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Popular Investor Sergejs Kovalonoks talks about his methodical investment habits

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Sergejs (@BalanceAM) from Latvia is a Popular Investor who likes to keep his Risk Score low. He has been with eToro since late 2017, and if you check out his stats, you’ll see he says he has 8 years of trading experience. His strategy involves rotating his portfolio at the end of each quarter, and he often uses short positions as a diversification tool. We asked him a few questions about his trading habits on eToro:

65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. This is not investment advice.

1. Tell us a little bit about yourself
I’m 30 years old, living in Riga, Latvia. My passion for markets emerged when I first saw an ad of a brokerage firm on a billboard in my university, on the Economics and Business Administration building, which stated “start trading FX and become financially independent.” A couple of days later I found myself in the library surrounded by a pile of books about forex trading. These were ancient books, with too many charts and indicators, and I had no idea what it all was about (though I still enjoyed to read them), and it was the only occasion in which I was reading books at university during the evening. Cutting a long story short, after finishing my studies, I quickly entered the asset management industry where I continue to study and work as a financial analyst for almost 9 years now.

2. Did you have previous experience with financial investments before joining eToro?
Before joining eToro, I already had plenty of experience in managing money and a necessary fundamental knowledge of working with various financial instruments. However, eToro’s social component was something entirely new to me, and in the beginning, it was difficult to figure out what people value the most and what they want to see from an adequate Popular Investor. I’m still in the process of adjusting the way I present the data and explain my decisions so that everybody knows exactly what’s going on. Sometimes it feels like an unending process.

3. Why did you choose to join eToro?
Honestly, I think it is the by far the best option at the moment to bring institutional management expertise into the broader retail market. eToro offers not only a reliable and easy-to-use platform, but also the support of a highly dedicated team that responds with interest and enthusiasm on any new ideas brought forth by the wide range of traders/investors globally. Also, the compensation structure was attractive too, and I really liked that it is linked to the quality of a Popular Investor’s decisions and performance. Lastly, the fact that the whole environment is so transparent gives assurance that your skills and values will not be missed.

4. What are the three key benefits of using eToro?
In my view, the primary advantage of the eToro platform is its simplicity, and that it does not limit portfolio managers in complexity. The way things are organised gives many people an easy way to connect with markets and asset managers around the world. The second component is undoubtedly the possibility always to have an open line of communication. Here you can get feedback from investors almost instantly, especially if you did something wrong, which helps to correct the decision-making process and learn much quicker. The third element is the fact that the company is run by a CEO who has a clear vision of the future of the finance industry and an obsession with making it more accessible to those who need it the most.

5. How has eToro changed the way you trade?
Everything changes us in some way, and the investment process is not isolated from things surrounding us. By having exposure to eToro, I think I became even more dedicated to making the investment process more agile and plausible for a wide range of audience.

6. What is your type of trading strategy and what is it focused on?
To navigate through the different type of cycles, whether it is credit, business or economic, investors should have an attitude of “I know nothing about the future, but I will do my best to navigate through anything that comes”. My investment process is straightforward and based on the fact that companies with a higher spread between returns and the cost of capital, in the long-term, are rewarded the most. I cannot give you specific criteria and measurements, but I can say that every potential investment should survive my four different layers of screening before it can get into the portfolio.

The first layer is based on volume and price analysis. The second one is purely fundamental analysis driven, with criteria being automatically adjusted based on the incoming data. The third one helps to make a vital allocation decision. Finally, the last step involves finding the evidence that your initial case is wrong. This is probably one of the most important ones, and I spend most of the time finding factors that could significantly deteriorate the prime case scenario.

I also deploy the concept that things should be in balance and not overstretch in any direction for an extended period of time. It means that I don’t want to have exposure to growth, value, core, longs or shorts in a way that limits my ability to respond to growing risk in various pockets of the financial markets. The balance means finding a point in which you bear a risk that is more than compensated in a scenario that is most likely to happen. It’s never the same thing, but the principles that move you closer to the balance are always reliable and rarely change.

7. What are the benefits of being a Popular Investor and what is your long-term goal as one?
Being a Popular Investor creates a deep sense of responsibility and care for the people who decided to stick with you. My goal is to continuously improve my strategy so that it can withstand multiple cycles and make people a little bit happier financially.

8. Do you have any advice for your copiers/users considering copying you?
I wrote a post once for helping people decide who to copy. It included many things, but I will say the most important one: You are the king when it comes to rewarding/punishing investor for great efforts or negligence, and all that you need to do is to start or stop copy. Period. For your financial well-being, it’s essential to have exposure to the stock market, to make sacrifices regarding short-term pleasures which in turn saves you more money that you can put to work. Never save money that you can spend now and upgrade your performance in the markets. Be highly attentive to these things. Maybe a new iPhone is not really necessary for you right now; maybe your old TV is still ok – don’t throw money left and right just for the sake of 1-5 days pleasure. If you decided to copy me, don’t fall into the trap that I will be able to make you rich. Yes, I will do the best I can, but you should also make a lot of efforts both emotionally and physically to stick to the plan and fight for your financial independence.

9. What are your hobbies?
Apart from being overly engaged with the markets, sometimes I enjoy playing tennis with my friends, having a simple walk in nature with my dog and family, playing the guitar or reading a good book. You also need to challenge yourself constantly, so sometimes I also enjoy risky activities such as snowboarding, climbing or dirt bike riding.

65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. This is not investment advice.

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Bitcoin of 2020: On the Rise, Better Established, and Much More Stable

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Why Bitcoin is Continuing to Climb, from More Solid Ground Than Ever

Last night saw Bitcoin once again soaring up the market, with a 6% increase over the course of three hours. This continues a fantastic start to the year for the world’s largest decentralized currency, which is up 30% since January 1st, and pulling along with it several other primary cryptocurrencies, including Ether, Litecoin, Ripple, and Dash.

A Significant Moment for Bitcoin

January 2020 is certainly proving highly significant for Bitcoin. The sharp increases and painful falls of the past pale into comparison with now, as the current increase seems to come from a far better-established position with much more stability. Furthermore, the activity around Bitcoin is expanding in exchanges, banks, and other financial institutions, together with its legitimacy and relevancy.

World Economic Forum 

Last week, at the World Economic Forum annual summit at Davos, Switzerland, Bitcoin, cryptocurrencies, and blockchain technology were honored guests. Many of the billionaires, bankers and treasury ministers who gathered in Davos are still fairly skeptical about the decentralized economy, but despite this, they also realize that they cannot stop it.

The World Descends into Chaos, And Bitcoin is on the Rise

It seems that the more agitated the world agenda, the more Bitcoin’s popularity grows, and strengthens its status as a…

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World’s Richest 22 Men Are Worth The Same As All 325 Million Women In Africa — New Oxfam Report Reveals

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“Wealth inequality remains shockingly high.” This is the sobering conclusion of Oxfam’s latest report, published on the eve of the World Economic Forum Annual Meeting 2020.

The 162 richest people on the planet boast the same wealth as the poorest 50 percent — 3.85 billion — in the world.

From Tuesday, January 21, close to 3,000 delegates — including 53 heads of state — from 117 countries, will participate in the WEF summit in Davos-Klosters, Switzerland. According to the website blurb, the WEF Annual Meeting is “the foremost creative force for engaging the world’s top leaders in collaborative activities to shape global, regional and industry agendas at the beginning of each year”.

This year’s topic, for the great and the good of the business world and politics, is “stakeholders for a cohesive and sustainable world”. While the hellish fires raging in Australia fan the flames for climate change, the perverse irony that most of the 774 public speakers will have been flown into the summit will not be lost on the people who are truly concerned about the heating of the world.

Similarly, that many of the wealthiest people in the world will gather to no doubt use the WEF platform to further boost their richest, through additional business deals and contacts, while…

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Cryptocurrency Prices Rally Towards Double-Digit Gains in 2020

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The cryptocurrency market has started 2020 with a huge bang, expanding by an impressive 23% within the first two weeks of the year. The overall market capitalization of the cryptocurrency market – a measure of the size of the market – has grown from $192 billion at the start of the year, to well over $240 billion by the middle of January.

Leading the pack is Bitcoin (BTC), which constitutes more than 65% of the overall market size. Going from just under $7,200 at the end of 2019 to a high of $8,800, Bitcoin recorded double-digit gains within two weeks. January 14 saw a spike of more than 11% in Bitcoin’s price, fuelling speculation that the two-year-long cryptocurrency recession could finally be over.

Bitcoin Price Chart

Among the many factors that contributed to Bitcoin’s price increase was the geopolitical upheaval emanating from increasing tensions between the USA and Iran, which led to a flight of safety capital by investors, to safe-haven assets such as gold. Already established as a manifestation of digital gold, it seems hardly coincidental that the prices of both gold and Bitcoin went up.

Another catalyst for the increase was the official…

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