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What is a deflationary Cryptocurrency? A Deflationary Cryptocurrency is one that burns, (mints) its supply. This process lessens the number of coins or tokens on the market over a specific period (generally a year), which reduces supply and increases the price.

In general terms, ensuring that there isn’t an oversupply of a currency can be an important monetary tool to reducing inflation. Evidence of quantitative easing and what can happen when there is an oversupply can be seen by the record high inflation seen around the world. The two largest cryptocurrencies, Bitcoin and Ethereum, are both tipped to become deflationary in the future but for varying reasons Is Bitcoin deflationary?

Bitcoin has a fixed, maximum supply of 21,000,000 BTC that will be fully mined in the year 2140. The current supply of BTC is 19,008,012.00 and 20% of this supply has been lost due to forgotten passwords and forgotten keys. It’s projected that Bitcoin may officially become deflationary once its full supply has been created, as the circulating supply will continue to reduce due to holders’ unintentional losses.

Is Ethereum deflationary? Unlike, Bitcoin, Ethereum does not have a maximum supply. Rather, it has an annual supply cap at 18 million ETH.

For Ethereum to become deflationary, 2 ETH would need to be burned per block; this is because this amount is minted for each block that is mined. As per the historical data, the ETH net issuance will dive lower creating a rally in the ETH price as the circulating supply will be less. A common way to achieve deflation is by burning tokens.

Ethereum does this by minting tokens that are staked or when NFTs are minted. A point worth noting is that cryptocurrencies with a finite supply are deflationary by default. When investors buy and hold the coin, the supply reduces.

Ethereum has temporarily turned deflationary in the last few days. An unknown project by the name of XEN has assisted in the burning of ETH. What is XEN?

XEN is a project created by the “Fair Crypto Foundation,” backed by Jack Levin, one of the first employees at Google working on cloud infrastructure. The ethos aims to empower the individual with a token that starts with a zero supply and has no pre-mint, CEX listings, admin keys, or immutable contracts. XEN, which launched on Oct. 8, can be claimed, minted, or staked and is based on the first principles of cryptocurrency: self-custody, transparency, trust through consensus, and permissionless value exchange without counterparty risk.

XEN can only be traded on Uniswap, where there is very little liquidity. Time will tell if the latest hot cake in crypto turns into just another swindle. Key Takeaways ETH has turned deflationary over the past 24 hours.

High gas consumption to mint tokens for the new project XEN Crypto is the primary cause of the ETH supply drop. ETH's supply has dropped on several occasions since Ethereum completed "the Merge" in September. Are you keen to venture into trading Cryptocurrency pairs, FX, stocks or commodities?

If so, you can do so by opening an MetaTrader trading CFD account with GO Markets here or call our Melbourne based office on 03 8566 7680 to discuss your trading goals with our account managers to get started. Sources: https://au.finance.yahoo.com/, https://xcoins.com/, https://coingape.com/, https://cryptopotato.com/, https://cryptoslate.com/

Long and Short trading and investing strategies are often seen as advanced strategies only used for large hedge funds and large banks. However, retail traders can learn valuable lessons and ideas from this type of trading strategy that is usually reserved for institutional players. What is a long-short strategy?

A long-short strategy as described by its name involves holding a basket of both long and short positions of assets all a part of a portfolio or a singular trading strategy. These assets tend to be equities securities or derivatives but can also be other asset classes such as commodities and FOREX. The idea behind the strategy is that due to the negative correlation between the shorts and long positions they cancel out much of the market volatility whilst at the same time profiting up movements in price in either direction.

Steps to develop a Long Short strategy Establish which assets classes you wish to trade This step involves generating ideas for which asset classes you whish to trade. This may include FOREX, Commodities, Indices, or equities. For many traders, a combination of assets may produce an effective strategy.

For example, someone may choose to allocate 60% of the portfolio to equities, 20% to FOREX and 20% to commodities or 100% to equities. Determine how many assets to hold with in strategy. The aim of this section is to ensure that there are enough assets to be, diversified enough that a significant move in one direction will not blow the strategy out and to ensure.

The strategy requires that enough assets are held to minimise the volatility. If too few assets are used, then the returns may not be consistent enough and prone to large gains and losses. A standard range may include 20 assets with the breakdown of long and short varying from strategy to strategy.

Apportion the % of assets that will be held long and those that will be held short? This step involves an element of discretion and is where the individual trader can utilise their own experiences and edge to enhance the strategy. For instance, some traders may choose to create a 50/50 split strategy.

This means that exactly half the assets will be long, and half will be short. More specifically this split may occur via value weighting, number of assets or by price per share. Alternatively other strategies may involve having a lower proportion of short assets held, such as 20% Short and 80% long.

These types of strategies may work better when in a trending market because the strategy can still make money on assets that are falling in value whilst also taking advantage of the strong overall market trend. Choosing the individual assets to be held This is perhaps the most important step of the process. Choosing assets to hold can be a difficult task and may require both technical and fundamental analysis to find top performing assets to hold long and poor performing stocks to hold short.

The craft of the long, short strategy is performed at this stage as a trader needs to find high performing or low performing assets. An example of a 50/50 Long Short Portfolio construction is shown below. (NOTE this is a fictional Long Short portfolio and is not a real strategy or portfolio) Positives of a Long Short Strategy A long-short strategy may be able to avoid volatile returns and the effect of a choppy market because the short positions can reduce negative returns if the market is falling, and long positions can take advantage of the market is lifting. if a trader can effectively allocate their Longs and shorts, profit can be effectively achieved in most market conditions. Allows a trader to utilise their ‘edge’ for a wider array of assets.

Disadvantages This approach requires active portfolio management. As positions are constantly changing and weightings for different assets change, adjustments may need to be made to ensure that the strategy continues to balance. A Long Short strategy also generally requires a longer time frame then other scalping strategies or intraday strategies.

Having short positions means that the holder of the short is at risk of short squeezes. A short squeeze is something that anyone wishing to short should be aware of. It occurs when to many short positions attempt to close their positions at once.

This can cause a spike in the price and may force bigger positions to close, further driving up the price. Ultimately, a Long Short strategy for trading and investing can be a way to achieve more stability in volatile market conditions and provide a way to capitalise on market movements in both directions. Even just understanding how a Long-Short strategy works can provide traders and investors with enhanced understanding of how market forces impact on trading and potentially provide new strategies.

Many trading strategies utilise technical analysis to predict price patterns and for entries and exits. These strategies revolve often begin with the idea of the price having identifiable support, resistance and trendline market structures which indicate where various buying and selling points can be placed for a trade. These support and resistance indicate far more then just the price at a moment in time.

Rather they reflect the psychology of the market at a given point in time. However, when trading it is important to remember that the market is not just made of one type of trader. The market is made up of day traders, swing traders, scalpers, funds, hedge funds, retirement funds, Investment banks and all in between.

Each of these participants has their own time frame for a trade/investment. This element is the key as to why trader can utilise multiple time frame analysis. The theory it that the more market participant who view the respective level as a support or resistance, the more likely it will act in that way.

For example Assume that the price of stock A is sitting on a 5-minute support at $100. Looking purely at this 5-minute chart a trader may look to buy on this support level. However, after looking at the 30-minute chart, the chart shows that the price is not actually a support but rather just a random price point and therefor no trade is entered.

Alternatively, the 30-price chart supports the original price as a support and therefore may support the price point being a support point. How to implement multiple analysis into your trading. Determine your standard trading timeframe.

This step should be a relatively simple step if you have a clear edge. For some traders it can be 5 minutes, 15 minutes, 1 hour, one day or even one week. Work back usually by a factor a factor of 4/5 or by a logical time frame adjustment Prior to your first drawing of support resistance and trendline it is important that you adjust the timeframe of your price chart by a factor of 4/5 or a by logical adjustment such as an hour – to a day or day to week.

Example 5min – 30 min 1 hour – 4 hours 1 hour – day 1 day – 1 week 1 week – 1 month Add in Support and Resistance Lines on longer term time frames The analysis can now start, and the key is to draw the most obvious and consistent support and resistance time frames. This step also serves an important step in helping determine if the price is trending or is ranging. Revert to trading time frame and redo the same process highlighting convergences The next step is to revert to the desired trading time frame and conduct the same process.

This time if there is a Support/resistance line that is already made and acts as one on the shorter timeframe, highlight it or tag it. Looking at the example below for US car making company Tesla, the process is shown on the chart below. Firstly, with the weekly chart, support and resistance points were plotted with the black lines.

The below the daily chart shows that the support point at $265.25 acts as support for both timeframes. This indicates that price may act with more strength as a support zone. Similarly, if the level breaks it may indicate a more powerful move because more market participant will likely be involved.

In the other example for the EURUSD the same process has been done and shows that the price at 0.9600 is also doubling as a support on the daily and weekly charts. The use of multiple time frame analysis can optimise trading systems by reducing risks of fake breakouts and improving entry and exit accuracy.

Maturity, Yields, Par Values and Coupon payments. These are words that everyone has heard of but not many have a good understanding of what they mean. In this article all these complicated terms will be explained.

Please note that while this information is most relevant for physical bonds, it is still important to understand when dealing with CFD’s as they play an important role in how bond CFD’s are valued. What is a Bond? A bond is an instrument that is used by companies and governments and other entities to raise money through the issuing of debt.

There are different typed of bonds however, the simplest bonds are contracts in which an issuer (Company/Government) receives a payment from the purchaser or bond holder in exchange for the rights to interest plus the principal amount. For example, a government may issue a 10-year bond for $1000 in which they agree to pay 1% interest per annum which will equate to $10 per year. In addition, they will pay back the principal amount once the bond matures.

Key Terms Issuer – The entity that sells the bond initially and must make payments. Holder – The entity who is possession of the bond. Principal – The amount of debt that the government/company has taken that will be paid at maturity.

Par Value – The nominal value of the bond or the price when it was issued. Coupon Payment - The interest payment that is paid to the bond holder. Yield –The coupon payment divided by the Bonds face value.

Maturity – The date when the principal amount of the bond will be paid back. Bond Ratings Generally, Bonds are rated according by agencies, based on how safe the underlying assets are. For instance, government bonds tend to be rated the highest as they are guaranteed by the government, and governments are highly unlikely to default.

In a practical sense, the US government is such a reliable issuer that it should never default on the repayments. This makes Bond’s a great asset to act as a hedge against unsystematic risk. On the other hand, corporate bonds may be given lower ratings depending on their credit risks.

Inverse Relationship between Bond Price and Yield The price and yields for bonds are inversely related. This is important to note as bonds are often charted against their yield and not price which is how derivatives are often charted. Therefore, a trader should be aware of the inverse relationship between price and yield.

This occurs because as the price of a bond changes up or down the interest rate must adjust to ensure that the coupon payment is the same. Assume Bond A is issued at $1000 dollars and 10% interest rate to pay a $100 coupon. 1 Year later that same bond is now priced at $900, however the bond must still pay out a $100 coupon. However, to get a coupon payment of $100, the interest rate must increase.

The formula below shows this: $900 x Interest Rate = 100. Simple Algebra shows that the interest rate = 11.1% Understanding this relationship will make eliminate one of the more confusing elements of trading bonds. Catalysts for Bond Prices The general factors that influence a bond’s price are related to the interest rates and the broader economy.

For instance, if the market interest rate 2% and the bond’s coupon rate is 1%, then the bond will trade at a lower price and vice versa. Subsequently, bonds can be a handy way of tracking the sentiment as they often reflect the feeling in the market. Economic events can impact on the performance of bonds.

When the economy is growing and equities are doing well, bonds tend to perform worse as the return is limited. However, during times of volatility and poor stock market performance, the bond market tends to perform better as the market looks for safety in the guaranteed returns from bonds. Inflationary pressure and low or high interest rates can influence the direction of the way in which bonds are traded.

Generally, in a strong economic market, bonds with longer maturities tend to have higher yields than those in shorter maturity. This is generally due to the thought that the time that is further in the future will has more uncertainty than that in the near-term future. The general exception to this is when the market expects a recession soon.

This causes what is known as an inverted yield curve, in which the shorter-term bond is yielding a higher interest then the long-term bonds. You can trade CFD on the 10 Year US treasury note, 5 Year US treasury Note, UK Gilt, Euro Bund and the JGB Japan Futures on Go Markets Metatrader 5 platform

The United States used 30.28 trillion cubic feet of natural gas in 2021, making them the world’s largest consumer of natural gas. Natural gas consumption in the United States has two seasonal peaks, largely reflecting weather-related fluctuations in energy demand. One of the biggest consumptions of gas is industrial, residential and commercial cooling and heating systems (eia, 2022).

As the world’s largest user of natural gas transitions out of summer, will this change indicate a decrease of their natural gas consumption? Could the decrease in demand for cooling be reflected on the technical charts? On a daily timeframe, natural gas has been on a steady upward trend since the end of June, in tandem with the beginning of summer in the US (seen on the chart below).

A trendline from the beginning of that trend until now can be drawn, and we can see recently that line has been broken by a daily candlestick, closing below the trendline which can indicate a change in trend for natural gas. After the strong break below of the trendline followed by multiple bearish daily candlesticks, we can consequently expect further downside movement for natural gas, after breaking through a strong support at $8.4, in all probability with natural gas currently sitting at $7.895 we could see natural gas come down to the next support level around $7.57.

Have you ever heard the saying, “70% of trading is in the head”? This is because the markets are mostly moved with sentiment, a good barometer to gauge is the Fear and Greed index, emotions trigger actions, there is a reason why there are sellers and buyers in the market at the same time, yes it can be attributed to the way people take in information or understand the data, in a normal day, there are always winners, as there are always losers. So, with that in mind you might understand that this information or data is truly important to traders as it impacts heavily on the markets, as such that, as a trader it would be irresponsible for you to focus solely on the Technical Analysis and disregard the Fundamentals.

However, you could be able to trade Fundamentals without the Technical Analysis. What is Fundamental News? The best way to answer this, is by acknowledging that the performance of an economy is a direct result of different political, social and economic outcomes.

These could differ from the release of figures of the unemployment rate to interest rates, from elections to the GDP, to geopolitical events such as the invasion of Ukraine to a countries coup or BREXIT. All of these have profound effects on the price of commodities, currencies, bonds, or securities, as it would either make the asset easily accessible or as in recent times with COVID it makes is harder to supply it when there is huge demands. Investors are always on the lookout for small details that would help them decipher if their investments are in sound condition or if they need to do something to avoid losing their positions.

Typically, if you are trading CFDs you would look to an Economic Calendar – It’s just like a standard calendar, which provides timelines of specific reports and/or meetings which will take place in the future, from various countries around the world. You could see one here at Forex Factory. A great tool which will aid traders to set up their trades in advance or allow them to make a decision to see if it would be wise to keep a trade open during the event, or open a trade before or wait until the fact to enter the market.

As you begin to follow economic announcements, you may understand why some events—like the consumer price index—may cause markets to move. But you may wonder why it’s important to follow lesser events, like the food price index. Usually, a major event provides an indication of the state of the economy.

But traders follow lesser events because they provide an indication of upcoming major announcements. For example, a jump in food prices may mean the consumer price index will jump as well. An example of an economic calendar is below.

Fundamental Analysis consists of the trader keeping track of all these factors within the reports and how they have affected the market. Fundamental analysis can also cover broader aspects of trading depending on the asset in question. The various fundamental factors can be grouped into two categories: quantitative and qualitative.

The financial meaning of these terms isn't much different from their standard definitions. Here is how a dictionary defines the terms: Quantitative – "related to information that can be shown in numbers and amounts." Qualitative – "relating to the nature or standard of something, rather than to its quantity." In this context, quantitative fundamentals are hard numbers. They are the measurable characteristics of a business.

That's why the biggest source of quantitative data is financial statements. Revenue, profit, cash flow, assets, wages and more can be measured with great precision. Fundamental Trading can be done in various ways depending on your availability – some reports are released late in the night or early morning depending on your perspective, which mean, you may be asleep so trading these may require a level of organisation from your part in terms of understanding how to set up pending orders, with the right risk management in place to take you out of the trade whether it has reached your desired profit limit or the amount you’d be happy to risk losing or trade the action live as you see the reaction of the price movement.

All In all Fundamental news, analysis and trading are a major facet of trading, it is also right to mention, that some fundamental traders would incorporate technical analysis from time to time to create stronger affirmations in their research. Sources: babypips.com, https://www.contracts-for-difference.com/, https://www.investopedia.com/, www.forexfactory.com