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Parker

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  1. Hi Jeremy, Since the last decade, several digital currencies have come up, making the fate of FIAT currencies uncertain. While fiat currencies are still dominant in the real world, cryptocurrencies are picking up pace in the traditional business world, showing signs that perhaps, they might take over someday. But will they? Unlike FIAT currencies, cryptocurrency is decentralized and unregulated, hence not easy to manipulate or regulate. With cryptocurrency, there’s no need for intermediaries in everyday transactions, so businesses and consumers can cut huge costs. While using a complex code system to protect the transfer of sensitive data, digital currencies are more secure than traditional notes that are easy to counterfeit. While the world would surely benefit from a cryptocurrency-dominant era, government acceptance, global adoption, massive improvement in cybersecurity technology, among other things, will have to happen before cryptocurrency can be adopted. If countries like China, who have already shown interest in using cryptocurrency in the future, become successful in replacing FIAT currencies, perhaps it might encourage other nations to take a similar step. Even so, it will be difficult to convince governments to abandon the traditional currencies that they can fully control. Therefore, for now, FIAT currencies will remain dominant, at least until when the world would be fully sold out on an alternative.
  2. Hi Sophia, A standard Contract for Difference, or CFD, automatically becomes terminated on a predetermined date. This process is referred to as the CFD expiry date. However, a CFD may contain a rollover option. This option lets you extend your contract. In other words, a rolling daily CFD is an open-ended contract without an expiry date but rolled over automatically from a trading day to the next. This goes on until you terminate the contract. With this in context, and before you venture into opening a position in CFDs, ensure you determine whether the CFDs have expiry dates or whether they are rolling CFDs. Make this determination because, should your choice have an expiry date, its position will close on that date. Closure would be regardless of whether its underlying asset value has lost, or gained, in relation to its position. Such a situation would not arise if you opted for rolling CFDs.
  3. It has been a downward trend for the aviation industry since the Covid-19 outbreak. However, there now seems to be a turning point in sight with increased bookings reported amid the expected resumption of local and international freights. Can you explain how the airline industry will recover as this also affects their stocks?
  4. Hallo there, This is a great question as the housing sector is one of the most adversely affected by the Covid-19 pandemic. The Coronavirus has triggered similar macro environments to those that resulted in history’s worst housing bubble. That bubble arose from a huge money supply expansion, creating the infamous subprime mortgage crisis. This eventually led to the last Great Recession. Currently, no vaccine will protect the real estate commercial industry from the resounding impact of rising numbers of covid-19 cases in Britain and globally. Real estate shares have shown a marked downturn, which is similar to most of the other market sectors. Effects do not discriminate across jurisdictions, as FTSE news coverage on real estate shares has shown. If you feel you can’t handle the housing market which is heading further down, dapple in shorting real estate shares through a REIT itself or through an ETF. Numerous REITs pepper the market that cover hotels, residential properties, student housing, and industrial buildings. On the other hand, the coming weeks and months may actually turn out to be an excellent market for first time real estate share buyers. If you are new to the market or just starting out, share prices are currently low and falling. It creates a perfect opportunity to average down, in anticipation of a price shoot up, once the coronavirus crisis is over.
  5. Hi Grace, This is a good question about the performance of this social media giant's cryptocurrency. Below are the latest updates. In April 2020, Facebook Inc. and partners revealed the Libra cryptocurrency project would support several digital coin versions. Each digital coin would have backing from individual fiat currencies, such UK sterling. In March 2020, checkout.com, a Briton payments start-up, become a member of the Libra Association. This association represents a digital currency project brought together by Facebook Inc. in 2019. Checkout.com becomes the first online payment processor to join this alliance, after US giants, such as Stripe, Mastercard, and Visa pulled out. This pull out arose from regulatory concerns that came to a head in October 2019. During early 2020, several firms have expressed their willingness to back the Libra Crypto. They include cryptocurrency brokerage Tagomi, Heifer International, a non-profit organization, and e-commerce giant Shopify. On 15 May 2020, one of the world's largest institutional investors, Singapore's Temasek, threw their support behind Facebook Inc led Libra. This development could help in breathing new life into this project amid heavy fire from regulators. An important feature about Temasek's endorsement rests on the fact that it is a state-backed investment firm. This critical endorsement further comes after the Libra association lost several high-profile members due to concerns it would threaten security on global financial systems. These fears also include concern regarding money laundering and privacy.
  6. Hi Penninah, Controversy has stalked crypto since inception. Among controversial occurrences are numerous rags-to-riches stories and provision of opportunities for scammers to make millions from innocent investors and buyers. Unknowing rookies fall for mouthwatering deals that turn out to be nothing but rip-offs. Finally they lose their money and they have no one to hold accountable or follow up with. Read on to learn how this happens. Nature of Crypto scams Online criminals apply both old fashioned and the latest technological tactics in swindling targets. Schemes rest on digital currencies whose exchanges are online blockchain databases. Again, Crypto fraudsters depend on true and tried Ponzi schemes in using funds from new entrants in paying older investors. Sophisticated and highly automatized systems form the bases upon which crypto fraud takes place. These include automated systems beloved of people interested in cryptocurrencies, such as automated software interactions within Telegram. Furthermore, even in legitimate transactions, fraudsters have been known to manipulate prices within the marketplace. How to avoid getting scammed Scammers commonly buy huge amounts of new altcoins. An increase in market prices happens, leading to fear of missing out among everyone else. New investors start investing, prices go up, and scammers dispose of their stock, making huge profits. Learn to identify and avoid such pump and dump strategies through picking stable or popular cryptos, like Bitcoin. Cloud mining lets you lucratively mine cryptocurrencies without resorting to expensive hardware. Fraudulent cloud mining services, however, promise impossible returns and fail to mention stiff hidden fees. Practice vigilance while signing up on cloud mining server services. Malware creators have ventured into crypto spaces as well. Modern malware will target you the cryptocurrency user or investor. They will latch onto your online wallet account balance, drain it, and replace your real address with one by a scammer. Update your system firewall and antivirus to avoid such malware scammers. Visit trustworthy and secure platforms that do not demand downloads of suspicious attachments. Stick with recognized and reputed crypto exchanges only. To identify them, regularly browse genuine crypto forums while subscribing to RSS notifications you can authenticate.
  7. Parker

    How do I trade CFDs

    Hi Lindsay, The contract for difference -CFDs- trading represents you with an avenue to profit from international price movements. You have an opportunity to use your expertise in hypothesizing an increase or decrease in prices for fast-moving instruments within global financial markets. Defining CFD Trade A definition acts as an excellent starting point. Trading involves a contract for exchanging the difference in value for whichever underlying financial market instruments you target. However, you don’t own this instrument. Your profit or loss arises from how much your choice of instrument changes while the contract remains valid. Profiting from CFDs As a trader, your objective involves making a profit from CFDs. To achieve this, your proficiency must rest on accurately predicting which way an instrument’s price will head. If you predict an increase, you would place a ‘buy’ trade at the prevailing price. Subsequently, you would sell later once the price has increased. A wrong prediction in price changes means losing your initial investment and perhaps even more than your original deposit. Starting Off in Trading As a neophyte in this market, you must learn the ropes first and fast. The best way includes opening a free demo account with a proficient brokerage. Run such an account until you attain sufficient confidence and proficiency to trade in your own money. Demo accounts often don’t have time limits. Pick a market to trade on, select an instrument, or trade a particular market value entirely. Determine the number of CFDs to purchase or dispose and remember to include a stop-loss limit to diminish possible losses. Trading Tips Rapid fluctuations occur, making it critical to remain on your toes once you enter this market. Subscribe to international financing journals and forums to keep tabs on the market. Also, seek a traders’ guide and cultivate excellent relations with support departments.
  8. Hi Penninah, There is a very big number of ETFs. Below we discuss the top six so that you can make an informed decision when investing. Sector ETFs They allow you to invest in a particular market sector. With sector ETFs, you’re less likely to find large tracking errors from the underlying index, thanks to their high level of liquidity. One of the upsides of sector ETF is its pure-play exposure in an attractive industry. That is, when the sector you choose is doing very well, you can fully benefit in it since the poorer performing stocks won’t water down your returns. Dividend ETFs They aim to maximize returns from stocks that pay high dividends and may contain only the domestic stocks or be a global dividend ETF. With the emphasis on the less-risky bigger blue-chip firms and on companies that exhibit a strong history of dividend increase, they’re a perfect choice for the risk-averse stock investors looking for income. Though some dividend ETFs aim to maximize the current yield for maximum distribution of income, others emphasize the history of the stock's consistent dividend growth. Also, unlike most ETFs', their expense ratio is generally lower and has no minimum deposit requirements. Bond ETFs Bond ETFs allow investors to invest in the bond market and are traded throughout the day on a centralized exchange. Being passively managed and traded, it’s more liquid and transparent during times of stress, promoting market stability. They can be categorized into bond sector ETFs that focus on specific types of bonds such as corporate debt, or broad market ETFs that deal with an entire market. While dividends are treated as either income or capital gains during taxing, their tax efficiency doesn't count much since capital gains—unlike in the stock market—don’t play a big role in bond returns. Currency ETFs Like in commodity ETFs, currency ETFs allow you to profit on how other currencies values compare to the British Pound. Through managed portfolios, investors get structured investment exposure to the foreign exchange market. Since the currency market is influenced by the ever-fluctuating global economic conditions, political stabilities, and interest rates, currency ETFs often have a higher relative risk. With its foreign exchange market being the largest in the world, it attracts many investors who trade throughout the normal trading hours. Commodity ETFs They give exposure to the commodity market, targeting specific areas in the market. It’s worth noting that when you purchase a commodity ETF, you don't buy the commodity. That is, they consist of future derivatives that represent the corresponding amount of the commodity. Because they create their benchmark indexes, the broader commodity indexes tend to have tracking errors. Even so, they’re still very popular since investors don’t have to learn how to buy futures or other derivative products to get exposure to commodities. Inverse ETFs Inverse ETFs is formed by using various derivatives aimed at helping investors make profit through short selling when there’s a decline in the value of a broad market index or a group of securities. It’s not a long-term investment since the fund’s manager buys and sells the derivative contracts daily.
  9. Parker

    What is leverage in CFD

    Hi Lindsay, Leverage in CFD is the ability to use a deposit, referred to as a margin, to gain access to the total value of the trade. You only invest a small amount, and you have exposure to the market while your provider gives you with the rest. As a result, you can earn a higher yield on your equity. Correspondingly, the losses can be as high as the gains, so it depends on how the market goes. This is because the profits and losses are calculated according to the full contract value after closing the trade. Using leverage also helps you to go short. Going short is using leverage to speculate on how the markets are going up or falling and taking advantage appropriately. Similarly, leverage enables you to have free cash to invest elsewhere without having to put it all in CFDs.
  10. Hi Penninah, Even though a cryptocurrency is a digital currency, when it comes to taxation, it is treated as an asset. Cryptocurrencies attract a capital gains tax when disposed of. HMRC defines “disposal” as follows. Paying for goods and services using crypto assets Trading one type of crypto assets for another different one Gifting crypto assets to someone Disposing of crypto assets to get money Cryptocurrency gains are calculated using share pooling. This method calculates the average cost of all your current assets to determine the value of assets you are selling. The amount of tax you will pay is guided by your income tax bracket as well as the marginal rate of tax. However, you are exempted from capital gains tax for transactions below £11,700. Other kinds of cryptocurrency transactions include the following. When workers and freelancers are paid using cryptocurrency instead of cash. When miners are paid in cryptocurrencies after mining cryptocurrencies For these two transactions, you pay national insurance contributions and income tax. There is a bit of relieve in cryptocurrency taxes because you are not required to pay capital gains tax in the following instances. For charitable donations, unless when they sell the cryptocurrency more expensively than they bought it. When you purchase crypto. You should make sure to keep records of your cryptocurrency transactions. Similarly, indicate each source of your crypto assets for tax purposes. This will make it easy for you to verify the tax deducted.
  11. Hallo there, I would love to know more about inverse ETFs and if you would advise me to invest in them.
  12. Hi Jovan, I am sure you are not alone in this predicament. But you will not be in the dark anymore. Read on to get factual information to enable you join the world of cryptocurrencies. The following are the proven benefits of investing in crypto. Accessibility You don't need to open a bank account to trade cryptocurrencies. All you need to open is an exchange account online to enable you to store your cryptos in a digital wallet. All you need is a mobile phone with internet, and you can complete your transactions. Confidentiality Cryptocurrency is a transaction carried out between two people with no third parties like banks involved. This means no other person knows how much you are transacting or what you are purchasing or selling. Efficiency and speed As we have noted, trading cryptos is a private affair. Other than conducting your business privately, you also avoid costs associated with third parties. Overall, it becomes quicker and easier to transact. Simplified worldwide exchanges Cryptocurrencies do not incur transaction fees that international transactions attract. It is also a more straightforward exercise since there's no paperwork or third parties involved. Ability to trade 24/7 You can trade in cryptocurrencies any day and hour of the week. The only time you might not be able to trade is when there is downtime as the market takes in the infrastructure updates. Availability of margin trading Margin trading means you can get into trade positions with a value higher than the funds in your account. In cryptocurrency, it means the exchange loans you money to enable you to join positions with high values. High volatility Volatility is the rate at which prices decrease or increase in a given period of trading. Cryptocurrencies are highly volatile, which means the prices are continually moving, and the returns are high. However, the risk is also high, and you can incur losses.
  13. Parker

    What are ETF's?

    Hi John, ETF means Exchange Traded Fund, and they work by tracking the performance of a specific market or whole equity indices such as S$P Europe 350. As the name indicates, these are funds traded on the stock exchange the same way other stocks are traded. Being a fund means ETFs consist of either stocks, commodities, currencies, bonds, properties, or a combination of them all. Therefore, ETFs give you access to diversified asset classes all at the same time. ETFs earn you returns depending on the asset classes that make it up. Depending on the type of fund, you can earn capital gains or interest income money, which your ETF provider will send you. Before investing in ETFs, carefully read and understand its full prospectus to understand its holdings, risks, investing strategies, and its prior performance.
  14. Hi Penninah, You are on the right track since the most important thing after settling on an investment option is to find out the risks that come with it. Let's dive into the most common risks of ETFs. Taxation risk First, the taxation of an exchange trade investment keeps fluctuating, which can have negative effects. Additionally, the profit from ETFs attracts income tax instead of capital gains tax. Composition risk You can have two ETFs in the same sector and with the same names but with different holdings. This is usually the case if the construction of their indexes differs. As a result, these ETFs will have differing returns. Additional costs risk Apart from the standard costs like taxes and interest income, creation fees and capital gains, ETFs are also subject to other costs. These inexplicit costs include direct trading costs, sales charges, market impact costs and commissions. Tracking error risk This error occurs when a particular ETF fails to match its index. This can be caused by either high fees, the replication method applied, dividend timing or an unused cash balance. A tracking error is an important indicator of how the ETF performs. The risk of closure Due to diminishing assets and a lack of interest by investors, many ETFs get liquidated or closed. on top of the closure, costs associated with the closure are also passed on to the investor Risks in the market ETFs are affected by market forces, just like other investments. Counterparty risk The majority of ETFs carry out swaps with a counterparty and lending out of securities and are therefore prone to counterparty risk. This means you stand to lose should the counterparty fail to honour their part of the bargain.
  15. Hi Penninah, Confirmations refer to the number of blocks that are added to the blockchain after you make a transaction. For a transaction to have been sent or received successfully, six confirmations are required. This might vary depending on the amount you are transacting, whereby a big amount needs more confirmations and a lesser amount lesser confirmations. Each confirmation takes around ten minutes which means six confirmations will take an hour. The more they are,the harder it is to tamper with the blockchain. The notifications you might receive after carrying out a transaction are as follows. Failed: which means a mistake occurred in the process. Expired notification: meaning the time stipulated for you to pay has elapsed. Pending: signifies the number of required confirmations are not yet achieved. Paid: this means the payment is successfully made and has reached your wallet.
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