into the right management of the quality. Some traders even have a wrong ideology of the proper quality of the trading system. They basically judge a book by its cover. To be exact, their mind thinks about the income as being the main focus in the business. Well, it is not right for the proper business performance. The traders will have to think in the best possible ways for the most proper business performance. We are going to be working with good thinking of the trades. There are ways to work out the trades. All you will have to do is think in the best possible way.

Set things up for the orders

From the beginning of the trades, there will have to be some good thinking. Again, there cannot be any kind of intentions of getting good income from the trades. We will have to sort out the most proper way with the trades. Doing some good planning is needed. Think about simple setups for all of the orders for the trades. As there is more prominence of a losing a trade, why not think about making the minimal investment? There will have to be good thinking for the lots. It cannot be too much for the traders to handle. The mentality of the traders will be disturbed from too much of investment into the trades. Think in the best possible ways for all of the right business performance. There are some good ways for traders to manage the most proper thinking. In the system of trading, there will have to be good overall thinking of the system. It is necessary for traders to maintain the most proper management. One more thing, try to maintain the right kind of thinking with the leverage system.

Learn to trade the market with logic

Making consistent profit in the Hong Kong trading community is one of the most challenging tasks in today’s world. However, if you follow the guideline of the experienced traders, it won’t take much time to master the art of trading. Use the demo account to develop your skills and once you start to make consistent profit use the Saxo Forex trading account. Focus on long term goals and try to trade the market with proper discipline. Consider trading as your business and you will see a significant improvement in your trading career.

There can be a good analysis

Besides the right setups for the opening of a trade, there will also have to be good care for the closing. The trading platforms like Meta Trader will give you some good ways to maintain consistency in the business. There are some good ways for traders to manage the most proper thinking. Just try to manage the most proper business performance in the business, it is necessary for the most proper performance to get some good returns from the trades. But thinking in the best possible ways will have to be reflecting in the setups. We are talking about too much without any kind of technical information. Based on the simple risk to profit ration, think about the stop-loss and take-profit. From there, you will be fine with all of the trades.

Focus on the closing of trades

Some good performance will be possible with the trades from now on. The traders will need some good ideology of the system to work with the trades. We are talking about the possibilities in the executions of the trades.

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