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How A Forex/CFD Brokers Risk Model Affects Your Trading Success

It is essential for you as a trader to know the financial risk model of a company before
deciding to trade with them; because your short and long-term happiness will definitely and largely
depend on it.
Believe it or not, trading is actually and always a financial battle between two parties opposing each
other. One party must win while the other party must lose. There is NEVER a WIN-WIN
situation in the trading world.
It doesn’t matter whether you are trading directly with a Bank or at an Exchange or with a traditional
Broker. It also doesn’t matter whether you are trading in OTC style or Exchange style.
If the financial risk model you are under is not the type whose design is such that doesn’t put the Broker in advantage
over you; then you should not be surprised if someday you are screwed, especially if you are
consistently profitable against them. It is always a matter of time before this happens.
Unfortunately, the design of the traditional market is tailored to overprotect the Brokers and Banks.
This is the reason why they make it compulsory to trade with spreads, commissions, slippage and all sort of traditional market bottlenecks.
Another aspect of the design which is of prime concern is the structure that says before you can trade with the Broker, you must first send your deposits to them to hold. This rule will keep you always at their mercy should you become consistently profitable.
Although, it is fair to mention that some of the traditional Brokers have deep pockets to absorb losses.
Some also usually have more losers than winners over an extended period of financial assessment. However,
that is not to excuse any of them of being able to screw up their clients in the event where the tables
turn suddenly, and more winners emerge than losers. Unfortunately, this market scenario happens a lot
of times.
The fact that a Broker is regulated doesn’t necessarily mean they will do honest business with you at all
times. It is a common saying that the ‘House’ always wins because the traditional market is designed to
work that way. It is also a standard expectation of Brokers that clients will still lose all their funds
within the first six months of trading, so they plan their risk based on this expectation and should their
hope be cut short, do not be surprised to experience unhappiness going forward.
TYPES OF FINANCIAL RISK MODELS
1. STP – Straight through Processing model
2. ECN – Electronic communications network model
3. DMA – Direct market access model
4. MM – Market maker model
5. P2P – Peer to Peer model
The STP/ECN and DMA models are the TRADITIONAL agency models that send all your trade flows to the
owners of the traditional market. The owners of the conventional market are called the Market Makers.
These Market Makers are the ones who you are trading against at the end of the business chain.
So if you win, they lose. In the same vein, if you always win, it means the provider will continuously lose and vice versa.
The market makers have the right to reject your trade flows. Now, this is a critical aspect of
trading. You can be trading with a Broker that is operating an STP/ECN/DMA model and yet have your
trading profits canceled or a worse scenario whereby your deposit is held back for a while. This
unethical behavior of the STP broker may be because their Market Maker rejected your flows
at some point and consequently, whatever profit you made becomes invalid. The market maker may as
well choose to punish the Broker for allowing such streams by holding back the client’s deposit. These are
some of the real facts of the traditional market models.
Even though some of the agency Brokers who deal in extra large volumes usually send flows out to their
Market Makers in bulk, it is still possible for the Market Maker to asses how profitable the trade flows are, to take necessary measures to counter the flows or hedge themselves.
That is why some STP Brokers endeavor to work with as many Market Makers as possible to spread the risk of profitable trades among different MMs, but this also comes with its unique challenges both for the Broker and the clients.
In contrast, the Peer to Peer model though new to financial market systems, it is different from
every other business model practiced by the financial market’s operators. As oppose to the
ECN/STP/DMA/MM models where you are trading against the Brokers and Market Makers, the Peer to Peer model means you are dealing directly with other market participators with the Broker serving as the licensed and regulated independent settlement party known as the exchange administrator.
In this scenario, the loss of one client is used to fully offset the win of the other client at all times. In this case, there is no of default of profit payments.
An exchange/neutral trading climate created without the bottlenecks found in the other financial market models.
It is important to note that either of them cannot close genuine Peer to Peer trading contracts Peers at any time before the stop loss or take profit rates are hit or anytime before the contract expires in the case of an options contract. This factor ensures the trading conditions equal, unbiased and independent of conflict of interest.

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How A Forex/CFD Brokers Risk Model Affects Your Trading Success
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How To Short Bitcoin

Determine The Optimal Bitcoin Trading Strategy For You.short bitcoin future Step one: Decide whether you are bullish or bearish on bitcoin for the long run: Reasons for being bearish. Do you consider Bitcoin as the future global currency? Do you have the technical skills to store bitcoin securely? Are you prepared and able to comply … Continue reading How To Short Bitcoin
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How To Short Bitcoin
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crude oil retracement to 67.8

Yesterday, it went down once and finished high. The position of 68-68.1 was more than once, rose to 68.7, and finally, it fell to around 67.6. There was not much fluctuation and market, and the general direction was still bullish. Change, as long as 67 has not broken, then the idea of ​more operations will … Continue reading crude oil retracement to 67.8
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crude oil retracement to 67.8
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Gold rebounded Above 1320

the price of gold by the dollar impact of a substantial upside, continued to fall, yesterday, after a rally above 1326, has repeatedly been tested, finally ushered in a sustained decline in the stock market to drop eventually ending at 1315. in the global recession of assets, gold will continue to be sought after in … Continue reading Gold rebounded Above 1320
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Gold rebounded Above 1320
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Don’t count on the Bank of Japan!

Survey Expects Bank of Japan to Adjust Monetary Policy This Year

  The latest survey released by Bloomberg this week shows that compared with a month ago, the economists currently expecting the Bank of Japan to adjust its monetary policy this year have sharply halved, and no one expects the Bank of Japan to take action this Friday.

  Of the 47 economists surveyed by Bloomberg, only seven said they expected monetary policy adjustments this year, down from 14 in the March survey. Most economists believe that at least until April 2019 monetary policy will change.

  At last week’s G20 meeting, Bank of Japan Governor Haruhiko Kuroda said that the central bank will continue to maintain accommodative monetary policy given that the Bank of Japan is still far from achieving its price target.

  The Bank of Japan’s Monetary Policy Committee now expects the inflation rate to approach 2% around the fiscal year that began in April 2019. Kuroda also unexpectedly stated on March 2 that the Bank of Japan may consider the details of any exit stimulus policies after that.

  It is worth noting that the two-day policy meeting concluded this Friday would be the first meeting of two new vice presidents of the Bank of Japan, including Wakabe Masumi. Before being nominated to the committee, he repeatedly called for more easing. However, according to Wadabe Masumi’s answer at the congressional confirmation hearing, many economists surveyed expected that his vote this week would be consistent with other members.

  ”I expect the Deputy Governor Tanie Chang to agree with the current policy direction,” said Shihiaka Yuji, chief economist at Mitsubishi UFJ Morgan Stanley. “However, he may ask the Bank of Japan to retain as much as 80 trillion yen in government bond purchases as much as possible, and to correct the current shortage of purchases.”

  Shimanaka refers to the difference between the size of the Bank of Japan’s assets to be purchased each year and the actual purchase size. The Bank of Japan’s stated goal is to increase its holdings of government bonds by $ 742 billion annually, but in the fiscal year ending in March, its balance sheet has only increased by around 50 trillion yen.

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Don’t count on the Bank of Japan!
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The U.S. dollar stands out versus other currencies

The USD stands out versus other currencies   On Tuesday, the U.S. dollar index maintained a continuous upward trend. During today’s intraday it traded through an integer mark of 91 in one fell swoop. The highest mark in nearly 14 weeks. In just six trading days, the trend of the United States Index has completed a … Continue reading The U.S. dollar stands out versus other currencies
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The U.S. dollar stands out versus other currencies
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Volatility Falls to Multi-Week lows as Stock-Rally Continues

CBOE VIX Volatility Index falls sharply on Thursday.

The CBOE VIX (NYSEARCA:VXX) declined sharply on Thursday, as stocks staged another relief rally on signs of prevailing calm in the geopolitical arena.

 

The Chicago Board Options Exchange (CBOE) Volatility Index declined 8.7% to close at 18.49, its lowest level of the month. The so-called “fear index” traded between 18.16 and 19.92.

 

 

In equities, the S&P 500 Index (NYSEARCA:SPY) gained 0.8% on Thursday.

Major VIX ETFs:

iPath S&P 500 VIX Short Term Futures ETN: (NYSEARCA:VXX) Designed to offer exposure to the S&P 500 VIX Short Term Futures Index Total Return. The Index uses CBOE Volatility Index futures by way of a long position in the first and second-month VIX Futures contracts. VXX declined 4.1%

 

ProShares Short VIX Short-Term Futures (SVXY) to track the inverse daily performance of the S&P 500 VIX Short-Term Futures Index. SVXY advanced 2.1%

 

ProShares UltraShort Term VIX Futures: (NYSEARCA:UVXY) UVXY is designed to deliver 2X (leveraged) returns of the day’s moves in the S&P 500 VIX Short-Term Futures Index. It tacks the two front months of the futures contract. UVXY declined 6.2%. 

 

VelocityShares Daily 2x VIX Short-Term Futures ETN (NYSEARCA:TVIX) TVIX is a leveraged VIX ETN designed to deliver 2X the returns of the daily S&P 500 Short-Term Futures Index. TVIX declined 6.5%.

 

The Final Word: Volatility is back to trading below the historic average, a sign that the bulls are once again controlling the tempo. However, underlying disks tied to geopolitics and free trade continue to threaten the outlook.

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Volatility Falls to Multi-Week lows as Stock-Rally Continues
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Price of Bitcoin, Ethereum and Ripple surges as European Central Bank dismisses cryptocurrency ban fears

Price of Bitcoin, Ethereum and Ripple surges as European Central Bank dismisses cryptocurrency ban fears

The price of Bitcoin and other chief cryptocurrencies rose today following the European Central Bank announcement laid off worries of an impending ban. Last month, the slide of Bitcoin started to be so intensive that the sharp drop was called as a ‘bloodbath’ and a ‘horror show’, before gradually being named the ‘cryptopocalypse

Nevertheless, after that, the price of most key cryptocurrencies has been ascending, although all crypto-markets continue to be highly unpredictable and prone to dramatic wobbles. The price of one Bitcoin is resting at about $8,800 this morning, which is a gain of about $400 from its lowest point yesterday.

Mario Draghi suggested it was not his organisation’s responsibility to regulate Bitcoin. The price of Bitcoin has been on the up for the past 2day

Mario Draghi likewise warned the public about the dangers attached to the volatile cryptocurrency, which is vulnerable to dramatic fluctuations and failures. Governing bodies are displaying a developing urge for new measures to regulate the crypto-markets, which have seen wild price swings and a series of heists as well as a rapid growth in the assortment of coins on offer.

 

 

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Price of Bitcoin, Ethereum and Ripple surges as European Central Bank dismisses cryptocurrency ban fears
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