What is Swap in Forex Trading? (With Examples)

The intelligent investors guide to cryptocurrency: Part 3b - Pricing and liquidity

*Introductions: I'm joskye. A cryptocurrency investor and holder. *
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Hi again. This is the third part in our ongoing series on how to trade better and determine intelligent investments in cryptocurrency for the future.
 
 
Part 3b continues where I left off with a discussion about price metrics specifically, what determines the price and the importance of liquidity:
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The day traders:
 
As I mentioned in my previous article, as of writing almost every cryptocurrency is determined purely by speculative value.
 
 
For instance in cryptocurrency Bitcoin is still the biggest player in the game. It carries a per unit price of $900 per coin. There are currently 16,090,137 (16 million) coins in circulation giving it a total marketcap value of [$900 x 16090137 =] $14481123300 or 14.48 billion USD.
 
 
Shadowcash looks even more meagre compared to the total cryptocurrency marketcap with only 0.048% of the total cryptocurrency sphere.
To any Shadowcash holders despairing at this point, relax. There are over 707 cryptocurrencies trading as of writing and SDC holds the 27th ranking in terms of market cap. In such a competitive field, filled with scams that's pretty good. Moreso when you consider that SDC is a legitimate technology and is currently probably very undervalued.
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Lets look at the rich list for bitcoin:
 
Why did I just talk about this?
 
In cryptocurrency I see this happening on the markets all the time. Indeed market manipulation effects every single cryptocurrency eventually.
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Market manipulation!
 
Large holders of valuable, high marketcap coins will often make multiple small volume purchases of less valuable, low marketcap coins. Often this will follow announcements regarding developments in that low marketcap coin.
 
 
Low volume buying in a market with low daily trading volume can gradually drive up the price attracting an influx of buyers into that coin; often they will make larger volume purchases of it which helps drive up the price much further. This will trigger a further chain of buyers experiencing FOMO (fear of missing out, detailed in Part 2) who will drive up the price even further. The price will pump. Often will smaller cap cryptocurrencies this may result in a sudden 20, 40, 60 or even +100% increase in value often over a very short time space (1-2 days, 1-2 weeks maximum).
 
 
The only way to discern if the sudden rise in coin value is due to pre-rigged market manipulation is to look at:
 
You are looking for organic, gradual growth based on a solid value proposition. Sudden large spikes in value should make you pause and wonder if it's worth waiting for a gradual correction (organic drop) in price before entering your buy order.
 
Do not fall for a pump and dump. Stick to the lessons covered in previous parts of this guide (especially part 3a and 2) and you will be much less likely to lose money in the long run trading and investing in cryptocurrencies.
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The pattern of change on daily trading volume, the order book and liquidity:
 
Lets look at SDC and Bitcoin again. This time we are going to compare the daily trading volume (last 24 hours) in USD.
 
 
I'd just like to use this opportunity to point out and reinforce the idea that day traders not holders dictate the daily price of an asset. I'd also like to point out daily global trading volume on Forex is $4800 billion which makes Bitcoin a very small fish in the broader arena of global finance and trade i.e. Bitcoin is still very vulnerable to all the price manipulation tactics and liquidity issues I am going to be describing in this article by bigger players with richer pockets.
 
 
The daily trading volume also gives you an idea of how much fiat currency you can invest into a given cryptocurrency before you suddenly shift the price.
 
 
A sudden rise in coin price heavily out of proportion to the rise in daily trading volume should be the first sign to alert you to a pump & dump scam.
 
Daily trading volume should show a steady increase over time with sustained buy support at new price levels; this is a good marker of organic, sustainable growth.
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For more detail you can now look at the depth chart:
 
The depth chart is very useful to know how much fiat currency is required to cause the spot price of a given cryptocurrency to rise or fall by a given amount.
 
NB the price of most cryptocurrencies is expressed in Bitcoin because it has the largest market cap and daily trading volume of all cryptocurrencies by a very large margin and because with a few exceptions (Ethereum, Monero) most cryptocurrencies do not have routes to directly purchase via fiat currency without first purchasing Bitcoin.
 
Liquidity is super important. People often complain about a market lacking liquidity but that is often because they are trading in fiat volumes which far exceed the daily trading fiat volumes of the cryptocurrency they are referring to. If you are investing or trading in a cryptocurrency, always factor in the your personal liquidity and need for liquidity relative to that of the cryptocurrency you are investing in. In other words don't expect to make a profit next day selling 'cryptocurrency x' if the size your single buy order composes >90% of the buy orders on the market for 'cryptocurrency x' that day (indeed in such a scenario be very prepared to sell at a loss next day if you absolutely have to)!
 
 
There are certain patterns on a depth chart that make me believe a significant, sustained price rise is imminent: One example occurs when there is a very large volume of buy orders (>25% of total buy volume within 5% of current price) very close to the current (spot) price, and a very large number of sell orders close to but significantly above the spot price (approx 25% total sell volume within 10% of current price) and especially if the total buy order volume is a significantly higher percentage than it has previously been. This simply indicates high demand at current price which may soon outstrip supply. Again I stress that these patterns can be manipulated easily by wealthy traders.
 
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The order book is another way of looking at the depth chart and allows you to see the specific transactions occurring that compose daily trading volume by the second!
 
I find it useful because it allows me to identify:
 
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The price charts:
 
Discussions about price charts could be endless. I'm not going to go into too much detail, mostly because I'm an investor who believes the value proposition, good consistent development, decent marketing and communications will ultimately trump spot prices and adverse (or positive) short term price trends in the future.
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The news cycle:
 
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Other interesting points: The 'coin x' scenario and the ridiculousness of marketcap:
 
'Coin X' is an imaginary hypothetical coin. There are only 10 in circulation. It has no value proposition beyond it's speculative value i.e. it will never generate a revenue independent of it's speculative value.
 
 
I'd like to point out the similarities between ZCash and 'coin x' (especially during it's launch).
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Lessons:
 
 
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References:
1. Coinmarketcap rankings: https://coinmarketcap.com/all/views/all/ 2. Coinmarketcap daily trading volumes https://coinmarketcap.com/currencies/volume/24-hou 3. Bitinfocharts - Top 100 Richest Bitcoin addresses: https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html 4. Crypto ID - Shadowcash Rich list: https://chainz.cryptoid.info/sdc/#!rich 
 
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Further articles in this series:
 
"The intelligent investors guide to cryptocurrency"
 
Part 0 -
Part 1 -
Part 2 -
Part 3a -
Part 3b -
Part 4 -
Part 5 -
Part 6 -
Part 7a -
 
"The intelligent investors guide to Particl -"
 
 
Full disclosure/Disclaimer: At time of original writing I had long positions in Ethereum (ETH), Shadowcash (SDC), Iconomi (ICN), Augur (REP) and Digix (DGD). All the opinions expressed are my own. I cannot guarantee gains; losses are sustainable; do your own financial research and make your decisions responsibly. All prices and values given are as of time of first writing (Midday 8th-Jan-2017).
 
Second disclaimer: Please do not buy Shadowcash (SDC), the project has been abandoned by it's developers who have moved on to the Particl Project (PART). The PARTICL crowd fund and SDC 1:1 token swap completed April 15th. You can still exchange SDC for PART but only if it was acquired prior to 15th April 2017 see: https://particl.news/a-community-driven-initiative-e26724100c3a for more information.
 
Addendum: Article updated 23-11-2017 to edit references to SDC (changed to Particl where relevant to reflect updated status) and clean up formatting.
submitted by joskye to Particl [link] [comments]

Currency Swap - By Lakshman Maaheshwary How To Calculate FX Forward?  FX Swap Calculation Example Lesson 6.1: What is swap in forex trading? - YouTube Explained: Forex Swap. - YouTube Currency Swap Agreement Explained with Example - YouTube Forex SWAP - What is Swap Rate in Forex Trading? - YouTube

An FX swap is a composite short-dated contract, consisting of two exchanges, sometimes known as legs. (1) An initial exchange of two currencies on a near leg date, commonly spot. (2) A later reverse-direction exchange of the same two currencies, on a far leg date. For example, euro might be paid and dollars received in the near leg, with euro received and dollars paid in the far leg. DRAW THEM ... Forex (FX) is the market where currencies are traded and is a portmanteau of "foreign" and "exchange." Forex also refers to the currencies traded there. Needless to say, the fx market is open 24 hours a day, 5 days a week only closing its doors for national holidays. Forex trading is done in currency pairs such as the USD/EUR pair or the JPY/AUD pair. For example, it may cost a trader 1.335 USD to buy one euro in the case of the USD/EUR pair. This forex swap deal effectively results in no (or very little) net exposure to the prevailing spot rate, since although the first leg opens up spot market risk, the second leg of the swap immediately closes it down. Forex Swap Points and the Cost of Carry. The forex swap points to a particular value date will be determined mathematically from the overall cost involved when you lend one ... Take an example of forex swap. Say those two parties X and Y trading with each other. While X has got certain amounts of USD, Y has got some EUR. When they trade against each other, X and y agree to exchange their principle and interest rates. The rate of interest will depend on the spot exchange rate at that time. Thus swapping is exchanging currency positions and earning the net rise or fall ... A foreign currency swap, also known as an FX swap, ... A common reason to employ a currency swap is to secure cheaper debt. For example, European Company A borrows $120 million from U.S. Company B ... Swap is 3 times bigger than usual if you keep your position overnight from Wednesday to Thursday. It happens because of the impact of the futures market. A swap involves pushing back the value date on the underlying futures contract. If a position was opened on Wednesday, the value date will be Friday. If a position is kept open overnight from Wednesday to Thursday, the value date will be ...

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Currency Swap - By Lakshman Maaheshwary

Currency Swap is an important tool to obtain cheaper loans in the international markets and also to hedge foreign currency loans. How do they work? Find all about it here, explained simply ... Forex SWAP - What is Swap Rate in Forex Trading? If you have ever had a look at the MetaTrader, there is a window that shows your positions on the market. On... In this video, I am going to demonstrate you an FX Swap calculation example along with the FX Forward explained in details. After seeing this complete tutorial you will be easily able to ... Get more information about IG US by visiting their website: https://www.ig.com/us/future-of-forex Get my trading strategies here: https://www.robbooker.com C... Shopping. Tap to unmute. If playback doesn't begin shortly, try restarting your device. Up Next. Cancel. Autoplay is paused. You're signed out. Videos you watch may be added to the TV's watch ... The Reserve Bank of India (RBI) has decided to inject rupee liquidity into the system through long-term foreign exchange buy/sell swap — a first-of-its-kind ...

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