No announcement yet.

RoboForex - Forex Broker: overview and news

  • Filter
  • Time
  • Show
Clear All
new posts

  • Bear Market: Characteristics and Tradings Principles

    Author: Victor Gryazin

    This overview is devoted to the bear market, its signs, and several popular trading strategies at the bear market.

    What is bear market

    The bear market is the state of the financial market when asset prices are falling steeply, and investors are nervous or even panicking. The notion usually characterises the stock market, but can also be used for the currency, commodity, crude materials, and real estate markets, as well as other branches of economy.

    The bear market is the direct opposite to the bull market we have already told you about. During this phase, the prices of most stocks are falling, dragging behind stock indices. In other words, there is a downtrend: new lows are set regularly, and small local highs turn out to be lower than the previous ones.

    Unlike bull markets, bearish ones last rather short – on average, from six months to two years. However, they are characterised by increased volatility – prices might be falling very fast. The main reason for the market to become bearish is a crisis in the global economy that involves the decline of all main macroeconomic indices.

    Previous such period lasted for about six months and was provoked by the pandemic of COVID-19 in 2020. When the crisis was over, times of active growth (bull market) followed, coming to an end in January 2022. Now we are in another bull market, created by the decline of indices of the global economy due to the geopolitical situation and fast growth of prices for energy carriers.

    How to detect bear market

    The beginning of an economic crisis, swift growth of prices for energy resources, various bubbles bursting in the stock market — these are the main reasons for the bear phase to start. At these times, the market is pessimistic and panicking; investors try to withdraw money from high-risk assets and thus save their capital.

    Main signs of the bear market:
    • Fast falling of asset prices. In the stock market, stock indices and share prices fall. A rough landmark at which the bear market begins would be the phase where main stock indices lose 20% of their recent highs.
    • Negative economic reports. Inflation and unemployment grow, the GDP is falling, threatening a recession (negative GDP), companies suffer losses.
    • Pessimism and panic among market players. Investors try to sell shares as fast as possible lest they fall too much and put money in cash or bonds, gold and other protective assets.

    How to trade in bear market

    Such times are no doubt scary for investors: no one ever wants to see the price of their portfolio fall. On the other hand, chances appear to make money work in the long run while shares are traded with a big discount. One can even make a profit on short-term sales, or simply shorts. Let us take a look at several popular strategies for trading in the bear market.

    Withdrawing cash and hedging

    Experienced investors can use special protective instruments for hedging their portfolios. The idea is to use futures, options, or other instruments that yield a profit at a falling market. However, hedging might cost a lot and requires a high level of financial literacy.

    The simplest and most available way to keep one's capital safe when asset prices begin to fall is withdrawing cash. Cash is the safest haven; one can wait for the crisis to end transferring their capital into one or more safe currencies — the US dollar, Swiss franc, or the Japanese yen. As soon as the acute phase of the crisis is over, and the market starts reversing upwards, the investor may start to buy shares again. Their money is safe, while asset prices might turn out really appetising.

    Playing short

    In the falling market, one can make money on short positions, selling assets at higher prices than they buy them. If the investor does not have the shares of the company they need, they can address a broker and borrow them. Then they can be sold, bought after they fall at a lower price, and returned to the broker with a profit on price differences. Stock indices can be sold via futures, options, or CFDs.

    A short position is naturally short-term: the trader sells the asset and holds the position open for several days or weeks. The goal of such a trade is to catch the declining wave and take the profit at the beginning of an upward reversal. Such trading requires the experience of active trading, the skill of using tech analysis instruments and indicators, and strict following of risk management rules

    Read more at R Blog - RoboForex

    RoboForex team


    • RoboForex’s giveaway for $1,200,000 has started!

      Take part in our tremendous promotion to celebrate RoboForex’s 12th anniversary! Each month from July 2022 through April 2023, we will give away money prizes among our clients, partners, and CopyFX Traders.
      • 640 prizes for $1,200,000
        They will be raffled over 10 months.
      • 64 winners each month
        The prize fund for each giveaway is $120,000.
      • Prizes up to $20 000
        Withdraw your prize from your account right after you win or use it in trading – the choice is yours.

      How to take part?

      Get Coupons every month for fulfilling conditions of the promotion. You may take part in giveaways each month and get Coupons in all 3 categories at once.[LIST][*]For traders with Prime accounts

      Trade on the best conditions: spreads from 0 points, commissions from 10 USD per 1 million USD of trading volume, leverage up to 1:300.

      Conditions for receiving a Coupon:
      • Deposit at least 300 USD to your account
      • Perform at least 3* lots of trading operations per month

        * - Only the positions in currency pairs and metals opened in the current month are taken into account.


      Attract clients to trade and receive up to 84% of the Company’s revenue.

      Conditions for receiving a Coupon:
      • Partner commission at month-end is at least 300 USD

      CopyFX Traders

      Earn on your strategies at CopyFX and increase your chances to win a prize.

      Conditions for receiving a Coupon:
      • Make the Top 30 of the best CopyFX Traders on Prime accounts in the current month

      Coupons are already being given!

      Join in the promotion and take part in giveaways each month. Good luck!

      More about the promotion

      RoboForex team


      • RoboForex has updated the R StocksTrader web platform and mobile application

        RoboForex is constantly improving its multi-asset web platform and mobile application for trading. We’re delighted to offer you more details about new features and useful tools that are already available in R StocksTrader.
        What’s new about R StocksTrader?
        • Home screen
          The app’s home screen offers important information for a trader to follow: lists with popular and recently-viewed assets, financial data for an account, and upcoming dividends.
          Another useful feature that is now available to users is sets of the instruments which can be used for long/short-term investments.
          In the “New to the market (IPO)” section, you can find CFDs on stocks of the companies that went public in the last 6 months.

        • Over 20 specific watchlists
          Looking for popular instruments in different categories is now easier – lists with all suitable assets are combined into convenient watchlists: “Invest in China”, “Invest in Volatility”, “Invest in Gold”, and others.

        • 500 new instruments
          These include such popular assets as Beyond Meat Inc (BYND.ny), Didi Global Inc. (DIDI.ny), and Spotify Technology SA (SPOT.ny).

        • Enhanced interface
          We’ve improved the app navigation and search screen for available assets.

        • Updated trading statement design
          We’ve revised the trading statement design and added monthly/yearly periods.
        • Extended trading sessions
          A new trading schedule for US30, US500, and NAS100 – from 3 AM to 11:15 PM, and GER40 – from 9:05 AM to 10:55 PM.

        Trade over 12,000 instruments from a single R StocksTrader account!

        Download on the App Store

        GET IT ON Google Play

        Open R Stock Trader

        RoboForex team


        • RoboForex: important information in view of Alphabet's stock split on 18 July 2022

          On 18 July 2022, Alphabet will have its stocks go through a split. A stock split is a corporate action, as a result of which the company increases the number of issued shares by a specific multiplier and reduces the value of each share by the same multiplier.

          Google will conduct a 20-for-1 stock split (1 share will be split into 20).

          How will this affect positions and orders?

          If you have open positions in Alphabet shares or plan to open such positions, please pay attention to the following changes, which will be effective as of 18 July 2022:

          MetaTrader 4 / MetaTrader 5 accounts

          The split procedure will take place on 18 July and will be completed prior to the US Stock session's start at 16:30 hours (server time).
          • All pending orders (Buy Limit, Buy Stop, Sell Limit, Sell Stop, Buy Stop Limit, Sell Stop Limit, Stop Loss, and Take Profit) in GOOGL will be cancelled.
          • For positions in GOOGL, the opening price will be divided by 20.
          • The volume of each open position in GOOGL will be multiplied by 20.
          Please note that if you are using an Expert Advisor (EA), we suggest that you check with its developers whether its code needs any modifications to ensure the correct interpretation of the price data after the stock split.

          R StocksTrader accounts

          The split procedure will take place on 18 July and will be completed prior to the US Stock session's start at 16:30 hours (server time).
          • During the split procedure, all active pending orders (Buy Limit, Sell Limit, Stop Loss, and Take Profit) in GOOGL, GOOGL.nq, GOOG, and GOOG.nq will be cancelled.
          • For positions in GOOGL, GOOGL.nq, GOOG, and GOOG.nq opened before the split, the opening price will be divided by 20.
          • The volume of all open positions in GOOGL, GOOGL.nq, GOOG, and GOOG.nq will be multiplied by 20.
          • All positions in any of these instruments in the same direction and on the same account will be combined into one new position. This new position will have the opening price and a volume based on an average weighted price of all positions held before the split.

          The historical charts in your trading terminal will be updated to reflect the new prices of the above-mentioned instruments.

          All other aspects of trading conditions shall remain intact. Please take this information into account when planning your trading activity.

          RoboForex team


          • RoboForex received two prestigious global awards

            RoboForex is constantly working to enhance its services so that you can operate in the financial markets as comfortably as possible. We’re delighted to inform you that two of the company’s products have been praised by the professional community, thereby adding more awards to a great many accolades earned by RoboForex.
            Two global wins for RoboForex

            The company won the award for "Best Mobile Trading App (Global)" at the Global Forex Awards - B2B 2022 and received the “Best Prime Trading Account (Global)” title at the Ultimate Fintech Awards 2022.

            Trade with the market leader
            • The best conditions in the industry
              With Prime accounts, you can invest with spreads from 0 pips, leverage up to 1:300, and an order execution speed from 0.1 seconds.
            • Over 12,000 instruments
              Stocks, Indices, Cryptocurrencies, Metals, and other popular assets are available for trading.
            • Advanced mobile solutions
              The R MobileTrader application developed by RoboForex has been highly appreciated by the professional community for the third year in a row.

            RoboForex team


            • Dear traders!

              This week, the ContestFX project will continue with the following exciting competitions on demo accounts:

              The 136th competition of "Demo Forex" has reached its "equator".
              The 370th competition of "Week with CFD" has just started.
              504th competition of "Trade Day" will start on 20.07.2022, at 12:00.
              418th competition of "KingSize MT5" will start on 21.07.2022, at 20:00.

              Taking part in our contest will require a one-time registration procedure, and the winners who receive prize money to their real accounts will be able to use it to make profit in the Forex market.

              We're looking forward to your joining in and wish you good luck!

              RoboForex Contest


              • What Is Inflation: Reasons and Consequences

                Author: Victor Gryazin

                What is inflation? What are the reasons for it? How does it influence the economy, and what methods are there to control it? In this article, we will try to answer these questions. Let us get started.

                What is inflation

                Inflation is the index of general growth of prices for goods and services. When prices grow, a unit of the national currency can buy fewer goods and services. Hence, inflation facilitates a decrease in the purchasing power of money. The opposite of inflation is deflation, which is a stable decline of the prices for goods and services.

                In other words, inflation is the speed (expressed in pecent) of the growth of general price levels for goods and services. Inflation levels demonstrate how high prices have grown in the country over a certain timeframe. Inflation leads to an increase in the prices for various assets over time. The higher reaches inflation, the more prices grow.

                How inflation influences economy

                Inflation can be either a negative or positive phenomenon depending on the speed of its growth and other events in the economy. Excessive inflation is considered bad for the economy, yet no inflation at all is also a negative event. Most economists consider stable inflation of 2% a year optimum.

                Here is how inflation influences the economy depending on its speed:
                • Moderate inflation is under 10% a year, and thanks to being predictable and controllable it supports sustained growth of the economy and does not lead to abrupt depreciation of the national currency.
                • Galloping inflation is between 10% and 100% a year. It has a negative influence over the country’s economy. Producers of goods and services prefer binding prices to some stable and convertible global currency. People try to save their money by investing it in various material goods: cars, household appliances, real estate – thus heating up prices additionally.
                • Hyperinflation is especially high, above 100% a year. Quite often such inflation can be a consequence of acute political crises or wars that demand decisive actions from the government. This can totally destroy the turnover of goods and cash and the whole financial system of the country due to the loss of trust in money.


                Methods of controlling inflation

                The financial regulator of the country bears the responsibility of fighting back inflation. This is done by certain measures of the credit and monetary policy. Here are the main methods by which Central Banks can influence inflation.
                • Deterrent credit and monetary policy is nowadays one of the most popular ways of controlling inflation. The goal of such a policy is to decrease money supply in the economy by increasing the interest rate. This helps to cool down the economy, making credits pricier and thus decreasing spendings of consumers and companies. The CB can sell securities in the open market, increse reserving norms for commercial banks, and apply other measures of selective credit control. Increases in the interest rate have a bad influence on the stock market but facilitates growth of the national currency.
                • Financial measures. They include increased control of state expenses, private expenses, private and state investments. Tax regulations also belong here: the tax system must provide stimulation to those who save, invest, or produce more.
                • Price control. Another efficient measure of conquering inflation is increasing production and controlling prices for goods from the basic basket, such as food, clothes, fuel, etc.

                Closing thoughts

                Inflation levels show how high prices have grown for certain goods and services over s certain timeframe. To assess inflation, several indices are used (CPI, PPI, WPI). Moderate inflation enhances economic growth, while high inflation have a negative influence on the economy. Control over inflation is carried out by the Central Bank; the main controlling measure is toughening of credit and monetary policy.

                Read more at R Blog - RoboForex

                RoboForex team


                • How to Trade by Reversal Strategy

                  Author: Andrey Goilov

                  One of the main principles of tech analysis is “Trend is your friend”. Hence, some insist that for better results trading must occur by the trend only. However, any trend eventually comes to an end. A bull trend ends and changes or a bear one, and vice versa – see some examples on the charts.


                  The strategy we are about to discuss is called Reversal. The name makes it clear that here the trader is to wait for the trend to end and enter the market in the opposite direction. The timeframe is H4, which means the strategy does not require much time spent in front of the computer, tracking the price. The authors note that the method is quite easy to use, and risk management rules allow placing a Stop Loss much lower than the Take Profit.

                  In the article, we will see how to use the ZigZag and MA indicators to catch the end of the trend and enter by the new trend.

                  Setting up indicators for strategy

                  The method is applicable for two currency pairs only: EUR/USD and GBP/USD. These are popular instruments these days; also, movements of GBP/USD will be the strongest. To start trading, two indicators need to be added to the chart:
                  1. Simple Moving Average with period 18
                  2. ZigZag with period 150
                  Let us discuss each of these indicators for better understanding the Reversal strategy. Also, while the MA is, in essense, a basic instrument known by each trader, ZigZag is not so widespread.

                  Simple Moving Average

                  The method is based on the signals given by the SMA. It is super user-friendly: if prices are above the indicator line, it is a signal to buy. And if the price breaks the line from above, look for signals to sell. As a rule, this indicator is used in every trend strategy.

                  How to buy by Reversal strategy

                  After adding all the instrument to the chart, let us look into the details of opening long positions:

                  1. ZigZag values reach their lows. The indicator helps define important levels on the chart. If the indicator values reach the lows, a good bounce upwards is likely to follow.

                  2. Price breaks through the SMA upwards. Check out the Close price of the candlestick: if the price turns out to be above the MA, the breakaway is true, so a buying trade can be opened at the opening of the next candlestick. This is the second signal by the strategy, which is necessary to avoid entering the market at each low shown by ZigZag. When the price breaks through the MA from below, this will be a signal for the beginning of an uptrend.

                  Bottom line

                  The Reversal strategy is an easy way to catch the change of the market trend. The advantages of the method are availability of the indicators: there is no need to look for anything extra and go deep into details. The potential goal is 3-4 times bigger than the loss, which allows for covering several losing trades by one profitable. However, trade occurs on H4 with altered ZigZag values, signals will be scarce, and only two currency pairs suit the strategy. This must be the only serious drawback of the strategy. Apart from this, this is a simple strategy with clear entry and exit rules.

                  Read more at R Blog - RoboForex

                  RoboForex team


                  • Price Channel in Trading: How to Draw and Use

                    Author: Victor Gryazin

                    This overview is devoted to the use of price channels in trading: what does this term mean? How to find a price channel on the chart? Where to open and close trading positions?

                    What is price channel

                    According to a definition from tech analysis, price channel is the fluctuation of the asset price between two parallel support and resistance lines inside the current trend.

                    In other words, a price channel appears on the chart when the movements of the quotes of a certain asset over a certain timeframe are limited by two parallel lines: one up, one down.

                    Types of price channel

                    Depending on the direction of the support and resistance lines, three main types of price channel can be singled out:
                    • Ascending price channel: the lines are headed upwards, the market is growing
                    • Descending price channel: the lines are headed down, the market is falling
                    • Sideways price channel: the lines are horizontal, the quotes fluctuate in a limited range.

                    How trade in price channel

                    Do you remember the motto of tech analysis? It goes: "Trend is your friend", i.e. one should trade the trend. Finding an active price channel on the chart, the trader does not only see the trend direction but also gets interesting entry and exit points for their positions. Let us get into classic ways of trading price channels.

                    Trading ascending channels

                    The channel forms in an uptrend: each new high is above the previous one, and so is each new low. The support line goes through lows — this is the main line of the channel, the trendline. The resistance line goes through the highs. In ascending channels, only buys are valid.

                    Main ways of trading:

                    The main thing is that buys are only opened at the support line. The Stop Loss is placed beneath this line. Positions are closed at the resistance line. Trading may go this way while the price remains inside the channel.
                    When the quotes break through the support line, the ascending impulse is over. The price escapes the channel and reverses. From now on, selling can be considered.


                    Trading descending channels

                    The channel forms in an active downtrend: each new high is lower than the previous one, and so is each new low. The resistance line goes through the highs — this is the mainline of the channel (the trendline). The support level goes through the lows. Only selling trades may be opened in a descending price channel.

                    Read more at R Blog - RoboForex

                    RoboForex team


                    • Dear traders!

                      This week, the RoboForex company's project called ContestFX offers you the following competitions:

                      The 137th competition of "Demo Forex" and 372nd competition of "Week with CFD" have just started.
                      The 506th competition of "Trade Day" will start on 03.08.2022 at 12:00.
                      The 420th competition of "KingSize MT5" will start on 04.08.2022 at 20:00.

                      It does not take much effort to participate in our demo contests - all you have to do is go through a simple registration procedure just once and then you'll get access to any chosen competition with just a couple of mouse clicks.

                      We're looking forward to your joining in and wish you good luck!

                      RoboForex Contest


                      • How to Trade by Psychological Reversal Strategy

                        Author: Andrey Goilov

                        Certain traders choose against using indicators in their strategies, considering them lagging. Such traders are sure that all they need for market analysis is the price chart. The price contains all the necessary parameters and factors and represents the behaviour of the mob and major players alike. One only needs to learn how to read and understand charts. Also, some investors think the fact that indicators base in price parameters to be yet one more their drawback.


                        The trade practice called Psychological Reversal presumes using no indicators. It is based in the understanding of the psychology and behaviour of a group of tra ders. It might seem to be similar to the False Breakaway technique but the Psychological Reversal strategy has strict time limits of market entry.

                        This article explains how to interpret the behaviour of market players correctly in times of strong movements and how to manage risks by the strategy.

                        What is Psychological Reversal strategy

                        The trader works on hourly charts. The idea is to look for strong breakaways of levels and expectations of fast price reversals. For example, if the market is in an uptrend, the price breaks through the nearest resistance level with a large candlestick and soon returns — this is a signal to sell.

                        Some think that most market players place protective orders behind local extremes, hoping for a soon market reversal. As soon as the price reaches these orders, a movement in the opposite direction happens; traders lose, and later the market, indeed, reverses downwards.

                        Example of buying by Psychological Reversal

                        On H1 of GBP/USD for 7 February 2022 the price is declining from the high, and the overall movement resembles a downtrend, in which each next high or low is lower than the previous one. The price tests 1.3504 and quickly bounces off it. We mark this level as a strong support area.


                        Then we need to keep an eye on a breakaway of this level and assess the behaviour of market players. The level is broken 21 hour later, after which the price returns to the level on the next candlestick already. This signals a trend correction, which means we may buy.

                        In this case, the TP is 15 points, equalling the distance from the level to the deepest point of the price decline.

                        Read more at R Blog - RoboForex

                        RoboForex team


                        • The Free Float Ratio: Everything Investors Should Know

                          Author: Maks Artemov

                          There are plenty of indicators and multipliers for analysing public companies. In this article, we’ll talk about one of them, the Free float ratio. We’ll find out the formula for calculating it and describe how investors use it when analysing the market situation.

                          What the Free float ratio is

                          The Free float ratio is the quantity of shares available for public trading. They are traded on stock exchanges, are not owned by strategic investors, and are available to retail ones. You can meet other names it goes by – Float or Public Float.

                          What shares are not included in a Free float calculation?

                          When calculating the Free float ratio, the following shares are not included:
                          • Owned by shareholders, the company’s management and top managers
                          • Owned by the state
                          • Owned by big investment funds, which are majority shareholders
                          In addition, limited shares are also not taken into account. For example, shares that were given to an employee as a reward for the merits for a company.

                          How the Free float ratio is calculated

                          To calculate the Free float ratio, we need to know the number of free float shares and the total number of shares issued. To make the formula look easy to understand, we’ll denote these parameters as A and B, respectively.

                          The Free float ratio calculation formula:

                          Free float = A / B

                          The ratio can be specified in two formats – in percentage (for example, 50%) or decimal fraction (for example, 0.5).

                          Let’s say that a company issued 100,000 shares; 51% of them, 51,000, a majority stake, are owned by the management, while the rest 49,000 shares were released for free circulation. In this case, the Free float ratio will be 0.49 or 49%.

                          The Free float calculation: 49,000 / 100,000 = 0.49

                          What Free float value is considered optimal?

                          The optimal Free float value for both traders and investors is in the range of 40–80%. Such volumes of free float shares provide some kind of protection against market fluctuations, increase the instrument's liquidity, and afford an opportunity to buy or sell an asset at any time. In other words, the higher the Free float ratio, the more liquid the instrument is and the more opportunities investors have.

                          Disadvantages of the low Free float ratio

                          First of all, small or limited market demand. After buying some shares, a trader might find it difficult to sell them. There is a possibility that there won’t be a buyer in the market to acquire this asset, or its price might be very low.

                          Secondly, there might be sharp price fluctuations in either direction at a time of news releases, which may cause panic among market players.

                          Thirdly, buying a vast amount of shares by a single investor might significantly raise the price and cause disbalance. Selling a major minority shareholding can be delayed and it also might result in a price surge. In some cases, shares can’t be sold at all because there are no investors willing to buy them.

                          How to use the Free float ratio for market analysis

                          To begin with, the ratio provides an investor with an understanding of an instrument's liquidity. If the ratio value is 40–80%, an instrument is considered quite liquid and involves smaller trading-related risks.

                          The Free float value above 80% means that it will be difficult for jobbers and big-time investors to cause higher volatility in the market by selling/buying big amounts of shares.

                          A ratio value below 40% says that the majority of shares are owned by principal shareholders and they have the ability to influence share prices by unloading a lot of shares in the market. Small amounts of free float shares raise additional difficulties for selling them.

                          Read more at R Blog - RoboForex

                          RoboForex team


                          • Dear traders!

                            This week, the ContestFX project invites you to take part in the following competitions:

                            The 137th competition of "Demo Forex" is gaining momentum.
                            The 373rd competition of "Week with CFD" has just kicked off.
                            The 507th competition of "Trade Day" will start on 10.08.2022 at 12:00.
                            The 421st competition of "KingSize MT5" will start on 11.08.2022 at 20:00.

                            We remind you that all the winners of our contests receive prize funds to their real trading accounts which they can use to perform trading operations on the Forex market

                            Take your chance to be one of them!

                            RoboForex Contest


                            • Electric Cars Increase Demand for Lithium: Which Companies Will Attract Attention?

                              Author: Eugene Savitsky

                              Brass is the main metal for the global green energy transition. However, there is another metal which is vital for the process, and this is lithium. This article is devoted to this material, primarily used in batteries and energy storage units. Unlike brass quotes, lithium quotes are trading near their all-time highs instead of falling. Over the past two years, lithium prices increased by 1,280%. This article explains what this metal is like and which companies produce and sell it.


                              Lithium is a light, soft alkaline metal of silvery white colour. It is used rather widely, including in chemical electricity sources, metallurgy, electronics, nuclear energy, healthcare, lubricants, space industry, glass industry, etc. The main consumers of lithium are glass industry (29%) and energy (27%).

                              The main lithium mines are situated in the so-called Lithium Triangle on the territory of Argentina, Bolivia, and Chile. This region holds about 70% of global lithium reserves. The Top 5 list of countries with largest reserves features Bolivia, Argentina, Chile, Australia, and China.

                              How lithium is mined

                              There are two ways of mining lithium. The first one is the ore method. It implies construction of a mine or quarrying. The metal itself is produced from pegmatite minerals. The second way is producing lithium from water solution.

                              The second method costs less: the solution is pumped up to the surface from the depth of several meters. It fills up huge pools and then evaporates under the sun, leaving in the pools a concentrate that is gathered and transported to the plant. There lithium is separated from the white flour, pressed in bricks, and sent to customers.

                              The second method is only used in countries with dry climate. In many Northern lands this method can hardly be used because water will need to be heated up in the process of gathering lithium, and this implies additional costs. So, only countries with extremely cheap energy carriers can afford this.

                              What Free float value is considered optimal?

                              The optimal Free float value for both traders and investors is in the range of 40–80%. Such volumes of free float shares provide some kind of protection against market fluctuations, increase the instrument's liquidity, and afford an opportunity to buy or sell an asset at any time. In other words, the higher the Free float ratio, the more liquid the instrument is and the more opportunities investors have.

                              What influences lithium prices

                              As said above, lithium is widely used and has always been in demand. However, the volumes required by the global market used to be much smaller than these days, and lithium companies managed to satisfy the demand fully. The situation changed abruptly when humanity started mass production of electric cars because lithium is used in batteries. So, the metal price started growing at once.

                              Take a look at the diagram of global sales of electric cars. Since 2014, sales of electric cars have been growing. In 2018 and 2019, sales volumes remained at a more or less equal levels, i.e. there was a minor pause. However, in 2020 and 2021, sales doubled.


                              The dynamics of electric cars sales and lithium prices correlate. Hence, the main demand for lithium is created by the car industry. And the more electric cars appear, the higher becomes the demand for the metal.

                              Risks and lithium ETFs

                              The first ones to mention are political risks, i.e. limitations imposes on the business of foreign companies in certain countries, like in Chile. These situations will have a good influence on lithium prices, which means the price might grow after such events, yet the companies that get the limitations imposed on them will suffer a stock price decline. To avoid the risks entailed by investing in one company, investors might consider lithium ETFs, such as Global X Lithium & Battery Tech ETF (NYSE: LIT) or Amplify Lithium & Battery Technology ETF (BATT).

                              The second risk bases itself in active investments in lithium mining that might make the supply exceed the demand. In this case, lithium quotes will start declining, and companies that have invested in increasing production will fail their financial liabilities because their income will fall.

                              Read more at R Blog - RoboForex

                              RoboForex team


                              • Rule 72: What Is It for and How to Use It?

                                Author: Victor Gryazin

                                This overview is devoted to such a method of assessing investments as Rule 72. We will see how it works and how it can be used.

                                What is Rule 72

                                Rule 72 is a simplified calculation method that shows how fast your investments will double if the profitability remains stable. Calculation of complicated percentage (profitability of constant reinvestments) is a really difficult mathematical operation that makes most people grab a calculator. Hence, for less accurate calculations, right on your lap, investors use Rule 72.

                                By this method, any person can simply count in their mind and fancy the magic of complicated percentage.

                                If you want to know how much time you will need to double your assets if the interest rate remains set, this Rule is the fastest option. It was for the first time mentioned in the works of an Italian mathematician Fra Luca Bartolomeo de Pacioli.

                                Calculation formula for Rule 72

                                The mathematical formula for Rule 72 looks as follows:

                                T = 72 / R


                                T is the time during which the capital be doubled;
                                R is the interest rate.

                                When it comes to assessing the errors of such estimations, you get better results when the interest rate is about 8%. Nonetheless, you can feel confident when the interest rate is between 1% and 15%.

                                When the profitability is higher than this, the calculation becomes too inaccurate. In the end, nothing can be compared to the real calculations of complicated percentage with special calculators.

                                How to use Rule 72 in finance

                                There are several main ways of using Rule 72 in finance:
                                • Calculation of capital doubling time: the main task of the rule is assessing how many years it will take the capital to grow twice when the yearly interest rate is set (acceptable accuracy is between 1% and 15%).
                                • Profitability calculation: the formula can be used vice versa as well, assessing which yearly interest rate is necessary to double the capital over a certain time. For example, to find out which interest rate we need to double the capital in 6 years, you just divide 72 by y = 12%.
                                • Assessing inflation influence: it helps to understand how inflation decreases the capital if it just lies idle and brings no profit. For example, let us see how long it will take your savings under the mattress to become 2 times smaller when the yearly inflation is 6%: 72/6 = 12%. 12 years later, if inflation is stable, you will be able to buy twice as less goods and services than now. From some $10,000, you will only have $5,000.

                                What is the difference between Rule 72, Rule 70, and Rule 69

                                Apart from Rule 72, you can use Rule 70 and Rule 69 with the same goals. These rules help to simplify calculations or calculate more accurately depending on the period of interest payments.

                                For example, Rule 69 is most accurate when interest is paid daily. For monthly and annual payments, Rule 72 is normally used. Rule 70 is applicable for the sake of simplicity.

                                Anyway, each of these rules can be used for fast calculations with a set and relatively low error level. Choose the rule that is better for your goal.

                                Bottom line

                                Rule 72 is a simple and comfortable way of calculating the attractiveness of investments right in your mind. This is quite an innacurate way that makes certain errors but gives an opportunity to assess the profitability of investments without going deep in maths.

                                Read more at R Blog - RoboForex

                                RoboForex team