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Danitah J

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  1. Danitah J

    Risks of Day trading.

    Hi Eric, Day trading is the purchase and sale of the same securities within one single trading day. It is most common in stocks and foreign currencies. The practice however is highly risky especially for people who are still novices in the stock trading business. Some of the major risks associated with day trading may include; Unless you have sufficient knowledge, skills, and a working strategy, you stand a chance of making huge losses in day trading because of the complexities in the stock market, which can be uncertain and very unpredictable. Since the stock markets are often full of uncertainty, Day trading can be stressful because as a day trader, you will have to spend several hours during the day watching the charts and looking out for opportunities, which may or may not come. Day trading can turn into an unhealthy habit likable to gambling. Most people who day trade often lack the financial discipline to accept losses. Instead, they end up doubling or even tripling their trade sizes in an attempt to recover previous losses. This leaves them vulnerable to the total loss of their investment capital especially if they experience consecutive losses. Fear and greed are some of the major factors why day trading is risky. The habit of recovery lost trades leads to the bigger problem of over trading in stock with huge volumes that significantly increase your brokerages and taxes. Having a proper trading strategy and the financial discipline can significantly help reduce the levels of risks associated with day trading. A proper trading strategy will ensure that you accept and cut your losses in time when a trade fails. The other downside to day trading, which is another risk factor, is the problem of proportionate risk-reward potential. Day traders can easily be enticed by taking small profits and they end up continuing with trades even though they make more losses in return. There are several other reasons why day trading is risky. The best approach for those who want to attempt day training is to acquire as much knowledge and information as possible, develop a proper trading plan and stick to it and always making sure to put up stop losses for every trade attempted.
  2. Hi Eric, According to the regulations by the United States Securities and Exchange Commission, penny stocks are all shares that are traded below 5 dollars per share. Because of their low trading value, penny stocks are mostly associated with small companies and are traded infrequently. Because of the low trading value, penny stocks have relatively lower numbers of willing buyers in the market. Another defining characteristic is that most penny stocks trade via over the counter transactions whereby the trading transactions are conducted through an electronic over the counter bulletin board (OTCBB) or via privately owned pink slips. Also, since there is no trading floor for over the Counter transactions, the quotations for penny stocks trades are all conducted electronically. The lack of ready willing buyers makes trading in penny stocks riskier because as an investor, you may buy penny stocks but due to their price volatility, you may end up losing all your investment due to lack of willing buyers. The volatility of penny stocks gives them a higher potential for rewards but also an equally higher potential for loss of your investment. As a beginner, trading in penny stocks may not be advisable. They are mostly suitable for established investors who have developed significantly higher risk tolerance levels. If you must trade in penny stocks, it is recommended that you consider taking the following particular precautions. One, determine and set your stop-loss order so that you always have a limit at which you sell your security in case the market moves in the direction opposite to what you had intended when making the initial trade. With this understanding in mind, any trader who wishes to take up penny stocks must have and set realistic expectations with a clear understanding that this kind of stock is significantly high-risk investments.
  3. Hi Milan, A paper wallet is a detached mechanism for keeping Bitcoins. Bitcoin is a virtual currency; therefore, you cannot physically represent it. This also applies to other cryptocurrencies. The wallets that store these currencies are in the form of software applications. These programs help in updating the blockchain ledger once a transaction has taken place. Unlike the hot wallets, paper wallets function away from the internet. Also, they are not the actual storage for bitcoin. Paper wallet refers to the method that a crypto holder will use to access their cryptocurrencies. These paper wallets were well known in the juvenility of Bitcoins. Recently, many people are looking at alternative methods for storing their cryptocurrencies. A paper wallet has the public and private keys, just like the hot and cold wallets. If you want to hold your currencies in a paper wallet, you will print the private key on a piece of paper. When establishing a paper wallet, you should check a wallet generator platform where your keys will be created and their relevant QR codes. It is good to disconnect your internet when generating this key and delete your internet history after creating these keys. This will save you from cybercrimes such as hacking. This method is practicable for most users; however, you should try your best and check for any malpractices before you generate your keys. After printing out your codes, you should safely keep that paper. In the past years, paper wallets were the safest ways to store Bitcoins. If you set certain precautions and construct your paper wallet well, it will be hard for your wallet to be hacked. It is one of the safest ways you can store your bitcoins away from cyber-attacks and malware practices. In a paper wallet, you print and store your bitcoins offline. It would be best if you remember that you are not storing and publishing the real bitcoin. Instead, it is the information in the bitcoin wallet that you will be generating and storing. The security offered here is, however, not a sure guarantee that your coin is safe. If a hacker knows where your paper wallet is located, they can access and steal your bitcoin. Others may find essential information, which will consequently lead to you losing your funds.
  4. Hi Milan, A hot wallet will allow you to transact your cryptocurrency coins. In cryptocurrencies, you do not have any physical wallet to store your coins, utterly different in traditional currencies. Crypto wallets are of different types, and apart from storing the coins, they also offer them protection. The most popular wallets where you can store your funds are the hot and the cold wallets. Unlike hot wallets where you operate them plugged into the internet, on cold wallets, you store your holdings offline. You may have many different wallets for storing your cryptocurrencies, and you always have a reason why you store your coins either online or offline. One significant advantage you get for storing your coins in a hot wallet is the ability to monitor your transactions. If you want to purchase things using your cryptocurrency coins, you may use a hot wallet since you will quickly transfer your holdings across the internet. Cybercrimes are the drawbacks of using a hot wallet. Since you carry out transactions while connected to the internet, there is a high possibility that hackers will get into your wallet and steal your funds. This should not keep you away from storing your funds in a hot wallet. There are several operations you can utilize to ensure sufficient protection of your funds. After mining your cryptocurrency, you have to decide where you will store your tokens. If you choose to store them in a hot wallet, it will help record the transactions that occur on the blockchain ledger and assist in making any changes required. In a hot wallet, you will also have the private and public keys. The public key, which is similar to the account username, will identify the wallet so that you can retrieve the tokens without disclosing your identity. The private key is like a PIN, which will enable you to access your wallets and carry out various activities such as transacting the coins. Without these keys, your wallet is impractical. You should keep only a few tokens in the hot wallet so that you will not incur significant losses in case of an attack.
  5. Hi Milan, If you want to diversify your portfolio, then, exchange-traded funds are the go-to option. ETFs are almost similar to mutual funds; they bring assets together to come up with a particular objective that aims at tracking a given index. However, ETF trade in a stock exchange, just like stocks. You need not have any minimum balance to diversify your portfolio in ETFs like that required in mutual funds. The drawback in ETFs is that, for any share trade you make, you need to pay a commission for it. On the bright side, however, you can invest in commission-free ETFs that platforms such as Vanguard and Fidelity have made available. Commission-free ETFs are best if you are not a frequent trader. These companies offer commission-free ETFs if they own the platform in which the trade is made. For example, if you own an account with a vanguard, you will not pay transaction fees while placing a deal. It would help if you made your ETFs available on a minimum of two platforms for you not to pay commissions for your trades. The main objective of an ETF is to track an index. Before you start dealing in any ETFs, you should know the asset allocation strategy that best suits you and the one you are willing to pursue. Commission-free ETFs may be grouped into large-cap, mid-cap, and small-cap stock ETFs. In large-cap stock-ETFs, you may choose to have the are Core S&P 500 ETF (IVV). IVV follows the S&P 500 as its benchmark. The S&P 500 is among the most popular and tracked index. The Vanguard Growth ETF (VUG) is also a sizeable large-cap stock ETF. It pursues the MSCI US index. You can also deal with the Vanguard Value ETF. In the mid-cap stock ETFs, You can invest in the Vanguard Mid-Cap, which usually tracks the CRSP US Mid Cap index. You can also deal with the Vanguard Mid-Cap Growth ETF (VOT) or the Vanguard Mid-Cap Value ETF. In small-cap stock ETF, you can deal with the Vanguard Small-Cap ETF, which tracks the CRSP US Small Cap index. It determines how small companies perform in the US equity market. You can also invest in vanguard small-cap value ETF. It tracks the performance of the MSCI US low cap Value Index, whose intention is to evaluate how small companies that deal with equity in the US perform. There are many other commission-free ETFs that you can invest in. The best companies you can set up an account with for commission-free ETFs are the J.P Morgan, E*TRADE, Webull, vanguard. Fidelity, and many more. These firms will also offer you with a wide variety of ETFs that will diversify your portfolio.
  6. Danitah J

    What is a water ETF?

    Hi Milan, Water is best known as a source of life; however, you can use it to diversify your portfolio. Water is a commodity ETF, just the same way you have gold and energy ETFs. Water is becoming scarce recently, and this scarcity is what is making it a good investment option. Water covers most parts of the earth's surface; however, a good fraction of it is usually salty water. However, this water is unhealthy for human use and various social activities such as crop irrigation and industrial use. The growth of industries and increased agricultural activities have a significant impact on water shortages across the world. Various indexes aim at tracking multiple investment opportunities that arise due to water shortages. One such index is the Dow Jones US Water Index. Typically, it is a barometer that consists of many companies globally linked with the water business. Another high index is the ISE-B&S water index. It constitutes water distribution, filtration, and other firms that focus on dealing with solutions that are linked to water. The S&P Global Water Index checks the utilities, materials, and infrastructure related to water while Bloomberg and the MSCI water indexes look at the water sectors internationally. Finding information about these indexes can, however, be challenging. There are many water ETFs in the stock market. Water ETFs may focus on particular countries, while others trade may concentrate on all exchanges. A good example is the PowerShares portfolio, which focuses specifically on water companies based in America. There is a high demand for water all over the world because water is essential for human survival. Therefore if you invest in water ETFs, you are best assured to make significant gains. You may focus on water pieces of equipment, the distribution of water, or any other water-related products that may bring you income. However, like any additional exchange-traded funds, water ETFs come with several risks that you need to evaluate before you invest.
  7. Hi Earnest, If you are a prospective ETF investor or have been in this field for quite some time, you may be familiar with commission-free ETF. Investing in commission-free ETF is attractive since you are thinking of a deal where you will not pay any commissions. However, lovely as it may sound; investing in these ETF is not a guarantee that you will not incur any costs. Nonetheless, it means that the prices you will pay are slightly less than when you would have paid a commission fee. Any ETF you choose to invest will come with commission fees as well as some fund expenses. Therefore, in commission-free ETF, you can be sure of incurring these funds costs and any other costs associated with ETF other than the commission. Commission-free ETF are funds that are not accompanied by any trading costs. Exchange-traded funds are traded on an exchange market similar to where stocks sell though they have the same elements as mutual funds. When you trade any instrument on an exchange, you have to suffer commission costs, also known as the transaction fees. In exchange-traded funds, the commissions you pay will be between $10 to $20, depending on the brokerage firm you are dealing with. Any time you want to trade your shares, you will pay the commission. The amount you spend on the commission may vary depending on your frequency of trading. The commissions are costly if you frequently trade your shares. On the other hand, buying commission-free ETF will significantly save your money more, so if you trade your ETF shares monthly. A good number of brokerage firms will offer you the commission-free ETF. The firm may have several propriety funds set aside, which they offer without commission. The firm will, however, charge a commission for funds that are not part of these funds. An excellent example, in this case, is Vanguard. The Vanguard ETF do not incur any commission; however, its opponent Fidelity is usually charged the transaction fee. Before you invest in ETF, it would help if you checked the elements you want from a brokerage firm. Investing in commission-free ETF is not always the best option. Since ETF are very similar to commodities, all the funds aim at one goal. ETF whose costs are low is the best to invest in. It would be best if you avoided brokerage firms that claim to have commission-free ETF, yet they go ahead and charge you commissions. The exclusion to this is when you have an account with the brokerage firm that charges commissions on ETF, and you rarely place any trade. You should also circumvent from buying ETF where the broker charges you huge transaction costs than what you would have suffered if you decided to buy and hold an ETF
  8. Hi Milan, The benefit of getting high leverage in the Forex market is what allures most investors into it. You may have heard about leverage; however, there is a high possibility that you do not know how it works, what it means, and its effect on your trades. In leverage, you borrow a specific amount from your broker that you need will need while investing. The leverage that the Forex market offers is usually high; therefore, you will be controlling a massive amount of money when you get this initial margin. To get the margin-based leverage, you should divide the total transaction's value with the margin amount that you should come up with. The amount of leverage that you will put up will rarely affect your risks, which means that your profits or losses will not be affected by the value of your margin. The reason for this is that you can always allot more money than the margin required. Therefore, the actual leverage is what should help identify your profit or loss. To get the real leverage, you divide the full face value in your open market positions with your working capital. Leverage in the Forex market is usually about 100:1. This intimates that, for each $1000 you have in your account, the value that you can trade can add up to $100,000. Many Forex investors trust that the leverage functions as risk, and that is the reason why Forex brokers offer it in large quantities. Forex brokers will not be offering this kind of leverage if this risk is unmanageable. The real leverage may either magnify your profits or your losses. If you apply for high leverage, then you will be signing in for a higher risk. The margin-based leverage may not come with such hazards; however, you need to be cautious when dealing with it. Once you learn how to manage leverage, you are assured that you can deal with it, and there should be no need to worry about taking it. If you apply the liberal approach while trading, then you should never use leverage. You will only succeed and make significant profits if you manage your leverage carefully and thoroughly. You may earn good money or, at the same time, lose a fortune for using high leverage; this is the meaning of leverage as a double-edged sword.
  9. Hi Stella, Investing in cryptocurrencies is usually a good investment option. On the other hand, it can eat you up till you quit the venture. Everything about cryptocurrencies from mining to storing transactions occurs online. The digital nature of cryptocurrencies leaves typically it exposed to cybercrimes. The Initial coin offering (ICO) is an excellent example of cryptocurrency undertakings where people easily fall for traps. Before you take up in any initial coin offering, make sure that you keenly research it and be confident enough to deal with it. There are several ICOs that you may have read about and have seen how successful they have been. However, this should not make you hesitate from looking deep into it; you may find a red flag that will keep you from engaging in it. Always make sure that you keenly scrutinize and examine the white paper before you take part in the project. The white paper outlines typically what the project entails and its objectives. Look at the areas that may result in problems not leaving behind those not clearly stated in the white paper. Some white papers with those problems you term as small and others that do not clearly state everything you need to know may result in significant losses if you engage in that project. You must dedicate ample time to research the developers and other people who are part of the project. There have been many cases where an ICOs project has stated people are taking part in the project while in the real sense, they are not part of it. Keenly researching on the individuals taking part in the project will significantly save you. ICO projects aim at achieving different goals, and their characteristics also vary. However, several of them have a common element, which is financial transparency. A company that publicly shares its financial information with you is worth dealing with. Those that hide it from you may not be legit, a big red flag not to take part in that project. In ICO, there is wide use of tokens, and you will buy them, hoping that their value will increase. It is essential to know how these tokens are issued and how you can own them before you invest in ICO. These are just a few things that you can consider before you take part in any ICO project. Doing your thorough research is the best way to ensure that you do not fall for a trap. And as you research, better and real opportunities may present themselves.
  10. Hello Earnest, Cryptocurrencies are becoming the talk of the town to most people—the most known ones being Bitcoin, Ethereum, and Litecoin. If you do not want to invest in any of these best cryptos, you may deal with the Initial Coin Offering (ICO). When a new cryptocurrency is coming up, you will be allowed to get these coins in exchange for the fantastic cryptocurrencies that they possess, such as the Bitcoin. This type of funding where you use a cryptocurrency such as Bitcoin or Ethereum to get the new coin is referred to as an initial coin offering. In ICO, you come up with a deed stating how your new coin will work. Create a great website explaining to people why your invention is useful. Then ask them to send you funds in the form of other cryptocurrencies like Bitcoin, and in return, you send them the new coin. Investing in ICO will not make you own a position in that company. You only hope that the value of the new coin will rise and, as a result, make you money. Anyone can launch an ICOs, provided you have the technology needed to ask people to fund your coin. Cryptocurrencies are not regulated. Though various countries are looking at holding this market, it is not a walk in the park. Lack of regulation is one major reason many scammers outrightly steal from you, and unfortunately, there is least you can do about it. As great as ICO investing looks, it is one of the easiest ways to lose your funds. Someone may bring you this idea; you will see it as a great one. You will realize you have fallen into a pit trap after you send in your funds, and this developer is nowhere to be seen. Do Your research before you enter into such deals. Do not just rely on the basic information that your friend will give you.
  11. Hello Earnest, Many changes are taking place in the cryptocurrency world. All geared towards making the cryptocurrency a better investment option than it is already. With excellent knowledge, remarkable optimism, and proper dedication in this market, then you are best assured that you will reap great benefits in your trades. Cryptocurrencies are currently well known worldwide, and their popularity will continue growing each day and for the longest time. If you want a good investment option for the long term, the crypto market will best suit you. Many positive factors will prompt you to start dealing in cryptocurrencies and be part of their growth. One positive thing about the crypto world is that there is an introduction of allowable Initial Coin Offerings (ICOs). In the crypto market, there are several cryptocurrencies with a stable value. The invention of ICOs is meant to fulfill certain objectives. ICOs are changing the value of cryptocurrency transactions and coming up with exchanges that are easy to use. ICOs are bringing innovations in terms of technology, whereby there is an introduction to better mining hardware. In terms of financial design, investors have better options for what they want to invest in and have the freedom to select what they want. Blockchains in cryptocurrencies are resulting in the introduction of digital wallets, which ensure the safety of cryptocurrencies. Debit cards are also being introduced. Such things will most ultimately encourage more people to join this world. The digital wallets will make you not worry about losing your funds since they are well protected. Most states are now trying to regulate the crypto market. One positive effect of cryptocurrency regulation is that it will help protect you from losing your funds and safeguard you from any harm. When you hear about cryptocurrencies, the first thing you will think of is the Bitcoin. It is the most popular crypto in the world, and its users beat those of other cryptocurrencies. However, it has some challenges, the major one being that it handles only a few transactions at a time. Still, this issue is on the look, and there are solutions taking place to change the subject. Several financial institutions are looking at investing in cryptocurrencies. The crypto world is and will continue to experience steady growth.
  12. Hi Mary, Volatility in exchange-traded funds can be an excellent opportunity for you to make a profit. However, there are at times where day trading volatility can be of high risk. When an ETF is volatile, it tends to move reversely to essential stock indexes like the S&P 500. There will be a time when the S&P 500 will increase; the amount of volatility ETFs will inturn fall. Contrarily when the value of S&P goes down, that of volatility ETFs will rise. You can take advantage of the changes in volatility ETFs at points where the market moves in the opposite direction and when the vital indexes are sharply declining. Just like there are volatility exchange-traded funds, you may also have subtle exchange-traded notes. You can apply day trading volatility in both of them provided that the one you choose to trade is highly liquid. To determine whether an exchange-traded fund or note is highly liquid, you check the number of shares you will sell each day. One volatility exchange-traded fund you can trade is the inverse volatility ETFs. This ETF follows the direction of the essential stock indexes typically, and it is best if you are looking at day trading an ETF or ETN whose volume is high. However, the most liquid and primarily used ETN/ETF in volatility is the iPath S&P 500 VIX Short-Term Futures ETN (VXX). When the value of the S&P 500 is low, that of VXX rises rapidly. On the other hand, when the S&P 500 is rising, VXX starts to fall; hence it will not be suitable for day trading. The best opportunities are when the S&P 500 is declining. Volatile exchange-traded funds are most often on the top of the S&P 500. In such cases, you will know whether you want to buy or sell in this market. However, VXX is not always leading the S&P 500. The S&P 500 may be above it, which will also give you the knowhow of when you can trade VXX. The best intraday trading opportunity is when the S&P 500 drops significantly. At such a time, you can follow entry and will enable you to profit from volatility ETF/ ETN. The price swings in volatility ETF/ETN are usually higher than in the S&P 500; hence they are best for day trading. It would be best if you employed stop-loss orders to limit risks while trading in an ETF strategy.
  13. Hi Earnest, The main reason why you choose to invest is to make a considerable amount of profits. Investing in gold is one way you can make nice profits. There are many investment options for gold, the popular one for the longest time being the physical gold. The introduction of exchange-traded funds has led to the emergence of gold ETF as one of the best investment options for it. From gold ETF being safer to invest in them being highly liquid, these are just some of the significant benefits of investing in gold ETF. However, gold ETFs have their drawbacks that can make you abandon this investment option. Gold ETF come in terms of derivatives and contracts. Therefore, you can repossess them only as cash. Also, as the capital gains tax in other ETF is written off, this may not be the case in gold ETF, meaning you will incur an extra cost when you could have invested in other ETF that are tax-efficient. You will incur additional expenses in gold ETF, the maintenance fee for the dematerialized account, and the price for running this account. You must check how the gold ETF performs before you select it as your investment option. Also, always check on the market risks that come with the gold ETF. Being vigilant and understanding what you will meet in this market will help you make a better strategy on trading the gold ETF.
  14. Hi Stella, ETF typically track the performance of an index. Gold exchange-traded funds usually track the prices of gold. When you invest in Gold ETF, your objective is to invest in indexed gold ETF of a certain stock exchange. Investing in gold ETF comes with very many uses that allure many investors into it. However, like any other exchange-traded funds, certain things can bar you from investing in gold ETF. One advantage of investing in gold ETFs is that you will incur minimal fees. Gold ETF with them little or no charges. You may have to pay premiums when you buy gold products such as jewelry and gold coins, making gold ETF a better investment option to other gold products. When you invest in gold ETF, you are best assured that your gold is safe. Other gold products like jewelry and bars are easy to steal hence a lousy investment option. The earnings you will get from gold ETF are almost similar to that of real gold. When the value of the dollar is falling, that of gold starts to rise. This is a proper hedging mechanism for your portfolio. Consequently, when the price of the dollar is rising, that of gold will fall. Identifying this trend is easy and will help you know when you should sell or buy a gold ETF, enabling you to make a profit and minimize your losses. Gold ETF are highly liquid; hence it is easy to buy and sell them. They tend to favor short and medium-term investors. It will be easy for you to sell off gold ETF through your broker. The case is usually different when you invest in physical gold since there are times when the bank may decline from buying back your gold. Your physical gold will need a safe where you will store the gold, and you have to pay annual safe fees for keeping it in that bank. Also, when you are selling it, the bank will deduct a certain amount. You will not incur such costs when you invest in gold ETF.
  15. Hi Earnest, Gold exchange-traded funds are ETFs that pursue the price of gold. Gold ETF is a product ETF having gold as its major commodity. Exchange-traded funds usually hold assets such as stocks and bonds nearly in their portfolio all through the trading day. They are almost similar to an individual stock, and they trade in the same way. Investing in gold ETFs will not make you own gold itself since the fund carries the derivative contracts of the gold financed by it. Dealing in gold ETF will enable you to learn how gold performs and how its price changes. Many investors of Gold ETF use it to offer them protection from the government and economic interferences. When the value of the dollar falls, that of gold will rise. Investing in gold ETF will protect you from the risk associated with the dollar's falling value if such is what your portfolio holds. On the other hand, if you sell your gold ETF, you will gain protection in your portfolio if the value of the dollar rises. A gold ETF aims to hedge the risk of gold commodities and help those commodities gain exposure when gold fluctuates. If the risk in your portfolio rises with the increasing price of gold, your gold ETF will help minimize that risk. You can also use the gold ETF as an industry ETF. In a case where you want to learn about gold mining and invest in a gold ETF, it will help you out in this industry.
  16. Hello Mary, Forex market is one of the large financial markets, and it trades large volumes each day. The prices in the Forex market fluctuate more often in the Forex market. Forex investors use several strategies to identify a market trend and place their trades. The break out strategy is one of the commonly used techniques in this market. In this strategy, the currency pair may move above the resistance level or below the support level. It will then continue to follow the direction of the breakout. When the value of one currency changes relative to another, it may result in a breakout since it takes place with immense energy. One way you can trade break out in the Forex market is by adding the Donchian channel indicator in your intraday chart. Intraday charts will give you more signals to trade. You also need to identify your trend. Identifying the market trend to use will help you know when it is right to employ your breakout strategy. Following a certain direction will also help you perfect your trading strategy. After you identify your trend, impose your entry price through the help of the Donchian channel indicator trend. After your state your entry order, you can now impose your exit order. Adding your exit order will help you make use of a manual trailing stop. In the breakout strategy, the trailing stop location is at an equal price as the resisting Donchian channel.
  17. Hi Mary, Bollinger Bands help to determine the price levels comparatively. They are tools that depend on market standards to help study the market pattern and come up with precise trading techniques. Bollinger Band acts as a technical analysis indicator, and it is made up of three lines. It measures the moving average for 20 days of the final market price. Lines of equal distance are drawn on each side in the moving average. The length of these lines shows the price volatility. The sidelines may approach or drift from each other, depending on how the price changes. For example, When the price is rising, it will go after the upper band and touch it. While using a Bollinger Band, you should watch the price movements at the perimeter and confirm if the trend continues and check for an interchange in the sides to decide on changing the direction. To protect you from the risk of getting a margin call while trading in CFDs, you must use other measures that seem to support the price movements. Such a change may occur when the price fluctuates and comes back with more bars.
  18. Hi Mary, Financial markets such as the Forex and CFD market employ day trading as one of their trading styles. The cryptocurrency market is also not left behind. You can conduct day trading in this market like any other financial market; however, you need to be vigilant and know the techniques you will employ to succeed. Day trading is a short-term trading technique where an investor will buy an asset, hold it for a short time and sell it when its prices are favorable to make a profit. Primarily making a profit is usually the main objective of any market. In cryptocurrencies, you buy crypto when you speculate that its price will fall, you make a purchase, and when the prices start to rise, you sell off your crypto. Though you will hold it for a short while, you intend to make a quick profit from that span. You can also use the charts to predict the market prices of the cryptocurrency. You study the charts and guess how the market prices will move, and from there, you decide on either buying or selling your cryptocurrency. Before you trade any crypto, however, you need to look for a good exchange. In day trading, you will sell your coin within 24 hours. You need to select a good cryptocurrency option that is highly liquid and suits the trading session you want to trade with. If you choose to trade for the whole day, it would be best if you selected an exchange with different pairs. For example, Binance coin has many different trading pairs, and it trades in large amounts each day. Understand all the risks that come with day trading and, most importantly, learn how to use this trading technique excellently.
  19. Hi Hakiza, Leveraged ETFs employ derivatives and debt to boost the profit from an underlying asset. They are also marketable securities. Dow Jones Industrial Average and Nasdaq 100 are examples of indexes that are available in Leveraged ETFs. Unlike traditional securities that mimic its essential indexes respectively, leveraged ETF tracks its underlying index on a 2:1 or 3:1 basis. Leveraged ETF may pursue the S&P, therefore, using financial elements and debt to increase their gains. The gain is however, dependent on the leverage amount an ETF uses. Generally, in leverage, funds are borrowed, and it utilizes the to purchase financial instruments such as options to influence the way the price moves. While dealing with leverage, you may make significant gains. However, the risks that come with using leverage may result in substantial losses—the possibility of making a loss in Leveraged ETFs if usually much higher than from other traditional funds. Also, the expenses in leveraged ETFs are usually way high in that they can primarily eat up the profit you make. Some costs you may incur in leveraged ETFs are the transaction fees and the management fees. The high costs that come with leveraged ETFs are as a result of the premiums that you pay so that you can purchase the options contract. Borrowing costs also result in the leveraged ETFs' high prices. Leveraged ETFs are however, cheaper in contrast to other tools traded on a margin. In margin trading, you pay for just a fraction of the total amount needed, and the broker lends you the remaining amount which you will pay a premium for.
  20. Hello Mary, Financial instruments that get their performance from an underlying asset are known as derivatives. Exchange-traded funds are not derivatives; however, there are exemptions of them that are derivatives. Examples of exchange-traded funds that employ derivatives are such as short ETFs and particular leveraged ETFs. Inverse ETFs display the opposite of the essential asset. Leveraged ETFs aim at providing a lot of profit than the underlying asset. For example, stock options base their value from the share prices of a public company; hence, it is derivative security. Their value is not as exact as the shares, but it is closely related to it. Other derivatives include options, futures, swaps, and forwards. Mostly, derivatives are traded on contracts and not on an exchange. The trading of results depends on the changes in the price of the underlying asset. Many investors are trading with financial tools that do not deal in derivatives since they consider them as complex. They also say that the risks associated with the derivative-based instruments are many.
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