Digital Currency Trading – Bitcoin & Valuation Metrics – Crypto Currency

Bitcoin is the digital currency gold standard as of right now. It is the most valuable crypto currency, and many experts are predicting what many believe to be outrageous price increases over a very short timeline. While we are in uncharted territory with regards to digital currency, there is some support for these claims. In this article I’m going to break down some of the metrics that could be used for these predictions. It’s easy to find people touting large numbers, but it’s not quite as easy finding out why those numbers are being thrown around. I’m equating bitcoin to the US Dollar for my numbers. This is done as these large numbers being thrown around must be predicated on Bitcoin becoming the gold standard of crypto currency. The closest metric for that with traditional currencies is the US Dollar.

Countries have currency, but they also have control over the supply of currency.  The US took the dollar off the gold standard a long time ago, so the only thing backing up the US dollar is faith in the United States.  The same goes for Bitcoin.  The only thing backing up bitcoin is faith in the blockchain.  The difference is the blockchain is public, and there are a limited number of bitcoins that will ever be produced.  That is not true of the US dollar.

Just to give you an example.  Money in the US is measured in a few different ways.  M1 is a measure of essentially all the cash in circulation for a basic explanation.  Right now there is about $3.5 trillion in circulation.  In 1959 there was $138 billion in circulation.  All that extra money was essentially created by the government.  This cannot happen with Bitcoin.

M2 is a measure of all cash in circulation (essentially M1) plus all short term deposits and assets that can be converted to cash within 24 hours.  That number is much larger.  Today there is about $13.6 trillion in circulation using the M2 measure.  In 1981 that number was $1.8 trillion.  Again, the increase is money created by the US government.

Now compare that to bitcoin, which has about 16.5 million coins in circulation now, with a hard cap of around 21.5 million coins.  There will never be more than 21.5 million coins.  In fact there will be less as coins that are digitally lost are not typically recoverable.  Should bitcoin be accepted as the gold standard of digital currency – which right now that is where it stands – it is a known quantity.  Everyone knows how much there is, and there is no way for an outside party (like a country) to control or increase that quantity.

For my valuation, I’m counting on bitcoin being the digital standard, much like the US dollar is the standard world currency – for now.  Using my numbers above, and using the M1 numbers for US dollars in circulation, valuing bitcoin straight across to US dollars would indicate a value of about $162k per bitcoin.  That is ONLY valuing bitcoin equal to the actual cash in circulation right now in US dollars – the M1 number.

If we use the M2 number of $13.6 trillion, my valuation of bitcoin goes up substantially.  Valuing bitcoin straight across compared to all dollars in circulation plus all short term deposits that can be converted to dollars in 24 hours gives me a value of over $632k per bitcoin.

This does not even touch on longer term deposits and longer term money market funds.  That’s M3 money, and the US Bank does not even publish this number any longer.  That number is even higher than M2 money.

Now back to my reasoning for digital currency becoming the world standard.  It cannot be manipulated by governments.  So right now, the US has $3.5 trillion in cash and equivalents.   It has $13.6 trillion in cash, equivalents and short term deposits.  It has a national debt of just under $20 trillion.  So the US debt is larger than all the US cash in circulation, plus all the deposits that can be turned into cash quickly.  The US debt comes out to about $165k per taxpayer.

So the US keeps borrowing money, keeps printing money and keeps increasing it’s debt.  Read the newspapers, they are going to have to increase the debt limit again shortly so they can borrow more.  The US is not the only country playing this game with money.  With a global economy and digital currency that cannot be manipulated, it is only a matter of time before one of these digital currencies becomes the gold standard for investors to flock to for security.  Bitcoin is a good candidate as it is the market leader, and there is a hard cap on how many coins are out there.

A reasonable target in my opinion for Bitcoin is $78k, just under 50% of the US M1 supply.  I think that is a conservative number should it really gain traction. Think about that for a minute. I’m throwing out $78k as a value per Bitcoin as a conservative number….  I don’t think Bitcoin will be the long term digital currency that is used daily due to processing times (which are being worked on and may change), but I do think that there will be a digital currency to fill that niche.  One contender right now is Ripple.  It’s worth about .22 right now.  I like it as it has a much higher cap for the number of coins out.  It caps at 100 billion coins.  It also is used by large companies right now, and one of the validators in it’s user base is MIT.  It’s starting to gain some traction in the banking communities and processes very fast.  It is the 4th largest digital coin in terms of total value.  With 100 billion coins potentially in circulation, one upside I like is that the value won’t get so high as to deter people from buying it.

There are lots of other coins out there as well.  Eutherium is a large one.  I like it because a lot of these other coins are built on it’s blockchain.  It’s being used, so it is in demand and will continue to be in demand.  There are about 93 million euthereum coins out right now, and it is the second largest digital coin behind Bitcoin in terms of value.  Litecoin, Dash, NEO, ZCash, Monero – there’s a lot of coins out there with billion dollar market caps (13 to be exact with OmiseGo real close to being the 14th).

Lastly, the biggest thing I like, is that even though these coins have been around for a while, the volume has crazy potential to go much higher.  Most I think will end up being essentially bubbles that pop, but a few winners will be long term players on a global scale.  We don’t nessicarily have to find the winner, though, as I think we are in the beginning stages of a bubble period.  Think about this:  You look at financial markets and what not more than the average person.  How many people do you know that own any digital currency besides me?

The market share is super small right now, and with even small percentage growth the volume will increase in a huge manner.  Also, there has been multiple tries to get an ETF approved for bitcoin.  At some point it will be approved.  When there is an exchange traded fund investing in bitcoin, the volume and price increase will be crazy.  Countries are starting to adopt digital currencies.  Japan not long ago gave approvals for merchants to accept bitcoin.  Australia is looking at adopting a digital currency.  So is Russia.  What is the largest digital currency that people  know of right now?  Bitcoin.  Ask the average person about digital currency and if they know anything about it at all, they will know Bitcoin.  You will have a hard time finding someone who knows anything about any other digital currency, even a name.

With a fixed number of coins in circulation, and with that fixed number being low (I use 21 million rather than the current float), it does not take that much volume to make big moves.  And I don’t think big money has really come into it yet.  Once it does, crazy moves and ridiculous wealth making opportunities are there.

Making Money With Currency Trading Requires Discipline

Making money with currency trading requires substantial discipline. The motivation to try your hand at this is very understandable, as most people seek it out as a way to make money on their own without a job, schedule, or boss. Unfortunately, while hating your current day job might proved a strong motivator that drives you towards trying this, if you want to be successful at it, then you need to stay at that day job or another one for awhile as you establish yourself in currency trading.

Just learning how to go about making money with currency trading takes months. Before you even put your first dollar into it, you should spend at least a month using the free demos or dummy accounts that the various trading platforms or software offer. You need to familiarize yourself with the options, buttons, menus, and everything else involved. Just learning the mechanics can actually take a month on its own.

Once you do that, you still need to spend several months working in the dummy account trying various strategies and techniques. This is where you learn how to make money with currency trading, but practice with fake virtual money first.

Even after you start dealing in real money, you need to stick with one currency pair to master fundamentals and basics. You also need to only use discretionary income from your existing budget, and have an emergency reserve fund stashed away that you do not touch so you have multiple month’s worth of bills saved up.

Making money with currency trading is profitable for those who are disciplined, determined, and diligent, but most of all for those who are persistent and patient. The wealth is there, but if you are heading into it with an attitude of getting rich quick so you can quit your job next week or month, your expectations are probably unrealistic.

Make Money With Currency Trading Tomorrow After The Election

If you want to start making money with currency trading, you need to take a look at what is going on in the world right now. There hasn’t been this kind of an opportunity since Brexit. As I sit writing this, Donald Trump is about to become the next President of the United States of America. The elite didn’t expect it to happen, but it happened anyway. It’s going to be a market shaker, and you should know that huge current events are going to affect the currency trading markets throughout the world.

In fact, the whole world was watching the US election. Not everyone was watching of course, but you get the picture. Market futures are down, and the interesting thing about currency trading is that you can play currencies either way. In essence, you can hedge against a currency. The votes are almost tallied, so the moment is now really if you want to start making plays on what’s going to happen. Do you already have an account?

If not, there are plenty of reputable brokers whose minimum deposit requirements aren’t too bad. It would be important to find one that can take your deposit quickly, but make sure that you’re using a broker that has a great rating and reviews. You have to watch a little when it comes to some Forex brokers.

Plus, you have to make sure that you are paying the lowest commission that you have to pay. You know investors are looking at tomorrow morning and beyond as a lucrative money-making opportunity. Of course, what’s going on is much deeper than that, and it’s not like you want to be greedy. I’m talking about investing with the right mind and putting the market to work for you. The currencies are always going to fluctuate.

Learning How Currency Trading Works

Trading currencies on the Forex market is something that is available to individual traders everywhere. As long as you have a reliable high speed Internet connection and some starting seed money for trading you have the ability to pick out a broker, open an account, and start trading. However, there is no market that is trickier or more volatile than the Forex and that’s why new traders should take some serious time to study how trading currencies work and to use practice accounts to get the hang of things before putting your own money up for risk.

Leverage: Friend & Foe
Leverage is a major part of how currency trading works. Generally the minimum trade is $1,000, which will normally control $100,000 in currency. This is how major money can be made (or lost) when the value between a couple currencies moves even a fraction of a cent (or pips). Looking at 0.0002 might not seem like much, at least not until you take that times 100,000.

Leverage means a small amount of money put in can reap massive profits when the trade breaks your way, but it also means that you can lose a lot of your initial investment in a very short time if the market goes volatile and suddenly turns against you.

Trailing Stops
Trailing stops are your best friend when trading the Forex. This means as your currency pair is moving, when it goes down a certain number of pips, the stop automatically kicks in and kicks you out of the trade. This is critical to make sure that you protect yourself from potential losses while still staying in long enough to cash in on some winning trades.

All smart traders use trailing stops. This is a huge part of how successful currency trading works.

Learn Currency Trading: So Much To Learn

When it comes to currency trading there is a lot to learn. The Forex market is the most complex trading market in the entire world as well as the most volatile. There are many different strategies to trading, and many different ways to make money doing so.

All trading is done in currency pairs. One currency is used to buy another, and the hope is that the difference in changing values between the two creates a bigger gap – allowing the trader to profit. Leverage is also a major part of trading currencies on the foreign exchange (Forex) markets.

Generally speaking $1 controls $100 in the forex so the conventional $1,000 bet size actually controls $100k of currency. This is how such small and frequent volatile movements in the market can result in so much profit – because it is scaled up times 100. The numbers can be a little bit higher or lower, but $100 is a pretty common base.

One of the first things you will need is a trading account with an online broker. Look for a broker online and use the software they provide. Every one of these should come with practice software that uses play money but real life charts. This is crucial in order to get used to how the charts work, how fast the markets move, and to learn how to handle all the action going on so you can profit instead of getting confused which is a recipe for disaster.

Keep in mind that currency markets move by the second, meaning you really need to keep on top of them and learn how to read patterns to have any chance at all of becoming a successful trader. If you do this, you will have a chance make money trading currency.

Understanding Basic Currency Trading Tips

Forex trading can be extremely complicated and challenges even the best of traders, and that’s before looking at the specific ins and outs that come with specific currencies, currency pairs, and other economic factors that can affect these trades. Then there are also the various off-shoots or differing types of currency trades like carry trades, scalping, or even binary options.

These are all important concepts to understand if you want to know how to trade in a way that will help you earn long term profits. The first thing you need to know about is leverage. Leverage is the key behind how people can make so much money with a single trade, or lose so much is some things go wrong. Generally speaking $1 put up for trading equals $100 on average although sometimes depending on the broker you might get a 150:1 or even 200:1 ratio.

While a higher ratio can conceivably lead to higher profits, they can also make the trade more volatile so this is a two-edged sword.

Potential Correlation Issues
Every currency has its own personality. Certain correlations will make a huge difference. The AUD, for example, is tied closely to the price of copper. High copper prices mean higher AUD value, low prices go the other way. Since New Zealand’s economy is so tightly tied to Australia’s, it is also affected by that. The Swiss Franc is often seen as a safer currency so when markets are in turmoil in general, the CHF tends to often see a strong upswing.

The price of gold and the USD also have a strong inverse correlation. Gold is seen as important for when the Dollar is weak. High gold prices usually mean a weak USD. A strong USD usually means lower gold prices.

These are reports you have to keep an eye on if you are going to trade the Forex successfully.

Currency Trading: The Basics You Should Know

Currency trading is a popular form of online trading that has strongly eclipsed stocks and commodities as the most traded market in the world. Focusing on the buying and selling of one currency for another, the foreign exchange (Forex) is where these trades takes place and allows individuals and brokers the opportunity to trade in international currencies using broker approved trading software and leveraged money to attempt to make their trading fortunes.

The Markets Are Volatile
The Forex market tends to be very volatile, in part because money is generally leveraged at $1 put in at position controlling $100 of actual currency. That means your $1,000 bet on a currency pair actually represents the buying and selling of $100,000 of actual currency. That means even the smallest movement in price up or down between the two currencies can lead to huge jumps in the market.

Trading Is Done In Pairs
In order to buy one currency, you must sell another, and vice versa. There are always two currencies involved, and well over 90% of all currency trading involves the big eight nations (as far as currency goes): The United States, Canada, Great Britain, European Union (EU), Switzerland, Japan, Australia, and New Zealand.

No Set Trading Floor
Unlike many stock markets, there is no set trading floor for the Forex. The market is open 24/7 online, and although trading of each individual currency tends to be hottest when that nation’s other trading markets are open, those currencies are still available to continue trading any time during the week. Since it is all done online and through online brokers, there is no actual physical location where trading takes place.

These are some of the basics you need to understand if you’re going to jump into the constantly changing world of currency trading.

British Pound

The British Pound Sterling is used as a reserve currency around the world and is presently ranked third in amount held as reserves. The percentage which pounds make up of total reserves has increased over recent years, due in part to the stability of the British economy and government, gradual increase in value against many currencies and relatively high interest rates compared to other major currencies such as the dollar, euro and yen. The Pound is the third most widely held reserve currency worldwide, having seen a resurgence in popularity in recent years. Analysts say this resurgence is caused by carry-trade investors considering the pound as a stable high-yield proxy to the euro. The British Pound is one of the most popular currencies for trading.