Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

DbPhoenix

Pearls

Recommended Posts

A man can't spend years at one thing and not acquire a habitual attitude towards it quite unlike that of the average beginner. The difference distinguishes the professional from the amateur. It is the way a man looks at things that makes or loses money for him in the speculative markets. The public has the dilettante's point of view toward his own effort. The ego obtrudes itself unduly and the thinking therefore is not deep or exhaustive. The professional concerns himself with doing the right thing rather than with making money, knowing that the profit takes care of itself if the other things are attended to. A trader gets to play the game as the professional billiard player does -- that is, he looks far ahead instead of considering the particular shot before him. It gets to be an instinct to play for position.

 

JL

Edited by DbPhoenix

Share this post


Link to post
Share on other sites

You are off to a great start here, and I am looking forward to the series of posts. Thanks for taking the time to do this!

 

Many modern people have a very hard time with this concept, they are supposed to be keeping busy, working hard, accomplishing tasks. And a certain percentage of traders are addicted to "action."

 

I frequently keep in mind the attitude and skills required by ancient primitive hunters, who spent most of their time stalking extremely slowly in expanded awareness, or even positioned motionless next to a trail. Their modus operandi was all about high probability hunts through enormous patience and skill. They did not waste energy on targets where the chance of a net gain of energy was very low. For many modern people, such a mindset is almost incomprehensible, and so when they become traders they keep chasing prey they have almost no chance of acquiring, and the end result is less and less reserve energy over time, until they die of exhaustion . . .

Share this post


Link to post
Share on other sites

RULE #2: Don't get irritated or angered by long session of folding.

 

We are all playing probability over a long run. Understand it. Accept it. Mentally prepare for it. Keeping our head makes all the difference. (William)

Share this post


Link to post
Share on other sites

Observation, experience, memory and mathematics -- these are what the successful trader must depend on. He must not only observe accurately but remember at all times what he has observed. He cannot bet on the unreasonable or on the unexpected, however strong his personal convictions may be about man's unreasonableness or however certain he may feel that the unexpected happens very frequently. He must bet always on probabilities -- that is, try to anticipate them. Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass.

 

 

JL

Share this post


Link to post
Share on other sites

RULE #3: If you've been folding a lot, for a long time in the game, and you're starting to think that maybe it's time you got in and played a few hands again -- that's not a good enough reason. Keep folding.

 

The level beyond this is having no desire to act inappropriately-- to be so immersed in the moment and the process that time does not exist and thus impatience does not exist.

 

Great traders have rituals they enjoy for their own sake, a method and a habit that acts as its own reason for being. When you have this mindset, impatience goes away; whatever is in front of you becomes too engaging to worry about what you aren't doing or could be doing.

 

The amount of time a trader should be willing to wait for a good trade is infinite, because with the correct mindset the trader isn't actually “waiting” in the traditional sense; being and experiencing yes, waiting no. (darkhorse)

Share this post


Link to post
Share on other sites

Rarely do any of us grow up learning how to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way. In the trading environment, you will have to make up your own rules and then have the discipline to abide by them.

 

The problem is, price movement is fluid, always in motion, quite unlike the highly structured events that most of us are accustomed to. In the market environment, the decisions that confront you are as endless as the price movements you intend to take advantage of. You don't just have to decide to participate, you also have to decide when to enter, how long to stay in, and under what conditions to get out.

 

There is no beginning, middle, or end - only what you create in your own mind.

 

JL

Share this post


Link to post
Share on other sites

RULE #4: Don't feel like a martyr when folding. Don't start feeling self-righteous about all this folding you are doing ... as if now it owes you (because you've been so good, so disciplined, so patient ...). This is a trap .... As you keep folding, you must feel neutral about it.

Share this post


Link to post
Share on other sites

Via Addicted2Success and Barry Ritholz:

 

 

Insightful Investment Quotes

 

warren-buffett-quote.jpgWarren Buffett (Net Worth $39 Billion) – “‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

 

george-soros-quote.jpgGeorge Soros (Net Worth $22 Billion) - ”I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.”

 

 

david-rubenstein-quote.jpegDavid Rubenstein (Net Worth $2.8 Billion) – “Persist – don’t take no for an answer. If you’re happy to sit at your desk and not take any risk, you’ll be sitting at your desk for the next 20 years.”

 

ray-dalio-quote.jpgRay Dalio (Net Worth $6.5 Billion) – “More than anything else, what differentiates people who live up to their potential from those who don’t is a willingness to look at themselves and others objectively.”

 

edward-lampert-quote.jpgEddie Lampert (Net Worth $3 Billion) – “This idea of anticipation is key to investing and to business generally. You can’t wait for an opportunity to become obvious. You have to think, “Here’s what other people and companies have done under certain circumstances. Now, under these new circumstances, how is this management likely to behave?”

 

t-boone-pickens-quote.jpegT. Boone Pickens (Net Worth $1.4 Billion) - “The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.”

 

Charlie-Munger-quote.jpegCharlie Munger (Net Worth $1 Billion) – “If you took our top fifteen decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor.”

 

david-tepper-quote.jpgDavid Tepper (Net Worth $5 Billion) – “This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing.”

 

Benjamin-Graham-Quote.jpegBenjamin Graham – “The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.”

louis-bacon-quote.jpgLouis Bacon (Net Worth $1.4 Billion) – “As a speculator you must embrace disorder and chaos.”

 

paul-tudor-jones-quote.jpgPaul Tudor Jones (Net Worth $3.2 Billion) - “Were you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt. After a while size means nothing. It gets back to whether you’re making 100% rate of return on $10,000 or $100 million dollars. It doesn’t make any difference.”

 

bruce-kovner-quote.jpgBruce Kovner (Net Worth $4.3 Billion) - ” My experience with novice traders is that they trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks. The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.”

 

rene-rivkin-quote.jpegRene Rivkin (Net Worth $346 Million) - “When buying shares, ask yourself, would you buy the whole company?”

 

peter-lynch-quote.jpegPeter Lynch (Net Worth $352 Million) – “I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.”

 

John-Templeton-Quote.jpegJohn Templeton (Net Worth $20 Billion)- “The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.”

 

john-bogle-quote.jpegJohn (Jack) Bogle (Net Worth $4 Billion) - “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”

Share this post


Link to post
Share on other sites
RULE #2: Don't get irritated or angered by long session of folding.

 

We are all playing probability over a long run. Understand it. Accept it. Mentally prepare for it. Keeping our head makes all the difference. (William)

 

Hence;

 

The outcome of a particular trade is irelevant, if we followed our trading plan flawlessly but our stop gets hit, there is no reason to rationalize much less analyze the loss.

Share this post


Link to post
Share on other sites

RULE#5: Sometimes others get to play and you don't.... But the most important thing is this: you must be comfortable with this - welcome it. Make peace with this idea. Cross your arms and sit back.

 

It is silly to try to catch every swing or worry about missing a move. There are thousands of markets out there and we are missing a play ALL THE TIME. The objective is to execute the business plan with precision over a long run. Precision = Speed. Marginal, wild, random trading will only bring chaos into the statistical equation.

 

There are also internal reasons not to play. The poker adage H.A.L.T (Hungry, Angry, Lonely, Tired) basically says that if you can't play with a smile, don't play at all.

And scared money rarely wins. (William)

Share this post


Link to post
Share on other sites
RULE #3: If you've been folding a lot, for a long time in the game, and you're starting to think that maybe it's time you got in and played a few hands again -- that's not a good enough reason. Keep folding.

 

The level beyond this is having no desire to act inappropriately-- to be so immersed in the moment and the process that time does not exist and thus impatience does not exist.

 

Great traders have rituals they enjoy for their own sake, a method and a habit that acts as its own reason for being. When you have this mindset, impatience goes away; whatever is in front of you becomes too engaging to worry about what you aren't doing or could be doing.

 

The amount of time a trader should be willing to wait for a good trade is infinite, because with the correct mindset the trader isn't actually “waiting” in the traditional sense; being and experiencing yes, waiting no. (darkhorse)

 

In practice, if you wait to play only high value hands, you will be hard pressed to win money if you are playing against high quality players. If is best to play junk from time to time and show that you have played junk so that you do not get pegged as a tight player.

 

The odds in poker are pretty simple and most decent local non transient players understand them. When you are playing with people who understand the odds, you are playing at best in a negative sum game since there is a rake and a toke. To win, you need to learn how each player acts or reacts when they are in a hand. If you play with the same people long enough, you can come pretty close to guessing their 2 cards (in texas hold'em) they are holding almost down to the exact suit, just as often as you can complete your best friend's or spouse's statement before he or she does or know what he or she is going to say before they say it. You learn to read individual facial, body, breathing, and hand gestures which tell you if he has a good hand or and if you should call or raise or fold.

 

The odds are important, but you make money by learning to play the players and you need to keep the other players confused about the way you play.

 

The odds in poker are much more objective than they are in trading; therefore, traders are disadvantaged to poker players since there are no "nuts" in trading, arbitrage trading aside. The back testers believe that they can approximate the odds, but back testing is a systematic statistical misinterpretation.

 

The parallel "reading traders" in trading may seem like it is harder to do than it is in a poker game where the players are visually inspectable, but it is possible to understand what the other traders are doing by understanding the patterns that present themselves at particular places and times and understanding how you can tell if trader a, b, c is present.

 

When you understand who may be trading at a particular pattern, then you may decide to, for example, fade that fib pull back short instead of taking it long like you normally would have done. Or, you may decide to short the low at support instead of buying the low and expecting support to hold. Learning who you are trading against and how to trade with or against them will magnify your success.

Share this post


Link to post
Share on other sites

RULE #6: To win at poker you must embrace the idea of breaking even.... A distaste for breaking even can lead us into the valley of pressing and overplaying and other wrongful activity.

 

We have to have a positive mindset for the long run. But one-sided expectation for a short performance interval is just going to chew us up. Breaking even or a loss is just one of the natural outcomes in a statistical run. This is the way our trading plan supposed to work given the nature of the game... it is not broken. The reason we have a plan in place is to help us focus on executing sound decisions under fire. Do not make it difficult by outsmarting our own plan. Pressing at the last hour to meet some number in our head is just out of place.

 

When you have a glass of muddy water, you can't make it clear by stirring it. You can't make the mind clear by forcing it one way or the other. Don't force your expectations on your trading; let the Law of Large Numbers do its work in peace. (William)

Share this post


Link to post
Share on other sites

RULE #7: Regard patience as a central pillar of your game and strategy.... Don't assign it a secondary or lesser role.

"Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferably one that is also sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading." (Mark Weinstein)

Share this post


Link to post
Share on other sites

RULE #8: Keep plugging away. Expect nothing.... There will be times when you play tight, keep playing tight, and keep on playing tight, and it still does no good...the bad cards just keep coming.... You may have to just keep doing it until the end, with no reward at all.

 

 

When there is no expectation, there is no fear of the outcome. (William)

Share this post


Link to post
Share on other sites

RULE #9: Don't fall into the "Now Trap." Players want to win now, today. Results must happen now, in this hand, the one right in front of us.... We assign a little more importance to where we are. We make it bigger, more important.... But we do this timewise , too -- we assign things more importance because they are happening in the present moment.... Yet giving greater importance to the present in the game of poker allows us to imagine marginal hands into good hands and good hands into great hands.

Share this post


Link to post
Share on other sites

RULE #10: The long run is longer than you think.... Playing only the best hands can be frustrating.... Anger and irritability can arise. The emotions can be severely tested. This is where Zen comes in.

 

The only way to turn the corner is to get rid of marginal trades. It is ALREADY a very fine balance. If one injects a few marginal trades into the picture, he quickly screws up the Profit/Loss equation. Making the matter worse, doing so will create chaos in both one’s equity curve and one’s head. Just get rid of marginal trades, don't stare the monitor the whole day, and learn to maximize profits WHEN appropriate.

 

If we fail to take the responsibility for getting rid of marginal trades, we lose the privilege to trade. Provided one does have a good method, it’s meaningless to try to fix things any other way.

 

Trade LESS, make more. (William)

Share this post


Link to post
Share on other sites

RULE #11: Don't defend patience too strongly.... You can't make yourself go to sleep through sheer strength of will. It is not about the strength of commitment -- it is more of a gentler thing -- a letting go.

 

We have to be aware and allow space for our ego's demands. Let the ransom demands be heard yet be objective in the moment, knowing we are still in the driver's seat -- we are not being kidnapped and the threats are baseless. Be compassionate and forgiving to the feeble ego -- that is how we give it space.

 

Since the neurotic fixations are held by tensions, relax your arms and legs and be aware. As the Zen saying goes: "When you eat, eat. When you sleep, sleep." May I add: "When you wait, wait. When you trade, trade." (William)

Share this post


Link to post
Share on other sites

RULE#12: Don't be impatient about patience.... Your brain is telling you to play patiently while your emotions are saying, "What's taking so long?" These two must be in alignment.

 

The gatekeeper of our subconscious keeps us from constant behavioral modifications, which means that if you are not a patient type, there is probably more work then just telling yourself to be patient. I think one might have a chance in two ways:

 

1) If you are an enlightened kind of guy, you can tap into your own innate essence for power. The power comes from your strong awareness. All your subtle self-talk and make-believes and all the games your ego plays will evaporate in the expanse of your wisdom. Just like an old man watching children play.

 

2) Change your internal self-talk. Bypass the gatekeeper and do some behavioral modification. There are two ways to bypass the gatekeeper: use sheer will and persistence, and keep changing your self-talk on the conscious level. Eventually you will nag your gatekeeper to death. (William)

Share this post


Link to post
Share on other sites

RULE #13: Occupy yourself while you are not playing.... It is critical that you learn to enjoy yourself in the cardroom in ways other than in the game itself -- by constantly staying, and playing.... The fact is, if you are playing correctly, you are going to be doing a lot of folding. So you need to think of ways to fill this time. If you hate this period of time -- when you're not playing , and some do -- it will have the effect of throwing your game out of kilter.

 

I can only trade for so many hours. This is another reason look for ways to trade more effortlessly so my energy level can be better maintained throughout the day. There are times when I find myself constantly in the market and that is a very BIG red light that "I AM GAMBLING" because the market is random most of the time and if I am in it all the time then I am not playing the highest probability play. (William)

Share this post


Link to post
Share on other sites

RULE #14: Begin by playing tight, but don't forget to stay tight.... The important thing is not who possesses the control and discipline at the start of the game, but who possesses it at the middle, the end, and all points throughout.

 

It is easy to have faith in yourself and have discipline when you're a winner, when you're number one. What you've got to have is faith and discipline when you're not yet a winner. (Vincent Lombardi)

 

Stick to a plan despite what happened before and what will happen after. It is less about fighting and more about surrendering. (William)

Share this post


Link to post
Share on other sites

RULE #15: Discipline your game...it is more like patience -- pacing yourself (especially emotionally) for the length of the game. It is different than mere patience, however. It comes from a larger and longer-term view of things -- one that steps back and sees things as a whole.

1) There is a parallel between meditation and trading according to plan: we tend to create chaos by imposing our will into the processes because we want to "improve" the processes to match our preconceived expectation. Are our expectations realistic? Probably not...especially if they come right out of trading books. Let the process of either trading (according to plan) or meditation take its natural course -- stop the tampering.

 

2) The performance of actions [should be] in accord with the natural flow of changes rather than one's self-interest. Retire one's ambitions. Act non-coercively. Stop fixating on one's own agenda.

 

3) Conserve one's vitality by getting in tune and acting according to what the situations naturally call for instead of one's own will or contrivance. (William)

 

I've said it before, and I'm going to say it again, because it cannot be overemphasized; the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a psychological game. Most people think that they're playing against the market, but the market doesn't care. You're really playing against yourself. You have to stop trying to will things to happen in order to prove that you're right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you're right, but to hear the cash register ring. (Marty Schwartz)

Share this post


Link to post
Share on other sites

RULE #16: The true journey of mastery is in each moment... Writer George Leonard, in his book Mastery, refers to this as the "goalless journey". In other words, there is no finish line; the journey itself is the destination.... According to Leonard, mastery lives within itself and the practice of itself -- doing a thing for its own sake; not just reaching the goal, but each hour, each moment, every day is the goal.

 

Fulfill one's role as a trader each moment -- a trader's actions should be in tune with the ever-changing market instead of one's own agenda. There is no need to call for perfection in the maneuvers as long as one never deviates from the focus in fulfilling that role. Winning streak can make a trader focus on the numbers rather than be in touch with his role. So is losing streak. (William)

Share this post


Link to post
Share on other sites

RULE #17: You cannot apply the principles of Zen until you know the game perfectly -- inside and out.

 

Having the proper attitude of Zen calm and confidence does no good if you do not know the game. Zen will not make up for, or offset, incorrect ... play. As a result, there is a certain amount of ordinary, old-fashioned work involved in mastering the game -- a certain amount of sweating the white beads before the days of tranquility come along.

 

The most important thing to know, above all things, is exactly how to play the game. No outlook, attitude, or philosophy is as important as this.

 

Good [trading] is not a "mood", it is a series of individual decisions. It does not occur by "Buddhistically" meditating ourselves into some dreamlike mental state, but rather by knowing the game well and being in synch with it -- by inserting ourselves correctly into the flow of what is going on in front of us.

 

No Zen attitude will make up for this lack. You may be quite Zen-like and have all the attributes of Zen calm, but if you play incorrectly, the result is that you will get destroyed. Practice, and long hours at the table, are indispensable.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date : 23rd January 2020. How To Improve Your Trading Mindset 23rd January 2020.Our Head Market Analyst, Stuart, explains how to improve your Trading Mindset. Understand the importance of emotional control and discipline through an unmissable Q&A session.Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Bitcoin: Upcoming Halving And What To Expect Bitcoin’s upcoming halving will be one of the most followed crypto-related occasions in the year 2020. Thousands of cryptocurrency enthusiasts will be observing the markets eagerly to witness what effect this year’s halving will have on the cryptocurrency. Many believe that the occasion would have a positive effect on BTC’s price as has been observed in the past. On the other hand, some are expecting the price to drop dramatically after the occasion. Whatever the result may be, it is apparent that this occasion will be a defining juncture for Bitcoin. In this review, we breakdown what the Bitcoin halving is all about, some effects of this occasion, historic occurrences, and what to anticipate from this year’s halving occurrence. Bitcoin was built on a system that mandates regular halving (also known as Halvenings) to sustain its value. The halvings are programmed to happen every 4 years. Already, Bitcoin has witnessed two halving processes, the first in 2012, and the other in 2016. The next halving process is scheduled for the 20th of May 2020. Bitcoin’s Value Preserving Strategy Bitcoin runs on a deflationary economic model which ensures that over time, lesser and lesser Bitcoin tokens will be created until finally, the creation of new Bitcoin tokens will end. BTC’s total supply is capped at 21 million, meaning that it is impossible to have more than that exact number of Bitcoin token in circulation at any point in time. It has been estimated that the very last Bitcoin token will be mined in the year 2140. Bitcoin’s deflationary model predisposes it to scarcity which increases in demand, thereby causing its value to increase as well. This model is different from traditional fiat which is based on an inflationary model, this means that banks can instruct for the printing of more banknotes at will. This is not an ideal practice per se as a boost in the volume of banknotes in circulation could result in the devaluation of that currency. Bitcoin’s “Block Reward” System New Bitcoin tokens are pumped into the market through a popular process known as cryptocurrency “mining”. Bitcoin miners get rewarded with a Bitcoin “block” allotment every time they successfully solve transactions. The blocks are allotted by the Bitcoin algorithm. The block rewarding process happens every ten minutes. So in fact, ten minutes from this moment, new Bitcoin tokens will be created. Mining is not an easy process. It requires a certain level of expertise, specific hardware, and a serious quantity of electricity. After the inception of Bitcoin, the first mining reward was fifty Bitcoin. This meant that every ten minutes, a Bitcoin miner received fifty Bitcoin tokens for solving transactions. That number has since been halved, twice, and is now at 12.5 Bitcoin token per block reward. By May this year, the halving will bring that figure down to 6.25 Bitcoin token per block reward. This feature has been pre-programmed into Bitcoin’s system. What This Could Mean for Mining Lesser block rewards are not the only reason Bitcoin is scarce. It has gotten significantly harder to mine Bitcoin and receive rewards. This is because mining is now more difficult as more miners are entering the system thereby increasing competition. Consequently, an increase in competition means miners require more sophisticated tools to solve cryptographic Algos. Over the years, miners have created what is known as “mining pools” to better handle the rising competition of mining. Mining pools are a network of miners, collectively working towards achieving block rewards. Block rewards in mining pools are distributed according to the percentage of effort put into earning a block. Improved Stock-To-Flow Ratio Halvings have several profitable impacts on Bitcoin. One such effect is that it boosts the Stock-To-Flow ratio of Bitcoin. A commodity’s STF ratio is calculated by dividing the quantity of the asset held in reserves, by the quantity manufactured in a year. The greater the STF ratio, the lesser the annual inflation on that asset. Commodities like gold possess a very impressive STF ratio as its available quantity is limited. Presently, Bitcoin has a significantly lesser STF ratio, unlike gold. Regardless, more halving occasions will boost the Bitcoin’s STF ratio. It is even believed that someday, Bitcoin will surpass gold in the STF ratio rating and will be an even better store of value. This is probably why Bitcoin is dubbed “digital gold”. After-Effects of Previous Halvenings 2012’s Halving The first Bitcoin halving happened on the 28th of November. On that day, the cryptocurrency recorded a 6.5% trade range. Regardless, to the surprise of many, the price remained at a consolidated state months after the occasion. This was partly because Bitcoin was still in its infancy and so, not many people were engaged with it. Also, media coverage at the time was not what it is today, which means many people were not informed of what was going on. Based on the information on Bitcoin’s BNC Liquid Index, the price of BTC attained a high of about $32 on the 8th of June 2011. The price of BTC never broke above the $32 mark until the 28th of February 2013 (4 months later), where price witnessed a climb to $260 after which a drop was experienced and the price stayed below that level for several months. Fast forward to the 30th of November 2013 (close to a year after the 2012 halving), Bitcoin rallied dramatically and peaked at $1,167, which was a whopping 9,686% increase from the initial price of $11 on halving. 2016’s Halving On the 9th of July 2016, the second halving, the price peaked at $664 but did not maintain that uptrend instead fell to $626 on the same day. Subsequently, the price continued on that downward trajectory for about three months. However, things started looking up for Bitcoin from the 27th of October 2016 when price closed above the previous halving’s high of $664. Bitcoin later proceeded to smash its last all-time high of $1,167 on the 23rd of February 2017. This spike started the famous bull rally of 2017 through 2018, which witnessed a peak at $20,000 sometime in December 2017. 2016’s halving shot Bitcoin’s price from $664 to $20,000 which was a growth of 2,912%. Possible Outcomes of this Year’s Halving? In the crypto sector, the Bitcoin halving is undoubtedly among the most talked-about and anticipated occasions of the year. Presently, there are mixed expectations as to what the outcome of the 2020 halving may be. Many in the crypto sector are very optimistic and believe that, just as in the past, the price will soar dramatically either before or after the occasion. Creator of Kraken, Jesse Powell expects the price of Bitcoin to rise close to $100k or 1 million after the halving. The CTO of Morgan Creek Digital Assets also shares the belief of Jesse and expects Bitcoin to reach the $100,000 mark by 2021. He says that scarcity is a driving force for the demand of any commodity. He explains that the 2020 halving will cause Bitcoin to be more scarce. Other crypto players believe that this year’s occasion will not have a similar trajectory with past occasions and would, instead, mar the price of Bitcoin. Another possible scenario that has been observed over time is the “buy and dump” case. This scenario usually plays out when there is a highly anticipated occurrence. It works exceptionally well when the upcoming occasion is sure to have a quantifiable effect on supply and demand dynamics. The price of the asset in question experiences a huge spike just days or a few weeks to the main event. This transpires because investors stock up on the asset towards the event. After the event, however, the price of the said asset drops significantly. This kind of activity has transpired frequently in the cryptocurrency space. One such occasion was the Bitcoin futures trading releases for the CBOE and CME. Just a few days to the CME’s release, the price of Bitcoin rallied from $6,400 and peaked close to its all-time high of $20,000 in a day. Not surprisingly, the price dropped considerably in the period that followed those releases. Furthermore, some cryptocurrency experts believe that the aftermath of the halving has already been priced in. It has been observed that demand is “missing” in the Bitcoin market, this could be a clear indication that the halving has been priced in. Usually, months before a halving, a boost in demand and price of Bitcoin is always noticeable. This time, however, no increase can be observed in neither of the stated areas. In this case, it could lead to a lateral trading period which might be a good thing for traders. At the moment, Bitcoin is still struggling to break above the $7,200 mark and there are no signs of a reversal happening soon. Whatever the result may be one thing is for sure, the price of Bitcoin is set to experience drastic changes this year.   Source: https://learn2.trade 
    • Your All-Round Guide To Security Token Offerings Security token offerings (STOs) are one of the most revered investment options in the crypto space at the moment. It has even been termed the “future of fundraising”. But what exactly are STOs and what is the rave all about? This article aims to break down STOs, what it is all about, and how it can be beneficial to you. What Exactly is a Security Token Offering? STOs, simply put, provide a means of tokenizing fungible financial assets such as stocks, bonds, and REITs, and introduces the tokens to the public through regulated channels. STOs are a lot like ICOs as they generally involve the same processes. However, the differentiating factor between STOs and ICOs is in the tokens being sold. With ICOs, the tokens are usually non-descriptive and could range from anything digital currencies to utility tokens. With STOs however, the token is a “security”, meaning that it is exchangeable and possesses a set monetary value. Breakdown of Security Tokens Security tokens function as digital versions of the assets they represent. Here’s a list of some popular security token representations: 1- Capital markets: Firms can convert their shares into tokens, allowing investors to own parts of the firm. In some cases, owners of tokens receive dividends and can execute votes on the affairs of the firm. 2- Equity funds: Equity funds can also tokenize their shares for sale. 3- Commodities: Commodities like gold, natural gas, coffee can be tokenized. 4- Real estate: The equity of this asset class can be tokenized, much like how REITs function. STOs do not change the underlying securities, instead, it makes these assets more readily accessible on a digital platform. Unlike other digital assets, security tokens can only be traded on certain regulated exchanges. Some exchanges require interested investors to meet some set qualifications. Advantages of STOs STOs are formulated with regulatory-compliance in mind, unlike ordinary token sales. Security tokens provide its owners with several legally binding rights. Some security tokens even bestow its owners with rights to dividends or other defined streams of income. Security tokens are also beneficial to their issuers. From the onset, the entities issuing the tokens are aware that their tokens are being purchased by accredited and verified investors and so, they don’t have to worry about the credibility of their investors. Other advantages of STOs include: 1- It is adequately regulated: Entities issuing security tokens must operate under the guidance of designated regulatory agencies in the region like SECs and FTCs. 2- You can rest assured that STOs won’t falter in the future: Unlike ICOs that cannot be guaranteed, STOs are sure to always deliver because it is properly regulated. 3- STOs offer great convenience: Procuring security tokens is easy, straightforward, and stress-free. All you need to do is to adhere to the STO requirement in your jurisdiction and you’re good to go. 4- It can be programmed: Security tokens are programmable and can be facilitated by smart contracts. 5- Automated dividend disbursement and voting: Some security tokens are structured to send dividends automatically through smart contracts. Also, some security tokens provide the bearer with exclusive voting rights in the affairs of the entity offering the tokens. 6- It is a globally accessible investment vehicle: Investors across the globe can procure security tokens regardless of their location. 7- It is not susceptible to manipulation: Considering the mode of operation STOs are run by, big players cannot manipulate its movements. 8- STOs are very liquid: It is a very promising investment option as it has an impressive liquidity quality and can be traded easily. With benefits like these, STOs are for sure transforming the fundamentals of the financial sphere. Disadvantages of STOs As with every other form of investment, security tokens has its limitations and shortcomings. Some of these limits are: 1- It is considerably more costly than utility tokens: STOs, unlike ICOs, hosts many organizations in their fundraising campaigns. Also, regulatory fees are not cheap which makes it more capital-intensive to host STOs. 2- Investor Qualifications: Countries like the US have certain qualifications an investor has to scale before becoming eligible to engage STOs. According to the SEC to be an “Accredited investor”, you must have an annual income rate of $200k and above or a minimum of $1 million in the bank. 3- Specific trading conditions: STOs can only be traded on certain designated exchanges. Also, these tokens are time-bound meaning that you are allowed to trade these tokens between investors for a set period after the STO. The Howey Test Usually, tokens are said to be securities, by law, when they pass certain thresholds. One such way to identify a security instrument is by applying the “Howey Test”. But first, let’s look at a piece of quick background information on how the Howey test came to be. In 1944, a citrus plantation called the Howey company of Florida leased out a large portion of its land to several investors in a bid to raise funds for much-needed developments. The buyers of the land were not skilled or versed in citrus farming in any way and decided instead to just be “speculators” and let the experts do their jobs. The lease was made on the premise that profits would be generated for the investors by the lessor. Not long after the business transaction the Howey company was sanctioned and accused by the United States SEC of failing to register the sale with the authority. The SEC maintained that the company was dealing with unregistered security. Howey denied the claims however, assuring that what it offered wasn’t a security. After much debate, the case ended up in the Supreme Court, which later ruled in favor of the SEC that Howey’s land leasing were undoubtedly securities. It remarked that investors were purchasing land mainly because they saw an opportunity to make a profit off the deal. Howey was then ordered to register the sale. This was the story of the enactment of the Howey test. Today, per the Howey test, anything is deemed to be a security if it satisfies the following criteria: 1- The investment included money. 2- The investment was made on an enterprise. 3- Profit will be made from the efforts of the providers of the investment. The Howey test has become a stronghold name in the crypto space. In 2017 and 2018 (during the “Heydey boom”), many ICO providers were completely consumed with scaling the Howey test as it was a major determinant used in ascertaining the legality of an ICO by the SEC. Failure to pass the test meant the offering was illegal and was sanctioned by the authorities. Some ICOs even advertised their tokens as investment instruments that had no value, describing their tokens as “utilities” used only for interactions on the platform. The Inception of STOs The very first STO was released by Blockchain Capital on the 10th of April 2017. The release pooled about $10 million in one day. Several STOs have been released following the first event including tZero, Sharespost, Aspen Coin, Quadrant Biosciences, and many more. STOs have since gained widespread acceptance and relevance in today’s market. Understanding the Distinction Between Security Tokens and Tokenized Security Confusing security token for tokenized securities is a common trap that people fall into. The main distinction between the two is that the former is usually a recently issued token that functions on a distributed ledger system while the latter is just a digital manifestation of pre-existing financial instruments. Apart from similarities in appearance and nomenclature, security tokens have absolutely nothing in common with tokenized securities. What Entities are Involved in an STO Issuance? Assuming a business entity plans on issuing security tokens as an embodiment of equity in its establishment, the next necessary step for that business would be to involve certain players and follow certain directives. It has to formally contact an issuance platform to serve as a medium for issuing the tokens. Popular issuance platforms include Polymath and Harbor, which consist of service providers like custodians, broker-dealers, and legal entities to carry out secure processes. Who Can Invest in STOs? STOs are available to the general public for the taking, regardless of location. However, as mentioned previously, the US has certain rules guiding STO investments. In the US, it is mandatory to be an “accredited investor” before you can invest in this instrument. An accredited investor is an individual with an annual cash flow of $200k and above for at least 2 years or a net worth of $1 million and above. More nations are starting to adopt the United States’ classification method and have begun restricting certain classes from investing in STOs. It is advisable to always research on the STO rules and regulations of the jurisdiction you’re planning on investing with. Final Word STOs provide businesses with the prospect of raising funds in an easy and regulated setting. It gives both investors and issuers a good deal of benefits, while also ensuring insurances against fraudulent or malicious practices, unlike ICOs. Issuers are not limited to any industry, they can vary from several sectors including real estate, VC firms, and small and medium enterprises. Moving forward, we will likely witness prominent firms venture into the STOs.   Source: https://learn2.trade 
    • PocketOption Broker - 50$ Binary Options No Deposit Bonus - https://1binaryoptions.eu/review/pocket-option/ USA, EU, & WorldWide Customers Welcome Daily 250$ Binary Options FREE ENTRY Trading Tournament
    • Good news is my posts no longer seem to need moderator approval! Beginning tomorrow, I will be day-trading two currency pairs: EUR/JPY and GBP/USD. I'll trade during the morning and afternoon hours, New York time.  I'll be using an Oanda "core pricing + commission" account. I plan to trade a "practice account" through the end of January, then a small "live" account beginning February. I've set my charts up to closely resemble the format popular in the RCRT thread (NinjaTrader + MetaTrader). My trading style will primarily consist of what I've learned from that thread. I'll track my performance in terms of R-multiples.  The purpose of this thread is just for a little fun with some bonus accountability. I've got nothing to sell/teach, and I will probably lose money! 😁
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.