Bitcoin Takes Center Stage at iFX EXPO in Macau Despite Chinese Government Hostility

Commercial interest in virtual currency within the financial sector has advanced significantly recently, with banks beginning to provide deposit accounts, and entrepreneurial technology companies having installed the world's first Bitcoin ATM.

As the financial world began to readily accept Bitcoin (BTC) as a viable and legitimate currency, interest among FX firms to offer it as a tradable instrument gained momentum, with certain retail FX providers throwing caution to the wind in terms of the high risk involved due to Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. Read this Term which resulted in values of the virtual currency ranging from $70 to one BTC, to over $1,000 to one BTC in the twilight weeks of 2013.

Bitcoin an Attention-Grabber Among International FX CEOs

As the financial community is beginning to extend a warm welcome to Bitcoin around the world, the future of the virtual currency is becoming a subject of debate among senior financial sector CEOs at panel discussions at prestigious international conferences, with last week's iFX EXPO having been a highly interesting case in point.

Soon after the two day event which gathered international FX industry leaders had commenced, a discussion panel consisting of such exalted company as Tamas Szabo, IG Group's Regional Head for Asia-Pacific, Steven Reiter, CEO of Sentry Derivatives and Avtar Sandhu, Senior Commodities Manager at Singaporean giant Phillip Futures turned quickly turned to the subject of Bitcoin when debating as to what they view as the next big trading product in Asia.

A very interesting topic of discussion, especially bearing in mind China's attempts to discourage the population within the tightly controlled yet highly valuable target market for electronic trading companies based in free market economies across the globe.

Can BTC Rival Gold With No Physical Backing?

The debate regarding Bitcoin was a crowd-pleaser as China’s main Bitcoin exchange has reported some of the highest trading volumes despite the increasing governmental disapproval and subsequent banning of the acceptance of deposits from payment firms to Bitcoin exchanges under the vice-like grip of its jurisdiction.

Mr. Szabo raised his concerns about the future of a currency that is not government-backed, considering it lackluster and therefore to be approached with trepidation.

During this lively debate, a comparison was made between Bitcoin and the gold market, however, Mr. Sandhu stated the fundamental difference: “Gold is physically backed, and in Asia it is used as an investment product, you buy it, keep it and store it.”

Whilst these particular conglomerates have begun to share their opinions on the viability of offering Bitcoin, none of them have yet added it to the list of available instruments on their respective platforms. Thus far, this position has been spearheaded by some of the more gung-ho firms such as Markets.com, Ava and Plus500, the latter of which rapidly adapted its trading terms subsequent to launching BTC in order to cope with Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent. One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent. Read this Term teething troubles.

Whilst the participants in the lively discussion demonstrated that Bitcoin-related thought is being circulated within the boardrooms of some of the largest FX firms on the technology and brokerage sides of the business, none of the firms represented by the panelists have yet to take it up, however the mere notion that it is being talked about energetically by senior executives during a debate on the next big trading product in Asia is testimony to Bitcoin's potentially powerful future presence.