What Is An Initial Coin Offering (ICO)?

Trading Blog | 5 min read 

What is an Initial Coin Offering (ICO)?

Initial Coin Offerings (ICO) are the hot new way to raise funds for new cryptocurrencies, but what are they?

Written by Mitchell Roach
Follow me – @mvtchh

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If you’ve been kicking yourself for not getting in on the ground floor of top cryptocurrencies such as Bitcoin and Ethereum, you might want to consider looking into investing in an Initial Coin Offering. An Initial Coin Offering commonly referred to as an ICO, is a fundraising mechanism in which new projects sell their underlying digital tokens in exchange for bitcoin and ether.

 

Investing in ICOs

Whereas Bitcoin primarily focuses on payments and moving money between ecosystems, ICOs support companies with almost limitless applications. Here’s how it works, a document is created essentially detailing exactly how the system would work and why it’s a great idea that could be very useful, usually called a white paper. Then, people are asked to send money, usually, Bitcoin or Ether, but also traditional fiat currencies, and in return investors are returned with the new cryptocurrency or virtual token created. Investors hope that the new cryptocurrency will get used a lot and be in high circulation, which would, in turn, raise the value of the currency.

Most ICOs work by having investors send funds, usually bitcoin or ether, to a smart contract that stores the funds and distributes an equivalent value in the new virtual token at a later point in time. It’s important to note that unlike an Initial Public Offering, also known as an IPO, investing in an ICO won’t result in you having an ownership stake of the company you’re giving money to. You’re gambling that the currently worthless currency you pay for now will increase in worth later and make you money.

When investing in ICOs, you often have the option to become part of the development of new, upcoming technology. They often have a network of supporters already in place, which means the investment is already in a much stronger position to see faster growth. ICOs offer the opportunity to see gains much quicker and can take profits out of the company invested in more easily.

The success of an ICO is influenced by many aspects. Despite being a relatively new fundraising model, popularity has rapidly increased in recent years. As many of the ICOs are based on new blockchain technology, you need to have a thorough understanding of what you are putting your money into, as well as your financial requirements and understanding of the investment landscape. As with any investment decision, buyers and sellers need to find out as much information as possible – establishing both the positive and negative points.

What’s the difference between ICOs and IPOs?

How is buying a token different from buying a stock? Although the concepts are very similar, ICOs and IPOs differ significantly in terms of their mechanics and regulatory frameworks. IPOs are developed and organised by established private companies who are looking to start selling shares in the public domain. On the other hand, ICOs are organised by startups to raise seed money. This investment will not result in the individual having an ownership stake of the company, instead, it is an opportunity for the token to gain value over time.

The startups often don’t have a product ready, so they conduct ICOs based on their product idea and utility. When conducting ICOs, there are not many strict regulatory guidelines to stick to and they are not restricted by international borders. Usually, a percentage of the tokens is sold to ICO participants and a percentage kept for the company’s needs – which allows investors to fund the projects they like.

When investing in a stock you are purchasing a piece of the equity and operating company. Anything the company does such as cash flows or profits, you own a portion of that. Fundamentally tokens are different. You are not buying part of the company, you are buying the money supply of the future technology project. For example, a future casino being built, and the owner wants you to invest in the casino chips before the finalisation of the casino. This is similar to token sales; the team wants you to buy the tokens before the creation of the technology and platform. If the technology or platform is well used, the value of the tokens will correlate with the value of the company.

How to choose an ICO to invest in

When looking for quality ICOs to invest in, it is important to find a strong development team, preferably individuals with cryptocurrency experience, who can exhibit past successes. The white paper is also a crucial aspect of your investment, as this is what describes every aspect of the project itself. This includes the initial concept, the technology behind it, as well as the circulation of tokens and how they will be used. This crucial information will help you understand the logistics behind the project, helping you to become part of exciting future technology advances.

There are plenty of other techniques when it comes to evaluating tokens, it’s important that you view our in-depth guide on how to evaluate different tokens like a pro.

What to look out for?

Whereas Bitcoin primarily focuses on payments and moving money between ecosystems, ICOs support companies with almost limitless applications. Here’s how it works, a document is created essentially detailing exactly how the system would work and why it’s a great idea that could be very useful, usually called a white paper. Then, people are asked to send money usually Bitcoin or Ether, but also traditional fiat currencies, and in return, investors are returned with the new cryptocurrency or virtual token created. Investors hope that the new cryptocurrency will get used a lot and be in high circulation, which would, in turn, raise the value of the currency.

Most ICOs work by having investors send funds, usually bitcoin or ether, to a smart contract that stores the funds and distributes an equivalent value in the new virtual token at a later point in time. It’s important to note that unlike an Initial Public Offering, also known as an IPO, investing in an ICO won’t result in you having an ownership stake of the company you’re giving money to. You’re gambling that the currently worthless currency you pay for now will increase in worth later and make you money.

How can we help you?

As an establishment, we are an incredibly dedicated team of individuals who help offer online trading courses for beginners in cryptocurrencies. If you are just learning to trade and want to know how to invest in the stock market and digital currencies, our specialists can guide and support you on your learning journey.

Are you interested in participating in embarking on a course of online trading for beginners? The starttrading.comwebsite is where you need to be. Please feel free to complete the contact form on our website and we will get back to you as soon as possible.

Conclusion 

At the bottom line, ICOs are an incredibly new way of raising money, and everyone is trying to adapt to the new ways without getting screwed over. If you think you’re able to make a killing on a promising new ICO, just make sure to do your homework beforehand. Cryptocurrency is all about high risk, high reward, and ICOs are no different.

Be warned, ICOs are highly risky even under the best of circumstances and have a high potential for scams. How can you tell what’s a scam and what’s real? The first point is that the ICO itself could be a scam or a ponsy scheme.

When looking into an ICO as an investment you need to make sure that there is a solid business plan and a product, instead of some sort of promise of financial gains or rewards. You must ensure that the ICO website or contribution page is the official project page, instead of a phishing page generated by hackers to lure investors into crowdfunding to a 3rd party. Aside from these easily avoidable scams, you need to look out for aggressive marketing tactics, such as paying influencers to positively promote the virtual token.

A lot of ICOs use bots for social media, when seeing information about the ICO make sure the engagement is coming from real followers. Using all of this information when seeing information about the token, highlights the importance of doing your own research and staying sceptical.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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What is RSI? How to Trade using Relative Strength Index (RSI)

Trading Blog | 5 min read 

How to trade using the Relative Strength Index

The Relative Strength Index is one of the best indicators to determine whether an asset is over or undervalued and in turn determine the best time to trade (buy/ sell). 

Written by Mitchell Roach
Follow me – @mvtchh

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Have you ever entered a trade or bought an asset hoping for the trade to go your way, but instead the trade has instantly gone the other? Don’t worry it happens to beginner traders every single day. If only there was a way to see how over or under valued a currency pair, stock or cryptocurrency is at any time… It’s your lucky day, this ultimate beginners guide to mastering technical analysis is going to break down the Relative Strength Index (RSI) and show you how to trade using it!

What Is Relative Strength Index – RSI?

The relative strength index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a currency, stock, cryptocurrency or any other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100.

Typically traders interpret an RSI value of 70 or above as an indication that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.

What does Overbought mean?

An overbought asset means that the asset is currently overvalued and that excessive buying has lifted prices. Anytime the RSI level is above 70 it means that the asset is overbought (recently having a hard run up).

This is usually due to the market becoming irrational, such as during news releases. Often leading to FOMO (Fear Of Missing Out), in which ‘late comers’ will start to enter positions to try and make a quick profit.

Typically when a currency, stock, community or cryptocurrency is overbought it is not a good opportunity for you to BUY or open a LONG position. As the market will likely correct to the downside. Try to think of this as a car driving up a very steep hill and having to take regular breaks to cool off the engine, meaning the price needs to cool off before it can continue higher.

On the other hand, anytime the RSI level is above 70, this is likely a much better opportunity to SELL or open a SHORT position. When trading, especially using the RSI its important to remember the famous Issac Newton quote “What Goes Up Must Come Down”.

What does Oversold mean?

An oversold asset means that the asset is currently undervalued and that excessive selling has dropped prices. Ironically, this is also usually due to the market becoming irrational, however, lower prices often lead to FUD (Fear, Uncertainty and Doubt).

This is usually due to rising sell pressure caused by news events, supply zones, market panics and selloffs. Typically when a currency, stock, community or cryptocurrency is oversold it is a good opportunity for you to BUY or enter a LONG position. As the market will likely correct to the upside in the near future.

RSI Example

When it comes to technical analysis and in particular the Relative Strength Index. No currency pair or cryptocurrency stays as strict to the RSI as Bitcoin. As shown in the example, throughout the history of Bitcoin, anytime the RSI level has been over 70 the price has seen a sharp correction back down, correlated by a drop in RSI level to below 70.

When trading Bitcoin it often drops straight into oversold territory below 30, this is when experienced traders are likely to place BUYS or LONG positions. The probability is much greater that the price will bounce from oversold levels.

Alternatively, when the price is over 70 on the RSI and considered overbought, there is a much higher probability that the price will decrease in value, as it has proven to do so time and time again.

Limitations Of The RSI

The RSI compares both bullish and bearish price momentum and displays the results as an oscillator that can be placed alongside a price chart. Like most technical indicators, its signals are most reliable when analysing the long-term trend. True reversal signals are rare and can be difficult to separate from false alarms.

Since the indicator displays momentum, as long as an asset’s price momentum remains strong (either up or down) the indicator can stay in overbought or oversold territory for long periods of time. Therefore, the RSI is most trustworthy in an oscillating market when the price is alternating between bullish and bearish periods.

Conclusion:

This is also how institutional investors and the “smart money” invest capital, it is extremely important to trade like the smart money and have the mindset of an institutional investor to benefit like one. Following the simple RSI strategy laid out will greatly improve how you determine whether an asset is over or undervalued and allow you to get the best results out of your trades.

Remember the aim of the game is to “buy it low and sell it high” and don’t trade with your emotions or let your emotions overcome your better judgement. It is important to note that the RSI indicator can stay overbought and oversold for long periods of time.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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Week Ahead beginning 1st July 2019

Trading Blog | 5 min read 

Forex Trading News – Week Ahead beginning 1st July 2019

This article provides a quick overview of the week ahead in the FX (Forex) markets.

Written by Mitchell Roach
@mvtchh

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Start Trading Forex news

Forex Trading News

The USD and stocks are given a strong lift after Trump-Xi meeting in Japan delivered what the markets expected. For now, the greenback is trading as the strongest ones while traders are revisiting the chance of Fed cut in July. CAD is steadily firm, partly helped by rally resumption in oil price, as WTI breaches 60 handle. Swiss France and Yen are broadly pressured but Euro and AUD are not far behind.

US job numbers, PMI figures from the UK, eurozone, China and the US, and an OPEC meeting are key events this week, with much of the tone for the first half of the week determined by the outcome of the G20 meeting over the weekend. US markets are closed on Thursday for Independence Day, with trading likely to be quiet around this key holiday period.

 

Our Favourite assets we are watching this week:

#EUR JPY – Strongly Bullish on 4hr, Daily and Weekly charts

EUR/JPY edged higher today but the overall outlook is unchanged. Price actions from 120.78 are seen as a consolidation pattern. The further rise cannot be ruled out. But upside should be limited by 123.73 resistance to bring larger fall resumption. On the downside, below 121.65 minor support will turn bias to the downside for 120.78 low. Decisive break there will resume the decline from 127.50 and target 118.62 low next.

#CAD/JPY – Strongly Bullish on Daily to Monthly charts

CAD/JPY is trading higher and closed above 55- day EMA for the second consecutive day. It hits 5 -week high after the release of Canadian GDP data. Canadian Apr GDP came at 0.3% compared to forecast of 0.2% and y/y reading came at 1.5% vs 1.6% expected. The strong oil price due to the escalation of tension between the US and Iran is supporting the pair. It hits an intraday high of 82.43 and is currently trading around 82.33.

Trade War Impact in July 2019

This weekend’s trade truce between the US and China delivered a nice start to the trading week for equities all around the globe. All the major indexes are higher on the reset of trade talks between the world’s two largest economies.

President Trump softened his tone on supplying Chinese tech giant Huawei and signalled he will not raise tariffs, while China will buy more US farm goods. The concessions from both sides are hardly anything for both sides to brag about, this meeting basically just brings us back to where we were in talks in late April.

While no set timeline has been suggested by both sides, financial markets are appearing to be optimistic we could see something by Autumn. The political motivation from both sides to reach final trade deal is growing, Trump with his 2020 election and China with the 70th anniversary of the founding of the People’s Republic of China, which falls on October 1.

Oil & OPEC’s Impact for July 2019

Crude prices opened the weak gap higher as the G20 side-line meetings delivered two positive outcomes: the world’s largest two economies resume trade talks and Russian President Putin gave the Saudis the green light to approve cuts by six to nine months.

Today, the JMMC meeting saw the committee fall in line with what President Putin and Saudi Crown Prince Mohammed Bin Salman agreed upon over the weekend. The big surprise from the JMMC meeting was that Iran backed down from their stance of requiring the input of anti-sanctions language in its communique. Going into the meeting the base case was for the production cuts to be extended until year end. The potential of having them last until the first quarter of 2020 is helping oil stay near its sessions high.

Gold’s Impact for July 2019

Gold plummeted below the $1,400 an ounce level after the latest chapter in the US-China trade war saw a reset in trade talks. The yellow metal’s selloff was the worst in a year, but we should see global growth concerns and fresh stimulus bets from the largest central banks see buyers jump back in. A finalized trade deal is still far away and we could see talks collapse again in a couple of months.

https://zerohedge.talking-forex.com/live.html

https://www.fxstreet.com/economic-calendar

https://www.actionforex.com

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At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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What is the Stock Market? A Beginners Guide to Stock Trading

Trading Blog | 5 min read 

What is the Stock Market? A Beginners guide to Stock Market trading

This guide provides a detailed overview of the top tools and techniques within the stock market

Written by Mitchell Roach
Follow Me – @mvtchh

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How to trade the stock market

When making any investment it is important to gain some understanding in what you’re getting into. This will allow you to achieve the best results possible and limits the amount of mistakes made. If you want to actually learn how to trade stocks you’ll need a basic understanding to begin with, on how stock trading works which will be explained in this article. After reading this stock market guide you will have an a basic understanding to get started trading stocks, if you want to take your trading tot he next level a trading mentor is very beneficial, especially if you are looking to make money from stocks in the long run.  Book a FREE consultation with one of our trading mentors for more information.

What is Stocks?

A stock is a type of investment which allows you to have a share in a company. When you buy a stock from a business you’re essentially purchasing a small piece of that company which is called a share. Shareholders contribute to the company’s’ profits as they are investing into the company’s future as long as they own their shares. Investors typically buy stocks from companies that they predict will increase in value over time. If this happens then the stock brought can be sold for a profit. For many businesses distributing stock creates an opportunity to raise money to invest and expand in their company. Whilst for investors or potential investors like yourself, stocks enable a growth in your money and outpace inflation in due course.

The main goal when investing into the stock market is to make a profit by selling the stock for more than you paid for.

What is stock trading?

The stock market provides a secure and regulated environment for traders to participate in regular activities of buying, selling of shares in publicly held companies with a zero to low operational risk. The supply and demand of each company’s stock is tracked through stock exchanges which directly affects stock prices. Public companies sell their stock through a stock market exchange like the New York Stock Exchange (NYSE) or Nasdaq for example although there are many other stock markets exchanges all over the globe. Investors are then able to buy and sell these shares among themselves through stockbrokers.  Stockbrokers are individuals or firms who are licensed to trade stocks through the exchange-this allows them to buy and sell at your request. In exchange for dealing with individuals trades the broker collets a commission or a fee. You can sign up to a stock broker here >

Long –term vs. Short term Stock Trading

With fluctuations in the market happening on a daily basis there are two main strategies used by investors: short-term trading or long term trading also known as buying and holding. Investors who do best over the long term have a diversified portfolio of many stocks which they hold onto through good and bad times. This approach requires you to wait until the stock’s value has increased over an extended period of time – also known as passive trading. Having patience and the ability to overlook short term fluctuations is needed with long term trading as it is the ongoing performance of the stock which is important not the recent ups and downs happening on a daily basis.

On the other hand, short term trading is about using the constant volatility and fluctuating prices in the market to your advantage.  Investors who use this method of trading watch the markets for opportunities to buy low and sell high making numerous of trades in a short time period- also known as active trading. This type of trading comes with a potential for easy profit but is also associated with risks such as there may not be rise in value of a low stock price over a short period of time or it may actually lose value. Investors also end up paying more capital tax the more frequently they sell their shares. This was pretty much done to encourage traders to trade over a long term scale. There are many styles of short term trading such as day trading, intraday trading and sclaping.

How to invest in stocks

Before you start trading or investing in stocks it is essential that the money you are investing is NOT more than you can afford to loose. This is due to the fact that you will need to be willing to lose some or all of that money as a beginner. The stock market is forever fluctuating and you can never be in control of business setbacks. You also have to consider that the riskier the investment, the higher the potential rewards and losses. With active trading timing the market is a tricky thing to do as you have to choose the right opportunities twice – once when you buy the stock then another when you sell it.

Traders using this approach will benefit from short term changes in the market by frequently buying and selling based on trends. At start trading we offer copy trading services, which thousands of beginners people are using on a daily basis, who don’t have the time watch to the market but are looking for short-term rewards. Copy-trading allows you to copy the trades of experienced professionals who have high success rates for every trade they make.

As an investor your choice in a broker is important because it has huge implications for how much you’ll pay in fees, the types of investments you have access to and what your eventual returns will amount to. You can sign up to a stock broker here >

Some brokers are known as discount brokers who execute trades inexpensively but typically don’t provide any personalised guidance. Full service brokers offer a comprehensive variation of services including investment advice however the higher quality of service will require a higher fee which some find worth every penny. Both services have pros and cons but it depends on what approach in investing works best for you and what your goals are.

Many first time investors believe that to make money in the market you have to pick individual stocks but this is not the case. It takes time and patience to build a diversified portfolio of individual stocks as you need to do your research in each area of investment.  Alternatively many investors especially those with experience have made their successes through using mutual funds and exchange-traded funds which is also a good place for beginners to get started in trading. This provides automatic diversification that helps to protect your portfolio from inevitable market setbacks even if you have little money to invest. Mutual funds and exchange-traded funds provides a basket of investments in different areas of the markets in one single package.

What determines stock price?

As I have mentioned a few times the prices in the stock market constantly fluctuate on a day to day basis, you might be asking yourself, what makes stock prices fall and rise?

The very straightforward answer is supply and demand. The price changes in the market reflect the supply and demand in that present moment so when a stock is seen as desirable then the stock price will increase. Factors could include a company’s recent success, a strong industry sector or just plain and simple popularity.

On the other hand investors may be unwilling to purchase a stock due to a weak industry sector, company failings or the fact that the price is too high. This is called a lack of demand which will inevitably cause the stock price to drop. When this happens at some point the price will reach a point low enough for investors to start buying again where the cycle will repeat itself, this is known as market cycles. These are the trends which active traders will be looking out for.  Passive traders who take on a long term approach to trading would invest in stocks which have strong earnings and a bright future and wait for the price to rise over a long period of time.

Advantages of trading the Stock market? 

Investment gains

The most prominent advantage of buying or selling stocks is investment gains. Overtime the stock market tends to increase in value despite the prices of individual stocks fluctuating daily. Investments in steady companies that are able to grow to give investors returns on investment through profits. With the potential to grow wealth through value appreciation of assets the stock market attracts those with efforts to secure their financial future.

There are two trading methods to make money

The stock market gives you the option to make money on both a long term and short term basis. Some stocks also offer the opportunity to earn dividends which provides additional investment income. Dividends can be defined as a payment made by a business to its shareholders. The payouts are usually made in cash although they can also be distributed in stock dividends where stock shares are allocated to shareholders.  In essence a dividend is basically a reward given to shareholders for owning stock in the corporation.

Easy to buy

Buying stocks isn’t as formal as it used to be, with electronic and technological advancements buying stocks online literally takes minutes. You can purchase your shares through a broker, financial planner or online.

The Best way to outpace inflation

Historically stocks have averaged an annualised return of 10 percent although it does mean you must have a longer time scope. Nevertheless stock investments still out runs the average annualised inflation rate of 3.2 percent.

These are only some of the advantages to name

Disadvantages of trading the Stock market? 

You could lose all your investment

When a corporation does poorly, the investors will sell allowing the stock prices to plummet. As you sell during the company’s hardship you are exposed to losing your initial investment. If losing your initial investment is something you can’t afford to do then you should consider buying bonds. This provides an income tax break if you lose money on your stock loss.

Can be very time consuming

Before buying a stock you have to research every company to determine how profitable it will be for you in the long run. You have to learn how to read financial statements, annual reports and keeping up to date with your company’s developments in the news. It is also required to monitor the stock itself as even the best company’s price will fall in the market.

Stock trading can be an emotional rollercoaster

Stock prices increase and decrease second by second and many individuals buy high out of greed and sell low out of fear. Focusing on the price fluctuations of stocks can be damaging to your investment especially without patience. It is best to check on a regular basis rather than constantly watch the prices.

You are competing with professionals

Along with Knowledge and time professional traders and institutional investors have refined trading tools, computer systems and financial models at their disposal which some find intimidating.

Conclusion

To conclude although there are risks to investing into stocks, these can all be minimised with the right guidance and approach to what method of trading is best suited to your goals. Start trading provides services which can both teach and guide you into the right direction of a bright financial future in the stock market. With our mentoring services available you’ll be able to gain the confidence necessary in making sound trades and investments in the Stock, Forex and even Cryptocurrency markets. Book a FREE consultation with one of our trading mentors today for more information or to discuss any of the topics mentioned in this article in further detail.

  • Cryptocurrency’s website, channel or blog

One of the next places you as an investor or trader would want to have a look at is the cryptocurrency’s website, channel or blog, depending on the platform used by the userbase. This could represent the official and main channel of communication of the core development team. Our cryptocurrency market cap is the best all-in-one tool to keep in the loop on any specific cryptocurrency activity, news or any form of communication.

These channels could also be on platforms such as Telegram, WhatsApp or Discord channels and it is necessary to join them and ask questions to get more information on the cryptocurrency you are analysing. This is also a great way to interact directly with the developers and find out if they are trusted and moving the cryptocurrency forward. Be sure to follow the updates given by the developers in their official blog to track the progress and see if the developers are truly following their roadmap usually found on their website.

  • Community Forums

This is probably one of the places traditional investors would’ve never considered on gathering information for their fundamental analysis but in the cryptocurrency space, forums are a great way to get a better understanding of the cryptocurrency, as well as the sentiments surrounding the cryptocurrency. This is also a great platform to speak with other possible investors in the cryptocurrency space and discuss and share information with each other.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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How to Trade the Head and Shoulders Pattern

Trading Blog | 5 min read 

How to Trade the Head & Shoulders Pattern

The Head and Shoulders chart pattern is a powerful charting pattern used in technical analysis. This ultimate guide of chart pattern mastery will show you how to start trading the Head & Shoulders pattern like a pro.

Written by Mitchell Roach
Follow me – @mvtchh

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chart pattern - start trading

The Head and Shoulders is a extremely popular and easy to spot chart pattern used in technical analysis. After you read this guide you will know exactly what to look out for whilst trading. The pattern appears on all times frames and can, therefore, be used by day and swing traders as well as investors. Entry levels, stop levels and price targets make this trading formation easy to implement, as the chart pattern provides important and easy-to-see levels.

What the Pattern Looks Like

 

First, let’s look at the formation of the head and shoulders pattern:

Head and Shoulders

Commonly seen at market tops.

Formation of the pattern:

  • Left shoulder: Price rise followed by a left price peak, followed by a decline.
  • Head: Price rise again forming a higher peak.
  • Right shoulder: A decline occurs once again, followed by a rise forming the right peak which is lower than the head.
 

Chart pattern formations are rarely textbook perfect, meaning there may be some discrepancies between the respective shoulders and head.

 

Placing the Neckline

The first step is to locate the left shoulder, head and right shoulder on the chart. In the standard head and shoulders pattern (market top), we connect the low after the left shoulder with the low created after the head. This creates our “neckline” – the blue dashed line on the example.

How to Trade The Head and Shoulders Pattern

It is very important that traders wait for the pattern to complete. One should not assume that a pattern will develop or that a partially developed pattern will become complete in the future. Partial or nearly completed patterns should be watched, but no trades should be made until the pattern breaks the neckline. In the head and shoulders pattern, we are waiting for price action to move lower than the neckline after the peak of the right shoulder. For the inverse head and shoulders, we wait for price movement above the neckline after the right shoulder is formed.

A trade can be initiated as the pattern completes. Plan the trade beforehand, writing down the entry, stops and profit targets and noting any variables that will change your stop or profit target. The most common entry is when a breakout occurs – the neckline is broken and a trade is taken. Another entry point requires more patience and comes with the possibility that the move may be missed altogether. This method involves waiting for a pullback to the neckline after a breakout has already occurred. This is more conservative in that we can see if the pullback stops and the original breakout direction resumes, but it also means the trade may be missed if the price keeps moving in the breakout direction.
 

Placing your Stop-Loss

In the traditional market top pattern, the stop-loss is placed just above the right shoulder (topping pattern) after the neckline is penetrated. As a break above this point is usually where the pattern becomes invalidated. Alternatively, the head of the pattern can be used as a stop, but this is likely a much larger risk and reducing the reward to risk to reward ratio of the pattern.

Why the Head and Shoulders Pattern Works

No pattern is perfect, nor does it work every time. Yet there are several reasons why the chart pattern theoretically works:

  • As price falls from the market high (head), sellers have begun to enter the market and there is less aggressive buying.
  • As the neckline is approached, many people who bought in the final wave higher or bought on the rally in the right shoulder are now proven wrong and facing large losses – it is this large group that will now exit positions, driving the price toward the profit target.
  • The stop above the right shoulder is logical because the trend has shifted downwards – the right shoulder is a lower high than the head – and therefore the right shoulder is unlikely to be broken until an uptrend resumes.
  • The profit target assumes that those who are wrong or purchased the security at a poor time will be forced to exit their positions, thus creating a reversal of similar magnitude to the topping pattern that just occurred.
  • The neckline is the point at which many traders are experiencing pain and will be forced to exit positions, thus pushing the price toward the price target.
  • Volume can be watched as well. During inverse head and shoulder patterns (market bottoms), we would ideally like the volume to expand as a breakout occurs. This shows increased buying interest that will move price toward the target. Decreasing volume shows lack of interest in the upside move and warrants some skepticism.

Disadvantages of Trading Head and Shoulders

As stated, no trading pattern is perfect. Here are some potential problems with trading a Head and Shoulders pattern:

  • You need to find patterns and watch them develop, but you should not trade this strategy until the pattern is completed. So it could mean a long period of waiting.
  • It will not work all the time. During times of high volatility, the stop-loss levels will sometimes be hit.
  • The profit target will not always be reached, so traders may wish to fine-tune how the market variables will affect their exit from the security.
  • The pattern is not always tradable. For example, if there is a massive drop on one of the shoulders due to an unpredictable event, then the calculated price targets will likely not be hit.
  • Patterns can be subjective. One trader may see a shoulder, where another does not. When trading patterns, define what constitutes a pattern for you beforehand – given the general guidelines above.

Conclusion

Head and shoulder patterns occur on all times-frames, and can be easily seen visually. While subjective at times, the complete pattern provides entries, stops and profit targets, making it easy to implement a trading strategy. The pattern is composed of a left shoulder, head, then followed by a right shoulder. The most common entry point is a breakout of the neckline, with a stop above (market top) or below (market bottom) the right shoulder. The profit target is the difference of the high and low with the pattern added (market bottom) or subtracted (market top) from the breakout price. The system is not perfect, but it does provide a method of trading the markets based on logical price movements. (Profit-taking opportunities abound using this lesser-known pattern.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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10 Tips for Successful Social Trading

Trading Blog | 5 min read 

10 tips for Successful Social Trading

Social Trading trading is a fun, constantly-evolving and thriving approach towards trading and investing, that takes your trading experience to another level.

Written by Mitchell Roach
@mvtchh

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You may have heard that the world of trading is becoming more and more accessible. The variety of tools and platforms is shockingly big and diversified. The latest industry trend is social trading as it allows to benefit from the features of a traditional social media combined with the tools for trading and investing. Novice traders can benefit from copying professional traders live trades and strategies. 

1.

Use auto-copying

Auto-copy is the central element of social trading and stands as the key function of our partners ‘NAGA’ groundbreaking platform allowing you to replicate the activities of the experienced traders and well-known investors. You benefit from their knowledge of finance by just clicking a single button. It’s as easy as following someone on Twitter or Instagram.
 
This groundbreaking algorithm already managed to innovate and turn upside down the archaic financial industry we had a couple of years ago.
 

2.

Never forget tip #1

Indeed, auto-copying is the ongoing trend of 2019 that helps you get use of the analysis and strategic thinking of much more experienced traders than you are. Of course, it doesn’t mean this is a magic pill for successful investments, but it is a handy and useful tool that can save you lots of time and months of researching.

3.

Don’t underestimate the social features when it comes to investing

We all know how difficult it can be for a newcomer to the financial markets without an experienced and supportive helping hand. It’s always easier to get a fast head-start when you can learn from leading traders just by following them on the platform.
NAGA offers a great variety of engagement options such as News Feed that helps you connect with other traders. You can comment, like or follow other users, all with one idea in mind: use the insights of experienced investors to develop your own trading style.

4.

Follow the strategy of more than just one trader

While it is possible to have gains by copying only one trader, it is better to diversify your portfolio. Basically, by copying more traders, you are lowering your risk.
Remember: even the best traders have bad days, weeks or even months and they can also lose, so diversification is the key to minimizing your loss.

5.

Do your own split-run testing

Try copying a couple of traders with smaller budgets and check which ones of them have bigger profits and ROI in the Stats section. It is best to use a minimum budget for that so that you minimize your risks as much as possible.

6.

Avoid new and unverified users

New doesn’t always mean bad, but to be on the safe side it is always better to stick to this routine: Try auto-copying only verified users and the ones that already have a proven record of success, you can easily check the stats in their profile.

7.

Following “Most Copied” isn’t always the right way to go

While the copiers with the highest profit&loss numbers and ROI seem to be the most logical target for copying, it is best sometimes to use filters in the Top Traders section to find the right trader with the strategy that has the same interests and risks as you do.

8.

Never hesitate to stop

The best strategy is not to let the traders you copy reach 30% and more loss on the overall amount invested. So, if you see that things don’t feel right — just pull the plug and stop auto-copying the losing trades.

9.

Reinvest your gains

Sometimes it is really tempting to withdraw your first profits and spend them on something nice for you, but never forget about compounding. To create wealth, you have to reinvest a percentage of your profits. That is the right strategy to stack and increase your profits over time.

10.

Do your own research

Auto-copying is one of the best ways to trade and invest, but are you going to be satisfied with gains without even understanding how this all works? Today’s financial markets tend to be very dependant on market news. Any information or insight starting from big companies’ bankruptcy reports to even innocent tweets by a reckless CEO may affect the price drastically. Subscribe to NAGA’s highlighted news, follow our trading insights on social media, check the economic calendar and be prepared to become a trading expert yourself 😉

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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What is Forex? Forex Trading for Beginners

Trading Blog | 5 min read 

What is forex? Forex trading for beginners

The foreign exchange market, also known as Forex or “FX”, is the largest financial market in the world. There are many benefits of trading forex, which include convenient market hours, high liquidity and the ability to trade on margin. This ultimate beginners guide to trading forex will help you to start trading like a pro. 

Written by Mitchell Roach
Follow me – @mvtchh

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If you’re looking to start trading forex online and feel as though it is a potential opportunity for you make money, you’re properly wondering about the best way to get your feet wet and learn how to get started in forex trading.

It’s important to have an understanding of the markets and trading strategies used to trade so that you can more effectively manage your risk, make winning trades, and set yourself up for success in the financial markets.

 

How does Forex trading work?

In the Forex (FX) market, you essentially buy or sell currencies with the aim of making a profit from the changes in their value. Forex, also known as foreign exchange, is a decentralised global market where all the world’s currencies trade. 

If you’ve ever travelled to another country, you usually had to find a currency exchange broker and then exchange (swap) your local currency into the currency of the country you are visiting. This is the basic principle of the Forex market, buying currencies when the price is going up and selling currencies when the price is going down.

You may have heard of the New York stock exchange (NYSE) and thought to yourself that this is where the real money is being made. It may be a surprise to you to find out that the Forex market is actually the giant when it comes to trading, transacting over $5 Trillion per day compared to $22.4 Billion per day on the NYSE.

With an average daily trading volume of $5 trillion, Forex is one of the most actively traded markets in the world. Due to this huge popularity, the Forex market attracts many UK traders, both beginners and experienced traders alike.

 

Why trade Forex and what are the main advantages of being a Forex trader?

Forex market hours

Certain markets such as stocks often have opening and closing times meaning you can’t place orders outside of these times. However, the Forex market is a 24-hour market, 5 days week from the Australian Open to the New York Close. The Forex market closes on Friday night at 10pm (UK time) and does not open again until 9pm (UK time) on Sunday evening. However, because the market is only closed to retail traders (not central banks and related organisations), Forex trading actually does take place over the weekend. This means that there can be a difference in price between Friday close and Sunday open – known as a gap.

This is an advantage for those who want to trade part time because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep. Because Forex is a truly global market, you can always take advantage of different active session’s forex trading hours.

Traders need to be highly aware of the weekend Forex trading hours and alter their positions accordingly. If you do not want to expose your position to the risk of gapping, you may want to consider closing your position on Friday evening or placing stops and limits to manage this risk.

Tax-efficiency

Both spread betting and trading CFDs on forex can offer significant tax benefits:

  • Spread betting is completely tax free.* There is no capital gains tax (CGT), as you never own the underlying asset
  • CFDs are not exempt from CGT. However, you can offset your losses against your profits for your CGT liability, which makes CFDs useful for hedging

Trade a wide range of currency pairs

Forex trading gives you the opportunity to trade a wide variety of currency pairs, speculating on global events and the relative strength of major and minor economies.

With most Forex brokers you can choose from over 80 currency pairs, including:

  • Major currency pairs, eg GBP/USD, EUR/USD, and USD/JPY
  • Minor pairs, eg USD/ZAR, SGB/JPY, CAD/CHF
  • Emerging currency pairs, eg USD/CNH, EUR/RUB and AUD/CNH
  • Exotic pairs, eg EUR/CZK, TRY/JPY, USD/MXN

Learn more about currency pairs and how to trade them in our Forex currency pair guide

Leverage can make your money go further

Leverage or margin trading offers the ability to make large profits from a relatively small investment. Leverage in Forex enables you to open a position against a currency pair by paying just a small proportion of the full value up front, similar to a deposit. The profit or loss you make will reflect that of the full position, not just the deposit (margin). However, this can also amplify losses, meaning losses could exceed your initial deposit. For this reason, it’s important to refer to our 6 risk management tips to stay as safe as possible whilst trading.

Hedge with Forex

Hedging is a technique that can be used to reduce the risk of unwanted moves in the forex market, by opening multiple strategic positions. 

There are a variety of strategies you can use to hedge forex, but one of the most common is hedging with multiple currency pairs. By choosing forex pairs that are positively correlated, such as GBP/USD and EUR/USD, but taking positions in opposite directions, you can limit your downside risk. For example, a loss on a short EUR/USD position could be mitigated by a long position on GBP/USD.

Alternatively, you could use forex to hedge against loss in other markets, such as commodities. For example, because the USD/CAD generally has an inverse relationship with crude oil, it is commonly used as a hedge against falling oil prices.

Why trade Forex instead of Stocks?

Deciding whether to start trading Forex or Stocks is an important decision that you should base on which asset you are interested in trading – currencies or shares. Here are a few reasons why some traders prefer to trade Forex than Stocks:

  • Market opening hours: The stock market is limited to an exchange’s opening hours, whereas the Forex market is open 24-hours a day. However, it is worth noting that certain stock indices are available for weekend trading
  • Higher liquidity: the Forex market sees an average daily turnover of $5 trillion, whereas the stock market sees comparatively fewer trades per day
  • Greater volatility: the stock market tends to have more stable prices that change over a longer period of time. Although this is great for investing and some trading styles, the volatility of the Forex market can create an exciting range of opportunities for shorter-term traders.

When you are deciding whether you want to start trading the Forex or the Stock market, you should consider your attitude to risk and your financial goals.

 

Learn about the currencies you are trading

Before you start, you’ll need to understand what you’re trading. A vast majority of new traders tend to jump in and start trading anything that looks like it moves. Usually using high leverage and trade sporadically in either direction, ultimately leading to loss of money.

Understanding the currencies you are buying and selling makes all the difference. For example, a currency may be beginning to increase in value after a large fall in price. Encouraging inexperienced traders to “try to catch the bottom.” The currency itself may have been falling due to bad employment reports for multiple months. Ask yourself, you would you buy something like that? Most likely not, this is why you need to know and understand what you buy and sell.

Currency trading is great because there are so many different currency pairs to trade. However, it doesn’t mean that you need to trade them all. It’s better to pick a few and focus on those, at Starttrading.com we’d recommend 3-6 if you are starting out. Having only a few will make it easy to keep up with economic news, politics and tendencies of the countries involved. 

 
 

What are the main currencies in Forex?

Across the globe, there are hundreds of different currencies in use. Each of them are divided into two main sorts, major and exotics. All of the major currencies have been derived from the most powerful economies. These nations include the US (USD), Japan (JPY), the UK (GBP), the Euro Zone (EUR), Canada (CAD), Australia (AED), Switzerland (CHF) and New Zealand (NZD). These seven currency pairs make up almost 80% of the total daily trading volume.

 

What are the major FX pairs?

Trading EUR/ USD 

This is the most popular traded currency pair in the world, representing the two largest economies (Euro vs US Dollar) and has faced the most volatility since the inception of the euro in 1999.

Due to the high popularity of this conversion means that is always highly liquid, offering the potential for the competitiveness of price as offers to buy or sell are easy to find.

Trading USD/ JPY 

Being the second most popular trading pair in the world, the characteristics of this pair make it perfect for both the beginner and experienced Forex trader. Day traders have plenty of opportunities to turn a profit due to its high levels of volatility. The popularity of this pair also means that finding trading tips and Forex signals is relatively easy.

Although volatility is a benefit, traders should be aware that sudden price fluctuations can occur – so it can be easy for seemingly winning scenarios to become a loss. By conducting a thorough market analysis before trading, you can understand the patterns in price action and movements that may threaten economic growth in the market.

Trading GBP/ USD

Compared to other major pairs, there is often a much wider price range to play with, due to its unpredictability and volatility. It can move extremely quickly, which means professionals need to employ effective risk and money management strategies to avoid losing money when trading.

It is thought approximately 35% of the volume traded in the FX markets goes through London. However, when working with British pounds and the London Stock Exchange, traders with less experience may fall victim to misleading signals.

Trading USD/ CHF

In times of economic uncertainty or market turmoil, the Swiss franc has become a very safe investment. This is an excellent choice for traders who seek markets that are perceived as lower risk, as Switzerland has an exceptional reputation for stability, safety and neutrality.

The Swiss franc is also very similar to the British pounds in terms of volatility, price shifts, and technical characteristics. Therefore, if you are a beginner of trading with this currency there are plenty of bar charts, graphs, and forums which have been developed from experienced traders available for you to use.

What moves the Forex market?

The forex market consists of currencies from all over the globe, which can make exchange rate predictions extremely difficult as there are many factors that could add up to price movements. However, like most financial markets, forex is primarily driven by the forces of supply and demand, and it is important to gain an understanding of the influences that drive price fluctuations.

The banks

The central banks control the currency supply, they can announce measures that will have a significant effect on their currency’s price. For example, quantitative easing involves injecting more money into an economy, causing the currency price to drop.

News reports

Commercial banks and other investors tend to want to invest their capital into economies that have a strong outlook. If a positive piece of news hits the markets about a certain country, it will encourage investment and increase demand for the local currency.

On the other hand, a negative piece of news can cause investors to pull their money and sell positions, in turn lowering a currency’s price. This is why currencies tend to reflect the reported economic health of the region they represent.

Market sentiment

Market sentiment, which is often in reaction to the news, can also play a major role in driving currency prices. If traders believe that a currency is headed in a certain direction, they will trade accordingly and may convince others to follow suit, increasing or decreasing demand.

How to learn Forex trading

Here at starttrading.com, our main aim is to provide individuals with the information and educational content they need to become a more successful trader. We have an entire team of professionals who would be more than happy to guide and support you on your trading journey, turning your wealth into success.

To learn more about our online trading and Forex trading courses, you are more than welcome to complete the contact form on our website. Include all of your relevant information and a member of our staff will get back to you as soon as possible, to discuss how we can best meet your requirements.

The importance of Forex education

To start trading effectively, it’s critical to get the right forex education. You can find a lot of useful information on forex here at Starttrading.com. Spend time reading up on how forex trading works, forex pips, forex NFP, and risk management, for starters.

As you may learn over time, nothing beats experience, and if you want to learn forex trading, experience is the best teacher. A trading mentor is always great to guide to and stop you making those rookie mistakes.

When starting out it is always recommended to open a forex demo account and try out some demo trading. It will give you a good technical understanding of the mechanics of making forex trades and getting used to trading on a trading platform.

No amount of trading books or networking can teach you better than experience the value of closing your trades and getting out of the market when your reasoning for getting into a trade becomes invalid. It is very easy for traders to think the market will come back around in their favor, letting their emotions get the better of them and cloud their judgement. You would be surprised how many traders fall prey to this trap and are left heartbroken and often out of pocket when the market only continues to trade against their anticipated direction.

This emphasises the famous and painfully true statement from John Maynard Keynes, “The market can stay irrational, longer than you can stay solvent.” Meaning, it does little to no good to say the market is acting irrationally and think it will come back in your favour (direction of your trade).

 

How to start trading Forex

Step 1

Open a NAGA or MT4 trading account 

You need to open a trading account in order to start trading. The application process is simple and secure and you can apply for an online account at any time by filling in the online application form.

Once you have successfully completed the verification process, you will receive a confirmation email to confirm that your account is open.

You may receive a call from an account manager, in case you have any additional questions.

Step 2

Fund your trading account

Once your account is open, you’ll need to deposit funds into it to start trading. You can do this in a variety of ways via the ‘Account’ tab in the trading platform

Your initial deposit must be at least $1.

For more information on how you can transfer funds in and out of your account, visit NAGA

Step 3

Start trading

Now you have an online trading account and have deposited funds, you can utilize all of NAGAs innovate features to start trading. The social trading tool that takes your trading experience to another level. Beginner traders can benefit from automatically copying the professional traders live trades and strategies.

You can access live price feeds, streaming charts and news instantly and trade 24-hours a day. Good luck and safe trading.

Book a Professional Trading Mentor

With this blog you now have an understanding of Forex and how to get started trading. But as a beginner, it is still important to gain trading skills, knowledge, do’s and dont’s from someone with experience. At Startttrading.com we are here to support you on your journey to trading success! We offer live support whenever you need it, trading strategies and skills, mindset mentoring and much more. Tailoring you into successful trader. We are currently offering 50% OFF on your first trading mentoring session so now is the best time to get started!

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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How to start trading from home. A 6-step guide.

Trading Blog | 5 min read 

How to start trading from home. A 6-step-guide

This guide provides a quick overview of the five steps needed to start trading from home. After reading this you will have a strong understanding of the Foreign Exchange (Forex), Stock and cryptocurrency markets to begin your trading career

Written by Mitchell Roach
@mvtchh

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trade cryptocurrencies

Trading in the cryptocurrency markets can be very daunting due to the infancy of the cryptocurrency space and the lack of a long history, which typically acts as a solid foundation for traders to build decisions upon. In traditional markets such as the stock market people do not base their trading decision solely on the technical side but make use of fundamental analysis techniques as well. However, a vast amount of cryptocurrency traders lack or dismiss the importance of fundamental analysis whilst trading cryptocurrency, this is why we have created a comprehensive guide to help you trade cryptocurrencies using the fundamental information available at this moment in time.

What is cryptocurrency fundamental analysis?

Before we go any further it is important to define the term “cryptocurrency fundamental analysis”. Cryptocurrency fundamental analysis is a forecasting method used to predict the price of a digital asset (cryptocurrency) usually in the mid to long-term. This method does not rely so heavily on the exact price at the moment but considers all the available information about that particular cryptocurrency and all the current and future factors that may influence the price.

Traditionally fundamental analysis is useless in short term. Stock investors for example apply this forecasting method to get the general picture of an asset’s value. In the case of cryptocurrencies, it can be seen as of little importance as to predict too far into the future as cryptocurrency markets changes in a very fast manner, thus whilst using cryptocurrency fundamental anaylsis we tend to focus in the range of mid to long term.

The following four points are traditionally used to summarize the workings and reasoning behind fundamental analysis:

  • The price of every asset changes due to a specific reason.
  • We can find this reason by analysing the asset and its interactions in detail.
  • Any news, rumours or events has consequences which can affect the price of the asset.
  • If one person knows all the facts and can make the right decision, that person is able to predict future price of that asset.

The above points relate to the cryptocurrency trading space as well, however, some traditional methods inside fundamental analysis needs to be changed to analyse crypto specifically. New tools need to be developed and the needed data and information is found in a variety of different areas.

Cryptocurrencies are similar to both currencies and stocks and thus has a combination of both’s features alongside the new features discussed above. All those specific features affect cryptocurrency fundamental analysis and make it unlike anything we had before.

Where to get your fundamental information and its importance

Looking at traditional investments such as stocks for example, fundamental analysis entails evaluating the financial health and viability of a company according to the contents and conclusions drawn from its financial statements, usually made available to the public by the company. If the conclusions look promising, meaning the company is in good financial health and growth is almost guaranteed, we state that the company has good fundamentals and we can, therefore, invest in it.

In the cryptocurrency space however, performing fundamental analysis is radically different due to the fact that there are no financial statements. This is due to the following reasons:

  1. A Cryptocurrency is not a corporation. Cryptocurrencies are not based on generating revenue such as corporations but is rather seen as a store of value within a network.
  2. Cryptocurrencies do not have a long history.  Due to the infancy of cryptocurrencies, almost all cryptocurrencies are in their development stage. This means that there are limited adoption and a limited track records available.

Due to the above-mentioned reasons, fundamental analysis of cryptocurrencies must be performed with a different methodology. A good understanding of a cryptocurrency’s fundamentals allows you to form your educated opinions and have data and information backing it, which is rare in the crypto world due to its complexity.

Here are a few ways on where to begin your fundamental analysis:

  • Cryptocurrency’s white paper

A cryptocurrency’s white paper is a detailed proposal, usually written or typed out, by the cryptocurrency’s development team. This paper outlines the purpose and ‘internal workings’  of the specific cryptocurrency and represents the main source of evaluating the fundamentals of the cryptocurrency. The white paper is one of the first things you must read while performing fundamental analysis on specific coins or tokens. Note that these papers can get very technical, it is good idea to understand the jargon if you are going to read these.

  • Cryptocurrency’s website, channel or blog

One of the next places you as an investor or trader would want to have a look at is the cryptocurrency’s website, channel or blog, depending on the platform used by the userbase. This could represent the official and main channel of communication of the core development team. Our cryptocurrency market cap is the best all-in-one tool to keep in the loop on any specific cryptocurrency activity, news or any form of communication.

These channels could also be on platforms such as Telegram, WhatsApp or Discord channels and it is necessary to join them and ask questions to get more information on the cryptocurrency you are analysing. This is also a great way to interact directly with the developers and find out if they are trusted and moving the cryptocurrency forward. Be sure to follow the updates given by the developers in their official blog to track the progress and see if the developers are truly following their roadmap usually found on their website.

  • Community Forums

This is probably one of the places traditional investors would’ve never considered on gathering information for their fundamental analysis but in the cryptocurrency space, forums are a great way to get a better understanding of the cryptocurrency, as well as the sentiments surrounding the cryptocurrency. This is also a great platform to speak with other possible investors in the cryptocurrency space and discuss and share information with each other.

What to look for in projects

Now that you know where to find the information or data on a specific cryptocurrency you are analysing. The next step entails which questions to ask and which information to look at whether to decide fundamentally if the cryptocurrency you are analysing is a good investment. Here are a few attributes to look at to determine whether it is a good investment or not:
  • Long-term Scalability
In the long term, one of the fundamental issues that needs to be solved in blockchain technology is the issue of scaling. The blockchain model depends on all connected nodes, miners, to process and agree on every transaction. This protocol quickly runs into limitations of how fast a payment can be distributed, stored and verified. Currently there are many cryptocurrency projects out there which claims they have solved these problems and promises close to a million transactions per second. It is important to note that almost all of these approaches are either impractical in real life or break the fundamental premise of a cryptocurrency being trust-less and decentralized. Thus, while doing your fundamental analysis it is important to look at the implementations the developers are performing to advance realistic scalability of their technology. For more information on how this could be done, read up on the concept of sharding.
  • Trust-less decentralization
The concept of trust-less value transfer or trust-less execution is one of the most important properties a cryptocurrency can have. This should be the backbone of the cryptocurrency you are analysing. For example, a transaction can be sent to anyone anywhere in the world without needing a bank or escrow involved.Be aware of some cryptocurrencies with too simple implementations or a mirror of already established implementations as simple transactions are very basic and has a limited use-case. For example, it does not make sense investing in a cryptocurrency that does precisely the same as Bitcoin, as Bitcoin is already established and will be the best in that field. A project has to offer a unique and useful advancement on basic blockchain technology.
  • Usefulness of the cryptocurrency
Also, one of the most important factors to look at is for who the cryptocurrency is developed for and whether it truly enriches those peoples lives. There have been many cases where teams tried applying blockchain in a misguided manner to any and all systems to join in with the hype. This is obviously then useless, unless you need the very specific properties of a decentralized and trust-less system, Blockchain is no more than a different type of higher tier database.

Pros and cons of fundamental analysis

Fundamental analysis of cryptocurrencies has its advantages and disadvantages. One of the biggest advantages is that these forecasting methods allow you to understand the general situation on the crypto market and find the general tendency. Another advantage is that it lets the investor understand precisely what he/she is investing in and not speculating on the ‘product’.One of the biggest disadvantages is the misinterpretation of any situation. When you deal with fundamental analysis, you risk misinterpreting every situation. For example, you may come to a conclusion that this or that event will increase crypto’s price, but the price stands still or even decline. Fundamental analysis in the cryptocurrency industry is even more subjective than technical analysis.The second disadvantages discussed is that this forecasting method is difficult to conduct for beginners with limited knowledge in this field. You need not only to know how to gather information but also understand how to use it and what it means.

Conclusion

Hopefully, after reading this article you now have a better understanding of fundamental analysis and how it is performed in the cryptocurrency space. While there is a magnitude of innovation across the cryptocurrency space, caution is still strongly advised. It is advised to do further research on this topic and be 100% informed of everything there is to know about the cryptocurrency you would like to invest in.If you would like to learn how to use fundamental analysis whilst trading cryptocurrencies than our trading academy and mentorship services are designed to support you into becoming a profitable trader.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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How to start trading or investing in XRP (Ripple)? A 3-step-guide.

Trading Blog | 5 min read 

How to start trading or investing in XRP (Ripple)? A 3-step-guide

This guide provides a quick overview of the five steps needed to trade (buy/sell) cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP).

Written by Mitchell Roach
@mvtchh

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If you are reading this, you have probably heard of cryptocurrencies or more specific, one of the leading cryptocurrencies called Ripple (XRP). Most people know it as Ripple, but Ripple is, in fact, the name of the company that created XRP and uses it for international payments. Another concept that has probably led you to this article as well is trading, whether it is stocks, foreign currencies or cryptocurrencies. This article mainly focuses on trading cryptocurrencies, in this case XRP and how to get started.

This article covers the basics of XRP and will help you get familiar with an exchange called Binance. It also walks you through the steps on how to purchase XRP on this exchange.

Lastly, we will discuss some additional information we feel is advantageous to know when starting to trade or invest in XRP.

XRP

XRP, a cryptocurrency created by a company called Ripple, is a coin created for everyday transactions which is widely used by individuals, institutions and banks.

The continuous and various developments on Ripple have made it a top choice for not only daily transactions but also an investment opportunity for the nearest future, some even prefer to trade it against other cryptocurrencies.

Whether you are just sending some XRP to someone on the other side of the world, trading it, or buying them to keep as investments, this article guides you on how to acquire XRP tokens in 3 simple steps by exchanging it with major cryptocurrencies on the Binance Exchange.

Before you get some XRP on Binance, you need to have the same worth of Bitcoin (BTC), Ethereum (ETH), or any other cryptocurrency to exchange for XRP. There are a couple of ways of buying Bitcoin and other alternative cryptocurrencies with fiat, but this is covered in our previous articles listed below.

Here is a step-by-step guide for you to follow so that you can jump into the cryptocurrency markets and start buying XRP today:

Step 1

Register on the Binance Exchange

Selecting a cryptocurrency exchange in 2019 to purchase your first cryptocurrencies can be a daunting and overwhelming process. After all, there are over 200 cryptocurrency exchanges in today’s market, with 24-hour trade volume in the billions. So, how do you make your choice?

Here are a few attributes to look at while choosing your exchange of choice:

  • Geographical location and their constraints;
  • Transaction fees;
  • Security, anonymity, and customer support;
  • Ease of use and User Interface;
  • Volume and liquidity of the exchange.

Note that the above list does not cover all needed attributes to consider while choosing an exchange but are a good solid basis to start off with. An expanded version of this steps can be found in one of our previous articles listed below.

A few exchanges to choose from are:

For the purpose of this article, we will work on the Binance Exchange.

Here is a quick summary of what has been discussed in the previous article regarding registration on Binance.

  1. Register on the Binance exchange – Firstly, you need to create an account on the Binance exchange platform. To do this, head over to the Binance Exchange official site and click on the register link on the top right of the screen and fill in the following fields. Follow the prompts until your account is registered.
  2. Verify your account – Fill the Registration form and verify your account.

 

Step 2

Choose an XRP Wallet

After choosing your exchange, in our case Binance, you would need to create a crypto wallet to store and control your funds on. Due to this article focusing on XRP we need to obtain an XRP wallet. Firstly, a cryptocurrency wallet is a place where you store encrypted passwords that represent your coins, it is the equivalent to storing money in a bank account. Below is listed different types of crypto wallets for you to choose from.

There are several types of cryptocurrency wallets that provide different ways to store and access your digital currencies. Wallets can be broken down into three categories namely: (a) software wallets, (b) hardware wallets, and (c) paper wallets.

Again, more information on cryptocurrency wallets, see the link provided below to read our previous articles.

For the purpose of this article, we will use an online software wallet to store our XRP.

You will find that Binance has its own cryptocurrency wallets provided for you as a user on the exchange, but it is advised that after your trading is done to move your funds from the exchange to a separate wallet and never leave it on an exchange.

Step 3

Purchasing XRP.

From this point on we will dive into what you came here to learn. We will guide you through buying the cryptocurrency XRP on the Binance exchange.

You may or may not have some experience in trading the stock market or Forex (FX) market, but the Crypto market is a whole different ‘game’. It is advised to study the cryptocurrency charts first before starting to trade or invest in them. It is advised not to assume that your skills attained by trading other markets will be sufficient and that your trading plans will work the same in the crypto market.

It is important to find a strategy for each trade you will make and apply these strategies in the Cryptocurrency market.

  • Firstly, log onto the Binance exchange, it is assumed that you already have an account registered and that your account is funded as explained previously and in previous articles. For this article, we assume you have read the previous article and are familiar with the terms. We will work with the XRP/BTC trading pair which assumes that your account is funded with Bitcoin in this case. After login click on the “Exchange” button represented in the top left corner:
  • After clicking on “Exchange”, select advanced and you will find the following page:
  • Head over to the top Right-hand side to choose your trading pair and search for XRP in the search bar as shown below:

This will lead you to the chart representing XRP’s price against Bitcoin’s price. This is where we are going to trade our XRP tokens against Bitcoins. The Page should look similar to the following:

  • To start trading or holding XRP, we need to buy some first. To buy your first XRP go to the bottom right-hand side of the page where you will find a section stating” Buy XRP”. The section will look similar to the following:
  • Make sure the ‘Limit’ tab is active as seen above highlighted in Orange. A ‘Market’ tag would buy Ripple for you at the first selling price of a XRP seller, this price is usually a higher price that if you set it yourself. If you’re a completely new trader, you can use the Market tab to eliminate the possibility of error.

Note that the above picture shows a balance of 0 BTC and 0 XRP due to it being used for this demo. In your case, after depositing BTC, your available BTC balance will be presented in the buy column.

  • Determining how much XRP you would like to buy – The first box “Buy XRP” has a subsection called “Price”. This box represents how much 1 XRP costs in terms of Bitcoin. The second sub box “Amount”, you are expected to input the number of XRP you would like to purchase. Use the options below it to select what percentage of your funded coins to use, 25%, 50%, or all your funds 100% and the amount of XRP you can purchase will automatically show up in the “Amount” box. Lastly the “Total” sub box will show you how much your purchase will cost. In this case in terms of BTC.
  • Purchasing XRP – To finalize your purchase, click the “Buy XRP” button.

Your XRP order will now be listed onto the exchange and executed once ‘somebody’ sells their XRP to you at that price. If you have selected the Market Price, your order will go through immediately. Your XRP will now be sent through to your Binance XRP wallet, and it is advised if all trading or investing is finished to deposit it into your external XRP wallet.

Additional Information

XRP Adoption

A magnitude of global payment transfer companies is adopting the XRP ledger in their payment flows. Additionally, Ripple has announced partnerships with major companies and institutions such as Santander, SBI Holdings, and the China-based payment system, LianLian. The financial industry outlook for Ripple looks very positive with over 100 financial players including banks and payment providers benefitting from Ripple’s blockchain-based solutions.

It is said that XRP can replace the traditional SWIFT payment system and become the preferred payment processor for banks.

XRP Transaction Speed

XRP is designed to handle 1500 transactions per second. XRP has a significant speed advantage over its nearest cryptocurrency competitors such as TRON which currently handles 1000 transactions per second and Bitcoin Cash with 60 transactions per second. Ripple also competes with traditional payment procedures trailing behind VISA (at 25000 transactions per second). Thus, XRP is able to handle bank transfers and financial transactions at very high speeds.

Conclusion

While trading or investing in XRP or any other cryptocurrency, it is advised to always stay calm and not attach emotions to it, have a strategy and follow it. It is advised to research XRP, its advantages and disadvantages in more detail before investing in it, this goes for ANY cryptocurrency or any other investment decision in fact.

You have successfully attained XRP now and thus setting you ahead of the rest of the world. Good luck and safe trading or investing.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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NFP and Forex: What is NFP and How to Trade It?

Trading Blog | 5 min read 

NFP and Forex: What is NFP and how to trade it?

Nonfarm payroll employment is a compiled name for goods, construction and manufacturing companies in the US.

Written by Mitchell Roach
Follow me – @mvtchh

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What is NFP?

The non-farm payroll (NFP) report is a key economic indicator for the United States economy. It represents the number of jobs added, excluding farm employees, government employees, private household employees and employees of nonprofit organizations.

NFP releases generally cause large movements in the Forex market. The NFP data is normally released on the first Friday of every month at 8:30 AM ET. This article will explain the role NFPs play in economics and how to apply NFP release data to a forex trading strategy.

The non-farm payroll report causes one of the consistently largest rate movements of any news announcement in the Forex market. As a result, many analysts, traders, funds, investors and speculators anticipate the NFP number and the directional movement it will cause. With so many different parties watching this report and interpreting it, even when the number comes in line with estimates, it can cause large rate swings. In this article you will learn how to trade this move without getting knocked out by the irrational volatility it can create.

How does the NFP affect Forex?

The non-farm payroll report causes one of the consistently largest rate movements of any news announcement in the Forex market. As a result, many analysts, traders, funds, investors and speculators anticipate the NFP number and the directional movement it will cause. With so many different parties watching this report and interpreting it, even when the number comes in line with estimates, it can cause large rate swings. Learn how to trade this move without getting knocked out by the irrational volatility it can create.

 

Analysing the Non-Farm Report Number

Like any other piece of economic data, there are three ways to analyze the U.S. non-farm payroll number:

  • A higher payroll figure is good for the U.S. economy. This is because more job additions help to contribute to healthier and more robust economic growth. Consumers who have both money and a job tend to spend more, leading to growth. As a result, foreign exchange traders and investors look for a positive addition of at least 100,000 jobs per month. Any release above—let’s say 200,000—will help to fuel U.S. dollar gains. An above-consensus estimate release will have the same effect.
  • An expected change in payroll figure causes a mixed reaction in the currency markets. Forex investors witnessing an expected change in the NFP report will turn to other sub-components and items to gain some sort of direction or insight. This includes the unemployment rate and manufacturing payroll sub-component. So, if the unemployment rate drops or manufacturing payrolls rise, currency traders will side with a stronger dollar, a positive for the U.S. economy. But, should the unemployment rate increase, manufacturing jobs decline, investors will drop the U.S. dollar for other currencies.
  • A lower payroll figure is detrimental for the U.S. economy. Like any other economic report, a lower employment picture is negative for the world’s largest economy and the greenback. Should the NFP report show a decline below 100,000 jobs (or a less-than-estimated print), it’s a good sign the U.S. economy isn’t growing. As a result, Forex traders will favour higher-yielding currencies against the U.S. dollar.
 

Trading News Releases

Trading news releases can be very profitable, but it is not for the faint of the heart. This is because speculating on the direction of a given currency pair upon the release can be very dangerous. Fortunately, it is possible to wait for the wild rate swings to subside. Then traders can attempt to capitalize on the real market move after the speculators have been wiped out or have taken profits or losses. The purpose of this is to attempt to capture rational movement after the announcement, instead of the irrational volatility pervading the first few minutes after an announcement.

The release of the NFP generally occurs on the first Friday of every month at 8:30 a.m. EST. This news release creates a favourable environment for active traders because it provides a near guarantee of a tradable move following the announcement. As with all aspects of trading, whether we make money on it is not assured. Approaching the trade from a logical standpoint, based on how the market is reacting, can provide us with more consistent results than simply anticipating the directional movement the event will cause.

How does this affect other pairs

The NFP data is an indicator of American employment, so your currency pairs that include the US dollar.

It can still effect other pairs like CAD/JPY for example, so please be cautions when trading during NFP

Other currency pairs also display an increase in volatility when the NFP releases, and traders must be aware of this as well, because they may get stopped out. The chart below shows the XAU/USD during the NFP data release. As you can see, the increase in volatility could stop a trader out of their position.

Top Tips & Strategies

We have rounded up 4 tips to remember when trading the NFP in forex:

  1. NFP data is released on the first Friday of every month.
  2. The NFP data release is accompanied with increased volatility and widening spreads. With this being said you must take caution when trading on NFP days.
  3. Currency pairs not related to the US Dollar could also see increased volatility and widening spreads. Gold, GBP, AUD and other pairs can become incredibly volatile.
  4. Trading the NFP data release can be dangerous due to the increase in volatility and possible widening of spreads. To combat this, and to avoid getting stopped-out, we recommend using the right leverage, or no leverage at all.

Conclusion

NFP trading can provide benefits to traders trying to profit on highly volatile price movements. However it is extremely difficult to determine the direction of price before the move has happened. At starttrading.com we recommend waiting at least 15 mins after a high impacting news event to enter a trade, allowing you to better perspective on how the news will affect price. For more insight in understanding and investing in the Forex Market get in touch with one of our trading mentors today who will help guide you through the processes of IPO’s. Start trading provides services which can both teach and guide you into the right direction of a bright financial future in the stock market. With our mentoring services available you’ll be able to gain the confidence necessary in making sound trades and investments in the StockForex and even Cryptocurrency markets. Book a FREE consultation with one of our trading mentors today for more information or to discuss any of the topics mentioned in this article in further detail.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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