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joshdance

The Close of a Bar is Meaningless

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I'm not saying they can't be high or "too high". I'm saying they can't both be high within the same strat. It is an either or situation.

 

High win/loss ratio with small win amounts or Low win/loss ratio with high win amounts.

That is just how math works whether it is trading or sports or music or .......

 

I don't think that this is true at all. I believe it is very possible to have a high win/loss ratio with high win amounts. In fact, it is the one thing that I continually strive for on an ongoing basis. Have I achieved it yet with total consistency? No. Do I believe that I will get there eventually? Absolutely!

 

I'm curious what math you are using to arrive at this self-limiting conclusion?

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Hopefully most of the thousand readers are doing serious inner work aligning their representational system to their own perceptual type/profile, instead of assuming, the standard consensus charting methods, the bars, etc. really are the market…

 

I started this thread to accomplish that very purpose, because you may "hope" all you want, but I'm sure you would doubt that this is the case for the general trading community. As with everything in trading and most things in life, there is no right or wrong, clear cut answer. The title of this thread itself challenges one of the many assumptions that most traders hold.

 

Hopefully, we haven’t influenced anyone to come to discount the close if it actually should be ‘meaningful’ in their world

 

If they are doing well, then I hope not too; but the "world" of many traders is a world that they might be okay with if it were 'shaken up' a bit. Just look at youtube videos of trading, and you will see what the average trader learns from. Realize that this is the food they are eating and the air they are breathing, and then it may not seem so bad to introduce some conflict into their minds, and jump start the engines of critical thought. My ideas are no better than anyone else's. But when we all exchange ideas in a relatively civil way, and when we stimulate each other's thought process, then we have accomplished the purpose of coming together in a forum format to begin with.

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..... to introduce some conflict into their minds, and jump start the engines of critical thought. My ideas are no better than anyone else's. But when we all exchange ideas in a relatively civil way, and when we stimulate each other's thought process, then we have accomplished the purpose of coming together in a forum format to begin with.

 

on this vein, if you dont think the close has meaning then what does? (system specific for Zdo)

or is the point as others have touched on, the close of a 5 min, v 6 min v 241 tick bar is largely irrelevant, its just a means of triggering a trade based on taking the snapshot at that timeframe?

 

plus, the meaning part can simply be that it forms a part of a more complex system, it is merely the ignition to start an engine, so in terms of being system specific, it is crucial however its meaning by itself is only a minute part of the overall system - so maybe it is more a question of how meaningful is the close of a bar to your system/method?

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I'm curious what math you are using to arrive at this self-limiting conclusion?

The math of reality.

 

Knock 'em dead kiddo. Own the world when you are done.

 

In the meantime google terms like: probabilty theory, bell curve, statistical analysis etc.

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... Just look at youtube videos of trading, and you will see what the average trader learns from. Realize that this is the food they are eating and the air they are breathing, and then it may not seem so bad to introduce some conflict into their minds, and jump start the engines of critical thought...

 

Similarly, I cringe when people say" google it" to find an answer, as if the right answers are just a few keystrokes away. There are certainly answers, but they are not right by virtue of the fact that they have been put on a website. Most people will accept an answer as truth when they read or see threads that have similar or consistent answers. Research takes patience but it has turned into an .A.D.D. event

 

We only wish it was so easy.

 

Just a thought

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I'm not saying they can't be high or "too high". I'm saying they can't both be high within the same strat. It is an either or situation.

 

High win/loss ratio with small win amounts or Low win/loss ratio with high win amounts.

That is just how math works whether it is trading or sports or music or .......

...............................................................................................................................

(stupid comment (mine) EDIT

Edited by mitsubishi

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or is the point as others have touched on, the close of a 5 min, v 6 min v 241 tick bar is largely irrelevant, its just a means of triggering a trade based on taking the snapshot at that timeframe?

 

It's the "triggering a trade" part that mostly concerns me. I've had conversations with traders who were looking to enter a trade, and heard them practically praying that the 5 or 3 minute bar would close at the price they wanted, so their R:R would be better -- in other words, they were looking to buy, but per their "rules" they could not enter before the close of the bar, and they were hoping that it wouldn't go up until the bar closed, so that they could get in, and so that the bar would be smaller, because they would place their stop on the other side of the bar.

 

Many times we will wait to see if the market will support a price before buying before blindly jumping in, allowing others to engage in price discovery first so that we can piggyback. We can either wait a certain amount of time, until a certain number of shares or contracts have traded, or use some other criteria, to have a greater degree of confidence that we are with the side of the market that is stronger. But why should how long we wait, be it time, or activity, be predetermined by a bar periodicity? Why not say "I will buy if it stays above X for Y minutes," rather than the trigger always happening or not happening at 1:15, 1:30, and every other 15 minute interval, for example? What if the price trades that you want at 1:14 -- is 1 minute really enough to verify for you? Or what if it trades at 1:16? You then have to wait 14 minutes?

 

I've attached 5 minute charts of ES for today, each starting at one minute offsets from each other. The beauty is that the market's intention and direction is very clear--up. Do you need to see where each bar opens and closes? The range of price movement continues up.

 

What does each closing price of the bar, or opening price of the bar, tell you that you cannot see without them? Look at the other two charts. One is a 5 minute, the other is volume based for smoothness, but neither shows the open or close. When I look at these, my eye is drawn to the direction of the market, and particular areas. On the other charts, you see red and green (again, based on open/close), bodies and wicks, and more data to interpret. I might add, data that is NOT generated by the market, but imposed by the structure shown. We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

00.png.b46b625cc925367d5bd86b52a0c85a63.png

01.png.e7eda62bed27166f1761d415ed4080dc.png

02.png.15211758f4a92fb628549bc4a3810289.png

03.png.50a31907fc234f6e9f988cc21a6c4339.png

04.png.80d2dbecef1a18a3fa4175b177d46f83.png

noclose.png.c9dfae8490ff1b59f64583a9bcbd4b45.png

noclosevol.png.931bbb6f4f13d40bf4585e4acd7796ae.png

Edited by joshdance

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It's the "triggering a trade" part that mostly concerns me. I've had conversations with traders who were looking to enter a trade, and heard them practically praying that the 5 or 3 minute bar would close at the price they wanted, so their R:R would be better -- in other words, they were looking to buy, but per their "rules" they could not enter before the close of the bar, and they were hoping that it wouldn't go up until the bar closed, so that they could get in, and so that the bar would be smaller, because they would place their stop on the other side of the bar.

 

Many times we will wait to see if the market will support a price before buying before blindly jumping in, allowing others to engage in price discovery first so that we can piggyback. We can either wait a certain amount of time, until a certain number of shares or contracts have traded, or use some other criteria, to have a greater degree of confidence that we are with the side of the market that is stronger. But why should how long we wait, be it time, or activity, be predetermined by a bar periodicity? Why not say "I will buy if it stays above X for Y minutes," rather than the trigger always happening or not happening at 1:15, 1:30, and every other 15 minute interval, for example? What if the price trades that you want at 1:14 -- is 1 minute really enough to verify for you? Or what if it trades at 1:16? You then have to wait 14 minutes?

 

I've attached 5 minute charts of ES for today, each starting at one minute offsets from each other. The beauty is that the market's intention and direction is very clear--up. Do you need to see where each bar opens and closes? The range of price movement continues up.

 

What does each closing price of the bar, or opening price of the bar, tell you that you cannot see without them? Look at the other two charts. One is a 5 minute, the other is volume based for smoothness, but neither shows the open or close. When I look at these, my eye is drawn to the direction of the market, and particular areas. On the other charts, you see red and green (again, based on open/close), bodies and wicks, and more data to interpret. I might add, data that is NOT generated by the market, but imposed by the structure shown. We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

 

That pretty much sums it up.I used that phrase a couple of days ago on another thread.When i first started trading i realised (for me) that unless you have an unfair advantage in terms of insider knowledge and the ability to move a market,then the quickest route to succeed might be to impose a model on what to the beginner seems random.Somehow during this process the models that got "imposed" became progressively better as the learning curve grew.But since it is all, in the end just numbers,lot's of things can work,even if the theory behind them is flawed.

Anyone who has a deeply flawed theory that is making a lot of money isn't going to change their view based on threads like these.

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It's the "triggering a trade" part that mostly concerns me. I've had conversations with traders who were looking to enter a trade, and heard them practically praying that the 5 or 3 minute bar would close at the price they wanted, so their R:R would be better -- in other words, they were looking to buy, but per their "rules" they could not enter before the close of the bar, and they were hoping that it wouldn't go up until the bar closed, so that they could get in, and so that the bar would be smaller, because they would place their stop on the other side of the bar.

 

............

What does each closing price of the bar, or opening price of the bar, tell you that you cannot see without them? ........

We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

 

absolutely - if you are a trader waiting in hope then you have other issues. You do need the context and the trigger be it a 5 min, 1 min, 30 min is a RELATIVE measure. Your context in terms of something is going up has to be based on what you are looking at. Trying to tell the trend of a daily chart by looking at the 5 min is next to impossible, but using a 5min chart to try and time daily entries makes sense......and its in the timing that makes the difference, as this can be linked to how much you want to stop yourself out for.

 

eg; do you want to take a $1000 risk once, or ten trades at $100 risk to try and achieve the same result. (now while the brokers may want you to take the 10x) I would rather take more trades with less loss.

 

So thinking something is going up and just buying might work, trying to improve the timing should help, the key will be in the trade management afterward - ie; if you are right, how long you run it for v the losses, and how small your losses are relative to how long you expect to be able to run it for......similar themes arise - cut losses, run profits - no matter the time frame, or the trigger.

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We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

 

Spot on! Not the entry is important but the direction.

 

I shifted to volume and tick based charts - and it's working for me. As long as you are using a chart you need to deal with closes. In your case you don't display them but they are there.

 

The bar close is what it is - a dead sentence. Now that the bar is done and over we can assess it's life - high, low, volume, speed of formation (for tick and volume charts) and, yes, if this helps you make right decisions - bar open and close.

 

I appreciate this thread because many gurus out there put too much importance on candle types and bodies and wicks... At best you can break even without having the bigger picture and the direction in mind.

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I'm not saying they can't be high or "too high". I'm saying they can't both be high within the same strat. It is an either or situation.

 

High win/loss ratio with small win amounts or Low win/loss ratio with high win amounts.

That is just how math works whether it is trading or sports or music or .......

 

ST,

 

again what do you consider "high".

 

Since math is involved we need to deal with numbers to asses your statement.

50% win probability and 1:1 win/loss ratio will give you a flat curve.

 

At what point for you see these two (yes, both of them) become too "high" mathematically?

60% and 2:1? Or 90% and 5:1? Or in between?

 

Thanks!

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ST,

 

again what do you consider "high".

 

Since math is involved we need to deal with numbers to asses your statement.

50% win probability and 1:1 win/loss ratio will give you a flat curve.

 

At what point for you see these two (yes, both of them) become too "high" mathematically?

60% and 2:1? Or 90% and 5:1? Or in between?

 

Thanks!

At the risk of repeating myself - over and over. :doh:

 

No overall win rate (other than can't go over 100%) or winning individual trade is too high(depending on how long trade is held).

 

It is the combination. Repeat combination of the two.

 

High win rate with high winners.

 

Horse racing like trading is another form of gambling. Life is a gamble. Everything is so don't misunderstand my use of the word gamble. Doesn't bother me in the least.

 

At the track you can bet on the favorite or on the long shot. Favorites win more often but pay out less, longshots rarely win but when they do they pay big.

 

Now why is that? Might it have something to do with the math involved, i.e. how much the track takes in and can afford to pay out but still make a profit? Hmmm.

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It is the combination. Repeat combination of the two.

 

High win rate with high winners.

 

 

With risk to bore my self - I am kindly asking for numbers, SunTrader. We can talk in general as much as we want about math and probabilities.

 

Fortunately, math uses numbers! Show me the numbers, please!

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With risk to bore my self - I am kindly asking for numbers, SunTrader. We can talk in general as much as we want about math and probabilities.

 

Fortunately, math uses numbers! Show me the numbers, please!

Start with 1+1 then and let me know when you are done.

 

Because I sure am.

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Start with 1+1 then and let me know when you are done.

 

Because I sure am.

 

 

You can expand on horse races all you can.

 

Until you don't pull out some numbers your talk is not about math and probabilities.

 

I hope you have someone to talk to because I am done will taking a condescending attitude.

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It is really Nice thing to share with you..i just read the opinions and eagerly want to share mine.First of all i believe that closing is absolutely effective on long term analysis. i am using line charts for trading and all we know that line charts are totally based on closings. As far as my observation i believe that one level is break when it close below or above the level. beauty of line chart is that there is no shadows. so if i need to open or close a position than i will wait for various closings.if a level breaks in 30 M and 1H chart respectively it will indicate me that now there is more chances to break that level in 4H chart and 1Day chart which clear my mind to sit on a long or short direction.if it resist some levels i will think about to stand a side.

So as far as my observation i believe that close of a Bar or Candle is not meaningless.

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The only close that has a higher relative importance is the close of a day.

Because it forces those working on very small time Horizons to close positions.

 

Multiples of this Day .. week month YEAR will have also a (less) relative importance.

Divisions will have even less relative importance ( but yes, some )

 

Still all these even are of only relative importance.

 

What has an absolute importance.. IS not the close of a time frame.

 

But the end of a Buying or Selling wave..

 

Something that is very educative is to draw a 1 box reversal P&F chart.

 

2x 5x or 10x the bid/ask spread ( depending on the price ) . make sure you use the course of trades ( they are the absolute reality ) and not any H/L of a time framed bar.

 

Then look at what you have drawn

Ask what is it that makes the chart change columns ?

 

It is not any time frame or the close of any time frame. it is when buyers and sellers become exhausted .

 

Those tops and bottoms of the alternating columns.

Have an Absolute Reality. They have Absolute Position in Space and Time.

 

Just like looking at a Mountain from varying distances.

 

Its top is THE TOP etc

 

Changing the BOX size is not changing time frame it is just changing the distance you are viewing the absolute reality FROM.

 

Motorway

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The only close that has a higher relative importance is the close of a day...........

 

What has an absolute importance.. IS not the close of a time frame.

 

But the end of a Buying or Selling wave..

 

Finding tops and bottoms definitely is more important but it wasn't the question.

 

In any case P&F is good in hindsight.

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As always, this is solely my opinion as there is little "truth" in the markets but rather we merely have opinions and our own view of things.

 

Bar closes are not "important" in the sense that they mean anything significant to any significant number of people.

 

The close of a bar is a snapshot of a price traded in the flow of market activity.

 

Is the close of a bar truly meaningless? Let's have a look...

 

1. There is little truth in the markets. If this is a true statement, then the only truths are price, and more importantly, change in price. So far, so good.

 

2. Bar closes are not important to any significant number of people (variable time frame distortion, etc, muddles the picture, ...) I'm not so sure that this is a true statement. A more accurate statement might be "no single time frame's close (or range bar, or tick bar, etc) is more significant than any other time frame's close."

 

3. The close of a bar is a snapshot of price traded in the flow of market activity. So very true.

 

And at some point, since we are taking measurements of the flow of market activity, we are going to have to choose a price somewhere in the price bar to make our trading decision. If we are going to "measure" price action, we are going to have to pick some point and call it personally significant, or we'd never enter the market!

 

And if we are using price bars, what are we going to call "significant" if not the open, or the close, or the high, or the low, or all of the above? The only wrong answer is "none of the above."

 

So JD's title is relative. One man's meaningless is another man's bread and butter...

 

 

Luv,

Phantom

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1. There is little truth in the markets. If this is a true statement, then the only truths are price, and more importantly, change in price. So far, so good.

 

Actually you lost me here phantom -- I don't see how price can be "true" or "false."

 

A more accurate statement might be "no single time frame's close (or range bar, or tick bar, etc) is more significant than any other time frame's close."

 

Possibly, but after further thinking, if we measure significance by how many traders (or the potential trading volume of such traders) view a specific time frame, then perhaps we could say that one is more significant than another. If 50% of all market participants watched exactly the same chart, then it would be more significant than any other, assuming that those who watched it used its bar closes in making trading decisions.

 

we are going to have to choose a price somewhere in the price bar to make our trading decision.

 

Let me fix that: "we are going to have to make a decision, and are going to have to enter the market at some price." For example, those who do not trade with bars, and who have no concept of a "bar," do not need such a bar to make a choice on when to enter the market. They must, however, enter at some price, of course. This goes along with the intent of this thread.

 

So JD's title is relative. One man's meaningless is another man's bread and butter...

 

Agree, and thank you for your contributions and opinions, they are appreciated and valued!

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The only close that has a higher relative importance is the close of a day.

Because it forces those working on very small time Horizons to close positions.

 

Bingo.

 

But the end of a Buying or Selling wave..

 

Something that is very educative is to draw a 1 box reversal P&F chart.

 

2x 5x or 10x the bid/ask spread ( depending on the price ) . make sure you use the course of trades ( they are the absolute reality ) and not any H/L of a time framed bar.

 

I have never gotten into P&F charts but am going to use this an example to learn some new things. I have two settings: a box size and reversal size. For the ES, what settings should I use to start with in my quest here motorway? Sorry, I'm just not familiar with the terminology of what "1 box reversal" is.

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Try box size .5 and reversal size 1

 

As alternate ( depending on your software )

 

You could try BOX size .25 and reversal 2

 

 

Try also Box Size 1 X Reversal 1 (alternate Box size .5 X Reversal 2 )

 

Should give you nice charts.

 

.25 being the min increment on the instrument.

 

Motorway

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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 
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    • 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! 😁
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