Bitcoin Blasts Through $9,000 But Another Fork Is Coming

Bitcoin seems to be like the victim in a 1980’s slasher movie. It keeps running towards the exit to [generic horror movie location: camp, house, neighborhood] screaming the entire way only to be bifurcated via chainsaw and/or machete right before salvation.

OK maybe that was a metaphor was a little labored, but just this year we have seen bitcoin’s drop and recovery twice after the bitcoin cash and bitcoin gold fork and once just under the fear of a hard fork – Segwit2x – that was slated for the middle of November but was cancelled due to disagreement within the bitcoin community.

This latest bitcoin fork though seems slightly different as certain sources are speaking about 1 bitcoin potentially being turned into 10 bitcoin diamonds. Kind of like if aforementioned slasher movie victim was a Olympic cross-country runner that may spontaneously force mitosis. This could possibly push even more speculative buyers into the fray trying to ride the bitcoin dragon. The groups, known as the Bitcoin Diamond Foundation, of bitcoin miners that are behind the fork proposal seek to increase the capacity of the block and the speed of transaction confirmation.

Since Friday we have seen bitcoin blast through the $9,000 level inching towards $9,600 (indicative price) at the time of writing this article. Yet again this in combination with the proposed fork are making analysts and the general investigentsia (like the intelligentsia but for money. Funny enough some of bitcoin’s price drops weren’t even due to forks.

The crashes bitcoin experienced though weren’t exclusively due to the fear of forks (forkaphobia?) though:

Historical Bitcoin Crashes:

  • 71% price drop, in 2013 recovering after seven months, due to a rush of speculative buyers after media coverage.
  • After a jump 10 times its April $120 price by November, bitcoin came down to $500 right before Christmas. This was again largely due to speculative bitcoin trading.
  • 49% drop in 2014 recovering after 2 years this time due to the now infamous Mt. Gox hack. Mt. Gox was at the time one of the most established bitcoin exchanges.
  • 36% drop under speculation of a fork in June 2017 – ironically the actual fork in August that created Bitcoin Cash, didn’t affect the price as much.
  • 37% by the middle of September, but just three days later the crypto started recovering pushing through the $4,000 mark towards it pre-price drop price of close to $5,000. The reason for the drop was largely due to China’s regulation of ICO and speculation that China would outright ban cryptocurrencies.

Ultimately when talking about bitcoin and these past crashes, you need to remember that in its most distilled form, taking away the media buzz, investors potshots and moguls hopeful quips about the future – bitcoin is a currency, the more people that actually use it to buy things and the more retailers start adopting it the more its intrinsic

https://www.yourgenome.org/facts/what-is-mitosis

http://fortune.com/2017/09/18/bitcoin-crash-history/

https://en.wikipedia.org/wiki/List_of_Bitcoin_forks

 

Shine on, You Crazy Blockchain: the Bitcoin Diamond Fork is Now

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Bitcoin Blasts Through $9,000 But Another Fork Is Coming

Bitcoin seems to be like the victim in a 1980’s slasher movie. It keeps running towards the exit to [generic horror movie location: camp, house, neighborhood] screaming the entire way only to be bifurcated via chainsaw and/or machete right before salvation.

OK maybe that was a metaphor was a little labored, but just this year we have seen bitcoin’s drop and recovery twice after the bitcoin cash and bitcoin gold fork and once just under the fear of a hard fork – Segwit2x – that was slated for the middle of November but was cancelled due to disagreement within the bitcoin community.

This latest bitcoin fork though seems slightly different as certain sources are speaking about 1 bitcoin potentially being turned into 10 bitcoin diamonds. Kind of like if aforementioned slasher movie victim was a Olympic cross-country runner that may spontaneously force mitosis. This could possibly push even more speculative buyers into the fray trying to ride the bitcoin dragon. The groups, known as the Bitcoin Diamond Foundation, of bitcoin miners that are behind the fork proposal seek to increase the capacity of the block and the speed of transaction confirmation.

Since Friday we have seen bitcoin blast through the $9,000 level inching towards $9,600 (indicative price) at the time of writing this article. Yet again this in combination with the proposed fork are making analysts and the general investigentsia (like the intelligentsia but for money. Funny enough some of bitcoin’s price drops weren’t even due to forks.

The crashes bitcoin experienced though weren’t exclusively due to the fear of forks (forkaphobia?) though:

Historical Bitcoin Crashes:

  • 71% price drop, in 2013 recovering after seven months, due to a rush of speculative buyers after media coverage.
  • After a jump 10 times its April $120 price by November, bitcoin came down to $500 right before Christmas. This was again largely due to speculative bitcoin trading.
  • 49% drop in 2014 recovering after 2 years this time due to the now infamous Mt. Gox hack. Mt. Gox was at the time one of the most established bitcoin exchanges.
  • 36% drop under speculation of a fork in June 2017 – ironically the actual fork in August that created Bitcoin Cash, didn’t affect the price as much.
  • 37% by the middle of September, but just three days later the crypto started recovering pushing through the $4,000 mark towards it pre-price drop price of close to $5,000. The reason for the drop was largely due to China’s regulation of ICO and speculation that China would outright ban cryptocurrencies.

Ultimately when talking about bitcoin and these past crashes, you need to remember that in its most distilled form, taking away the media buzz, investors potshots and moguls hopeful quips about the future – bitcoin is a currency, the more people that actually use it to buy things and the more retailers start adopting it the more its intrinsic

https://www.yourgenome.org/facts/what-is-mitosis

http://fortune.com/2017/09/18/bitcoin-crash-history/

https://en.wikipedia.org/wiki/List_of_Bitcoin_forks

 

Shine on, You Crazy Blockchain: the Bitcoin Diamond Fork is Now

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FOMC Fears Pushes Gold Up, ECB Pressuring Euro

During yesterday’s FOMC meeting concerns were aired regarding growth of inflation, raising suspicions that they may keep interest rates unchanged until the end of the year. Although most analysts assumed that an the US was poised for a third interest rate hike in 2017. This fear seemed to resonate into the markets causing gold to recover previous losses trading in the area of 1289.86 (indicative price).

 

Another central bank that may cause a market reaction is the ECB – today’s 12.30 GMT minutes could cause a change in the direction of the EUR that managed to remain relatively unscathed even during the inability of Merkel to consolidate her “Jamaican” coalition in the Bundestag. It is currently at 1.18318 (indicative price).

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What Is Leverage And How Its Used In Trading

There are people out there that are trading bitcoin with just $815 when its price is more than $8000? OK that might have come off as a bit too sell-y, but hear me out. In CFD and Forex trading there is a service most brokers offer called leverage. What is leverage? In extremely basic terms it increases the initial amount that you put forth for a trade. So you can understand all the benefits and of course risks involved with leverage though, you will have to read on.

 

Leverage 101

You won’t be graded in this class but you should definitely take notes. By definition leverage is using a tool to increase force. In trading terms that essentially means being able to make a larger trade with a much smaller initial investment. First and foremost, if you are trading without any risk management it’s like giving a monkey a machine gun – something is bound to go wrong, click the link if you don’t believe me. So now that you have some sort of risk management in place, let’s look into the nuts and bolts of leverage. First: calculation, leverage works like a multiplier, 1:5 means that every dollar is worth five. So a $100 is worth $500. OK that calculation is relatively easy, the next one gets a bit more complex, margin is the capital you need to keep in your account to be able to trade. Leverage becomes a “ratio” in this case so 1/5 = 20% (this percentage is also known as margin) means that you need at least 200 USD to perform a 1000 USD trade.  That is important when using leverage, because if the markets move against you and your account goes under $200 than in most cases your trades will be closed.

Most people use leverage in conjunction with stop-loss a risk management tool, to protect themselves from this.

 

So How Is that Useful?

For example we have seen bitcoin go viral, both on the markets and in the news. Today’s bitcoin price (indicative at the time of writing this article) is above $8100 pushing towards $8200 – how could any normal person trade on that price? Well with a leverage of 1:5 you could trade for just $1620 or with leverage of 1:10 you could trade bitcoin for just $810. The benefit being in the case of a climb of bitcoin, say from $8100 to $8200 you need a fraction of the $8,100 not the entire amount.

 

So How Much?

Too much of a good thing can be bad and leverage should be treated like that. It can be used within a very disciplined strategy with the correct fail-safes/risk management tools. Also partnering with a broker that offers negative balance protection, will prevent your account from going below zero when trading with leverage. Keep in mind that leverage increases not only your initial investment but your exposure to the market. What does that mean? Let’s assume you use a 1:5 leverage to open a $100 trade (i.e. with an initial investment of $20) compared to a 1:500 to open a $10,000 trade. If the markets move against you your loss will be analogous to your initial investment.

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Bitcoin is currently priced at 8000 USD. This is how are some people buying it for 800 USD

Owning or trading bitcoin might seem like a dream for most people, especially since the cryptocurrency reached an unprecedented high – breaking through the $8000 level today on November 20th. And each time it inches up a little more – another person out there mutters “If only I had…”.

What if I told you there are tons of ways to trade bitcoin. What if I told you that there is a way to increase the size of your trade, without the need to increase your initial investment?  Allow me to introduce you to CFD bitcoin trading, which you might not be familiar with, but it comes with a lot of robust features. Trading CFD bitcoin allows anyone to buy or sell with a predetermined price to exit the trade, which can help them manage their profit and risk (known as stop-loss and take-profit). It also allows traders to use leverage. For most people this is one of the biggest appeals of trading CFDs.

What is leverage you ask? Leverage is exactly what the name indicates – it leverages (A.K.A. increases) your trade, like a lever increases your strength – this means someone can enter a trade that is worth a little more than their initial investment. To keep the example simple; if a person has 1:10 leverage – which is what easyMarkets offers on bitcoin with an initial investment of $800 (these are the indicative prices at the time of writing this article) someone could purchase one bitcoin worth ten times their initial investment: $8000 (the indicative price at the time of writing this article). Of course, caution is necessary when trading, markets move in both directions.

In a completely hypothetical scenario, with a 1:10 leverage you could have purchased one bitcoin worth $2730 back in August for $273. Today, in ideal circumstances, your $273 dollars would be worth $8000 – a profit of $5270. If we go back even further, not that far though – 2010 10,000 bitcoin was valued at around $30 dollars (this is practically common knowledge due to the infamous Bitcoin Pizza Day), today that same amount would be worth around a staggering $80,000,000.

 



 

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Euro falls on the back of Merkel’s failed attempt to form a coalition.

Europe’s longest-serving leader is currently standing on the abyss of an uncertain future.  Angela Merkel’s attempt to form a coalition with the Free Market Liberal party(FDP) collapsed over the weekend with the FDP walking out and with its leader saying there was no “basis of trust” to form a new German government.

 

The failed negotiations now mean that Mrs. Merkel will meet with the German President Frank-Walter Steinmeier later today, who has the power to call a snap election.

 

Many are citing that this latest chapter is the worst crisis ever faced by Merkel’s in her 12-year tenure.

 

It appears that the main area of disagreement is once again the talk and fear of immigration, with the German Chancellor defending her open border policy during the 2015 -2015 refugee crisis.

 

Angela Merkel now has two options, try to form a minority government with the Green party which would leave her with very little power in the German parliament or indeed ask the German President to call a new general election only months after the previous one in September.

 

This latest case of uncertainty means that Europe’s biggest economy is handicapped and unable to move forward in any euro-area policies.

 

AS news of the failure to form a coalition hit the markets, the Euro has come under pressure, with the EUR/USD currently trading at the time of writing at 1.1749 and the EUR/GBP trading around 0.8879.

 

The DAX has also fallen and is currently trading around 12886.30.

 

With the financial markets being heavily influenced by politics, Angela Merkel’s meeting today with the German President and its outcome is being monitored closely and many a Euro bull are holding their breath.

 



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Markets Got You Down?

Ever heard of little thing called traders psychology? I know everyone and their brother talks about it, but the truth is that is because its arguably one of the most important aspects of trading and being a trader. A lot of people usually parallel traders in their mind with macho, can’t lose type of people. Losing though is part of the trading game and how you recover from a loss might be just as important. Another important component of trader’s psychology is the ability to make decisions under pressure. The competition is steep out there, so keeping a calm and collected demeanor while you are sitting on coals is important (I do not condone coal-sitting, it’s just a metaphor)

 

Discipline

A trading strategy is vital if you want to reach your investment goals. Knowing your target entry price, and knowing what measures you will take to manage your risk, isn’t worth much when you don’t adhere to it.  Exiting a trade prematurely because of market pressure, can have catastrophic results on a trader’s mentality. Exiting due to your strategy or data, gives you an opportunity to adjust and pivot when you are in the same situation in the future.

One of the biggest downfalls of starry-eyed beginning traders is focusing on the up, without having the correct risk management measures in place when it inevitably goes down.

 

Calm Yourself

Having a plan when things go proverbially sideways can help you maintain a cool head.  Being in full realization that any instrument on any market can go down just like it goes up will hopefully help you when you need to let go of a position in the red.   A great example is bitcoin, just a week ago within a period of just 24hrs it lost more than $1000. I’m pretty sure there were traders that held on to their bitcoin positions hoping it would move north of 7000 or more dollars only to see it crashing down.  And traders loved bitcoin, to the point where Google searches for buy bitcoin surpassed those for buy gold in October – but as the old axiom goes “love hurts”.

 

Options are Always an Option

The good thing about Options is that they allow you to only risk your premium.  That way even if the trade goes against you what you are risking is predefined.  This can help you control your emotions a little bit better since you more or less know the outcome if it goes against you.

 

That’s What Business is Like

If you are intending to be professional trader, you are essentially becoming your own boss and business do well and do badly. Again, this is realizing that there is a downside to every position, every market goes down, every bubble bursts and every rose has a thorn.  Even in a traditional job, some months are better than others (darn bills).  Think of your loses not as losses but pressure tests for your trading strategy. Although I’m sure Warren Buffet was born Wall Street Journal in hand, he must’ve made mistakes early on in his investing career (which started at 12 or something equally ridiculous).

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Bullet Report: Top 5 Market Facts to Know – November 17th

1. The U.S. dollar moved lower against other major currencies on Friday, but losses were expected to remain limited after an important U.S. tax reform bill was passed by the House of Representatives. The U.S. House of Representatives on Thursday approved a broad package of tax cuts, which will now be debated by the Senate. Investors were still cautious however, as the Republican majority is smaller in the Senate and no decisive action is expected until after next week’s Thanksgiving holiday.

 

2. The yen weakened in early Asia on Friday in a light data day regionally ahead. USD/JPY changed hands at 113.06, up 0.16%, while AUD/USD was trading at 0.7550. EUR/USD was last quoted at 1.1795, down 0.24%. The U.S. dollar index was last quoted up 0.17% to 93.88.

 

3. Oil prices were steady today but on track for the first weekly fall in six weeks, under pressure from surging U.S. supplies and creeping doubts over Russian support for continuing a cut in crude output. Brent crude was at $61.78 per barrel at 09:38 GMT. WTI was at $55.36 a barrel, up 22 cents. Still, crude was set to fall around 2-4% for the week on worries about growth in U.S. production and inventories.

 

4. The price of bitcoin spiked to a record high climbing above $7,900. As of 09:29GMT, the price of bitcoin was trading at $7,693.13, representing a gain of more than 6% since the day’s open of $7,279. That figure also signifies a gain of over $450, according to the CoinDesk Bitcoin Price Index (BPI).

 

5. The U.S. Department of Labor reported Thursday that initial jobless claims increased 10,000 a seasonally adjusted 249,000 for the week ended Nov. 11, missing forecasts of a 4,000 decrease. Philly Fed manufacturing index for November fell to 22.7 in November from 27.9 in October, undershooting economists’ forecasts for a reading of 25.



 

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Do You Know Your Pivot Points?

Trading can be really confusing right? I mean – S&R, Heinki-Ashi candlesticks, shadows, hammers and retracements – I mean what do those even mean?! Well, I know because I write about them, but not everyone writes about trading on a daily basis. Ok let’s at least set a starting point….see what I did there? Pivot points are key price regions which an instrument’s price might reach resistance or support. The way pivot points are calculated  are with standard metrics meaning they can stand as unbiased gauges of support and resistance. This is why many market veterans actually use pivot points to calculate S&R.

 

Pivot points are calculated with specific formulas; based on the instrument’s lasts day’s low, high and the last closing price. In general, three resistance, three support and one central pivot are plotted on a H1 (or one hour) chart. To calculated them:

  • Central Pivot point (denoted as PP) = (Close+ Low + High) / 3
  • First resistance (denoted as R1) = (2 x PP) – the instrument’s Low
  • First support (denoted as S1) = (2 x PP) – the instrument’s High
  • Second resistance (denoted as R2) = PP + (the instrument’s High – the instrument’s Low)
  • Second support (denoted as S2) = PP – (the instrument’s High – Low)
  • Third resistance (denoted as R3) = the instrument’s High + 2(PP – the instrument’s Low)
  • Third support (denoted as S3) = the instrument’s Low – 2(the instrument’s High – PP)

You can find the values for closing, low and high by putting the chart in D1 (or daily mode), using the previous day’s candlestick.

You can also use various tools which automate pivot point calculation and plots the indicators on your chart.

 

What do Pivot Points Do?

As I mentioned in the intro pivot points are great tools to map the area between support and resistance. It not as cut and dry as that though because the lines R1, R2 and R3 can also work as support, depending of the vector of the price action. Inversely, S1, S2 and S3 can be stand-ins for resistance depending on the conditions, so keep that in mind as we go forth with pivot points.

Here are a few ways pivot points can be used:

 

a) Trading a Breakout

If the price of an instrument doesn’t break through a pivot point it can be considered either support or resistance. Sometimes though an instruments price fuelled by fundamental data can break through these pivots.

This gives the trader using pivots points to delineate support and resistance the opportunity to trade the breakout – although in most cases the price will test these levels it broke through again.

Although many traders use breakouts in their strategy, it can definitely be risky.

 

b) Trading Within a Range

You can also use the pivot points to designate an area, that has not experienced a breakout.  Traders that use this strategy generally seek to buy towards the lower area of the region (thus at a lower price) and sell in the higher areas of the region (or a higher price). This is less risky than breakout, as a breakout can be momentary and in many cases may return to retest both support and resistance, whereas trading within a region, gives the trader more leeway. None-the-less there are multiple variables when using this, that can affect the outcome of a trade.

 

c) Gauging Market Sentiment

Pivot points can also be used to measure market sentiment, by watching what the price action does at the opening of markets in correlation to the central pivot point (which as you remember is an average of the Low, High and Closing of the previous day).

 

Conclusion

EA’s, chart indicators and tools such as pivot points are exactly that, tool. Every tool needs a competent user for it to work as it was intended. Keep in mind that trading has many variables which include both technical, fundamental and of course human factors.

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EM Asia Currencies Rebound

By Patturaja  Murugaboopathy 
    Nov 7 (Reuters) - Emerging Asian currencies rebounded on
Tuesday as a dollar rally lost some steam on lower U.S. Treasury
yields and investors were sceptical that the U.S. Congress will
quickly pass a major tax bill.
  However, investors were wary of a possible escalation in
political tensions that could affect the won and other regional
currencies, with U.S. President Donald Trump visiting South
Korea on Tuesday.
    Trump is on a 12-day tour in Asia, covering five Asian
countries, to discuss trade policies and North Korea.
    Given tensions over North Korea, the dollar-yen should
remain a bit weak this week despite the Bank of Japan's doggedly
dovish efforts to weaken the yen, Stephen Innes, head of trading
in Asia-Pacific for Oanda in Singapore, said in a report.

Reuters

 

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