Angsversteuring en Valuta Verhandeling

Inleiding

Emosies speel ‘n belangrike en groot rol in Forex of Valuta Verhandeling se optrede, prestasies en resultate. Vir optimale prestasie, is dit van kardinale belang dat die verhandelaar kennis moet neem van die belangrikste emosies wat betrokke is by valuta verhandeling. Met kennis van die emosies kan verhandelaars hulself beter toerus met die beste strategieë en gepaste geestes ingesteldheid.

Ongeag of die verhandelaar spanning of opgewondenheid tydens transaksies ervaar, kan emosies die uitkoms van verhandelingsresultate grootliks beïnvloed. Vir voortgesette winsgewendheid en beheerde geestesgesondheid moet die verhandelaar genoegsaam bewus wees van die onafwendbare emosies wat met valuta transaksies gepaard gaan.

Emosies en Valuta Verhandeling

Die sielkunde wat met valuta verhandeling gepaard gaan het baie te doen met die verhandelaar se instinktiewe reaksie op mark toestande. In ‘n voortdurend veranderende omgewing van verhandeling is onbeheerde emosies wel moontlik, veral gedurende groot markbewegings.

Dikwels gaan emosies ongehinderd wat aanleiding gee tot onvoorspelbare resultate. Ongeag of die aanvaarde strategie bepaal dat ‘n transaksie gesluit of voortgesit moet word, kan emosies ander reaksies uitlok wat die uitkoms kan verander. Met ‘n oorvloed van inkomende inligting en data, moet verhandelaars bemeester hoe om emosies in toom te hou wanneer uitgedaag word.

Valuta verhandelings geskied in omstandighede waar hefboomvoordele van toepassing is. Met mark wisselvalligheid kan hefboomvoordele groot winste bewerkstellig. Aan die ander kant kan die einste hefboomvoordeel tot groot verliese lei.

Emosies soos vrees, gulsigheid en selfs geloof is eie aan die menslike natuur en speel ‘n groot rol in besluitneming. Die vrees om te verloor is ‘n werklikheid en is bedoel om die mens te help om gevaar uit te skakel ten einde te oorleef. Vrees kan egter tot groot verliese lei met valuta verhandeling.
Dit is egter ‘n feit dat alle verhandelaars – ongeag hul vlak vaardigheid – van tyd tot tyd verliese ervaar. Valuta verhandeling geskied as berekende risiko aksies waar kanse om wins te maak verhoog word deur die mees winsgewende valuta geldpaar te identifiseer, markte te analiseer en na die plasing van ‘n transaksie stop verlies vlakke aktiveer ten einde katastrofale verliese te keer.

Ten spyte van briljante tegniese analise en die beste beleggingstrategie sal verliese voorkom. ‘n Tipiese fout wat verhandelaars doen is om winste in te kort en verliese te laat voort ploeter. Daar bestaan ‘n eenvoudige verduideliking daarvoor: wanneer verliese voorkom bestaan daar hoop dat die mark sal omdraai en die verlies verander in ‘n wins. Wanneer wins voorkom ontstaan die vrees dat die mark sal omdraai en winste verander in verliese. In laasgenoemde geval is ‘n wins beter as geen wins daarom word die transaksie vroeg gesluit. Hierdie tipes van optredes kan die verhandelaar noop om uit die mark te tree en nie weer te verhandel nie, of die verhandelaar keer vinnig terug in ‘n poging om verliese te probeer verhaal. Emosies word dan dryfveer en goeie verhandelingstrategië word in die wind geslaan.

Gesonde Geestesgesondheid

Valuta verhandeling vereis ‘n gesonde geestes ingesteldheid. Sonder sodanige gesonde ingesteldheid dal verhandelings daar onder lei. Met gesonde sielkundige ingesteldheid kan die verhandelaar – beginner sowel as gevestigde verhandelaar – ‘n krag word om mee rekening te hou in die verhandelingsmark. Maar hoe kan ‘n gesonde geestes ingesteldheid gekweek en onderhou word?

Die wagwoord hier is om bewus te wees eie reaksies en die bestuur van sodanige emosies. Bewusmaking van eie reaksies en gepaardgaande emosies sal die verhandelaar leer om ‘n stabiele ingesteldheid te beoefen wat toelaat dat strategieë toegepas word sonder emosies en met dissipline. Dit sal verhandelaars baat om die algemene emosies te identifiseer. Hier volg ‘n kort opsomming van die mees belangrikste  emosies wat valuta verhandeling kan beïnvloed.

Verhandeling “Rooi Miere”

Senuweeagtigheid kom algemeen voor. Selfs met die bestaan van ‘n beproefde strategie is die idee om kapitaal te waag in valuta verhandeling senuweetergend. Gedurende hierdie tye is dit belangrik om om vertroue te hê in die strategie en die strategie gedissiplineerd toe te pas totdat die transaksie gesluit word. Elke besluit moet gerugsteun word met die beproefde strategie en ‘n blywende positiewe ingesteldheid wat ook al die uitkoms van die transaksie is.

Mark Opwinding

Valuta verhandeling het die potensiaal om met ‘n verskeidenheid van maniere sukses vir die verhandelaar te bring. Mark opwinding kan verhandelaars motiveer om suksesvol die reis te geniet. Die valuta mark behoort die opwinding van die mark asook die ambisie van die verhandelaar te stimuleer. Mark opwinding kan ook veroorsaak dat verhandelaars afwyk van geykte beplande strategieë. Daar moet ten alle tye gewaak word dat gedissiplineerde beplanning nie wyk voor mark opwinding nie. Sulke afwykings laat die risiko element verhoog en verliese kan en sal voorkom.

Die verhandelaar moet seker maak dat dissipline die botoon voer in alle besigheidstransaksies.
Spyt van vorige verliese Emosies van skuldgevoel en teleurstelling met vorige transaksies wat nie die gewenste resultate gelewer het nie kan die aspirasie om volhoubaar goed te doen negatief beïnvloed. Die emosies kom voor op grond van persoonlike persepsies van swak prestasie, verlore geleenthede of transaksie verliese. Tot ‘n mate sal gevoelens van spyt verhandelaars verhoed om verder te gaan met hul verhandelings. Maar wanneer spyt in ‘n positiewe lig gesien word kan verhandelaars geïnspireer word  om transaksies te optimaliseer. Sulke optimalisasie skei suksesvolle verhandelaars van middelmatige  verhandelaars.

Die begeerte vir meer

Daar is niks so soet soos oorwinning nie. Wanneer die verhandelaar die soete oorwinning van ‘n goeie wins ervaar het, word die behoefte en begeerte om bete te presteer al groter. In ‘n mark wat eindelose geleenthede bied, kan gulsigheid soms ongemerk verby glip. Sonder die rugsteun van gefundeerde inligting om besluite op te laat berus, kan die behoefte vir meer (gulsigheid) lei tot verliese as gevolg van groter risiko. Die behoefte vir meer moet gesteun word met ‘n berekende strategie en dissipline.

Vrees vir die valuta mark

Verhandeling geskied in ‘n wisselvallige mark en vrees vir die onbekende mark bewegings kan meer spanning veroorsaak as wat nodig is. Op die lang duur kan vrees verhandelaars verhoed om ooglopende geleenthede nie raak te sien nie. Die verhandelaar raak losgemaak van die transaksie voorhande. Om vrees te bowe te kom, kan aandag aan die volgende geskenk word:

  •  Die verhandelaar moet weet wat hy/sy kan hanteer en wat nie. Daarmee kan verskillende scenarios beter beoordeel word.
  • Vrees kan ‘n ontvlugting reaksie veroorsaak, maar vrees kan ook die verhandelaar noop om meer versigtig te werk te gaan. Die verhandelaar behoort ‘n balans te vind tussen ontvlugting en voortsetting
  • Vrees word grootliks veroorsaak deur negatiewe gebeure in die verlede. Daarom is dit beter om ‘n positiewe uitkyk te hê en nie te broei op die negatiewe nie.

Praktiese aanwysers

Ten einde die normale menslike emosies wat met verhandeling gepaard gaan, kan die
verhandelaar op die volgende praktiese wenke let om meer gedissiplineerd sonder emosies
transaksies aan te pak:

Dit neem tyd om met vertroue kapitaal te waag te waag in die valuta mark. Daardie vertroue kom met die wete dat ‘n strategie is met historiese data en onder ‘n veelheid van omstandighede getoets. Die  moontlikheid van sukses en faling is dus bekend. Met kennis van hoe die strategie onder verskillende omstandighede funksioneer kan transaksies met groter vertroue geplaas word.

  • Met ‘n gesonde, vooropgestelde idee op watter vlak die stop verlies geplaas moet word sowel as die potensiaal van die prys teiken, sal die potensiële risiko/beloning van die transaksie duideliker wees. Sulke kennis sal groter vertroue om te verhandel skep.
  •  Die bepaling van die transaksie lotgroote moet robuus genoeg wees om te verseker dat selfs al word die stop verlies vlak geaktiveer dat die verlies klein sal wees in verhouding tot die rekening balans. Dit is makliker om angs te oorkom wanneer daar met klein genoeg lotgroottes verhandel word sodat enige verliese of ‘n reeks verliese nie die langtermyn verhandeling sal beïnvloed nie
  • Uitmuntende verhandeling met vertroue is gegrond op die bestaan van ‘n omvattende verhandelingsplan wat bepaal met watter geldeenhede verhandel word en onder watter omstandighede transaksies geplaas sal word. Die wete en kennis van belowende transaksies sal meer vertroue skep wat deur dissipline ondersteun word.

Gevolgtrekking

Die nuwe sowel as die gevestigde verhandelaar moet ten alle tye emosies beheer ten einde te
verseker dat transaksie met die laagste moontlike risiko geplaas word. Deur emosies te ken, te
verstaan en te bestuur sal impulsiewe optrede vermy word. Om transaksies foutloos uit te voer,
moet gedissiplineerde verhandeling plaasvind. Dissipline is belangrik in die beheer van emosies.
Foute moet verklein word en verhandelaars moet kan steun op ‘n berekende strategie terwyl
emosies uit te verhandeling gelaat word.

Forex: Trusting Probabilities and Mastering Psychology


Introduction

Traders, and especially new traders, seem to not grasp the fact that trading currencies is a
game of numbers and where mastering the psychological states are essential to good trading.
Even seasoned traders with an excellent track record seem to forget the law of numbers and
give no thought to the psychological aspects of trading.
Traders who understand the law of large numbers, make it work for them to benefit their
trading strategies and ultimately their profitability.

The Law of Large Numbers

The law of large numbers states that if the probability of something to happen is X%, the result
will approach closer and closer to that probability the more attempts are made.

Take a small test:

A coin will be flipped 100 times. With each tale, you will win R0.50 and with each head you
forfeit R0.25. (Flipping a coin has a 50% of landing on tales)
Would you participate in this adventure?
If not, then you are no trader / entrepreneur and can only operate in the safety and comfort of
a steady job – you are overly risk averse. The trader with an appetite for risk on the other hand
has an expectant return of: Profit = 100*(0.5*50 – 0.5*25) = 100 * 12.5 = R1250

In the given example above, the AVERAGE profit is R12.50 per flip. But that does not mean that
R12.50 will be made with each flip. The trader could lose on 10 flips in a row, which might
shaken his / her confidence, but this losing streak will NOT change the expected profit of the
game in the long run.

The lesson from this small test is that with each coin flip, EDGE will emerge to produce a net
winner. The trader needs to internalize and accept uncertainty: the result of one trade is not
guaranteed, not even for the best trader in the world. The trader needs to preset conditions to
exit losing trades to be able to trade again and again. This also means that not every trade will
stretch to 1 000 pips and the trader will need some way to estimate where to exit from a trade.
To take probability even further, a compromise between Stop Loss and Take Profit levels are
required as distance from the starting point. A target of 500 pips will not be obtained regularly
and there should be “breathing space” for price movement. Price movement will ultimately hit
your Stop Loss, and if to wide large losses will be suffered.

To have more winners than losers in trading requires everything….. chart analysis,
understanding market momentum and mood, macro analysis, risk and money management.

THE item that that makes all of this possible: emotional control and clarity of mind. The trader
must find a system or strategy and stick to it at all times.

Trading Psychology

Looking at a trading chart the trader has to realize that the chart has no feelings and neither
does the chart care about the trader. The currency market is driven by a mixture of
fundamental forces and the aggregate “belief” of the market participants. The market
participants are humans and computer programs developed by humans. The interpretation of
the market may be polluted by wishful thinking, reality check problems and a variety of other
human emotions.

In trading, the majority of participants are doing the wrong things or following incorrect
actions. That is why there are so many traders in the market losing money. Some of these items
include the setting of to tight stops or no stops at all, using to high leverage, chasing the
market, not able to “see” clear trade setups, using items such as “head and shoulders” as
magical formulae and trading with technical indicators as if the indicators will accurately predict
the future. It is not wrong to use these items, but only in a responsible manner. These items do
not provide the trader with an edge – nearly everybody else utilize them. What is required is a
deeper understanding of the market and to not fall victim to the psychological traps of denial,
avoidance, cognitive capture / information bias, fear, greed and other mental toxins providing a
distorted reality. The trader must be able to look at the chart without wanting to see a buy or
sell opportunity. Just notice “WHAT IS”. Ask if recent candlestick patterns are convincing? Is this
part of the bigger picture or is something seen which looks bigger than it really is? Look at the
15 minute chart and be convinced that the price can’t go higher while reality is a 5 year low.

What is required from the trader is to understand and trust large number probabilities, keep
losses small in relation to profits, avoid setting stop losses to tight, find a system with a small
edge that would suit a particular trading personality, aim for an 80% win rate and a 20% loss
rate, look at the market without emotions, ego, psychology and manage stress. This way the
trader can enjoy process without ever stop learning. No trader can stop learning, reading,
working on self, strategies and understanding the market.

Conclusion

The aforementioned discussion is all good, neat and well, but also need to be put in practice
and practically applied.

One of the best suggestions to approach the market without fear, misgivings or greed is to have
a well-documented trading plan. A trading plan that sets out the traders’ goals which starts
from the ideal situation to be achieved and cascaded down to practical small units to be
achieved. In addition to the personal goals to be achieved, the actual strategy on the currency
pairs to be traded must be included. This strategy will spell out which currency pairs will be
followed, the type of analysis (fundamental versus technical), which indicators will be used, the
time scale, on which circumstances will entry and exit points be based, the leverage, risk and money management. These rules need to be followed very meticulously and record must be
kept in a disciplined manner.

Utilizing a trading plan should be the only routine that need to be followed during the trading.
It should be followed religiously and the results recorded. The trading plan need to be analyzed
and the trader must learn from mistakes. Mistakes must be used to tweak the trading plan to
better the plan. The habit to follow the trading should be reinforced with a positive mindset
and on a conscience the trader must address any and all psychological issues.

With the trading is it possible for the trader to act without emotions and see what the factual
situation on the chart is. By repeating the trading plan over and over (big number probability)
the trader will become profitable in the long run. By repeating the trading over and over the
trader will overcome psychological attachments fear, greed, anxiety elation and any other
human instinct or emotion which could have a negative impact on profitability.

Forex Trading: Is it Gambling or Not?

Introduction

The question of if Forex trading is a form of gambling is often asked as the popularity of Forex
trading are on the increase globally. More people are entering this lucrative market which is
globally the most liquid financial market with an estimated daily turnover of $5 trillion. A
market that has traditionally been the exclusive playing field of banks and the super-rich, is now
available to the retail trader through advancements of internet technology.
Whilst the question of forex being a form of gambling may be asked, the same question is
applicable to other forms of investments too. It can be asked if the outcome of shares
purchased will deliver a guaranteed profit? Even the grain farmer planting his seeds under
favorable conditions is not guaranteed of a crop that could be sold at a profit in the market
place.

The concept of gambling can be made applicable to a large variety of items.
Forex Trading and Gambling: What is the difference?
The most noticeable difference between Forex trading and Gambling is that the casino is rigged
with the odds rigged in the casino’s favor. The casino will only present games where the house
has the upper hand. Let us take roulette as an example. The gamblers’ chance of winning is
1:37. The table is numbered from 1 to 36 plus the zero. If one gambling chip is place on every
number, then 37 chips have been placed. Only one number will win. The winning pay-out in this
case is 35 chips. The gambler has lost two chips. The odds are in the favor of the house.
With trading, the retail trader is able to beat the amount of money that was risked in a trade
several times over. A possibility that is not available in gambling. But the casino owner knows
that if there is no winning in the casino, the number of patrons will dry up quickly. So occasional
and “controlled” wins are part the casino strategic plans. These “wins” are communicated
vigorously to create the euphoria of winning.

The casino employs other methods to lure the gambler out of reality. The gambling floor has
no windows and no visible clocks. This is to distract the gambler from time being spend on the
gambling floor. Free drinks for the serious gamblers are seen as the cost of doing business
whilst the gamblers’ senses are impaired. Spending 5 gambling chips is much easier than
counting out R500,00. The gambler who has to count out R500,00 cash might think twice
before placing a bet.

The serious and successful Forex trader on the other hand stack the odds in his favor. This is
achieved by having a well thought-through trading strategy, tested and tweaked over time. The
strategy will dictate which currencies to trade at which time, what the trade size must be in
relation to the account balance, how risk will be mitigated by means of a Stop-Loss strategy and
how to contain human greed by having a Take-profit exit plan. The trader will meticulously keep record of each trade, recording all detail. Losses that occurred will be studied to ensure that the
same mistake is not repeated. The successful trader sees losses as learning opportunities. The
trader has learned to keep emotions out of trading by disciplined trading according to the
trading strategy. Losses are kept to the same level to ensure that large losses do not wipe out
winnings.

The successful trader has learned through experience that less trading on longer time frames
has the potential of delivering larger profits than repeated trading, based on enhanced
adrenaline based trading.

Gambling in essence is about the desire and wanting a return on an investment that is far in
excess of the amount of effort put into the act. Gamblers step into casinos with nothing but
their hope to make money. When money is lost, the gambler will try, often more aggressively,
to recover the losses by placing more bets.

And gambling has another possible side-effect. Gambling may become addictive with the
danger of loosing money the gambler is not able to lose.
Forex has the potential to become gambling if the market is treated like an enormous Jackpot
or Roulette table where the hope of winning is based on nothing but pure luck. Trading blindly
in the Forex market with no plan or strategy will cause the Forex Gambler to lose money just
like any game of luck.

Entering Forex trading without having attended a quality training course is a dangerous
endeavor where the Forex gambler will be losing money without understanding what the
reasons are.

Conclusion

It is not gambling when Forex trading is treated seriously and managed like a business, where
capital is being preserved and managed, costs are limited through risk mitigating, trading
opportunities are being seized and profit and losses are being calculated. The serious Forex
trader can rely on price patterns and analysis with technical indicators to decide where and
when to open and close a trade. The Forex trader is a life-long student and always learning from
mistakes. Disciplined trading is key to success.

The casino gambler relies on luck and chance in a game where the odds are stacked heavily
against the gambler in an environment where sense and reason are being inhibited and the
concept of time is diminished. A “must win” mindset to recover losses will see additional funds
being brought to the gambling table at the delight of the casino owner. The casino gambler
discards discipline hoping that luck will change to his favor with the next hand.
The seasoned trader has the ability to place a trade with defined stop-losses and take profit
levels and walk away from trade performing other duties. The gambler has to stay put at the
gambling table until funds have dried up.

What differentiate C2Wealth Training from the rest?

Introduction

In the Forex industry there are many honest and many not so particularly honest persons

working. The same notion may be applied to the training provided in the industry.

Apart from the honesty and integrity factor, there is also the notion that every service provider

considers his or her service to be different from the pack. And again, the same may be said of

the training service providers in the Forex industry.

Being different from the rest of the pack does not implicate dishonesty. Each service provider

places different levels of emphasis on different items. This does not mean that a service

provider is wrong – the approach is different from the rest of the pack.

It is of critical importance to be able to define what is different in the service that is

being delivered. One cannot just claim to be different and therefore call the service to be of a

better quality and standard. The difference must define and presented to be able to offer the

potential a reasonable chance to make an informed decision.

C2Wealth is a training service provider and prides itself to be different from the rest of the

industry. We have been able to define our difference and is proud to present the reasons for

being different in this article.

The defined difference in presenting training to potential investors stand on two legs – firstly,

we recognize and accepts the fact that there is a difference between education on the one

hand and training on the other hand. Secondly, we recognize the fact that newcomers to the

industry need to find a business from which they potentially can make a profit and a sustainable

income from they may live.

Let us look at these two aspects separately:

Education versus Training

At C2Wealth we believe that there is a difference between education and training. This

difference is built into our programs, which have been developed with this difference in mind.

But what is difference between education and training?

C2Wealth see education as a process of systematic learning that develops a sense of judgement

and reasoning. Training implies the act of imparting a special or behaviour or skill to be utilized

on an operational level.

In this difference we recognize that education has a wider perspective and is comparatively

longer than training. Training on the other hand is the further enhancement of skills

development which improves performance and productivity in the current environment.

 

We therefore have a strong believe that class-room based interventions are more effective and

productive than technology based and self-study actions. The contact and exchange between

the learner and tutor cannot be fully replicated in a technology-based environment. We also

believe that that self-study is most of the time done in an unstructured manner, is time

consuming and with no feedback from a teacher is less effective. Over time, self-study will be

less cost effective than classroom-based interventions.

It is true that learners do not learn at the same speed in a classroom environment. A seasoned

tutor can, however, with the frame of reference of previous experiences make a big difference

and ensure that all learners receive equal interventions.

At C2Wealth we guard against being overly theoretical. Theory is acknowledged, but the

emphasis is on practical education. Learners need to open a demo account beforehand and

practice what is being taught on the demo accounts. Functionality is not the only aspect that

receives attention – we teach the wider picture and show what impact actions have on each

other. For instance, we teach learners the relationship between lot size, margin and equity and

how a change in the one will affect the other.

One the more serious problems we have identified in the Forex training industry is the fact that

there is tendency amongst certain training service providers to provide limited functional

training and mainly focus on teaching a specific strategy. In this lies a huge problem. In the

Forex industry there is no such thing as “one size fits all”. One strategy cannot deliver positive

results for all. Every trader must find his or her own niche and comfort zone. Traders does not

react the same to the various technical indicators. Trader personalities differ and trading styles

differ. Certain strategies require the trader to be on the trading platform constantly with no

room for free time. C2 Wealth aim to avoid this environment and teach learners to become

skilled in all trading functionalities and independently arrive at their own trading strategy.

There are various training programs available after completing the initial foundation training

course. These training interventions are aimed the further enhancement of the skills acquired

during the foundation education phase. The focus is on practical and specialized skills and can

thus, be training and not education.

We are satisfied that after completing our initial 3 day Forex Foundation course, the new trader

will be able to independently make a judgement call to enter into a transaction after careful

analysis of the market to identify entry and exit points and practice sound risk and money

management.

Forex Business Approach

The new trader must realize and understand from the outset that Forex trading is not a “get-

rich-quickly” scheme. Unfortunately, many new traders fall for the trap of cheap propaganda

on the web or by other media that Forex trading holds the magical key to untold riches in an

easy manner. Nothing can be further from the truth. Treating Forex trading like a trip to the casino will end in the same manner – all money will be lost. Traders should be calm and

calculating with a goal of making profit. Not hoping for that one “lucky draw” that will bring the

riches.

At C2Wealth we educate learners the entrepreneurial aspect of trading. Trading, like any other

type of business has associated costs. The trader must aim to bring in more revenue with

winning trades than funds going out with costs. When costs get out of control, money will be

lost and the Forex business will go under.

What are then associated costs of trading? Here is an illustrative list:

  • Losing trades
  • Broker spreads and commissions
  • Trade roll-over and swaps
  • Computer hardware
  • Internet costs
  • Other office equipment

Of the six items listed above, the first one, namely losing trades, has the single biggest influence

and has the possibility to totally wipe out the account.

Losing trades is a fact of life in the Forex trading business and traders must learn to accept

losses and learn from it. The approach at C2Wealth is to educate traders to combat and restrict

losing trades by means of the following:

  • Have a well-documented trading strategy and stick to the strategy
  • Develop from the trading strategy a trading plan and treat the plan as the Forex Business Plan
  • Be the eternal student with an unquenchable appetite for learning
  • Stop the search for the trading “Holy Grail” – it does not exist
  • Be careful and mindful of the tips and good intentions of the “trading experts”
  • Invest in yourself and not trading bots

The foundation education also stresses the importance of risk and reward. The risk and reward

strategy that we teach emphasize a focus on more winning trades significantly larger than the

losing trades. With a risk to reward ratio of 1:2 a winning streak of 35% – 40% will make a

decent profit. This is more achievable than trying for a high percentage of 70% – 80% of the

time with a lower risk to reward percentage.

In the foundation training time is spend on calculations required to better understand where

profit and loss will occur. Learners are taught the calculation of pip values, broker spreads, lot

sizes, margin, equity, free margin and margin percentage. Classroom exercises and homework is

given to ensure an understanding of what make up the profit or loss of a trade. We are of the

opinion that merely showing on-line calculators for this important function is not efficient.

 

Types of trader also has an influence on trading costs. Scalpers and day traders normally close

their trades before end of day. Swing traders and position traders hold their positions open for

much longer periods – days, weeks and even months. The latter type of trading also incurs

costs, namely roll-over and swaps. These items are the cost that arises in the form of interest

between different banks from different countries (not central banks). Depending on the

interest differential between banks the trader must either pay interest or receive interest.

C2Wealth ensure through foundation education that the trader is aware of these facts for

interest can become a major cost element.

Trader expectation also need to be managed. C2Wealth provide ample examples of prudent

funding of accounts. An expectation to earn a R1 000,00 per month from a R100,00 account will

not be met. With prudent funding comes the importance of correct lot sizes, type of currency

pair to be traded (spread costs) and the use of risk management items.

Forex trading is not an easy scheme, but requires hard work, dedication and discipline. Forex

trading must be treated as a business and not like a casino game. Trading skills are honed when

operational trading is consistent with a documented trading plan and losing trades are seen as

learning opportunities.

https://www.facebook.com/C2Wealth/

Future Forex Trading to be Blockchain Driven?

What is Blockchain Technology

By now, we are sure that everyone has heard of cryptocurrencies and Bitcoin, but not everyone
knows about blockchain or understands what exactly it is.
A basic way to think about it is as a public ledger of all the transactions that took place in the
cryptocurrency

For the uninitiated, a ledger is simply a record of something — whether it be trades executed
by traders, or financial transactions to buy goods and services – and as the amount of ‘data’ the
world now produces continues to grow at parabolic rates, people’s ability to use and
understand that data is lagging behind.
Essentially, blockchain is a decentralized and publicly available register of all data in the
network that is open for viewing to all users at all times, but no one can edit or alter any of the
information that has already been recorded in the database. This is achieved by
cryptographically securing the network which makes it practically unbreachable and is exactly
what makes the blockchain technology so powerful.
It’s a fully transparent database of all the transactions and there is literally no space for any sort
of falsification to take place. The blockchain ledger is constantly updated as new transactions
are recorded and is automatically distributed to all of its users.

Forex Complex Problems

Forex currency trading involves the trading of one currency for another. The trading takes place
on a global decentralized network. Important in the trading is the use of middlemen and the
settlement of transactions post the closing of transactions.
Foreign currency exchange is a nightmare because it has multiple co-dependencies and parties
with separated ledgers to keep all the transactions in place. The system relies on regulatory
agencies, monopolies such as SEPA and SWIFT, brokers, traders and banks all over the world to
perform a simple transaction.
Corruption at any level of a centralized organization can cause distortion across the business
and consequentially, can cause distortion for all its connected nodes (clients, employees,
vendors etc.). In the world of FX trading, manipulated transactions are difficult to detect due to
the industry’s Over the Counter (OTC) nature and vast depth.
The system is clunky and relatively expensive, operating on dispersed, decentralized exchanges
with duplicate processes, a lack of standardization, an emphasis on direct relationships and
increasing capital requirements. Although the infrastructure has radically improved over the
past few years with the introduction of new trading venues, greater liquidity, algorithmic execution and improved data aggregation, the industry still regards settlement risk as one of its
greatest threats.

Solutions for the Problem

If we look at the forex market, there’s no doubt that the emergence of online and
mobile trading platforms such as MT4 has made the foreign exchange more accessible to
investors. The same cannot be said for major institutions, however, who still need to push
transactions through a number of middlemen while paying a slight fee for the privilege.
It was with this in mind that Goldman Sachs applied for a patent on a blockchain-inspired
ledger, which could quickly process forex trading transactions without charge.
The application, which was published in the autumn of 2016, outlined a distributed ledger that
would ultimately revolutionize this marketplace, while also potentially introducing a new,
Bitcoin-sequel digital currency for traders.
Goldman Sachs is not the only bank experimenting with Blockchain, but they’re among the
first to apply this technology to forex market trading. Once the patent is applied and rolled
out, it would create a new model for trading currencies in the digital age, and one which
eschewed the need to send funds to an intermediary foreign exchange settlement service
while the transaction is being completed.
With blockchain technology, it is possible to eliminate all the bad – complexity, security and high
cost, and emulate and exponentiate all the good: instant international currency conversion that
is secure and affordable.
This is possible because by being open, records are held in public: the KYC, transaction and
contracts are publicly available data. It means that regardless of the currency type, money is
ultimately being held in all currencies and in multiple accounts by default. With nothing to
convert, there is no money being lost.
Investors could still use the MT4 app to execute orders, they would complete transactions
by connecting to a decentralized and distributed ledger that optimized market access. This
would also allow for direct, real-time settlement for all traders while creating greater
accountability and transparency in relation to individual orders.

Last Thought

Blockchain can be applied to any number of products and markets, and the forex market is
no exception. Given this and the imperfections of the current model, which is
relatively complicated and opaque, it’s only a matter of time before this technology will
revolutionize FX trading and the way in which investors access the market.

Forex Trading Advantages

FREEDOM

Forex traders normally conduct business at whatever time is convenient for them- this
translates to freedom from normal office hours. Forex traders can operate at any time they
wish. As expected, this attracts people from different time zones, lifestyles, and experience
levels. If you have an internet connection, then you can trade from anywhere in the world.


STABILITY IN PROFITS

Since your trading involves only a currency pair and not multiple combinations of markets and
trends, the opportunity for profit is always there. There is no bulldog watching of rising or
falling of markets, goods and industries. Profits can be achieved whether the market is bullish
or bearish for one currency against the other. What matters is the direction of the trade in the
right currency pair.

ENDLESS ACTIVITY

The forex market is open 24 hours on weekdays as it is a worldwide market. If compared to
other markets that function at certain hours and days, the forex market dwarfs’ other markets
in terms of activity and opportunities in the week. Investors can exploit trends and setups that
happen within the week, anytime.

LOWER COSTS

Due to the highly liquid nature of the forex market and to the technology involved in
transacting the trades, you have one of the most important features that attracts traders to
forex- the lower trading costs. You can forget about the accustomed costs that take away from
your bottom line and focus solely on the spreads. Furthermore, spreads paid as commissions to
the brokers in the forex market are normally smaller than those other markets. This can only
translate to better profits.

TRANSPARENCY

Due to the electronic nature of the transactions, analyzing and managing assets is highly
efficient and easier than it used to be. All information is accessed through the platform from
the computer. Deals are executed as you see them and as they fit your strategy. This gives you
a better feel of the market cycle, making your decisions easier and your predictions more
accurate on every trade.

LEVERAGE

Unlike other markets where leverages are small, forex trading allows for higher levels of
leverage, providing the opportunity to trade to up to a hundred times the assets in your
account. Forex brokers can allow a lot of leverage depending on the type of account. Naturally,
this can also convert into higher risk if you don’t know what you’re doing, thus, the importance
of learning to trade forex the right way. Risk management is very important to protect your
account from highly leveraged losses. It is very important to learn to trade forex the right way
from the start to avoid potential losses.

ABUNDANT OPPORTUNITIES

Forex trading is considered the perfect free market for logical reasons. All traders are given an
equal playing field. Even when one currency is falling, by definition, this just means that there is
another currency rising against the one that is falling and opportunity for profit exists. An
unlimited earning potential, the stability, the freedom, and the even opportunity are the main
reasons why you should learn to trade forex and what makes the foreign exchange market an
exciting opportunity for anyone.

 

Also follow us on Facebook:
https://web.facebook.com/C2Wealth

Twitter:

Bookings:
https://www.quicket.co.za/events/?search=FOREX%20BASICS%20TRADING

Rollover Interest in Forex

Introduction

Overnight interest is either paid or earned on all open positions at 17h00 Eastern Standard Time (EST) – which is 22h00 South African time. The time might vary between some brokers. This interest, also called rollover or swap, will either be credited or debited on the full size of the open positions and is also dependent the established margin and position in the market. Depending on the interest differential, interest will be either received or paid.

Description of mechanics

The interest fees are called rollover, because it occurs when an open position from one settlement date is rolled over into the next settlement date. Rollover transactions occur automatically if the open position is hold past the change in value date. Behind the scenes, the settlement occurs in two business days. Thus, if its Mondays before 17h00 EST currencies are trading for value on a Wednesday, so that after 17h00 EST on Monday the trade date becomes Tuesday and the trade is traded for value on a Thursday.

Trades that are opened and closed before 17h00 EST are not liable for rollover as there is no change in settlement date.

Wednesdays carries a 3 day rollover. On 17h00 EST, the value changes from Friday to Monday, a weekend rollover which means a three day rollover (Saturday / Sunday / Monday) which means the rollover costs / gains are going to be three times as much as any other day.

Why does rollover Interest Credit or Debit Occur?

Trading with currencies is trading with cash. Going long with a currency is similar to holding a deposit in a bank and interest will be earned. Going short on a currency is similar to borrowing money on which interest is to be paid. With traded currencies the relationship is more complicated. With a currency pair, a currency with a positive balance is being hold (currency going long) and a currency with a negative balance (currency going short) is being held simultaneously. The difference in the interest rate of the two countries is called the interest-rate differential.

Being credited or debited for rollover is dependent on two factors: 1) the position being hold (long or short) and 2) the interest-rate differential between the two currencies in the pair being traded.

Every currency trade involves borrowing one currency to buy another currency. Therefore is interest rollover charges part of Forex trading. Interest is being paid on the currency borrowed and interest is being earned on the currency being bought. Effectively, interest is being earned or paid depending on the direction of the trade.

Currency being bought with a higher interest rate than the one being borrowed will result in a positive net differential rate. Funds will be earned. Selling a currency with a higher interest rate than the currency being bought will result in a negative net differential, and interest will be paid for the rollover. The rollover costs/credits are based on the position size and the larger the position size, the larger the cost or gain will be.

Interest rates are not cast in concrete and are changing constantly with changing economic conditions.

Can paying swap rates be avoided?

Normally, there are three ways to avoid paying swap rates:

1.      Trade in the direction of positive interest

Trades can be entered in the direction of the currency that gives positive swap. But only focus on this when there is a history of positive results

2.      Trade only intraday and close transactions before 17h00 EST

This way swap would be avoided. This strategy should only be employed because of trading strategy and not because of swap considerations.

3.      Open a swap free Islamic Account offered by some brokers

These particular accounts are run in full compliance with Islamic beliefs and the policy of no interest to be paid upon business transactions.

Finding rollover rates on trades

Current rollover rates are available in MetaTrader 4. Find the rates from the following path:

  • Open Market Watch (Ctrl + M)
  • Click Specifications
  • Scroll down to find:
    • Swap Long; and
    • Swap Short

A positive number will indicate interest to be received. A negative number will indicate interest to be paid. If both numbers are negative means that interest rates are nearly the same.

Conclusion

Rollover swap rates are a reality when trading currencies. The trader needs to take this cost seriously to ensure that accounts stay profitable. If possible, avoid the paying of rollover fees and if rollover fees are unavoidable ensure prudent funding of accounts.

Flexible Work Environment – Forex

The nature of the forex business is that of the mobile office. Forex trading is traded 24/5 per week from anywhere in the world where the internet is available.

The forex business may be conducted from the home office environment or from a mobile office environment where the trader is not office bound. To enable the trader to trade unhindered globally, planning and organizing is required. Planning is key to success and some of the options to consider could include the following:

Device

The investment in the correct device for trading is of utmost importance. The device is usually the most expensive capital lay-out and should be approached with care. Consider the trading activities the trader is expecting. The technical specifications of the device should be carefully scrutinized.

Laptop

The laptop is the most common device to be considered for a mobile office. The modern laptop is a rugged and sturdy device and lends itself to be effective in a mobile office setup.

Smartphone and Tablet

The latest technological advances have allowed traders to trade directly on smartphones and tablets. These devices are well-suited to accompany laptops or can be traded directly from. Most brokers offer mobile platforms. All that is required is a stable internet connection to make the smartphone or tablet a handy utility to the mobile office.

The screen size and software will dictate the choice of smartphone or tablet. Especially the screen size is of importance. The screen should be large enough to navigate, monitor the charts and trade efficiently. Small screen sizes might hinder productivity or add to eye strain.

Before trading on a smartphone or tablet, consider the battery life of the device. Ensure the device to be suitably charged.

Secure Internet Connection

A mobile office for Forex requires at least 5 megabytes to trade and analyze charts. Free wi-fi provided to travelers and passersby is not reliable nor secure. The use of a portable broadband or a MiFi could counter free wi-fi. The portable device should be tested for speed of cellular data network. Another option is to create a hotspot with a USB modem.

An encrypted password must be used to protect data.

Virtual or Mobile Backup system

Mobile backups should be created to allow for access to data on the go or for when back at a home office. It is also a buffer against malfunctions.

Backups can be done via a USB flash drive, external or portable hard drive or via online backup systems.

What to pack when traveling

Ensure to travel light and stick to essential digital accessories if it contributes to better trading. Useful accessories to consider include:

  • Laptop or wireless mouse with mouse pad
  • Universal adapter
  • Small surge protector for traveling
  • Headphones or earphones
  • Tablet stand
  • Power bank, extra batteries or power cord for all devices
  • Privacy screens or protectors
  • Cleaning products for devices like wipes or solutions
  • Wrist cushion or smart gloves
  • Extra back-up systems like USB or external hard drive

Summary

Forex trading provides a kind of business mobility that is flexible to any change in location. With a mobile office, your work is ready to go without any extra obstacles. It is the best solution for when you suddenly need to work out of the office or travel during work days. Make sure to plan ahead and do a test run for your productivity levels. Once you have everything you need, take advantage of your mobile office for convenient trading on-the-go.

 

What a Trader needs to know about the Forex Market

The Forex market came into existence in the 1970’s when the United States abandoned the gold standard as benchmark for the value of the US Dollar. Forex in itself is an abbreviation for foreign exchange and the root purpose of the market is to evaluate the currency of one country to the currency of another country.

It was in 1973 that the countries which formed part of the industrialized world decided to make their currencies freely available to trade. This immediately formed the exchange rate in terms of value of one currency pitted against another. This further led to the establishment of currency prices being quoted on a daily basis. The explosion in computer technology made foreign exchange transactions possible in most parts of the world. Due to the foreign exchange markets, the world today is truly a global village and it is possible to perform intercontinental business transactions from every corner of the world.

For a better understanding of the foreign exchange market, attributes of the market will be highlighted. This is an effort to shed light about the currency market to facilitate the move to become a Forex trader:

  • Currencies are always traded in pairs in the Forex market. For every foreign exchange transaction, one currency is traded for another, i.e. GBP/USD will translate to how many Dollars it will take to purchase a British Pound.
  • Symbols are being used to indicate currencies. The GBP symbol indicates the Pound Sterling and the USD symbol indicates the United States Dollar. Other symbols include the AUD for the AUSTRALIAN Dollar, the EUR for the European Union euro, CHF for the Swiss Frank and the JPY for the Japanese YEN to name but a few.
  • There are current approximately 150 currency pairs available which could be traded in the currency market
  • There is a market price associated with each currency pair, i.e. EUR/USD, GBP/USD, USDJPY. This price refers to how much of the second currency it will cost to buy one unit of the first currency. An exchange rate for the GBP/USD is 1.2801, then it costs 1.2801 US Dollars to purchase a Pound Sterling.

On the reverse side, to establish how much it will cost in Pounds to buy a US Dollar, the calculation is flipped, and 1 (one) is divided by 1.2801 to give answer of 0.7811. It therefore costs 0.7811 US Dollars to buy one Pound. The price of the currencies constantly fluctuates as global transactions occur, 24 hours a day during the week.

  • A pip is the fourth decimal in place in a currency pair. When the Japanese Yen is involved as the second currency, the pip is the second decimal. When the price of the GBP/USD moves from 1.2800 to 1.250, a profit of 50 pips have been made – if you were in a buy transaction. If you were in a sell transaction and the price moved from 1.2800 to 1.2750, you would have a 50 pip
  • The profit made depends on how much of the currency were bought or sold. Currency pairs are transacted in lot sizes. The standard lot size is 100 000 units, the mini lot size is 10 000 units and the micro lot size is 1 000 units. A standard lot size pip is worth $10,00, the mini lot size is worth $1,00 and the micro lot size pip is worth $0.10. This is on the assumption that the accounting of the trade account is in US Dollars.
  • For any pair where the USD is the second currency, the pip values in the previous paragraph applies. However, if the USD is quoted first, the pip value will be different. Example: The pip value of the USD/CHF (Swiss Franc), the normal pip value is divided by the current USD/CHF exchange rate. Thus, a micro lot size is worth $0,10 / 0.9435 = $0.1060, where 0.9435 is the current price of the pair, and subject to change.
  • The JPY pairs (USD/JPY), follows the same process, but is then multiplied by 100.
  • In terms of trading, the first currency in a trading pair is always the directional currency on a forex chart. In the GBP / USD chart, when the price is moving higher, it means the Pound Sterling is moving higher relative to the USD. Similarly, if the price on the chart is falling and moving lower, then the Pound is declining in value relative to the US Dollar.
  • There are three forms of commissions used by brokers in forex. These commissions are the cost of forex transactions. The commission structures are not universal to all brokers and each broker applies the structure as they would see fit. The cost structures are (a) a fixed spread, (b)a variable spread; and (c)a commission based on a percentage of a spread.

The spread is the difference between the bid price (what the broker is prepared to pay for your currency) and the ask price (the price the broker is prepared to sell the currency)(The ask price is always higher than the bid price)

In a quote “EURUSD: 1.4952 – 1.4955” there is a difference of 3 pips (as calculated on the fourth decimal). This difference is called the spread. With a broker offering a fixed spread, the trader will always pay 3 pips transactions costs.  In the case of a broker with a variable spread, the spread would move up and down, depending on the currency pair being traded and the market volatility level.

Some brokers charge a small commission, sometimes as little as two-tenths of one pip and the trade will be passed on to a larger market maker with whom a relationship exists. This larger market maker could be able to provide a very tight or small spread that only larger traders could access.

  • Forex interest or rollover is another cost to take into consideration. Rollovers are the interest paid or earned for holding a currency transaction open overnight without settling. Each currency has an overnight interbank interest rate associated with it, and because forex is traded in pairs, every trade not only involves two different currencies, but also two different interest rates. The rates involved here are not central bank rates, but the overnight interest rates at which banks borrow unsecured funds from other banks. Should the interest rate on the currency the trader bought be higher than the interest rate of the currency sold, interest would be earned on the transaction. If the interest rate on the currency bought is lower than the interest rate on the currency sold, the trader will pay rollover interest.
  • Rollover rates on a Wednesday is three times higher than on a Tuesday. This is to account for the fact that banks are globally closed over the weekends and therefore the interest for the weekends are made up on a Wednesday.

With these concepts the new traders should have a better understanding of what is happening when there are movement on a forex chart. It will be easier to identify the profit potential available from chart movements.

 

The United States / China Trade War and Forex Trading

The Trade War Explained

Even before Donald Trump became president of the United States, he held the believe that China manipulated its’ own currency for economic advantage. Whether the believe was actually true is another matter.  But being the president of the United States, Donald Trump’s administration has embarked on a trade war with the Peoples Republic of China.

The 2018 trade war started with a single safeguard by the United States on washing machines and solar cell panels in January. This safeguard has pick up speed escalating into a full scale tariff war. At the core is President Trumps’ belief that trade deficits with countries around the world are hurting the U.S. economy and in particular manufacturing.

The reaction by China is a tit-for-tat response by imposing tariffs on $250 billion worth of Chinese imports. Tariffs were imposed especially on US agricultural goods.

The trade war has increased global economic uncertainty while the USD is strengthening against all major currencies, not least of which is the Chinese yuan. The effect is that US exports become more expensive and thus less attractive. True to his nature has President Trump tweeted that the Chinese and Europeans are manipulating their currencies to hurt the US. The Feral Reserve was also not spared. The Fed’s interest rate increase pushed up the exchange value of the Dollar.

The Trump administration has targeted China, the 27-member European Union and neighbors Mexico and Canada with trade tariffs. Despite a warning by President Trump to these countries not to retaliate in kind to US tariffs, the affected countries did just that.

China took some sting out of the US tariff sting by allowing its currency, the yuan to slide 9% against the dollar. This is the lowest level in several years making Chinese exports much cheaper. For the Chinese yuan to fall that far was a conscious decision, because Beijing still largely controls the value of its currency and could have intervened to stop the slide. In some ways the move to weaken the yuan was quite easy as the currency had steadily gained in value the prior year, providing some room to fall without causing too much damage.

Now, with Trump’s tariffs set to escalate even further, there are fears that China could just let the yuan fall as it did this summer, essentially unleashing a currency devaluation that would further ramp up bilateral tensions.

In late September, the United States levied 10 percent tariffs on $200 billion worth of Chinese goods, and the tariff is scheduled to rise to 25 percent in January. Trump has also threatened additional tariffs on $267 billion worth of Chinese products, adding up to essentially everything the country ships to the United States.

What happens to currencies when tariffs are imposed?

When a country imposes tariffs on another country, doubt is created on the imposed country’s economic outlook and raises the likely outcome of a retaliatory tariff decision. When there are doubts on the economic outlook of a country, investors are more likely to pull their capital from the country and that could lead to currency declines.

A decline in currencies normally lead to price instability and enhanced volatility.

Trade Forex with the Chinese Yuan

The currency of the People’s Republic of China is known as the Renminbi (directly translated as the People’s Currency) with the actual bank notes and coins themselves being called the Chinese Yuan. This is similar to the UK currency being known as Sterling, with the notes and coins being referred to as the Pound. The symbol used for the Yuan is ¥, and there are three Forex codes connected with this currency: RMB, CNY and CNH (which refers to the offshore tradable currency). The Chinese Yuan is used across the People’s Republic of China but not in Macau or Hong Kong (although it is sometimes accepted in these two regions), and it is not accepted as legal tender in Taiwan.

The rate of the CNY is set by the central bank, the People’s Bank of China, and it has a narrow band of variation, basing its value against several international currencies. The Yuan was originally pegged to the US Dollar, and this has been the case off and on over the last few years, with the most recent de-pegging occurring in 2010.

CNY/USD Explained

The currency pair CNY/USD is becoming increasingly popular with all kinds of investors due to the rise in interest in the Chinese economy. This pairing refers to the Chinese Renminbi currency and the US Dollar.

The Yuan is now the ninth most-traded currency worldwide. Each Yuan is made of 10 Jiao, and each Jiao consists of 120 Fen.

The CNY/USD pair is an exotic currency pairing because there is less trading of this pair when compared to the Cross and Major pairs, there is less market liquidity, which leads to a higher cost of trading.

There are several advantages to choosing to trade the exotic CNY/USD pair:

  •  Predictability – As there is a lower trading volume and slower trading pace in the CNY/USD market, price action can be predicted more easily, making long-term trades a possibility.
  • Fewer traders – CNY/USD transactions have a higher cost than that of major pairs, and when combined with the lower exposure of this pairing to the global Forex trade community, it means that speculators and casual investors are excluded from the market. This results in fewer traders.
  • Opportunities for diversification – The CNY to USD trade usually attracts more experienced investors wishing to develop a more diverse portfolio of investments. The CNY/USD market enables them to try a more unusual market, which may bring a greater profit should the trade work out successfully.
  • Challenging opportunities – As the CNY/USD market is quite unique, it represents a more challenging opportunity for experienced Forex traders, which enables them to create their own strategies and formulas in order to achieve a higher level of trading success.

 Forex Brokers in China

With more than a billion population and fin-tech industry on the rise, the world’s second-largest economy is a country with huge forex market potential. Nonetheless, China is in fact one of the most frustrating jurisdictions in the world for retail forex brokerages.

 

The reason for this is the policy of the Chinese government, which doesn’t seem too keen on the forex industry, to put it mildly. There was a ban on advertising of forex trading and related services on Baidu, the largest search engine operator in China. It was lifted, however there are still a number of impediments to forex brokers in the country, such as the unclear license application procedure, problems with cross-border payments, as well as a leverage cap of 1:20, to name a few.

The previous paragraph needs to be seen in the light of the fact that first forex retail license has been allocated on the 19th November 2018 to a Hong Kong brokerage named Guo Tai Jun. The broker is now allowed to enter the interbank forex trading market and carry out “spot FX, futures and swap currency trading operations.”

More importantly, people in mainland China will now be able to trade with Guo Tai Jun without needing to have a Hong Kong bank account with HKD in it.

There are foreign forex brokers in China. There have been concerns about the Chinese authorities shutting down non-Chinese FX brokers after they banned crypto currency trading in the country. Yet, it appears that the brokers licensed by reputable financial agencies such as the FCA in the UK or ASIC in Australia, are out of trouble, especially if they have physical offices in the country

Yet another option for foreign brokerages who wish to operate in China is through a joint venture with a partner that is 100% Chinese owned.