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Why You've Got a Bigger Advantage than Professionals

Fusion Markets

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You’ll often hear in the media or from professional market participants that retail clients “shouldn’t try to compete with the professionals”.


Ignoring the condescension here for a moment (“the adults will take it from here”) it is my firm belief after ten years of trading that this isn’t always true.


Sure, any beginner will find it challenging at the beginning to trade successfully, but you can’t expect to play like Roger Federer after one match of tennis, can you?


Charlie Ellis, the man who oversaw the $24 billion Yale endowment fund in the US once, said “watch a pro football game and it's obvious the guys on the field are faster, stronger and more willing to bear and inflict more pain than you are. Surely you would say ‘I don’t want to play against those guys.”


But Charlie is wrong in a few ways.


Yes, professional traders and institutions have many advantages at their fingertips. They get news faster than you do. Their trades go more quickly than yours. They pay far less than you do. You get the picture.


But it’s not all doom and gloom. Here are a few reasons why:


Time


No, not in the sense that you have more actual time to trade than them.


You probably don’t.


You’ve probably got a full-time job.


You might have kids or ailing parents to look after.


Trading is like a side hustle for you.


BUT your time horizon is different from theirs.


You can hold a trade for days or weeks without a Manager yelling at you “Why the hell are you selling euros, you dummy… the market is going up”. You might enter a trade on gold and plan to hold it for months.


A professional fund manager or trader might not have that luxury due to quarterly reviews, investor pressure or whatever else.


Professional Risk


Professional or Career risk is one I picked up from famed value investor, Howard Marks. In his book “The Most Important Thing” (one of my favourite investing/trading books of all time – buy it!) he talks about how in the GFC there was so much pressure on investors to not look silly by calling the bottom of the market or “catching a falling knife”. No one wanted to be the guy in the office who was buying Citibank at $1 per share!


Similar to my time point above, you don’t have that problem.


You don’t have your colleagues questioning you why you’ve bought or sold some instrument. Or a boss that is screaming at you and putting you into an emotionally defensive position trying to justify your actions.


Will you lose your job for selling USDJPY? No.


Does a professional trader get fired for always missing targets or taking on too much risk? Yes.


You need to work out what you’re happy with in your trading goals and go for them.


It’s entirely up to you what you define as success. The Pros don’t have that luxury.


Benchmarks


Which brings me to my next point.


Most professional traders and investors have a benchmark. If you’re a fund manager you’ll send out your monthly report to your investors saying “here is how much we made/lost.. and here is what the benchmark did”.


If you miss that benchmark, get ready for investor withdrawals. As a professional, you’re judged on your performance. Simple as that. The more investors leave. The more you have to sell. The more you sell, the worse your performance!


What’s your benchmark? You get to set your own. Happy with 1% a month? Awesome.


What about $100 a month so you can buy your wife dinner? Happy days.


Or $5,000 a month so you can pay off your mortgage? Even better.


It comes back to autonomy and your desires. No one else decides that but you.


Fees and Expenses


Believe it or not, you do have a HUGE advantage here, especially if you’re trading with a low-cost broker (hello, Fusion!)


If you’re a professional investor/manager, you’ll often have a significant research team, a very fancy office with lovely views, staff bonuses, visits to various investment conferences etc.


Not to mention all that travel to see your clients and investors!


Putting that aside for a moment, if you choose a good broker, you’ll pay zero spread and a small commission that is not far off what the pros trade. They’ve got $100,000,000 though, you’ve got one thousand!


So, ignore the haters telling you to stay out of the market because its only for the big boys.


However, let me be clear.


I’m not saying trading is easy and (unlike some) and that you can soon retire on the beach. It’s not. Trading FX, in particular, is a highly challenging exercise.


But don’t just assume because there are so many professionals in this that you can’t succeed or you’ll never be good enough. You have to play your own game, and for me, that’s the best part. I set my own rules as to what I consider success. That’s something the pros will never get.  


If you’d like to start trading and use your advantages to outperform the pros, Sign Up to Fusion Markets and get your feet wet with our demo account. When you're ready start a live account to start making real-time trades.

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Ethereum Trading: All You Need to Know
Fusion Markets

What is Ethereum?  


You may have heard of Ethereum being compared to Bitcoin, but Ethereum isn’t actually the digital currency itself. Instead, Ethereum is the technology that can run various financial services like payment systems, identity software, security programs, and of course, cryptocurrency trading.  

But how does this technology work?  

Like Bitcoin, Ethereum also uses blockchain technology, but there are quite a few differences on the deeper, more technical side. Blockchain technology is the foundation that supports all of Ethereum’s services.  

The biggest feature of Ethereum is that it is a programmable blockchain. This means that you’re free to use the technology according to your own needs. Whether you need it for payments, software, or even Bitcoin, you’re free to do that!  


Some of the world’s biggest companies are using blockchain in various ways, which shows how flexible the technology is. BMW, the renowned automaker, is using the Ethereum blockchain to track materials across its supply chain.  

De Beers, the biggest diamond mining company globally, is using the Ethereum blockchain to track diamonds from mining to selling. HSBC is also using the blockchain to conduct foreign exchange trades on its FX Everywhere platform.  

The blockchain can be used on just about any technology that requires information to be logged and verified.   

But if you’re here reading this article, you’re probably more interested in investing in cryptocurrency or buying cryptocurrencies. That would be ETH or Ether.  

  

What is the difference between Ether and Ethereum?  


If Ethereum is the technology, then Ether is the cryptocurrency that runs on that technology. However, for most people, “Ethereum” and “Ether” are used interchangeably to refer to the digital currency instead of the technology.  

The shorthand for Ether is ETH, and just like Bitcoin, ETH is a form of decentralised finance or “defi.”  

This means that the digital currency is not centrally regulated by one authority. Instead, all the computers on the blockchain do the work of validating each and every transaction on the network.  

Ether is up there with Bitcoin as one of the most highly traded cryptocurrencies globally, along with Ripple XRP and Litecoin and others available on Fusion Markets’ platforms.   

  

The benefits of trading Ethereum  


As with any digital currency, the biggest benefit of trading Ethereum is the lack of centralised regulation because of blockchain technology. This means that making fraudulent transactions on the network is extremely difficult and almost impossible.  

However, one thing that makes Ether different from Bitcoin is that the supply of Eth is limitless.  

Let’s break it down a little bit.  

The way Bitcoin works is people are constantly “mining” for Bitcoin. However, there is a predefined limit for the amount of Bitcoin that can ever be in circulation. Once all the available Bitcoin has been mined, that’s all the Bitcoin that will ever circulate.  

The Bitcoin mining rate slows down over time, so the prediction is that the last Bitcoin will be mined at around 2140. That’s over a hundred years from now, but it’s still a definite time that will arrive.  

For most people, the problem with the limited supply of Bitcoin is that it can create issues like high inflation levels in the future.  

The supply of Ether does not have the same limitations that Bitcoin has. Thus, it can be more stable in its fluctuations, and this effectively works as a hedge against extreme inflation.  

Ether is also less volatile, at least when compared to Bitcoin. So if you’re looking to invest or trade in cryptocurrencies, but you want to minimise the volatility, Ether may be right up your alley.  

  

Risk Management when it comes to Ethereum  


Despite the lower volatility levels of Ethereum, it is still a cryptocurrency. This means that unlike more traditional investments like stocks and forex, its price is still quite volatile in comparison.  

So, when trading or investing in Ethereum, it’s essential to employ risk management practices.  

First, only use as much money as you’re willing to lose. This is a basic precept for investing or trading in general, and it applies to Ethereum as well. The price of ETH in 2021 may be high, and it may look like it will continue to rise, but no one can really predict the next price movement.  

Second, diversify. Don’t put all your eggs in one basket. If you want to trade cryptocurrency, make sure to allocate your funds across multiple digital currencies. That way, if the price of one plummets, you still have your holdings in other cryptocurrencies to rely on.  

Third, do your own research. Don’t rely on social media gurus or finance forum posts that tell you when to buy or sell. Cryptocurrency is a fairly new concept, and it’s pretty much still in its infancy stages.   

If you’re investing in ETH, make sure that you understand it, how it works, and what the technology behind it is.  

A good investment is one where you believe in the product you’re investing in.   

While it’s true that no one can really predict how the price of the cryptocurrency will move, it’s much safer to put your money in investments that you’ve done research in instead of just blindly following what you see on social media.  

Finally, make sure to monitor your own physical and mental health while trading cryptocurrency. The markets run 24/7, and you don’t want to be looking at charts all day while ignoring your own well-being.   

Taking care of your mind and body allows you to make better, more rational trading decisions, dramatically reducing the risk.  

Risk management is a fundamental skill that any reasonable investor or trader should have. There are plenty of risks when it comes to ETH and cryptocurrency in general. Risk is unavoidable, so the best thing we can do is to manage and minimize it.  

  

The Future of Ethereum  


Despite cryptocurrency being a new concept and Ethereum being fairly more recent than Bitcoin, its rise in the charts shows that it’s here to stay.  

The main selling point of Ethereum is how its blockchain technology compares to Bitcoin, and with the number of people investing in or trading ETH, it’s clear that there is widespread acceptance and trust for ETH.  

Will ETH keep its place as one of the top cryptocurrencies in the future? The truth is, nobody knows. Governments are still only beginning to recognise and regulate cryptocurrencies, so the future of ETH is, as a whole, uncertain.  

But for some people, that uncertainty is what makes ETH such a good investment. Hopefully, this article has helped get you started on the basics of trading ETH. 

 


Ethereum Trading Cryptocurrency
Education
22.10.2021
Stuff that makes you think
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Beginner’s Guide to Cryptocurrency Trading
Fusion Markets

If you’ve hung around the Internet in the past five years, you’ve probably heard of the term “Bitcoin” or “cryptocurrency” being thrown about.

But what is cryptocurrency, and how does it work? How is it any different from the money we’ve grown used to over the past century? And how does cryptocurrency trading work?

People are talking about getting rich or blowing away their savings on this new technology, and it’s safe to say that cryptocurrency has taken the finance and tech industries by storm.

If you’re a little unfamiliar with cryptocurrency and you want to see what the hype has been all about, read on to get answers to your questions about cryptocurrency and cryptocurrency trading.

 

What is cryptocurrency?


In simple terms, cryptocurrency is a digital currency. It doesn’t exist in physical form and exists only in the digital world.

The main uses for cryptocurrency are “store of value,” currency, and as a traded item.

Cryptocurrency as a store of value is a fairly simple concept: you buy it and hold on to it while its value increases. This kind of use is why phrases like “investing in cryptocurrency” have popped up.

Since, for some people, the value of cryptocurrency will only increase as it becomes more widely accepted, they see cryptocurrency as more of a speculative investment than a commodity.

Whether or not cryptocurrency is a good investment will remain to be seen in the future, but it’s definitely true that the value of Bitcoin, the most popular cryptocurrency, has skyrocketed in the past years. Although with much volatility along the way to say the least.

As a currency, it works fairly like money, where you can use it to buy goods and services. A decade ago, you could use it to buy things only in the niche areas of the Internet. However, the acceptance of cryptocurrency is spreading more and more, and in some countries like El Salvador, Bitcoin has even become legal tender.

Like our typical currency (called fiat), the value of cryptocurrency also changes constantly. This is why there are markets for cryptocurrency trading available, and we’ll talk about that more later on.

 

What are the most popular cryptocurrencies to trade?


There are plenty of digital currencies around, and the most popular one, Bitcoin, is just one of many. There’s also Ethereum, Stellar, Ripple XRP, and Litecoin, which are some of the most traded cryptocurrencies around.

In more recent news, you’ve probably heard of Dogecoin as well. It’s a more niche meme that has gotten a lot of attention (Thanks, Elon!) as a cryptocurrency for trading, mostly because it saw a sudden increase in trading volume.

There are thousands of different cryptocurrencies out there, which just shows how versatile cryptocurrency is. If you want to trade cryptocurrencies, you can easily do so on platforms like Fusion Markets. These work very similarly to forex markets, where people buy and sell cryptocurrency regularly.

However, if you’re looking to trade cryptocurrency, it’s always important to do your research on which ones are good and which ones are not.

 

Benefits of cryptocurrency trading


For most traders, the biggest benefit of cryptocurrency trading is its novelty. Since cryptocurrency is still in its relative infancy, it has plenty of room to grow, and as it does, many believe that the value will only go higher and higher.

Another benefit is the fact that the cryptocurrency trading market is 24/7. Unlike trading individual stocks between 10am and 4pm (like in Australia), or even 24/5 like Forex, Crypto runs 24/7.

As long as people are willing to buy and willing to sell, the market will always run. This means that you don’t have to wait for market hours if you want to make a trade.

One more thing to note is the volatility. Cryptocurrency is volatile, much more volatile than forex and stocks. The prices of cryptocurrency can rise and plunge in a matter of seconds for seemingly no good reason, and for a lot of people, this volatility brings in a lot of excitement yet is not for the faint hearted.

 

Risk management


Of course, the things that make cryptocurrency trading the most exciting are also the biggest risks.

The volatility of cryptocurrency means that it can plunge just as easily as it rose. In fact, if you look at a price chart of Bitcoin, you’ll see that there have been multiple plunges that caused people to think that it was the end of crypto.

Additionally, the fact that the markets are open 24/7 means that the price can change significantly while you’re away, much like forex trading. It’s on you to make sure that you can trade while maintaining a good work/life balance.

 

Main differences between crypto and forex/fiat


While cryptocurrency is a digital currency, it doesn’t mean it’s the same as the money you have on a wallet such as PayPal.

Fiat currency like the US Dollar or the Euro is backed by physical currency. This means that for every dollar you have on your online account, there’s an equivalent physical form stored somewhere.

In contrast, cryptocurrency is purely digital. There’s no withdrawing it for cash, and the closest you can get is putting it in cold storage wallets instead of keeping it at an exchange, but that’s about it.

One more thing to note is that fiat currency is centralized finance, meaning that it’s regulated by the government that issues it. The US Government regulates and prints the US Dollar, for instance.

On the other hand, cryptocurrency is decentralized finance or “defi.” There’s no particular institution that regulates it. Instead, every single computer that’s on the network, or the “blockchain,” works to validate every transaction that takes place.

Basically, all computers monitor everything instead of trusting one institution (like a government) to do it for everybody. This aspect of cryptocurrency is the most appealing for many people because of its libertarian aspects since it’s free from government or bank control.

Additionally, the decentralized nature of the blockchain makes it so that it’s harder to commit fraud. Since all computers monitor the ledger of transactions, anyone who would want to make a fraudulent transaction would have to defraud all the computers on the blockchain.

That’s a lot of computers across the world.

 

There’s so much more to cryptocurrency, and we’ve barely scratched the surface of the technology behind it. We are witnessing a digital revolution in the making, so if this article has gotten you interested, and if you want to dip your toes in, it’s always best to do a lot of research and practice on a demo account first before spending your hard-earned money.

 


Currency Trading
Trading Tips
Bitcoin
Crypto Trading
Beginners
30.09.2021
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