Sophia

Investing is a risky and challenging undertaking, no matter which investment vehicle you choose. The best way to cushion yourself against risks is by diversifying your portfolio. Additionally, diversification will give you higher returns from your investments. Proper diversification is crucial, both in terms of yields and peace of mind. Tips on diversifying your portfolio: Diversify early on Instead of reacting to market behavior and rushing to invest in panic mode, make plans to invest when there is no rush. This way, you can think rationally and make the right choices. Do not hold too many investments Over diversification leads to a decrease in benefits once you have more than 20 securities. This is because you will have your money in many small investments. Additionally, the costs involved in investing in many diverse securities are high, given the carrying and transaction costs that come with each investment you choose. You don't have to go big all at once. It would be best if you increase your investments regularly in small doses. Using this strategy, you'll buy more shares when prices are low and fewer when prices are high. This is in contrast to investing heavily all at once when prices are high. Regularly re-balance Re-balancing is crucial to maintain an ideal portfolio. This also ensures you have a portfolio that reflects the target mix you initially had in mind. This could mean selling some of the assets you hold to buy more of others that work towards meeting your original goal. You should keep learning what is happening in the market to adjust your investments accordingly. In conclusion, portfolio diversification is something you can learn with time. Just keep the above tips in mind so that diversification works to mitigate your losses and not to leave you with poor investment choices.

Hi Philip, The day to day GBP/USD chart reveals this pair has been trading within a short-range this week. It shows the 50-day moving average resisting any urges to move higher. In the background, the United Kingdom and European Union trade negotiations go for a final round of talks in the coming week. In the coming round of talks, little progress is expected to come from either side. There are three main intractable issues holding up their progress. First, the two cannot seem to agree on what future role the European Court of Justice will hold. Another contentious issue is what each side considers to be a level playing field. Finally, the two sides cannot agree on fisheries. Each side takes a fixed position that the other should tone down on their stance. With this game of you first in play, a situation may arise where the European Union will bid the United Kingdom goodbye without a functioning trade agreement. None of the parties wishes for this to happen. UK Prime Minister Boris Johnson will apparently attend the talks next week. His attendance is expected to help achieve a breakthrough. Nevertheless, both sides appear to have already dug their heels in, and as such, progress expectations are low. The UK/EU trade stalemate creating a backdrop, Sterling Pound, will have a hard time pushing higher. This means short-term gains will remain mostly on hold. Led in part by middle month re-balancing, a short-term sequence of higher lows keeps in place. This will likely favor the Pound Sterling against the US dollar. On the other hand, with a 50% FIB retracement reading 1.2306 also coming into play, a further downside looks most likely in the coming week. To turn the sentiments positive, however, a close and break above 1.2362 needs to happen.

Hi Smith, The Director-General of the World Trade Organization on May 14th 2020 tendered his resignation effective August 31st 2020, one year before his term after holding the position for seven years. The organization will be turbulent as well as have significant adverse effects on world trade. The WTO role is to bring and maintain order in global trade relations safeguarding the rules, predictability and freedom of trade. Already the organization is grappling with unresolved disputes given they cannot give rulings since the United States immobilized the appeals body after blocking judges’ appointments for more than two years. As such, losing the director-general is a big blow because now more than ever, the broken global trading needs a leader to fix it. The following are some of the effects that will follow. • Lack of coordination among member countries The WTO predicts that international trade could decline by a third. The Covid-19 pandemic has affected global trade adversely. If it is to recover, cooperation is needed from all member countries. However, the chief’s resignation now complicates this endeavour. • Abuse of sanctions With no head, member countries will be a law unto themselves and disregard sanctions already in place. This will limit imports and affect global trade among member countries. • Reduced job creation When global trade is affected, enterprises will employ lesser staff to make goods and services to be exported. • Unsettled disputes will remain just that On top of current disputes staying unresolved for long, there will also be the headache to find a replacement in the present divided mode. In conclusion, to salvage global trade, the WTO needs to speak in one voice and find a worthy replacement. This will facilitate solving of pending issues and coming up with solutions to mitigate the world trade against the Covid-19 pandemic.

Hi Jeremy, This is a great question about fake crypto trading volumes. According to research, as much as 99% of trading crypto volume is fake. This is a phony trading volume given by brokerages for their selfish reasons. As a result, this becomes a problem for people wanting to know the popular cryptocurrencies and come up with a trading strategy using data given in the market. Fake volume means the trade actually took place, but the traders were only engaging in exchanges trading all by himself to make it look like there’s liquidity. Why the need for fake trading volumes? One of the top reasons why fake volumes are created is to attract people to that particular crypto because everyone wants to trade on big liquid exchanges, and the fake volumes give this illusion. Traders avoid small illiquid exchanges because a higher trading volume is ideal for buying and selling digital assets. A low trading volume means low liquidity, which translates into difficulties when a trader wants to buy or sell his digital assets. The need for increased media attention is another reason fake volumes are created. This is because fake volumes help the brokerages rank highest on CoinMarketCap’s Exchange list, making them appear as authority platforms. This attracts media attention just like popular exchanges and helps them gain new users. These new entrants bring in high listing fees from cryptos wanting to get listed on the exchange’s platform. Another reason for fake volumes is to avoid closure given declining trade volumes get delisted by crypto exchanges. Fake volumes are also used to hide fake projects. When you are investing in any blockchain, it’s crucial to do a background check just as you would do in venture capital. Do not be fooled or pulled in by the momentary hype surrounding its token.

Hi Cedric, A Forex demo account is your ticket to simulating a live trading and transaction environment. This account allows you to do so without using a single cent of your money. Every FX trader needs to use a Forex demo as their first FX account in order to obtain a feel of what currency trading entails. A demo will also induct you into the world of your broker and their trading platform. Should you feel a particular broker does not suit your style, opt out any time, and seek another without any losses. A demo account will let you identify your strengths as a trader as well as your weaknesses long before you venture into real trading. Once you are comfortable in what you do best, you can leverage this once you start dappling in the real market. Conversely, by identifying your weakness, you can fix them without losing your shirt in the process. FX trading is a very risky business. A demo account lets you identify your risk appetite prior to actual trading. Besides, you can keep transacting until you are fully ready to enter the real world of FX trading.

Hi Hernandez, Short-term traders often aim for small to moderate gains, taking positions that can last from seconds to several days. They focus on price action, not the long-term fundamentals of an asset. If you want to trade short term, here are four signals to guide you. Trend/Break out trading Here, you enter a trade very early as you wait for the market to break out of a range. That way, you can determine the point where the market sentiment changes, which could signal volatility and the beginning of a new trend. You then ride the new trend to the end. Reversal trading In reverse trading, you identify when the current trend will begin changing direction and take advantage of the immediate price reversal. Whether downtrend or uptrend, a short-term trader can make quick profits out of it. Momentum trading A trader can opt to buy or sell assets depending on the strength of the recent upward or downward trend. They rely on the fact that a trend should continue for sometimes if the force behind it is strong enough. That is, if the price starts falling, it will keep falling as more people short-sells, further sending the prices even lower. Support and Resistance/Range trading In this method, you trade within the lines of support and resistance. For instance, you can trade long after a resistance breakout then put a stop order just below the resistance level.

Hi there, I am a new investor and interested in Forex. Are there any scams in Forex I should be wary of, or is it a secure trade?

Hello Philip Amidst a broadening USD selloff, EUR/USD tried and failed in rising above the 1.1000 position during the past few days. Instead, the pair has reverted towards the center of 1.0800 to 1.1200 range it has held in the period since last summer. Some excitement resting on the EUR being at a turning point has triggered some spot price action. Again, pressure for EUR/USD downside shield on the options market has receded, particularly in the last three-month period. In the near term, two main drivers are likely to provide enhanced EUR support. First has been a French and German proposal for the creation of an EU Recovery Fund. Second, a rapidly rising sentiment within the Euro-Zone economy has it that the worst of the pandemic is over. Most analysts have yet to be convinced the EUR is about to strengthen at sustainable levels, vide the USD as it did circa 2017. Although analysts agree that major downside risks for the EUR have declined, an upside capacity for EUR/USD needs to remain limited. The top range in May needs to rest within the 1.0800 to 1.1200 range. So, until May 31, downside Euro risks have declined, although upside potential has limitations.

Hi there, With both China and the US being major players in world economy,how do you think their trade war is affecting global markets?

Hi Lindsay, The homebuilder ETFs were doing pretty well, but with widespread lockdown worldwide, thanks to corona virus, the housing market is struggling. While the housing sector hasn’t been hit as hard as other industries such as airlines, it is feeling the impacts. The loss of employment in different industries means few people can afford to buy homes right now. Those who can afford are in fear, and buying a house right now is probably the last thing in their mind. The supply of building material and provision of labour are affected hence the homebuilders can’t build fast enough. Even though the industry seems to be resilient, the less-capitalized homebuilders might not withstand the weaker housing activities if the lockdown and economic slowdown prolong. This might force them to close down. However, most homebuilders are continuing to build, hoping for the market to improve once lockdown eases. If it happens so, then homebuilder ETFs can gradually gain their lost glory.

Hi there, The Bitcoin price has been dropping in the last couple of days. Is the price drop anything to worry about?

Hi Hernandez, In covered call ETFs, an investor gains profit by selling a call option on a particular asset on which he holds a long position. Covered call ETFs have been on the rise over the recent years. They have gained massive attraction from investors seeking to customize and diversify their portfolio quickly as well as traders targeting specific industries, sectors, or countries. The ability to target a specific sector means you don't have to stick with a broader market index when you can exploit better opportunities and more choices that your preferred sector offers. Since the buyer of your call option has to pay a certain premium before buying it and you keep that premium no matter what, you'll make more money if the asset increase in value. And in an event the asset decline in value, you will mitigate loss since the premium will be used to offset the losses. Considered a conservative investment approach, covered call EFTs are a great way of minimizing volatility and, at the same time, capturing some exposure to equity market gains. With the downsize protection they offer when the market declines, the ability they provide to invest in specific sectors, and their opportunity for portfolio diversification—covered call ETFs are, therefore, worth investing in

Hi there, I am new to investing and I am perplexed to learn that CFDs have an expiry date. Can someone please explain what this means?

Hi Sam, This is a great question since you need a broker to access the crypto market. Therefore, it's important to find the best cryptocurrency trader to help you facilitate the trade. Pepperstone Pepperstone is a popular online broker amongst crypto traders worldwide and offers trading assets such as Ethereum, Bitcoin Cash, Bitcoin, Dash, and Litecoin. Trading is available across all their trading platforms such as cTrader and MetaTrader 4 (MT4), allowing worldwide access to the crypto market. XM Group With millions of clients across 196 countries, it's one of the largest crypto trading brokers in the world. Here, traders can access some of the most popular cryptocurrencies (BCHUSD, BTCUSD, LTCUSD, ETHUSD, and XRPUSD), which are available 24 hours a day, five days a week, across their user-friendly platforms. AvaTrade This is a UK based award-winning cryptocurrency broker. It allows you a good selection of cryptocurrencies to trade through MetaTrader 4 (MT4) among other best online trading platforms. With just $100 deposit, you can begin trading crypto online while enjoying excellent customer service in 14 languages. eToro eToro has its own fully functional cryptocurrency wallet and offers physical cryptocurrency in its user-friendly copy trading platform. eToro is simply one of the best crypto brokers. Is it Better to Use a Crypto Exchange or a Broker that Allow You to Trade Crypto? Though average crypto traders commonly use the crypto exchange, it's less feasible for larger amounts, making higher volume traders prefer crypto brokers. Additionally, using brokers is a more convenient process, with a faster settlement period, simpler deposit process, friendlier charges, tighter spreads, and more robust security. Which should you use? Any. However, when larger trades are involved, perhaps you will benefit from the brokers' attractive transaction fees.