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BITCOIN TRADING – LEVERAGE

In the case of cryptocurrencies, there is volatility. Even for some more conservative traders, this may be overkill. Therefore, before you start trading such volatile instruments, make sure that they are right for you.

Keep in mind that market fluctuations of 10% or even 20% in virtual currency prices during the day are not atypical. Great news for speculative traders is that they will be able to use leverage when trading with cryptocurrencies account Admiral Markets.

Remember, however, that leveraged trading increases not only your profits but also your losses. Therefore, use leverage wisely, after weighing all possible risks. You are probably wondering why it is worth using trading with such a volatile trading instrument?

Using leverage provides capital that you can use to trade other instruments, currencies, stocks, indices, commodities, etc. Thus, you can diversify your portfolio of financial instruments, thereby reducing the risk to your capital. The same time, if you choose to trade with leverage, you can double your positions when trading bitcoins or other cryptocurrencies and try to get the maximum profit if you can correctly understand the price direction.

 

 Bitcoin Trading – Long and Short Positions

As mentioned earlier, when trading bitcoin using CFDs, you can benefit from price movement in both directions. At the same time, you will suffer losses if the worlds most significant becomes cheaper. On the other hand, if you think the current Bitcoin price is high and going down, you can go short and win when the price goes down. In this situation, you will lose if the price goes up. Taking short positions can also help those who have already purchased or mined bitcoins. By opening a short position for Bitcoin CFDs, they will be able to ensure their jobs against a fall in the Bitcoin price.

Start making money on both the highs and lows of Bitcoin using the best trading platform designed for trading various asset classes. Financial peak is best platform for bitcoin trading.

 

 Bitcoin Trading – High Liquidity and Security

Another benefit of trading cryptocurrencies with Admiral Markets has to do with liquidity. Unlike trading virtual currencies with any the broker that can survive a temporary liquidity crisis and even collapse due to a hack or cyber attack, trading cryptocurrencies with Admiral Markets guarantees constant liquidity.

This liquidity is guaranteed by several of the largest cryptocurrency exchanges in the world.

This much protect you from the negative scenarios described above if you are trading on a specific crypto exchange that can bring you significant financial losses.

 

 Trading Bitcoin with Admiral Markets – Fees

Before you start trading any instrument, it is recommended that you familiarize yourself with the associated transaction costs. Ignorance can lead to severe problems, especially in cryptocurrency trading, which can eat up a significant portion of your future profits.

The advantage of trading cryptocurrencies with Admiral Markets is that you do not pay commissions when trading them outside of the spread. You have no commissions for currency conversion, as well as commissions for transferring funds to and from your account if you are actively trading. Also, if you trade any other cryptocurrencies other than

Bitcoin, it will be converted to Bitcoin when you buy and sell the corresponding currency.

The only things you need to pay is the difference between the buy-sell price and the sell-sell price, that is the spread.

These flexible trading conditions are because the trader speculates on the price movement of the underlying asset Bitcoin or another the cryptocurrency that he trades instead of owning the asset.

However, it should be reiterated that when trading Bitcoins via CFDs, leverage can increase both profits and losses and therefore, an adequate risk management strategy should be implemented.

 

 Bitcoin Trading – Technical Analysis

It is the application of analytical methods to determine the future direction of an asset’s trading, based mainly on its past behaviour. Technical analysis methods are numerous and varied, allowing traders to choose the best ones for them based on trading style, trading goals and risk aversion.

And this is partly because the fundamental analysis is practically not applicable to trading and investing in Bitcoin.

 

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Finance

FIDUCIARY MANAGEMENT

by Devan Nathwani, FIA and Investment Strategist at Secor Asset Management

 

Defined Benefit pension schemes are one of the most significant institutional investors, representing c.£1,700 billion[1] in assets. With investments becoming increasingly more complex, regulatory and reporting requirements increasing and markets generally being volatile, making investment decisions is taking up more of the governance budget. This has been further highlighted in the recent Covid-19 crisis where pension schemes were faced with falling equity markets, collateral calls and new investment opportunities arising from market dislocations. Corporate sponsors saw their pension scheme deficits widen at a time when free cash flow was needed to maintain working capital. There is a vast array of investment or de-risking products that claim to have low governance requirements, however often they can require giving up investment freedom and transparency or have high costs. This is where partnering with a Fiduciary Manager can help.

 

What is Fiduciary Management?

Fiduciary Management is essentially a form of delegated investment decision making. Fiduciary Managers partner with pension schemes to give advice on scheme investments and are responsible for the implementation of that advice. Fiduciary Management relationships are often highly customised and do not have to be “all or nothing”. A simple Fiduciary Management partnership could involve a Fiduciary Manager managing a fund-of-hedge-fund portfolio. A more comprehensive partnership could involve a Fiduciary Manager using their investment expertise to make investment decisions on the entire scheme portfolio. In practice, these partnerships can take many different forms and the best relationships are often highly customised, be it in the services received, the portion of the assets covered or the decisions that are delegated.

 

Devan Nathwani

Why Fiduciary Management?

Every pension scheme is different and in practice will choose to partner with a Fiduciary Manager for different reasons. Some common reasons for partnering with a Fiduciary Manager are:

Independent investment expertise

Over the last 10 years pension scheme investments have become increasingly more complex, with alternative asset classes becoming a core component of the strategic portfolio. Asset classes such as Private Equity, Private Credit and Property require in-depth knowledge of the different strategies deployed within them and often require portfolio management expertise to deal with capital calls and distributions and the sizing of commitments. Independence can be crucial here as these asset classes often carry high investment fees and require careful investment due diligence. A Fiduciary Manager typically has deep investment experience in a broad set of asset classes that a pension scheme can in-source without the cost of building an in-house team. Independence can be very important as a Fiduciary Manager that has no association with the underlying managers that a pension scheme invests with, can make investment decisions with minimal conflicts of interest.

Precision and speed

As highlighted by the market impact following the Covid-19 pandemic, it is important for pension schemes to be able to implement their investment decisions with speed and precision. Markets move every single day and investment opportunities can often arise and pass more quickly than a typical pension scheme governance structure can tolerate. Risk management is one of the most important objectives for a pension scheme, with unrewarded risks needing careful management and rewarded risks needing to be sized appropriately. Fiduciary Managers monitor their client portfolios daily and can act quickly to take advantage of investment opportunities or rebalance the portfolio as markets move.

Transparency

As regulatory requirements have increased, pension schemes are increasingly being asked to monitor their investment decisions with more scrutiny. Regulation requires them to consider Environmental, Social and Governance (ESG) factors in their investment decisions and understand the performance of their investments in detail, including the impact of explicit and implicit transaction costs. In addition, as funding levels improve, pension schemes and their sponsors are looking for tighter control and greater transparency over the scheme’s risks. This is particularly important as schemes approach their desired “End Game”. Good Fiduciary Managers typically have proprietary tools and systems that facilitate better performance and risk measurement. As regulations form and evolve, Fiduciary Managers adapt their investment decision making processes to account for them making compliance much easier.

Limited resources

Typically pension schemes and their sponsors have limited internal resources with limited time to spend on both investment and non-investment related matters. Most companies do not have dedicated pensions treasury teams so it can be difficult to devote the sufficient time that is required to both monitoring investment performance and making investment decisions. Where new asset classes are added to a pension scheme’s portfolio, additional training may be required which can take a considerable amount of time, particularly for more complex asset classes. Partnering with a Fiduciary Manager can supplement any existing governance structure by re-focusing pension scheme resources on more strategic matters.

Accountability

Pension schemes typically receive advice from investment consultants who do a good job of advising on strategic matters but are ultimately not accountable for the performance and the outcome of that advice. Pension scheme representatives are increasingly looking for their advisors to be accountable for their advice and the performance relative to the liabilities. Fiduciary Management solutions typically focus on liability relative scheme performance and are governed by the GIPS Fiduciary Management Performance Standard, to ensure a consistency in performance measurement.

Value for money

Fiduciary Management relationships are often all-encompassing and typically cover all investment related matters for the pension scheme. Through economies of scale, Fiduciary Managers negotiate more favourable asset management fees on behalf of pension schemes and are able to get schemes of all sizes access to investment opportunities that would historically only be available to larger schemes. The combination of investment expertise and accountability under a single Fiduciary Management solution, is expected to deliver better funding and performance outcomes which ultimately offers better value for money.

 

Why now?

Fiduciary Management as an investment solution is arguably more relevant today than historically. The recent crisis has highlighted the need for an investment partner who can help manage the downside risks associated with investing in equities, manage the collateral behind important hedges and take advantage of market dislocations. Many corporate sponsors will have seen their pensions contributions eroded and balance sheet deficits widened during the Covid-19 market crisis and a Fiduciary Management partner could have helped better navigate the volatility.

As corporate sponsors begin to consider the “End Game” for their DB pension scheme, they are increasingly faced with the dilemma of entering low-governance investment solutions that may be poorly constructed or paying an insurance premium to “Buy-out” the scheme.

Solutions such as Cashflow Driven Investing (CDI) tend to overemphasise portfolio construction to be based on uncertain cashflow profiles, and excessively exposing the pension scheme to risky credit allocations, which in a post Covid-19 world could expose pension schemes to adverse funding outcomes.

For corporates who prefer to avoid a large cash lumpsum payment for insurance-based buy-outs, a Fiduciary Manager can offer an alternative solution to reaching the required funding level for such a transaction to take place. By slowly growing the asset base while carefully managing risks, pension schemes can become buy-out ready allowing their sponsors to reinvest free cashflow in existing or new business lines.

Partnering with a Fiduciary Manager today could give pension schemes the tools to better manage the next crisis and offer more flexibility in reaching the desired End Game.

 

[1] The DB Landscape – Defined Benefit Pensions 2019 – The Pensions Regulator dated January 2019

 

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Top 10

TIME TO THINK OUTSIDE OF THE BLACK BOX

Mike Brockman, CEO, ThingCo

 

If you have the unbridled joy of parenting a teenager you’ll probably know what telematics insurance is.  In very simple terms, telematics or ‘black box’ insurance enables insurance companies to track driving behaviour using technology fitted to the car or via a smartphone app.  It is the first practical example of IoT – machine to machine communication of real-time data.

Telematics has been crucial to helping thousands of young people get experience on the road who would otherwise have found the cost of insurance too high.  When you look at the number of road casualties in the UK over the last nine years there is a clear correlation between the rising adoption of telematics and a fall in young driver casualties[i].  The problem is that as soon as they can, young drivers chuck in telematics and take traditional insurance.  As such telematics insurance has got stuck firmly in a rut.

So why is that a problem?

First, telematics saves lives – think what it could do if more drivers had it.

Secondly motor insurance costs are linked to claims costs – if we can bring down the cost of claims through the engagement, speed of response in accidents and anti-fraud benefits of using telematics data to its full potential, everyone could access cheaper insurance.

Mike Brockman

Thirdly we are living in a world deeply impacted by COVID-19.  Travel trends were already altering prior to the pandemic but have changed and could remain significantly changed for the foreseeable future.  Consumers are beginning to think more deeply now about their motor insurance and value for money.  This may create demand for motor insurance cover that is more responsive to people’s individual driving behaviours – why pay an annual premium when you only use the car once or twice a week?  On the flipside, those nervous of using public transport could see an increase in their car use.  Telematics allows insurance providers to offer insurance based on actual rather than predicted use.

The fundamental reason for telematics getting stuck in a rut is insurance companies are not offering something consumers actually want and they are not deriving value from their investment in the technology.  Different telematics devices give different qualities of data and that data determines the economic equation they have to resolve in terms of how much they pay for the technology and what value they get from it.

Another key factor is that if you give something away – as the insurance industry has done with telematics ‘black boxes’ – you are sending a strong signal to the customer that the technology is of no value to them and only there to serve the insurer’s need.

You need to make the device a desirable piece of technology that consumers would value in their own right – rather than something that is imposed on them to get cheaper insurance.   By introducing new technologies into these devices such as Voice, camera, ADAS, black spot warnings, it becomes a truly connected device that not only helps the driver but also creates incredible amounts of data that’s useful to the insurer to manage risk and provide better customer services.

With next generation telematics, the data is no longer a one way street direct into the insurer.   You can feed that data back to the customer and develop additional services such as a voice alert when they have been driving for too long without a break, an incentive of a coffee at the next rest-stop.

Telematics also transforms the claims process for the customer and the insurance provider. A crash alert can kick in and activate a voice command in the device and that will ask the driver if they had an accident, whether they need help and will alert emergency services if necessary.

This is where the data brings huge value to the insurance provider providing a whole range of detail – like a liability assessment, video footage, fault, g-force etc.  This data is dynamite to First Notification of Loss team with an insurance provider.

But the biggest difference next generation telematics offers is it really strengthens the relationship with customers and insurers can make it fun as well.  Insurance and fun aren’t usually two words you see in the same sentence but unlike traditional insurance, or old school telematics, it allows engagement and the opportunity to provide incentives without any big brother feeling about it.

Technology has changed massively over the last ten years, the quality of devices has developed and the Cloud has opened the potential for telematics products to be designed for customers in the most attractive way.   Barriers around trust and big brother can be broken down by being absolutely clear that the data belongs to the driver – they can choose how it is used to their benefit, spelling out the advantages, being transparent and flexible.

COVID-19 is providing an opportunity to stand back and think about telematics differently – how to make it customer friendly and how to make the economics work.  By leveraging next generation telematics technology the insurance market has a window of opportunity to turn the motor insurance grudge purchase into something consumers really start to value.

 

[i] https://blogs.lexisnexis.com/insurance-insights/2019/04/the-road-to-safer-driving-infographic-how-telematics-can-be-directly-linked-to-reducing-casualties/

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