Trading as the main source of income

Can trading in Forex or in the Stock Exchange market become the main and the stable source of income? Actually, this question interests each novice trader, but there is no one who can give a definite answer. The success in this sphere of activity depends upon various factors: patience and equilibrium, the ability to make quick rational decisions, a developed intuition and a little bit of luck, but the most important factors are considered to be knowledge and experience.

Moreover, the process of learning should be proceeded throughout the whole activity. Because of the seeming freedom, when you do not have a supervisor and a strict work schedule, many novice traders forget that it is one of the most risky and responsible professions.

For becoming the main source of income, trading requires much time and effort. Furthermore, this work is not for those, who are looking for stability. That is why, before quitting your main job and taking up trading, it is necessary:

• To have a very good understanding of technical and fundamental analyses;
• To learn to control your emotions;
• To educate yourself constantly;
• To have sufficient funds

The success stories of famous traders often inspire beginners, who, by quitting their main jobs, get involved in trading and for a short period of time lose all their money.

The advertisements of some brokers, who offer accelerated courses and 100% success, also contribute to the loss of money. It is impossible to study all the factors affecting the price formation, learn money management, cultivate such qualities, necessary for having a successful trading, as discipline, purposefulness, patience, etc., for a week or for a month.

Trading in financial markets can become the main source of income, but it will take a year or several years until you develop your own time-tested strategy. Moreover, the strategy should be developed and tested on a demo account just by yourself. The usage of someone else’s strategy, even if it is considered to be a successful one for its developer, usually ends up with nothing, because it does not take into account your psychology and capabilities. Besides the professional qualities of a trader, the right choice of a broker is also very important for achieving success in trading.

Check the regulation of the company and its reliability, the stability of the offered trading platform, the quality of order execution, trading conditions, the promptness of withdrawal of funds and the client support service.

Trading is difficult, but at the same time pleasant work, where success comes with experience and knowledge.

Where to Invest Your Money ?

In investing, rely on the ordinary virtues that intelligent, balanced human beings have relied on for centuries: common sense, thrift, realistic expectations, patience, and perseverance.

Investing is essential for everyone without discrimination. Almost anyone can devote at least a little money to investments, be attentive to it and wind up with more money than he or she started with.

The beginning of each good plan is the clear statement of goals. Before paying down high interest debt and building your emergency fund, it would be better to think why you’re investing. Consider how much money you want to have, and in what period of time.

It’s quite helpful to figure out exactly what your investment purpose is before you invest a single dollar. Here’s how to start: Take a piece of paper and list all the things that you are intended to do. In order to organize your goals and future plans you had better use time frames.

Now that you have already your goals and intentions, it’s time to understand and familiarize yourself with the most popular trading  instruments.

You will be ready to make an investment only when you have gained a deep knowledge of investment funds and strategies. In the given article we’ll show you the best way of becoming a successful investor by revealing and explaining you the safest means of making your money work for you.

The bigger the amount of money you are going to invest, the more choices you have. Major part of investors make their investments in more than one place, however the way they split their investments differs depending on their goals and the amount of risk they are ready to accept.

Bonds are considered to be some of the safest investment securities around the world. The reason is that a bond is essentially a loan. Because of being such safe investments bonds carry low interest rates. Here investor is the person who’s loaning the money. The most popular bond is a Treasury bond or a T-bill. Buying a T-bill indicates that you’re loaning money to the United States government at a fixed interest rate. You can also buy bonds from local governments (municipal bonds) and businesses (corporate bonds).

Stocks are usually purchased through brokers; you buy pieces or shares of a corporation which gives you decision-making power.

Buying a stock you also buy partial ownership in a company. Stocks are sold as shares, and it’s typical of each shareholder to be entitled to a percentage of the annual profits of the company, called a dividend. However, most people don’t buy stocks for the dividends. They actually buy them as long- and short-term investments.

The price of a share of stock undergoes certain changes. Stock prices may go up and down depending on the perceived value of a company in the eyes of investors and on the value of a company on paper.

The golden rule for investing in stock is to buy when the price is low and sell when the price is high. Historically, the stock market has grown on an average of between 10 and 12 percent a year. This is why many financial advisors consider stock an excellent long-term investment. The stock market is also attractive for short-term, higher-risk investors. With stock prices changing every minute, there’s tremendous potential for a quick profit or an equally quick loss.

Mutual funds are not insured by government agency. They are built-in diversification, some funds have low initial purchase amounts, and you’ll have to pay annual management fees.

Your money is shared with cash from thousands of other investors to be able to buy a portfolio of stocks, bonds and other securities. The advantage of mutual funds is that they make it possible for you to use instant diversity in your investments. Your money is invested in a balanced portfolio of stocks and bonds without getting fees for each purchase.

Gold and silver are considered great ways to store your money and keep up with inflation. They are very liquid and are not subject to tax.

Though stocks, bonds and mutual funds are very popular investments, they are not the only ones. Stock futures and foreign exchange market known as Forex market are also contemporary means of investment. The former includes contracts to buy or sell a certain amount of stock on specific date. Whereas in the Forex market you can trade international currencies.

To sum up it is worth saying that each type of investment has its peculiarities, risk extent and advantages. As an investor you are the one who should carefully scrutinize and find out the one which will suit him more.

Algorithmic Trading

With the rapid development of computer technologies at the end of the 20th century the process of trading in financial markets changed and became completely electronic. There also appeared a separate segment of trading known as algorithmic trading.

Algorithmic trading is an automated system for placing and managing trading orders on various financial instruments through computer programs based on mathematical algorithms. In algo trading trades take place without human participation. An algotrader or a quant trader only describes the algorithm of behavior of the robot (mechanical trading systems (MTS)) in different situations in the programming language. Based on the analysis of the previous prices of financial instruments, they predict the probability of falling of the future price in a given range. Robot enters into a transaction or quits it in case of certain changes in the price chart of the trading asset. A popular method of algorithmic trading is considered to be High Frequency Trading (HFT), that is to say the conduction of electronic trading at very high speeds. High frequency robots with the aim of generating high profits open and close short-term positions with high volumes.

Algorithmic trading strategies

There are many strategies of algo trading, which are installed in a trading robot by programmers. Here are its main strategies:

VWAP (Volume Weighted Average Price) – Distributes the volume of requests uniformly within a certain period of time at the price of better supply or demand, but it does not exceed the volume weighted average price over a specified period.

TWAP (Time Weighted Average Price) – Executes requests and evenly divides them into equal time intervals. The strategy does not consider predicted changes of trading volumes, which may negatively affect the market.

Percentage of Volume – Supports the fixed percentage of participation in the market chosen by a user. It makes small and frequent transactions by well reacting to the jumps of volume.

Iceberg – Set selling or buying request, which does not display the entire size of the market requests. Potential buyers see only a part of the request and only after its execution the next part is being published. And this continues until its full implementation.

Trend – following strategy – the main objectives of the strategy are: the early detection of the emerging trend through various indicators of technical analysis, the release of signals for trading in the direction of a trend and the release of signals about the closure of the position when signs of a trend termination appear.

Arbitrage – Foreign Exchange market robot, fixing divergence of the prices on the same or equivalent instruments in various market places, buys cheap in one place and immediately sells in another place with the expectation that prices of the instruments will coincide and the positions will be closed with profits. Arbitrage is considered to be a risk-free strategy, because the robot buys assets for a short period of time, thus avoiding sudden price fluctuations during the time. Accordingly, the income from arbitrage transactions is also insignificant and the total profitability is formed by the frequency of transactions.

Scalping – a strategy for short-term intraday speculative transactions. High-frequency robots are the most commonly used robots for scalping, which open and close positions during seconds, in case of making a small profit in a few pips. Basically, the strategy is used in the derivatives market, where the commission from the turnover is significantly lower.

Pair trading or statistical arbitrage – the strategy aims to identify the correlation between various instruments of the market and make profits from the imbalance between them. In other words, in small time intervals one asset can be undervalued or overvalued against the other one. Robot uses that very moment by fixing the deviation of the current ratio from the value of its moving average. Algorithmic trading with all its advantages regarding the speed of trading, absence of emotions, providing high market liquidity, decrease of volatility in the market, etc. has also several disadvantages:
- High-frequency algorithmic traders often make the market operation complicated, by making an excessive number of requests.
- Unreasonable increase of volatility of the market. For instance, on May 6, 2010 for a few minutes, the Dow Jones Index dropped 8.6% (the loss of the market was more than $1 trillion). Then, during 90 seconds, the index regained 543 points (4.67%). The reason was that the high-frequency robots in case of uncertainty liquidated all their positions. The sharp outflow of liquidity on the background of the started drop of the index led to its excessive strengthening without any economic basis.
- Failure of the algorithmic systems. There are some cases, when the major players of the market were on the verge of bankruptcy because of the failure of the program

A Cup of Fresh Coffee Makes Your Day

For those who are addicted to coffee, there could be nothing better than the smell and taste of a fresh cup of coffee. IKAWA entirely changes the way we roast and drink coffee with the world’s first digital micro-roaster. The IKAWA Home Roaster gives the unique opportunity to roast your own coffee at home in just a few minutes and discover a new world of stunning fragrances. The coffee we drink each day is originated from “green” unroasted coffee beans. In order to get the best coffee with the best smell and taste you will need the best green coffee beans and a perfect roaster. That’s what offers the IKAWA Home Roaster: a wide range of green coffee beans from famous locations, and roast recipes to bring the best flavors out of the beans. All you will need to do is to select the roast recipe on your smartphone, drop the beans into the roaster and watch them roast. It will take you a couple of minutes. You can even modify the recipe by changing the roast duration, temperature and even the air flow with your smartphone or tablet to discover a new world of flavors.

Quants: The Kings of Wall Street (part 1)

Is being a good financier enough for making money on trading? The history of Wall Street has shown that, in fact, the world's best specialist of funds management was physicist and mathematician James Simons.

Who are the Quants?

Quants are the people who trade on the stock exchange markets by using the latest technology and sophisticated mathematical and statistical algorithms. They are the new generation of traders of Wall Street who do not analyze financial news and do not forecast the value of the companies, instead, they make algorithms affecting the profitability and reducing the risks. In fact, they are not financiers and economic analysts, but physicists, mathematicians, and programmers.

Basically, the Quants work for large financial institutions and banks, since for high-frequency trading, they require ultra-fast communication channels and high-performance computing.

Attack on Wall Street

High-frequency trading became popular in Wall Street in the 2000s. At that period of time, financiers started talking about a new era in the economy: the robots made by Quants were making transactions on the purchase and sale of shares independently, they were following the market and with the help of mathematical methods they were predicting the behavior of stocks rates. In comparison with a human being, robots had a number of advantages: the program could make transactions a hundred times more often, work much better than an individual, make technical analysis of the market. Another great advantage of the program was the absence of emotions inherent to people, which periodically did harm to traders.

A while later, after the great enthusiasm, traders noticed the disadvantages of robots. The participants of Wall Street soon realized that they affect the pricing negatively by setting a lot of orders and changing the price several times per second. Soon, most of the world’s markets introduced tax on the robots. But the main danger in the performance of robots became the failure of programs, which could bankrupt large companies in case of the absence of human’s modern intervention. Now, the Departments of Treasury of UK and US are struggling with this phenomenon.

Famous Quants

The first genius, who found out that with the help of mathematical skills it was possible to earn millions on Wall Street, was Edward Thorp, who, in the 1950s, used his scientific knowledge for “hacking” the blackjack and drew an analogy between gambling and investment business. In the end of the 1960s Thorp was using his knowledge of probability and the statistics of the stock market, and by detecting and exploiting many anomalous evaluations in the stock exchange markets, he earned a lot of many.

One of the most successful hedge fund managers is considered to be 77 – year - old James Simons, who was given the nickname “Quant King” by his colleagues and journalists. In 1974, the former teacher of mathematics invested $600 thousand in commodity futures with his partners. At that period of time, the prices of sugar futures raised and after seven months novice investors earned $6 million. In 1978, Simons founded Monemetrics, an investment company, which was the predecessor of Renaissance. His idea was to use mathematical models in currency trading. Mathematical models have been improved over ten years, and in 1988 Simons and James Ax, his colleague from the University founded a hedge fund company, which was called Medallion. The 1990s were successful years for Medallion. In its 11 years of existence, the fund, where 148 people were working, demonstrated 43.6% annual average income. According to Forbes, his current fortune is estimated to be $14 billion.

Ken Griffin, is considered one of the most successful traders of our time. He founded a hedge fund, which today controls assets worth $26 billion, the 6 billion of which is Griffin’s own fortune. He gave the dominant role to the mathematical methods in the performance of Citadel. Like James Simons, he trusts trading conducted through computers, the programs of which are created by mathematics and physics.

Forex and CFD Trading Platform NetTradeX

NetTradeX is a CFD and Online Currency Trading platform that helps  to make trading operations in Forex Markets. NetTradeX owns trading platforms for Windows and for mobile.  You can find more information about NetTradeX trading platforms for mobile in my future posts.

In this post I will speak about NetTtradex Trading Platform for Windows and about NetTradeX Advisors.

NetTradeX Trading Platform for Windows (v2.5.1)

NetTradeX Trading Platform for Windows (version 2.5.1) offers more than 40 currency pairs and more than 100 Index, Equity and Connodity CFDs for trading. This  trading platform has a complete set of features for Forex Trading and for Forex technical analysis. NetTradeX trading platform allows the trader to place Trailing-Stop order with server-side execution and allows to use trading orders – Pending, OCO, Activated, Stop Loss, Take Profit.

It is worth mentioning the advantages of the platform. These are:

• Trading in all major financial markets
• Balance and lock trading
• Opening positions of any volume
• Instant execution of deals
• Server-based execution of Trailing Stop order
• Built-in language NTL+ for automated trading
• Unique portfolio trading (GeWorko Method)
• Opportunity to create personal trading instruments

 NetTradeX Advisors

NetTradeX is a software product considered to be complementary the main NetTradeX Trade Platform. The benefit is that users can operate only on the terminal NetTradeX Advisors or simultaneously on both terminals – primary and secondary.

NetTradeX Advisors employs the same data for user authorization as those of Trading Platform, that is as you login you need to insert the following info – login (the one of your NetTradeX account), password – again your NetTradeX account password and Type (Demo/Real).

In the last days of 2016, investors made profits