How to Trade the Head and Shoulders Pattern

How to trade the head & shoulders pattern

The head & 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.

The Head & Shoulders is an 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 head & shoulders pattern looks like

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

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.

As you can see from the image above, it is very similar to the triple top, however the peaks are of different heights and the neckline is not strictly horizontal.

A head and shoulders pattern is formed first by a peak (the shoulder) followed by a higher peak (the head) followed by another lower peak (the second shoulder).

In this instance, we draw the neckline by connecting the two lowest points that are visible from the pullbacks. More often than not the line will not be straight, but don’t worry this is typical for a head and shoulders pattern.

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

So how do we trade this? Well, we use the exact same method as the triple top and double top. Simply wait for a clean break of the neckline and then enter our SELL positions. We can expect a pullback to be a similar distance to the difference between the head and the neckline.

Tip: Some traders say that the signal is more accurate when then neckline is a downslope. This would signify that the market is clearly losing strength and the possibility of a clean break of the neckline is more likely.

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

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. The decreasing volume shows a lack of interest in the upside move and warrants some scepticism.

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.

Inverted head and shoulders

As with most of these patterns, there is always a mirror pattern that works in the exact same way. Here is an example of an inverted head and shoulders pattern.

As you would expect, the inverted head and shoulders pattern only arises in a downtrend and must meet all of the same criteria as the standard head and shoulders pattern.

We simply place a LONG once there is a clear break of the neckline and the trend reversal is confirmed.

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.

10 tips for successful social trading

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

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.

So, what is social trading?

Social trading is a form of investing that allows investors to observe the trading behaviour of their peers and expert traders and to follow their investment strategies using auto copy trading activities. The World Economic Forum report has even called it a low-cost and sophisticated alternative to traditional wealth management.

Social trading introduces a new way of analyzing financial data by providing a ground to compare, comment and auto copy techniques and strategies. Traders can interact, watch others make trades, duplicate their trades and learn what incentivised the top performer to make a trade in the first place.

Let us give you the 10 tips that will help you feel comfortable within the new trend and “saddle” the “investing bull” of social trading.

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 minimise 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 😉

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

This guide provides a detailed three-step guide needed to start trading (buy/sell) Ripple (XRP).

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.

What is XRP?

XRP, a cryptocurrency created by a company called Ripple, is a coin created for everyday transactions which are 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.

How to buy XRP?

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:

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 these 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.

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.
Verify your account – Fill the Registration form and verify your account.

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.

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 an XRP seller, this price is usually a higher price than 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.

What is NFP and how to trade it? Forex trading for beginners

Non-farm payroll is an economic report that is released once per month. It has huge importance within the forex market as it creates large volatility and price movements. In this article, you will learn how to trade this move without getting knocked out by the irrational volatility it can create.

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:

NFP data is released on the first Friday of every month.
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.
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.
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 the 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 the price.

Risk Management – 6 Essential Tips Every Trader Should Know

Risk Management – 6 Essential tips every trader should know

This guide provides a quick overview of the six essential tips every trader should know when calculating risk management. By the end of this guide, you will be able to apply top risk management practices to help you stay safe whilst trading.

Take-profit, stop-loss, indexes, ETFs, risk-to-reward. Confusing right? Does it make you feel bored? Or stupid? I don’t blame you; trading firms love to use confusing terms to make you think that only they can do what they do. Today we are going to talk about risk management.

You can honestly have the best trading plan in the world, but without solid risk management in place, you can still take loses. As a trader, you need to understand how to manage your risk, size your positions and set your orders correctly if you want to become a profitable and professional trader.

As a trader, managing your risk is just as important as developing a solid trading strategy. No trader is perfect, and all traders will inevitably have losing trades or even losing streaks.

Managing risk is easy once you know the formula, today we are going to give you 6 simple tips to help you manage your risk straight of the bat.

1. Don’t trade more than you can afford to lose.

First things first. The number one thing that you can do to manage your risk like a pro is to never trade money that you can’t afford to lose. I know it can be difficult, but you need to not let your eyes be too big for your belly. Everyone wants to get rich quick, but if you go into this with this mindset, you are taking the wrong approach. You CAN make a lot of money trading, IF and only IF you follow the steps and the processes laid out.

If you are trading money you can’t afford to lose, such as using too much leverage, and you lose significantly or even face the threat of losing significantly, your decision making will be compromised, and mistakes will happen.

When I first started out, I got hit by this myself. It’s not fun, but it happens, every trader goes through this. I’m telling you to prevent you from going through this yourself.

2. Allocate time to calculating your risk on each trade.

You should be allocating time for every trade to calculate your risk. This may seem simple to the majority of traders rush this important aspect of analysis.

Take note that when I trade, I often pass up many possible trades that at first look great, but when I start calculating my risk it doesn’t seem to add up. The average beginner spends little to no time calculating and managing risk, before placing a trade.

Why is it important? Well, we are in the business of making money, and in order to make money, we have to learn how to manage risk and potential losses.

3. Risk to reward ratio

Life is a constant battle between risk vs reward. No matter what you do in life you have a reward and you have risk. The markets are no different. Trading is NOT gambling; this where a lot of people are wrong. The way you need to look at it is, you have how much you are willing to lose and how much you are willing to make.

This is where we are going to do a little bit of maths, don’t worry I’ll try to keep it as simple as possible.

Let’s say you do 10 trades.

And on EACH trade you have a ratio of 3 to 1. Meaning you make $3 when you’re right and you lose $1 when you’re wrong.

Out of those 10 trades, even if your right only 5 times (50%). Then you would make $15 for every $5 you lose.

4. Position sizing.

Many traders are just looking to get right into trading with little to no regard for their account size. They simply decide how much they can stomach to lose in a single trade and hit the “trade” button.

More times than not letting the last trade determine the size of the next trade, most likely doubling the size of a position due to making or losing money in a previous trade. meaning they have zero control of risk management.

This is the WORST thing you can do trading. If you are on a losing streak and you are doubling your position sizes. You WILL loose much than you should have.

This ties in with the next tip which is.

5. Don’t trade with emotions.

We all have this natural human nature called greed, which is constantly pushing against risk management, some of us experience it more than others. I myself have a high tolerance for risk, due to my experience and personality. But you need to ask yourself the question of how much you are willing to lose on a trade.

6. Learn from your mistakes.

It is ok to make mistakes, but not ok to repeat them. Many traders keep losing money, repeating the same mistakes and not learning.

A gambler doesn’t remember what they have done right to make money or what they did wrong to lose. If you remember what part of your strategy has made you money, you will do more of the right stuff and stop repeating the wrong moves.

Let’s be realistic: it’s difficult to remember all the nitty-gritty details of trading tools, systems, entries, exits, news reports, and all of the other complex details. That’s why we write these things down. Successful traders keep good records, review them, and learn from them.

The markets are constantly fluctuating and changing if you don’t adjust your trading strategy you cannot adjust with the markets. A trading strategy will work much more effectively in one market environment as opposed to another. I review my trading data to see how my strategy is performing in the current market to see how I can continuously adjust and improve to maximise my profits.

Conclusion

A fine-tuned risk management strategy is what gives traders the ability to lose on trades without causing irreparable damage to their accounts. Think of it this way. A day trader can have a 50% win rate and still be profitable if their average profit is twice the amount of their average loss.

If you want to learn more head over to starttrading.com blog. The easiest place to start trading.

The basics of investing in cryptocurrency

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).

Here at Starttrading.com, we completely understand that it can be quite daunting starting your cryptocurrency trading career. To help you understand the basics of cryptocurrency trading, our team have put together this guide to help you when getting started – providing you with a basic understanding when opening an account with different trading platforms.

What is a cryptocurrency?

Built on blockchain technology that only exists online, cryptocurrencies are a tradeable digital asset or digital form of money. This virtual money is not backed by a government or a central bank of any country. Without government control and interference, the transfers can be done with minimal processing fees – avoiding the high fees charged by traditional financial institutions.

One of the most famous cryptocurrencies is Bitcoin, which was invented to create an alternative currency for anyone who wanted to opt out of the traditional banking system during the 2008 Financial Crisis. Cryptocurrencies like Bitcoin want to make financial transactions more open and accessible to everyone around the world – which is why they have become so popular in recent years.

How do cryptocurrencies work?

When it comes to cryptocurrencies and bitcoin exchanges, there are a number of basic concepts that you need to understand:

Public ledger

A public ledger can be viewed as a data management or storage system – a very similar concept to a database system of bank records. However, unlike those in a bank, this system is self-run and self-governed without the interference of outside parties.

An example of a public ledger is a blockchain and all confirmed transactions are included in the blockchain, with the integrity and the chronological order of the data being enforced with cryptography.

Within a cryptocurrency network, hundreds and thousands of individuals maintain a copy of the ledger. This allows everyone to know the number of how many crypto tokens are in circulation and what transactions are authentic to be recorded – which prevents any misuse like double-spending.

Mining

Mining is the process of confirming various cryptocurrency transactions and adding them to the blockchain digital ledger. Every time a transaction for a cryptocurrency is made, miners are then responsible for ensuring the authenticity of information and updating the blockchain with the transaction.

The data is assembled into a system called ‘blocks’ which is then verified by cryptocurrency miners to ensure they are legitimate. Once a block is filled to capacity with transaction details, more information is mined and are once again added to the blockchain by the network participants.

Transactions

A transfer of funds between two digital wallets is called a transaction, which then gets submitted to a public ledger and awaits confirmation.

When each transaction is made, the wallets use an encrypted electronic signature which provides a mathematical proof that the transaction came from the owner of the wallet. The miners then confirm the transactions and add them to the public ledger. The signature also prevents the transaction from being altered by anybody once it has been issued.

How can Starttrading.com help you?

Online trading with cryptocurrencies works very similar to stock market trading. However, cryptocurrencies can be high-risk investments so it is important to have a good understanding of your trading strategy before you invest in bitcoin and other digital currencies. Feel free to enrol in our free online trading course is designed to help you become a profitable trader.

Top Stock Picks for 2019 – What Stocks to Buy?

This article includes an exploration of what is on the stock market including upcoming IPO’s, industries, growth and dividend stocks along with other information which is handy to know about the performance of the market.

2019 is shaping up to be another great year for trading and investing in stocks. With the seemingly endless list of stocks and shares available to buy on exchanges and brokers, it can often be confusing which stocks to buy. In this article, we have laid out the best stocks and IPOs to look into and are likely to see positive price movements.

Upcoming IPO’s

This year brings opportunities with the IPO calendar filled with unicorns which is the Wall Street lingo for fast growing start up companies valued over $1 billion. Below we will list some new upcoming IPO’s as well recently listed.

Airbnb

This company had talks to go public later this year with Amazon veteran to serve as the company’s chief financial officer; however news through the most recent buzz indicated that the company may not be going public in 2019 after all. Nevertheless Airbnbcontinues to grow beyond basement apartments, spare bedrooms and second home rentals with a valuation of $31billion. The firm is a online marketplace which allows people to rent out spaces on a short term basis. As a private corporation last year the company raised $4.4 billion. There are strong ambitions to make Airbnb a global travel community which is built on experiences and content so if interested keep an eye out on the plans behind when and if the IPO will still be in process.

WeWork

Founded in 2010 WeWork is an American company that provides shared workspaces for start up firms, large and small businesses, entrepreneurs and freelancers. After a cash investment from the Japanese SoftBank, the company was valued at $47billion. We work is now in view of an IPO later this year a lot sooner than investors expected having filed paperwork with the SEC on 29th April. With an exceptional growth increase, the WeWork Company now operates three branches: The WeWork shared workplace provider, WeLive- a flexible apartment and rental provider and a WeGrow- an entrepreneurial school. There has been some speculation on the exact IPO date and share price due to the fact that SoftBank reduced the initial funding proposal from $12billion to $2billion but despite this Weworks CEO has made clear that reduced funds will not affect the company’s IPO. The company has said to have turned over the $2billion during the course of one year. This IPO may provide an interesting opportunity for traders regardless of the concept of the company not being a new idea. WeWork use of bars, events and fashionable interior seems to appeal to a larger audience than the more traditional providers such as the likes of Regus- a business which has been around for decades.

Palantir

Palantir is a data mining company co-founded by Peter Theil who is one of the brains behind the PayPal payment processing. Reports indicate an IPO in the second half of 2019. It was last valued at £20billion under fundraising around 2015. The company is known for being one of the biggest competitors in Big Data and has earned its reputation from being highly secretive. In 2017 a Guardian headline suggested that Palantir holds as much real-world power as Google, while a more recent Bloomberg article revealed that Palantir ‘knows everything about you’. Although the company may face challenges with going public particularly with concerns of transparency on how data is used, the 14-year-old company is predicted to turn a profit this year- a rare achievement for many tech IPOs.

Levi Strauss

The world-renowned jeans maker is expected to raise between $600 million and $800 million although this has not yet been confirmed. The business was listed for 13 years before being taken private for $1.4 billion in 1984 after experiencing a decline. Levi now wants to capitalise after working hard to improve its performance dramatically with debt reduced to over half in the period of a couple years. Revenue towards the ending of November 2018 had grown by 14%to $5.6 billion with a net income increasing to $283.1 million. Retail, particularly in fashion, is one of the most challenging industries at the moment, mostly due to online competition which in turn is starting to show signs of saturation. Levi has 2,900 stores but primarily sells through 50,000 partners across the world with 105 of its business considered to be online. Nevertheless, Levi believes there’s room for expansion in the likes of Asia, proving it with ample chances to grow.

Livongo

Founded in 2014, Livongo is a company in the health care industry that sells smart devices and software which is designed to help manage behavioural health, diabetes, hypertension and other chronic diseases. The corporation has integrated its platform with Apple, Fitbit and Samsung Smartwatches last month. Investor interest in Livongo Health inc is considered to be hot, prompting the healthcare technology company to boost its price targets by 13% ahead of the offering taking place Thursday on the NASDAQ. Livongo plans to raise up to $320 million in an offering which could value at about $2.3 billion, that’s more than double of the company’s valuation of $850 million in April 2018. The company plans to sell $10.7 million shares to public investors for between $24-$26 per share and has also set aside $1.3 million to sell to underwriters.

Recently Listed IPO’s

Uber

Uber Technologies inc was one of the highly anticipated offerings of 2019 with a valuation over $80 billion. Uber went public in May at a price of $45 per share on the New York Stock Exchange (NYSE) – a price well short and lower than the anticipated $100 billion valuation. At the start of the year Uber and Lyft were in competition in launching their first IPO where Lyft won. Although the IPO was oversubscribed, Uber settled for a lower price to avoid a repeat of Lyft’s IPO experience late in March where prices were strong then later fell in trade. Uber placed orders for a lower price which fell in the lower end of the $44-$50 per share price range.

However, despite Uber making the efforts to moderate its IPO expectations, some still felt the stock was overpriced. Orders were also put in at a lower price to accommodate mutual fund. Paypal holdings agreed to invest $500 million at the IPO price in a private placement where associations of the SoftBank Vision Fund, Toyota Motor Corp and Denso Corp would together invest $1 billion for Uber’s autonomous driving efforts adding more to Uber’s total intake.

Beyond Meat

Founded in El Segundo California 2009 this company took the Wall Street by storm when it went public in May making it one of the exciting IPO’s of 2019. Beyond Meat is a food company which makes plant-based meat where it’s premier product is the Beyond Meat which sells at Whole Foods and TGI Fridays to name a couple. Shares rocketed 163% higher on the first day of trading where the company managed to raise $240 miliion at $25 per share resulting in a $1.5 billion valuation.

Upcoming industries

Cannabis

With a push for legalisation in recent years, cannabis is one of the fastest-growing industries in the US with 33 states currently permitted to use medical cannabis and recreational use being legal in 10 states including Washington DC for adult use. This Cannabis boom is expected to affect more than just medical patients. By 2020 more people are predicted to be working in the legal cannabis industry than the manufactory industry where revenue is expected to grow from $7.2 billion in 2016 to over 24 Billion by 2020. Investment activity boomed last year increasing to 13.8 billion in total value from $3.6 billion the year before. As the industry is still moderately new and volatile, it allows plenty of room for companies with inventive growing and plant breeding techniques to shape the market. If the public continues to favour legalisation then the legal cannabis industry will most certainly continue to grow and thrive.

Artificial Intelligence

The global artificial intelligence market size is expected to reach $170 million by 2025 from $4065 million in 2016. The AI market is segmented by technology, geography and industry vertical. The ranges of technologies are broken up into machine learning, natural language processing, image processing and speech recognition. From driverless cars to virtual doctors, AI is transforming the way work, live, travel and how we do business in the 21st century. In 2016 the machine learning category dominated the market in terms of revenue and is expected to maintain its trend in the upcoming years looking to increase in demand for artificial intelligence industry solutions. Based on industry vertical the market for artificial intelligence is categorised into media and advertising, telecom and IT, healthcare, retail, automotive and transportation whereby the IT and telecom sector is expected to dominate the global artificial intelligence throughout the forecast period. Geographically the market is analysed across North America, Asia-pacific and Europe. During 2017 the North America region contributed to the highest revenue share in the artificial intelligence market and is predicted to secure the leading position with presence of key companies and large investment in the AI market. Key corporations profiled include Google Inc, Apple, Microsoft Corporation, IPsoft and that’s just to name a few. AI have a Rapid growing presence in today’s world with applications ranging from heavy industry to education, it has become prevalent that this technology has the potential to revolutionise how the everyday world operates.

To name a few some of the most popular use of AI today includes Apples personalised assistant Siri which uses machine-learning technology in becoming smarter and better at predicting and understanding our natural language, questions and requests. Alexa who was introduced by Amazon took the world by storm with its ability to decipher speech from anywhere in a room helping us to search the web for information, shop, schedule appointments, set alarms as well as many other things. It also helps power our smart homes and has been useful for those with limited mobility. Tesla which could possibly be the best car ever made has received so many rewards and recognition due to its predictive capabilities, self-driving features and technological advances. As time goes on these cars are only getting smarter thanks to their over the air updates. Netflixprovides highly accurate predictive technology based on customers choices and response to films. Netflix analyses billions of records allowing it to make recommendations to suit your film preferences and as the dataset grows, this tech will become smarter and adaptive.

While AI can be applied to most sectors once the technology advances enough there are many fields that will soon be reaping the benefits of AI if they already aren’t! According to Forbes industries that will soon be revolutionised by AI are the following:

Cyber security
DevOps and Cloud Hosting
Manufacturing
Healthcare
Construction
Education
Retail
Business intelligence
Mental Health diagnosis and treatment
Supply Chain Management

2018 Best Performing Stocks

When it comes to trading & investing, history typically repeats itself. It is important to look back at previous trends to give you a better understanding and picture of what is likely to happen. Here is a list of last years best forming stocks:

ABIOMED, inc.

This company made a gain of almost 120 per cent where at the start of the year investors could have more than doubled their money in the space of 10months. The company had later delivered successful earnings in November which had reversed a recent downtrend.

Advanced Micro Devices (AMD)

At the start of last year opening share prices for Semiconductor Company, Advanced Micro Devices were £10.42. Since then AMD stock has doubled during September and the stock actually managed to peak at $30 a share before it fell back down in October. However, once announcements were made that the company’s chips were being used by Amazon’s cloud computing diversion the stock increased.

TripAdvisor, Inc (TRIP)

During 2018 the stock rocketed up the charts. Although it remains inadvisable for investors or beginners to make stock picks based on this sites advice, investing in this company would have been a very wise move at the start of last year. Those who did would of ended up doubling every dollar they invested by Early November.

Netflix, Inc (NFLX)

During 2018 Netflix experienced a 60% gain in just 10 months and has shares well over $300 each as the company continues to stream money into its shareholder’s accounts.

HCA Healthcare (HCA)

HCA Healthcare is a company which operates small care hospitals and surgical services providing for patients at its 179 hospitals and 120 freestanding surgical centres. Its stock performance and earning last year allowed the company to add 60percent to its market value and as admissions arise this should continue to grow.

Best Stock picks for beginner investors

Finding the best stock to watch and buy comes from having basic understanding on stocks itself and knowing what a potential market winner looks like. Take a read on our beginners guide to stock trading to gain some enlightenment on exactly what stock trading is and how to invest in the market.

Doing your research is a huge part of investing in stocks, it is important to look for traits like increased earnings and sales growth, strong return on equity and a fast-growing and industry-leading product or service. When getting started sticking with company’s which you know can be a reasonable approach to take especially if you’re interested in a long term investment. Here is a list of a few top-quality companies which everyone is familiar with worth investing in.

Alphabet (Google)
Apple
Facebook
Nike
Disney

Best dividend stocks

A dividend stock allows an investor to gain regular passive income simply from owning shares in a company. Historically stocks that pay dividends have outperformed those that don’t. Businesses who are generating strong cash flow and who have strong financials are most likely to produce high returns which attract investors. Some of the best companies who pay dividends include:

Altria Group (MO)

The giant tobacco Altria Group is able to provide major capital back to its shareholders through dividend and buy backs. Altria which owns Philip Morris USA (who also owns other brands) pays a huge 5.7% dividend due to strong margins, customer loyalty and low reinvestment requirements. Pursuing growth Altria Group invested $1.8 billion in a Canadian Cannabis Company known as the Cronos Group. Altria’s steadiness and ability to promptly take new growth opportunities make it a good investment for a dividend stock.

Target Corp.

With competitors such as Walmart and Amazon, Target offers something for their investors which none of its competition does and that a yield of 3.6%. Targets payout ratio sits on about 41% revealing that without a doubt the company can sustain its dividend payments while also retaining enough to reinvest in growth as well. Despite Amazon’s expansion, sales continue to grow and with a track record of increasing quarterly payments for 50 consecutive years why not invest in this stock which proves to be steady and reliable.

Starbucks

The company continues to undertake its massive international expansion, increasing its growth phrases and in turn rapidly boosting its dividend payouts. With a free cash flow of over $3.34 Billion and 8 years of uninterrupted payout growth, the company attracts a lot of investors looking for a company with dividend growth.

Aqua America Inc

Trading on the New York stock exchange this water company serves around 3 million customers in Ohio, New Jersey, Texas, Pennsylvania, Virginia, North Carolina and Indiana. With a quarterly dividend rate of 0.219 per share, Aqua America has an annual yield of 2.3%. Although the yield itself may not be exciting, investors who are risk averse should consider this company due to longevity and growth in its payout. Aqua America has been paying out quarterly cash dividends for more than 73 years and in the past 27 years the company has consecutively raised its payout.

Johnson & Johnson

Aside from being a company to hold an AAA credit rating, this company has one of the safest dividend payouts in the world. Johnson & Johnson relies on its three businesses to bring something beneficial to the table which each individual segment lacks. With it’s business sectors broken down into healthcare products, medical device units and the pharmaceutical segment the company has been able to raise its quarterly payout for 57 consecutive years and has grown its adjusted earnings over the course of 35 years straight. The J&J 2.9% yield attracts investors with their continuous uninterrupted payouts.

NextEra Energy

One of the easiest ways of securing a safe and passive payout is through purchasing companies that deal with a basic need. Historically utilities are viewed as a defensive investment that is turned to when the stock market is struggling or when the economy is wavering as they are slow-growing. Nevertheless, NextEra isn’t like your average utility stock as the company proactively develops the way utilities operate and is on the leading edge of a renewable energy shift.

Best growth stocks

Growth stocks are beneficial of outsized gains compared to the averages. When investing in the upside of stock investopedia has provided us with some main things to look out for. These include improving fundamentals, good entry points and a history of bullish trading patterns in the shares. The top five stocks viewed as long term potentials are as followed:

Chipotle Mexican Grill Inc

Chipotle has a very strong fundamental history which means that it supports a long term investment approach. The 2019 year over year revenue growth rate increased by +13.9% and the 2019 year over year diluted earnings growth rate was at an increase by +59.6%. Considering the technical areas also referred to as good entry points a year to date outperformance vs the market indicates +49.12% vs SPDR S&P 500 ETF with recent bullish trading signals.

Facebook Inc, (FB)

With over 1 billion users on its platforms: Instagram, Facebook and Whatsapp this company is considered a top social network platform. Facebook stock stands out due to the technical factors of:

The company has a year to date outperformance vs Market: +28.34% vs SPY
Year to date outperformance vs technology sector: +19.8% vs Technology Select Sector SPDR fund
Recent Bullish trading signals

Looking into the fundamental picture of the company it does support a long term investment with the 2019 revenue growth rate increasing by +26% however the 2019 diluted EPS growth rate -50% which includes $3billion legal expenses related to the FTC.

Illumina, Inc

Illumina is a leading genome and DNA sequencing firm with a year to date outperformance vs market of +0.69% vs SPY and year to date outperformance vs healthcare sector of +10.63 vs health care select sector. In addition to this Illumina’s growth rate has been impressive with a 2019 revenue growth rate of +8% and a 2019 GAAP net income growth rate of +11%

Paypal Holdings Inc

The leading e-commerce payment company which is also known for its payments through Venmo has a year to date outperformance of +19.96% vs SPY. The year to date outperformance vs technology sector equates to+11.10% vs XLK. Growing rates have been steady with a +12% revenue growth rate and +34% for GAAP EPS growth rate.

Visa Inc

This payment firm also known for being one of the largest globally has been a growth predator over the years. The technical’s’ of the company shows that the outperformance is +13.61% vs market (SPY) and the outperformance vs the financial sector is +17.22% vs Financial Select sector SPDR fund. The company’s stock has been up steadily since January and visa remains in growth mode with a 2019 net revenue growth rate of +8% net income per share growth rate of +17%.

These 5 companies discussed represent a potential buying opportunity for investors looking to take a long-term approach. Considering the strong historical revenue and earnings growth, along with the bullish usual trading signals which they all share; these stocks would be worth a place in the growth-orientated portfolio and a good buy.

Conclusion

To conclude, when getting involved in any investments within the stock market the most important thing to do is your research! Taking the initiative to do your background researches on companies allows you to track the organisation’s performances where you are then able to discover information which you were unaware of. Research allows you to make more of an informed decision on whether the investment is for you or not. Looking for traits such as a consistent increase in revenue growth and earnings in a company can help give you a gage of progression, although it is important to note that there is always risks in investments and some things can happen within an organisation unexpectedly and out of their control.

For guidance or any information related to the topics discussed in the article or trading and investing in the stock market, sign up to our FREE trading course.

7 steps to evaluating the value of a cryptocurrency

We provide a detailed formula for evaluating a variety of cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP). By the end of this step-by-step guide, you will be able to evaluate and trade any cryptocurrency listed on the marketcap.

Let’s talk about how to evaluate the thousands of tradable cryptocurrencies.

We will give you the tools and skills needed to figure out what matters and help you find the right tokens. There are fundamentally 7 factors when evaluating a cryptocurrency, to find out what actually makes a crypto company a good business and in turn worth investing into.

Let’s dive into it.

1. The team behind the project

The first and most important business factor is the quality of the team behind the project. Whilst looking at the team what you want to see is a diverse mix of business and technical people, as crypto is the application of technology to business. What you also want to see is a good track record of somebody in the company, within the cryptocurrency or blockchain community. Preferably a highly technical individual who understands the blockchain. You can see if the team has previously built open source projects, for example, a site such as Github that can host open-sourced software.

Doing intensive research on the team behind the project is one of the main ways of determining if the crypto project is a scam. This is especially important when looking at a new/ promising Initial Coin Offering (ICO).

Many new cryptocurrency traders often make mistakes when assessing project teams, especially Hard and Soft Forks. For example, there is a lot of excitement around the forks of Ethereum and Bitcoin. It’s important to note that the fork isn’t necessarily the same team as the main/ core blockchain. The teams behind forked blockchains often lack the vision and technical skills of the founding teams behind the core blockchains, and as a result, are typically less attractive opportunities for cryptocurrency investors.

2. Product use case

The second most important factor is a product use case, does the digital asset have a strong use case to gain wide-scale adoption? Without adoption, a cryptocurrency is simply just a long string of code on the internet. Ask yourself if you would use this token in your daily life? Or can you see someone else using it? The main thing to remember when evaluating a cryptocurrency is whether or not the product behind the cryptocurrency solves or will solve an important problem for a vast amount of people. You want the cryptocurrency to solve a big problem for a broad number of people. Remember, the more a cryptocurrency is used, the higher the value.

When trading or investing in any asset, especially cryptocurrencies, it is essential to not let your emotions overcome your reasoning and judgement. For example, as a cryptocurrency trader, you don’t want to invest in a project that is aiming to create sustainable energy specifically in Capetown, South Africa. Instead, you want a project that is aiming to create sustainable energy from the entire African continent or perhaps the entire world!

You must ask yourself two questions. Does the target market have the potential to grow? And, are there people out there who WANT and NEED this product right now?

Currently, the cryptocurrency market is heavily focused on products that solve problems for the existing crypto community rather than products that solve problems beyond the crypto community. For the cryptocurrency market is going to grow rapidly it needs to become much more diversified, a cryptocurrency exchange ICO pops up near enough every day. This niche has become very saturated unless this ICO has a plan to revolutionise cryptocurrency exchanges, why bother? You want to find projects that have the potential for wide-scale of adoption outside of the crypto/ blockchain space, in booming industries such as Transport, Education, Agriculture and Healthcare.

3. Traction

The third factor is traction, how effective and efficient are the team delivering on their vision? In the best case, the team already would have a minimum viable product, at least some technology that they have put together. The company behind the cryptocurrency should have a roadmap that they are following strictly, which can usually be found on their website. A roadmap is similar to a business plan, outlining the business goals and deadlines for completion.

If for any reason the team is not following their roadmap or going, this is usually a red flag. Showing the team is not stable and has lost track of targets. This will cause FUD (Fear, Uncertainty and Doubt) for investors. Making them likely to sell their crypto holdings, driving the price down. As a trader, it is a great opportunity to either sell your holdings if the team is going of course on their goals or open a sell position to make a profit.

However, if the team is delayed on a deliverable in the roadmap, but has been transparent with the community. This is a good sign and giving investors a sense of trustworthiness towards the team.

4. Competition

The fourth factor is competition, did the team pick something new or are they entering an already crowded market? Since the cryptocurrency economy is still so new and in its infancy, there is a huge variety of opportunities for companies to build completely new and fresh ideas. However, you want to find an industry that the team is able to build a strong defensible position. Can the team be the best in their space? Is there some technology underlying the token that gives the token a long-term competitive advantage?

You will often find crypto companies creating alternatives for existing companies in the traditional economy. Since blockchain technology allows us to make transactions faster, more secure, more accessible and transparent.

5. Legal status

The sixth factor is one of the most important, the legal status of the company. Cryptocurrency regulation is somewhat confusing, to say the least, due to the decentralised nature of cryptocurrencies companies are often faced with challenges to get licenses to operate in certain countries. Some regulators such as the SEC have straight up banned ICOs int heir jurisdiction. I mean it can even be a headache for a cryptocurrency trader to work out how much tax to pay on their crypto.

Researching where a companies legal status is will help you understand if the token or project is a fraud or scam and built completely out of thin air. You may what to also work out if the token a utility token or a security token. Read our STO explanation to understand the importance and differences.

6. Investors

The seventh factor is other investors, who are invested in this company. Is the company only an Initial Coin Offering or has the team already been backed by a venture capital firm prior to the ICO? Typically a company that has already had a collection of legitimate and reputable investors will do better than one without. Clearly, the invested company has seen some value to this project and feel as though it will do well.

7. Market cap

The last factor is the size of the market cap, ideally, you want to see a $1 Billion market. A high cryptocurrency market cap enables the team to try a variety of different things and products, whilst still maintaining a profit.

Conclusion

These 7 steps are just a simple framework to evaluate the fundamentals of token-based projects, we’re not trying to create complex formulas that define what the exact value of something should be. Following the steps outlined here and you will know which projects have long term value and which coins are just based on hype.

Value is relative; we think that cryptocurrencies will continue to grow in value over the long-term and we also think there are tremendous misallocations right now between projects with in-the-moment value and projects with long-term fundamental value. By focusing on fundamentals, we think it’s possible to benefit in the long-run.

Of course, all of these factors can also be applied to traditional markets and companies such as Forex and Stocks.

For more insight in understanding, trading and investing, enrol in our free online trading course, which will help guide you through your journey to become a successful trader.

What is a currency pair? Forex trading for beginners

A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. Currency trading is conducted in the foreign exchange, also known as the forex or “FX” market.

If you are starting to trade currencies in the Forex market, you are likely confused by all of the symbols and quotes blurring around on your screen. If you have done some research you would have seen the term pairs and wondered to yourself what on earth is a currency pair? When you trade in the forex market, you buy or sell in currency pairs.

A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency.

Forex currency pairs are written as XXX/YYY or simply XXXYYY. Here, XXX is the base currency and YYY is the quote currency. The currencies are listed as a three-letter code, which tends to be formed of two letters that stand for the region, and one standing for the currency itself. For example, GBP/ USD is a currency pair that involves buying the Great British pound and selling the US dollar.

Forex trading always involves selling one currency in order to buy another, which is why it is quoted in pairs. The price of a Forex pair is how much one unit of the base currency is worth in the quote currency. Essentially meaning how much currency you can purchase with another.

What is a base currency?

The base currency is the first currency listed in a forex pair. The base currency is the currency you are buying when you trade a Forex pair. If this Forex pair rises in value it means that the base currency has gained strength against the quote currency.

What is a quote currency?

The quote currency is the second currency listed in a forex pair and is used as the reference against the base. The base currency is the currency you are selling when you trade a Forex pair. If this Forex pair decreases in value it means that the quote currency has gained strength against the base currency.

If you buy a currency pair, you buy the base currency and implicitly sell the quoted currency. The bid (buy price) represents how much of the quote currency you need to get one unit of the base currency. Conversely, when you sell the currency pair, you sell the base currency and receive the quote currency. The ask (sell price) for the currency pair represents how much you will get in the quote currency for selling one unit of base currency.

Unlike the stock or commodity market, you trade currencies, which means you’re selling one currency to buy another. For stocks and commodities, you’re using cash to buy an ounce of gold or one share of Apple stock. Economic data relating to currency pairs – interest rates, gross domestic product (GDP) information, major economic announcements – affect the prices of a trading pair.

To keep things ordered, most providers split pairs into the following categories:

Major pairs. Seven currencies that make up 80% of global forex trading. Includes EUR/USD, USD/JPY, GBP/USD and USD/CHF
Minor pairs. Less frequently traded, these often feature major currencies against each other instead of the US dollar. Includes: EUR/GBP, EUR/CHF, GBP/JPY
Exotics. A major currency against one from a small or emerging economy. Includes: USD/PLN, GBP/MXN, EUR/CZK
Regional pairs. Pairs classified by region – such as Scandinavia or Australasia. Includes: EUR/NOK, AUD/NZD, AUG/SGD

Major currency pairs

There are as many currency pairs as there are currencies in the world. The total number of currency pairs that exist changes as currencies come and go. All currency pairs are categorized according to the volume that is traded on a daily basis for a pair. The currencies that trade the most volume against the U.S. dollar are referred to as the major currencies. All major pairs contain the U.S. dollar (USD) on one side and are the most frequently traded.

A widely traded currency pair is the Euro against the U.S. Dollar, also shown as EUR/USD. It’s actually the most liquid and most heavily traded currency pair in the world. The quotation EUR/USD = 1.2500 means that one euro is exchanged for 1.2500 U.S. Dollars. In this case, EUR is the base currency and USD is the quote currency (counter currency). This means that 1 euro can be exchanged for 1.25 U.S. dollars. Another way of looking at this is that it will cost you $125 to buy EUR 100.

All of the major currency pairs have very liquid markets that trade 24 hours a day every business day, and they have very narrow spreads.

Minors currency pairs

Currency pairs that are not associated with and do not contain the U.S. Dollar (USD) are referred to as minor currencies or crosses. These pairs have slightly wider spreads and are not as liquid as the majors, however, they are still very liquid markets nonetheless. The most actively traded minor pairs are derived from the three major non-USD currencies: EUR, JPY, and GBP. Some examples of crosses include the EUR/GBP, GBP/JPY and EUR/CHF.

Exotic currency pairs

Exotic currencies pairs include the currencies of emerging markets, such as Brazil, Mexico or Hungary. These pairs are not as liquid, much more volatile and the spreads are much wider. An example of an exotic currency pair is the USD/SGD (U.S. dollar/Singapore dollar).

Keep in mind that these pairs aren’t as heavily traded as the “majors” or “crosses,” so the transaction costs associated with trading these pairs are usually bigger.

It’s not unusual to see spreads that are two or three times bigger than that of EUR/USD or USD/JPY. So if you want to trade exotics currency pairs, remember to factor this in your decision.

Why is cryptocurrency so volatile?

In this blog post, we will help explain why cryptocurrencies such as Bitcoin and Ethereum are so volatile and why it’s a big deal.

Unlike traditional currencies such as the Euro and Great British Pound, which tend to fluctuate between 0.5%-1% on any given day, cryptocurrencies show large fluctuations sometimes shifting from around 5-10% per day. This volatility is important as purchasing and selling currencies at the correct times can lead to big profits for traders. It’s not uncommon to see trading periods where a catalytic event can trigger price fluctuations around 50% and in some major cases all the way up to 200-300%. Why is this asset class more volatile than any other liquid asset in the market?

It is hard to pinpoint why cryptocurrencies are so volatile with one exact reason, but rather a few which have been explained below:

1. No intrinsic value

Most cryptocurrencies don’t sell a product, earn revenue or employ thousands of people. They generally don’t return dividends, and just a tiny amount of the total value of the currency goes into evolving it. Because of this, it is extremely difficult to value. How do we know if it is fundamentally overbought or oversold? When is it a good value or overpriced? Without any fundamentals to base this information off of, we can only rely on market sentiment, often dictated by the media that makes money on viewership.

2. Lack of regulation

The lack of regulation in the cryptocurrency space can play a factor in the volatility of the price. This low level of regulation allows for market manipulation. Often done by placing orders with the intent to cancel, whereas in a regulated market such as the foreign exchange placing fake orders is illegal. Creating these false orders can lead to a misrepresentation of market behaviour which can cause volatility with the false orders encouraging uncertainty.

3. Supply and demand

Another reason the price of crypto is so volatile comes down to simple Economics. When the demand for an asset increases quicker than the supply, the price is likely to rise. We saw this come into play with Bitcoin during the Christmas period of 2017. The demand for Bitcoin was widespread due to the profit being made by traders throughout the year and the supply could not keep up with the massive uptake, which led to the price reaching an all-time high of around $20,000.

4. Lack of institutional capital

While it is undeniable that some pretty impressive venture capital companies, hedge funds and high net-worth individuals are both fans of and investors in crypto, as a segment, most of the institutional capital is still on the sidelines.

At the moment there has been little to no movement on a Bitcoin ETF or Mutual Fund, which is predicted to introduce much needed institutional volume into the cryptocurrency markets.

5. Market size

The cryptocurrency market is only roughly 10 years old and still an emerging market. The total size of the cryptocurrency market is currently $250B. Although this is a huge amount, it is a small figure when compared to the foreign exchange market which totals around $5T per day. This is why the foreign exchange market is able to keep stability even when there are massive movements in the market. The same cannot be said about the cryptocurrency market. This allows a few big traders who hold a lot of currencies (referred to as whales) have the ability to shift the market by making huge transactions.

When will volatility decrease?

Over time, we can expect more regulation, a greater diversity of investors, and a more mature outlook on the crypto market. We can also expect higher utility value as merchants find more accessible ways of accepting cryptocurrency, and the technology behind transactions also improves. While volatility may decrease, we can also expect a gradual but steady surge in the value of the cryptocurrency market as a whole. Just as the stock market has given way to long-term holders, so too will the cryptocurrency markets. At the very least, it appears to be something that is going to be here for the long run.

How to trade the head & shoulders pattern

The head & 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.

What the head & shoulders pattern looks like

Commonly seen at market tops.

Placing the neckline

How to trade the head and shoulders pattern

Placing your stop-Loss

Why the head and shoulders pattern works

Disadvantages of trading head and shoulders

Inverted head and shoulders

Conclusion

10 tips for successful social trading

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

So, what is social trading?

1. Use auto-copying

2. Never forget tip #1

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

4. Follow the strategy of more than just one trader

5. Do your own split-run testing

6. Avoid new and unverified users

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

8. Never hesitate to stop

9. Reinvest your gains

10. Do your own research

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

This guide provides a detailed three-step guide needed to start trading (buy/sell) Ripple (XRP).

What is XRP?

How to buy XRP?

1. Register on the Binance exchange

2. Choose an XRP wallet

3. Purchasing XRP

Additional information

XRP Adoption

XRP Transaction Speed

Conclusion

What is NFP and how to trade it? Forex trading for beginners

Non-farm payroll is an economic report that is released once per month. It has huge importance within the forex market as it creates large volatility and price movements. In this article, you will learn how to trade this move without getting knocked out by the irrational volatility it can create.

What is NFP?

How does the NFP affect forex?

Analysing the non-farm report number

Trading news releases

How does this affect other pairs

Top tips & strategies

Conclusion

Risk Management – 6 Essential tips every trader should know​

This guide provides a quick overview of the six essential tips every trader should know when calculating risk management. By the end of this guide, you will be able to apply top risk management practices to help you stay safe whilst trading.

1. Don’t trade more than you can afford to lose.

2. Allocate time to calculating your risk on each trade.

3. Risk to reward ratio

4. Position sizing.

5. Don’t trade with emotions.

6. Learn from your mistakes.

Conclusion

The basics of investing in cryptocurrency

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).

What is a cryptocurrency?

How do cryptocurrencies work?

Public ledger

Mining

Transactions

How can Starttrading.com help you?

Top Stock Picks for 2019 – What Stocks to Buy?​

This article includes an exploration of what is on the stock market including upcoming IPO’s, industries, growth and dividend stocks along with other information which is handy to know about the performance of the market.

Upcoming IPO’s

Airbnb

WeWork

Palantir

Levi Strauss

Livongo

Recently Listed IPO’s

Uber

Beyond Meat

Upcoming industries

Cannabis

Artificial Intelligence

2018 Best Performing Stocks

ABIOMED, inc.

Advanced Micro Devices (AMD)

TripAdvisor, Inc (TRIP)

Netflix, Inc (NFLX)

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

Risk Management – 6 Essential tips every trader should know

Top Stock Picks for 2019 – What Stocks to Buy?