What is Margin Trading? (With an Example) - My Trading Skills
How Does Margin Trading in the Forex Market Work?
What is Forex (FX) Trading and How Does it Work? | IG UK
Former investment bank FX trader: some thoughts
Hi guys, I have been using reddit for years in my personal life (not trading!) and wanted to give something back in an area where i am an expert. I worked at an investment bank for seven years and joined them as a graduate FX trader so have lots of professional experience, by which i mean I was trained and paid by a big institution to trade on their behalf. This is very different to being a full-time home trader, although that is not to discredit those guys, who can accumulate a good amount of experience/wisdom through self learning. When I get time I'm going to write a mid-length posts on each topic for you guys along the lines of how i was trained. I guess there would be 15-20 topics in total so about 50-60 posts. Feel free to comment or ask questions. The first topic is Risk Management and we'll cover it in three parts Part I
Why it matters
Using stops sensibly
Picking a clear level
Why it matters
The first rule of making money through trading is to ensure you do not lose money. Look at any serious hedge fund’s website and they’ll talk about their first priority being “preservation of investor capital.” You have to keep it before you grow it. Strangely, if you look at retail trading websites, for every one article on risk management there are probably fifty on trade selection. This is completely the wrong way around. The great news is that this stuff is pretty simple and process-driven. Anyone can learn and follow best practices. Seriously, avoiding mistakes is one of the most important things: there's not some holy grail system for finding winning trades, rather a routine and fairly boring set of processes that ensure that you are profitable, despite having plenty of losing trades alongside the winners.
Capital and position sizing
The first thing you have to know is how much capital you are working with. Let’s say you have $100,000 deposited. This is your maximum trading capital. Your trading capital is not the leveraged amount. It is the amount of money you have deposited and can withdraw or lose. Position sizing is what ensures that a losing streak does not take you out of the market. A rule of thumb is that one should risk no more than 2% of one’s account balance on an individual trade and no more than 8% of one’s account balance on a specific theme. We’ll look at why that’s a rule of thumb later. For now let’s just accept those numbers and look at examples. So we have $100,000 in our account. And we wish to buy EURUSD. We should therefore not be risking more than 2% which $2,000. We look at a technical chart and decide to leave a stop below the monthly low, which is 55 pips below market. We’ll come back to this in a bit. So what should our position size be? We go to the calculator page, select Position Size and enter our details. There are many such calculators online - just google "Pip calculator". https://preview.redd.it/y38zb666e5h51.jpg?width=1200&format=pjpg&auto=webp&s=26e4fe569dc5c1f43ce4c746230c49b138691d14 So the appropriate size is a buy position of 363,636 EURUSD. If it reaches our stop level we know we’ll lose precisely $2,000 or 2% of our capital. You should be using this calculator (or something similar) on every single trade so that you know your risk. Now imagine that we have similar bets on EURJPY and EURGBP, which have also broken above moving averages. Clearly this EUR-momentum is a theme. If it works all three bets are likely to pay off. But if it goes wrong we are likely to lose on all three at once. We are going to look at this concept of correlation in more detail later. The total amount of risk in our portfolio - if all of the trades on this EUR-momentum theme were to hit their stops - should not exceed $8,000 or 8% of total capital. This allows us to go big on themes we like without going bust when the theme does not work. As we’ll see later, many traders only win on 40-60% of trades. So you have to accept losing trades will be common and ensure you size trades so they cannot ruin you. Similarly, like poker players, we should risk more on trades we feel confident about and less on trades that seem less compelling. However, this should always be subject to overall position sizing constraints. For example before you put on each trade you might rate the strength of your conviction in the trade and allocate a position size accordingly: https://preview.redd.it/q2ea6rgae5h51.png?width=1200&format=png&auto=webp&s=4332cb8d0bbbc3d8db972c1f28e8189105393e5b To keep yourself disciplined you should try to ensure that no more than one in twenty trades are graded exceptional and allocated 5% of account balance risk. It really should be a rare moment when all the stars align for you. Notice that the nice thing about dealing in percentages is that it scales. Say you start out with $100,000 but end the year up 50% at $150,000. Now a 1% bet will risk $1,500 rather than $1,000. That makes sense as your capital has grown. It is extremely common for retail accounts to blow-up by making only 4-5 losing trades because they are leveraged at 50:1 and have taken on far too large a position, relative to their account balance. Consider that GBPUSD tends to move 1% each day. If you have an account balance of $10k then it would be crazy to take a position of $500k (50:1 leveraged). A 1% move on $500k is $5k. Two perfectly regular down days in a row — or a single day’s move of 2% — and you will receive a margin call from the broker, have the account closed out, and have lost all your money. Do not let this happen to you. Use position sizing discipline to protect yourself.
If you’re wondering - why “about 2%” per trade? - that’s a fair question. Why not 0.5% or 10% or any other number? The Kelly Criterion is a formula that was adapted for use in casinos. If you know the odds of winning and the expected pay-off, it tells you how much you should bet in each round. This is harder than it sounds. Let’s say you could bet on a weighted coin flip, where it lands on heads 60% of the time and tails 40% of the time. The payout is $2 per $1 bet. Well, absolutely you should bet. The odds are in your favour. But if you have, say, $100 it is less obvious how much you should bet to avoid ruin. Say you bet $50, the odds that it could land on tails twice in a row are 16%. You could easily be out after the first two flips. Equally, betting $1 is not going to maximise your advantage. The odds are 60/40 in your favour so only betting $1 is likely too conservative. The Kelly Criterion is a formula that produces the long-run optimal bet size, given the odds. Applying the formula to forex trading looks like this: Position size % = Winning trade % - ( (1- Winning trade %) / Risk-reward ratio If you have recorded hundreds of trades in your journal - see next chapter - you can calculate what this outputs for you specifically. If you don't have hundreds of trades then let’s assume some realistic defaults of Winning trade % being 30% and Risk-reward ratio being 3. The 3 implies your TP is 3x the distance of your stop from entry e.g. 300 pips take profit and 100 pips stop loss. So that’s 0.3 - (1 - 0.3) / 3 = 6.6%. Hold on a second. 6.6% of your account probably feels like a LOT to risk per trade.This is the main observation people have on Kelly: whilst it may optimise the long-run results it doesn’t take into account the pain of drawdowns. It is better thought of as the rational maximum limit. You needn’t go right up to the limit! With a 30% winning trade ratio, the odds of you losing on four trades in a row is nearly one in four. That would result in a drawdown of nearly a quarter of your starting account balance. Could you really stomach that and put on the fifth trade, cool as ice? Most of us could not. Accordingly people tend to reduce the bet size. For example, let’s say you know you would feel emotionally affected by losing 25% of your account. Well, the simplest way is to divide the Kelly output by four. You have effectively hidden 75% of your account balance from Kelly and it is now optimised to avoid a total wipeout of just the 25% it can see. This gives 6.6% / 4 = 1.65%. Of course different trading approaches and different risk appetites will provide different optimal bet sizes but as a rule of thumb something between 1-2% is appropriate for the style and risk appetite of most retail traders. Incidentally be very wary of systems or traders who claim high winning trade % like 80%. Invariably these don’t pass a basic sense-check:
How many live trades have you done? Often they’ll have done only a handful of real trades and the rest are simulated backtests, which are overfitted. The model will soon die.
What is your risk-reward ratio on each trade? If you have a take profit $3 away and a stop loss $100 away, of course most trades will be winners. You will not be making money, however! In general most traders should trade smaller position sizes and less frequently than they do. If you are going to bias one way or the other, far better to start off too small.
How to use stop losses sensibly
Stop losses have a bad reputation amongst the retail community but are absolutely essential to risk management. No serious discretionary trader can operate without them. A stop loss is a resting order, left with the broker, to automatically close your position if it reaches a certain price. For a recap on the various order types visit this chapter. The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This is referred to as ‘stop hunting’. This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK. Why are stop losses so important? Well, there is no other way to manage risk with certainty. You should always have a pre-determined stop loss before you put on a trade. Not having one is a recipe for disaster: you will find yourself emotionally attached to the trade as it goes against you and it will be extremely hard to cut the loss. This is a well known behavioural bias that we’ll explore in a later chapter. Learning to take a loss and move on rationally is a key lesson for new traders. A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not. Bruce Kovner, founder of the hedge fund Caxton Associates There is an old saying amongst bank traders which is “losers average losers”. It is tempting, having bought EURUSD and seeing it go lower, to buy more. Your average price will improve if you keep buying as it goes lower. If it was cheap before it must be a bargain now, right? Wrong. Where does that end? Always have a pre-determined cut-off point which limits your risk. A level where you know the reason for the trade was proved ‘wrong’ ... and stick to it strictly. If you trade using discretion, use stops.
Picking a clear level
Where you leave your stop loss is key. Typically traders will leave them at big technical levels such as recent highs or lows. For example if EURUSD is trading at 1.1250 and the recent month’s low is 1.1205 then leaving it just below at 1.1200 seems sensible. If you were going long, just below the double bottom support zone seems like a sensible area to leave a stop You want to give it a bit of breathing room as we know support zones often get challenged before the price rallies. This is because lots of traders identify the same zones. You won’t be the only one selling around 1.1200. The “weak hands” who leave their sell stop order at exactly the level are likely to get taken out as the market tests the support. Those who leave it ten or fifteen pips below the level have more breathing room and will survive a quick test of the level before a resumed run-up. Your timeframe and trading style clearly play a part. Here’s a candlestick chart (one candle is one day) for GBPUSD. https://preview.redd.it/moyngdy4f5h51.png?width=1200&format=png&auto=webp&s=91af88da00dd3a09e202880d8029b0ddf04fb802 If you are putting on a trend-following trade you expect to hold for weeks then you need to have a stop loss that can withstand the daily noise. Look at the downtrend on the chart. There were plenty of days in which the price rallied 60 pips or more during the wider downtrend. So having a really tight stop of, say, 25 pips that gets chopped up in noisy short-term moves is not going to work for this kind of trade. You need to use a wider stop and take a smaller position size, determined by the stop level. There are several tools you can use to help you estimate what is a safe distance and we’ll look at those in the next section. There are of course exceptions. For example, if you are doing range-break style trading you might have a really tight stop, set just below the previous range high. https://preview.redd.it/ygy0tko7f5h51.png?width=1200&format=png&auto=webp&s=34af49da61c911befdc0db26af66f6c313556c81 Clearly then where you set stops will depend on your trading style as well as your holding horizons and the volatility of each instrument. Here are some guidelines that can help:
Use technical analysis to pick important levels (support, resistance, previous high/lows, moving averages etc.) as these provide clear exit and entry points on a trade.
Ensure that the stop gives your trade enough room to breathe and reflects your timeframe and typical volatility of each pair. See next section.
Always pick your stop level first. Then use a calculator to determine the appropriate lot size for the position, based on the % of your account balance you wish to risk on the trade.
So far we have talked about price-based stops. There is another sort which is more of a fundamental stop, used alongside - not instead of - price stops. If either breaks you’re out. For example if you stop understanding why a product is going up or down and your fundamental thesis has been confirmed wrong, get out. For example, if you are long because you think the central bank is turning hawkish and AUDUSD is going to play catch up with rates … then you hear dovish noises from the central bank and the bond yields retrace lower and back in line with the currency - close your AUDUSD position. You already know your thesis was wrong. No need to give away more money to the market.
Coming up in part II
EDIT: part II here Letting stops breathe When to change a stop Entering and exiting winning positions Risk:reward ratios Risk-adjusted returns
Coming up in part III
Squeezes and other risks Market positioning Bet correlation Crap trades, timeouts and monthly limits *** Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
You may have heard about off-shore tax havens of questionable legality where wealthy people invest their money in legal "grey zones" and don't pay any tax, as featured for example, in Netflix's drama, The Laundromat. The reality is that the Government of Canada offers 100% tax-free investing throughout your life, with unlimited withdrawals of your contributions and profits, and no limits on how much you can make tax-free. There is also nothing to report to the Canada Revenue Agency. Although Britain has a comparable program, Canada is the only country in the world that offers tax-free investing with this level of power and flexibility. Thank you fellow Redditors for the wonderful Gold Award and Today I Learned Award! (Unrelated but Important Note: I put a link at the bottom for my margin account explainer. Many people are interested in margin trading but don't understand the math behind margin accounts and cannot find an explanation. If you want to do margin, but don't know how, click on the link.) As a Gen-Xer, I wrote this post with Millennials in mind, many of whom are getting interested in investing in ETFs, individual stocks, and also my personal favourite, options. Your generation is uniquely positioned to take advantage of this extremely powerful program at a relatively young age. But whether you're in your 20's or your 90's, read on! Are TFSAs important? In 2020 Canadians have almost 1 trillion dollars saved up in their TFSAs, so if that doesn't prove that pennies add up to dollars, I don't know what does. The TFSA truly is the Great Canadian Tax Shelter. I will periodically be checking this and adding issues as they arise, to this post. I really appreciate that people are finding this useful. As this post is now fairly complete from a basic mechanics point of view, and some questions are already answered in this post, please be advised that at this stage I cannot respond to questions that are already covered here. If I do not respond to your post, check this post as I may have added the answer to the FAQs at the bottom.
How to Invest in Stocks
A lot of people get really excited - for good reason - when they discover that the TFSA allows you to invest in stocks, tax free. I get questions about which stocks to buy. I have made some comments about that throughout this post, however; I can't comprehensively answer that question. Having said that, though, if you're interested in picking your own stocks and want to learn how, I recommmend starting with the following videos: The first is by Peter Lynch, a famous American investor in the 80's who wrote some well-respected books for the general public, like "One Up on Wall Street." The advice he gives is always valid, always works, and that never changes, even with 2020's technology, companies and AI: https://www.youtube.com/watch?v=cRMpgaBv-U4&t=2256s The second is a recording of a university lecture given by investment legend Warren Buffett, who expounds on the same principles: https://www.youtube.com/watch?v=2MHIcabnjrA Please note that I have no connection to whomever posted the videos.
TFSAs were introduced in 2009 by Stephen Harper's government, to encourage Canadians to save. The effect of the TFSA is that ordinary Canadians don't pay any income or capital gains tax on their securities investments. Initial uptake was slow as the contribution rules take some getting used to, but over time the program became a smash hit with Canadians. There are about 20 million Canadians with TFSAs, so the uptake is about 70%- 80% (as you have to be the age of majority in your province/territory to open a TFSA).
Eligibility to Open a TFSA
You must be a Canadian resident with a valid Social Insurance Number to open a TFSA. You must be at the voting age in the province in which you reside in order to open a TFSA, however contribution room begins to accumulate from the year in which you turned 18. You do not have to file a tax return to open a TFSA. You do not need to be a Canadian citizen to open and contribute to a TFSA. No minimum balance is required to open a TFSA.
Where you Can Open a TFSA
There are hundreds of financial institutions in Canada that offer the TFSA. There is only one kind of TFSA; however, different institutions offer a different range of financial products. Here are some examples:
The Canadian big 5 bank branches and most other financial institutions offer a TFSA that allows you to buy mutual funds, hold cash, GICs, term deposits, and possibly ETFs. This is a good choice if you want guaranteed returns or diversified investing.
There are a number of on-line banks such as Tangerine, Simplii Financial, Oaken Financial, and many more that offer the TFSA.
The discount DIY brokerage arms of the big 5 banks give you more choices, including stocks, warrants, bonds and options. There are also standalone brokers like IBKR Canada, Questrade, Qtrade, and Virtual Brokers, among others, that offer this.
Some brokerages and financial advisors also offer TFSAs that give you these investment choices, in different formats such as:
Traditional brokerage, where a stockbroker invests your money (BMO Nesbitt Burns, RBC Dominion Securities and others)
Financial advisor who will invest your money according to a plan you put together with the advisor (TSI Network and many others)
"Robo" advisors such as Wealthsimple, RBC InvestEase, BMO SmartFolio, or Wealthbar
BMO's AdviceDirect, which is a semi-directed hybrid between standalone DIY investing and fully-advised investing, where you operate on a DIY basis but have access to a registered investment advisor (a live person) who can give you suggetions and advice.
Your TFSA may be covered by either CIFP or CDIC insuranceor both. Ask your bank or broker for details.
What You Can Trade and Invest In
You can trade the following:
GICS, mutual funds, term deposits
individual common and preferred stocks listed on an "approved exchange" which is the TSX, TSX-V, NASDAQ, NYSE, and about 20 other exchanges worldwide, but not the US OTC pink sheets. Many examples, such as Suncor, Linamar, Apple, any of the big banks, and many thousands of others, when you want to buy into an individual company
stock-like securities like REITS, ETFs and ETNs, including 2x and 3x leveraged
gold and silver certificates
cash of many countries (CAD/USD/EUGBP/AUD/NZD/JPY/CHF and many others)
government bills and bonds of most countries, subsovereigns like Canadian provincial bills and bonds, and most corporations
options that trade on the Montreal Exchange or various options exchanges in the USA and the rest of the word (see FAQ for details)
gold, silver bullion certificates
shares in certain private companies -- but consult your tax advisor on this
What You Cannot Trade
You cannot trade:
commodity futures contracts
option spread positions (see FAQ for details)
anything that requires a margin account, meaning, a special kind of account that allows you to borrow money directly from the broker against the assets you have in your account and the assets you intend to buy.
crypto (although there exist crypto ETNs that you can buy)
Again, if it requires a margin account, it's out. You cannot buy on margin in a TFSA. Nothing stopping you from borrowing money from other sources as long as you stay within your contribution limits, but you can't trade on margin in a TFSA. You can of course trade long puts and calls which give you leverage.
Rules for Contribution Room
Starting at 18 you get a certain amount of contribution room. According to the CRA: You will accumulate TFSA contribution room for each year even if you do not file an Income Tax and Benefit Return or open a TFSA. The annual TFSA dollar limit for the years 2009 to2012 was $5,000. The annual TFSA dollar limit for the years 2013 and 2014 was $5,500. The annual TFSA dollar limit for the year 2015 was $10,000. The annual TFSA dollar limit for the years 2016 to 2018 was $5,500. The annual TFSA dollar limit for the year 2019 is $6,000. The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500. Investment income earned by, and changes in the value of TFSA investments will not affect your TFSA contribution room for the current or future years. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/contributions.html If you don't use the room, it accumulates indefinitely. Trades you make in a TFSA are truly tax free. But you cannot claim the dividend tax credit and you cannot claim losses in a TFSA against capital gains whether inside or outside of the TFSA. So do make money and don't lose money in a TFSA. You are stuck with the 15% withholding tax on U.S. dividend distributions unlike the RRSP, due to U.S. tax rules, but you do not pay any capital gains on sale of U.S. shares. You can withdraw *both* contributions *and* capital gains, no matter how much, at any time, without penalty. The amount of the withdrawal (contributions+gains) converts into contribution room in the *next* calendar year. So if you put the withdrawn funds back in the same calendar year you take them out, that burns up your total accumulated contribution room to the extent of the amount that you re-contribute in the same calendar year.
E.g. Say you turned 18 in 2016 in Alberta where the age of majority is 18. It is now sometime in 2020. You have never contributed to a TFSA. You now have $5,500+$5,500+$5,500+$6,000+$6,000 = $28,500 of room in 2020. In 2020 you manage to put $20,000 in to your TFSA and you buy Canadian Megacorp common shares. You now have $8,500 of room remaining in 2020. Sometime in 2021 - it doesn't matter when in 2021 - your shares go to $100K due to the success of the Canadian Megacorp. You also have $6,000 worth of room for 2021 as set by the government. You therefore have $8,500 carried over from 2020+$6,000 = $14,500 of room in 2021. In 2021 you sell the shares and pull out the $100K. This amount is tax-free and does not even have to be reported. You can do whatever you want with it. But: if you put it back in 2021 you will over-contribute by $100,000 - $14,500 = $85,500 and incur a penalty. But if you wait until 2022 you will have $14,500 unused contribution room carried forward from 2021, another $6,000 for 2022, and $100,000 carried forward from the withdrawal 2021, so in 2022 you will have $14,500+$6,000+$100,000 = $120,500 of contribution room. This means that if you choose, you can put the $100,000 back in in 2022 tax-free and still have $20,500 left over. If you do not put the money back in 2021, then in 2022 you will have $120,500+$6,000 = $126,500 of contribution room. There is no age limit on how old you can be to contribute, no limit on how much money you can make in the TFSA, and if you do not use the room it keeps carrying forward forever. Just remember the following formula: This year's contribution room = (A) unused contribution room carried forward from last year + (B) contribution room provided by the government for this year + (C) total withdrawals from last year. EXAMPLE 1: Say in 2020 you never contributed to a TFSA but you were 18 in 2009. You have $69,500 of unused room (see above) in 2020 which accumulated from 2009-2020. In 2020 you contribute $50,000, leaving $19,500 contribution room unused for 2020. You buy $50,000 worth of stock. The next day, also in 2020, the stock doubles and it's worth $100,000. Also in 2020 you sell the stock and withdraw $100,000, tax-free. You continue to trade stocks within your TFSA, and hopefully grow your TFSA in 2020, but you make no further contributions or withdrawals in 2020. The question is, How much room will you have in 2021? Answer: In the year 2021, the following applies: (A) Unused contribution room carried forward from last year, 2020: $19,500 (B) Contribution room provided by government for this year, 2021: $6,000 (C) Total withdrawals from last year, 2020: $100,000 Total contribution room for 2021 = $19,500+6,000+100,000 = $125,500. EXAMPLE 2: Say between 2020 and 2021 you decided to buy a tax-free car (well you're still stuck with the GST/PST/HST/QST but you get the picture) so you went to the dealer and spent $25,000 of the $100,000 you withdrew in 2020. You now have a car and $75,000 still burning a hole in your pocket. Say in early 2021 you re-contribute the $75,000 you still have left over, to your TFSA. However, in mid-2021 you suddenly need $75,000 because of an emergency so you pull the $75,000 back out. But then a few weeks later, it turns out that for whatever reason you don't need it after all so you decide to put the $75,000 back into the TFSA, also in 2021. You continue to trade inside your TFSA but make no further withdrawals or contributions. How much room will you have in 2022? Answer: In the year 2022, the following applies: (A) Unused contribution room carried forward from last year, 2021: $125,500 - $75,000 - $75,000 = -$24,500. Already you have a problem. You have over-contributed in 2021. You will be assessed a penalty on the over-contribution! (penalty = 1% a month). But if you waited until 2022 to re-contribute the $75,000 you pulled out for the emergency..... In the year 2022, the following would apply: (A) Unused contribution room carried forward from last year, 2021: $125,500 -$75,000 =$50,500. (B) Contribution room provided by government for this year, 2022: $6,000 (C) Total withdrawals from last year, 2020: $75,000 Total contribution room for 2022 = $50,500 + $6,000 + $75,000 = $131,500. ...And...re-contributing that $75,000 that was left over from your 2021 emergency that didn't materialize, you still have $131,500-$75,000 = $56,500 of contribution room left in 2022. For a more comprehensive discussion, please see the CRA info link below.
FAQs That Have Arisen in the Discussion and Other Potential Questions:
Equity and ETF/ETN Options in a TFSA: can I get leverage? Yes. You can buy puts and calls in your TFSA and you only need to have the cash to pay the premium and broker commissions. Example: if XYZ is trading at $70, and you want to buy the $90 call with 6 months to expiration, and the call is trading at $2.50, you only need to have $250 in your account, per option contract, and if you are dealing with BMO IL for example you need $9.95 + $1.25/contract which is what they charge in commission. Of course, any profits on closing your position are tax-free. You only need the full value of the strike in your account if you want to exercise your option instead of selling it. Please note: this is not meant to be an options tutorial; see the Montreal Exchange's Equity Options Reference Manual if you have questions on how options work.
Equity and ETF/ETN Options in a TFSA: what is ok and not ok? Long puts and calls are allowed. Covered calls are allowed, but cash-secured puts are not allowed. All other option trades are also not allowed. Basically the rule is, if the trade is not a covered call and it either requires being short an option or short the stock, you can't do it in a TFSA.
Live in a province where the voting age is 19 so I can't open a TFSA until I'm 19, when does my contribution room begin? Your contribution room begins to accumulate at 18, so if you live in province where the age of majority is 19, you'll get the room carried forward from the year you turned 18.
If I turn 18 on December 31, do I get the contribution room just for that day or for the whole year? The whole year.
Do commissions paid on share transactions count as withdrawals? Unfortunately, no. If you contribute $2,000 cash and you buy $1,975 worth of stock and pay $25 in commission, the $25 does not count as a withdrawal. It is the same as if you lost money in the TFSA.
How much room do I have? If your broker records are complete, you can do a spreadsheet. The other thing you can do is call the CRA and they will tell you.
TFSATFSA direct transfer from one institution to another: this has no impact on your contributions or withdrawals as it counts as neither.
More than 1 TFSA: you can have as many as you want but your total contribution room does not increase or decrease depending on how many accounts you have.
Withdrawals that convert into contribution room in the next year. Do they carry forward indefinitely if not used in the next year? Answer :yes.
Do I have to declare my profits, withdrawals and contributions? No. Your bank or broker interfaces directly with the CRA on this. There are no declarations to make.
Risky investments - smart? In a TFSA you want always to make money, because you pay no tax, and you want never to lose money, because you cannot claim the loss against your income from your job. If in year X you have $5,000 of contribution room and put it into a TFSA and buy Canadian Speculative Corp. and due to the failure of the Canadian Speculative Corp. it goes to zero, two things happen. One, you burn up that contribution room and you have to wait until next year for the government to give you more room. Two, you can't claim the $5,000 loss against your employment income or investment income or capital gains like you could in a non-registered account. So remember Buffett's rule #1: Do not lose money. Rule #2 being don't forget the first rule. TFSA's are absolutely tailor-made for Graham-Buffett value investing or for diversified ETF or mutual fund investing, but you don't want to buy a lot of small specs because you don't get the tax loss.
Moving to/from Canada/residency. You must be a resident of Canada and 18 years old with a valid SIN to open a TFSA. Consult your tax advisor on whether your circumstances make you a resident for tax purposes. Since 2009, your TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older and a resident of Canada. Note: If you move to another country, you can STILL trade your TFSA online from your other country and keep making money within the account tax-free. You can withdraw money and Canada will not tax you. But you have to get tax advice in your country as to what they do. There restrictions on contributions for non-residents. See "non residents of Canada:" https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
The U.S. withholding tax. Dividends paid by U.S.-domiciled companies are subject to a 15% U.S. withholding tax. Your broker does this automatically at the time of the dividend payment. So if your stock pays a $100 USD dividend, you only get $85 USD in your broker account and in your statement the broker will have a note saying 15% U.S. withholding tax. I do not know under what circumstances if any it is possible to get the withheld amount. Normally it is not, but consult a tax professional.
The U.S. withholding tax does not apply to capital gains. So if you buy $5,000 USD worth of Apple and sell it for $7,000 USD, you get the full $2,000 USD gain automatically.
Tax-Free Leverage. Leverage in the TFSA is effectively equal to your tax rate * the capital gains inclusion rate because you're not paying tax. So if you're paying 25% on average in income tax, and the capital gains contribution rate is 50%, the TFSA is like having 12.5%, no margin call leverage costing you 0% and that also doesn't magnify your losses.
Margin accounts. These accounts allow you to borrow money from your broker to buy stocks. TFSAs are not margin accounts. Nothing stopping you from borrowing from other sources (such as borrowing cash against your stocks in an actual margin account, or borrowing cash against your house in a HELOC or borrowing cash against your promise to pay it back as in a personal LOC) to fund a TFSA if that is your decision, bearing in mind the risks, but a TFSA is not a margin account. Consider options if you want leverage that you can use in a TFSA, without borrowing money.
Dividend Tax Credit on Canadian Companies. Remember, dividends paid into the TFSA are not eligible to be claimed for the credit, on the rationale that you already got a tax break.
FX risk. The CRA allows you to contribute and withdraw foreign currency from the TFSA but the contribution/withdrawal accounting is done in CAD. So if you contribute $10,000 USD into your TFSA and withdraw $15,000 USD, and the CAD is trading at 70 cents USD when you contribute and $80 cents USD when you withdraw, the CRA will treat it as if you contributed $14,285.71 CAD and withdrew $18,75.00 CAD.
OTC (over-the-counter stocks). You can only buy stocks if they are listed on an approved exchange ("approved exchange" = TSX, TSX-V, NYSE, NASDAQ and about 25 or so others). The U.S. pink sheets "over-the-counter" market is an example of a place where you can buy stocks, that is not an approved exchange, therefore you can't buy these penny stocks. I have however read that the CRA make an exception for a stock traded over the counter if it has a dual listing on an approved exchange. You should check that with a tax lawyer or accountant though.
The RRSP. This is another great tax shelter. Tax shelters in Canada are either deferrals or in a few cases - such as the TFSA - outright tax breaks, The RRSP is an example of a deferral. The RRSP allows you to deduct your contributions from your income, which the TFSA does not allow. This deduction is a huge advantage if you earn a lot of money. The RRSP has tax consequences for withdrawing money whereas the TFSA does not. Withdrawals from the RRSP are taxable whereas they are obviously not in a TFSA. You probably want to start out with a TFSA and maintain and grow that all your life. It is a good idea to start contributing to an RRSP when you start working because you get the tax deduction, and then you can use the amount of the deduction to contribute to your TFSA. There are certain rules that claw back your annual contribution room into an RRSP if you contribute to a pension. See your tax advisor.
Pensions. If I contribute to a pension does that claw back my TFSA contribution room or otherwise affect my TFSA in any way? Answer: No.
The $10K contribution limit for 2015. This was PM Harper's pledge. In 2015 the Conservative government changed the rules to make the annual government allowance $10,000 per year forever. Note: withdrawals still converted into contribution room in the following year - that did not change. When the Liberals came into power they switched the program back for 2016 to the original Harper rules and have kept the original Harper rules since then. That is why there is the $10,000 anomaly of 2015. The original Harper rules (which, again, are in effect now) called for $500 increments to the annual government allowance as and when required to keep up with inflation, based on the BofC's Consumer Price Index (CPI). Under the new Harper rules, it would have been $10,000 flat forever. Which you prefer depends on your politics but the TFSA program is massively popular with Canadians. Assuming 1.6% annual CPI inflation then the annual contribution room will hit $10,000 in 2052 under the present rules. Note: the Bank of Canada does an excellent and informative job of explaining inflation and the CPI at their website.
Losses in a TFSA - you cannot claim a loss in a TFSA against income. So in a TFSA you always want to make money and never want to lose money. A few ppl here have asked if you are losing money on your position in a TFSA can you transfer it in-kind to a cash account and claim the loss. I would expect no as I cannot see how in view of the fact that TFSA losses can't be claimed, that the adjusted cost base would somehow be the cost paid in the TFSA. But I'm not a tax lawyeaccountant. You should consult a tax professional.
Transfers in-kind to the TFSA and the the superficial loss rule. You can transfer securities (shares etc.) "in-kind," meaning, directly, from an unregistered account to the TFSA. If you do that, the CRA considers that you "disposed" of, meaning, equivalent to having sold, the shares in the unregistered account and then re-purchased them at the same price in the TFSA. The CRA considers that you did this even though the broker transfers the shares directly in the the TFSA. The superficial loss rule, which means that you cannot claim a loss for a security re-purchased within 30 days of sale, applies. So if you buy something for $20 in your unregistered account, and it's trading for $25 when you transfer it in-kind into the TFSA, then you have a deemed disposition with a capital gain of $5. But it doesn't work the other way around due to the superficial loss rule. If you buy it for $20 in the unregistered account, and it's trading at $15 when you transfer it in-kind into the TFSA, the superficial loss rule prevents you from claiming the loss because it is treated as having been sold in the unregistered account and immediately bought back in the TFSA.
Day trading/swing trading. It is possible for the CRA to try to tax your TFSA on the basis of "advantage." The one reported decision I'm aware of (emphasis on I'm aware of) is from B.C. where a woman was doing "swap transactions" in her TFSA which were not explicitly disallowed but the court rules that they were an "advantage" in certain years and liable to taxation. Swaps were subsequently banned. I'm not sure what a swap is exactly but it's not that someone who is simply making contributions according to the above rules would run afoul of. The CRA from what I understand doesn't care how much money you make in the TFSA, they care how you made it. So if you're logged on to your broker 40 hours a week and trading all day every day they might take the position that you found a way to work a job 40 hours a week and not pay any tax on the money you make, which they would argue is an "advantage," although there are arguments against that. This is not legal advice, just information.
The U.S. Roth IRA. This is a U.S. retirement savings tax shelter that is superficially similar to the TFSA but it has a number of limitations, including lack of cumulative contribution room, no ability for withdrawals to convert into contribution room in the following year, complex rules on who is eligible to contribute, limits on how much you can invest based on your income, income cutoffs on whether you can even use the Roth IRA at all, age limits that govern when and to what extent you can use it, and strict restrictions on reasons to withdraw funds prior to retirement (withdrawals prior to retirement can only be used to pay for private medical insurance, unpaid medical bills, adoption/childbirth expenses, certain educational expenses). The TFSA is totally unlike the Roth IRA in that it has none of these restrictions, therefore, the Roth IRA is not in any reasonable sense a valid comparison. The TFSA was modeled after the U.K. Investment Savings Account, which is the only comparable program to the TFSA.
The UK Investment Savings Account. This is what the TFSA was based off of. Main difference is that the UK uses a 20,000 pound annual contribution allowance, use-it-or-lose-it. There are several different flavours of ISA, and some do have a limited recontribution feature but not to the extent of the TFSA.
Is it smart to overcontribute to buy a really hot stock and just pay the 1% a month overcontribution penalty? If the CRA believes you made the overcontribution deliberately the penalty is 100% of the gains on the overcontribution, meaning, you can keep the overcontribution, or the loss, but the CRA takes the profit.
Speculative stocks-- are they ok? There is no such thing as a "speculative stock." That term is not used by the CRA. Either the stock trades on an approved exchange or it doesn't. So if a really blue chip stock, the most stable company in the world, trades on an exchange that is not approved, you can't buy it in a TFSA. If a really speculative gold mining stock in Busang, Indonesia that has gone through the roof due to reports of enormous amounts of gold, but their geologist somehow just mysteriously fell out of a helicopter into the jungle and maybe there's no gold there at all, but it trades on an approved exchange, it is fine to buy it in a TFSA. Of course the risk of whether it turns out to be a good investment or not, is on you.
Remember, you're working for your money anyway, so if you can get free money from the government -- you should take it! Follow the rules because Canadians have ended up with a tax bill for not understanding the TFSA rules. Appreciate the feedback everyone. Glad this basic post has been useful for many. The CRA does a good job of explaining TFSAs in detail at https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
Unrelated but of Interest: The Margin Account
Note: if you are interested in how margin accounts work, I refer you to my post on margin accounts, where I use a straightforward explanation of the math behind margin accounts to try and give readers the confidence that they understand this powerful leveraging tool.
*** Updated Research SWK provides an amazing opportunity to take advantage of the bull market in precious metals at an undemanding valuation with excellent operational momentum. Environment: Precious metals have had a phenomenal ride lately; both due to fear arising from COVID-19, and coordinated monetary policy stimulating economies at an unprecedented level. The graphic below shows the recent parabolic move in GLD (overshadowed by SLV) and reflecting upon the 08 crisis and the numerous QE policies that followed, this upward trajectory may continue further. GLD vs DJIA (2006-Present) With rises in commodity prices, the logical next step is to get some operating leverage and purchase the gold miners. No doubt, this second level thinking has been handsomely rewarded albeit encountering the sovereign and FX risks with many of the global miners domiciled in South Africa and Russia: DRDGold, Polyus and Polymetal (April 20 - Present) Since many of these miners are in the process of expanding production, cash flow won't be realised for several years and operating margins may not improve as much as managements' forecast (i.e. ASX: DAC). Further, since the market has drawn the logical connection between commodity prices and miners, these companies have run a very long way in the last few months. Company Overview: This is where SWK provides us with a cheaper and lower risk opportunity to gain access to this thematic. SWK provides drilling services to large miners of metals (i.e. nickel, silver, gold etc.) in US, Canada, Europe and Australia. Specifically, they use specialised drills to extract samples, which they analyse to then assess to the viability of a site. Increasing demand for mining exploration will, intuitively, increase drilling utilisation and drilling rates. SWK also entirely owns Orexplore, which provides mobile sample analysis to determine the characteristics of extracted cores. This improves the efficiency of examining the quality of a site by removing cost (transportation and storage), timing (it can be conducted on-site), and operational risk (damage in transit) all of which further benefit the mining co. and embed SWK into the exploration process. Competitive Advantage: SWK’s competitive advantage is being able to a world class cost effective and efficient underground drilling. For example, their development of DeepEX allows for longer hole from underground that are cheaper than many shorter surface holes. Their recent contract extension from BHP at Olympic Dam despite competitors (i.e. MSV and BLY) rigs being used onsite is testament to their value proposition. SWK has also invested heavily (~$25mn) into their Orexplore technology in an attempt to move up the value chain away from high-capital intensive drilling into a higher margin business. This technology removes significant operating expenses (employees and equipment), reduces lead time (can be built and shipped globally within 2 weeks), is very simple to use (technical training is not required), and most importantly, is currently being purchased for free and is the main catalyst in this investment (more on this later). Furthermore, SWK has made a concerted effort to increasingly diversify their product offering to different miners (with exposure to various commodities), and geographically. Their global and diversified footprint has provided them with a world-wide footprint, with costs to build their global business already incurred (most recently in Pogo – Alaska), further encouraging a buyout (more on this later). FY19 Financial Report H1 2020 Financial Report Catalyst and Valuation: Exit Options: The primary catalyst for a revaluation in SWK is a huge macroeconomic tailwind providing momentum that might facilitate a sale of the drilling business to a strategic buyer. Without doing too much crystal ball gazing, I view the exit opportunities as follows: 5% - Amazing sale of drilling business = >100%+ returns; 65% - Solid sale of drilling business = 50-100% returns; 20% - No sale and general re-rate = 25-50% returns; 10% - Languishing business and capital destruction = -25%-0% returns. Given management’s firm guidance towards the sale (https://www.openbriefing.com/OB/Swick-Mining-Services-Ltd/2020/2/25/Swick-HY20-Results-Conference-Call/3716.aspx at ~08:00) I will focus on our base case that entails: (i) selling or closing surface drilling business as it’s the lowest margin / weakest vertical; (ii) selling underground drilling business; and (iii) refocus towards Orexplore either through taking the business private, IPOing a new entity or rebranding SWK. Given shareholders have been frustrated with SWKs delay in progressing the business towards a sale and having difficulty commercialising Orexplore it has been important to wait for a noticeable inflexion point in the business to attempt to “time” entry as much as possible. Let’s see how the inflexion point is here beyond the macroeconomic environment above. Miners around the world are aggressively looking to expand their operations due to increasing commodity prices and SWK's services become front of mind. Recent news is ticking all the boxes and adding huge momentum in the stock to catalyse a re-rating.
Reinstatement of dividend payment and share buyback program showing prudential capital management and a positive outlook relating to future financial position. This is a double-edged sword as management raised capital at 23c and bought back shares from 12.5c through to 17.5. By buying now, we have avoided this dilution although acknowledge this was not the best form of capital management. On the other hand, it does suggest management are flush with cash and happy to redistribute to existing shareholders before a possible sale; that is, we get paid to wait:
Contracts are being extended, new contracts being won, and guidance on FY21 figures. Management are highlighting clear intention to demerge and growth is providing EBITDA growth for a better sale price:
The Orexplore website (https://orexplore.com/the-orexplore-review/) has received increased attention with far more activity within their “Review Blog” section leading towards commercialisation. Posts are being made almost weekly increasing its awareness:
MSV as the strategic buyer for the drilling business has shown intent to inorganically expand their operations. Deepcore had an EV of ~$44m (excl. additional earnout payments), revenues of ~$50m p.a., and an EBITDA of ~$12m with approximately half the rig number of SWK. This purchase confirms the “fair value” multiple for a drilling business is ~4x EV/EBITDA, even for a significantly weaker private business due to utilisation, profitability, scale and contractual certainty.
https://preview.redd.it/jumpn58y2dh51.png?width=602&format=png&auto=webp&s=ad650e7b63b341e06ddd0a8bff88121249a03925 Valuation: Ok, so let’s turn our attention to the forward guidance and conservative estimates for SWK. SWK against mostly all metrics is very cheap. Management have forecast EBITDA to be ~$25mn in FY20. Although I think we can conservatively estimate this to grow significantly throughout FY21. The improvements to EBITDA will come from the following: (i) commercialisation of Orexplore = $0.5-1mn, (ii) ~$3-4mn in reaching steady state (20%) margin from the Pogo contract as costs normalise and backdated earnings flow through; (iii) ~$2mn in operating expense reduction during COVID-19; (iv) the $120m increase in the order book between 30 July and 14 August implies $120/5 = $24m p.a. at a slight discount to target margin of ~15% gives another $3.5mn EBITDA. Putting this all together FY21 EBITDA might be ~$35mn. In addition to the purchase of Deepcore, we can use the current valuation ratios of MSV and CAPD as a guide. Currently competitors trade between 3.5x (CAPD) and 4.5x (MSV) EV/EBITDA multiples. If we use 4x as a reasonable multiple on current EBITDA, this would imply an enterprise value of ~$100mn (or a 30% upside) whilst paying nothing for Orexplore. Upon conservative forward FY21 EBITDA figures, the enterprise value could easily reach ~$150 (or a 100% upside) again paying almost nothing (only $1mn / $35mn in EBITDA) for Orexplore. By way of reference, SWK with similar metrics in 2011/12 was trading at a ~100% premium (i.e. ~40c (market cap $90-110mn) whereas now it is ~$20 (market cap $50mn). A decade ago, it also did not have the same existing clientele and large-scale contract wins (see 3a above with a forward order book of $363mn (relative to current revenues of ~$150mn). The cherry on top of this investment is Orexplore, which we buy for free. None of the revenue and earnings multiples above include any real impact from Orexplore. On 14th August the commercial viability of Orexplore was been partially validated with their first contract win. Although its value is only $700,000 over 6 months this call option like payoff comes entirely for free. Further, the true profit margins of SWK has been hidden due to the losses incurred from Orexplore, which has to date cost $25mn in R&D (or equal to almost 10yrs of earnings), the amortisation of associated software development, and continued global expansion (Portugal and Europe before North America) each requiring initial costs prior to achieving target margins. Even better we get a first glimpse at how attractive Orexplore might be. Combining discussion in the latest conference call (https://www.openbriefing.com/OB/Swick-Mining-Services-Ltd/2020/2/25/Swick-HY20-Results-Conference-Call/3716.aspx 04:30 - 06:30) with the recent contract we can conclude the following: (i) 3 machines at Sandfire will generate ~$3.6mn in revenue covering approx. 50% of cash flow with nearly no operating expenses; (ii) $700,000 for 6months scanning 1500m of core per month implies ~$75/m (against an estimated $100m from guidance). As per guidance, if we assume Orexplore machines can scan ~$4m/hr ($300hr) and total costs may include one unskilled technician and minimal overheads ~$50mn this provides a gross margin of ~75% (or almost 4x undergrounding drilling). Due to the profitability of Orexplore, 15-20 operational machines on yearly contracts would provide greater earnings than SWK’s entire business. Hopefully the publicity of Orexplore at Sandfire can attract some attention, and in turn some additional contracts. Risks: No investment is without its risks, and for SWK they fall into: (i) capital mismanagement; and (ii) poor communication / delays. Firstly, the recent capital raise at ~23c followed by aggressive buybacks at ~12.5-14c-17c seems unwise. Although buying now avoids this dilution, it is unclear why excess capital was required if dividends and buybacks were announced shortly thereafter. Secondly, the share price has historically languished due to a lack of publicity and detail on the transformational Orexplore. It is likely that management were unwilling to oversell the Orexplore narrative before genuine contracts were won and the technology was established. Now that these are in place, hopefully the corporate restructure can take place and the upcoming strategic review can provide a clearer picture for the near term.
There have been one or two reports of degradation on Zen 2 at surprisingly low voltages. We need to review this and figure out if the advice needs to change, and if so what to. But first, let’s cover how ‘safe voltages’ work, why 1.325V was recommended, and why these reports are very surprising.
Part 1: What makes voltage “safe” or “unsafe”
There are two (and a half) main types of failure related to voltage: electromigration, and oxide breakdown (or dielectric breakdown). Electromigration is most commonly considered, but with how aggressive Zen 2’s Precision Boost is it’s important to understand oxide breakdown in order to understand what can make voltage safe or unsafe on Zen 2. There are of course many other failure mechanisms for silicon chips, some of which do relate to voltage, but these two should be enough to understand for a sensible discussion.
Electromigration is a process where an electric current leads to physical damage to the conductor. This is described as being due to moving electrons physically hitting atoms – I don’t know if this is a theory or proven, but it’s a good way to understand it. You can see the physical effect of electromigration under an electron microscope here: https://upload.wikimedia.org/wikipedia/commons/5/5f/In_situ_electromigration.gif Electromigration is described by Black’s Equation, which doesn’t include voltage as a parameter but does include current and temperature. As far as I know there isn’t a way to figure out the exact relationships between voltage and lifetime or temperature and lifetime without either experimentation or more information than is publicly available, but in general;
The higher the temperature, the faster electromigration does damage
The higher the current, the faster electromigration does damage
Note that this is about speed of damage, not ‘damage or no damage’. Unless you’re running at absolute zero, electromigration will always be taking place. More on this later. Electromigration could in principle occur anywhere on a chip – ranging from a weak spot in a specific part of a chip, to a big power plane, or even parts of the package not on the silicon itself. Voltage affects electromigration directly because current is typically directly proportional to voltage. However, as long as the specific parts active aren’t too delicate, it’s possible that a lighter load that draws less current could be run at a much much higher voltage before electromigration would become a concern. Taking a simplified view, if the cores are robust but the internal power plane is delicate then you could run a very high voltage through one or two cores as this still wouldn’t be pulling too much current through the power plane, but an all-core load would need reduced voltage to keep the current under control.
1.5: Dielectric Breakdown
Dielectric breakdown, also known as oxide breakdown when applied to semiconductors, happens when the voltage across an insulator is enough to forcibly turn it into a conductor. For example, we can see air being subjected to a form of dielectric breakdown when a spark happens. Immediate dielectric breakdown shouldn’t occur in normal overclocking, but when a high enough voltage instantly kills a CPU, this is why.
2: Time-dependent Gate Oxide Breakdown
Time-dependent gate oxide breakdown happens as a result of a transistor being subjected to high voltage that isn’t enough for immediate dielectric breakdown, regardless of current. The mechanism doesn’t seem to be well understood, but the practical result is that random damage adds up over time. The main consideration for time-dependent gate oxide breakdown seems to be voltage, it seems probably that temperature would have an effect as well. There are physics mechanisms by which voltage leads to oxide damage like hot-carrier injection, I would characterise time-dependent gate oxide breakdown as the observed effect of all the various mechanisms. Because voltage affects time-dependent gate oxide breakdown directly, it doesn’t seem to me that how heavy the load is would affect it directly. However, any parts that are completely power gated would not be subject to time-dependent gate oxide breakdown while power gated. A single-core load would not intrinsically be any less at risk of time-dependent gate oxide breakdown, it could be mitigated by hopping the load between cores, but only to a fairly limited extent.
“Safe” vs “Unsafe”
Both electromigration and time-dependent gate oxide breakdown are processes that are always happening to a certain extent, as long as the chip is powered on. Reducing voltage reduces their rate, and increasing voltage increases their rate. Electromigration is also slowed down by reducing temperature, and both are reduced by lighter workload since as well as the reduced current drawn you can power gate more of the chip. In a way this means there is no such thing as a “safe” voltage. Simply running a chip damages it, even at stock, regardless of voltage. So what we mean when we say “safe voltage” is effectively something like; “The voltage at which it’s expected that the chip will not be damaged or destroyed so fast that we regret overclocking it” “Safe voltage”, unless you’re undervolting, does not mean and has never meant that the lifespan of the chip is unaffected nor that degradation will never take place. However the expectation is that degradation should take many years to appear. “Safe voltage” is also, and I cannot stress this enough, not a magic value where there’s no value below it and loads above it. It’s just an arbitrary line in the sand. This terminology and the concept of “safe” is in itself something that may need to be revisited at some point. In the past the tradeoff when overclocking was mainly increased power consumption above an arbitrary TDP, or eating into voltage margins. We now live in an era where turbo at stock takes chips well beyond their arbitrary TDPs anyway, and platform design is getting better at narrowing the voltage margins with Intel’s tightly regulated IVFIVR on some platforms and AMD’s clock stretching to deal with transients on a cycle-by-cycle basis.
LLC digression or “playing lawyer against the laws of physics”
In relation to “safe voltage” it’s also worth pointing out that there’s always an assumption that a sensibly low LLC level with a decent bit of Vdroop will be used. Some people will set the “safe” voltage then start pushing up LLC to get more and more load voltage. The chip is of course affected by the voltage and current actually going through it, not the bios settings, and will take damage just as it would at a higher set voltage with more Vdroop. When people think there’s somehow a loophole that lets them raise voltage without it being “unsafe voltage”, they can tell the chip that all they want, but it won’t listen to them and un-degrade itself. This isn’t directly relevant but is worth noting when talking about “safe voltage”. Similarly if you go the other way and have very high droop but tune to hit precisely the “safe voltage” according to monitoring software under load, with a set voltage well in excess, you’re running higher voltage at both idle and load than someone saying “X volts is safe” intends. Anyway…
Part 2: Where voltage recommendations come from
Traditionally there are three ways for the community to find out what voltage is “safe” for a particular chip;
The manufacturer just says what they think is “safe” directly. Examples include OCZ, who included a max voltage in their memory warranties, and AMD in the FX and Phenom II days who did not warranty overclocking but did include some conservative voltage advice in their Dragon platform performance tuning guide and FX performance tuning guide.
Employees or associates of the manufacturer with access to privileged information develop a personal opinion as to what is “safe” informed by that information, then share that opinion as nothing more than a belief that they personally sincerely hold. Intel are currently an example of this, with employees in their OC division willing and allowed to share personal opinions on what they run their personal systems at in a way that Intel can’t be held to.
Guesswork based on what similar chips can take, and feedback from people who have been able to degrade or kill chips. Related to this is a “rule of thumb” that OC power should be less than 2x stock power, but that isn’t necessarily reliable as some chips (especially at the top end of core counts) are constrained on stock power by sanity and not safety, whereas others might be pushed closer to their limit at stock than 2x implies.
Recently two more methods have been employed;
Looking for appropriate information in datasheets. This does not work – unless you think every single non-IVR Intel CPU back to at least 32nm Sandy Bridge has been able to take exactly the voltage that just happens to be the maximum possible with their VID table. There are also issues with mistaking stress ratings for 24/7 operation, such as with DDR4 where the 1.5V stress rated has been wrongly conflated with “1.5V, plus whatever noise comes out of the VRM above that, all day every day”.
Reverse engineering firmware. This is a fairly new thing with modern AMD CPUs, which are programmed with a complex boost algorithm. The idea is that given the boost behaviour shouldn’t apply an unsafe voltage, see what you can get it to apply with a given load and that should be safe for that load.
Variance between chips happens – different leakage means different current draw and therefore different electromigration at the same voltage, oxide layers will vary in thickness, and so on – and is rarely explicitly addressed, but when a manufacturer has had a hand in recommendations you can bet that it’s accounted for and the number given is close to being a lower bound. When numbers come from the community, ultimately there’s information about degradation that has been fed back, so that’s also reacting to the more delicate chips.
Part 3: Where 1.325V for Matisse comes from
I’m going to use more active voice for this part, as I’m talking about my personal thinking and choices. If you’re reading this, you’re probably aware of The Stilt’s excellent “strictly technical” articles. The immediate reason for the 1.325V recommendation will seem obvious – The Stilt quoted 1.325V as the average value that a Matisse chip’s own firmware will allow for intensive loads. A subreddit user (I can’t remember the spelling of their name but they have a strong history of good contributions) also linked to this with a title along the lines of “Maximum all-core voltage for ryzen 3rd gen is 1.325V”. I also pinned this post for a while. The obvious reading is that this was seen out of context, taken as gospel, and the nuance discarded. In fact, some information had already made its way to me already from very credible sources. This was very limited and what I can responsibly share is even more limited, because for some reason this is treated as super duper secret, and while I disagree with that it’s not my choice. I’ll also say now that I won’t be answering any questions at all about this, or engaging in conversation about it, nor will I be blinking a set amount of times or anything else. I understand that’s frustrating but I’m lucky to be able to even mention this. The information I have indicated that the 1.325V value that was getting popular was if anything conservative. To be clear, this related to values given as friendly advice by people in the know – certainly assuming long-term use, but also assuming high-end cooling. And definitely not something anyone should be held to (I suspect not being held to anything is why this is so locked down). However this gave me an indication of what not to be alarmed by, that placed 1.325V squarely in the “not alarmed” box. I’m talking about this because it’s the truth behind what happened, and it does not take precedence over actual experiences. It’s also worth nothing that many credible media outlets had shown overclocking results with much higher voltages, such as techpowerup who tested their 3700X with 1.4V. The choice was therefore, rather than declaring a higher voltage than 1.325V or looking further into it, to accept and endorse the value that was getting popular on the basis that, as well as not going against the tide, it should be on the safe side. This was also supported by the public information – after all, The Stilt didn’t talk about messing with “reliability scalars” for Matisse. 1.325V average for Matisse appeared, in terms of safety, equivalent to 1.33V for Pinnacle Ridge – and short-term degradation for Pinnacle Ridge was only reported, to my knowledge, above 1.38V.
Part 4: Why 1.325V might not be a good recommendation for Matisse
There have been multiple reports of chips degrading in surprising ways. For example;
A 3900X “died” (no longer stable at stock) from 1.36V set voltage with droop to a software measurement of 1.32v under load. This was “at 80C most of the time”. (report from AHOC supporters discord)
Now, these chips will all limit themselves to different voltages at stock when governed by SenseMI – different “FIT voltages” as they’re called – and it certainly seems likely for them to be less than 1.325V. However, as explored above, it’s not in itself unexpected that 1.325V would be above what’s practically a stock voltage. Again, even setting aside any whispers from any sources, even a chip with a very low 1.275V “FIT voltage” would be expected to last well at 1.325V based on how Pinnacle Ridge behaved. This means one way or another there’s something unexpected happening. What it doesn't seem to be is user error. There are too many reports for that at this point, and while some may be a little above 1.325V the effects still wouldn't be expected this soon.
Part 4.5: Things about Matisse that might complicate the situation
Fair warning, there’s going to be speculation in this section. I want to try and enumerate the possibilities to figure out what’s going on, and specifically avoid jumping to any conclusions. Frankly, I don’t think there is a single obvious conclusion. But first I want to talk about what we know. What we know about how Matisse differs from past CPUs:
Matisse is on a different process. This means resistance to electromigration and resistance to oxide breakdown will be different. Obviously this affects what voltage is safe, and will have different effects in low-current and high-current conditions. However, electromigration is also affected by temperature and a change to the process means the nature of the temperature scaling will be different.
Matisse selects clocks very quickly, apparently every 1ms, which will be faster than monitoring utilities poll. Hwinfo64 for example polls every 2 seconds by default, and has a minimum polling interval of every 50ms.
It’s possible that Matisse might have onboard dLDOs that are active when running PBO. Older Ryzen generations have these but they’re locked in bypass mode on desktop SKUs, since they wouldn’t be able to take the current. If they were activated on Matisse it would potentially allow for a higher all-core voltage while protecting more sensitive cores.
Part 5: Where do we go from here?
What we won’t do is say “don’t overclock”. There are always ways to tune performance – trading away power, eating into voltage margins by using a better than baseline motherboard, or improving cooling. But we need to look at the options.
Option 1: Reduce the suggestion for a “safe” fixed voltage
We could drop the blanket recommendation, say to 1.3v or 1.25V. If we go low enough it has to be safe – but it would probably make a fixed OC worse even all-core than stock on many chips. This does retain the benefit of giving users a single straightforward value.
Option 2: Tell people to determine their own safe voltage
This is the option that seems to be gaining mass popularity, and I guess would be the ‘path of least resistance’ now in the way 1.325V was previously. The idea is to still treat every chip as having its own concrete “safe voltage”, just per individual chip rather than per family as was done in the past and with option 1. The way this works is having assumed there’s a specific “safe voltage” per individual sample, we then assume that an end user can experimentally determine this for themselves with reliable results. The recommend method I’ve seen is to enable PBO (thus lifting off power and current limits), run the heaviest possible all-core workload, and then use software voltage monitoring to see what voltage the chip is getting. There are a couple of problems with this. Firstly, user error exists. Someone might pick the wrong prime95 setting, not assign enough threads, or have a background load that reduces the overall stress on the CPU. Secondly, if temperatures have an effect then someone might be testing at lower temperatures than they see under real load and still end up with an excessive voltage number. I also worry about this option because I already see some users arguing an obviously excessive voltage like 1.4V is fine because their chip runs it with PBO, and I can forsee some of the “Prime95 is overkill” crowd wilfully deciding to base their fixed voltage on a load that leads to a higher voltage. Reasons temperatures could change include change of room temperature, increases in dust affecting the cooling, and extra GPU load dumping heat into the case. It’s also possible an impatient user would just not let the system reach equilibrium. It’s my belief that this method is valid in many cases, but for the reasons above is not for everyone.
Option 3: Recommend PBO tweaking over fixed overclocks
Matisse chips seem to have a lot of room for tweaking without setting a fixed clock and voltage, and this also lets the chips boost higher for light loads compared to a fixed voltage as well as helping with idle behaviour. This also doesn’t mean we’d be banning discussion of fixed overclocks, just that it wouldn’t be the immediate recommendation for people with Matisse-based daily systems. The safe voltage FAQ entry for Matisse would say something like;
For Matisse it is recommended NOT to use a manual overclock in most cases. The technologies AMD collectively refers to as SenseMI, including Precision Boost 2, provide a very aggressive boost in lighter workloads while maintaining safety in heavier workloads in a way that a fixed manual voltage cannot compete with. You can of course still overclock Matisse chips but this is best achieved with Precision Boost Overdrive (PBO), which expands Precision Boost 2 power limits to trade power for performance (manual PBO limits can also trade performance to restrict power below stock).
It's my belief that this method would be the best to recommend. However I'd appreciate any and all constructive feedback people have.
This post applies to the infamous “Tarkov is not supposed to be a fun game.” quote from Nikita. First, I’d like to play devils advocate. The Dev Team have made numerous changes within this game that have improved aspects of QOL. Examples include the after raid healing, the anti-scam flea market implementations (I.e. trading your RR while it was still on your character.) and POST FX. I will even praise and kiss the golden feet of the men who finally struck down on radar hacks with encryptions. (I’ve noticed a huge difference in how I’ve died and how often I’ve died to an ambush.) I play in the mid-west so aimbot and speed hackers were a very rare occurrence, but a lowkey and undetectable radar was more than rampant. Most deaths I was left without a fighting chance, but all of a sudden most of my death come down to genuine gun-fights. However, when it comes to core in-game experience and progression, Tarkov has gone from hardcore and fun looter shooter, to micromanagement hell with high risk and low reward. •First Tasks and FiR changes. I’d like to clarify that I was apprehensive about the FiR flea market changes, however, I’d argue that it has made the player-driven economy better. On the other hand, the once tedious and boring tasks have become strenuous burdens. Streamers and people who spend a similar amount of time playing can play significantly more raids and can acquire the necessary items often. With this playtime comes more income and access to equipment, their risk is lowered in proportion to their stash. If they die with a rare task item that spawns in a specific location, no biggie, they’ll just get back into the raid and try again. -Here’s the main ordeal; casual players don’t have the time to deal with this and in order to successfully retrieve that item, a lot of things are placed at stake. Our limited time and our already lacking resources. We spend 1 or 2 hours a day and encountering a required item is unlikely. Most of these items spawn in highly contested areas. Should task items be a freebie? No, everything should require some appropriate amount of work. However, if I were to go to that contested area with my best gear. There are several likely outcomes -Somebody with a better spawn got there first, got all of the good shit and bailed. -I get there, loot the place and my required items are nonexistent
I get there find my items, place them in my secure container and leave the area, and on my way to extract I kill several scavs and the occasional PMC. By this point I’ve racked up more than enough XP to quality for FiR, but I can’t win every fight and I eventually parish to a player and often times a group of players.
-I get the item, and finish the raid🥳🥳 For me there’s nothing worse than dying with a required task item. I played the game the way the devs intended. I’m not Hatchet running, getting no XP, and sprinting my way to loot hotspots to gobble up all the good shit and die with it in my secure container to sell it on the flea market. I went in, got kills and eventually ran into a bigger fish. Now, after about 20-30 minutes of an unsuccessful raid, I have lost my expensive gear and my task goes uncompleted. This boring, uninspired game of fetch was pointless and I have to try all over again. This could easily be solved by removing found in raid requirements for tasks (which I think is an unnecessary extreme) or differentiating FiR for tasks from Flea market eligibility. This would improve everyone’s experience and RMT douchebags would have little to no benefit. •Second, The Weight System. At the moment, I believe the weight system is very balanced and enjoyable. I can’t pick up 3 Gen 4’s and 2 fully equipped SA-58s from raiders in labs and I’m okay with that. However, Nikita has remarked that the current games weight balance makes the game easy mode and he wants to change it. No, this game is not easy because I can carry a reasonable amount of loot that makes the raid worth it in the first place, the game is enjoyable. Easy would be taking in class 6 armor, a THICC items case and filing it up to the brim with raider loot and skipping out of Labs with a 12 mil rouble score. The average player did not do this in the first place, and I’m glad it’s no longer an option. If the weight is adjusted for the worst, what’s the point of playing with high tier gear? Why bring in my M1A and armor just to pick up a couple of scraps, when I could play as naked as this game allows you to be with a mosin and one shot a chad and take up his delicious gear? This occurs now on a small scale, but it will get much worse and practically unviable to run the best gear. •Third. In General, it just feels like recent changes aren’t implemented to make the game better, they’re implemented for the sole purpose of striking down on RMT and sacrificing the rest of us in order to do so. Ironically, these harsh changes are just encouraging the morally grey to say fuck it and buy roubles. Why deal with these harsh changes and low profit margins on high risk raids, when I can buy 20 million roubles and go guns blazing and actually enjoy a raid. What’s a 700k loadout mean to me now that I have so much? I don’t use RMT because I’d rather spend my money on real goods or other games, but at this point I wouldn’t blame somebody for doing it. I use to think that RMT takes the purpose and fun out of the game (and it still does, but I can’t blame somebody for being fed up with the current climate) but the game itself is just so punishing for those of us that don’t sit on our asses all day. •Finally, The current skill leveling is an absurd grind, especially strength. I’ve played 40+ hours this wipe and I have level 1 strength. Grenades are an expensive commodity and the only efficient form of leveling strength up. It truly feels like they don’t want this game to be fun. My stats so people don’t assume I’m a whiny chump who can’t play the game. 130 raids/ 61 survived (46%) 4.3 k/d 1.17 PMC k/d
Progress Report 51: Yes, Prime Minister (UK Pt. 1)
Hello, and welcome to Progress Report 51 for Calm Before the Storm. Today, we’ll be taking a look at the United Kingdom’s Peacetime Political Content. The PR schedule for the UK will be as follows:
Pt. 1 (This PR): Peacetime Politics
Pt. 2: Other Peacetime Content (re-armament, foreign, and colonial policy)
Pt. 3: Wartime Content
The UK in 1933 starts under the eyes of King George V and Prime Minister Ramsay MacDonald’s (National Labour Organization) Second National Government: Though the PM is from the Social Democrat party (NLO), the government was largely dominated by members of the Conservative and Unionist Party, commonly known to us as the Conservatives. The UK starts with the following national spirits: Pacifism: The terror of the First World War caused anti-war sentiments and pacifism to skyrocket in popularity, leading to a strong lack of support for intervention in Europe: The Great Depression: As you may know, the collapse of the American stock market had a similarly devastating effect on the British Economy, leading to the fall of the Second MacDonald Ministry (Labour Government) and the abandonment of the gold standard. However, by 1933, the economy had troughed and was slowly on its way back up. Subsequent governments had engaged on a rough austerity program that continues into the game’s start. The Sun Never Sets: Britain in 1933 boasts the largest colonial empire in history. As such, profits from the colonies are represented by making more consumer goods available for you, and the ability to conscript natives are represented as recruitable population. However, as the UK found out post-war, maintaining such a large empire is expensive. Welfare Spending: This is the first of the three parliamentary modifiers, which you may recognize from Progress Report 49. The UK uses the same parliamentary mechanics as Weimar Germany, meaning that changes in policy can be represented as a change in these dynamic modifiers. In 1933, the austerity program meant that relatively little was being spent on welfare. Revenue and Stimulus: This modifier represents combined revenue (taxes and tariffs) and stimulus spending. Thus, the modifier starts with a positive value as relatively little is being spent on output due to austerity, but the government is taking in much more from taxes and tariffs. Defense Spending: Like welfare, relatively little is being spent on defense at this moment. Let’s meet the parties!
Communist Party of Great Britain (CPGB): The CPGB is a stalinist party, and as you might expect, it is significantly influenced by Moscow. Their electoral goals are to transform the UK into a USSR-style Vanguard Party State. However, a distinction must be made between the more dogmatic party leadership and the more flexible party activists. The latter segment of the party puts significant emphasis on anti-fascist activism and cooperation.
Independent Labour Party (ILP): confusingly, the Independent Labour Party precedes the Labour Party itself, and is not a splinter group. Instead, the ILP was formed to allow for the representation of labour interests independent from the Liberal party. Though they have the same philosophical roots, the ILP is noticeably to the left of Labour. Their platform demands the immediate institution of minimum wage laws, workday reform, and nationalization of key industries.
Labour Party (DemSoc LP): Labour was not initially formed as a political party, but more of a coordinative umbrella group for organizing leftist parliamentary candidates. Up to 1932, when the ILP broke ties with Labour, it was common to see candidates as members of Labour and the ILP simultaneously. Labour’s 1934 program, which is used in-game, demands the establishment of a National Health Service, the nationalization of some industries, and other pro-working class positions.
National Labour Organization (NLO): The NLO is a splinter party from Labour, formed by Prime Minister Ramsay MacDonald to join the National Government. NLO policy is more loosely defined, but it is generally worker-oriented and definitely protectionist.
Liberal Party (SocLib LP): The Liberals and Labour are not one party. Their initials are just the same. The Liberal Party used to be one of the strongest parties in the UK until Labour and the ILP usurped them as the primary party of the working class. The Liberals are pro-welfare and pro-worker, though to a more moderate level than the other leftist organizations. They joined the National Government in 1931, but quickly left over policy disagreements.
Independent Liberals (IL): The Independent Liberals are not really a party, but rather an informal grouping around David Lloyd George and his family. Though they are also technically socially liberal as well, they left the Liberal Party over the Liberals’ joining of the National Government, which was decidedly protectionist where Lloyd George famously advocated for free trade, and have thus been given the market liberal slot.
Liberal National Party (LNP): The Liberal Nationals -- to become the national liberals after the war -- are another split from the Liberal Party. Unlike the Independent Liberals, the Liberal Nationalists are in favor of protectionism, and thus continue to support the National Government.
Conservative and Unionist Party (CUP): The Conservatives, sometimes known as Tories, start the game with an overwhelming majority in parliament. The CUP has several factions within it, including the semi-progressive One-Nation Tories, a more Liberal Faction, and the infamous High Tories. The High Tories and any Ultra-Royalists (neither of whom have seats, or at least any worth mentioning) have been abstracted in Authoritarian and Autocratic Despotism respectively. These wings cannot rise to any prominence. The dominant wing in 1933 by far is Baldwin and Chamberlain’s liberal wing, who support democracy, liberal economics (though with protectionism), and cautious welfare measures.
British Fascists: The British Fascists claim to be a fascist party, though are more accurately described as an Ultra-Royalist Anti-Communist group. They peaked with a few thousand members in 1926 when their leader, Rotha Lintorn-Orman predicted that the General Strike of that year would lead to a violent Bolshevik revolution, only to be met with peaceful actions. By 1933, the organization was all but defunct, as much of its money was spent on parties. It dissolved in 1934, and Lintorn-Orman died the following year.
British Union of Fascists (BUF): In 1930, an influential member of the Labour Party, Oswald Mosley, published his “Mosley Memorandum” and pressured Labour to adopt it as their platform. The memorandum included significant public works projects and the adoption of a form of economic corporatism. When Labour refused to accept it, Mosley left and formed a new party called the New Party. Though it did not win any seats in 1931, it did garner a surprising amount of vote share in some constituencies. After meeting with Italian dictator Benito Mussolini, Mosley founded the British Union of Fascists on the Italian model.
Parliament: Instead of starting with the focuses, we will be starting with the House of Commons: The House is programmed to show only those parties who have seats, so if, for example, the Communists gain seats (which they are programmed to in 1935), they will show up as having them. However, if they lose those seats, they will disappear. As you can see, the National Government has such an overwhelming coalition that for the first couple of years in the game, you cannot fail to pass any laws. Please seeearlierprogressreports to learn about Parliaments. Finance Acts are only available for the given year. Unlike in other nations, British laws cost less and take less time to complete, as there is a very high volume of them. Other acts will become visible as you take the focuses in the tree. The Trees: We will start with the National Government Tree which should last you until the 1935 election. Now, very little happens in the UK in terms of parliamentary policy until the Government of India act (which will be handled by the colonial policy tree), so these might seem like filler, though there are important acts that lay the groundwork for further reforms. Unlike in Weimar Germany, multiple laws can be tied to a single focus. For example, the Legal Reform focus offers six focuses that bleed into the post-election period These laws will become available about 1-2 months before they were enacted (as written on the documents themselves). You can take the focuses at any time, though the laws will not necessarily show up immediately. The AI will only take the focuses at an appropriate time. Reforms in Scotland is a vital focus to take here, as it allows you to enact other laws relating to Scotland There are other smaller focuses, such as “Prevent Animal Abuse” and “The Petroleum Production Act”. All these focuses except for the header unlock laws rather than directly affecting your country. This includes those focuses with a single law, such as “Married Women’s Rights” or “Amend the British Nationality Act”. These should take you up to the 1935 election. This is the only election event, and will be used for all elections. Note that the text and results are dynamic. You do not get to directly choose the results of the election. Instead, the game will automatically reallocate seats in the House of Commons, and the winner is chosen from there. If the Conservatives have more seats, then they will declare victory. If Labour has more seats, then they will have won. Only the CUP and Labour can win elections. The UK’s voting system, first-past-the-post, strongly favors large parties as it gives the constituency to the candidate with the most votes regardless of vote share. As such, to properly model the UK’s electoral system, the algorithm in-game is heavily biased towards Labour and the CUP.These are the seats reallocated using the popularities at start. Note that in 1935, and 1935 only, the CPGB, ILP, and IL are scripted to get their historical amount of seats at minimum regardless of popularity. As the Conservatives won the election, the Conservative Tree is opened up. The Conservatives will try to enact their historical legislation between 1935 and the start of the war in 1939, as well as three fictional laws at the bottom. The laws, like in the National Government tree, are roughly arranged in order of year, but are grouped together when it is appropriate. The Conservatives are interested in democratic and pro-worker reforms, but at a far more cautious rate than Labour. As you can see, major pieces of legislation receive their own focuses. At the bottom, you have the three fictional focuses. Here are three examples of laws. Here is an [example of an effect]https://i.imgur.com/unpvda8.png. National spirits are a rare consequence of an act. This is a more common set of effects. If Labour is elected, they will of course have their own tree. You might notice that some of these focuses overlap with the Conservative tree. Said focuses either include more laws or will be automatically bypassed if the Conservative version of the focus is already complete. Labour will largely attempt to enact legislation from their victory in 1945 to 1950. This is allowable because the actions of the two Attlee Ministries largely match their 1934 program. However, what if Labour is elected early? In this case, the game will record when Labour is first elected, and use that as a starting point for all the laws. Therefore, if Labour is elected 10 years early, the laws will be scheduled for 10 years earlier. If Labour is elected 5 years early, the laws will be scheduled for 5 years earlier, etc. Labour will want to reverse Conservative restrictions on strike actions and improve education. However, their primary goal is the nationalization of resources and utilities. This includes the nationalization of Coal, Electricity, Transport, Water (which was actually done by the Caretaker government in 1945 but is included here if it is not done earlier), hospitals (the NHS), communications, and the Bank of England. You might notice that labour has far more laws than the Conservatives do. This is accurate to what happened historically. Whereas the House of Commons may have enacted 14 laws on average between 1933 and 1938 (inclusive), Labour enacted 22 between 1946 and 1950 (inclusive). However, after Labour takes both nationalization focuses, and are still in power six years later, they will get this event. In short, it is a proposal to introduce elements of democratic management into state-owned workplaces. An act will be slated to unlock for seven years after Labour is first elected to this effect. Of course, refusing it might be better if you’re starved for political power… Event Chains The UK has received several event chains to provide a sense of political development as a supplement to the focus tree. We’ll go over them now. We’ll start with the Labour Party chain. In a gameplay sense, since you cannot directly choose a Labour victory, this chain is one of the mechanisms used to allow a player to go down the Labour path. As a result, a player who wishes to remain Conservative now has greater impetus to complete the National Government tree. The chain starts with the 1934 London City Council election, in which the Conservatives lost control for the first time in thirty years. The LCC will immediately get to work improving infrastructure and services. However, these projects will cost money, and Labour will soon run out the 2M pounds in the treasury. Concurrently, Labour will adopt a new platform at their 1934 conference. This platform would be the basis of the policies of the Attlee Ministries, and thus the Labour path in-game. If fascism continues to expand into Europe, then Labour will to pressure their leader, the arch pacifist George Lansbury to resign. If fascism does not continue to expand into Europe, then he will remain. Otherwise, Labour will want to take the party in an actively anti-fascist direction, which forces them to abandon pacifism (though they officially maintained an anti-war position in opposition to Conservative policy). Labour will then soon hold its leadership election. There are three possible Labour Leaders: Clement Attlee, deputy party leader; Herbert Morrison, leader of the LCC; and Arthur Greenwood, the former minister of health. The winner is determined randomly. Related to the Labour Chain, the Pacifism sub-chain will begin in February 1933 with the King and Country Debate. A few years later, this will be followed up by the Peace Ballot, a poll conducted by the League of Nations Union. The Socialist League subchain details the story of the eponymous Socialist League, a left-wing faction within Labour. The League wanted to bring Labour into cooperation with the ILP and the CPGB, which was rejected by the party at large. Note that this happens in 1937, and Labour will have the opportunity to entertain this proposal, though nothing will come of it. The Socialist League dissolved soon after. The British Union of Fascists chain begins in early 1934, when the Daily Mail prints a headline declaring “Hurrah for the Blackshirts!” Lord Rothermere was a personal friend of Mussolini and Hitler, and was thus enthusiastic at a properly fascist party in the UK. However, this is where the BUF peaks, as support will steadily decline as the Blackshirts engage in thuggery and violence at events, culminating at the Olympia Rally. The chain will pick back up again in 1936, as Mosley announces a march through the East End. Stepney residents appealed to higher authorities, both inside and outside the government, but ultimately, they had to organize themselves. These efforts were led by the Jewish People’s Council and Communist Party MP Phil Piratin. Right before the march, local officials and activists will pressure the Home Office to prevent the march, which was historically ignored. However, the player and the AI have the choice of following through. It is thus entirely possible to avoid the Battle of Cable Street entirely. However, if the march is allowed to continue, there are three possible outcomes. The historical outcome has the highest chance of happening, and will always happen if historical focus mode is on. Historically, Anti-Fascist groups including Communists, Anarchists, Socialists, Jewish Groups, and Irish Dock Workers managed to establish a blockade blocking the march, which the police tried to reroute to Cable Street. They were likewise unable to go past the blockade at Cable Street, after which the march was called off. Should the police manage to clear out some of the first blockade, the Blackshirts will attempt to go through their planned route. This will trigger an all-out brawl with the anti-fascists, who outnumber the police and Blackshirts by over two to one. They will force the Fascists out by force, which is deemed a “full anti-fascist victory” (as opposed to the historical anti-fascist victory), though the BUF will use this opportunity to victimize themselves. Now, the logical third outcome would be a fascist “victory”. In this rare scenario, East End activists are unable to convince the CPGB leadership not to hold an unrelated anti-fascist event at Hyde Park at the same time in support of Spain, while they were historically able to convince the Party Leadership to divert resources into helping the East End instead. The police will try and clear out the first blockade as in the ahistorical far-left victory scenario, but the anti-fascists will no longer outnumber the fascists by a large margin, and thus will create a standoff. This will be perceived to be a failure of the CPGB (within local and leftist circles) and thus cause a rise in support for the ILP instead. Should either anti-fascist victory scenario occur, the chain will end with a retaliatory Pogrom. The British Fascists event chain only has three events. First, the BF dissolves in late 1934. As written in the event, the BF was very much on the decline since 1926, and much of their budget was being spent on parties. It went bankrupt in 1934, and consequently dissolved. Rotha Lintorn-Orman will die the following year. However, in 1939, the Far-Right Authoritarian slot will be filled once more, this time by the British People’s Party. A splinter faction of the BUF, they are technically fascist, but they also adopted Social Credit policies. Finally, we have the Abdication Crisis Chain. It will really start in January 1936, when King George V dies. This will, of course, put Edward VIII on the throne. Edward VIII was popular among the people for his good looks and fashion sense, but was not trusted by the political establishment to properly fill his role as King. The monarch is meant to be politically neutral; they are not meant to give opinions on policy or try and influence legislation in any way. However, some of Edward’s remarks (in public!) made the establishment very worried that he was trying to influence public opinion and thus policy. In addition, whereas the King is meant to show a more measured middle-class personality in public, Edward wasn’t very discreet about his affair with Wallis Simpson, an American who in 1936 was separating from her second husband. When Mrs. Simpson divorced her second husband in October 1936, everyone assumed that Edward was going to marry her as soon as possible. The proposed marriage was opposed on moral, religious, political, and nationalist grounds. Faced with this proposition, Prime Minister Stanley Baldwin (though it could be a Labour PM, the chain is unchanged) offered him three choices. First, Edward could simply marry Mrs. Simpson, granting her the title of Queen Consort. Second, he could marry her Morganatically, which would deny her any titles. Thirdly, he could abdicate. The government and the Prime Ministers of the dominions were strongly against the standard Royal Marriage, stressing that option two and three are preferable. However, Edward proposed that he make a broadcast in which he would publically accept the Morganatic Marriage. Baldwin saw this as an attempt to influence public opinion, and blocked the speech. Faced with no other option, Edward chose to abdicate. His brother Albert will then take the throne as King George VI! The chain does not end here. First, Stanley Baldwin will resign in 1937 (even if the Conservatives are not in power) for health reasons. Secondly, Edward and Wallis, now the Duke and Duchess of Windsor, will tour either Nazi Germany or, if there is no Nazi Germany, he will tour Fascist Italy. And finally, Ireland will become a de facto republic. This will be moved to the Irish focus tree, but it is here for now to provide a mechanism for Ireland to break free. Full Tree So Far Frequently Asked Questions: Will it be possible to Keep Edward VIII, either through a morganatic marriage or other methods? Not in 0.1. We will look into options in future versions, but a morganatic marriage will not be possible. Edward can only have the throne or the marriage, not both. Will the Conservatives and Labour have unique interactions with Edward VIII, or will those events be the same? They will be the same for the time being. Can we CPGB/Liberal/BUF participation in government? The CPGB and BUF had very little popular support, and it is implausible that they would get sufficient support from either the people or another party. Both Leninism/Stalinism and Fascism never really caught on in the United Kingdom. Though the Liberals have seats unlike the other two, they a) still have insufficient support to form a government and b) disagree too much with Labour and the Conservatives to join a coalition with them. Can the BUF’s ideology change if the international situation is different? Not at present, though this will be looked into in the future. However, it will not allow for a BUF path unless the UK is occupied by a fascist country. Is there a Republican path? Republicanism is a dead movement by the 1930’s, specifically because of actions taken by the Conservatives in the two decades prior to present the Monarchy as an inter-class institution rather than a symbol of the upper class. Will Labour be able to enter into a coalition with the ILP and/or CPGB? Labour, the ILP, and the CPGB largely wanted nothing to do with each other, especially between Labour and the Communists. Is the old parliament system (as shown in PR 26) gone? Yes, the UK will now use the same system as shown in Spain and Germany. Can Irish or Welsh Nationalist Parties gain Representation in Parliament? Not in this time period. The SNP first gained representation in 1970, and Plaid Cymru first gained representation in 1974. Closing Thoughts: We are still in need of developers, primarily coders at this point. If you have an interest in coding - regardless of nation or other aspect - please see Progress Report 8.5 or message me directly for details. If you have an interest in coding but don’t know how to code, the Hoi4 Wiki contains a great amount of information! We are not just looking for country developers, we are also looking for people to do some generic work. If you do not have much coding experience, this could work well for you! About the Position: As a coder you will work with our planners to create content for countries in the game. This includes, but is not limited to focus trees, decisions, events and national spirits. You will get the chance to develop programming and teamwork skills. You will also be working with artists and writers to implement our top-quality graphics and writing. Commitment: Our system of management ideally expects that each modder make a meaningful contribution every month, with a limit of three months of inactivity. However, we understand that sometimes, life just gets in the way, so such situations will not count as inactivity, so long as the team is notified beforehand (and if you don't know what counts and what doesn't, just ask!). Positions available: Lots! Qualifications:
Experience with Hoi4 code OR strong experience with other PDX games' code (such as CK2 or EU4)
Ability to work well in a team
A tolerant and open mind
About the Team: The CBtS team (which at present includes upwards of 50 developers) is intercontinental and multicultural, and we offer a welcoming and friendly environment. We're happy to help each other with our code, learning how to make gfx, Aside from modding, we enjoy memes, video games, and learning more about history.Where do I sign up?If you're interested in joining the team, please see Progress Report 8.5 OR message me for details. Where can I go to learn how to mod? The Hoi4 Wiki contains extensive documentation on how game mechanics can be scripted and how to use most commands. There are also many tutorials on YouTube. Other Credits:
Each day, millions of trades are made in a currency exchange market called Forex. The word "Forex" directly stems off of the beginning of two words - "foreign" and "exchange". Unlike other trading systems such as the stock market, Forex does not involve the trading of any goods, physical or representative. Instead, Forex operates through buying, selling, and trading between the currencies of various economies from around the world. Because the Forex market is truly a global trading system, trades are made 24 hours a day, five days a week. In addition, Forex is not bound by any one control agency, which means that Forex is the only true free market economic trading system available today. By leaving the exchange rates out of any one group's hands, it is much more difficult to even attempt to manipulate or corner the currency market. With all of the advantages associated with the Forex system, and the global range of participation, the Forex market is the largest market in the entire world. Anywhere between 1 trillion and 1.5 trillion equivalent United States dollars are traded on the Forex market each and every day. Forex operates mainly on the concept of "free-floating" currencies; this can be explained best as currencies that are not backed by specific materials such as gold or silver. Prior to 1971, a market such as Forex would not work because of the international "Bretton Woods" agreement. This agreement stipulated that all involved economies would strive to hold the value of their currencies close to the value of the US dollar, which in turn was held to the value of gold. In 1971, the Bretton Woods agreement was abandoned. The United States had run a huge deficit during the Vietnam Conflict, and began printing out more paper currency than they could back with gold, resulting in a relatively high level of inflation. By 1976, every major currency worldwide had left the system established under the Bretton Woods agreement, and had changed into a free-floating system of currency. This free-floating system meant that each country's currency could have vastly different values that fluctuated based on how the country's economy was faring at that time. Because each currency fluctuates independently, it is possible to make a profit from the changes in currency value. For example, 1 Euro used to be worth about 0.86 US dollars. Shortly thereafter, 1 Euro was worth about 1.08 US dollars. Those who bought Euros at 86 cents and sold them at 1.08 US dollars were able to make 22 cents profit off of each Euro - this could equate to hundreds of millions in profits for those who were deeply rooted in the Euro. Everything in the Forex market is hanging on the exchange rate of various currencies. Sadly, very few people realize that the exchange rates they see on the news and read about in the newspapers each day could possibly be able to work towards profits on their behalf, even if they were just to make a small investment. The Euro and the US dollar are probably the two most well-known currencies that are used in the Forex market, and therefore they are two of the most widely traded in the Forex market. In addition to the two "kings of currency", there are a few other currencies that have fairly strong reputation for Forex trading. The Australian Dollar, the Japanese Yen, the Canadian Dollar, and the New Zealand Dollar are all staple currencies used by established Forex traders. However, it is important to note that on most Forex services, you won't see the full name of a currency written out. Each currency has it's own symbol, just as companies involved in the stock market have their own symbol based off of the name of their company. Some of the important currency symbols to know are: USD - United States Dollar EUR - The Euro CAD - The Canadian Dollar AUD - The Australian Dollar JPY - The Japanese Yen NZD - The New Zealand Dollar Although the symbols may be confusing at first, you'll get used to them after a while. Remember that each currency's symbol is logically formed from the name of the currency, usually in some form of acronym. With a little practice, you'll be able to determine most currency codes without even having to look them up. Some of the richest people in the world have Forex as a large part of their investment portfolio. Warren Buffet, the world's richest man, has over $20 Billion invested in various currencies on the Forex market. His revenue portfolio usually includes well over one-hundred million dollars in profit from Forex trades each quartile. George Soros is another big name in the field of currency trading - it is believed that he made over $1 billion in profit from a single day of trading in 1992! Although those types of trades are very rare, he was still able to amass over $7 Billion from three decades of trading on the Forex market. The strategy of George Soros also goes to show that you don't have to be too risky to make profits on Forex - his conservative strategy involves withdrawing large portions of his profits from the market, even when the trend of his various investments seems to still be correlating upward. Thankfully, you don't have to invest millions of dollars to make a profit on Forex. Many people have recorded their success with initial investments of anywhere from $10,000 to as little as $100 for an initial investment. This wide range of economic requirements makes Forex an attractive venue for trading among all classes, from those well entrenched in the lower rungs of the middle class, all the way up to the richest people alive on the planet. For those on the lower end of the spectrum, access to the Forex market is a fairly recent innovation. Within the past decades, various companies began offering a system that is friendlier to the average person, allowing the smaller initial investments and greater flexibility that is seen in the market today. Now, no matter what economic position you are in, you can get started. Although it's possible to jump right in and start investing, it's best that you make sure you have a better understanding of the ins and outs of Forex trading before you get started. The world of Forex is one that can be both profitable and exciting, but in order to make Forex work for you it is important that you know how the system works. Like most lucrative activities, to become a Forex pro you need a lot of practice. There are many websites that offer exactly this, the simulated practice of Foreign Exchange. The services provided by online practice sites differ from site to site, so it is always a good idea to make sure you know all of the details of the site you are about to use. For example, there are several online brokers who will offer a practice account for a period of several weeks, then terminate it and start you on a live account, which means you may end up using your own money before you are ready to. It's always a good idea to find a site that offers an unlimited practice account. Having a practice account allows you to learn the ways of the trade with no risk at all. Continuing to use the practice account while you use a live account is also a beneficial tool for even the most seasoned Forex traders. The use of a no risk practice account enables you to try out new trading strategies and tread into unknown waters. If the strategy works, you know that you can now implement that strategy into your real account. If the strategy fails, you know to refrain from the use of that strategy without the loss of any actual money. Of course, simply using a no risk account won't get you anywhere. In order to make money with Forex, you need to put your own money in. Obviously, it would be ridiculous to travel to other countries to purchase and sell different currencies, so there are many websites that you can use to digitally trade your money. Almost all online brokerage systems have different features to offer you so you have to do the research to find out which site you wish to create an account with. All brokers will require specific information of you to create your account. The information they will need from you includes information required to communicate with you, including your name, mailing address, telephone number, e-mail address. They also require information needed to identify who you are, including your Social Security number, Passport number or Tax Identification number. It is required by law that they have this information, so they can prevent fraudulent trading. They may also collect various personal information when you open an account, including gender, birth date, occupation, and employment status. Now that you have practiced trading currency and set up your live account, it is time to truly enter this profitable yet risky world. To make money with Forex, you do need to have money to begin with. It is possible to trade with very small amounts of money, but this will also lead to very small profits. As is with many other exchange systems, high payouts will only come with high risks. You can't expect to start getting millions as soon as you put money in to the market, but you can't expect to make any money at all if you don't put in at least a 3-digit value. As most Forex brokers will warn you, you can loose money in the foreign exchange market, so don't put your life savings into any one trade. Always trade with money that you'd be able to survive without. This will ensure that if you get a bad trade and loose a lot of money, you wont end up on the streets, and you'll be able to make a comeback in the future. So how does trading currency work? Logically, trades always come in pairs. For example, a common trade would be the United States Dollar to the Japanese Yen. This is expressed as USD/JPY. The way to quote a trade is kind of tricky, but with practice it becomes as natural as reading your native language. In a Forex quote, the first currency in the list (IE: USD in USD/JPY) is the base currency, and in the quote the base is always one. This means if (hypothetically of course) One USD was worth Two JPY, that the quote would be expressed as 1/2. When trading in Forex, we use pips. Pip is an acronym for "percentage in point". A pip a certain decimal place in a number compared to the same decimal place in another number. Using pips, we track the gains and losses of a currencies value compared to another's. Let's take a look at an example. Say a value is written as 1.0001/1.0004. This would indicate a 3-pip spread, because of the 3 number difference in the fourth decimal place. Almost all currency pairs go to the fourth decimal place. The only currency pair that doesn't is that of the USD/JPY, and it goes to the second decimal place. For example, a USD/JPY quote with a 3-point spread would look like this: 1.01/1.04. A very common aspect to the foreign exchange is leverage. Leverage trading, also known as trading on margin, is a way to amplify the amount of money you are making. When you use leverage trading, you borrow a certain amount of money from your broker and use that to make your transaction. This allows you to trade with more money then you are actually spending, meaning you can make higher profits than you would normally be able to make. There are risks associated with leverage trading. If you increase the amount of money you are using, if a trade goes bad, then you'll loose more money than you'd usually loose. The risks are worth it though, because a big win on margin means a huge payout. As mentioned before, it is definitely a wise idea to try out leverage trading on your practice account before you use it excessively on your live account, so you can get a feel for the way it works. Now that you're an expert on the way Forex trading works there are some things about foreign exchange that you should know. Forex is just like the stock market in that there are many benefits and risks, but if you are going to invest your time and personal money into this system, you should be fully aware of all of the factors that may change your decision to invest in the currency market. Generally speaking, Forex is a difficult subject to opinionate on, because of the different factors that may alter the currency over the years. "Supply and demand" is a major issue affecting the Forex organization, because the world is in constant variable to change, one significant product being oil. Usually the currency of all the nations around the globe is described as a huge "melting pot", because of the fact that all of the interchanging controversy, political affairs, national disputes, and possibly war conflicts, all mixed together as a whole, altering the nature of Forex every second! Although problems such as supply and demand, and the whole "melting pot" issue, there are a numerous amount of pros to Forex; one being benefited profit from long term stock. Because of the positive aspects of Forex, the percentage of the use of electronic trading in the FX market (shortened from Foreign Exchange) increased by 7% from 2005 to 2008. Despite the controversial realm of Forex, it is still recognized today by many, and is still popular amongst many of the nations in the world. Of all the organizations that recognize Forex, most of them practice fiscal policy, and monetary policy. Both policies are dependent on the nation's outlook on economics, and their standards set. The government's budget deficits, or surpluses against the country, is widely affected by the country's economic status of trade, and may critically inflict the nation's currency. Another factor for the nation's deficit spending is what the nation already has, in terms of necessities for the citizens, and the society. The more the country already has, prior to trade, the greater the budget for other demands from the people, such as technology, innovations in existing products, etc. Although a country may have an abundance in necessities, greed may hinder the nation's economic status, by changing government official's wants, to want "unnecessary" products, therefore ruining or "wasting" the country's money. This negative trend may lead to the country's doom, and hurt the Forex's reputation for positive change. There are some countries which hold more of a product (such as oil stated above), the Middle East dominating that sector in the circle of trade; Since the Middle East suffers much poverty, as a result of deficit spending, and lack of other resources, they demand for a higher price in oil, to maintain their economic status. This process is known as the "flights to quality", and is practiced by many countries, wanting to survive in the trading network that exists today. Interest rate, and leveraged financing, is due to the inflations that occur in many parts of the world from one point to another. Inflations wear down purchasing abilities, causing the currency to fall with it. In some cases, a country may observe the trends that it takes, and beforehand, take action to avoid any mishaps that had been experienced before. Sometimes, the country will buy more of a product, or sell more of a product, otherwise known as "overbought" or "oversold". This may aid in the country's future, or devastatingly hurt the country, because of lack of thought, as a result of fraud logic. "What started out as a market for professionals is now attracting traders from all over the world and of all experience levels" is part of a letter of the chairman of Forex, and it is completely true. There is even a 30-day trial for Forex online if anyone interested in Forex wants to learn more about the company. Although affected by leveraged financing, interest rate, and causing an increase or decrease in exchange rate risks, Forex can be a great way for quick profits and integrated economy for the country. In investing in stocks that are most likely to be successful for a long period of time, and researching these companies for more reference and background that you need to know, Forex can aid in these fields. In the Forex market of different levels of access, the inter-bank market composed of the largest investment bank firm, which contains "spreads", which are divided into bid, and ask prices. Large amounts of transactions, with large amounts traded, and requesting a small amount of difference is known as a better spread, which is preferred by many investors. In comparison to the Stock Market, the Forex organization is just as stable, and safe, if the users on it are aware, and decently knowledgeable about the topic. The Stock Market Crash in 1929 was a result of lack of thinking, because of the extremely cheap shares, replacing the shares originally costing thousands of dollars. When the Stock Market crashed, and the New Deal was proposed by Franklin D. Roosevelt, leveraged finance was present, and utilized to stabilize the economy at the time. The United States was extremely wealthy and prosperous in the 20s (prior to the depression), and had not realized what could happen as a result of carelessness in spending. This is a result of deficit spending, and how it could damage a society, in less than a decade! When joining Forex, keep in mind that with the possible positive outcomes, and negative ones, there are obstacles that must be faced to become successful. As a result of many catastrophic events, such as the Great Depression that occurred in the United States, people investing in the Forex organization keep in mind of the dangers, and rewards that may come upon them in a certain point in time. With more work and consideration outputted by a person, or organization in the Forex program will there be more signs of prosperity as a result. In relation to individuals such as Warren Buffet and George Soros, they have become successful through experience, and determination through many programs, and research, for security purposes. Reserving some of the most riches people in the world, to others that are just test driving it to discover its potential for them, Forex is a broad topic that experiences different people everyday. Forex may not help everyone that invests in it, but if enough outputted effort is amplified in attempts to better the economy, it is most definitely something that any person should experience first-hand.
What is Forex Trading: Forex Trading is trading currencies from different countries against each other. Forex is an inter-bank market that took shape in 1971 when global trade shifted from fixed exchange rates to floating ones. This is a set of transactions among Forex market agents involving exchange of specified sums of money in a currency unit of any given nation for currency of another nation at an agreed rate as of any specified date. During exchange, the exchange rate of one currency to another currency is determined simply: by supply and demand - exchange to which both parties agree. Actually Forex is the financial game between BULLS and BEARS. The Major currencies pairs are: EUUSD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD And these are the 6 best Forex Markets. What are Forex Signals? Forex signals are indicators that let you know when it's a good time to buy or sell a currency pair. They provide you with insight as to what's going on in the Forex market without the necessity to monitor Forex trends throughout the day. If you are self-employed or employed by another company, Forex trading is likely a part-time endeavor for you. You won't have time to sit at the computer and monitor the Forex market all day. Forex signals can be delivered to you throughout the day by professional Forex traders to give you a heads-up on what's going on in the market. You can receive the signals, and then place the signals for buy or sell. Forex signals are basically "suggested" buy and sell points with price targets and stop-loss levels delivered by fx signal providers to traders. They may be delivered by email, instant messenger, cellphone, live currency trading systems or direct to your Forex signal metatrader on your desktop. Forex trading is a risky business and it takes some time to master the art of Forex trading signals. There are a number of fx signal providers but before you choose, you need to make sure you have done your homework. Always ask for the Free signals to deliver for 3 to 5 days and test those signals in your Demo Account. The main characteristics of Forex trading signals to be aware of are as follows; Cost: monthly subscription Complexity: Simple "one email a day" OR Full-Service Control: You keep full control OR the signal provider trades your a/c for you Most Forex trade signals charge a very modest subscription fee, usually in the region of USD $80 - $400 per month. If you're new to Forex trading, you probably realize how important it is to make the right trading decisions. One wrong trading move can drastically harm your portfolio while a good move can bring tremendous profits. That's why trading signals are so important. Once you've tried a Forex demo account for practice and created a strategy that works for you, you can add trading signal services as a useful tool in your Forex trading. With online Forex, finding a trading signal service is easier than ever. In their simplest form a Forex trading signal will send you a Forex alert email once a day listing trade set ups for the next 24 hours. Some Forex signal providers offer a free trial service, thus allowing currency traders to sample the signals to assess their worth. This is a helpful step, as it allows the trader to consider the quality and reliability of the signals before paying money. This is a crucial element in the research process, and weeds out the providers who want money upfront as they are not confident in their ability to call profitable trades. This is a good service that you can try for free for 3 to 5 days. Various fx signal providers offer a few complimentary services along with the featured ones. Look for a fx signal company that provides email support, phone assistance and even mentoring to their clients. This is of great value, especially to new traders. They assign their time assisting traders in taking buy/sell decisions. Forex traders depend upon and trust the recommendations of these professional signal providers, while making investing decision in the Forex market Forex signals are not meant to be a magic solution to all your Forex problems. They are designed to inform you about the market. Forex business timing is extremely crucial; a trader can earn millions or lose even more depending upon the his timely or untimely actions. Besides, being the biggest market on the face of earth - it generates business activity of almost 3 trillion USD, it operates around the clock, all over the globe, making it thus impossible for a trader to stay vigilant all the time about market fluctuation and probable changes therein. Therefore a trader needs alarms and indicators to get knowledge about the possible opportunities and probable pitch points. Hence the need for Forex signal or alerts. Basically Forex alert or signal is a communication or intimation to the trader indicating the ripe time to buy/sell and the suitable price to pay/ask. Most of the time, such signals and alerts are provided by trained professionals, either individual or companies. When choosing a Forex signal service, be sure the company offers the type of signal alerts you need. Every person is different. Some require computer or email alerts, while others are not accurate Forex signals are made for both professional traders and although new traders. The best Forex signals trading system is going to cover multiple situations on the Forex market. For instance the best Forex trade signals is going to cover all major currencies like GBP, USD, and EUR at all times the market is open, not only for specific situation. Simply to get the full value of your Forex trade you must know what is happening in regards to all the major currencies. The Forex system should also be able to give you at least 1-3 Forex trading signal alerts a day. Some Forex trading signals are high volume scalpers, calling many trades in a day aiming to profit a handful of pips on each. Others only call a few trades a day, aiming to profit 20 - 80 pips on each single trade. Forex trading signal providers help you in minimizing risks or losses in trading. Forex signals are generally given on a daily updated basis and all are contingent on factual market analysis and behavioral flow and not on mere hearsay and other speculations. The signals are calculated and generated by using different indicators such as trends, moving average, Elliott waves, Bollinger bands, Fibonacci series, etc. In spite of that, some uses strategies like: Pip Maximizer Method 1 Pip Maximizer Method 2 Pip Reversal Method Pip Divergence Method Instant Pip Method Pip Retracement Method Quantum Pip Strategy ... to give profitable and accurate signals. The following question I wish to raise, is the abundant selection of Forex signals from which we can choose. Because of the variety of service providers, they offer different services, of which we must be aware. The first type of Forex signal provider will just send out trade alerts by email, often daily, sometimes at several intervals throughout the day. Thus you need to have a laptop of email receiving device ready at all times, to gain the most from trading Forex signals. The next type to consider are through EA/Expert Advisors. These types of signals are not good at all because those are the computer oriented programs which can ruin your money within a few trades. But fortunately this is not such a big problem today, as more traders have email reading devices. The most crucial aspect concerning the format you receive the signals, is to ensure that you receive them immediately, and have the capability to act on them straight away - so you have to have immediate access to your Forex brokerage account, and place the trade as soon as you humanly can. A unique benefit of trading Forex signals is that it gives guidance and discipline in a Forex currency trader. Forex profit signals service providers send you alerts when the conditions are right for the trade. They use cutting-edge technology which constantly monitor all major currency pairs for generating technical indicators. Forex signal generators produce Forex signals which are indicators of ideal trading opportunities. These are certain algorithmic patterns which have been evident in successful Forex trades throughout the years. These Forex signals are then fed onto the program of Forex automated EA or Expert Advisors. This program will then either make Forex trading decisions for the individual while s/he is away from the computer or advice the individual about what to do. Forex EAs act like wizards which monitor currency ratings through online Forex Trading Platforms. One can look at Forex signals as triggers of commands which allow the automated system to function. Forex signals can immeasurably add to the profits of a Forex trader. How to Receive Forex Signals: Forex signal services are available to provide signals to you around the clock. These services usually have professional Forex traders who monitor the market 24/7 and provide you with up-to-date information. These services often charge a monthly or yearly subscription fee for their services. The methods used to deliver the Forex signals to you can vary from one service to the next. Signals can be sent through email alerts, to your phone or cell phone, through your pager, or even through a pop-up software system that will show a screen on your computer each time a signal is sent. The services also vary in how they present information to you. Some will provide live charts to give you more insight as to what as happening in the market. Time frame for which the Forex trading signals are generated is equally important. Few trading signals can be valid only for a few minutes or an hour; others may have recommendations that are valid for a day or more. If the Forex trading signal providers generate signals for shorter time frame, you need to monitor the market frequently. Some Forex signal service providers offer add-on services like email or mobile alerts. The service provider should have end-to-end technical support for the customers. Even with experienced traders calling your trades, it's prudent risk management to never ever risk more than 3% of your initial capital on any one trade, preferably only 1%. So, if for example your initial capital, (or to put it another way, the maximum you can afford to lose) is let's say 5,000, the position size you take on each trade should be such that if the trade hit your stop loss, your maximum loss would be no more than 1% x 5,000 = 50. Forex signal providers render Forex business quite a bit easy for traders, especially those who are relatively new in the business. Forex signal generation and provision can be either manual or automated and it provides entry/exit points of the trade streak for major or already chosen currency pairs. In manual signal generation system a simple trade signal is provided by the single provider. In automated signal generation system, the Forex system not only intimates and alerts the trade to either enter or exit the trade, but some times makes the deal by operating in synchronization with the trader's bank or broker. Initially Forex signals and alerts used to come in the form of telephone calls and facsimiles. Now as we have stepped into the era of information revolution which has brought forth amazingly advanced digital technology, Forex signals and alerts generation and provision system has also advanced and become much more sophisticated and quick. Now these alerts come in the form of e-mails, SMS (Short Message Service, a way of sending text messages to mobile devices), or desktop software. However with trading Forex signals, there is no such chance to over trade your account. It is absolutely possible to learn the mental aspects of trading, by following a set of rules, and not to deviate from those rules. Many trading Forex signals provide you with a complete set of instructions in order to take the trade. Frequently the signal will have multiple exits, which enable a trader to take money off the table in small steps. So this enables the currency trader to input all of these prices into his trading platform when he gets the signals, and then to switch off the computer. As for any purchase, it is essential that the Forex trader first does his research into the more effective trading Forex signal service for him or her. This involves a lot of careful research, and reading various reviews and testimonials of the service in question. Before I go, in conclusion, the trader is strongly advised to practice using the trading Forex signals on a demo account first, so that the Forex trader can totally test out the profitability of the signals. This has an supplementary benefit for a complete new, as it will enable the currency trader to become familiar with the trading platform, and reduce the possibility of making any mistakes. Whenever possible, go for a free demo account and then try your forex signals for a few days before becoming a paid member. Forex trading does involve some planning and strategy building so be prepared for a steep learning curve before trading with real money! I'm going to start by telling you some cool facts about the FOREX market. As you may already know, FOREX is the acronym for "The Foreign Exchange Market." This market concerns itself with the buying and selling of the currencies of just about every country on earth. This market is BIG! So big, in fact, it's hard to wrap your mind around the size of it. Listen. The daily average volume of FOREX is: Almost 5 TRILLION Dollars Per Day! I'm going to try to bring that fact home for you: The New York Stock Exchange has a daily volume of approximately 50 billion dollars. That means the FOREX is 100 times larger than the NYSE Actually, the daily volume of the FOREX is triple the size of all other investment markets combined! In spite of its size, the FOREX does not have a physical location or a central exchange. It operates through an electronic network of people, banks and companies that specialize in trading one currency for another. Almost all FOREX trades are executed on the internet by someone sitting at a computer with a high-speed connection. So, if you don't like working with a computer you may as well stop reading... because... you will be left out. Still with me? Good. The Only 24 Hour Financial Market In The Whole World Because the FOREX does not have a physical location or a central exchange, it is able to operate on a 24 hour basis leapfrogging from one time zone to another across the major financial centers of the world. The FOREX market actually follows the sun around the globe... because... as one country is closing for the day, another is just opening up. This market is open 24 hours a day, six days a week from 5:00 PM Sunday (East Coast Time) to 4:00 PM Friday (East Coast Time). This 24 hour access combined with its huge trading volume makes this... The Most Liquid Market On Earth! Except for Saturdays, you can enter or exit the FOREX market anytime night or day. This market has virtually no gaps whatsoever and your stop-loss orders are almost guaranteed. Can you imagine that? The multi-trillion dollar liquidity, combined with 24-hour trading access virtually guarantees your stop-loss orders will be executed without slippage. Just try to get that kind of guarantee from your stockbroker! The stock, futures and options markets cannot offer you this guarantee because the limited trading hours create frequent gap opens. Nearly all Forex brokers make sure their hours of operation coincide with the hours of operation of the global FOREX market. Let's see, what else? Oh, yeah, no one can corner the market. The FOREX market is so huge and has so many global participants that no single individual nor entity... not even a central bank... can control the market for any significant period of time. Plus, There Is No Insider Trading! Because of the vast size of the global FOREX market and its non-centralized nature, there is no chance whatsoever for disruptions caused by insider trading. There is less chance for fraud in the FOREX than in any other investment market. Best of all forex can never become zero but stocks can become zero and majority of the options expire worthless. There are no commissions. Yep, you read it right. No exchange fees, no closing fees, no government fees, no brokerage fees. This all adds up to a very low retail transaction cost. If you select your broker properly, your round-trip transaction cost could be as low as .07 percent. And know this, a very desirable by-product of extremely high liquidity is almost instantaneous transactions executed with blinding speed. You can leverage your trades by a factor of 50 to 1, 100 to 1 and even 400 to 1. Not only that, you can trade with a very low margin with relative safety compared to the disastrous potential of margin trading found in other financial markets. Also it is tax free income if the country you reside has no capital gain tax. And finally, if you get really great at currency trading, your potential financial reward is so big it can make your head swim!
What does margin mean in Forex trading? As we've already stated, trading on margin is trading on money borrowed from your broker. Each time you open a trade on margin, your broker automatically allocates the required margin from your existing funds in the trading account in order to back the margin trade. The precise amount of allocated funds Margin trading in the forex market is the process of making a good faith deposit with a broker in order to open and maintain positions in one or more currencies. Margin is not a cost or a fee, but So is margin trading good or bad. Well, margin trading is an incredible opportunity offered by brokers to trade large amounts of an asset in the financial markets with a small initial investment. Of course, this isn’t without any risks, but if managed well, you can amplify your profits while trading currencies. Margin is a key part of leveraged trading. It is the term used to describe the initial deposit you put up to open and maintain a leveraged position. When you are trading forex with margin, remember that your margin requirement will change depending on your broker, and how large your trade size is. This is the maintenance margin, and when stock prices decline to this level, or even below this level, traders will be issued a margin call, after which they will be required to deposit more money. FX Maintenance Margin Calculation. For forex trading accounts as well, traders have to follow maintenance margins.
Trading 101: What is a Margin Account? Come join me for a live session where I talk more about trading, the markets and all the money that can be made. Claim... Broker I recommend: https://www.lmfx.com/?refid=51421 Accepting US customers as well. Website: https://fx.rafalzuchowicz.com/ Contact: [email protected] Understanding forex leverage, margin requirements and sizing trades for successful trading. Margin trading in the forex market is the process of making a good faith deposit with a broker in order to open and maintain positions in one or more currencies. Margin is not a cost or a fee, but ... Go to: https://satoshismines.com scroll down to find the video on how that can help you grow your bitcoins. Plus if you want to find out more about the tools...