Gold is essential for your diversification strategy. Learn how to protect your portfolio.
With recent occurrences such as geopolitical tensions and climate change, the markets have become more unpredictable than ever before. This can be tricky for anyone trying to build a well-balanced trading portfolio to reduce risks for consistent gains.
So, what can traders do to build more resilient portfolios in volatile markets?
Everyone knows of the adage, “Don’t put all your eggs in one basket”— Now, the big question is… which basket then?
The sudden rise of chaos in the market brightened the appeal for safe-haven assets. Many traders have included greenbacks, mutual funds, and government bonds… but there’s one reliable asset that has proven to stand against the test of time.
Before we delve into why gold is a great portfolio diversifier, it’s important to first understand how to go about your diversification strategy.
Diversification involves putting your money in a variety of assets that typically do not react in the same way or at the same time to market volatility.
Because gold is not tied to any specific currency, this helps protect your portfolio against dollar devaluation and fluctuations in exchange rates.
During the financial crisis in 2007 – 2009, we witnessed one of the worst shocks to the US economy. The US stock markets crashed. The housing bubble had burst. Unemployment climbed. As we were on the brink of total market collapse, investors sought shelter in gold. The demand for gold spiked and continued to climb, doubled in value, reaching new highs*.
*PS. This is a cautionary lesson of why we need to diversify our portfolios.
3 bright reasons why gold is now your best bet to protect profits and limit losses
Central Bank’s Sustained Purchase of Gold
According to a report from the World Gold Council (WGC) on January 31, 2022 was a huge year for gold. Central banks and other institutions snapped up around 1,082 tonnes of the precious metal, setting a new record. The trend continued into 2023 with the second-largest purchase ever recorded, totaling 1,037 tonnes.
When central banks buy lots of gold, it can become scarce. This often happens during times of political tension when people see gold as a safe bet. As more people rush to buy gold, its price goes up. Now could be a wise time for you to put your money on the precious yellow metal before it’s too late.
The Dow Jones Industrial plunged 1.76% while the S&P 500 lost 1.55%. Nasdaq 100 dropped 1.59% at the end of the day, entering bear market territory. U.S. stocks were under pressure, along with major Europe stock indexes. However, gold prices continued to surge and held most of its gains at the market close.
For the majority, this is a tragedy. While we don’t wish for the tensions to escalate, gold has once again proven its status as a safe haven. Industry experts believe that only a sharp reduction in geopolitical tensions or the unlikely event of an interest rate hike by the Fed will cause demand for gold to decrease.
If history is a guideline, this leads us to the next point as the Middle East conflict intensifies.
Gold Prices at All Time High
Gold’s rapid rise was driven further when Iran launched over 300 drones, missiles on Israel, in response to April 1’s suspected Israeli strike on the Iranian consulate in Damascus, Syria.
The US dollar and gold typically have an inverse relationship: when the US dollar rises, gold prices tend to fall, and vice versa.
According to Jim Wyckoff, senior analyst at Kitco Metals (quoted by Reuters):
What’s really telling about the strength of gold is the US dollar index and Treasury yields are climbing, yet gold continues to rally strongly. That’s very indicative of strong safe haven demand.
Plus, there’s a fast and easy way to add precious metal to your portfolio: Gold CFDs
By trading gold CFDs, you can…
Get more flexibility to enter and exit the markets (Higher liquidity)
Actively take control of your financial decisions – your trades, your way!
Amplify potential gains with just a small deposit. Unlock the power of leverage.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
Can day trading make you rich? Are all the stories portrayed over social media true, that day traders would all be sipping pina coladas at the beach all day everyday, changing their Lamborghinis as they wish? With the right skills and experience, day trading can be lucrative and lead to significant financial gains even when you have capital as small as $100.
But here’s the catch – it is a skill to be acquired over years of experience.
So What is Day Trading?
Day trading is a strategy in financial markets where traders buy and sell a certain class of asset within the same trading day – occasionally just within a matter of a few minutes. The goal is to simply capitalise on short-term price movements in the market. Typically, day traders close out all positions before the market closes to avoid unmanageable risks and price gaps, just so that sleep is not lost by worrying about how the trade will go next.
Some key aspects of day trading include:
Short-Term Nature: No holding positions for months or years, only holding positions for minutes to hours within the same day.
High Frequency: Many day traders execute multiple trades per day, looking for small but consistent opportunities to profit from the market.
Use of Leverage: Day traders often use leverage (borrowed money) to increase their buying power, which can amplify both gains and losses.
How Difficult or Risky is Day Trading?
As mentioned, the use of leverage magnifies the high returns. However at the same time it also creates significant risks. For a beginner in trading, it is common to go through a phase of financial losses, especially when risk management skills and psychological resilience is yet to be developed.
Is Day Trading a Scam?
It is, and it is not. Typically, day trading is perceived to have the image of a scam because new day traders failed to practice risk management leading to huge losses by over leveraging. Thereafter, such losses cannot be recovered except by sourcing new income from either becoming a better trader in the future or other channels of income, such as taking up a job, freelancing or working on a side hustle.
Another aspect of “scam” is when a day trader chooses to trade on a platform with little to none credentials. These are brokers that would entice traders to deposit money on a perpetual basis, and once a certain amount of deposit is hit, the broker would disappear into thin air, never to be found again. Therefore, it is important for a day trader to choose a trusted platform to start the journey.
OMG! So What is the Best Day Trading Platform?
Those who have been in the financial markets as long term investors may have heard about platforms such as Webull, Robinhood, Fidelity, eTrade and ThinkorSwim. These are platforms regulated by the United States, and there is this restrictive practice called the pattern day trading (PDT) rule.
A Quick Glance at Pattern Day Trading
The PDT rule is a regulatory guideline in the United States applicable to its stock market traders aiming to curb excessive risk-taking, protecting traders from the potential significant losses.
In general, traders who executed three day trades within five business days would be identified as a pattern day trader and would be required to maintain either $25,000 or they will not be allowed to day trade for a period of ninety days.
Sounds like a harsh requirement? That’s because it is.
How Much Money Do I Need to Start Day Trading? Must it be $25,000?
Not necessarily. With VTMarkets, it is much more flexible where you can start day trading with a minimum deposit of just $100. For a new trader, it is highly recommended that you test the platform out by trading on the demo account first.
Day Trading with a Variety of Asset Classes
Day trading is also not just limited to the stock market. VTMarkets give you a wide range of choices which include:
Forex: Buying and selling currency pairs within the same trading day, aiming to profit from short-term fluctuations in exchange rates. The forex market operates 24 hours a day, five days a week, allowing traders to engage in trading activities during any session: Asia, Europe, or North America. Major currency pairs include EURUSD, USDJPY, GBPUSD, USDCHF, AUDUSD, USDCAD and NZDUSD.
Indices: Collections of stocks that represent a segment of the stock market, such as the S&P 500, Dow Jones Industrial Average, NASDAQ Composite, FTSE 100, DAX, or Nikkei 225. Day trading of indices simply capitalises the price movements within the same trading day.
Energy: This sector includes commodities such as crude oil, natural gas, gasoline, and gas oil.
Precious metals: Gold, silver, copper, platinum, and palladium are precious metals traded as commodities and are typically traded in the form of derivatives such as CFDs. In particular, gold is popular among day traders due to its liquidity.
Candlestick Chart Patterns are a Huge Part of Day Trading
Regardless of which asset class chosen, candlestick chart pattern is the bread and butter for a day trader. This is also known as technical analysis, whereby traders seek to understand price patterns and market dynamics, thereby executing trade strategies using such timely and actionable insights in the markets being traded. Candlestick chart patterns helps with risk management while maximizing opportunities for profit within the same trading day,
OK, I’m Convinced. How to Get Started in Day Trading Now?
As someone new to day trading, the first step is to start demo trading with VT Markets. Once you are familiar with the platform, and gain confidence in your trading knowledge, you can also start trading in a live market environment.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
Affected by international holidays, the trading hours of some VT Markets products will be adjusted. Please check the following link for the affected products:
Pictured: You enjoying the beautiful sakura beneath a pastel blue sky
While the entire of Japan has been seeing the Sakura blossom throughout April, the Japanese Yen continued to depreciate following the announcement from the Bank of Japan on maintaining its current interest rate. With that, the JPY/USD fell to a 34-year low of 156, a price level last seen in May 1990.
Impact of the Weakening Japanese Yen
Export
From the perspective of export business, the weakening Yen helps large Japanese companies with global operations, as the value of their repatriated overseas profits also would increase accordingly.
Tourism
The weak Japanese Yen increases the buying power of foreign tourists, boosting the country’s already established status as a popular destination, and even exceed pre-pandemic levels. Combined with the cherry blossoms happening from March to May every year, the streets of Kyoto are filled with more tourists than ever. Bloggers speak about how visiting Japan feels cheaper than other first world countries such as Switzerland, Australia or New Zealand, and this is particularly true for tourists whose income are denominated in the US Dollar or Euros.
If you must ask whether this is a good time to take a vacation to Japan, the answer is a resounding yes. Book that flight, pack your bags, go – while the cost is still relatively low.
Day-to-Day Consumption
On the downside, a soft yen makes imports of energy and food more expensive, hitting domestic consumers hard. Although in March 2024, big companies in Japan agreed to raise wages by 5.28%, which is also the heftiest in 33 years, consumption remained soft and there is much more room for the Japanese Yen to improve.
What’s Next for the Bank of Japan (BoJ)?
BoJ governor Kazuo Ueda has stated that the overall policy settings of Japan will remain accommodative, meaning there will not be a major interest hike unless inflation runs hotter than expected. The key point to be observed will be whether consumption recovers.
Will JPY Remain Weak or Recover?
That will largely depend on the trajectory of the interest rate gap.
From the Perspective of JPY
What governor Ueda said seems to indicate that the rate gap between JPY and USD will remain wide. If such measures were to be maintained, it is no surprise that the selling momentum of the JPY will continue, while strengthening the USD.
From the Perspective of USD
On the flip side however, there is a slight rebound of the JPY after Fed chairman Jerome Powell indicated that the US central bank will maintain its plan of cutting rates three times in 2024 despite bumpy inflation. Such dovish move by the US Fed will tighten up the rate gap later in 2024 and would support the strength of the JPY.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
With forex brokerages a dime a dozen these days, it’s easy to overlook the importance of a good broker. With each broker touting a variety of selling points and gimmicks, traders today are overwhelmed from information overload – making them especially susceptible to exploitation by scammers.
While not entirely fool-proof, traders equipped with comprehensive market knowledge are significantly less vulnerable to fraud. Which is why today we explore the case of Michael Philip Atkins – a 51-year-old American man who was extradited to Singapore after being arrested for fraudulent trading.
Atkins, who was recently sentenced in Singapore, deceived investors out of approximately $13.2 million by misrepresenting the success of their investments.
How Did the Scam Work?
Michael Philip Atkins and his company, Aureus Capital, is a textbook example of how a forex trading can be used as a pretext for a scam.
The Setup
Aureus Capital was ostensibly set up to offer leveraged foreign exchange trading services. From April 2013 to July 2014, the company attracted clients with the promise of managing their funds to generate substantial profits through forex trading.
Clients entered into agreements where they would share 40% to 50% of the profits with Aureus, while bearing all the losses.
The Deception
To begin trading, clients were instructed to transfer funds directly into a specified bank account. Over the course of operation, this account amassed more than S$13.2 million from hopeful investors. However, the majority of these funds were not used for their intended purpose.
Of the S$18 million collected, Aureus Capital funneled more than S$14.7 million into other channels, including hefty payments to its directors, leaving a minuscule portion for actual trading.
Misrepresentation
To maintain the illusion of profitability, Aureus Capital issued weekly statements to its clients. These statements purportedly reflected profitable trades and a healthy investment portfolio.
In reality, these statements were grossly misleading as only about $1.25 million was ever actually used for trading activities, and these operations were, in fact, loss-making.
The Collapse
The scheme began to unravel in mid-2014 when Aureus Capital announced it was halting trading to “acquire a banking license.”
This was a diversion. When clients requested withdrawals of their funds, they were stalled with promises of refunds and rebranding. Eventually, the company became uncontactable, leading to a police alert by the distressed investors.
Legal Actions
Atkins initially evaded legal consequences by fleeing to the United States but was eventually extradited back to Singapore due to international law enforcement cooperation, marked by an Interpol red notice.
His extradition and subsequent legal proceedings eventually led to a prison sentence of three years and three months.
Global Incidents of Forex Fraud
Sadly, Atkins’ case is not an isolated incident. Multi-million forex scams are not unique or rare – in a field where accountability often is slighted,
The Crown Forex Scam
In Switzerland, Crown Forex declared bankruptcy in 2009 after being investigated for financial irregularities.
Investors around the globe lost around $79 million due to the firm’s illicit activities, including the misuse of investor funds for personal gains and operational expenses rather than actual forex trading.
Refco Scandal
Another high-profile forex fraud was the collapse of Refco in 2005, a company that concealed $430 million in bad debts from its investors.
The scandal not only led to significant financial losses for traders but also highlighted severe lapses in corporate governance and risk management.
Proliferation of Forex Scams
Fraudulent practices in forex range from Ponzi schemes to sophisticated “Robot” scamming, where fake automated trading systems are touted for their supposed high returns.
Additionally, “signal seller” scams involve individuals who, after collecting fees for trading tips, disappear without delivering any real value.
The allure of easy money can be tempting, but these examples serve as a cautionary tale about the risks of engaging with unregulated entities or those promising unrealistic returns.
Identifying and Avoiding Scams
The key to avoiding such pitfalls is education and vigilance. Traders must be wary of brokers promising high profits with no risks, and the absence of regulatory oversight.
Common red flags include high-pressure sales tactics often found in boiler room scams, unprofessional practices like unsolicited cold calls, and the use of unfamiliar trading platforms.
The Importance of Regulation
But often times there are simply too many variables to take into account when evaluating these brokers. That’s where regulation comes in.
See – regulation is a critical factor in the trustworthiness of a forex broker. A regulated broker is more likely to offer transparent operations and fair trading conditions.
Here’s a look at the steps forex brokerages must undertake before acquiring a license and the protections these regulations afford to investors:
Capital Requirements
To ensure financial stability and the ability to withstand market volatility, regulatory bodies often require forex brokers to maintain a minimum level of operating capital. This requirement protects clients by ensuring that the brokerage can meet its financial obligations, particularly during periods of unexpected losses
KYC and Background Checks
Regulatory authorities conduct thorough background checks on the brokerage’s owners and key staff members. This helps prevent individuals with a history of fraudulent activities or financial malpractice from running or being involved in forex brokerage operations.
Operational Compliance
Forex brokers must comply with operational standards that include fair execution of trades, transparent pricing, and the proper handling of customer funds.
Compliance is monitored through regular audits and reporting requirements.
Segregation of Funds
To protect investors, regulations often require that client funds be held in segregated accounts separate from the brokerage’s operating funds.
This prevents the misuse of client money and ensures that the funds are available for withdrawal at all times
Risk Disclosure
Brokers must provide detailed and clear information about the potential risks associated with forex trading.
This includes the risks of leveraged trading, the volatility of the forex market, and the potential for loss. Accurate risk disclosure ensures that clients make informed financial decisions.
Protections in Place for Investors
Regulations also protects traders by setting in place certain safeguards to ensure accountability by brokerages.
Investor Compensation Schemes
Many regulatory jurisdictions offer compensation schemes that protect investors if a forex broker fails. These schemes can reimburse investors for losses up to a certain amount if the broker becomes insolvent or ceases trading.
Perhaps the most well known example of an investor compensation scheme is the Financial Services Compensation Scheme (FSCS) in the United Kingdom. This scheme acts as a safety net for clients of authorized financial services firms.
Ever had that sinking feeling that you may have been scammed? 😲
— Financial Services Compensation Scheme (@FSCS) March 18, 2024
If a firm fails or goes bankrupt, the FSCS can compensate customers. For investment claims, including those related to forex trading, the FSCS covers up to £85,000 per eligible person, per firm.
This protection includes investments, insurance policies, insurance broking (for policies underwritten), and deposits.
Dispute Resolution
Regulated forex brokers are required to have in place effective procedures for addressing customer complaints and disputes.
This often includes access to an independent ombudsman or a financial dispute resolution service, which can offer a way to resolve issues without the need for costly legal action.
Transparency and Fair Practices
Regulation enforces strict rules on marketing and what brokers can promise to potential clients. It ensures that all advertising material is honest and not misleading, providing traders with realistic expectations about the outcomes of forex trading.
Regular Monitoring and Reporting
Regulated brokers are subject to ongoing monitoring by their regulatory body, which includes regular reporting on their financial health and compliance with trading practices.
This continuous oversight helps to maintain a safe trading environment for all participants
A good broker like VT Markets can significantly reduce the risk of falling victim to forex scams.
Regulated by multiple regulatory bodies, such as Mauritius Financial Services Commission (FSC) as well as Financial Sector Conduct Authority (FSCA) of South Africa, VT Markets strictly adheres to regulatory standards, transparency in operations, and robust educational resources.
Such resources empower traders with the knowledge to spot scams. This includes providing detailed information about trading conditions and the risks involved in forex trading.
Nevertheless, education remains the trader’s best defense, ensuring they are equipped to identify and avoid potential scams.
VT Markets is committed to providing customers with a faster and more stable trading environment. We will upgrade our server and the MT5 software version from 00:30 to 06:00 server time on April 27, 2024 (Saturday).
During this period, Client Portal / VT Markets APP / MT4 / MT5 will be affected. You will not be able to log in to trade or perform the following operations, including deposit and withdrawal applications, account opening, and other account-related applications.
Please refer to the MT4 / MT5 software for the specific update completion and trading opening time.
Please pay attention to the following matters:
1. During the maintenance period and before the opening of the market, the quotation servers will be stopped. You will not be able to open new positions, close, or adjust any existing positions.
2. There might be a gap between the maintenance period and before/after the trade opening time. Pending orders or stop loss/take profit which is within the gap range will be executed at the market price after the maintenance ends. We recommend you pay attention to your positions.
Regarding MT5 server upgrade, please make sure that after April 27, 2024, your MT5 software has been updated to version 4150 or higher, and the computer operating system must be Windows 7 x 64-bit (or newer) to meet the minimum device requirements. You can download the latest version from the official website “Trading” → “MetaTrader5” to avoid the software malfunctioning.
The steps to check the MT5 software version are as follows:
※PC: Go to MT5 software > Help > About
※Android: Go to MT5 software > About
※iOS: Go to MT5 software > Settings > Settings
If you have not upgraded to the latest version, please uninstall the old version and click the following link to download and install the latest version:
