Is it time to breakup with Bitcoin?
June 4, 2021 by The Q.ai Team
The educational portion of this newsletter is focused on forex currency trading
In 3:20 minutes, you will learn:
- 5 headlines that pretty much sum up the week
- Why millennials are struggling to grow wealth
- An introduction to trading forex
- Our rec of the week
Five headlines that sum up the week
1. Huawei launched a mobile OS that would essentially replace Android
Huawei has launched a new operating system called Harmony OS. If Huawei is successful at persuading smartphone makers to adopt its OS, it could change the entire playing field for non-Apple devices. Currently, 8 of 10 smartphones sold in the world currently run on Android.
2. Ant Group is restructuring to become a consumer finance firm
A few months back, Ant Group founder Jack Ma was in hot water with regulators in China after he spoke out against their policies. This resulted in the company withdrawing from what could’ve been the biggest IPO ever – and Jack Ma even went MIA for a bit. Shifting to a financial holding company allows Ant Group to be regulated like a bank.
3. Etsy acquired Depop for $1.6 billion
Arts and crafts marketplace Etsy has bought Depop, a Gen Z alternative to both Etsy and Poshmark. And that is exactly why Etsy spent $1.6 billion to acquire the company – the vast majority of Depop users are younger than 26. On the other hand, the average age of an Etsy seller is 39. With Depop being the 10th most-visited site in the U.S. among Gen Z-ers, the acquisition makes a ton of sense for Etsy.
4. Biden expands list of Chinese companies banned from U.S. investment
Chinese surveillance technology has always been a serious concern for U.S. national security. It led Trump to create a list of 31 companies that investors are prohibited from owning or trading in the U.S. This week, President Biden nearly doubled that list, adding 28 additional Chinese companies to the list. This order will go into effect on August 2nd.
5. Elon Musk’s cryptic Bitcoin breakup tweet
Many people are convinced that Elon Musk has the influence to manipulate markets. The argument is sound when he Tweets about Bitcoin and the price drops. But just like any startling headline, it’s clear that not every investor excludes emotion from their decision-making process. And if you’re using a mobile-first trading app, it’s even easier to make a fear-induced snap decision to hit the sell button.
ICYMI: The millennials turning 40 this year are 80% as wealthy as their parents at the same age
It’s been tough to grow wealth as a millennial. We’re crippled with student loan debt, wages haven’t changed much and we’ve been hit with not one but two financial crises. To put things in perspective, in 1986, when older Baby Boomers turned 40, the U.S. economy grew by 3.5%. Last year, we saw the U.S. economy shrink by 3.5%.
All of these things are factors for why millennials are not as financially well-off. These are the main points highlighted in this Bloomberg article.
The price of home ownership has risen so high, about 1 in 5 millennials say they plan on paying rent for their entire lives. The ones who do plan to own homes – 63% of all millennials – admit that they have no money for a down payment at this time.
Tempting as it may be to say “OK boomer” the next time someone says millennials are entitled, lazy and don’t work as hard, don’t bother. The best thing you can do for yourself is create your own financial safety net by putting away money.
Instead of moving your money into a savings account that collects under 1% of interest each year, consider the two-birds-one-stone approach of saving and growing your money. One way to do that is to leverage an investing app like Q.ai. You don’t even need to rebalance it every year like many investors do. We have AI for that – and it rebalances automatically every week.
What you need to know about forex currency trading
- The foreign exchange market, or forex market, is where currency pairs are traded
- Currencies always trade in pairs, such as CAD/USD, with the left side representing 1 native dollar and the right side representing the counter currency
- Trading forex is one tool for hedging and speculation – and while it can bring great profits, it also comes at enormous risk
The forex market provides a way for investors to profit off the fluctuations in foreign currency exchange rates. In fact, the word itself is an amalgam of “foreign” and “exchange.”
Forex, as the name indicates, is the process of exchanging one currency for another – for instance, as you would do if you were going on holiday to Montreal and needed to trade your U.S. dollars (USD) into Canadian dollars (CAD).
But when it comes to trading currency for profit rather than pleasure, the process is a little more complex.
What is the forex market?
The forex market, where currencies are exchanged and traded for profit, is the largest market in the world by daily trading volume, making it one of the most liquid markets in the world. It operates in multiple financial hubs around the globe, including London, New York, Hong Kong, Tokyo Paris, etc.
As a result, the market is open 24 hours a day, 5 days a week – making it the only nonstop trading market in the world.
Thanks to the lack of a centralized marketplace, modern forex trades are conducted electronically OTC (over the counter) via a network of interbank trading terminals and computer networks.
While this provides speed and widespread access, it also means that the forex market is less transparent than other financial markets. OTC markets don’t require financial disclosures – and large liquidity pools from major institutional firms are a prevalent feature.
What is forex currency trading?
Forex currency trading as an investment tool. Forex pairs are traded in lots, with the size of the lot dictating the type of forex account.
- A standard forex account trades up to $100,000 in one lot
- Mini forex accounts trade up to $10,000 in a single lot
- Micro forex accounts let you trade up to $1,000 in one lot
How do investors make their fortunes (or not) in the forex market? It all comes down to two distinct features that make forex an attractive asset class:
- The ability to profit directly from changes in the exchange rate
- The ability to capitalize on the interest rate differential between two currencies by buying the currency with the higher rate and shorting the currency with the lower rate (sometimes known as a carry trade)
Why trade forex?
Traders and institutions typically trade forex for one of two reasons: to hedge against risk or speculate on price movements. However, trading forex is complex and can be incredibly risky.
For instance, the interbank market that controls forex trading has varying degrees of oversight around the world. Not to mention, the OTC nature of forex trading means that the forex market is less transparent than other financial markets. Additionally, while the extreme leverage offered by many brokers makes it easy for traders to get involved in the market, such measures can bankrupt both traders and dealers alike.
Attaining success requires both luck and an intimate understanding of economic fundamentals and indicators. Without a broad understanding of various countries’ economies – not to mention the global economy – grasping the intricacies of currency fluctuations is nearly impossible.
The bottom line
Simply put, forex is alluring to many traders because of the massive, unbridled potential for profits. Many brokers allow traders to invest with enormous leverage – up to 100:1. And because currency fluctuates on a dime due to national, international, and economic pressures, the constant tide of volatility means that opportunities for advancement crop up dozens of times per day. But there are two sides of a coin, and volatility can work for – or against – you.
Read the full “Investing 101” resource on forex currency trading
This week’s episode discusses “green stocks,” challenges and opportunities with ETFs and Robo Advisors. Pay particular attention to the segment on Robo Advisors. The podcast highlights the benefits of a “set it and forget it” model, but mentions that the lack of control can be frustrating especially with the lack of transparency from the AI. We couldn’t agree more. While Q.ai has all of the upsides of a Robo Advisor, we want to make it clear that it is not the same thing.