Huawei business explained
Huawei is one of the largest technology and telecommunications companies in existence today. Its best-known product is smartphones, but it also produces telecommunications equipment, routers and modems, consulting services and software.
Like many of today's large companies, Huawei started with a modest capital of 3 thousand dollars and 3 employees. It was in 1987 when engineer Ren Zhengfei founded the company in the city of Guangdong to distribute imported telephone exchanges.
During those years, China was looking to modernize the country's telecommunications and Huawei's founder saw the opportunity to scale his venture to a national telecommunications company. Thus, he interspersed the commercialization of telephone exchanges with the practice of reverse engineering from which he hoped to develop his own product.
Thus, in 1993, Huawei launched a telephone switch completely developed by them and which was better than any of those available in China at the time. And this first step was enough for Huawei to become what it is today.
Evolution of Huawei
If anything characterizes Huawei, it is the speed with which it adapts to market requirements and advances in technology.
In its evolution it went through manufacturing products based on GSM, CDMA and UMTS technologies. The production of routers and LTE telecommunications equipment, as well as its cell phones being in 2009 when Huawei would produce its first smartphone with the Android operating system.
One of its milestones was the Huawei P40 whose camera completely eclipsed all other devices available on the market at the time regardless of whether it was Samsung or Apple. There was no one who at the time did not see the advertising of the smartphone, listen or read something about it.
Subsequently, already framed in the trade war between the United States and China, Huawei was one of the sanctioned and most damaged companies. First, Google was banned from selling the Android operating system for Huawei cell phones. Secondly, because of Trump's accusations of espionage, with which he asked his allies not to maintain relations with the company.
But despite this, the company has found a way around the obstacles to the point that the sanctions have not prevented it from becoming the world's largest cell phone manufacturer. Likewise, Huawei continues to lead the development and implementation of 5G technology worldwide.
And all this just goes to show how big Huawei has become, to the point that the world's leading economy cannot fully exert its power over it.
These are the financial assets you can trade
Meet the Exchanged Traded Fund
Have you heard about Exchange-traded funds? They are passively managed funds, known for merging the benefits of stocks and mutual funds, because they can be exchanged regularly at market price, but have much more investment possibilities and considerably lower fees.
Currency trading or Forex consists, as the name says, in the exchange of currencies. Put differently, is the conversion of one currency to another, and the aim is, evidently, to obtain a benefit out of this.
If you decide to exchange EUR and USD, you purchase euros and pay with dollars, hoping that the euro will increase compared to the dollar. Therefore, if you bought each euro for 1.15 USD and you sell them back when their price is 1.20 USD, you'll be keeping that difference.
As you may have already inferred, this kind of trading usually implies a large capital, because prices never increase that much, or using a lot of leverage, which implies an extra risk. Our advice for those who are new in the world of trading is not to start with Forex, but with a safer and simpler market.
This broker allows exchanging the most known currency pairs. Nevertheless, consider that in Forex sales are made through CFDs, thus you will not own the underlying asset.
How do Contracts for Difference work?
You probably have found the acronym CFD more than once if you already registered on this broker. We will explain exactly what this means, but you should know first that cryptocurrency trading on this broker is only CFD when you short sell.
We will also refer to terms such as leverage and “going short”, in case you are thinking about day trading cryptocurrency or more advanced practices.
Even if you don't have a positive balance, you can still operate on this broker with CFDs. Let's say that you believe that the Huawei will fall, so probably you think that it is better to refrain from getting in until it does. Nevertheless, if you really consider that it's going down, why not making some profits out of that?
You can do this through what is known known as “going short”. Its operation, roughly, consists in the following:
- You ask for a loan of, let's say, 100 units of Huawei, which total price at the moment is $ 5,000 (obviously, these numbers are made imaginary)
- You sell them at their price at the moment, $ 5,000
- The Huawei goes from $ 50 to $ 30 (as you calculated, the price decreases)
- You purchase all 100 units again, but at the current value, $ 3,000
- Then you pay back the 100 units to whoever loaned them to you
- The $ 2000 difference is yours
Consider that it is much simpler than it sounds: we can summarize this whole operation by saying that by trading in Huawei you can also earn money if you anticipate it will fall.
How to use leverage when trading Huawei
If you still don't know what “leverage” is, we'll describe it briefly: it is the possibility to invest a higher amount than you actually have. For example, you can enter with $ 100, but if you use x2 leverage, you will be investing $ 200.
Leverage, Take Profit and Stop Loss
Assuming that, for instance, you are certain that Huawei price is going up, and that you have $ 1,000 for “going long”, you should know that you can increase your investment and earn higher profits.
Perhaps you could go to your bank, request a credit, wait for it to be accepted, wait for the money, send the money to your broker, confirm that it arrived, and then buy Huawei… Nevertheless, when you finish doing all that, probably Huawei would be already much higher, and it wouldn't be a good idea to invest.
Leverage is just like a loan, but it is only a few clicks away! the broker allows you to invest (and earn) much higher amounts than what you actually have on the platform. As in the image below, you will see the different options you have:
When trading with other kinds of assets you can use more leverage. This is because cryptocurrencies are usually medium-long term investments, and leverage is used especially for short-term operations or day trading. Let's talk a bit more about how leverage works.
You enter with $ 1,000 and pick leverage x2, which means you would really invest $ 2,000 (the extra $ 1,000 to reach $ 2,000 are “borrowed” from the broker).
A week later Huawei price goes up by 20% and now your investment costs 2,400. So, a wise decision is to sell them back now.
You will have to give back the $ 1,000 of leverage and the net profit would be $ 400 (since the other $ 1,000 was your initial investment).
With $ 1000 you get $ 400 more, no less than a profit of 40%. That's not bad at all, right?
But watch out: if all goes as you planned and the asset increases, you will make profits. Nevertheless, if the asset decreases, you will also lose more money than you invested.
For instance: if the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. That is why to operate with leverage it is fundamental to know about Take Profit and Stop Loss.
Take Profit is used as a form of reducing risks when trading. When you enter, you can set a profit limit and ask that your position is automatically closed when the asset reaches a price.
If you purchased Huawei shares at $ 100, you request your broker to close when it reaches $ 120. That way, you make sure you won't be blinded by greed and decide to keep waiting in case it keeps going up, which could make you lose it all.
Stop Loss is even more important, especially if you use leverage, since a small loss with leverage can have a significant impact on your wallet. You always need to mark a Stop Loss more conservative than that suggested by the broker.