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Hi Benjamin, Thanks for coming here. Support zones mark the level at which stock prices stop sinking. They’re characterized by buyer demand surpassing that of sellers. Resistance zones, on the other hand, are levels at which asset prices stop rising. Here, the sellers exceed the buyers. Oftentimes, a trader buys shares after prices reach the support zone hoping the stock will rebound. Likewise, they book profits by selling shares when the stock nears a resistance level. Long traders place stop orders just beneath the support. Similarly, short sellers set their stops slightly over the resistance. Powerful price movements trigger these stops resulting in automatic selling and buying. Not to say resistance zones are permanent. In case an asset’s value passes the support level, it continues to drop until a new support level is formed. This is also the case for resistance. Unable to predict the new floor or ceiling, short sellers are likely to avoid the trade at first. The strength of these resistance zones depends on the number of times the stock bounces off them.

Thanks for asking. The trader opposes a security’s predominant trend by purchasing when the majority is selling and offloading when the majority is buying. A winning strategy relies on investors’ overconfidence instead of market data. Seeing most trends are controlled by facts, spotting a fade can be daunting. That’s why the method is popular among institutional investors and expert traders. This technique thrives on volatility because of the recurrent profitable corrections. Typically, an investor awaits the release of details like profits, interest rate changes, and sales projections. Though it matches different securities, fading suits the Forex market because of currency fluctuations triggered by key indicators. Suppose a country’s trade results are higher than projected. The value of its currency against the USD will increase causing institutional investors to align their capital with the possibility of a growing currency. Algorithmic and retail traders will tag along. While attributing part of the rise to positive economic statistics, a fade trader knows increased demand also plays a role and the currency will return to its original value.

A pip shows the lowest price shift in an exchange market. Because 4 decimal places are the pricing for most pairs, the tiniest movement occurs at the farthest decimal point. For instance, a 20-pip change would be recorded if the EURUSD pair went from 1.3040 to 1.3060. However, this rule doesn’t apply to JPY pairs. Since their quoted exchange rate is 10 or more, these currency pairs reach 2 decimal places. As such, there will be a 50-pip growth of the dollar against the yen if the USDJPY pair increases from 230.20 to 230.70. In contrast, pipettes make pips’ one-tenth figure. While it’s represented by the third decimal digit for JPY pairs, it moves to the fifth place for normal currency pairs. In addition to understanding exchange rate movements, pips and pipettes are essential for determining a position’s gains and losses and managing risks.

Hi Mary, Bollinger Bands use past data to determine market direction, volatility, consolidation periods, and potential trend break-outs and continuations. The fact that it measures market momentum and changes its shape according to recent price action gives it an edge over standard indicators. It forms three lines. Marking the top end of the estimated range, the upper line serves as resistance. It’s derived from doubling the standard deviation and adding it to the moving average. Conversely, the lower band marks the bottom of the estimated range and acts as a support. It’s calculated by doubling the standard deviation and subtracting the result from the moving average. Likewise, the middle band is an extra barrier working as resistance for trades above it and support for trades below it. It’s determined by adding the closing values of the past 20 periods and dividing the answer by 20. This indicator is not only useful for avoiding risky trades but also finding new opportunities.

Hedging your portfolio with an index CFD is a cost-effective avenue to quickly enter a position. This is while locking in your portfolio price at a certain point in time. Remember to take into consideration your portfolio size, and whether it moves in step with its corresponding CFD index, before entering a trade. Do not use hedging as your substitute for a trading strategy. Use hedging as a tool to assist you in navigating future price movements. That way, you get to enjoy immediate confirmation and execution of trades you venture into. An index CFD is a highly liquid instrument to trade in too. You also get to enjoy lower fees for your transactions than you would incur if you bought or sold a whole basket of shares making up the index. Most important, a CFD gives you options to easily short its index if you suspect the market is about to fall.

Great question,Linah, Investors are leaving other markets for Forex. But what makes the industry so attractive? First off, the market is accessible thanks to its low capital requirements and transaction costs. Since they benefit from spreads, most providers don’t impose brokerage, government, exchange, or clearing charges. The industry’s high leverage also facilitates huge contract values from small deposits. Taking the case of a 50:1 leverage, an investor can purchase or sell $2,500 in currencies with a $50 deposit. Moreover, the volatile market lets you offload assets at a profit. The fact that it runs day and night also makes it suitable for part-time traders. Not forgetting the high liquidity. With its numerous participants, it’s impossible for single players to determine market values for long periods. The good news is most brokers are controlled by several bodies making Forex less prone to scams. Additionally, newbies can polish their abilities with a demo account.

Hi Hakiza, This strategy involves the purchase and sale of a security before the day ends. The aim is to make a profit regardless of whether the trade takes seconds or hours. For cryptocurrencies, day trading success relies on several factors. The first one is volatility. Unlike stocks, digital coins experience sharp swings within 24 hours with some cryptocurrencies being more unstable than others. The way you use this volatility determines your profit. But trades don’t always go as planned. Hence, avoid chasing losses when your prediction is wrong. Moreover, use a simulator to perfect your trading skills beginning with small amounts when you’re ready for the market. Don’t forget to set targets. In most cases, traders commit below 1% of their bankroll. Therefore, your risk won’t exceed $10 per trade if your account has $1,000. Though the returns may appear minimal, investing small percentages ensures you don’t go broke. Stop-loss orders are also necessary for preventing losses.

Hi John, A Junk Bond ETF rests on non-investment grade bonds. Such bonds have a BBB rating or lower. These bonds come with heightened default risks. However, they offer investors well above average yields. A Junk Bond ETF presents an investor with a high-risk tolerance and opportunities to play yield curves and interest rates. An investor needs to monitor their holdings as closely as daily, though. In other words, a High-Yield ETF, also named a Junk Bond ETF, provides a trader with exposure to debts owed by US companies rated below BBB. Since such High-Yield ETFs have amplified risks, they present investors with attractive returns as compensation for their enhanced risks. An example is the iShares iBoxx $ High Yield Corporate Bond ETF, HYG A. This ETF tracks the results of the Markit iBoxx USD Liquid High Yield Index investments. This index consists of high yielding US corporation bonds with a less than investment grade classification.

Hi, The only similarity between stock and cryptocurrency trading is the word trading. Differences are outstanding. Stock markets have strict regulations and laws against insider trading. Crypto trading doesn’t. Once you purchase stocks through a brokerage, you have entitlement to cash and stock insurance through FDIC and SIPC. The US doesn’t recognize cryptocurrencies, meaning crypto trading doesn’t enjoy insurance security. Stock trading takes place publicly and enjoys backing from revenue-generating and asset-holding entities. Cryptos, and their related tokens, rest almost entirely on thin air. Cryptocurrency exchanges transact online exclusively exposing investors to hackers. Furthermore, transactions are not reversible and investors have no legal avenue for recourse. Stocks do suffer phishing and scams but never vanish into thin air. In stocks, stolen money transactions can be reversed. Anyone can create their own cryptocurrency but shares need to be issued by private firms. Blockchain can be generated by anyone. Shares, particularly those traded on the Dow, NASDAQ, or NYSE, abide by recognized rules before they reach the market.

Hi Carlyn, You are on the right track. Being decentralized, cryptocurrency presents earning opportunities away from government interruption. But scammers and misinformation have made investors skeptical the industry. So, how do you tap into the digital market? You can start with trading. Open an account with a reputable exchange, purchase coins, and hold them until you’re able to sell them at maximum value. Some cryptocurrencies even offer dividends. Thanks to altcoins with decent price movements, you don’t need expensive assets to make gains. Gambling is another option. Since winning depends on luck, avoid risking huge sums. You can also run masternodes. This involves keeping a real-time account of the activities on a cryptocurrency’s native blockchain. However, a minimum coin balance is required. Cryptocurrency arbitrage cannot go without mention. It entails buying and selling coins between exchanges for a profit. Additionally, you can loan your digital coins to other users on P2P lending platforms.