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What is Tron?
Tron is a decentralized platform launched in 2017 that, like all cryptocurrencies, works with blockchain technology. With the difference that it can process 2,000 transactions per second, unlike Bitcoin and Ethereum which do not exceed 25 transactions per second.
The Tron platform was conceived with the idea of being an entertainment platform that allows to store content in a decentralized way. Also enabling access from anywhere in the world in an easy way and generating profitability for content creators.
This is how after selling its tokens in August 2017, it launched the Blockchain Explorer and the Web Wallet in 2018. These with the idea of being able to access content stored on the Tron blockchain and store cryptocurrencies.
One of Tron's goals is to eliminate middlemen in the distribution of content and have the profits generated go directly to those who create the sources of entertainment.
An example of this would be to replace the Streaming platforms model. In this model, we pay subscriptions so that they then pay the content creators. Whereas in the model presented by Tron we pay the creator directly without the middleman.
Eliminating the middleman brings with it a direct consequence, cost reduction. This benefits both the creator and the person who enjoys the content. By not having the middleman, the creator receives a little more for his work and whoever acquires the content, also pays less for it.
Tron and the acquisition of BitTorrent
Framed in this idea, Tron Foundation, the company behind the Tron platform, acquired BitTorrent in 2018 for $140 Million. And as we know, BitTorrent is a content distribution platform that works with a peer-to-peer distribution protocol, like cryptocurrencies.
BitTorrent is one of the most widely used platforms for downloading audiovisual content (movies, series, documentaries). Its acquisition by Tron represents a milestone and positive point since, it took advantage of an already existing platform to advance its proposed objectives.
The future of Tron
Although Tron is a young platform, it is a favorite among developers for creating decentralized applications because of its simplicity and transaction speed. And although with cryptocurrencies nothing is assured, it is well known that behind Tron there are a lot of big Chinese Investors backing the cryptocurrency.
And finally, what most differentiates Tron from other young cryptocurrencies, besides the improved transaction capacity, is the fact that it is focused on a single sector, the entertainment sector.
What types of financial assets can you trade?
Exchange-Traded Funds or ETFs are a type of passively managed fund, similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are traded in the market like stocks, during the day. Their advantage is that they offer more alternatives compared to stocks, and their fees are much lower than those of an actively managed fund.
This is the best option for people who can invest in the long term, especially for those who are starting to trade, because it is less expensive, diversified, and safer.
Unlike a lot of people think, benchmark returns are very difficult to beat and very few fund managers achieve that, apart from some famous cases, like Warren Buffett's.
In practice, if a fund manager achieves to beat the benchmark, it is only for a short time or on a specific occasion. Or perhaps they would charge very high rates and indexing would be a better decision.
Index funds offer solutions to both concerns: their commissions are insignificant and in the long term they almost always beat active managers.
Forex or currency trading allows obtaining profits by converting one currency for another.
In case you decide to trade the EUR/USD pair, you acquire euros and pay with dollars, thinking that the first currency (the euro) will increase compared to the second (the dollar), to make a profit by selling it. Let's say you entered when a euro is worth 1.10 USD and you exit when it reaches 1.15: that margin is yours once you sell again.
As you may have deduced, operating with currencies requires investing a lot, because prices never increase that much, or using a lot of leverage, which you know is a risk. Our advice for those starting in the world of trading is to choose another market to begin with, since Forex is not the safest.
You can trade with almost every currency on this broker but remember that Forex functions through CFDs, which means you won't own the underlying asset.
What are CFDs?
If you browsed this broker previously, you probably noticed that the initials CFD appear frequently. We will come back to it, but you should know first that cryptocurrency operations on this broker are only CFDs when you short sell or leverage over x2 (and this is not even an option on this broker).
For the record, and in case you want to try at some point day trading cryptocurrency and other more advanced operations, you will also find information about concepts such as short-selling and leverage.
Even if you don't have a positive balance, you can still bet on this broker with CFDs. In a hypothetical case: you have the conviction that the Tron will go down, so you clearly think “if it is going to depreciate (go down in price), I'll just wait and go when it has gone down”. However, if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. More or less, this is how it works:
- They lend you, let's say, 100 units of Tron, which cost $ 5,000 (these numbers are imaginary)
- You sell them at their price on the market, $ 5,000
- The Tron devaluates from $ 50 to $ 30
- You buy all 100 units one more time, but now their price is $ 3,000
- You pay back the 100 units to whom made the loan in the first place
- The rest is yours, so, you will have earned $ 2000
Keep in mind that it sounds much more complicated than it really is: we can just say that by trading in Tron you can also earn money if you anticipate the downs.
Do you know what leverage is? Just in case, we'll put it simply: another advantage of trading is that it allows you to invest more money than you can have in a given time. For instance, if you have $ 100 and you use x2 leverage, the amount of your investment will be $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say now that you know that Tron is going to rise, and you want to take a long position.
You are certain that Tron will rise, but you can only invest $ 1,000. Isn't it a shame to miss out on the opportunity to earn more money?
You could consider requesting a loan, but you must know that all the process takes time, and by the moment you receive the money, Tron might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is like a credit, and you will only have to click a few times! the broker allows you to operate with much more than what you have on the platform. As in the image below, you will see the different options you have:
Within other markets, you can use more leverage. Why? Because cryptocurrencies are usually medium-long term investments, and leverage is used especially for short-term operations or day trading. But let's explain how leverage works with the previous example:
- If you decide to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 (remember that$ 1,000 are a “loan” from the broker).
- Then, turns out that Tron does increases, as you assumed, and now the cost of your investment is $ 2,400 (20% higher), so you decide to sell back because you want to play it safe.
- Once the $ 1k from leverage is deducted, you will have $ 1,400 left; which means you've earned $ 400, since the other $1,000 was yours from the beginning.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment. That is pretty good.
But watch out: if all goes as you intended and the asset increases, you will make money. However, if the price goes down, you will also lose more money than you invested.
For example: if instead of increasing by 20%, the price falls by 10%, you won't lose $ 10, but $ 20, because of the leverage. That is why to operate with leverage it is essential to take into account Take Profit and Stop Loss.
Take Profit is a trading limit you can set for your assets: you program your operation and ask the platform to sell them once they get to a point above the entry price. For instance, you can buy Tron at $ 100 and request that your position is closed automatically when it reaches $ 120. It is very helpful to avoid being blinded by enthusiasm: we would all accept a 20% profit when investing, but when you reach that 20% it is easy to ask yourself “what if this keeps going up and I can earn even more?”. It's like you got assured in advance of not doing anything dumb in the future.
Stop Loss is even more important, mostly when trading with leverage, since a small loss could have a significant impact on your wallet. Always remember to establish a Stop Loss more conservative than that suggested by the broker.