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Strategies to Make You Money in Periods of Low Volatility

Strategies to Make You Money in Periods of Low Volatility – Introduction

Long-term investors like Warren Buffet buy companies and hold them for many years. For example, Buffet has held Coca-Cola’s stock for decades. By doing this, he has made money as the stock has continually moved up during this time. For short-term traders however, they buy and sell stocks within a short period of time. They benefit from the huge moves that happen during the day. To make more money therefore, they require volatility which makes stocks and other instruments have huge moves. Investors measure volatility using the VIX index. A low Vix number implies a period of low volatility while a big number indicates a period of high volatility.

There are many factors that contribute to volatility. For example, an election in a major country or a referendum can contribute to volatility. Equally, other factors like trade deals or a major announcement from a major country can lead to volatility. Recent events that have contributed to volatility includes the just concluded American election, the Greek debt crisis, and the Brexit vote.

This year however, traders are facing a challenge of lack of volatility in the market. As shown below, the volatility index has remained extremely low this year.

 

 

This means that traders have had a challenge of making money. A report last week from Bloomberg quoted several traders who were idle most times of the day because of this problem. It is therefore understandable that quant traders like Renaissance Technologies have reported sluggish performance this year. Market Making companies like Virtu Finance which benefit from volatility have reported weak earnings and resulted to other strategies like M&A to survive.

The lack of volatility has been caused by several factors such as the lack of major global events. It has also been caused by the shift from active management to passive management. In the latter method, investors park their funds in passive funds like mutual funds and ETFs. How then do you make money during this time?

The first method is to find sectors or instruments that have some degree of volatility. Although most sectors have experienced a period of low volatility, some individual instruments have had an interesting performance. For example, in the cryptocurrencies scene, the main currencies have had an interesting run. This year, the main currencies like Bitcoin and Ethereum have quadrupled. However, in the past one month, they have fallen by more than 60%. This fall is credited to several factors. First, the acceptance of these currencies in major retailers and online shops has declined significantly. Second, there has been panic selling among traders when the prices started to fall. Third, this could be a correction. For traders, you can take advantage of the volatility to make money.

The second way of making money during such periods is to look globally. The United States and Canadian markets might not be volatile but that does not mean the same is happening in other countries. Day Trade the World (DTTW) gives you an opportunity to trade stocks from tens of countries. While a lot of caution is needed when trading stocks in these countries, it is possible to make money in their stock markets.

Third, you need to consider other asset classes or instruments. Perhaps you have made money trading stocks. In these periods, you can do well by experimenting with other assets like currencies or commodities.

The rule is to take more time to find areas that are still volatility. You should spend more time researching new areas like commodities and emerging market stocks to find areas to make money in.

Strategies to Make You Money in Periods of Low Volatility – Useful Links:

 

Bitcoin stands in front of ethereum on creamy background. Domination concept. New virtual money, 3D rendering.

Cryptocurrencies: A Look at Bitcoin and Ethereum

Cryptocurrencies: A Look at Bitcoin and Ethereum – Introduction

Cryptocurrencies have become a modern-day goldmine. They have become so popular that many people from around the world are hoarding them. They have also made a few people multi-millionaires. For example, if you bought bitcoins worth $1000 in 2010, you would now be a multi-millionaire. This year alone, bitcoin has gained from a low of $1000 to a high of $3000. On the other hand, Ethereum has gone from less than $70 to a high of $400. In the recent past, the two currencies have corrected, falling by more than 50%. They have become the most volatile ‘asset classes’ in the market. Last week, Bloomberg had an article on the unknown trader who had amassed a fortune of more than $200 million as a bitcoin trader.

  • Trade and Don’t Invest

Many experts have declared that cryptocurrencies are the future of finance. IBM has even started a new blockchain department that helps global companies on different areas. Big banks like Goldman Sachs and Morgan Stanley have published articles supporting cryptocurrencies. While the future might be this technology, the fact is that we are in a bubble territory.

A bubble is a period where prices of items go up without having an intrinsic value. For example, before the recession, the prices of homes in the United States went up fueled by cheap credit. People bought the houses with borrowed money expecting to exit at a big profit. The price of houses nosedived when people could not afford the houses.

The same concept is true of the dot com bubble when many worthless companies held their IPO. Some of these companies had no revenues. Some only added the dot com value in their name. When the time of reckoning came, people who had bought the stocks had no one to sell to. Billions of dollars ‘evaporated’.

This is the same thing with the cryptocurrencies. Most of the people who own them don’t know what to do with them. They even don’t understand the underlying technology. They buy them because of the hype.

Therefore, I recommend that you trade these currencies. You should not hold the temptation of buying and holding them forever. Doing this will expose you to a lot of risks.

  • Acceptance remains low

A common challenge for the cryptocurrencies is that many retailers have stopped accepting them. When the concept of cryptocurrency came up, many retailers accepted them. People could buy and pay for their products using the currencies. Today, the number is not growing and chances are that this will continue. Therefore, if retailers will not accept bitcoin, holding it might be worthless. In addition, fraud in the market remains high. A week ago, a dark market called Alpha Bay shut down with the owners of the website going away with bitcoins worth millions of dollars. The level of fraud is increasing in the bitcoin related market.

  • Caution ahead

For traders and long-term bitcoin and other cryptocurrency holders, a lot of caution is required as we go into the future. On August 1, there will be the ‘civil war’ in the bitcoin scene. This day, two factions that control the bitcoin market will know whether to adopt a new software update or not. If this fails, the bitcoin could be split into two. This move could lead to significant volatility in the market. There have been calls for regulation in the cryptocurrency market. These moves could lead to significant volatility in the market.

Cryptocurrencies: A Look at Bitcoin and Ethereum – Useful Tips:

Live of successful trader

A Guide to Live a Happy and Fulfilled Life of a Trader

A Guide to Live a Happy and Fulfilled Life of a Trader – Introduction

Being a trader can be fun especially when you are making good money. However, the fact is that all traders go through the motions. They go through dark periods when things are not going well. As a trader, you will go through difficult periods when nothing seems to work. When this happens, bad things can happen. In the past, we have seen many traders get depressed. Others have gone to the extent of committing suicide because of the losses. In this article, I will highlight a few strategies that you can use to live a happy and fulfilled life as a trader.

  • Trade with money you can afford to lose

The first thing you need to do is to trade with money you can afford to lose. This means that you should only trade with money that you don’t have immediate use for. For example, you should not trade with money that you intended to pay school fees or medical needs with. You should also avoid the concept of borrowing money to trade. Doing this exposes you to a lot of risks that you can do without. Instead, you should only trade with money that you don’t need. Although you will feel bad if you don’t win, chances are that you will not be affected much when you lose the funds.

  • Take calculated risks

Another thing you need to do if you want to live a comfortable life is to always take calculated risks. As I have mentioned before, risk management is the most important aspect of any trading. Without proper risk management strategies, no one can make it as a trader. You must know how to allocate capital so that you can make small profits while exposing yourself to little losses. You must also learn how to end a  losing trade. The best way of doing this is to have a stop loss and sticking with it. You should not extend the stop loss hoping that the trade will recover.

  • Take time to rest

One thing I find very fulfilling is that the market closes every Friday and opens on Monday. This is a very important thing because it means that traders from around the world are not trading. As a trader, this gives you the time to rest and relax. I recommend that you take this time to rest, watch movies, go to holidays, and hang out with your family and friends. As you do this, you can forget about the market, your wins, and your losses.

  • Share knowledge

Successful investors like sharing their strategies with the rest of the world. Warren Buffet writes a letter every year sharing with investors key ideas of his investments. Other successful investors regularly make presentations on their investment thesis in conferences and seminars. Others like David Einhorn have published their own books. As a trader, you must learn to share your knowledge with upcoming traders. You can do this by starting a blog or by creating videos. You can also hold seminars. In your talks, you should ensure that you mention your ups and downs. By doing this, you will also gain a lot of insights which will help open your mind.

  • Be content

Finally, you should be content with what you make. Remember that not all your trades will work out as planned. You might plan for a trade to make you $100. You close the trade with just $40. Instead of feeling bad about it, you should learn to be content with what you make. Doing this even when you make losses should make you content.

A Guide to Live a Happy and Fulfilled Life of a Trader – Useful Tips: 

  • For more information, please click on LiteForex;
  • To find out more go to FXCM;
  • Another interesting reading on Eminimind.

 

Communication post - D Quote

D-Quote Close Order Features and Functions

Day Trade The World™ is proud to announce that in coordination with Cuttone, we have adjusted the time you can cancel orders for CUTN D-Quote orders from 3:54:59 PM to3:59:45 PM.

Below is an overview of the distinct features and advantages of using Cuttone D-Quote Close and E-Quote Parity orders.

Cuttone Pool of Parity
By routing to the NYSE through eQuote Pool of Parity, traders have access to the Cuttone Pool of Parity, an important tool that gives a distinct advantage when executing trading strategies.

Parity allows traders to equally access real-time liquidity along with other market participants. By utilizing Cuttone’s eQoute Parity route, traders can greatly increase their chances of getting a fill.

D-Quote Close
Traders can send D-Quote Close orders on NYSE symbols to receive the NYSE closing price, or to participate in re-opening events in case of a symbol halt such as halted for News Pending, Regulatory Halt, or Limit Up Limit Down (LULD). D-Quote orders will appear in the closing imbalance starting at 3:55 PM.
D-Quote Close orders offer our traders an advantage over the regular NYSE CCG auction orders by allowing order cancellation until 3:59:45 PM, which is much later than is possible on NYSE CCG.Traders are now able to send D-Quote orders until 3:59:45 PM, after which time orders will be rejected.

Another advantage of the D-Quote Close order type is orders can be sent in either direction of the published imbalance. This allows traders enhanced flexibility as the NYSE CCG order can only offset the published imbalance.
E-Quote Parity
The E-Quote Parity order type allows traders to take advantage of the NYSE parity rule, which you can read more about in the Parity & Priority Fact Sheet.
We recommend that you read the Fact Sheet, and specifically their “Allocation Example”, to see the distinct order priority advantages that using this order type can give.
This is because it allows you to often get faster fills than if your trader submitted their order through the Electronic Book because of the Parity Rule. In fact, Limit orders receive higher fill rates when they are sent through the E-Quote Parity route.
If you have any questions or comments, please submit a mojo.
HOW TO AVOID SCAMMERS

Simple Ways to Avoid Day Trading Scams

Simple Ways to Avoid Day Trading Scams – Introduction

Day trading and investing in general is one of the fastest growing industries today. People are enticed into the trading world because of the promise of working from home and making money without much effort. A recent report indicated that many people – especially in the United States – are now allocating money to stocks as institutional investors stay away. They are enticed by the superior returns that have come with the new administration. With these opportunities, many people have fallen prey into online scams. In this article, I will highlight a few ways of avoiding trading scams.

  • Research about any company

The first thing you need to do to avoid trading scams is doing intensive research about any company that you use. There are companies that promise low-cost brokerages. Other companies promise to trade for you. Others provide trading signals that are mostly ‘accurate’. Others on the other hand promise unparalleled news that is essential for trading. In all these, you need to be very careful before falling prey into these companies. You need to do intense research about the companies by considering several factors. First, you should read online reviews about these companies. There are many platforms like BBB that provide platforms for customers to leave reviews. Second, you should confirm whether the company is registered or regulated by any regulators. It is always advisable to use companies that you can track. In this, you can find the registered office of the company and its top leaders.

  • Find more about the people

Often, a ‘successful’ trader will come to your town to have a seminar with traders. In their marketing, they will show you the lavish lifestyle that they live. They will show you the high-end cars they drive, their choppers and yachts, and their mansions. The seminar will be free for anyone to attend. In the seminar, they will talk about how they started trading, the losses they made, and how a system they developed has helped them. At the end, they will ask you to become their student. As a student, you will be required to pay thousands of dollars to access the signals and the trading systems they use. Unfortunately, most of these people are usually scammers. Trust me, if they were so successful, they would focus on trading, instead of selling courses. You should take time researching about them.

  • Test the systems

If you have bought or subscribed to a system, before you spend any money on it, you should backtest it. This is where you use past data to see the performance of the system. The logic is that if the system worked in the past, chances are that it will work again. Therefore, before you deposit your money on a system, you should test it. If it is accurate, you can go ahead and use it.

  • Learn the basics

Unfortunately, most people who are interested in trading don’t know how to trade. They don’t understand why the assets move up and down. As a result, they implement the strategies they are told by the ‘experts’ without interrogating them. This is wrong. Instead, you should take time to learn the basics so that when you are told to buy an asset, you know what you are doing. Luckily, there is a lot of material on how the financial assets work. Take time to read these materials to get the basics.

  • Consult

You need to consult people who have experience in the trading world. If you are a beginner, you can learn a lot from people who have been there, and done that. By consulting these people, you will be at a good position to separate the truth from fiction. They will guide you on how to be successful by taking the long path that many people avoid.

Simple Ways to Avoid Day Trading Scams – Useful links: