Learning the friendly way

An unpredictable trend emerged in 2021 where dog-themed cryptocurrencies made a barking appearance, with Shiba Inu gaining much of the spotlight (and the value). Originally labelled a meme token, the network had much more in store for its increasingly growing following on the internet. As we explore what Shiba Inu is and how it originated, you can learn the ropes about one of the digital money coins with the biggest gains in market cap 2021.

When it came to crypto investing in 2021 the community was largely behind meme tokens. Heavily influenced by the likes of Elon Musk, Dogecoin and other spin-off cryptocurrencies saw an impressive increase in market value. As the main rival to Dogecoin, Shiba Inu is worth knowing about.

What is the Shiba inu coin?

Stemming from the logo of Dogecoin based off of a Shiba Inu dog from a meme, Shiba Inu was designed with the same dog in mind. The decentralized network was originally created in 2020 as an alternative to Dogecoin, but based on the Ethereum network.

The coin behind the network, SHIB, is based on an ERC-20 token standard and is only a small offering of the Shiba Inu network. There is also an exchange called ShibaSwap, where users can trade SHIB and other cryptocurrencies. Utilizing many dog references, the project's "woofpaper" (whitepaper) explains that users can also "bury" the tokens in smart contracts to earn interest, "dig" in the Puppy Pools to provide liquidity and utilize the networks other two tokens, Doge Killer (LEASH) and Bone ShibaSwap (BONE).

There is also an NFT game called Shiboshi Game and an NFT art incubator called Shiba Artist Incubator.

Why has Shiba inu been so popular?

After launching in 2020 the coin was dubbed the "Dogecoin killer" and gained mass interest on social media platforms (as well as the mainstream news). In early 2021, Coinbase added the coin to its list of supported cryptocurrencies prompting investors to send the price soaring over 40% in just two days. 2021 saw unbelievable gains for SHIB, including its ranking in the top 10 biggest cryptocurrencies by market cap.

Following a string of media announcements concerning Dogecoin (largely by Tesla founder Elon Musk), the platform leveraged on its mentions and in November 2021 recorded gains of over 60,000,000% since January of that same year. While Musk has mentioned SHIB on Twitter he has admitted to not actually owning any.

Who created Shiba inu?

Shiba Inu was created by an anonymous entity going by the name of Ryoshi, much like Satoshi Nakamoto behind the creation of Bitcoin. The network has an interesting story behind its total supply, with 1 quadrillion tokens minted at launch. It currently has a circulating supply of 549 trillion SHIB coins.

Ryoshi decided to lock 50% of the total supply in Uniswap for liquidity purposes and sent the remaining 500 trillion SHIB to Ethereum founder Vitalik Buterin. Buterin went on to burn 90% of his share and donated the remaining 10% to a Covid relief fund in India. This burning event saw an increase in market price, and of course, gained much media and website attention within the crypto community.

How does Shiba inu work?

The ShibSwap platform itself operates as a decentralized exchange, with earning capabilities via interest-bearing smart contracts. SHIB can be traded much like any other cryptocurrency and can be stored in any wallet that supports ERC-20 tokens.

The LEASH token was originally designed as a stablecoin linked to the Dogecoin price but was later changed to an ERC-20 token that allows users to stake their tokens in the liquidity pool and earn xLEASH as rewards.

The BONE token on the other hand is a governance token that is designed to provide users with voting rights on upcoming proposals on Doggy DAO.

The platform also launched 10,000 "Shiboshi" NFTs on the Ethereum blockchain in October 2021, made available for trade.

While it is often referred to as a rival to Dogecoin, the network presents many more use cases than simply a digital money system.

What is SHIB?

SHIB is the native cryptocurrency to the Shiba Inu platform. Currently (at the time of writing) holding a position in the top 20 biggest cryptocurrencies based on market cap, Shiba Inu has seen impressive results in the two years it has been on the market.

Where can I get Shiba inu?

To get your hands on SHIB you can simply buy the cryptocurrency through your Tap app. Using a range of cryptocurrencies and fiat currencies on offer, users can simply execute the trade and store of the SHIB in the unique wallet linked directly to your account.

Increasing speculation is that the global economy could be headed for a recession in 2023. This comes as governments around the world continue to grapple with rising debt levels and sluggish economic growth despite massive fiscal stimulus packages. 
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Meanwhile, companies are facing headwinds from changing consumer preferences, technological disruption, and escalating trade tensions. All of these factors have raised concerns about whether the current economic expansion can be sustained over the long term. 
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Below we explore the likelihood of an upcoming economic downturn and guide you through how to protect your savings and investments should you be faced with one. 
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Are we headed for a recession in 2023?

According to economic research conducted by Bloomberg, economists have predicted a 70% chance of a recession next year, up from their 30% prediction in July last year. While not the technical definition, recessions typically take place after two consecutive quarters of negative economic growth, which was seen last year. 
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Despite the interest rates and inflation, consumer demand has deteriorated. After two years of bulked-up hiring, job search activity is now also waning. The stock markets have declined approximately 20% in 2022 with speculations indicating that further drops in 2023 are likely to follow suit.
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While these stats might cause panic, know that recessions are part of the natural economic cycle. In fact, there have been thirteen recessions since World War II, each lasting an average of 10 months, all of which recovered. With the right preparations, an economic downturn can cause minimal damage to your financial goals. 
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How to ride out a recession with minimal damage (hint: emergency fund)

First and foremost, build your emergency savings fund before the recession goes into full effect. This involves saving money to build up three to six months’ worth of expenses that can be used for any unforeseen costs that might pop up over times of economic slowdown. Building an emergency fund is a surefire way to protect your investments and recession-proof your finances.
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On top of this, experts recommend putting off any big purchases, especially luxury items, and creating (and sticking to) a budget. Look for valuable money-saving tips and implement these into your day-to-day life. These tips might help you to save money beyond the economic uncertainty and help you to offset the rising costs of living. Consider creative ways to beat the economy and cut costs.
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How to manage debt in an economic downturn

If you have a steady job, starting today, increase your payments to eradicate your debt. Don’t underestimate the freedom that comes with being debt-free, not only financially but emotionally too. Once you’ve paid this off you will have more room in your balance sheets to navigate the interest rate hike and increased cost of living typically associated with recessions. 
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Should you lose your job, try to minimize your unessential debt repayments and focus on having enough money to cover your four pillars: food, utilities, shelter, and transportation. If you have funds left over, put them in a savings account, particularly if you don’t have your emergency fund set up yet.
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Whatever happens, do not get into more debt, high interest debt will only make a bad situation worse. Consider speaking to a certified financial planner if you are unsure.
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How to recession-proof your savings

Assuming you still have your job, continue to save money and build your cash reserves. Don’t let economic downturns stop you from moving toward your economic goals. Ideally, you have your emergency savings fund set up to buffer any personal losses and cover your living expenses. This allows you to put your usual amount of savings into an interest-yielding account without any concern for “what ifs”. 
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Now is also a great time to review your budget and allocate every cent to a purpose. If there is any extra money left over, incorporate this into your savings or retirement account. If not, revise to see where you can cut spending and fill up your savings jar. 
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How to manage your stock market investments during a recession

The golden rule of managing your investments and maintaining your financial position during a recession is not to sell at a loss. Time and time again we see investors make trades based on fear, and ultimately make terrible losses while peers that left their funds in the stock market account see impressive returns once the economy has returned to normal.
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Remember: losses are only realized once you withdraw the funds from the investment vehicles. Leave them in there, as with every economic cycle in history, it will get better. And if you have the funds, consider investing a little more - stock market prices will be at “discount” lows. 
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Other valuable advice is not to make any sudden changes to your investment strategy, consider investing as a long-term approach. 
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Some long-term investors look to incorporate shares in consumer staples companies into their portfolios as a strategy to overcome market slumps. By investing in funds like the Consumer Staples Select Sector SPDR Fund or the Vanguard's Consumer Staples ETF, the hopes are that the success of these funds will offset the losses from other stocks within the portfolio.
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Avoid FUD and be prepared

Despite whatever economic situation might arise, rest assured that it shall pass. After all, if you are reading this now then you have most likely lived through several recessions before and come out on top. Don't let any worries stop you from being prepared in case of a recession, after all, these tips above on how to recession-proof your finances are your best chance of coming out on top, again. 

Kyber Network was launched in 2018 with the aim of being the main liquidity hub for the DeFi space. KyberSwap is the platform's interface, a decentralized exchange (DEX) aggregator that provides convenient and secure value exchange within the crypto market. Overall, the Kyber Network platform provides a smooth token-swapping experience while boosting earnings for liquidity providers. 

What is Kyber Network (KNC)?

Kyber Network is a decentralized multi-chain liquidity hub that provides instant, secure transactions on any decentralized application (dapp). Its main goal is to provide deep liquidity pools that offer the best rates for DeFi dapps, decentralized exchanges (DEXs), and other users. Kyber Network is built on the Ethereum blockchain and makes use of intricate smart contracts.

KyberSwap is its flagship DEX aggregator and liquidity platform. KyberSwap sources liquidity from multiple DEXes to provide the best swap rates for traders in DeFi. KyberSwap is decentralized and permissionless, allowing users to conduct transactions on any of its supported 12 chains, including Ethereum and Binance Smart Chain. 

Kyber Network seeks to solve the liquidity issue in the DeFi industry by allowing developers to build products and services using the platform's protocol, while KyberSwap acts as the trustless trading platform that also provides rewards for liquidity providers. With over $1 billion in total volume from over 1 million user transactions, Kyber Network is a growing player in the DeFi space.

Kyber Network's governance structure is managed by holders of its native Kyber Network Crystals (KNC) token through a decentralized autonomous organization (DAO) called KyberDAO. This allows KNC token holders to have a say in the network's decision-making processes and contribute to its development and growth.

Who created Kyber Network?

Kyber Network was founded by Loi Luu, Victor Tran, and Yaron Velner in 2017. The project created 226 million KNC tokens, most of which were sold to buyers and investors during its initial coin offering. This raised Kyber Network 200,000 ETH (roughly $50 million at the time) to launch the platform. The protocol went live on the Ethereum blockchain in February 2018, with Vitalik Buterin as an advisor. 

In October 2017, the Kyber Network burned over 10 million KNC tokens, bringing the maximum supply down to roughly 215 million KNC.

Victor Tran is the current CEO of Kyber Network, while Loi Luu is the current Chairman. Yaron Velner stepped down as CTO in October 2019 but remains as an advisor. The Kyber team has over 50 employees globally, and its headquarters is in Singapore, with a large presence in Vietnam.

How does Kyber Network work?

Kyber Network is a decentralized protocol that enables users to instantly trade tokens without intermediaries. KyberSwap is the user interface for Kyber Network, with two protocols: Classic and Elastic. 

Classic features the Dynamic Market Maker (DMM) protocol and the Amplification (AMP) programmable price curve. Elastic is a tick-based AMM (automated market maker) with concentrated liquidity, allowing liquidity providers to specify the price range for adding liquidity and earn fees for swaps processed at a specific price. 

KyberSwap also has features like the Reinvestment Curve, multiple fee tiers, JIT Protection, and liquidity mining farms. The Kyber Network aggregates liquidity from various sources into a single liquidity pool on its network, and anyone can provide liquidity. The protocol is integrated into dApps (decentralized applications), DeFi (decentralized finance) platforms, and crypto wallets, enabling users to utilize any Kyber Network-supported token and allowing platforms to receive payment in their preferred token. 

The Kyber Network protocol relies on reserves to provide liquidity for its decentralized exchange platform, KyberSwap. When a user initiates a trade, the platform searches for available reserves to find the best available rate being offered by takers. 

There are three main types of reserves: Price Feed Reserves (PFR), Automated Price Reserves (APR), and Bridge Reserves. PFRs use price feeds to calculate conversion rates using smart contracts acting as an alternative to market makers, APRs provide rates for available crypto assets through smart contracts, and Bridge Reserves access other decentralized exchanges to deepen liquidity. 

Previously, reserves were required to participate in the Kyber protocol by staking KNC to pay for network fees, but a recent upgrade removed this requirement, making it easier for reserves to participate. Kyber Network collects fees in ETH, with a portion of them going to reserves based on the amount of liquidity they provide.

The reserves model is a critical component of KyberSwap, enabling the platform to offer fast and competitive token trading services to its users.

What is the Kyber Network Crystal (KNC) token?

Kyber Network Crystal (KNC) is the native coin for the platform and acts as both a utility and governance token. Users can stake it to vote on upgrades and policies or delegate their tokens to other validators and earn a portion of the block reward. 

Users who stake KNC receive rewards in ETH, and network fees paid in KNC will be burned over time, gradually reducing its supply. KNC holders can participate in the DAO and governance proposals by staking their assets or delegating their vote. 

They can also earn liquidity-mining rewards by staking their tokens in eligible Rainmaker farming pools or participating in various activities such as Trading Contest, Gleam Giveaway, and AMAs.

How can I buy KNC tokens?

Tap's mobile app offers a user-friendly platform for users to purchase, trade, and safely store Kyber Network's KNC token in an integrated wallet. The app supports a variety of cryptocurrencies and fiat currencies, which can be used for buying and selling KNC tokens. The app also makes use of a smart router which finds the best Kyber Network price at any given time.

Additionally, users can securely store not only KNC tokens but also other digital assets on the app. Downloading the Tap mobile app provides users with access to verified cryptocurrencies and fiat wallets, allowing them to take advantage of a wide range of investment opportunities.

In a world where markets fluctuate and investments rise and fall, understanding market volatility is key to making informed choices. Whether you're a novice investor, an aspiring trader, or simply curious about the financial landscape, this article will empower you with a concise explanation of volatility. By the end, you'll be equipped with the knowledge to navigate through uncertain times and seize opportunities when they arise.

What is volatility?

In the dynamic world of finance and investing, volatility stands as a powerful force that can influence markets and impact investment outcomes. But what exactly is volatility? At its core, volatility is a statistical measure of variation or fluctuation in the value of an asset or market index over a specific period. It paints a picture of the price fluctuations of the financial instrument, showcasing the twists and turns it experiences along the way.

Understanding volatility is crucial for anyone seeking to make informed choices in the financial realm. By comprehending this concept, you gain the ability to navigate through uncertain times and seize opportunities when they arise. Volatility is not just about random price movements, it carries meaning, insights, and opportunities for those who can decipher its patterns.

Measuring volatility involves a range of calculation methods, with volatility indicators like standard deviation and Bollinger Bands providing valuable insights. These measurements help quantify the speed and magnitude of price changes, giving investors and traders a clearer picture of an asset's behavior.

What drives volatility? 

Economic indicators, market conditions, and even investor sentiment play significant roles in shaping volatility levels. Understanding these factors can help you anticipate and interpret market movements, empowering you to make more informed decisions about any financial instrument.

It is important to note that volatility is not something to fear. Instead, it is an essential element of any market that offers opportunities for growth and profit. By embracing volatility and equipping yourself with the knowledge to navigate its ebbs and flows, you can embark on a journey that leads to greater financial empowerment and success.

How to measure volatility

When it comes to calculating volatility, there are several calculation methods that provide insights into the degree of price fluctuation and market dynamics. Let's explore three commonly used volatility measures: standard deviation, Bollinger bands and average true range.

Standard deviation

Standard deviation is a widely used statistical tool for measuring volatility. It quantifies the variability of an asset's returns from its average market price. A greater standard deviation indicates high volatility. By calculating the standard deviation of historical price data, investors and analysts can assess the asset's typical price movements and potential risk. 

This measurement helps provide a statistical framework for understanding volatility patterns and making informed decisions.

Bollinger bands

Bollinger bands are another popular tool for measuring volatility. They consist of three lines plotted on a price chart. The middle line represents a moving average, while the upper and lower lines depict bands that are typically two standard deviations away from the average price. 

The width of the bands expands and contracts based on the asset's price volatility. Narrower bands suggest low volatility, while wider bands indicate high volatility. Traders often use Bollinger bands to identify potential price breakouts or reversals, making it a practical tool for short-term trading strategies.

Average True Range (ATR)

The Average true range is a volatility indicator that measures the average trading range of a financial asset over a given period. It takes into account the asset's daily highs and lows, capturing the true extent of price movement. A higher ATR suggests higher volatility, while a lower ATR indicates lower volatility.

The ATR helps investors and traders gauge the potential range of price trends and set appropriate stop-loss levels or profit targets. It can be particularly useful for determining position sizes and managing risk in various trading strategies.

These three measurements provide valuable insights into volatility, allowing market participants to assess risk, identify opportunities, and make informed decisions. By incorporating these tools into their analysis, individuals can navigate the ever-changing market landscape with greater confidence and precision.

Three main factors affecting market volatility

Volatility in financial markets is influenced by a multitude of factors, ranging from economic indicators to market conditions and investor sentiment. Understanding these factors is crucial for comprehending the drivers behind volatility and making informed decisions on how to trade volatility. Let's explore three key factors that can affect volatility:

Economic indicators

Economic indicators, such as GDP growth, inflation rates, interest rates, and employment figures, have a significant impact on market volatility. Positive economic data can boost investor confidence and lead to periods of low volatility, while negative or unexpected data can create uncertainty and increase volatility. Traders and investors closely monitor these indicators to gauge the health of the economy and anticipate potential market movements.

Market conditions

Market conditions, including geopolitical events, industry trends, and regulatory changes, can greatly influence stock prices and therefore volatility. Geopolitical tensions, such as trade disputes or political instability, can create uncertainty and volatility in global markets. Similarly, changes in industry dynamics, technological advancements, or shifts in consumer behavior can disrupt established market patterns, leading to increased volatility.

Investor sentiment

The collective sentiment and behavior of market participants play a significant role in driving volatility. Investor optimism or pessimism can lead to exaggerated price movements and heightened volatility. Factors such as market psychology, fear, and greed can influence how investors interpret and respond to market information. Understanding and monitoring investor sentiment can provide insights into potential market shifts and the overall level of volatility.

It's important to note that these factors interact with one another, creating a complex web of influences on volatility. Keeping a close eye on economic indicators, staying informed about market conditions, and gauging investor sentiment can help individuals navigate volatile markets and make empowered decisions. 

By recognizing and analyzing these factors, investors and traders can better understand the underlying forces driving volatility and position themselves for success.

Types of volatility

There are two primary types of volatility: historical and implied. 

Historical volatility

Historical volatility, a reflection of an asset's past price movements, plays a vital role in understanding an investment's risk and potential reward. By examining an asset's historical price data over a specific period, investors can gain valuable insights into its typical fluctuations.

This knowledge empowers them to assess the level of risk associated with the investment at hand. Higher historical volatility signals a greater likelihood of significant price swings, while lower historical volatility indicates more stable price behavior. Armed with an understanding of an asset's historical volatility, investors can make informed decisions, effectively manage risk, and devise appropriate investment strategies tailored to their risk tolerance and goals.

Implied volatility

A powerful concept derived from options pricing, implied volatility measures the market's collective expectations regarding future price movements of the underlying asset. It serves as a measure of perceived uncertainty surrounding the underlying asset's future performance.

By examining implied volatility, investors can gauge the market participants' outlook and sentiment, providing valuable insights into potential price movements. Higher implied volatility suggests increased anticipated price fluctuations, while lower implied volatility signifies a more subdued market outlook.

Understanding implied volatility equips investors with a deeper understanding of market sentiment, enabling them to make more informed decisions and adjust their strategies accordingly to capitalize on opportunities in the market.

Understanding both historical and implied volatility allows traders to develop effective strategies in different market conditions.

What volatility means for trading vs investing in the stock market

Volatility plays a distinct role for traders and investors in the stock market. For investors, volatility represents risk and the potential for higher returns. They must carefully assess their risk tolerance and investment horizon when navigating through volatile markets. Long-term investors often view volatility as an opportunity to buy assets at discounted prices, confident that the market will eventually stabilize and provide favorable returns over time.

Traders, on the other hand, embrace volatile assets as they present short-term opportunities for gains. They capitalize on rapid price movements by executing timely buy and sell orders, aiming to profit from the volatility itself. Traders employ various strategies, such as momentum trading or breakout trading, to take advantage of price swings that occur during volatile market conditions.

Businesses also feel the impact of volatility as they plan budgets, manage supply chains, and make strategic decisions. Fluctuating prices and uncertain market conditions can significantly impact profitability and operational stability. Businesses must develop contingency plans and risk management strategies to navigate through periods of heightened volatility.

In summary, while volatile assets carry risk, they also offer opportunities. Understanding the implications of volatility is vital for all stakeholders involved in the stock market, allowing them to make informed decisions and navigate through dynamic market conditions.

Tips on how to manage volatility in markets

Managing volatility in the financial markets can be a daunting task, but there are strategies that can help individuals navigate uncertain times and mitigate risks. Here are some tips for managing volatility:

Diversify your portfolio

One of the fundamental principles of managing volatility is diversification. By spreading your investments across different asset classes, sectors, and geographic regions, you can reduce the impact of volatility on your portfolio. Diversification helps to ensure that if one investment performs poorly, others may offset the losses, providing a more balanced approach to risk management.

Set realistic expectations

Volatility is an inherent characteristic of the markets, and it's essential to set realistic expectations. Avoid chasing short-term gains or trying to time the market during volatile periods. Instead, focus on long-term goals and develop a disciplined investment strategy that aligns with your risk tolerance and financial objectives.

Maintain adequate liquidity

Having sufficient liquidity is crucial during periods of volatility. It provides the flexibility to take advantage of opportunities that may arise and helps you weather market downturns without having to make hasty or unplanned investment decisions. Keeping a portion of your portfolio in cash or highly liquid assets can provide a buffer and peace of mind.

Stay informed and educated

Knowledge is power when it comes to managing volatility. Stay informed about market trends, economic indicators, and global events that can impact the financial markets. Continuously educate yourself about investment strategies, risk management techniques, and asset allocation. By staying informed, you can make more informed decisions and react appropriately to changing market conditions.

Maintain a long-term perspective

Volatility can tempt investors to make impulsive decisions based on short-term fluctuations. However, maintaining a long-term perspective is vital for success. Understand that markets go through cycles, and volatility is often temporary. Stick to your investment plan, avoid emotional reactions, and focus on the underlying fundamentals of your investments.

Consider risk management techniques

In addition to diversification, consider risk management techniques such as setting stop-loss orders, using trailing stops, or implementing hedging strategies. These tools can help protect against sudden market downturns and limit potential losses.

Remember, managing volatility is about accepting that it's a natural part of investing. By following these tips and maintaining a disciplined approach, you can navigate through volatile periods with more confidence, make informed decisions, and potentially seize opportunities that arise.

Volatility across different markets

Volatility is not limited to the financial world; it pervades various industries, each with its own unique dynamics. In the realm of finance, stock markets are particularly prone to volatility. Factors such as company earnings, economic indicators, and investor sentiment can drive rapid price fluctuations. Understanding these drivers and monitoring market trends can help investors adjust their strategies and make well-informed decisions to navigate through volatile stock markets.

Cryptocurrencies have gained significant attention due to their unprecedented volatility. The prices of cryptocurrencies can surge or plummet within a matter of hours or even minutes. Factors such as regulatory developments, technological advancements, and market speculation can trigger intense price swings. Individuals investing or trading in cryptocurrencies need to be prepared for this inherent volatility and develop strategies that account for the unique characteristics of this asset class.

Commodity markets, encompassing resources such as oil, gold, and agricultural products, also experience considerable volatility. Supply and demand dynamics, geopolitical factors, and natural disasters can all contribute to price fluctuations. Traders and businesses operating in these markets must stay attuned to global events and industry-specific factors to manage risks effectively and capitalize on potential opportunities arising from volatile commodity prices.

By recognizing the varying indications of volatility in different fields, investors, traders, and businesses can adapt their strategies and decision-making processes accordingly. This understanding allows for the development of sector-specific expertise and the implementation of risk management techniques tailored to the particular industry's volatility.

Always remember that navigating volatility in these specific fields requires vigilance, adaptability, and a deep understanding of the unique factors at play.

In conclusion

Volatility, in its simplest form, refers to the degree of variation or fluctuation in the price or value of an asset. It measures the speed and magnitude of price changes over a given period. It is an inherent aspect of financial markets, but it doesn't have to be a barrier to success. By comprehending the concept of volatility, understanding its measurement methods, and recognizing the factors that drive it, you can make informed choices. 

Empowered with this knowledge, you can navigate through uncertainty, capitalize on opportunities, and weather the storm when markets become turbulent. Remember, volatility is not negative, it's a dynamic force that, when harnessed wisely, can lead to rewarding outcomes.

Trading involves the process of buying and selling assets on financial markets, such as stocks, currencies, bonds, and commodities, as opposed to buying and holding which would fall into the investing category. Achieving success in this field requires a trader to consistently generate profits over longer periods. Below we break down more about trading. 

What is trading?

Trading is the practice of buying and selling financial instruments with the intention to make a profit. These instruments come in many forms, from stocks and bonds to cryptocurrencies, with each asset having its own unique value that can rise or fall at any given time. Trading revolves around capitalizing on the price fluctuations of financial markets to sell at a higher price.

These financial assets will trade within certain markets, for example, currencies are traded on the forex market while stock trading involves buying stock on the stock market. The stock market is made up of plenty of stock exchanges around the world, from the Hong Kong Stock Exchange to the New York Stock Exchange. There are over 17,000 financial assets that one can trade across various markets, which we'll touch on below. 

With soaring inflation rates across the globe, many have turned to investing as a means to more effectively reach their financial goals. 

How does trading work?

Trading involves entering a market by buying an asset. When the market prices increase, you can sell the asset for a profit, while if the market prices decline, you can either sell your asset and make a loss, or hold onto it until the market improves. 

Market prices are typically influenced by supply and demand. Demand will drive prices up as more people are looking to buy the asset and are willing to pay higher prices. When there are more sellers than buyers the demand decreases and the prices will go down. 

The two most popular options for trading involve buying and selling assets through an exchange or OTC (over the counter). OTC trading involves two parties (traders and brokers) agreeing on a price to buy and sell the asset.

An exchange on the other hand will determine the prices for you and sell them in a more structured sense. Some investors will use a brokerage account to manage their investments through an exchange. 

Whether you are trading stocks or dabbling in forex trading, the process of buying and selling remains consistent.

Types of assets one can trade

As mentioned above there are plenty of financial assets available to trade. Below we break down the most popular options, with a brief explanation of what they are.

Stock trading

Stock, also referred to as equity, is a share in a company that provides the holder with factual ownership in the company it represents. Trading stocks is a popular online trading option that involves the process of buying and selling stocks.

Forex

Forex stands for foreign exchange and involves the trade of two different fiat currencies. Currency trading is done in pairs, where buying one indicates that you expect it to increase. 

Bonds

A bond is a form of security in which the issuer (typically a company or government) owes money to the holder and has an obligation, according to its conditions, to repay both the interest as well as principal at the agreed-upon date.

ETFs

ETFs or exchange-traded funds are investment instruments that track the price of underlying assets. These are baskets of shares, bonds, or commodities, potentially lowering one's risk and exposure. 

Cryptocurrencies

Cryptocurrencies are digital assets that can be traded on exchanges or peer-to-peer marketplaces. Cryptocurrencies are decentralized meaning that they are not controlled by financial institutions or governments. They are known to have short-term price fluctuations.

Index Funds

Indices measure the performance of a group of stocks as opposed to trading individual stocks. Different indices track different groups of shares which can be categorized by location, industry, sector, or entire stock exchange. 

Commodities

Commodities are raw goods typically broken down into four categories: metal, energy, livestock and meat, and agricultural. These are traded on various markets, typically through futures contracts. A trader will generally not get involved with the physical purchasing of the goods.

Stock market vs forex market

Investing in stock trading and investing in the foreign exchange (forex) market are two distinct forms of trading. Both provide investors with profit opportunities, but there are key differences between the two markets.

The stock market is a collection of exchanges where publicly traded company stocks, bonds, and other securities are bought and sold. On the stock exchange, buyers and sellers come together to negotiate prices. The foreign currency market, or Forex trading, is an electronic over-the-counter financial trading market made up of banks, brokers, institutions, and individual traders. It trades in currency pairs, such as US Dollar/Euro or Japanese Yen/US Dollar.

Though both investing channels offer potential profit, there are differences between the two. Stock trading requires a large sum of capital to start trading, while Forex often requires much less. In addition, stock trading deals in smaller amounts than Forex trading and has higher commissions and fees associated with it.

The stock price is also subject to strong volatility and can change quickly. On the other hand, Forex trading is a 24-hour market and trades in large amounts with much less volatility.

It's important to understand the differences between the two markets before deciding which one is right for you. If you're looking for long-term investments that require less capital, then stocks may be the best choice. But if you're looking for a more liquid market with a higher profit potential, then Forex trading might be the better option.

4 different ways to trade

Trading isn't a "one size fits all" solution; there are various methods of trading the markets that you can adopt, with some being simpler than others. If you want to identify which approach is right for you, take some time to read these guides on the major types of trading and build trading strategies that make financial sense to you and your personal finance goals.

1. Day Trading

Those familiar with the stock market are likely acquainted with day trading, a term used to define active trading. Day traders buy and sell assets within one business day– hence its name – in an effort to capitalize on short-term fluctuations for profit. When stock trading no positions are held overnight. 

Day trading allows traders to immediately take advantage of market volatility, offering a fast-paced method of trading. The downside, however, is that it requires more time, knowledge, and attention and will likely incur more transaction fees for each trade executed.

2. Position Trading

For some, position trading is merely a buy-and-hold tactic and not considered active trading. Position traders rely upon long-term charts (from daily to monthly) in tandem with additional methods to recognize the market's current direction. This kind of endeavor usually lasts anywhere from several days up to weeks or even months depending on the trend's duration.

These traders aim to capitalize on the ups and downs of market fluctuation by seeking out successive higher or lower highs. Instead of attempting to accurately predict prices, they aim to identify which direction the trend is headed to ride it as an opportunity for growth. Thus, trend traders look at trends rather than levels when making their decisions.

Traders that follow current trends usually enter the market after it has been established and quickly exit when a trend breaks. During times of high volatility, this trading strategy can be difficult to execute properly.

To successfully engage in position trading, one will need a strong understanding of technical analysis as well as patience. 

3. Swing Trading

When the trend shifts, swing traders tend to jump into action. Often when one trend ends there is an inherent level of price movement as a new pattern starts to emerge. During this period, swing traders will take advantage and buy or sell depending on which direction they anticipate the market may go in next.

Typically these swings are held for longer than just a day but are still shorter-term compared with trend trading that can last weeks or even months at a time. Swing traders typically use technical analysis or fundamental calculations.

Swing-trading algorithms are created to determine when it is opportune for investors to purchase or sell an asset. Without needing to precisely predict the peak or fall of various price movements, swing trading aims to rather identify whether the market is moving either up or down.

Range bound or sideways markets can pose a great danger as they provide no potential gains for swing traders. Requiring less time and attention to day trading, swing trading has a higher potential for larger returns, as well as larger losses. 

4. Scalping

Active traders frequently use scalping as a speedy method to capitalize on bid-ask spreads that differ from the norm. These discrepancies arise due to temporary differences in supply and demand, enabling savvy investors to benefit from them swiftly.

Scalpers don't look for big profits from large price movements or execute high volumes of trades. Instead, they strive to benefit from small moves that happen frequently and at manageable trading amounts. As the level of gain per trade is limited, scalpers search for liquid markets so their transactions can be made more often.

In contrast with swing traders who favor volatile markets where there are quick shifts in values, scalpers lean towards quiet trading conditions that aren't susceptible to abrupt changes in prices.

Scalping does not require strong technical understanding and generally holds less risk due to using less volatile assets. This style of trading does however require high upfront capital and can be very time-consuming. 

Trading vs investing 

Trading and investing are two distinct strategies with different objectives. Trading involves buying low and selling high or selling high and then buying low, usually in a short to medium-term timeframe. This strategy allows traders to make money without taking ownership of the assets they buy or sell. 

On the other hand, investors take possession of their assets for an extended period so that they can benefit from their long-term growth potential, which may result in higher returns than trading activity does over time.

Investors can also receive dividends from trading shares if granted by the company as well as having shareholder voting rights. 

In conclusion

Trading is the buying and selling of financial instruments such as stocks, bonds, mutual funds, currencies, commodities, derivatives, and other assets in order to benefit from price movements. It involves analyzing markets and making decisions based on fundamental and technical analysis.

If you're looking to tap into the world of earning passive income in the cryptocurrency space, you've come to the right place. While both yield farming and staking provide this service, they offer slightly different means of getting there. In this article, we're exploring yield farming vs staking, and how to get started. 

Both yield farming and staking fall under the DeFi (decentralized finance) umbrella. This aspect of the industry allows users to lend and borrow cryptocurrencies, similar to the traditional banking system. DeFi lending platforms and liquidity pools provide users with an alternative way to earn passive income, offering varying interest rates and methods of doing so. 

What Is Yield Farming?

Yield farming involves users lending their tokens to DeFi lending platforms. Investors can decide which cryptocurrencies they would like to use, and where they would like to invest their funds. The options range from lending platforms like Compound and Aave to decentralised exchanges (DEXs) like PancakeSwap and Uniswap. 

On a lending platform, the process typically involves a user depositing their funds on the platform, receiving both an APY (annual percentage yield) and tokens native to the platform. 

On DEXs, this alters slightly in that users need to provide one of the pair of coins as per the liquidity pool they wish to engage in. Users will then receive a percentage of the rewards of the pool based on the amount provided.

Passive income from yield farms comes from the interest paid to the borrower or the users of the liquidity pool. Yield farming is considered to be a more reliable option than trading cryptocurrency as yield farming uses smart contracts or automated market makers (AMM) to facilitate all trades. Top yield farms can be found on Ethereum, Polygon, Binance Smart Chain (BSC) and Fantom.

What Is Staking?

Staking involves locking your cryptocurrencies in a smart contract. In order to properly understand staking one will need to have a brief understanding of the Proof-of-Stake (PoS) consensus. 

While Bitcoin uses a Proof-of-Work mechanism to validate transactions through miners solving computational problems, PoS instead uses a less energy-intensive mechanism based on validators staking their cryptocurrency and generating new blocks. This is typically done in a selective process, with each validator getting a turn based on the amount that they stake. By staking in the network the validators are providing collateral to prove they are not bad actors. Ethereum is currently moving to a PoS consensus, with several other big cryptocurrencies already there.

To earn a passive income through staking users can opt to become validators on a network or participate in liquidity pools, alternatively, they can do so through a wallet or exchange that supports such activities. Pools vary in their conditions, lock-in periods (the amount of time the funds are required to stay there) and APYs.

As each staking process changes from cryptocurrency to platform, ensure that you do thorough research on the one you wish to take part in. Here are a few of the top staking coins: Ethereum (ETH), Cardano (ADA), PancakeSwap (CAKE), and Polygon (MATIC). 

Yield Farming vs Staking

While both offer excellent means of earning a passive income in the crypto space, the main difference is that yield farming involves depositing one's funds onto a DeFi platform while staking typically involves using one's funds to support a blockchain network or help validate transactions. 

Profits

Staking usually yields profits of around 5% and is expressed with a definite APY. Yield farming on the other hand can provide up to 100% returns but will require a well throughout investment strategy. 

Rewards

Staking rewards are given to validators as incentives for generating new blocks while yield farming rewards fluctuate with the token's price changes and are determined by the liquidity pool. 

Lock-In Periods

Some staking pools require users to lock in their funds for a certain period of time, often also stipulating a minimum amount. Yield farming does not require either of these. 

Security

Staking criteria are determined by the network and tied to the blockchain's consensus, users staking their funds are only at risk of losing them if they have ill intentions or act badly. Yield farming is less secure in that it relies on smart contracts and DeFi protocols, which can be susceptible to hackers if not created correctly.

Which Is Better: Yield Farming vs Staking?

Both yield farming and staking provide options in which one can earn passive income in the crypto space. While each has its advantages and disadvantages, the one offers a safer course while the other a more high-risk high reward endeavour. When it comes to deciding between the two, users should first establish how much risk they are willing to take and how comfortable they are in the DeFi space, followed by what kind of investors they would like to be.

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