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Hibiscus Petroleum Berhad (5199.KL)
https://preview.redd.it/gp18bjnlabr41.jpg?width=768&format=pjpg&auto=webp&s=6054e7f52e8d52da403016139ae43e0e799abf15 Download PDF of this article here:https://docdro.id/6eLgUPo In light of the recent fall in oil prices due to the Saudi-Russian dispute and dampening demand for oil due to the lockdowns implemented globally, O&G stocks have taken a severe beating, falling approximately 50% from their highs at the beginning of the year. Not spared from this onslaught is Hibiscus Petroleum Berhad (Hibiscus), a listed oil and gas (O&G) exploration and production (E&P) company. Why invest in O&G stocks in this particularly uncertain period? For one, valuations of these stocks have fallen to multi-year lows, bringing the potential ROI on these stocks to attractive levels. Oil prices are cyclical, and are bound to return to the mean given a sufficiently long time horizon. The trick is to find those companies who can survive through this downturn and emerge into “normal” profitability once oil prices rebound. In this article, I will explore the upsides and downsides of investing in Hibiscus. I will do my best to cater this report to newcomers to the O&G industry – rather than address exclusively experts and veterans of the O&G sector. As an equity analyst, I aim to provide a view on the company primarily, and will generally refrain from providing macro views on oil or opinions about secular trends of the sector. I hope you enjoy reading it! Stock code: 5199.KL Stock name: Hibiscus Petroleum Berhad Financial information and financial reports: https://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=5199 Company website: https://www.hibiscuspetroleum.com/
Hibiscus Petroleum Berhad (5199.KL) is an oil and gas (O&G) upstream exploration and production (E&P) company located in Malaysia. As an E&P company, their business can be basically described as: · looking for oil, · drawing it out of the ground, and · selling it on global oil markets. This means Hibiscus’s profits are particularly exposed to fluctuating oil prices. With oil prices falling to sub-$30 from about $60 at the beginning of the year, Hibiscus’s stock price has also fallen by about 50% YTD – from around RM 1.00 to RM 0.45 (as of 5 April 2020). https://preview.redd.it/3dqc4jraabr41.png?width=641&format=png&auto=webp&s=7ba0e8614c4e9d781edfc670016a874b90560684 https://preview.redd.it/lvdkrf0cabr41.png?width=356&format=png&auto=webp&s=46f250a713887b06986932fa475dc59c7c28582e While the company is domiciled in Malaysia, its two main oil producing fields are located in both Malaysia and the UK. The Malaysian oil field is commonly referred to as the North Sabah field, while the UK oil field is commonly referred to as the Anasuria oil field. Hibiscus has licenses to other oil fields in different parts of the world, notably the Marigold/Sunflower oil fields in the UK and the VIC cluster in Australia, but its revenues and profits mainly stem from the former two oil producing fields. Given that it’s a small player and has only two primary producing oil fields, it’s not surprising that Hibiscus sells its oil to a concentrated pool of customers, with 2 of them representing 80% of its revenues (i.e. Petronas and BP). Fortunately, both these customers are oil supermajors, and are unlikely to default on their obligations despite low oil prices. At RM 0.45 per share, the market capitalization is RM 714.7m and it has a trailing PE ratio of about 5x. It doesn’t carry any debt, and it hasn’t paid a dividend in its listing history. The MD, Mr. Kenneth Gerard Pereira, owns about 10% of the company’s outstanding shares.
Reserves (Total recoverable oil) & Production (bbl/day)
To begin analyzing the company, it’s necessary to understand a little of the industry jargon. We’ll start with Reserves and Production. In general, there are three types of categories for a company’s recoverable oil volumes – Reserves, Contingent Resources and Prospective Resources. Reserves are those oil fields which are “commercial”, which is defined as below: As defined by the SPE PRMS,Reservesare “… quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions.” Therefore, Reserves must be discovered (by drilling, recoverable (with current technology), remaining in the subsurface (at the effective date of the evaluation) and “commercial” based on the development project proposed.) Note that Reserves are associated with development projects. To be considered as “commercial”, there must be a firm intention to proceed with the project in a reasonable time frame (typically 5 years, and such intention must be based upon all of the following criteria:) - A reasonable assessment of the future economics of the development project meeting defined investment and operating criteria;- A reasonable expectation that there will be a market for all or at least the expected sales quantities of production required to justify development;- Evidence that the necessary production and transportation facilities are available or can be made available; and- Evidence that legal, contractual, environmental and other social and economic concerns will allow for the actual implementation of the recovery project being evaluated. Contingent Resources and Prospective Resources are further defined as below: -Contingent Resources: potentially recoverable volumes associated with a development plan that targets discovered volumes but is not (yet commercial (as defined above); and)-Prospective Resources: potentially recoverable volumes associated with a development plan that targets as yet undiscovered volumes. In the industry lingo, we generally refer to Reserves as ‘P’ and Contingent Resources as ‘C’. These ‘P’ and ‘C’ resources can be further categorized into 1P/2P/3P resources and 1C/2C/3C resources, each referring to a low/medium/high estimate of the company’s potential recoverable oil volumes: - Low/1C/1P estimate: there should be reasonable certainty that volumes actually recovered will equal or exceed the estimate;- Best/2C/2P estimate: there should be an equal likelihood of the actual volumes of petroleum being larger or smaller than the estimate; and- High/3C/3P estimate: there is a low probability that the estimate will be exceeded. Hence in the E&P industry, it is easy to see why most investors and analysts refer to the 2P estimate as the best estimate for a company’s actual recoverable oil volumes. This is because 2P reserves (‘2P’ referring to ‘Proved and Probable’) are a middle estimate of the recoverable oil volumes legally recognized as “commercial”. However, there’s nothing stopping you from including 2C resources (riskier) or utilizing 1P resources (conservative) as your estimate for total recoverable oil volumes, depending on your risk appetite. In this instance, the company has provided a snapshot of its 2P and 2C resources in its analyst presentation: https://preview.redd.it/o8qejdyc8br41.png?width=710&format=png&auto=webp&s=b3ab9be8f83badf0206adc982feda3a558d43e78 Basically, what the company is saying here is that by 2021, it will have classified as 2P reserves at least 23.7 million bbl from its Anasuria field and 20.5 million bbl from its North Sabah field – for total 2P reserves of 44.2 million bbl (we are ignoring the Australian VIC cluster as it is only estimated to reach first oil by 2022). Furthermore, the company is stating that they have discovered (but not yet legally classified as “commercial”) a further 71 million bbl of oil from both the Anasuria and North Sabah fields, as well as the Marigold/Sunflower fields. If we include these 2C resources, the total potential recoverable oil volumes could exceed 100 million bbl. In this report, we shall explore all valuation scenarios giving consideration to both 2P and 2C resources. https://preview.redd.it/gk54qplf8br41.png?width=489&format=png&auto=webp&s=c905b7a6328432218b5b9dfd53cc9ef1390bd604 The company further targets a 2021 production rate of 20,000 bbl (LTM: 8,000 bbl), which includes 5,000 bbl from its Anasuria field (LTM: 2,500 bbl) and 7,000 bbl from its North Sabah field (LTM: 5,300 bbl). This is a substantial increase in forecasted production from both existing and prospective oil fields. If it materializes, annual production rate could be as high as 7,300 mmbbl, and 2021 revenues (given FY20 USD/bbl of $60) could exceed RM 1.5 billion (FY20: RM 988 million). However, this targeted forecast is quite a stretch from current production levels. Nevertheless, we shall consider all provided information in estimating a valuation for Hibiscus. To understand Hibiscus’s oil production capacity and forecast its revenues and profits, we need to have a better appreciation of the performance of its two main cash-generating assets – the North Sabah field and the Anasuria field. North Sabah oil field https://preview.redd.it/62nssexj8br41.png?width=1003&format=png&auto=webp&s=cd78f86d51165fb9a93015e49496f7f98dad64dd Hibiscus owns a 50% interest in the North Sabah field together with its partner Petronas, and has production rights over the field up to year 2040. The asset contains 4 oil fields, namely the St Joseph field, South Furious field, SF 30 field and Barton field. For the sake of brevity, we shall not delve deep into the operational aspects of the fields or the contractual nature of its production sharing contract (PSC). We’ll just focus on the factors which relate to its financial performance. These are: · Average uptime · Total oil sold · Average realized oil price · Average OPEX per bbl With regards to average uptime, we can see that the company maintains relative high facility availability, exceeding 90% uptime in all quarters of the LTM with exception of Jul-Sep 2019. The dip in average uptime was due to production enhancement projects and maintenance activities undertaken to improve the production capacity of the St Joseph and SF30 oil fields. Hence, we can conclude that management has a good handle on operational performance. It also implies that there is little room for further improvement in production resulting from increased uptime. As North Sabah is under a production sharing contract (PSC), there is a distinction between gross oil production and net oil production. The former relates to total oil drawn out of the ground, whereas the latter refers to Hibiscus’s share of oil production after taxes, royalties and expenses are accounted for. In this case, we want to pay attention to net oil production, not gross. We can arrive at Hibiscus’s total oil sold for the last twelve months (LTM) by adding up the total oil sold for each of the last 4 quarters. Summing up the figures yields total oil sold for the LTM of approximately 2,075,305 bbl. Then, we can arrive at an average realized oil price over the LTM by averaging the average realized oil price for the last 4 quarters, giving us an average realized oil price over the LTM of USD 68.57/bbl. We can do the same for average OPEX per bbl, giving us an average OPEX per bbl over the LTM of USD 13.23/bbl. Thus, we can sum up the above financial performance of the North Sabah field with the following figures: · Total oil sold: 2,075,305 bbl · Average realized oil price: USD 68.57/bbl · Average OPEX per bbl: USD 13.23/bbl Anasuria oil field https://preview.redd.it/586u4kfo8br41.png?width=1038&format=png&auto=webp&s=7580fc7f7df7e948754d025745a5cf47d4393c0f Doing the same exercise as above for the Anasuria field, we arrive at the following financial performance for the Anasuria field: · Total oil sold: 1,073,304 bbl · Average realized oil price: USD 63.57/bbl · Average OPEX per bbl: USD 23.22/bbl As gas production is relatively immaterial, and to be conservative, we shall only consider the crude oil production from the Anasuria field in forecasting revenues.
Valuation (Method 1)
Putting the figures from both oil fields together, we get the following data: https://preview.redd.it/7y6064dq8br41.png?width=700&format=png&auto=webp&s=2a4120563a011cf61fc6090e1cd5932602599dc2 Given that we have determined LTM EBITDA of RM 632m, the next step would be to subtract ITDA (interest, tax, depreciation & amortization) from it to obtain estimated LTM Net Profit. Using FY2020’s ITDA of approximately RM 318m as a guideline, we arrive at an estimated LTM Net Profit of RM 314m (FY20: 230m). Given the current market capitalization of RM 714.7m, this implies a trailing LTM PE of 2.3x. Performing a sensitivity analysis given different oil prices, we arrive at the following net profit table for the company under different oil price scenarios, assuming oil production rate and ITDA remain constant: https://preview.redd.it/xixge5sr8br41.png?width=433&format=png&auto=webp&s=288a00f6e5088d01936f0217ae7798d2cfcf11f2 From the above exercise, it becomes apparent that Hibiscus has a breakeven oil price of about USD 41.8863/bbl, and has a lot of operating leverage given the exponential rate of increase in its Net Profit with each consequent increase in oil prices. Considering that the oil production rate (EBITDA) is likely to increase faster than ITDA’s proportion to revenues (fixed costs), at an implied PE of 4.33x, it seems likely that an investment in Hibiscus will be profitable over the next 10 years (with the assumption that oil prices will revert to the mean in the long-term).
Valuation (Method 2)
Of course, there are a lot of assumptions behind the above method of valuation. Hence, it would be prudent to perform multiple methods of valuation and compare the figures to one another. As opposed to the profit/loss assessment in Valuation (Method 1), another way of performing a valuation would be to estimate its balance sheet value, i.e. total revenues from 2P Reserves, and assign a reasonable margin to it. https://preview.redd.it/o2eiss6u8br41.png?width=710&format=png&auto=webp&s=03960cce698d9cedb076f3d5f571b3c59d908fa8 From the above, we understand that Hibiscus’s 2P reserves from the North Sabah and Anasuria fields alone are approximately 44.2 mmbbl (we ignore contribution from Australia’s VIC cluster as it hasn’t been developed yet). Doing a similar sensitivity analysis of different oil prices as above, we arrive at the following estimated total revenues and accumulated net profit: https://preview.redd.it/h8hubrmw8br41.png?width=450&format=png&auto=webp&s=6d23f0f9c3dafda89e758b815072ba335467f33e Let’s assume that the above average of RM 9.68 billion in total realizable revenues from current 2P reserves holds true. If we assign a conservative Net Profit margin of 15% (FY20: 23%; past 5 years average: 16%), we arrive at estimated accumulated Net Profit from 2P Reserves ofRM 1.452 billion. Given the current market capitalization of RM 714 million, we might be able to say that the equity is worth about twice the current share price. However, it is understandable that some readers might feel that the figures used in the above estimate (e.g. net profit margin of 15%) were randomly plucked from the sky. So how do we reconcile them with figures from the financial statements? Fortunately, there appears to be a way to do just that. Intangible Assets I refer you to a figure in the financial statements which provides a shortcut to the valuation of 2P Reserves. This is the carrying value of Intangible Assets on the Balance Sheet. As of 2QFY21, that amount was RM 1,468,860,000 (i.e. RM 1.468 billion). https://preview.redd.it/hse8ttb09br41.png?width=881&format=png&auto=webp&s=82e48b5961c905fe9273cb6346368de60202ebec Quite coincidentally, one might observe that this figure is dangerously close to the estimated accumulated Net Profit from 2P Reserves of RM 1.452 billion we calculated earlier. But why would this amount matter at all? To answer that, I refer you to the notes of the Annual Report FY20 (AR20). On page 148 of the AR20, we find the following two paragraphs: E&E assets comprise of rights and concession and conventional studies. Following the acquisition of a concession right to explore a licensed area, the costs incurred such as geological and geophysical surveys, drilling, commercial appraisal costs and other directly attributable costs of exploration and appraisal including technical and administrative costs, are capitalised as conventional studies, presented as intangible assets. E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an E&E asset may exceed its recoverable amount. The Group will allocate E&E assets to cash generating unit (“CGU”s or groups of CGUs for the purpose of assessing such assets for impairment. Each CGU or group of units to which an E&E asset is allocated will not be larger than an operating segment as disclosed in Note 39 to the financial statements.) Hence, we can determine that firstly, the intangible asset value represents capitalized costs of acquisition of the oil fields, including technical exploration costs and costs of acquiring the relevant licenses. Secondly, an impairment review will be carried out when “the carrying amount of an E&E asset may exceed its recoverable amount”, with E&E assets being allocated to “cash generating units” (CGU) for the purposes of assessment. On page 169 of the AR20, we find the following: Carrying amounts of the Group’s intangible assets, oil and gas assets and FPSO are reviewed for possible impairment annually including any indicators of impairment. For the purpose of assessing impairment, assets are grouped at the lowest level CGUs for which there is a separately identifiable cash flow available. These CGUs are based on operating areas, represented by the 2011 North Sabah EOR PSC (“North Sabah”, the Anasuria Cluster, the Marigold and Sunflower fields, the VIC/P57 exploration permit (“VIC/P57”) and the VIC/L31 production license (“VIC/L31”).) So apparently, the CGUs that have been assigned refer to the respective oil producing fields, two of which include the North Sabah field and the Anasuria field. In order to perform the impairment review, estimates of future cash flow will be made by management to assess the “recoverable amount” (as described above), subject to assumptions and an appropriate discount rate. Hence, what we can gather up to now is that management will estimate future recoverable cash flows from a CGU (i.e. the North Sabah and Anasuria oil fields), compare that to their carrying value, and perform an impairment if their future recoverable cash flows are less than their carrying value. In other words, if estimated accumulated profits from the North Sabah and Anasuria oil fields are less than their carrying value, an impairment is required. So where do we find the carrying values for the North Sabah and Anasuria oil fields? Further down on page 184 in the AR20, we see the following: Included in rights and concession are the carrying amounts of producing field licenses in the Anasuria Cluster amounting to RM668,211,518 (2018: RM687,664,530, producing field licenses in North Sabah amounting to RM471,031,008 (2018: RM414,333,116)) Hence, we can determine that the carrying values for the North Sabah and Anasuria oil fields are RM 471m and RM 668m respectively. But where do we find the future recoverable cash flows of the fields as estimated by management, and what are the assumptions used in that calculation? Fortunately, we find just that on page 185: 17 INTANGIBLE ASSETS (CONTINUED) (a Anasuria Cluster) The Directors have concluded that there is no impairment indicator for Anasuria Cluster during the current financial year. In the previous financial year, due to uncertainties in crude oil prices, the Group has assessed the recoverable amount of the intangible assets, oil and gas assets and FPSO relating to the Anasuria Cluster. The recoverable amount is determined using the FVLCTS model based on discounted cash flows (“DCF” derived from the expected cash in/outflow pattern over the production lives.) The key assumptions used to determine the recoverable amount for the Anasuria Cluster were as follows: (i Discount rate of 10%;) (ii Future cost inflation factor of 2% per annum;) (iii Oil price forecast based on the oil price forward curve from independent parties; and,) (iv Oil production profile based on the assessment by independent oil and gas reserve experts.) Based on the assessments performed, the Directors concluded that the recoverable amount calculated based on the valuation model is higher than the carrying amount. (b North Sabah) The acquisition of the North Sabah assets was completed in the previous financial year. Details of the acquisition are as disclosed in Note 15 to the financial statements. The Directors have concluded that there is no impairment indicator for North Sabah during the current financial year. Here, we can see that the recoverable amount of the Anasuria field was estimated based on a DCF of expected future cash flows over the production life of the asset. The key assumptions used by management all seem appropriate, including a discount rate of 10% and oil price and oil production estimates based on independent assessment. From there, management concludes that the recoverable amount of the Anasuria field is higher than its carrying amount (i.e. no impairment required). Likewise, for the North Sabah field. How do we interpret this? Basically, what management is saying is that given a 10% discount rate and independent oil price and oil production estimates, the accumulated profits (i.e. recoverable amount) from both the North Sabah and the Anasuria fields exceed their carrying amounts of RM 471m and RM 668m respectively. In other words, according to management’s own estimates, the carrying value of the Intangible Assets of RM 1.468 billionapproximates the accumulated Net Profit recoverable from 2P reserves. To conclude Valuation (Method 2), we arrive at the following:
Accumulated Net Profit from 2P Reserves
RM 1.452 billion
RM 1.468 billion
By now, we have established the basic economics of Hibiscus’s business, including its revenues (i.e. oil production and oil price scenarios), costs (OPEX, ITDA), profitability (breakeven, future earnings potential) and balance sheet value (2P reserves, valuation). Moving on, we want to gain a deeper understanding of the 3 statements to anticipate any blind spots and risks. We’ll refer to the financial statements of both the FY20 annual report and the 2Q21 quarterly report in this analysis. For the sake of brevity, I’ll only point out those line items which need extra attention, and skip over the rest. Feel free to go through the financial statements on your own to gain a better familiarity of the business. https://preview.redd.it/h689bss79br41.png?width=810&format=png&auto=webp&s=ed47fce6a5c3815dd3d4f819e31f1ce39ccf4a0b Income Statement First, we’ll start with the Income Statement on page 135 of the AR20. Revenues are straightforward, as we’ve discussed above. Cost of Sales and Administrative Expenses fall under the jurisdiction of OPEX, which we’ve also seen earlier. Other Expenses are mostly made up of Depreciation & Amortization of RM 115m. Finance Costs are where things start to get tricky. Why does a company which carries no debt have such huge amounts of finance costs? The reason can be found in Note 8, where it is revealed that the bulk of finance costs relate to the unwinding of discount of provision for decommissioning costs of RM 25m (Note 32). https://preview.redd.it/4omjptbe9br41.png?width=1019&format=png&auto=webp&s=eaabfc824134063100afa62edfd36a34a680fb60 This actually refers to the expected future costs of restoring the Anasuria and North Sabah fields to their original condition once the oil reserves have been depleted. Accounting standards require the company to provide for these decommissioning costs as they are estimable and probable. The way the decommissioning costs are accounted for is the same as an amortized loan, where the initial carrying value is recognized as a liability and the discount rate applied is reversed each year as an expense on the Income Statement. However, these expenses are largely non-cash in nature and do not necessitate a cash outflow every year (FY20: RM 69m). Unwinding of discount on non-current other payables of RM 12m relate to contractual payments to the North Sabah sellers. We will discuss it later. Taxation is another tricky subject, and is even more significant than Finance Costs at RM 161m. In gist, Hibiscus is subject to the 38% PITA (Petroleum Income Tax Act) under Malaysian jurisdiction, and the 30% Petroleum tax + 10% Supplementary tax under UK jurisdiction. Of the RM 161m, RM 41m of it relates to deferred tax which originates from the difference between tax treatment and accounting treatment on capitalized assets (accelerated depreciation vs straight-line depreciation). Nonetheless, what you should take away from this is that the tax expense is a tangible expense and material to breakeven analysis. Fortunately, tax is a variable expense, and should not materially impact the cash flow of Hibiscus in today’s low oil price environment. Note: Cash outflows for Tax Paid in FY20 was RM 97m, substantially below the RM 161m tax expense. https://preview.redd.it/1xrnwzm89br41.png?width=732&format=png&auto=webp&s=c078bc3e18d9c79d9a6fbe1187803612753f69d8 Balance Sheet The balance sheet of Hibiscus is unexciting; I’ll just bring your attention to those line items which need additional scrutiny. I’ll use the figures in the latest 2Q21 quarterly report (2Q21) and refer to the notes in AR20 for clarity. We’ve already discussed Intangible Assets in the section above, so I won’t dwell on it again. Moving on, the company has Equipment of RM 582m, largely relating to O&G assets (e.g. the Anasuria FPSO vessel and CAPEX incurred on production enhancement projects). Restricted cash and bank balances represent contractual obligations for decommissioning costs of the Anasuria Cluster, and are inaccessible for use in operations. Inventories are relatively low, despite Hibiscus being an E&P company, so forex fluctuations on carrying value of inventories are relatively immaterial. Trade receivables largely relate to entitlements from Petronas and BP (both oil supermajors), and are hence quite safe from impairment. Other receivables, deposits and prepayments are significant as they relate to security deposits placed with sellers of the oil fields acquired; these should be ignored for cash flow purposes. Note: Total cash and bank balances do not include approximately RM 105 m proceeds from the North Sabah December 2019 offtake (which was received in January 2020) Cash and bank balances of RM 90m do not include RM 105m of proceeds from offtake received in 3Q21 (Jan 2020). Hence, the actual cash and bank balances as of 2Q21 approximate RM 200m. Liabilities are a little more interesting. First, I’ll draw your attention to the significant Deferred tax liabilities of RM 457m. These largely relate to the amortization of CAPEX (i.e. Equipment and capitalized E&E expenses), which is given an accelerated depreciation treatment for tax purposes. The way this works is that the government gives Hibiscus a favorable tax treatment on capital expenditures incurred via an accelerated depreciation schedule, so that the taxable income is less than usual. However, this leads to the taxable depreciation being utilized quicker than accounting depreciation, hence the tax payable merely deferred to a later period – when the tax depreciation runs out but accounting depreciation remains. Given the capital intensive nature of the business, it is understandable why Deferred tax liabilities are so large. We’ve discussed Provision for decommissioning costs under the Finance Costs section earlier. They are also quite significant at RM 266m. Notably, the Other Payables and Accruals are a hefty RM 431m. What do they relate to? Basically, they are contractual obligations to the sellers of the oil fields which are only payable upon oil prices reaching certain thresholds. Hence, while they are current in nature, they will only become payable when oil prices recover to previous highs, and are hence not an immediate cash outflow concern given today’s low oil prices. Cash Flow Statement There is nothing in the cash flow statement which warrants concern. Notably, the company generated OCF of approximately RM 500m in FY20 and RM 116m in 2Q21. It further incurred RM 330m and RM 234m of CAPEX in FY20 and 2Q21 respectively, largely owing to production enhancement projects to increase the production rate of the Anasuria and North Sabah fields, which according to management estimates are accretive to ROI. Tax paid was RM 97m in FY20 and RM 61m in 2Q21 (tax expense: RM 161m and RM 62m respectively).
There are a few obvious and not-so-obvious risks that one should be aware of before investing in Hibiscus. We shall not consider operational risks (e.g. uptime, OPEX) as they are outside the jurisdiction of the equity analyst. Instead, we shall focus on the financial and strategic risks largely outside the control of management. The main ones are: · Oil prices remaining subdued for long periods of time · Fluctuation of exchange rates · Customer concentration risk · 2P Reserves being less than estimated · Significant current and non-current liabilities · Potential issuance of equity Oil prices remaining subdued Of topmost concern in the minds of most analysts is whether Hibiscus has the wherewithal to sustain itself through this period of low oil prices (sub-$30). A quick and dirty estimate of annual cash outflow (i.e. burn rate) assuming a $20 oil world and historical production rates is between RM 50m-70m per year, which considering the RM 200m cash balance implies about 3-4 years of sustainability before the company runs out of cash and has to rely on external assistance for financing. Table 1: Hibiscus EBITDA at different oil price and exchange rates https://preview.redd.it/gxnekd6h9br41.png?width=670&format=png&auto=webp&s=edbfb9621a43480d11e3b49de79f61a6337b3d51 The above table shows different EBITDA scenarios (RM ‘m) given different oil prices (left column) and USD:MYR exchange rates (top row). Currently, oil prices are $27 and USD:MYR is 1:4.36. Given conservative assumptions of average OPEX/bbl of $20 (current: $15), we can safely say that the company will be loss-making as long as oil remains at $20 or below (red). However, we can see that once oil prices hit $25, the company can tank the lower-end estimate of the annual burn rate of RM 50m (orange), while at RM $27 it can sufficiently muddle through the higher-end estimate of the annual burn rate of RM 70m (green). Hence, we can assume that as long as the average oil price over the next 3-4 years remains above $25, Hibiscus should come out of this fine without the need for any external financing. Customer Concentration Risk With regards to customer concentration risk, there is not much the analyst or investor can do except to accept the risk. Fortunately, 80% of revenues can be attributed to two oil supermajors (Petronas and BP), hence the risk of default on contractual obligations and trade receivables seems to be quite diminished. 2P Reserves being less than estimated 2P Reserves being less than estimated is another risk that one should keep in mind. Fortunately, the current market cap is merely RM 714m – at half of estimated recoverable amounts of RM 1.468 billion – so there’s a decent margin of safety. In addition, there are other mitigating factors which shall be discussed in the next section (‘Opportunities’). Significant non-current and current liabilities The significant non-current and current liabilities have been addressed in the previous section. It has been determined that they pose no threat to immediate cash flow due to them being long-term in nature (e.g. decommissioning costs, deferred tax, etc). Hence, for the purpose of assessing going concern, their amounts should not be a cause for concern. Potential issuance of equity Finally, we come to the possibility of external financing being required in this low oil price environment. While the company should last 3-4 years on existing cash reserves, there is always the risk of other black swan events materializing (e.g. coronavirus) or simply oil prices remaining muted for longer than 4 years. Furthermore, management has hinted that they wish to acquire new oil assets at presently depressed prices to increase daily production rate to a targeted 20,000 bbl by end-2021. They have room to acquire debt, but they may also wish to issue equity for this purpose. Hence, the possibility of dilution to existing shareholders cannot be entirely ruled out. However, given management’s historical track record of prioritizing ROI and optimal capital allocation, and in consideration of the fact that the MD owns 10% of outstanding shares, there is some assurance that any potential acquisitions will be accretive to EPS and therefore valuations.
As with the existence of risk, the presence of material opportunities also looms over the company. Some of them are discussed below: · Increased Daily Oil Production Rate · Inclusion of 2C Resources · Future oil prices exceeding $50 and effects from coronavirus dissipating Increased Daily Oil Production Rate The first and most obvious opportunity is the potential for increased production rate. We’ve seen in the last quarter (2Q21) that the North Sabah field increased its daily production rate by approximately 20% as a result of production enhancement projects (infill drilling), lowering OPEX/bbl as a result. To vastly oversimplify, infill drilling is the process of maximizing well density by drilling in the spaces between existing wells to improve oil production. The same improvements are being undertaken at the Anasuria field via infill drilling, subsea debottlenecking, water injection and sidetracking of existing wells. Without boring you with industry jargon, this basically means future production rate is likely to improve going forward. By how much can the oil production rate be improved by? Management estimates in their analyst presentation that enhancements in the Anasuria field will be able to yield 5,000 bbl/day by 2021 (current: 2,500 bbl/day). Similarly, improvements in the North Sabah field is expected to yield 7,000 bbl/day by 2021 (current: 5,300 bbl/day). This implies a total 2021 expected daily production rate from the two fields alone of 12,000 bbl/day (current: 8,000 bbl/day). That’s a 50% increase in yields which we haven’t factored into our valuation yet. Furthermore, we haven’t considered any production from existing 2C resources (e.g. Marigold/Sunflower) or any potential acquisitions which may occur in the future. By management estimates, this can potentially increase production by another 8,000 bbl/day, bringing total production to 20,000 bbl/day. While this seems like a stretch of the imagination, it pays to keep them in mind when forecasting future revenues and valuations. Just to play around with the numbers, I’ve come up with a sensitivity analysis of possible annual EBITDA at different oil prices and daily oil production rates: Table 2: Hibiscus EBITDA at different oil price and daily oil production rates https://preview.redd.it/jnpfhr5n9br41.png?width=814&format=png&auto=webp&s=bbe4b512bc17f576d87529651140cc74cde3d159 The left column represents different oil prices while the top row represents different daily oil production rates. The green column represents EBITDA at current daily production rate of 8,000 bbl/day; the orange column represents EBITDA at targeted daily production rate of 12,000 bbl/day; while the purple column represents EBITDA at maximum daily production rate of 20,000 bbl/day. Even conservatively assuming increased estimated annual ITDA of RM 500m (FY20: RM 318m), and long-term average oil prices of $50 (FY20: $60), the estimated Net Profit and P/E ratio is potentially lucrative at daily oil production rates of 12,000 bbl/day and above. 2C Resources Since we’re on the topic of improved daily oil production rate, it bears to pay in mind the relatively enormous potential from Hibiscus’s 2C Resources. North Sabah’s 2C Resources alone exceed 30 mmbbl; while those from the yet undiagnosed Marigold/Sunflower fields also reach 30 mmbbl. Altogether, 2C Resources exceed 70 mmbbl, which dwarfs the 44 mmbbl of 2P Reserves we have considered up to this point in our valuation estimates. To refresh your memory, 2C Resources represents oil volumes which have been discovered but are not yet classified as “commercial”. This means that there is reasonable certainty of the oil being recoverable, as opposed to simply being in the very early stages of exploration. So, to be conservative, we will imagine that only 50% of 2C Resources are eligible for reclassification to 2P reserves, i.e. 35 mmbbl of oil. https://preview.redd.it/mto11iz7abr41.png?width=375&format=png&auto=webp&s=e9028ab0816b3d3e25067447f2c70acd3ebfc41a This additional 35 mmbbl of oil represents an 80% increase to existing 2P reserves. Assuming the daily oil production rate increases similarly by 80%, we will arrive at 14,400 bbl/day of oil production. According to Table 2 above, this would yield an EBITDA of roughly RM 630m assuming $50 oil. Comparing that estimated EBITDA to FY20’s actual EBITDA:
FY21 (incl. 2C)
Daily oil production (bbl/day)
Average oil price (USD/bbl)
Average OPEX/bbl (USD)
EBITDA (RM ‘m)
Hence, even conservatively assuming lower oil prices and higher OPEX/bbl (which should decrease in the presence of higher oil volumes) than last year, we get approximately the same EBITDA as FY20. For the sake of completeness, let’s assume that Hibiscus issues twice the no. of existing shares over the next 10 years, effectively diluting shareholders by 50%. Even without accounting for the possibility of the acquisition of new oil fields, at the current market capitalization of RM 714m, the prospective P/E would be about 10x. Not too shabby. Future oil prices exceeding $50 and effects from coronavirus dissipating Hibiscus shares have recently been hit by a one-two punch from oil prices cratering from $60 to $30, as a result of both the Saudi-Russian dispute and depressed demand for oil due to coronavirus. This has massively increased supply and at the same time hugely depressed demand for oil (due to the globally coordinated lockdowns being implemented). Given a long enough timeframe, I fully expect OPEC+ to come to an agreement and the economic effects from the coronavirus to dissipate, allowing oil prices to rebound. As we equity investors are aware, oil prices are cyclical and are bound to recover over the next 10 years. When it does, valuations of O&G stocks (including Hibiscus’s) are likely to improve as investors overshoot expectations and begin to forecast higher oil prices into perpetuity, as they always tend to do in good times. When that time arrives, Hibiscus’s valuations are likely to become overoptimistic as all O&G stocks tend to do during oil upcycles, resulting in valuations far exceeding reasonable estimates of future earnings. If you can hold the shares up until then, it’s likely you will make much more on your investment than what we’ve been estimating.
Wrapping up what we’ve discussed so far, we can conclude that Hibiscus’s market capitalization of RM 714m far undershoots reasonable estimates of fair value even under conservative assumptions of recoverable oil volumes and long-term average oil prices. As a value investor, I hesitate to assign a target share price, but it’s safe to say that this stock is worth at least RM 1.00 (current: RM 0.45). Risk is relatively contained and the upside far exceeds the downside. While I have no opinion on the short-term trajectory of oil prices, I can safely recommend this stock as a long-term Buy based on fundamental research.
So here it is, three more days and October begins, which marks one year of trading for me. I figured I would contribute to the forum and share some of my experience, a little about me, and what I've learned so far. Whoever wants to listen, that's great. This might get long so buckle up.. Three years ago, I was visiting Toronto. I don't get out much, but my roommate at the time travels there occasionally. He asked everyone at our place if we wanted to come along for a weekend. My roommate has an uncle that lives there and we didn't have to worry about a hotel because his uncle owns a small house that's unlived in which we could stay at. I was the only one to go with. Anyways, we walk around the city, seeing the sights and whatnot. My friend says to me "where next?" "I don't know, you're the tour guide" "We can go check out Bay Street" "what's 'Bay Street?'" "It's like the Canadian Wall street! If you haven't seen it you gotta see it!" Walking along Bay, I admire all the nice buildings and architecture, everything seems larger than life to me. I love things like that. The huge granite facades with intricate designs and towering pillars to make you think, How the fuck did they make that? My attention pivots to a man walking on the sidewalk opposite us. His gait stood out among everyone, he walked with such a purpose.. He laughed into the cell phone to his ear. In the elbow-shoving city environment, he moved with a stride that exuded a power which not only commanded respect, but assumed it. I bet HE can get a text back, hell he's probably got girls waiting on him. This dude was dressed to kill, a navy suit that you could just tell from across the street was way out of my budget, it was a nice fucking suit. I want that. His life, across the street, seemed a world a way from my own. I've worn a suit maybe twice in my life. For my first communion, it was too big for me, I was eleven or whatever so who gives a shit, right? I'm positive I looked ridiculous. The other time? I can't remember. I want that. I want the suit. I want the wealth, the independence.I want the respect and power, and I don't give a shit what anyone thinks about it. Cue self doubt. Well, He's probably some rich banker's son. That's a world you're born into. I don't know shit about it. \sigh* keep walking..* A year later, I'm visiting my parents at their house, they live an hour away from my place. My dad is back from Tennessee, his engineering job was laying people off and he got canned... Or he saw the end was near and just left... I don't know, hard to pay attention to the guy honestly because he kind of just drones on and on. ("Wait, so your mom lives in Michigan, but your dad moved to Tennessee... for a job?" Yea man, I don't fucking know, not going to touch on that one.) The whole project was a shit show that was doomed to never get done, the way he tells it. And he's obviously jaded from multiple similar experiences at other life-sucking engineer jobs. My mom is a retired nurse practitioner who no longer works because of her illness. I ask him what he's doing for work now and he tells me he trades stocks from home. I didn't even know you could do that. I didn't know "trading" was a thing. I thought you just invest and hope for the best. "Oh that's cool, how much money do you need to do that?" "Ehh, most say you need at least $25,000 as a minimum" "Oh... guess I can't do that..." Six months later, I get a call and it's my dad. We talk a little about whatever. Off topic, he starts asking if I'm happy doing what I'm doing (I was a painter, commercial and residential) I tell him yes but it's kind of a pain in the ass and I don't see it as a long term thing. Then he gets around to asking if I'd like to come work with him. He basically pitches it to me. I'm not one to be sold on something, I'm always skeptical. So I ask all the questions that any rational person would ask and he just swats them away with reassuring phrases. He was real confident about it. But basically he says for this to work, I have to quit my job and move back home so he can teach me how to trade and be by my side so I don't do anything stupid. "My Name, you can make so much money." I say that I can't raise the $25,000 because I'm not far above just living paycheck to paycheck. "I can help you out with that." Wow, okay, well... let me think about it. My "maybe" very soon turned into a "definitely." So over the next six months, I continue to work my day job painting, and I try to save up what I could for the transition (it wasn't a whole lot, I sucked at saving. I was great at spending though!). My dad gives me a book on day trading (which I will mention later) and I teach myself what I can about the stock market using Investopedia. Also in the meantime, my dad sends me encouraging emails. He tells me to think of an annual income I would like to make as a trader, and used "more than $100,000 but less than a million" as a guideline. He tells me about stocks that he traded that day or just ones that moved and describes the basic price action and the prices to buy and sell at. Basically saying "if you bought X amount of shares here and sold it at X price here, you could make a quick 500 bucks!" I then use a trading sim to trade those symbols and try to emulate what he says. Piece of cake. ;) Wow, that's way more than what I make in a day. He tells me not to tell anyone about my trading because most people just think it's gambling. "Don't tell your Mom either." He says most people who try this fail because they don't know how to stop out and take a loss. He talks about how every day he was in a popular chatroom, some noob would say something like, "Hey guys, I bought at X price (high of day or thereabout), my account is down 80% .. uhh I'm waiting for it to come back to my entry price.. what do I do??" Well shit, I'm not that fucking dumb. If that's all it takes to make it is to buy low, sell high, and always respect a stop then I'll be fantastic. By the end of September, I was very determined. I had been looking forward everyday to quitting my painting job because while it used to be something I loved, it was just sucking the life out of me at this point. Especially working commercial, you just get worked like a dog. I wasn't living up to my potential with that job and I felt awful for it every minute of every day. I knew that I needed a job where I could use my brain instead of slaving my body to fulfill someone else's dream. "Someone's gotta put gas in the boss's boat" That's a line my buddy once said that he probably doesn't know sticks with me to this day. It ain't me. So now it was October 2018, and I'm back living with Mom n' Pops. I was so determined that on my last day of work I gave away all of my painting tools to my buddy like, "here, I don't need this shit." Moving out of my rental was easy because I don't own much, 'can't take it with ya.' Excited for the future I now spend my days bundled up in winter wear in the cold air of our hoarder-like basement with a space heater at my feet. My laptop connected to a TV monitor, I'm looking at stocks next to my dad and his screens in his cluttered corner. Our Trading Dungeon. I don't trade any money, (I wasn't aware of any real-time sim programs) I just watch and learn from my dad. Now you've got to keep in mind, and look at a chart of the S&P, this is right at the beginning of Oct '18, I came in right at the market top. Right at the start of the shit-show. For the next three or four weeks, I watch my dad pretty much scratch on every trade, taking small loss after small loss, and cursing under his breath at the screen. Click. "dammit." Click. "shit." Click. Click. "you fuck." Click. This gets really fucking annoying as time goes on, for weeks, and I get this attitude like ugh, just let me do it. I'll make us some fucking money. So I convince him to let me start trading live. I didn't know anything about brokers so I set up an account using his broker, which was Fidelity. It was a pain and I had to jump through a lot of hoops to be able to day trade with this broker. I actually had to make a joint account with my dad as I couldn't get approved for margin because my credit score is shit (never owned a credit card) and my net worth, not much. Anyways, they straight up discourage day trading and I get all kinds of warning messages with big red letters that made me shit myself like oooaaahhh what the fuck did I do now. Did I forget to close a position?? Did I fat finger an order? Am I now in debt for thousands of dollars to Fidelity?? They're going to come after me like they came after Madoff. Even after you are approved for PDT you still get these warning messages in your account. Some would say if I didn't comply with "whatever rule" they'd even suspend my account for 60 days. It was ridiculous, hard to describe because it doesn't make sense, and it took the support guy on the phone a good 20 minutes to explain it to me. Basically I got the answer "yea it's all good, you did nothing wrong. As long as you have the cash in your account to cover whatever the trade balance was" So I just kept getting these warnings that I had to ignore everyday. I hate Fidelity. My fist day trading, I made a few so-so trades and then I got impatient. I saw YECO breaking out and I chased, soon realized I chased, so I got out. -$500. Shit, I have to make that back, I don't want my dad to see this. Got back in. Shit. -$400. So my first day trading, I lost $900. My dumbass was using market orders so that sure didn't help. I reeled the risk back and traded more proper position size for a while, but the commissions for a round trip are $10, so taking six trades per day, I'm losing $60 at a minimum on top of my losing trades. Quickly I realized I didn't know what the hell I was doing. What about my dad? Does HE know? One day, in the trading dungeon, I was frustrated with the experience I'd been having and just feeling lost overall. I asked him. "So, are you consistently profitable?" "mmm... I do alright." "Yea but like, are you consistently profitable over time?" ......................... "I do alright." Silence. "Do you know any consistently profitable traders?" "Well the one who wrote that book I gave you, Tina Turner.. umm and there's Ross Cameron" ...................... "So you don't know any consistently profitable traders, personally.. People who are not trying to sell you something?" "no." ................... Holy fucking shit, what did this idiot get me into. He can't even say it to my face and admit it. This entire life decision, quitting my job, leaving my rental, moving from my city to back home, giving shit away, it all relied on that. I was supposed to be an apprentice to a consistently profitable day trader who trades for a living. It was so assumed, that I never even thought to ask! Why would you tell your son to quit his job for something that you yourself cannot do? Is this all a scam? Did my dad get sold a DREAM? Did I buy into some kind of ponzi scheme? How many of those winning trades he showed me did he actually take?Are there ANY consistently profitable DAY TRADERS who TRADE FOR A LIVING?Why do 90% fail? Is it because the other 10% are scamming the rest in some way? Completely lost, I just had no clue what was what. If I was going to succeed at this, if it was even possible to succeed at this, it was entirely up to me. I had to figure it out. I still remember the feeling like an overwhelming, crushing weight on me as it all sunk in. This is going to be a big deal.. I'm not the type to give up though. In that moment, I said to myself, I'm going to fucking win at this. I don't know if this is possible, but I'm going to find out. I cannot say with certainty that I will succeed, but no matter what, I will not give up. I'm going to give all of myself to this. I will find the truth. It was a deep moment for me. I don't like getting on my soapbox, but when I said those things, I meant it. I really, really meant it. I still do, and I still will. Now it might seem like I'm being hard on my dad. He has done a lot for me and I am very grateful for that. We're sarcastic as hell to each other, I love the bastard. Hell, I wouldn't have the opportunity to trade at all if not for him. But maybe you can also understand how overwhelmed I felt at that time. Not on purpose, of course he means well. But I am not a trusting person at all and I was willing to put trust into him after all the convincing and was very disappointed when I witnessed the reality of the situation. I would have structured this transition to trading differently, you don't just quit your job and start trading. Nobody was there to tell me that! I was told quite the opposite. I'm glad it happened anyway, so fuck it. I heard Kevin O'Leary once say, "If I knew in the beginning how difficult starting a business was, I don't know that I ever would've started." This applies very much to my experience. So what did I do? Well like everyone I read and read and Googled and Youtube'd my ass off. I sure as hell didn't pay for a course because I didn't have the money and I'm like 99% sure I would be disappointed by whatever they were teaching as pretty much everything can be found online or in books for cheap or free. Also I discovered Thinkorswim and I used that to sim trade in real-time for three months. This is way the hell different than going on a sim at 5x speed and just clicking a few buy and sell buttons. Lol, useless. When you sim trade in real-time you're forced to have a routine, and you're forced to experience missing trades with no chance to rewind or skip the boring parts. That's a step up because you're "in it". I also traded real money too, made some, lost more than I made. went back to sim. Traded live again, made some but lost more, fell back to PDT. Dad fronted me more cash. This has happened a few times. He's dug me out of some holes because he believes in me. I'm fortunate. Oh yeah, about that book my dad gave me. It's called A Beginner's Guide to Day Trading Online by Toni Turner. This book... is shit. This was supposed to be my framework for how to trade and I swear it's like literally nothing in this book fucking works lol. I could tell this pretty early on, intuitively, just by looking at charts. It's basically a buy-the-breakout type strategy, if you want to call it a strategy. No real methodology to anything just vague crap and showing you cherry-picked charts with entries that are way too late. With experience in the markets you will eventually come to find that MOST BREAKOUTS FAIL. It talks about support/resistance lines and describes them as, "picture throwing a ball down at the floor, it bounces up and then it bounces down off the ceiling, then back up." So many asinine assumptions. These ideas are a text book way of how to trade like dumb money. Don't get me wrong, these trades can work but you need to be able to identify the setups which are more probable and identify reasons not to take others. So I basically had to un-learn all that shit. Present day, I have a routine in place. I'm out of the dungeon and trade by myself in my room. I trade with a discount broker that is catered to day traders and doesn't rape me on commissions. My mornings have a framework for analyzing the news and economic events of the particular day, I journal so that I can recognize what I'm doing right and where I need to improve. I record my screens for later review to improve my tape reading skills. I am actually tracking my trades now and doing backtesting in equities as well as forex. I'm not a fast reader but I do read a lot, as much as I can. So far I have read about 17-18 books on trading and psychology. I've definitely got a lot more skilled at trading. As of yet I am not net profitable. Writing that sounds like selling myself short though, honestly. Because a lot of my trades are very good and are executed well. I have talent. However, lesser quality trades and trades which are inappropriately sized/ attempted too many times bring down that P/L. I'm not the type of trader to ignore a stop, I'm more the trader that just widdles their account down with small losses. I trade live because at this point, sim has lost its value, live trading is the ultimate teacher. So I do trade live but I just don't go big like I did before, I keep it small. I could show you trades that I did great on and make people think I'm killing it but I really just don't need the validation. I don't care, I'm real about it. I just want to get better. I don't need people to think I'm a genius, I'm just trying to make some money. Psychologically, to be honest with you, I currently feel beaten down and exhausted. I put a lot of energy into this, and sometimes I work myself physically sick, it's happened multiple times. About once a week, usually Saturday, I get a headache that lasts all day. My body's stress rebound mechanism you might call it. Getting over one of those sick periods now, which is why I barely even traded this week. I know I missed a lot of volatility this week and some A+ setups but I really just don't give a shit lol. I just currently don't have the mental capital, I think anyone who's been day trading every day for a year or more can understand what I mean by that. I'm still being productive though. Again, I'm not here to present an image of some badass trader, just keeping it real. To give something 100% day after day while receiving so much resistance, it takes a toll on you. So a break is necessary to avoid making bad trading decisions. That being said, I'm progressing more and more and eliminating those lesser quality trades and identifying my bad habits. I take steps to control those habits and strengthen my good habits such as having a solid routine, doing review and market research, taking profits at the right times, etc. So maybe I can give some advice to some that are new to day trading, those who are feeling lost, or just in general thinking "...What the fuck..." I thought that every night for the first 6 months lol. First of all, manage expectations. If you read my story of how I came to be a trader, you can see I had a false impression of trading in many aspects. Give yourself a realistic time horizon to how progress should be made. Do not set a monetary goal for yourself, or any time-based goal that is measured in your P/L. If you tell yourself, "I want to make X per day, X per week, or X per year" you're setting yourself up to feel like shit every single day when it's clear as the blue sky that you won't reach that goal anytime soon. As a matter of fact, it will appear you are moving further AWAY from that goal if you just focus on your P/L, which brings me to my next point. You will lose money. In the beginning, most likely, you will lose money. I did it, you'll do it, the greatest Paul Tudor Jones did it. Trading is a skill that needs to be developed, and it is a process. Just look at it as paying your tuition to the market. Sim is fine but don't assume you have acquired this skill until you are adept at trading real money. So when you do make that leap, just trade small. Just survive. Trade small. get the experience. Protect your capital. To reach break even on your bottom line is a huge accomplishment. In many ways, experience and screen time are the secret sauce. Have a routine. This is very important. I actually will probably make a more in-depth post in the future about this if people want it. When I first started, I was overwhelmed with the feeling "What the fuck am I supposed to DO?" I felt lost. There's no boss to tell you how to be productive or how to find the right stocks, which is mostly a blessing, but a curse for new traders. All that shit you see, don't believe all that bullshit. You know what I'm talking about. The bragposting, the clickbait Youtube videos, the ads preying on you. "I made X amount of money in a day and I'm fucking 19 lolz look at my Lamborghini" It's all a gimmick to sell you the dream. It's designed to poke right at your insecurities, that's marketing at it's finest. As for the bragposting on forums honestly, who cares. And I'm not pointing fingers on this forum, just any trading forum in general. They are never adding anything of value to the community in their posts. They never say this is how I did it. No, they just want you to think they're a genius. I can show you my $900 day trading the shit out of TSLA, but that doesn't tell the whole story. Gamblers never show you when they lose, you might never hear from those guys again because behind the scenes, they over-leveraged themselves and blew up. Some may actually be consistently profitable and the trades are 100% legit. That's fantastic. But again, I don't care, and you shouldn't either. You shouldn't compare yourself to others. "Everyone's a genius in a bull market" Here's the thing.. Markets change. Edges disappear. Trading strategies were made by traders who traded during times when everything they did worked. Buy all the breakouts? Sure! It's the fucking tech bubble! Everything works! I'm sure all those typical setups used to work fantastically at some point in time. But the more people realize them, the less effective they are. SOMEONE has to be losing money on the opposite side of a winning trade, and who's willing to do that when the trade is so obvious? That being said, some things are obvious AND still work. Technical analysis works... sometimes. The caveat to that is, filters. You need to, in some way, filter out certain setups from others. For example, you could say, "I won't take a wedge pattern setup on an intraday chart unless it is in a higher time frame uptrend, without nearby resistance, and trading above average volume with news on that day." Have a plan. If you can't describe your plan, you don't have one. Think in probabilities. You should think entirely in "if, then" scenarios. If X has happens, then Y will probably happen. "If BABA breaks this premarket support level on the open I will look for a pop up to short into." Backtest. Most traders lose mainly because they think they have an edge but they don't. You read these books and all this stuff online telling you "this is a high probability setup" but do you know that for a fact? There's different ways to backtest, but I think the best way for a beginner is manual backtesting with a chart and an excel sheet. This builds up that screen time and pattern recognition faster. This video shows how to do that. Once I saw someone do it, it didn't seem so boring and awful as I thought it was. Intelligence is not enough. You're smarter than most people, that's great, but that alone is not enough to make you money in trading necessarily. Brilliant people try and fail at this all the time, lawyers, doctors, surgeons, engineers.. Why do they fail if they're so smart? It's all a fucking scam. No, a number of reasons, but the biggest is discipline and emotional intelligence. Journal every day.K no thanks, bro. That's fucking gay. That's how I felt when I heard this advice but really that is pride and laziness talking. This is the process you need to do to learn what works for you and what doesn't. Review the trades you took, what your plan was, what actually happened, how you executed. Identify what you did well and what you can work on. This is how you develop discipline and emotional intelligence, by monitoring yourself. How you feel physically and mentally, and how these states affect your decision-making. Always be learning. Read as much as you can. Good quality books. Here's the best I've read so far; Market Wizards -Jack Schwager One Good Trade -Mike Bellafiore The Daily Trading Coach -Bret Steenbarger Psycho-cybernetics -Maxwell Maltz Why You Win or Lose -Fred Kelly The Art and Science of Technical Analysis -Adam Grimes Dark Pools -Scott Patterson Be nimble. Everyday I do my research on the symbols I'm trading and the fundamental news that's driving them. I might be trading a large cap that's gapping up with a beat on EPS and revenue and positive guidance. But if I see that stock pop up and fail miserably on the open amidst huge selling pressure, and I look and see the broader market tanking, guess what, I'm getting short, and that's just day trading. The movement of the market, on an intraday timeframe, doesn't have to make logical sense. Adapt. In March I used to be able to buy a breakout on a symbol and swing it for the majority of the day. In the summer I was basically scalping on the open and being done for the day. Volatility changes, and so do my profit targets. Be accountable. Be humble. Be honest. I take 100% responsibility for every dime I've lost or made in the market. It's not the market makers fault, it wasn't the HFTs, I pressed the button. I know my bad habits and I know my good habits.. my strengths/ my weaknesses. Protect yourself from toxicity. Stay away from traders and people on forums who just have that negative mindset. That "can't be done" mentality. Day trading is a scam!! It can certainly be done. Prove it, you bastard. I'm posting to this particular forum because I don't see much of that here and apparently the mods to a good job of not tolerating it. As the mod wrote in the rules, they're most likely raging from a loss. Also, the Stocktwits mentality of "AAPL is going to TANK on the open! $180, here we come. $$$" , or the grandiose stories, "I just knew AMZN was going to go up on earnings. I could feel it. I went ALL IN. Options money, baby! ka-ching!$" Lol, that is so toxic to a new trader. Get away from that. How will you be able to remain nimble when this is your thought process? Be good to yourself. Stop beating yourself up. You're an entrepreneur. You're boldly going where no man has gone before. You've got balls. Acknowledge your mistakes, don't identify with them. You are not your mistakes and you are not your bad habits. These are only things that you do, and you can take action necessary to do them less. It doesn't matter what people think. Maybe they think you're a fool, a gambler. You don't need their approval. You don't need to talk to your co-workers and friends about it to satisfy some subconscious plea for guidance; is this a good idea? You don't need anyone's permission to become the person you want to be. They don't believe in you? Fuck 'em. I believe in you.
Question on when positions on an account may be automatically closed.
I am currently paper trading to learn forex. In the last 2 weeks I have bumped 3000 into 9000. So far I would say 85% of my trades have been in the green. Mainly because is it goes the opposite direction I will hold until it comes back. My question is this. A few times I held I would dip -2500 or so when my equity is still 6k(ish) but the free margin is negative. At what point does it trigger where my positions automatically close? Does it close when equity is close to 0?
Just 2 more Conspiracy Theories that turned out to be True
(i couldn't post in the previous one , word limit )
1.Big Brother or the Shadow Government
It is also called the “Deep State” by Peter Dale Scott, a professor at the University of California, Berkeley. A shadow government is a "government-in-waiting" that remains in waiting with the intention of taking control of a government in response to some event. It turned out this was true on 9/11, when it was told to us by our mainstream media. For years, this was ridiculed as a silly, crazy conspiracy theory and, like the others listed here, turned out to be 100% true. It is also called the Continuity of Government. The Continuity of Government (COG) is the principle of establishing defined procedures that allow a government to continue its essential operations in case of nuclear war or other catastrophic event. Since the end of the cold war, the policies and procedures for the COG have been altered according to realistic threats of that time. These include but are not limited to a possible coup or overthrow by right wing terrorist groups, a terrorist attack in general, an assassination, and so on. Believe it or not the COG has been in effect since 2001.After 9/11, it went into action. Now here is the kicker, many of the figures in Iran Contra, the Watergate Scandal, the alleged conspiracy to assassinate Kennedy, and many others listed here are indeed members of the COG. This is its own conspiracy as well.
The CIA and Its Allies in Control of the United States and the World is a book written by Air Force Col. L Fletcher Prouty, published in 1973. From 1955 to 1963 Prouty was the "Focal Point Officer" for contacts between the CIA and the Pentagon on matters relating to military support for "black operations" but he was not assigned to the CIA and was not bound by any oath of secrecy. (From the first page of the 1974 Printing) It was one of the first tell-all books about the inner workings of the CIA and was an important influence on the Oliver Stone movie JFK. But the main thrust of the book is how the CIA started as a think tank to analyze intelligence gathered from military sources but has grown to the monster it has become. The CIA had no authority to run their own agents or to carry out covert operations but they quickly did both and much more. This book tells about things they actually did and a lot about how the operate. In Prouty's own words, from the 1997 edition of The Secret Team: This is the fundamental game of the Secret Team. They have this power because they control secrecy and secret intelligence and because they have the ability to take advantage of the most modern communications system in the world, of global transportation systems, of quantities of weapons of all kinds, and when needed, the full support of a world-wide U.S. military supporting base structure. They can use the finest intelligence system in the world, and most importantly, they have been able to operate under the canopy of an assumed, ever-present enemy called "Communism." It will be interesting to see what "enemy" develops in the years ahead. It appears that "UFO's and Aliens" are being primed to fulfill that role for the future. To top all of this, there is the fact that the CIA, itself, has assumed the right to generate and direct secret operations. "He is not the first to allege that UFOs and Aliens are going to be used as a threat against the world to globalize the planet under One government."
The Report from Iron Mountain
The Report from Iron Mountain is a book, published in 1967 (during the Johnson Administration) by Dial Press, that states that it is the report of a government panel. According to the report, a 15-member panel, called the Special Study Group, was set up in 1963 to examine what problems would occur if the U.S. entered a state of lasting peace. They met at an underground nuclear bunker called Iron Mountain (as well as other, worldwide locations) and worked over the next two years. Iron Mountain is where the government has stored the flight 93 evidence from 9/11.A member of the panel, one "John Doe", a professor at a college in the Midwest, decided to release the report to the public. The heavily footnoted report concluded that peace was not in the interest of a stable society, that even if lasting peace, "could be achieved, it would almost certainly not be in the best interests of society to achieve it." War was a part of the economy. Therefore, it was necessary to conceive a state of war for a stable economy. The government, the group theorized, would not exist without war, and nation states existed in order to wage war. War also served a vital function of diverting collective aggression. They recommended that bodies be created to emulate the economic functions of war. They also recommended "blood games" and that the government create alternative foes that would scare the people with reports of alien life-forms and out of control pollution. Another proposal was the reinstitution of slavery. U.S. News and World Report claimed in its November 20, 1967 issue to have confirmation of the reality of the report from an unnamed government official, who added that when President Johnson read the report, he 'hit the roof' and ordered it to be suppressed for all time. Additionally, sources were said to have revealed that orders were sent to U.S. embassies, instructing them to emphasize that the book had no relation to U.S. Government policy. Project Blue Beam is also a common conspiracy theory that alleges that a faked alien landing would be used as a means of scaring the public into whatever global system is suggested. Some researchers suggest the Report from Iron Mountain might be fabricated, others swear it is real. Bill Moyers, the American journalist and public commentator, has served as White House Press Secretary in the United States President Lyndon B. Johnson Administration from 1965 to 1967. He worked as a news commentator on television for ten years. Moyers has had an extensive involvement with public television, producing documentaries and news journal programs. He has won numerous awards and honorary degrees. He has become well known as a trenchant critic of the U.S. media. Since 1990, Moyers has been President of the Schumann Center for Media and Democracy. He is considered by many to be a very credible outlet for the truth. He released a documentary titled, The Secret Government, which exposed the inner workings of a secret government much more vast that most people would ever imagine. Though originally broadcast in 1987, it is even more relevant today. Interviews with respected top military, intelligence, and government insiders reveal both the history and secret objectives of powerful groups in the hidden shadows of our government. Here is that documentary: vid For another powerful, highly revealing documentary on the manipulations of the secret government produced by BBC, click here. The intrepid BBC team clearly shows how the War on Terror is largely a fabrication. For those interested in very detailed information on the composition of the shadow or secret government from a less well-known source, take a look at the summary available here.
2. The Federal Reserve Bank
The fundamental promise of a central bank like the Federal Reserve is economic stability. The theory is that manipulating the value of the currency allows financial booms to go higher, and crashes to be more mild. If growth becomes speculative and unsustainable, the central bank can make the price of money go up and force some deleveraging of risky investments - again, promising to make the crashes more mild. The period leading up to the American revolution was characterized by increasingly authoritarian legislation from England. Acts passed in 1764 had a particularly harsh effect on the previously robust colonial economy. The Sugar Act was in effect a tax cut on easily smuggled molasses, and a new tax on commodities that England more directly controlled trade over. The navy would be used in increased capacity to enforce trade laws and collect duties. Perhaps even more significant than the militarization and expansion of taxes was the Currency Act passed later in the year 1764.
"The colonies suffered a constant shortage of currency with which to conduct trade. There were no gold or silver mines and currency could only be obtained through trade as regulated by Great Britain. Many of the colonies felt no alternative to printing their own paper money in the form of Bills of Credit."
The result was a true free market of currency - each bank competed, exchange rates fluctuated wildly, and merchants were hesitant to accept these notes as payment. Of course, they didn't have 24-hour digital Forex markets, but I'll hold off opinions on the viability of unregulated currency for another time. England's response was to seize control of the colonial money supply - forbidding banks, cities, and colony governments from printing their own. This law, passed so soon after the Sugar Act, started to really bring revolutionary tension inside the colonies to a higher level. American bankers had learned early on that debasing a currency through inflation is a helpful way to pay off perpetual trade deficits - but Britain proved that the buyer of the currency would only take the deal for so long... Following the (first) American Revolution, the "First Bank of the United States" was chartered to pay off collective war debts, and effectively distribute the cost of the revolution proportionately throughout all of the states. Although the bank had vocal and harsh skeptics, it only controlled about 20% of the nation's money supply. Compared to today's central bank, it was nothing. Thomas Jefferson argued vocally against the institution of the bank, mostly citing constitutional concerns and the limitations of government found in the 10th amendment. There was one additional quote that hints at the deeper structural flaw of a central bank in a supposedly free capitalist economy.
"The existing banks will, without a doubt, enter into arrangements for lending their agency, and the more favorable, as there will be a competition among them for it; whereas the bill delivers us up bound to the national bank, who are free to refuse all arrangement, but on their own terms, and the public not free, on such refusal, to employ any other bank" –Thomas Jefferson.Basically, the existing banks will fight over gaining favor with the central bank - rather than improving their performance relative to a free market.
The profit margins associated with collusion would obviously outweigh the potential profits gained from legitimate business. The Second Bank of the United States was passed five years after the first bank's charter expired. An early enemy of central banking, President James Madison, was looking for a way to stabilize the currency in 1816. This bank was also quite temporary - it would only stay in operation until 1833 when President Andrew Jackson would end federal deposits at the institution. The charter expired in 1836 and the private corporation was bankrupt and liquidated by 1841.While the South had been the major opponent of central banking systems, the end of the Civil War allowed for (and also made necessary) the system of national banks that would dominate the next fifty years. The Office of the Comptroller of the Currency (OCC) says that this post-war period of a unified national currency and system of national banks "worked well."  Taxes on state banks were imposed to encourage people to use the national banks - but liquidity problems persisted as the money supply did not match the economic cycles. Overall, the American economy continued to grow faster than Europe, but the period did not bring economic stability by any stretch of the imagination. Several panics and runs on the bank - and it became a fact of life under this system of competing nationalized banks. In 1873, 1893, 1901, and 1907 significant panics caused a series of bank failures. The new system wasn't stable at all, in fact, many suspected it was wrought with fraud and manipulation. The Federal Reserve Bank of Minneapolis is not shy about attributing the causes of the Panic of 1907 to financial manipulation from the existing banking establishment.
"If Knickerbocker Trust would falter, then Congress and the public would lose faith in all trust companies and banks would stand to gain, the bankers reasoned."
In timing with natural economic cycles, major banks including J.P. Morgan and Chase launched an all-out assault on Heinze's Knickerbocker Trust. Financial institutions on the inside started silently selling off assets in the competitor, and headlines about a few bad loans started making top spots in the newspapers. The run on Knickerbocker turned into a general panic - and the Federal Government would come to the rescue of its privately owned "National Banks.
"During the Panic of 1907, "Depositors 'run' on the Knickerbocker Bank. J.P. Morgan and James Stillman of First National City Bank (Citibank) act as a "central bank," providing liquidity ... [to stop the bank run] President Theodore Roosevelt provides Morgan with $25 million in government funds ... to control the panic. Morgan, acting as a one-man central bank, decides which firms will fail and which firms will survive."
How did JP Morgan get so powerful that the government would provide them with funding to increase their power? They had key influence with positions inside the Administrations. They had senators, congressmen, lobbyists, media moguls all working for them. In 1886, a group of millionaires purchased Jekyll Island and converted it into a winter retreat and hunting ground, the USA's most exclusive club. By 1900, the club's roster represented 1/6th of the world's wealth. Names like Astor, Vanderbilt, Morgan, Pulitzer and Gould filled the club's register. Non- members, regardless of stature, were not allowed. Dignitaries like Winston Churchill and President McKinley were refused admission. In 1908, the year after a national money panic purportedly created by J. P. Morgan, Congress established, in 1908, a National Monetary Authority. In 1910 another, more secretive, group was formed consisting of the chiefs of major corporations and banks in this country. The group left secretly by rail from Hoboken, New Jersey, and traveled anonymously to the hunting lodge on Jekyll Island. In fact, the Clubhouse/hotel on the island has two conference rooms named for the "Federal Reserve." The meeting was so secret that none referred to the other by his last name. Why the need for secrecy? Frank Vanderlip wrote later in the Saturday Evening Post,
"...it would have been fatal to Senator Aldrich's plan to have it known that he was calling on anybody from Wall Street to help him in preparing his bill...I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System."
At Jekyll Island, the true draftsman for the Federal Reserve was Paul Warburg. The plan was simple. The new central bank could not be called a central bank because America did not want one, so it had to be given a deceptive name. Ostensibly, the bank was to be controlled by Congress, but a majority of its members were to be selected by the private banks that would own its stock. To keep the public from thinking that the Federal Reserve would be controlled from New York, a system of twelve regional banks was designed. Given the concentration of money and credit in New York, the Federal Reserve Bank of New York controlled the system, making the regional concept initially nothing but a ruse. The board and chairman were to be selected by the President, but in the words of Colonel Edward House, the board would serve such a term as to "put them out of the power of the President." The power over the creation of money was to be taken from the people and placed in the hands of private bankers who could expand or contract credit as they felt best suited their needs. Why the opposition to a central bank? Americans at the time knew of the destruction to the economy the European central banks had caused to their respective countries and to countries who became their debtors. They saw the large- scale government deficit spending and debt creation that occurred in Europe. But European financial moguls didn't rest until the New World was within their orbit. In 1902, Paul Warburg, a friend and associate of the Rothschilds and an expert on European central banking, came to this country as a partner in Kuhn, Loeb and Company. He married the daughter of Solomon Loeb, one of the founders of the firm. The head of Kuhn, Loeb was Jacob Schiff, whose gift of $20 million in gold to the struggling Russian communists in 1917 no doubt saved their revolution. The Fed controls the banking system in the USA, not the Congress nor the people indirectly (as the Constitution dictates). The U.S. central bank strategy is a product of European banking interests. Government interventionists got their wish in 1913 with the Federal Reserve (and income tax amendment). Just in time, too, because the nation needed a new source of unlimited cash to finance both sides of WW1 and eventually our own entry to the war. After the war, with both sides owing us debt through the federal reserve backed banks, the center of finance moved from London to New York. But did the Federal Reserve reign in the money trusts and interlocking directorates? Not by a long shot. If anything, the Federal Reserve granted new powers to the National Banks by permitting overseas branches and new types of banking services. The greatest gift to the bankers, was a virtually unlimited supply of loans when they experience liquidity problems. From the early 1920s to 1929, the monetary supply expanded at a rapid pace and the nation experienced wild economic growth. Curiously, however, the number of banks started to decline for the first time in American history. Toward the end of the period, speculation and loose money had propelled asset and equity prices to unreal levels. The stock market crashed, and as the banks struggled with liquidity problems, the Federal Reserve actually cut the money supply. Without a doubt, this is the greatest financial panic and economic collapse in American history - and it never could have happened on this scale without the Fed's intervention. The number of banks crashed and a few of the old robber barons' banks managed to swoop in and grab up thousands of competitors for pennies on the dollar. See:
In early deals today, the rupee traded at 71.38 a dollar, up 0.10% from Monday’s close of 71.44 Asian currencies were trading lower https://preview.redd.it/nefagk4ucgd41.jpg?width=1200&format=pjpg&auto=webp&s=761f8ada6aedc97ca9b9b6d2a81f384fb4a70328 The Indian rupee on Tuesday strengthened marginally against the US dollar after international crude oil prices fell on demand worries. In early deals today, the rupee traded at 71.38 a dollar, up 0.10% from Monday’s close of 71.44. The Indian unit had opened at 71.38 a dollar. Brent crude slipped on concerns that demand will be hit as the novel coronavirus spread rapidly in China and other countries. Global stocks and currencies also fell on concerns over the spread of the new virus. China on Tuesday reported a further increase in both the death toll and number of infected people from the virus. The director-general of the World Health Organization is visiting Beijing to assess China’s response to the disease as the death toll topped 100 and the number of cases soared overnight. Traders also focus on the US Federal Reserve meeting due today and tomorrow where it is expected to keep rates unchanged. Traders will also eye the Union Budget on 1 February for cues on fiscal deficit and government borrowing targets. Analysts expect the government may widen fiscal deficit for the current fiscal to 3.7% from 3.3% projected. The government may keep deficit target at 3.5% for next year. “All of this shall keep the rupee on upward bias but quantum of move shall remain low as people wait for budget before taking long bets. The further course of the pair shall be clearer after the Budget announcement as the markets will react differently to the various measures which shall be announced by the Government,” said CR Forex Advisors in a note to its investors The yield on the 10-year government bond was at 6.553% compared with its previous close of 6.556%. Bond yield and prices moves in opposite directions. The benchmark Sensex was at 41,150.72, down marginally. Year to date, the index has lost 0.24%. Year to date, the rupee has strengthened 0.06%, while foreign investors have bought nearly $2.23 billion in Indian equities and sold $1.44 billion in debt. Asian currencies were trading lower. Malaysian ringgit was down 0.62%, Thai Baht 0.26%, Indonesian rupiah 0.25%, Taiwan dollar 0.25%, Japanese yen 0.07%. China renminbi was up 0.46% and China Offshore 0.11%. The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 97.948, down 0.01% from its previous close of 97.956. Watch our Stock Market Target Calls Quality, Track sheet – Click Here or Subscribe us for Stock Market Trading >>>>Stock Cash Tips
Seeing the mentions and feel good messaging coming out about this operation lately piqued my curiosity. Normally, I don’t follow companies that spend on self-promotion around stock price, but one of our mods asked for this, and I wanted to see if there is visible cracks between messaging and reality. There are several, as this outfit has delayed operational announcements, and executed a sale/leaseback to free up cashflow.
Capitalized PP&E greater than goodwill/intangibles. Still 30% of assets.
Despite sales shrinking over the same period a year earlier, margins vastly improving
Lots of hype over the sales distribution network that LTYR brings. Sunnviva paid $8MM for it. Looks like entire value is for licence to distribute.
G&A and SBC $8MM this quarter (yeesh)
Dumped more than a million on forex losses. Given native currency accretion, this logically should be the other way round.
Note 12(e) illustrates a sale/leaseback on buildings and land. Typically, this is a financing vehicle to free up cash flow. Could be considered a desperate move for money, or a strategic focus on operations.
Note 12(g) shows option overhang. Number o/s isn’t massive, but the 8 year tenors are. Extremely rich compensation. The flip side is that mgmt has greater incentive for the longer term. All to the eye of the beholder here.
Note 14(d) explains the forex risk they’re wearing. The delta they report isn’t accurate tho.
Note 15 is one somewhat problematic to me: Related Party transactions. 15(c) is a good example.
Good disclosure on business segments - Note 16. Can’t speak to veracity.
Sales and Marketing expenses relatively low. This will be tested by the new distribution agreement - inasmuch as margin decay and product flow though costs will accrue here.
Capitalizing the build out ($25MM) will end up likely as leasehold improvements on balance sheet. Net $0 to assets.
All in all, it has the feel of a business in build out, and being somewhat behind the capital train’s lead car. Coinciding with the expanded messaging about the company, they’ve just come to market this morning looking for $10MM to provide working capital until expected revenues materialize. 25% of the total amount is being picked up by management. Coincidental? I’m neither ‘fur or ‘agin’ this outfit. Their SBC/G&A is very high for what they’ve achieved, and they’re putting much risk into the California rollout. Looking at their cash and leverage, it puts a lot onto making a splash right away. They’ve put sales numbers to the LTYR potential. With a payback period I eyeball at 3-4yrs. Under their projections, it suggests the buy was good. Tough thing is, it’s all promise. The share price decline they’ve had (and shared with many others) over the past year has stressed access to capital, and much is riding on this distribution deal. The related party transactions are somewhat concerning to me. They’ve made money across management in real estate transactions, construction contracts, legal fees, and consulting gigs. The reader should note this isn’t nefarious on its’ face - it’s not uncommon to have a tight mgmt team rely on each other’s competencies during build, but the intensity is somewhat high (Note 15). For in-sector risk, this one seems to have a lot riding going into a competitive, mature market. Discounts sought by retail for wholesale product a definite threat to margins, and a rough couple of quarters (or slowed realization) of sales expansion will stress cashflow. All I see here is promises, some revenue, & expensive in-house resourcing. I am not close enough (or knowledgeable) about the company and it’s products and the market with which it is heading full steam, into. The valuation I get - including LTYR revenue numbers - comes in at less than the share price value it’s at now, fwiw. The preceding is the opinion of the author, and not intended to be used to buy or sell any equity or derivatives - or anything else for that matter
Elaborating on Datadash's 50k BTC Prediction: Why We Endorse the Call
As originally published via CoinLive I am the Co-Founder at CoinLive. Prior to founding Coinlive.io, my area of expertise was inter-market analysis. I came across Datadash 50k BTC prediction this week, and I must take my hats off to what I believe is an excellent interpretation of the inter-connectivity of various markets. At your own convenience, you can find a sample of Intermarket analysis I've written in the past before immersing myself into cryptos full-time. Gold inter-market: 'Out of sync' with VIX, takes lead from USD/JPY USD/JPY inter-market: Watch divergence US-Japan yield spread EUUSD intermarket: US yields collapse amid supply environment Inter-market analysis: Risk back in vogue, but for how long? USD/JPY intermarket: Bulls need higher adj in 10-y US-JP spread The purpose of this article is to dive deeper into the factors Datadash presents in his video and how they can help us draw certain conclusions about the potential flows of capital into crypto markets and the need that will exist for a BTC ETF. Before I do so, as a brief explainer, let's touch on what exactly Intermarket analysis refers to: Intermarket analysis is the global interconnectivity between equities, bonds, currencies, commodities, and any other asset class; Global markets are an ever-evolving discounting and constant valuation mechanism and by studying their interconnectivity, we are much better positioned to explain and elaborate on why certain moves occur, future directions and gain insights on potential misalignments that the market may not have picked up on yet or might be ignoring/manipulating. While such interconnectivity has proven to be quite limiting when it comes to the value one can extract from analyzing traditional financial assets and the crypto market, Datadash has eloquently been able to build a hypothesis, which as an Intermarket analyst, I consider very valid, and that matches up my own views. Nicolas Merten constructs a scenario which leads him to believe that a Bitcoin ETF is coming. Let's explore this hypothesis. I will attempt to summarize and provide further clarity on why the current events in traditional asset classes, as described by Datadash, will inevitably result in a Bitcoin ETF. Make no mistake, Datadash's call for Bitcoin at 50k by the end of 2018 will be well justified once a BTC ETF is approved. While the timing is the most challenging part t get right, the end result won't vary. If one wishes to learn more about my personal views on why a BTC ETF is such a big deal, I encourage you to read my article from late March this year. Don't Be Misled by Low Liquidity/Volume - Fundamentals Never Stronger The first point Nicholas Merten makes is that despite depressed volume levels, the fundamentals are very sound. That, I must say, is a point I couldn't agree more. In fact, I recently wrote an article titled TheParadox: Bitcoin Keeps Selling as Intrinsic Value Set to Explode where I state "the latest developments in Bitcoin's technology makes it paradoxically an ever increasingly interesting investment proposition the cheaper it gets." However, no article better defines where we stand in terms of fundamentals than the one I wrote back on May 15th titled Find Out Why Institutions Will Flood the Bitcoin Market, where I look at the ever-growing list of evidence that shows why a new type of investors, the institutional ones, looks set to enter the market in mass. Nicholas believes that based on the supply of Bitcoin, the market capitalization can reach about $800b. He makes a case that with the fundamentals in bitcoin much stronger, it wouldn't be that hard to envision the market cap more than double from its most recent all-time high of more than $300b. Interest Rates Set to Rise Further First of all, one of the most immediate implications of higher rates is the increased difficulty to bear the costs by borrowers, which leads Nicholas to believe that banks the likes of Deutsche Bank will face a tough environment going forward. The CEO of the giant German lender has actually warned that second-quarter results would reflect a “revenue environment [that] remains challenging." Nicholas refers to the historical chart of Eurodollar LIBOR rates as illustrated below to strengthen the case that interest rates are set to follow an upward trajectory in the years to come as Central Banks continue to normalize monetary policies after a decade since the global financial crisis. I'd say, that is a correct assumption, although one must take into account the Italian crisis to be aware that a delay in higher European rates is a real possibility now. !(https://coinlive.io/ckeditor_assets/pictures/947/content_2018-05-30_1100.png) Let's look at the following combinations: Fed Fund Rate Contract (green), German 2-year bond yields (black) and Italy's 10-year bond yield (blue) to help us clarify what's the outlook for interest rates both in Europe and the United States in the foreseeable future. The chart suggests that while the Federal Reserve remains on track to keep increasing interest rates at a gradual pace, there has been a sudden change in the outlook for European rates in the short-end of the curve. While the European Central Bank is no longer endorsing proactive policies as part of its long-standing QE narrative, President Mario Draghi is still not ready to communicate an exit strategy to its unconventional stimulus program due to protectionism threats in the euro-area, with Italy the latest nightmare episode. Until such major step is taken in the form of a formal QE conclusion, interest rates in the European Union will remain depressed; the latest drastic spike in Italy's benchmark bond yield to default levels is pre-emptive of lower rates for longer, an environment that on one hand may benefit the likes of Deutsche Bank on lower borrowing costs, but on the other hand, sets in motion a bigger headache as risk aversion is set to dominate financial markets, which leads to worse financial consequences such as loss of confidence and hence in equity valuations. !(https://coinlive.io/ckeditor_assets/pictures/948/content_2018-05-30_1113.png) Deutsche Bank - End of the Road? Nicholas argues that as part of the re-restructuring process in Deutsche Bank, they will be facing a much more challenging environment as lending becomes more difficult on higher interest rates. At CoinLive, we still believe this to be a logical scenario to expect, even if a delay happens as the ECB tries to deal with the Italian political crisis which once again raises the question of whether or not Italy should be part of the EU. Reference to an article by Zerohedge is given, where it states: "One day after the WSJ reported that the biggest German bank is set to "decimate" its workforce, firing 10,000 workers or one in ten, this morning Deutsche Bank confirmed plans to cut thousands of jobs as part of new CEO Christian Sewing's restructuring and cost-cutting effort. The German bank said its headcount would fall “well below” 90,000, from just over 97,000. But the biggest gut punch to employee morale is that the bank would reduce headcount in its equities sales and trading business by about 25%." There is an undeniably ongoing phenomenon of a migration in job positions from traditional financial markets into blockchain, which as we have reported in the past, it appears to be a logical and rational step to be taken, especially in light of the new revenue streams the blockchain sector has to offer. Proof of that is the fact that Binance, a crypto exchange with around 200 employees and less than 1 year of operations has overcome Deutsche Bank, in total profits. What this communicates is that the opportunities to grow an institution’s revenue stream are formidable once they decide to integrate cryptocurrencies into their business models. One can find an illustration of Deutsche Bank's free-fall in prices below: !(https://coinlive.io/ckeditor_assets/pictures/946/content_2018-05-30_1052.png) Nicholas takes notes of a chart in which one can clearly notice a worrying trend for Italian debt. "Just about every other major investor type has become a net seller (to the ECB) or a non-buyer of BTPs over the last couple of years. Said differently, for well over a year, the only marginal buyer of Italian bonds has been the ECB!", the team of Economists at Citi explained. One can find the article via ZeroHedge here. !(https://coinlive.io/ckeditor_assets/pictures/953/content_2018-05-30_1451.png) Equities & Housing to Suffer the Consequences Nicholas notes that trillions of dollars need to exit these artificially-inflated equity markets. He even mentions a legendary investor such as George Soros, who has recently warned that the world could be on the brink of another devastating financial crisis, on lingering debt concerns in Europe and a strengthening US dollar, as a destabilizing factor for both the US's emerging- and developed-market rivals. Ray Dalio, another legend in the investing world and Founder of Bridgewater Associates, the world’s largest hedge fund, "has ramped up its short positions in European equities in recent weeks, bringing their total value to an estimated $22 billion", MarketWatch reports. Nicholas extracts a chart by John Del Vecchio at lmtr.com where it illustrates the ratio between stocks and commodities at the lowest in over 50 years. As the author states: "I like to look for extremes in the markets. Extremes often pinpoint areas where returns can be higher and risk lower than in other time periods. Take the relationship between commodities and stocks. The chart below shows that commoditieshavennot been cheaper than stocks in a generation. We often hear this time it is different” to justify what’s going on in the world. But, one thing that never changes is human nature. People push markets to extremes. Then they revert. " !(https://coinlive.io/ckeditor_assets/pictures/954/content_2018-05-30_1459.png) Bitcoin ETF the Holy Grail for a Cyclical Multi-Year Bull Run It is precisely from this last chart above that leads Nicholas to believe we are on the verge of a resurgence in commodity prices. Not only that but amid the need of all this capital to exit stocks and to a certain extent risky bonds (Italian), a new commodity-based digital currency ETF based on Bitcoin will emerge in 2018. The author of Datadash highlights the consideration to launching a Bitcoin ETF by the SEC. At CoinLive, our reporting of the subject can be found below: "Back in April, it was reported that the US Securities and Exchange Commission (SEC) has put back on the table two Bitcoin ETF proposals, according to public documents. The agency is under formal proceedings to approve a rule change that would allow NYSE Arca to list two exchange-traded funds (ETFs) proposed by fund provider ProShares. The introduction of an ETF would make Bitcoin available to a much wider share of market participants, with the ability to directly buy the asset at the click of a button, essentially simplifying the current complexity that involves having to deal with all the cumbersome steps currently in place." Nicholas refers to the support the Bitcoin ETF has been receiving by the Cboe president Chris Concannon, which is a major positive development. CoinLive reported on the story back in late March, noting that "a Bitcoin ETF will without a doubt open the floodgates to an enormous tsunami of fresh capital entering the space, which based on the latest hints by Concannon, the willingness to keep pushing for it remains unabated as the evolution of digital assets keeps its course." It has been for quite some time CoinLive's conviction, now supported by no other than Nicholas Merten from Datadash, that over the next 6 months, markets will start factoring in the event of the year, that is, the approval of a Bitcoin ETF that will serve as a alternative vehicle to accommodate the massive flows of capital leaving some of the traditional asset classes. As Nicholas suggests, the SEC will have little choice but to provide alternative investments. Bitcoin as a Hedge to Lower Portfolios' Volatility Last but not least, crypto assets such as Bitcoin and the likes have an almost non-existent correlation to other traditional assets such as stocks, bonds, and commodities, which makes for a very attractive and broadly-applicable diversification strategy for the professional money as it reduces one’s portfolio volatility. The moment a Bitcoin ETF is confirmed, expect the non-correlation element of Bitcoin as a major driving force to attract further capital. Anyone Can BeWrongDatadash, But You Won't be Wrong Alone Having analyzed the hypothesis by Nicholas Merten, at CoinLive we believe that the conclusion reached, that is, the creation of a Bitcoin ETF that will provide shelter to a tsunami of capital motivated by the diversification and store of value appeal of Bitcoin, is the next logical step. As per the timing of it, we also anticipate, as Nicholas notes, that it will most likely be subject to the price action in traditional assets. Should equities and credit markets hold steady, it may result in a potential delay, whereas disruption in the capital market may see the need for a BTC ETF accelerate. Either scenario, we will conclude with a quote we wrote back in March. "It appears as though an ETF on Bitcoin is moving from a state of "If" to "When." Datadash is certainly not alone on his 50k call. BitMEX CEO Arthur Hayes appears to think along the same line. On behalf of the CoinLive Team, we want to thank Nicholas Merten at Datadash for such enlightening insights.
Valuable information for new investors Warning. Looooong post. TL:DR in the bottom. Recently I have been chatting a ton with people who are very new to investing. I don’t claim to have mastered anything, however I have been able to help a lot of people through chats and messages. I’ve given advice and answered questions, and through that I found out a lot of problems new people run into, and decided to compile some of the points I found important. I will start this with the primary compiled information I usually give people when prompted, and then move on to specific questions I found important. A final note is that this is my own opinion and views, so feel free to disagree! I’d love input, even if I feel confident about this advice. First off I’d recommend searching for posts about starting out & learning the basics, both here and on other investing/trading subreddits. The question has been asked hundreds of times, and you’ll find some amazing answers if you look. The first thing you need to understand is that finance is all about information. If you want to learn, you need to take in information. All of the information. Books, news, financial statements, press releases and earning calls. Read everything. You will find hundreds of words you don’t understand, so look them up (investopedia have a majority of them). In the beginning you will struggle, however, as time goes by, you will start to understand. If you do not like reading, learn to like it. There is no way around this. If you find yourself investing without reading tons, you are going to lose. Books to recommend: Anything written by Warren Buffet, A random walk down wall street by Burton Malkiel (how I started), Stress test by Timothy Geithner & The intelligent investor (“thick” but all important). Pick out your favorite company in the world, and check if they are public. If they are, head over to their investor relations page and read the transcript to their latest earnings call. Read their financial statement (10-Q). If you don’t understand a word, look it up. This is frustrating but required. This method of reading, finding things you do not understand and looking it up (and learning it), will be the absolute unavoidable key to improvement. There are 3 things you should consider buying as your first investment: Large cap companies. These are the most risky you should consider buying. These large companies (Apple, Banks, Microsoft, 3M, JnJ, Walmart and the like) are stable, but can for sure give you a great return. Specific ETFs. An ETF is a basket of stocks, often with some sort of focus. It gives you instant diversification. The specific ETFs are less risky than the single stocks, but hold risk nonetheless. Specific ETFs are baskets of stocks of varying number, letting you buy one security, and get a tiny portion of many companies. This lets you bet on a sector. Say you think that robotics and automation is the future, you can bet on that by investing in $ROBO. Other examples of these are $KWEB, chinese e-com, $FNG, media and tech, $ITA, aerospace and defence and $SOXX, semiconductors. These let you invest in a promising industry, without having the risk of a single company failing. Lastly, and by far the best choice, is indexing. These are ETFS like $VOO, $VTI, $VWO and $VOOG, and is a way to take on the least amount of risk while still gaining along with the market. You get a wide basket of stocks, focusing on things like the S&P500 ($VOO), which is an index of large (minimum 6.1 billion USD) US companies. Historically , you can expect 7% annual gain here. That’s realistic. Anything offering much more than that without risk has tons of risk without disclosing it, per definition. $VOOG indexes growth companies, focusing less on the giants and more on the up and coming. $VWO focuses on emerging markets, getting places like brazil, russia and all over asia. Indexing is by far the best choice, and will very often gain you a steady growth. The final and great choice is $VTI, which is the global basket which contains the market as a whole. Remember, if you have to ask simple questions, you should be indexing. Asking questions is very important and a great way to learn, however, you should not make specific investments unless you can make the call 100% yourself with confidence. If you are not sure, you are making a mistake in purchasing. Lastly, and honestly most importantly, here is a list of things you should ALWAYS be able to answer before buying a security, equity or derivative:
Why am I getting this instead of an index? Where is the upside?
If the stock goes up, what action do I take? When do I sell? At what price or % gain.
If the stock goes down, when do I sell? At what % loss or a price.
What risks are there? How does the worst case realistic scenario look like?
Why am I making this investment right now? Is there a better time?
What exactly am I buying?*
And finally, always, without exception, perform your own Due Diligence. Don’t take advice from other people without understanding the situation yourself. If you have to ask questions, you should not own the equity. Ask about what you do not own. If you have to ask questions about an equity you already own, you have messed up, and should rethink your strategy. A last but VITAL note is to keep a journal. You should note down every stock purchase you make or decided to not make, noting down the stock, price, date and answers to the 6 questions. This will help massively over time, where you can look back how you felt before and why you made decisions. It helps to keep temporary emotion out, as well as self reflecting which is the most vital learning method of any craft. Q&A Should I buy cheap stocks like $XXX for 4 dollars per share, or expensive stocks like $YYY for 500 dollars per share? IT DOES NOT MATTER. The price of the individual share have no effect whatsoever on the price of the company, how much you will gain or how much risk there is. If you buy 10 A-stocks for 1 dollashare, and if you buy 1 B-stock for 10 dollars/share, both these purchases are EXACTLY the same, in practice. If stock A gains 10% you earn $1.00, if stock B gains 10% you earn $1.00. Then the stocks are valued at $1.1 and $11 respectively. But there is no different. Don’t let the price of the share fool you. The only thing that matters is the market cap, which is the (number of shares*price of 1 share). The market cap is the cost of ALL the shares in the entire company. Some stocks like being expensive to seem exclusive and expensive, but it’s really the company's choice. What numbers matter the most for the companies so I can compare? Well, that's complicated. DIfferent investors value different things. Some value P/E (price per earnings) and some value margin changes. You have to decide for yourself what matters, which leads to tons and tons of reading. Really, if you don't like reading and analyzing, this isn't something for you. Look at ETFs then. As a rule of thumb, 1 or 2 numbers is not enough to gauge the HUGE and COMPLEX being that is a corporation, so don’t get caught on something like P/E. Compare everything. Will I be able to profit? Probably. As a new investor, especially a young one, will see both success and failure over time. This is natural. I recommend investing a smaller amount of money. Either you will gain a few % and be excited to learn and continue, or you will lose a few % and you find the ultimate opportunity to analyze what your mistake was. Is $XXX enough money? Probably. It depends on your broker and fees. Any amount invested into the market is great, and a 10% increase is a 10% increase no matter how much you invest. Depending on your broker though, it might be easier or harder. With high commission, a smaller amount will be eaten by fees. With smaller amount, some expensive stocks (see $BRK.A) might be out of your reach. This shouldn’t be too much of a problem though. What broker should I use? The best one for you! Hard question. It is country dependent. Look around. You want low commission and any perks you require. To start out, depending on how much money you have to invest, look for low-commission brokers. $0 - $3 is a good range per stock purchase. If you pay more than 2% on your investment, you lose 2% to buy in. This would generally cause stock to not be worth to buy. So do some thinking on your own, to invest you will have to get used to it. Some brokers let you buy partial shares as well, which might be a plus if your capital is low to buy the more expensive stocks. What should I invest in? There are so many things! Like said above, cheap funds and common stock are good places to start. They are the core of investing, and should be your start. After that, move on and understand bonds. It will be all important during your career in investing. On top of that there are warrants, options, forex, commodities, and all kinds of additional derivatives. Stay clear of those completely until you can confidently make the call to try it out. My stock increased/decreased in value. Should I sell? Asking this question means that you weren’t thorough enough when you made the purchase. You should always have it written down on a paper. When do you get out? A valid answer is never. If you believe in the business and they prove themself strong, why ever sell? Some people like selling if they gain 30% or lose 30%. Some do the same on 15% respective 10%. It comes down to how much long term faith you have in the company, when you’ll need the money and what your risk tolerance is. Personally, when I buy a company, I will ignore it until something changes in the core business. I re-analyze each company each earning. It takes a lot of time, but its my method. If I buy something more high risk, I will sell at a set loss-% (20-40% loss) and the same on gain. How does taxes work and how should I plan for taxes? Taxes are hard and complicated, but it is something you must understand how it works. Capital gains taxes are vital to understand. Sadly, they work differently in each country, so there is no easy answer except for you to look up it yourself. But know it, it is vital. To end, these are the most important 4 rules of learning how to do all this:
Keep a journal and record the answers to all 6 questions each time you make a purchase, or decided in the end to not.
Each time in your reading if you come over a concept, word or idea that you do not understand, get used to looking it up and learning what it is. It’s key.
When you succeed, analyze if you got lucky or if your actual reasoning was the correct call. When you fail, analyze what your mistake was and write it down in your journal. Both are vital.
TL:DR: Investing is about reading. You should probably start by reading this now or give up. If you read it all, success! Keep going! Disclaimer: Don't invest money that you can't afford to lose. You might lose all your funds. Probably don't. lykosen11
We created this website to bring together all the tools and services you’ll need to start trading for real. If you want to start taking advantage of the markets now, without having to become an expert, our free trading signal. Whatever you’re looking for, you’ll find it with us. Here you’ll learn the basic terminology to be a successful Forex trader. To begin learning Forex, you’ll need to have a good grasp on the basic definitions, rules and terms used by professional traders. At first, this can sound daunting but after we spell out the fundamentals, it will become clearer and you’ll be on your way to becoming a Forex trader. We will cover terms, such as; base currency, the quote currency, micro lots, mini lots, standard lots, long position, short position, pips, spread, margin and many more. Someone who is using more than 10% of the whole equity into a trading session is probably not having a good money management strategy. Because you should always trade safe and also because the market may turn back on you and you would find yourself in a big margin problem. With good risk management, having 10% of your account invested can bring consistent returns with no problems.
Profit Rate :
Some traders can’t make 10% per year. Others can safely and consistently make 30% per month and they are not afraid to show their verified performance as a solid proof of what they offer. While taking into consideration a proper risk and money management, you should never aim to make millions in one week with a small account because that would probably mean hitting margin call. Just remember: a good strategy and analysis will always bring profits. And if at the end of the month you have only 1% profit, that means you don’t have -1% loss.
Choosing the Best Forex Broker :
In order to start trading Forex, you will need to find the right online Forex broker for you with the cash rebate program. It’s important to find the right Forex broker for your trading needs according to several important criteria, such as security, customer service, trading platform, transaction costs, live quotes and more. While reading our guide on how to choose the best FOREX BROKERS.
Forex for free :
Most Forex brokers offer many free options, services, tips and information to help you trade better. Real-time charts and news, help guides, and blogs help you understand and learn about the market in real time. There are also many “demo” accounts to try the market before putting in real money.
Why Trade Forex?
The Forex market is fast becoming the most attractive and popular market in the world. The traditional stock is no longer relevant and traders are moving fast into the Forex. We collected here a few reasons to show you why this is happening and what advantages the Forex market has to make is so popular. We choose to focus on a few very important advantages of the Forex trading and the reasons that people choose this market: forex is the largest financial market in the world. The daily volume of the Forex market is huge over $3 trillion per day. This makes the stability of the market very good compared to stock trading. The price in the Forex market is exactly what you see is what you get and you can follow it very easily. Forex trading simplifies everything, there’s no clearing fees, no exchange fees, no government fees, no brokerage fees, no middlemen. The elimination of the middlemen gets the traders closer to the actual trade and makes the traders responsible for their pricing. The brokers are usually paid through a service called “bid-ask spread”. The Forex market is open 24 hours a day. Opening on Monday morning (in Australia) and closing in the afternoon (in New York). This is great for traders that can trade all day long or in parts. You can choose the times that are convenient for your trading, day-night, when you eat or when you sleep, whenever you want. In Forex trading you can minimize the risk by depositing a small amount that will control a larger contract value. This is controlled by leverage and can make you profitable in the Forex market. If a broker gives 50 to 1 leverage it means that with $50 deposit you can buy or sell with $2500. If you put $500, you can trade with $25,000. All this needs to be done with great risk management because high leverage can easily lead to great loss, as well as great profit. The Forex market is huge and therefore also very liquid. This means that on every buys or sell that you make, there will be someone who will take the other side of the trade. You will never be grounded because there’s no one on the other side. To get started you would think that you need a lot of money. The reality is that online Forex brokers have “mini” and “micro” options and some of them have a minimum of only $25. This is great for Forex beginners because it makes the trading starting point easier. I’m not saying that you need to start with the minimum, but being cautious is never bad and starting small is good for the average trader. main trading company
Forex the best trading market :
You can easily predict the movements in the Forex market you have many repetitive patterns and it’s fairly easy to learn, recognize and analyze these movements. The prices tend to go up or down and return to the average. They stay for quite a long time up or down and this stability makes the Forex market a much easier market to follow. This gives the traders a huge advantage in controlling their trades much better than the disorder.
Risk Warning :
We always suggest our clients to carefully consider their investment objectives, level of experience, and risk appetite. try to money management with every trade. Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. FOREX IN WORLD takes no responsibility for loss incurred as a result of our trading signals. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts. FOREX TRADING IN INDIA: Forex means currency pair trading. Indian citizens can trade only currencies that have a pairing with INR. It is legal to trade with Indian Brokers providing access to Indian Exchanges(NSE, BSE, MCX-SX) providing access to Currency Derivatives. Since 2008, RBI and SEBI have permitted trading in currency derivatives. The currency pairs available for trading are USD-INR, EUR-INR, JPY-INR and GBP-INR.
by Shain Vernier May has been a banner month for Bitcoin (BTC), featuring a breakout rally above $8000. Crypto bulls have taken control of the BTC cash market, bidding values higher at a rapid pace. No one is 100% sure why values are spiking ― perhaps this week’s traded volumes of May Bitcoin futures are a clue.
May Bitcoin Futures Show Heavy Volumes
Monday was a huge session for assets across the board, especially equities and cryptocurrencies. Stocks took a beating, while cryptos rallied. May Bitcoin futures put in an opening week GAP up before posting a test of the $8000 level. Aside from the glaring daily GAP ($6290-$7150) for May BTC, the most striking observation from this chart are the daily traded volumes. Here they are from this week (approximate values):
Bitcoin futures are a large contract offered by the CME, featuring extensive margin requirements and a pricey tick size. In practice, they are not the most popular instrument among retail traders. However, institutional investors implement BTC futures to hedge portfolio risk and speculate on forthcoming moves in the cash markets. Given this week’s comparatively huge traded volumes in May Bitcoin futures, it appears institutional players are betting on an extended rally out of BTC. Bottom Line: If the big money players are going long, then look for everyone else to pile on. In the event we see a significant retracement in this week’s range, buying in from the daily 38% retracement is a good play to the bull. Taking a long position from $7125 is a solid market entry point. With an initial stop loss at $6489, this trade is good for $875 per BTC on a return to the $8000 level. Check out our free forex signals Follow the top economic events on FX Leaders economic calendar Trade better, discover more Forex Trading Strategies
Metatrader 4 - How to Install the Software on the Linux Platform
There is an immense curiosity about how traders should Easy Insta Profits Review use the very popular trading program Metatrader four on the Linux platform. The following content tells you the basic steps of installing MT4 in the Linux. Forex trader can adapt his distribution in an easy way, and install in on his or her ubuntu VPS. But until the Metaquotes really offers a native Linux version, or temporarily what one can do is to simply run the program under WINE emulation, and let the WINE tools to do the mundane job for you. Sixth, the whole MT4 download is complete, foreign currency traders should be able to detect an icon on their respective desktops and locate a current install of MT4 under their Linux. If they have any problems concerning the installation, they should consult the brokers and seek for online installation support, if many attempts of download fail. First of all, Forex traders should install WINE if it is not yet previously installed. Trader should key in: sudo apt-get install wine, then wait for things to happen. Once the WINE is installed, the trader needs to configure it, yet the process involved is pretty easy. A typical user should run /winecfg/ from the terminal and automatic set up will then begin. If you want further configuration or detailed tweaking, recheck the tabs when necessary, for more complex handling investors should consult online service or trading expertise. But usually one has to set it as a default, its equipment is more than enough for ordinary usage. Since currency trading involves some risks, it is recommended that the customer tests the software on a demo account to familiarize himself to the system. If the demo program does not satisfy the customer's needs, he can return the program with a 100 percent refund. What about the drawdown of the system This currency trading product's drawdown is 0.35 percent. This percentage figure shows the maximum percent of capital that this robot has lost. Compared to typical Forex drawdown rates of 10 percent to 20 percent, FAP Turbo's drawdown rate is low. This explains why the equity graph of this software is as smooth as shown on its website.FAP Turbo remains consistent in maintaining profitability even when the same rules as applied to its back tests are also applied to its live trading performance. This software product provides a lifetime membership to its customers. Members could get access to all the versions of the software as well as to all the latest updates. Installation instructions are included in the package. It's cumbersome to start off with foreign exchange trading. If you want to consistently earn profits in less time and effort, automated currency trading software are available. All you have to do is press buttons and expect your profit margin to rise.Your IvyBot purchase will never be outdated. Purchasing IvyBot for an affordable one-time fee includes having you as a lifelong member with IvyBot. With this membership, you'll be provided with free upgrades that will keep your robot updated with the Forex market and ensure that your robot stay profitable.Moreover, installing IvyBot is simple. Included in the package are video tutorials on how to install and operate the system as well as other additional indicators and scripts.Beginners and veteran Forex traders will appreciate IvyBot's automation and customization features. IvyBot is currently sold at $149.95. https://optimusforexreview.com/easy-insta-profits-review/
There is no person, who does not like money? If we talk about money none wants that the money they are having should be constant but it should be in increasing quantum when we talk about money there are numerous ways which is available to work with money to increase the same. Forex is a great way by which the money can be earned and for earning money from Forex the traders need to have the complete knowledge of Forex trading. Forex is not a simple topic which is possible to do without any complexities.
Why Learn to Trade Forex?
There is a famous quote by Albert Einstein- “You have to learn the rules of the game. And then you have to play better than anyone else.”
This quote is the essence of Why learn to trade Forex?
If any trader wants to trade in Forex and wants to understand this whole topic which is vast like ocean then this is something which is very important. Forex is a very volatile market with very high trading volume in the market. So trading in the Forex market is very profitable. As the thing is there like volatility and profitability goes hand to hand higher the volume in the market higher the volatility. So if any trader wants to trade with Forex with any intention which is full-time and part-time or both or a hobby, in any case, having full knowledge of the same will provide the trader proper command over this concept and he or she will be able to trade in the market while using every strategy which can be used. Incomplete knowledge is more dangerous than no knowledge. So there are many advantages of Forex education. For trading efficiently we should have knowledge of Forex education. Trading Forex is not easy as it is a volatile market and along with this the traders need to understand the same that if they are acquiring complete knowledge then only they can work properly. There are plenty of benefits when it comes to learning Forex online. Let's briefly examine the main ones.
What Are the Main Advantages of Having a FX Education?
There are plenty of benefits when it comes to learning Forex online. Let's briefly examine the main ones. You Get to Understand the Basics Forex has its own concepts and terminologies which can be difficult to grasp - so it's important that all traders become familiar with them. Even if you've had some experience trading stocks or other equities, you need to realize that Forex is a different ball game altogether with its own rules. With a Forex education free of charge, you'll become familiar with terms like pips, draw down, stop-loss order, Forex spread and margin call. They'll become part of your everyday vocabulary. You Can Create Your Own Plan Like any other business venture, anyone wishing to get involved in Forex must understand the fundamentals and have a plan of action. Your Forex trading plan or strategy is what will help you navigate through the market safely. A plan keeps you disciplined and stops your emotions getting the better of you. For more Details, Simple Forex Trading Strategies That work
Looking for Beta Users for Groundbreaking P2P Swap Trading System, Maximum Leverage, Minimum Risk, All Markets
I'm looking for traders to take positions (either in agreement with, or contrary to) my research/opinion or using your own trade setups and fundamental/macro outlook - via our P2P swap platform. You can use actual capital or I can give you test capital, basically, play money, to trade with me and my team and all I ask for is feedback on the system and the ability to quote you (which is not mandatory, but it would be nice). You can trade stocks, bonds, commodities, forex and forex pairs long or short, or swap the exposures directly for another asset, ex. S&P 500 for the LSE 100, Apple for Google, etc. Fees start at 5 bp, the best available from anywhere. Digital leverage is available, up to 10,000x worth (double digit profits/losses can be had from 11 basis points in movement, or less - so be careful), with no possibility of a Margin Call since the trades are pre-funded. If you think the opportunity is worthwhile, feel free to contact us or see info sheet below for more... Macro Trading Has a New Power Tool: Peer to Peer, Counterparty Risk-Free Swaps for Value Transfer & Trading Trade the value of over 45,000 tickers of instruments in every asset class from every major geography and exchange with up to 10,000x pricing leverage without concerns of counterparty/credit/default risk or margin calls. Very big claims… substantiated by a very big discovery in value transfer and security. Veritaseum is the worldwide leader in the financial implementation of “smart contracts” – unbreakable, self-executing bilateral agreements between two or more parties. We use these smart contracts to create peer to peer swaps for the transfer of value through the “blockchain,” a worldwide, open ledger of pseudonymous transactions that can be seen and audited by anyone, any time in the cloud. The blockchain is considered unhackable and one of the most secure implementations of cryptography to date. With the use of financial “wallets”, client side applications that use a simple interface to guide users in the quick (as in minutes – enter ticker(s), amount to risk, collateral, expiry and leverage required) creation of a smart contract (in this case a P2P swap), users trade OTC directly with other parties – totally bypassing and intermediating exchanges, with even less risk. Monetary value is committed up front, a leverage factor is digitally dialed in (anywhere from 2x to 10,000x) and the smart contract is created and sent to the blockchain to await a match. Once matched, the funds are locked into the transaction until expiry, at which point profits and losses are distributed along with principal and unused collateral (the capital chosen to be put at risk). A novel, risk averse, extremely powerful, and quite frankly - ingenious way to trade macro strategies. Not only can one go long or short any ticker in any asset class from any region for any currency, one can go long one ticker relative to another. For instance, those with a bearish outlook on the S&P 500 normally short it for USD. You can now short (pay) the S&P 500 index directly while going long (receiving) Eurozone equities (or 10 year treasury yields, or Swiss francs or the CNYJPY pair or bitocin), in a single transaction – with or out without leverage. Since the exchange is peer to peer, we never hold or control any of your assets, hence you are not exposed to our balance sheet, credit, default or counterparty risks (the blockchain is your effective counterparty). Veritaseum is a software concern, not a financial concern or intermediary! You can always track your assets and trade through the blockchain at any time. The capital is loaded in the wallet in the form of bitcoin, and for those who choose to minimize exposure to bitcoin market price volatility, leverage can be used to nearly eliminate the noise. You can also conduct trades using a demo mode and test coins, so as to use the system without risking actual capital.
Smart Contracts as Transaction Vehicles: The Safest Possible Way To Exchange Value
Veritaseum's UltraCoin smart contracts are: 1. highly flexible - you design your own derivatives yourself using your own parameters via our simple graphical user interface 2. self-executing 3. autonomous 4. unbreachable: we call them, the unbreakable promise! They are backed, fortified and stored by/on the blockchain itself 5. uber-transparent: simple click the "trace transaction" button to find the location and historical travel path of your assets anytime, from anywhere you have an internet connection
Trading Through a Balance Sheet-Based Financial Institution vs. Distributed, Decentralized, P2P Software Concern
What I do want to accomplish is the education through the fact that the Bitcoin protocol has given rise to the genesis of a new type of company, with a new business model that can offer a totally new type of product. As you were able to see from above, Veritaseum's UltraCoin offers a very uniquer product with many if not all of the attributes that potential competitors offer, with a slew of attributes that others can't touch. This is done at 1/5th of the price and at much less risk! When dealing with Veritaseum's UltraCoin, you can never get Gox'd because we never have (nor do we want) possession of your coins or fiat - every, at any time. Because we don't user our balance sheet (we are a software company, not a centralized exchange or brokedealer) you:
are never exposed to us as a counterparty, we make the blockchain your counterparty
never have to worry about our capital reserves or the capitalization/credit of your initial counterparty (all trades are fully funded at the outset, even a heavily levered trade at 10,000x),
You never have to worry about negative drawdowns, negative equity or margin calls
If a catastrophic event were to occur, say bi-coastal earthquake takes out our datacenters on the east and west coasts simultaneously while a meteor hits the backup center in the midwest, you will still be able to recover you funds - on your own. Since we do not have possession of your funds you don't have to worry about us absconding with them nor getting blown up with them. Each trade has a catastrophic rollback feature which will put you back into your original funding position n-time units after expiry. Unfortunately, you will not be able to complete your trade, but if two bi-coastal trades hit at the same time as meteor to the mid-west, you may not be studying that EUR short anyway :-)
This is just the beginning of what is capable with our Internet 2.0 business models. I implore you to download our:
and of course, the UltraCoin BTC wallet for Windows - or - Mac & Linux, which doubles as the trading client. The wallets have a "Demo Mode" which allows you to trade on testnet if, after using the spreadsheet modeler, you are still not comfortable committing live coins. You can get the demo (testnet) coins here.
Forex Kalender Market Heat Map Market Sentiment Indikation DAX30 Analyse EUR/USD Analyse Dow Jones Analyse Gold Analyse ... Was ist die Free Margin? Die freie Margin ist die Summe Ihres Eigenkapitals, die nicht in irgendeiner Position gebunden ist, und die Sie für neue Positionen am Markt nutzen können. Das ist aber noch nicht alles, denn die freie Margin ist auch die Differenz zwischen ... Margin is the amount of money necessary to cover your possible losses during margin trading. Free Margin Free margin is the amount availabe to open next trades. Free margin equals equity minus margin. Margin Call Margin Call is an alert to the trader when the account equity falls below 50% Margin Level. This means, that the account is left with ... Mostly, equity on a Forex account should be higher than the margin utilised for trades. The leverage factor, or the equity applied for the trade, can go a long way in terms of defining the profits made, or the losses sustained on the account. This pushes us to the point of understanding why it is important for traders to understand how to use equity to generate a balance between the risk, and ... Leverage, Margin, Balance, Equity, Free Margin, Margin Call And Stop Out Level In Forex Trading Click Here to earn Money just by reading our articles. I always see that so many traders who trade forex, don’t know what margin, leverage, balance, equity, free margin and margin level are. As a result, they don’t know how to calculate the size of their positions. Indeed, they have to calculate ... Pengertian dan perbedaan Balance, Equity, Margin, Free Margin, Margin Level dalam Forex di MetaTrader 4 Balance. Balance adalah jumlah dana dalam akun trading kamu, dana ini tidak termasuk dengan plus atau minus posisi terbuka yang mungkin kamu lakukan saat ini. Balance akan terupdate ketika posisi terbuka sudah tertutup. Understanding how equity, balance, unrealized profits and losses, margin and leverage are intertwined is very important for all forex traders. This way, you’ll be able to take calculated risks and prevent the notorious margin call from happening. Take care when opening leveraged positions and control your free margin, don’t risk too much of your account balance and – with a sound trading ... Free Margin: Free margin is the money that is not engaged in any trade and you can use it to take more positions. You remember what the margin was, right? Free margin is the difference of the equity and margin. At the above example, your position margin is $10. Lets say the equity is $1000. Therefore, your free margin will be $990 ($1000 - $10). If your open positions make money, the more they ... What is Equity? Equity in Forex trading refers to the account balance plus the unrealised profit or loss from your open positions. The account equity refers to the total amount of money the account. What is Free Margin? The free margin is the amount of money in your trading account that is available for opening new positions. The free margin is calculated by using the following formula: Let ... Free margin is the difference of your account equity and the open positions’ margin. As long as you do not have any open orders in your trading account, your account equity and free margin are the same as your account balance. Margin level shows the state of a trader’s trading account. It is the ratio of equity to margin. In case you don't find the answer for a question that interests you ... Free margin is the amount of money in your account available to open new trades based on your current margin use and equity. So Equity-Margin= free margin. The free margin available will increase/decrease depending on the profit (or loss) of your open position. I hope it makes sense.
Forex trading for beginners, part 5 - How Margin trading works, examples of why and when margin call and stop out happens. What is Equity and Free Margin. I ... Tagalog Forex Trading - Equity and Margin Sa video na ito, malalaman natin kung ano ba ang EQUITY at MARGIN sa forex trading. Dito ipapakita sa atin kung paano gumalaw or gamitin ang leverage ... Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. Hello traders all friends in this episode we will learn how to calculate margins, balances, free margins and mergin levels in forex. After we have a trading account, of course we will make a ... Put simply, Free Margin in forex trading is the money you have available for trading in your account, but how do you calculate it? Watch the video for the fu...