If you are into trading and deal with cryptocurrencies, then it is important to know how to read crypto charts. Anyone who trades in the stock market needs to have the basic skill ofreading charts. Whether it is the stock market or the cryptocurrency markets, the charts help you in your trading activity. Charts mainly show two characteristics, price and volume. Price on a crypto chart shows changes in cost of the cryptocurrency over time. Volume shows how many units of the cryptocurrency have been traded.
There are two main charts used to trade cryptocurrencies – the line chart and the candlestick chart. Let’s take a look at what these charts are and how to read them.
1) Line chart
This is the simplest of charts and shows the movement of prices in the form of a line. A line moving up indicates an upward trend in the price of cryptocurrencies. Line sloping downwards shows a fall in prices. The line chart can be prepared for any duration. It may be for a year where it shows the movement of prices over the different months of a year. This is the chart used by investors to track the movement of the cryptocurrencies that they have purchased.
Those who do day trading (buying and selling currencies on the same day) would use a chart that shows variation in prices over a day. It shows variation in prices over minutes or seconds. Day traders use real-time charts that show the movement of prices at that instant. As prices can fluctuate within seconds, day traders need this kind of a chart.
The line chart below shows the movement of a cryptocurrency over a period of a year. The months of the year and the changes in prices are shown in this chart. The volume is also shown in the form of a bar graph. For each movement of price, the corresponding volume is shown.
Let’s understand how to read this chart.
From this chart, we can make out that the highest price of the cryptocurrency was at the end of June when the price nearly touched $13,000. The lowest price was at mid-March when the price fell below $3,000 and almost touched $2,000.
If you look at the chart, you can see that at the beginning of May, the prices of the cryptocurrency showed a sudden upward movement at $4,000. From then on, it kept moving up. Had you bought the cryptocurrency at that time, you could have earned a handsome profit. How would you have known that the price would go up? The answer lies in the volume of transactions. Look at the volume bar graph, you can see it shoot up to more than 30,000 transactions. Volume indicates that more people are buying. It is a sign that there is a definite upward trend. Had you known to read this trend, you could have made a lot of money.
When the volume bar is green, it indicates there are more buyers. When it is red, it indicates the trend is in favor of selling. Reading the price and volume from a line chart is just one way of reading a crypto-chart. Many other tools can be used. For instance, a moving average is a tool used in technical analysis to read price changes in a more systematic way. There are many such tools that technical analysis provides. Mastering technical analysis can help you read a crypto-chart well and understand the trends.
2) Candlestick chart
This is a favorite chart used by advanced traders to help them to understand market trends and predict which way the market moves. This chart uses a symbol called a candlestick. The symbol shows the high, low, opening, and closing prices. One candlestick represents a period of time, which could be a minute, an hour, a day, or even a month – depending on the type of chart used.
If the candlestick is green, it indicates that the closing price is more than the opening price. This means the trend is in favor of buyers. A red candlestick indicates that the closing price is less than the opening price, showing a trend in favor of sellers. Reading these candlesticks is a subject by itself and helps a trader to get a better understanding of the market. It is a preferred tool by traders to take trading decisions.
Candlesticks form many patterns that can indicate a change in trend. A smart trader or investor will spot this trend and take a quick decision that can help in earning profits. For example, take a look at this candlestick formation known as the hammer.
The hammer shows that prices fell low, but then again rose well above the low and closed above the opening price. This tells you that buyers overtook sellers and pushed the price upwards. If you spot such a candlestick on your chart and it is accompanied by good volume, then it is a sure sign of a bullish or strong upward trend. This indicates prices are going to go up. A candlestick chart doesn’t tell you only about prices and volumes, it even tells you about the psychology of traders. It helps you get an insight into the thinking process of other traders. It helps you get a feel of the general sentiment of the market.It must be noted that one sign by itself cannot be used to make a definite prediction. A seasoned trader will look for various signs on the chart to confirm what is happening.
All this shows that you can read the crypto chart in the best possible way by learning technical analysis. This subject equips you with tools to be able to read charts and understand the message the chart is trying to convey. Mastering technical analysis can help you become a good trader who is able to predict market trends and take decisions accordingly. This is a good way of making profits by reading crypto charts.
Afreximbank’s African Commodity Index declines moderately in Q3-2020
African Export-Import Bank (Afreximbank) has released the Afreximbank African Commodity Index (AACI) for Q3-2020. The AACI is a trade-weighted index designed to track the price performance of 13 different commodities of interest to Africa and the Bank on a quarterly basis. In its Q3-2020 reading, the composite index fell marginally by 1% quarter-on-quarter (q/q), mainly on account of a pull-back in the energy sub-index. In comparison, the agricultural commodities sub-index rose to become the top performer in the quarter, outstripping gains in base and precious metals.
The recurrence of adverse commodity terms of trade shocks has been the bane of African economies, and in tracking the movements in commodity prices the AACI highlights areas requiring pre-emptive measures by the Bank, its key stakeholders and policymakers in its member countries, as well as global institutions interested in the African market, to effectively mitigate risks associated with commodity price volatility.
An overview of the AACI for Q3-2020 indicates that on a quarterly basis
- The energy sub-index fell by 8% due largely to a sharp drop in oil prices as Chinese demand waned and Saudi Arabia cut its pricing;
- The agricultural commodities sub-index rose 13% due in part to suboptimal weather conditions in major producing countries. But within that index
- Sugar prices gained on expectations of firm import demand from China and fears that Thailand’s crop could shrink in 2021 following a drought;
- Cocoa futures enjoyed a pre-election premium in Ghana and Côte d’Ivoire, despite the looming risk of bumper harvests in the 2020/21 season and the decline in the price of cocoa butter;
- Cotton rose to its highest level since February 2020 due to the threat of storm Sally on the US cotton harvest, coupled with poor field conditions in the US;
- Coffee rose 10% as La Nina weather conditions in Vietnam, the world’s largest producer of Robusta coffee, raised the possibility of a shortage in exports.
- Base metals sub-index rose 9% due to several factors including ongoing supply concerns for copper in Chile and Peru and strong demand in China, especially as the State Grid boosted spending to improve the power network;
- Precious metals sub-index, the best performer year-to-date, rose 7% in the quarter as the demand for haven bullion continued in the face of persistent economic challenges triggered by COVID-19 and heightening geopolitical tensions. In addition, Gold enjoyed record inflows into gold-backed exchange traded funds (ETFs) which offset major weaknesses in jewellery demand.
Regarding the outlook for commodity prices, the AACI highlights the generally conservative market sentiment with consensus forecasts predicting prices to stay within a tight range in the near term with the exception of Crude oil, Coffee, Crude Palm Oil, Cobalt and Sugar.
Dr Hippolyte Fofack, Chief Economist at Afreximbank, said:
“Commodity prices in Q3-2020 have largely been impacted by COVID-19. The pandemic has exposed global demand shifts that have seen the oil industry incur backlogs and agricultural commodity prices dwindle in the first half of the year. The outlook for 2021 is positive however conservative the markets still are. We hope to see an increase in global demand within Q1 and Q2 – 2021 buoyed by the relaxation of most COVID-19 disruptions and restrictions.’’
Beyond cost containment: Outsourced trading as the new norm
By Gary Paulin is Global Head of Integrated Trading Solutions at Northern Trust.
Outsourcing, initially of the back office, and subsequently of the middle office, has been a feature of the asset management industry for some years. More recently, in the third wave of outsourcing, managers began to outsource non-core front office functions, and the pace of change has grown rapidly to the extent that the industry has passed the tipping point of this transition.
For example, in our survey taken during Q1 2020 of 300 heads of investment operations from global asset management firms with assets ranging from $10 billion to $500 billion, 85% of respondents said they were already outsourcing their trading capability or were interested in doing so within the next two years.
What started as simply a cost-efficiency endeavour has evolved. The outsourced trading model has moved from being a largely defensive strategy – a response to cost pressures – to a proactive move that can de-risk and streamline operations and enhance governance and operational resiliency while also responding to very real and relentless margin progression.
In short, outsourced trading is increasingly viewed as a more optimal state for asset managers, and as the timing of the Northern Trust survey shows, this turn in thinking predates the onset of the Covid-19 pandemic. The pandemic in our view is an accelerant of change, but not the catalyst. We can see its origins more than a year ago, well before the economic cataclysm and office shutdowns of 2020.
Recent years have seen increased deal flow in the asset management industry, along with significant restructurings and increased investment in technology, as firms sought to gain scale, cut fixed costs and automate functions. These are classic responses to margin pressure, which has persisted even during the recent bull market in equities.
In fact, the drivers of change are global and go far beyond simple margin pressure. They include aspects of competition, the ability to leverage economies of scale, business resilience, changing economic models, variable costs, demographics, technology and regulation – drivers no longer hidden under the veil of strong markets. Critically, this past year has marked a significant change in the economics of the industry, as margins for many asset managers fell despite assets under management going up.
Margins are not expected to fall in a bull market like that of 2019 – when the S&P 500 gained over 28% – yet according to investment market analysts this, for many, is what happened. The long-held assumption that strong market returns correlate with asset manager financial performance broke down. Strong markets failed to mask the structural drivers underneath and, we believe, this was the tipping point for the industry.
As economics change so must operations. The pandemic brought new urgency – and opportunity – for managers to undertake an internal review of their whole office. The question at the bottom of such a review is whether a range of front office functions, historically perceived to be core to a successful asset management operation, actually deliver value. If not, these functions must be considered a cost and susceptible to outsourcing to a more cost-efficient platform. Meanwhile, the extended work from home protocols of 2020 have undermined some of the core objections to outsourcing, such as the assumption that portfolio managers need to work in close physical proximity to their trading desk.
Beyond the value/cost equation, however, there is increasing recognition that front office outsourcing – whether whole or in part – is directly beneficial. For example, outsourcing to a global service provider has enabled a range of firms to expand their investment horizons internationally without concern about governance issues as apply to passing overnight trading to third-party brokers who will almost certainly be under the same pandemic pressure as all the rest of us. Other firms have seized the opportunity of moving to a variable pay-as-you-go cost dealing structure to offer a broader slate of investment strategies or to develop their inhouse research capabilities.
These and other opportunities are new, and underline our view that front office outsourcing leads to an optimal state for investment managers; one where the playing field is levelled enabling medium and smaller firms to compete on the basis of pure alpha with large scale players.
But today, it is not just the smaller or medium managers who are outsourcing front office functions; many of the ‘big players’ are also in active transition. Why? Because the benefits of outsourcing apply to the whole asset management industry, but a hyper-scale manager requires a hyper-scale global service provider to work with. These used not to exist, now they do and both sides are riding the wave.
Factors That Affect the Direction of the Stock Market
A stock price represents the value of a particular stock of a particular entity, asset or another financial instrument. It is calculated by calculating the price per share of the stock at a particular price and period in time.
There are various factors that affect the direction of the stock market. These factors include interest rates and inflation rates as well as the state of the economy. If one of these factors is not in the favor of the stock market, then it could bring about a downfall of its value.
The stock prices are also affected by various stock indexes, which provide information on a particular company or industry. It helps to analyze the trends of the stock market and makes better decisions when buying and selling.
However, there are some major factors that can influence the performance of the stock market. One such factor is the state of the economy. The state of the economy refers to how well the economy is doing economically. If there is an economic decline in a particular country, then the state of the economy would be affected and the stock market would also take a hit.
Economic conditions can also affect the performance of the stock markets. For example, if the state of the economy is poor and the population is experiencing unemployment, then the economy will suffer and the stock prices will definitely take a hit.
Political turmoil can also bring about a negative effect on the stock markets because it affects the economic conditions and the way people relate to the government. When there is a lack of confidence in the state of the economy and people tend to sell off their stock at cheaper prices, the stocks of the company would suffer.
Another important factor that influences the direction of the stock market is the change in the global economy. It has been proven that the changes in the global economy are very large and it can affect the direction of the stock market in a major way. For example, during the global recession in 2020, the stock prices of many companies suffered a great deal and so did the profits of the company.
The most important thing that determines the direction of the stock market is the state of the economy and the state of the country in which the stock market is based. It is therefore, very important to invest in the stock market as a company that is in good condition. This is because it will help in ensuring the stability in the economy.
The price of the stock market is also affected by the political stability of the country in which the stock market is based. If there is a rise in the political instability, then the price of the stocks would surely go up. However, when the political stability improves, the prices of the stocks will definitely fall.
The factors that affect the direction of the stock market include the conditions in which the economy is doing. It is therefore, very important to have a good understanding of how the economic conditions in a certain country are progressing. This will help in making better investments.
There are certain countries that are very stable and these countries have a very high demand for the stocks of other countries. This means that people from those countries will invest in stocks of countries that are in good condition, and these investments will yield profits for them.
There are also certain countries that have very bad economic conditions and these countries have a very low demand for the stocks of other countries. These countries are also in need of investments and these investments will yield huge losses for them. Therefore, investing in these countries is not advised because these stocks will yield zero returns.
The stock markets are not stable unless there are good economic conditions prevailing in a country. This means that one has to know the economic condition of the country in order to make investments. Investing in the stock market is the best way to do this because investing will always yield returns, as long as the country in which one is investing is stable.
DAC 6 – D Day is imminent – Update of key elements
By Andrew Knight is managing partner of Harneys Luxembourg office and head of its Tax and Tax Regulatory team in...
5 steps for SMEs to budget properly for the coming year
By Fabio Comminot, Head of Dealing, Switzerland at Ebury, one of Europe’s largest Fintechs, has provided a five-step guide to...
Cash in the time of Covid-19: A tale of financial exclusion
By Matt Adam, company’s chief executive, We Are Digital Financial exclusion rates are on the rise thanks to Covid-19. But...
Track and Trace and Other Lost Data
By Ian Smith, General Manager and Finance Director at Invu You, like me, were probably amazed by the now infamous...
Why ID verification is no longer a barrier to global growth in banking
By Barley Laing, UK Managing Director at Melissa Issues related to effective identity (ID) verification have restricted the global growth...
Digital Finance: Unlocking New Capital in Disrupted Markets
By Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises...
Beyond the bottom line: why brands must show they care to connect with customers
By Vadim Grigoryan, Partner, Lunu Over the past few years, we’ve witnessed an ever-growing activism among consumers, with public opinion...
O-CITY enters Kenya to drive contactless payments across Matatu bus service
Up to 10,000 buses to become cashless with O-CITY’s M-Pesa-based ticketing solution O-CITY, the automated fare collection provider by BPC,...
Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year
Yolt launches evolved app to help shoppers save whilst they spend Across the UK, consumers are set to spend £6.4bn...
Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday
Half (52%) of European consumers plan to do Christmas shopping around holiday sales, including Black Friday, compared to previous years...