We are hearing more and more about bitcoin, an electronic currency on which some traders are quick to speculate. Here is an article to sort out the true from the false regarding bitcoin.
What is bitcoin?
Bitcoin, currency and means of payment
It is electronic money created in 2009 by Japanese calling himself Satoshi Nakamoto (pseudonym). We also say “virtual currency” but personally we don’t like this term which implies that this currency is not real. It is, however, since it is possible to pay for certain purchases with bitcoin. The objective was to create a currency independent of central banks and therefore of states. Therefore, bitcoin can be used in all states and especially between countries using different currencies, which minimize transaction costs since there are no exchange costs.
Bitcoin, a currency that knows no inflation
The basic principle of bitcoin is that unlike other currencies, it cannot experience inflation. In fact, bitcoin is bound to be in constant deflation, and this is what attracts investors and speculators of all kinds. How is that possible, you ask yourself? Bit coin’s money supply is limited; it will never exceed 21 million regardless of demand. So in theory, it is a currency that will always increase in value. In practice of course it is very different: in the short history of bitcoin we have already witnessed prodigious declines linked to crises of confidence in this electronic money. From Trademy you can have the perfect choice now.
What are the pros and cons of bitcoin?
Bitcoin is still recent, hence the many questions about it. While it has many advantages, the risks and doubts associated with this new means of payment should not be overlooked. Here are the main positive points of bitcoin and its limits.
Benefits of Bitcoin
- Bitcoin does not depend on a central bank or a state, so an economic or political crisis will not affect it
- Transactions between two states with different currencies will be less costly than changing currency
- Bit coin’s money supply being limited, this currency does not experience inflation
- For speculators, it’s very high volatility makes it possible to make profits in the very short term
- Bitcoin can be used worldwide
- There is no amount limit for bitcoin transactions
An extremely basic article today but not useless, which takes up the fundamental advice of forex trading: follow the trend. It sounds simple but it is not always as easy as it seems. This remedial course will allow you to learn how to identify a trend, whether or not to enter the market and if so which way to place your order. You will also learn to draw your own trend lines and use certain indicators to identify the market trend (or the absence of a trend for that matter). Of course, some are adept at contrarian approaches, and these methods can work just as well if used when appropriate. Only here, trend following alone will be discussed since it is the most widespread method among forex traders, and it is also the easiest to understand when starting out.
Trend tracking in the forex market
The objective of trend following or directional trading is to follow an upward or downward movement of the market. We will try to follow the entire movement, even if it is quite utopian to want to buy at the lowest to resell at the highest. The idea is still to get closer to this ideal. It is a method that is well suited to the forex market since it minimizes risk taking and the costs (spreads) taken by brokers. Indeed, the number of trades is relatively low with the trend following. Finally after, everything depends on your time horizon but with a graph in m5 you can hardly speak of “trend”. Personally for this method, we favour the times from H1 to H4, over 150/200 periods. If you do otherwise. From Unocoin exchange now you can have all the supports.
Why follow the trend?
Like any theory, trend following is based on an initial premise: the markets are punctuated by large bullish and bearish cycles which follow one another. If you think this is wrong, you have no interest in following this method. And there are many times when this claim can be questioned. Nevertheless, the trend following method is still reputed to be one of the most effective in the long term.