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MOST ESSENTIAL TRADING SKILLS FOR GAINING SUCCESS

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Traders who have certain trading skills can get success easily. But, if you think, you can make money easily, you are wrong. You have to practice more and more to become successful. So, if you’re a lazy person, then, trading is not a suitable profession for you. As trading is a challenging task, you’ve to always go through the continuous learning process. Because, without learning about the new facts of the market, it’s not possible to make a wise decision. But, most of the traders are not properly aware of the situation of the market. For this reason, they make many mistakes.

In this post, we’ll discuss the most essential trading skills which are important for gaining success. So, let’s know about these.

 

Work under pressure

If you can’t deal with the difficulties of the market, it would become difficult for you to make the right decision. Bear in mind, trading puts huge pressure. So, you’ve to take the preparation such a way so that you can do better. But, many traders, due to huge pressure, leave the market for good. However, being a retail trader, if you know the correct strategy, it might be easy for you to do better. Otherwise, you’ll make the constantly wrong decision. For which, you might suffer a lot.

 

Can play the mental game

Without being mentally strong, it’s not possible to be in the game. Traders should increase their mental stamina. Some traders think, they just need to focus on developing technical skills, and risk management skills, but it’s not true. If you can’t control your emotions, you might face trouble. So, being a trader, it’s necessary to do meditation which might aid you to get mental peace.

Sometimes, the situation becomes worst. And so, the traders can’t deal with it. During this situation, if they lose their hope, they might fail to go ahead. However, after trading for a long time, some traders lose their motivation. But, to trade smoothly, it’s important to get back the motivation. Many traders prefer to go on a family trip to relax.

However, being a newcomer, you can also take a break after trading sometimes. As a result, you may also reduce your pressure and thus perform better. Don’t try to trade always. If you do so, it would be stressful for you to take the right steps. Never forget the fact, options trading is all about precision. Unless you are emotionally stable, you should not take any trade regardless of the size of your investment.

 

Have a good knowledge

Newcomers should focus on gaining knowledge about the market. Some traders avoid fundamental knowledge. For this reason, they fail to predict the right thing. If you just observe the graph, you can’t make the right decision. You need to understand the meaning behind this. However, learn to analyze the news properly which might aid you to understand what you need to do. Always keep in mind, technical analysis and fundamental analysis both are important for understanding the market properly. So, give equal importance to the analysis. However, nowadays, traders don’t need to struggle to know about the market. They can easily get the information by searching online.

 

Independent thinker

Always remember, as a trader, you’ve to take your decision. But, some traders can’t act independently. They depend on others. For this reason, they face trouble. However, if they can learn to think by themselves, they might get the success. Bear in mind, without taking responsibility, you can’t reach the peak of the market. So, you should develop the courage level which might aid you to do better.

So, as a trader, if you can develop the mentioned skills, you may make your dream come true. That’s why, start working from now so that you can develop the certain skills, and enhance the knowledge. However, always keep the hope, you’ll achieve your target.

 

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FOMO, FOLO, AND THE VOLATILITY CONUNDRUM

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Katharine Wooller, Managing Director, UK, Dacxi

 

‘There is a lot of surface noise in the cryptocurrency space and most of it is the psychobabble of investor sentiment. One week it is the sound of everybody rushing towards a feeding frenzy. The next the wailing and gnashing of teeth as those near the surface (the ones most exposed) get spooked and rush the other way, falling over each other in the race to escape.’

I wrote the above paragraph on June 11th as the introduction to an article I was asked to contribute to a national newspaper.

The piece was essentially about what drives the roller-coaster of cryptocurrency prices – a pattern I have often referred to as ‘exquisite volatility’.

 

IT’S EASY TO OVERTHINK IT

Day to day volatility is something that market analysts and crypto critics alike are obsessed with on a day-by-day basis. In my view they overthink it. The main thrust of my argument in June, with crypto prices tanking, was that ‘buying the dip’ is a tried and tested strategy. At that time Bitcoin was priced around £25,000. Over the next few weeks, it then ticked down even further to £21,762 on July 20th.

At time of writing, about a month later, it’s around £32,680 or US$44,700. If you follow certain online forecasts, pundits are now suggesting Bitcoin could push the $100,000 barrier before the year is out. But, as I said above, it’s easy to overthink things, and sensational predictions make headlines.

 

IT’S INVESTOR SENTIMENT THAT REALLY DRIVES PRICES

Cryptocurrency in general is currently trying to find its identity. Is it a currency or is it a commodity? Is it something you ‘trade in’ or is it something you use to ‘trade with’ – i.e., use to buy other goods? Currently short-term prices are being driven by traders not users – nothing wrong with that, the function of any market is to allow people to buy and sell and make a profit through matched bargains.

The value of any commodity is only what somebody is prepared to pay for it, or what they can sell it for. On a speculative basis, rising values are driven by fear of missing out (FOMO) when the price is on the way up, which ramps the price up.  Downward values are driven by fear of losing out (FOLO) when the price starts dropping and the feeding frenzy turns into a selling frenzy.

Interestingly, traders measure their success not by what they can afford to buy with their crypto wallet, they measure success in terms of converting gains back to their local fiat currency – which rather misses the point of why Satoshi wanted to create a DeFi world in the first place.

 

THE RISK OF GAMING THE MARKET

The fact is that most traders are gaming the market. The risk is that there are some really big swinging crypto traders out there who can influence the market. Playing ‘coin’ like a computer game has inherent risks – rather like trying to predict when a murmuration of starlings over Brighton pier will change direction. I believe that as the market continues to mature and cryptocurrencies follow their destiny to become the enabler of decentralised finance on a global basis, the margins for traders will inexorably tighten.

At Dacxi we take the long-term view. We are firmly ‘buy-and-hold’ investors who, having looked at crypto’s growth curve and analysed the true sense of purpose of DeFi, don’t over-react to the short-term metrics. Dacxi is a wealth building platform and experience has taught us that very few people get rich quick – and more than a few of those that do, get poor again just as quickly.

For most of us building wealth takes a measured view and a measured time frame. From my point of view there’s nothing at all wrong with that!

 

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HOW CHANGES TO PROVIDENT FUND ANNUITISATION AFFECT APPROVED LUMP-SUM DISABILITY BENEFITS

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By Dolana Conco – Regional Executive – Alexander Forbes Retirement Consulting

 

New tax rules on the annuitisation of provident funds and lump-sum payouts made at retirement took effect on 1 March 2021. Fund members should be aware of additional implications for approved lump-sum disability benefits.

On retirement, members of these funds who were under age 55 on this date (known as T-day) may still take amounts which accrued prior to 1 March 2021, plus the fund return, in cash. Members over age 55 on T-day will have access to all amounts in the fund in cash when retiring from that fund. This is referred to as “vested benefits” as opposed to “non-vested benefits” where annuitisation rules apply to amounts above R247 500.

 

Approved lump-sum disability benefits paid by a pension fund

The approved (provided by the fund) lump-sum disability benefit in a pension fund was previously included as part of the fund benefit. It was normally treated in its totality as an ill-health early retirement benefit from the fund. The cash amount was limited to a maximum of one-third of the benefit, while the balance was used to buy a pension.

 

Dolana Conco

Approved Lump-sum disability benefits from provident funds

Those under the age of 55 will have the same limitations on their lump-sum disability benefit and how this is treated in terms of annuitisation as applies to pension funds.

  • Members over age 55 on 1 March 2021

The lump-sum disability benefit will be part of the vested benefits in the provident fund of which the member had membership on T-day. This means that the member can receive this payment in cash, after tax.

But if the member transfers to a new fund after T-day, and is then disabled, any lump-sum disability benefit paid out of the new fund will be a non-vested benefit. This means that annuitisation rules will now apply.

  • Lump-sum disability benefits under 55

Only amounts which have accrued before T-day fall into vested benefits. If a member is disabled after T-day, the lump-sum disability benefit payable will not fall into the vested benefits. The payment will be treated as a non-vested benefit. This means that the annuitisation rules, where the total benefit exceeds R247 500, will now apply to the lump-sum disability benefit.

 

Reform

While the above may be an unintended consequence of the annuitisation rules, we should take a step back and reconsider the real intention of reform.

Various stakeholders in the industry introduced and agreed upon reform as it became evident that current regulations were failing the member. Almost 50% of members retire on less than one-third of their final average salary, which renders a large part of people poor and dependent on the state. This is unsustainable and needs to change.

Reform has brought in different forms of laws to increase the savings culture and provide certain incentives – like a tax deduction if a member saves more, up to a certain limit.

With the lump-sum disability benefit now subject to annuitisation, funds need to consider this question: Would an income structured benefit still meet the intention and expectations by members, the fund and the employer in terms of their incapacity procedure?

The trustees and employer will have to revisit why the approved lump-sum disability benefit was selected in the first place. Was this to ensure that there would be a lump sum to:

  • meet the cost of additional care or adjustments to the home to assist the disabled employee, or
  • provide cash support ultimately to members who are found to be totally and permanently disabled?

If the above intent of providing a lump-sum benefit still stands, the trustees and the employer may need to consider changing the tax status of this benefit from approved to unapproved. This will ensure that the initial intention and expectations are still met.

Caution is made that changing to an unapproved benefit would mean that the employee would need to pay fringe benefit tax on the monthly premium. However, the benefit would be paid as a tax-free lump sum separate from the retirement fund for total and permanent disablement.

These discussions must therefore include decision makers on the employer side to:

  • help facilitate the messaging to the employees
  • manage any payroll impacts
  • align with their incapacity procedures

Any benefit structure implemented must be well considered to best suit the needs of the members. This could enhance the financial well-being of employees and lead to the best retirement outcomes.

 

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