What is the FinTech
Financial Technology or FinTech is the type of Technology aiming to improve financial services. A simple example is the mobile banking used in smartphones, investing services or the Cryptocurrency, which intend to make the financial services more accessible giving the total control to the individual, Sanicola, Lenny (February 13, 2017).
FinTech is the new financial model aiming to replace the financial services which are provided by existing commercial companies.
Start-up such as Coinbase Located in California, USA, allows the user to buy and sell Cryptocurrency and have secure accesso to the digital assets. Coinbase has exchanged more than $150 billion in forms of different Cryptocurrency, including Bitcoin, Bitcoin Cash, Ethereum and Litecoin.
Also established financial institutions such as JPMorgan has launched their FinTech strategy introducing the second US bank-backed cryptocurrency in 2019 after Signature Bank in 2018 launched Signet.
The JPM coin aims to settle payments between clients in its wholesale payments business, to reduce risk and enable the instant transfer.
Ironically the JPM’s CEO has always criticised the Bitcoin but stated that has always “believed in the potential of blockchain technology”.
However, the JPM said that until they are controlled and regulated, they will support the use of digital coins. Which that paradoxically has been created to avoid that the currency was under control.
(By Mary-Ann Russon Business reporter, BBC News, 14 February 2019)
How Technology has simplified the Technical Analysis for investor
Though, the FinTech is not only about digital currency but is part of everyday life and enabled the investor to build his portfolio investing directly with a simple click to buy his favourite company ‘s shares sitting comfortably at home.
Digital platforms and innovation in electronic trading allows the traders to observe the market behaviour in real-time and choose the investment avoiding high fees from brokers.
The Internet offers a wide range of expertise in trading and investor that other traders and investors can follow and mirror their investment strategies.
These platforms require little or almost no knowledge of online investment, and investors can learn to use simple tools to build their financial strategies and choose the right investment.
If you are thinking to invest in the market, forget about math, science and calculation, Technology allows investors with zero knowledge to being able to use simple tools to make a financial decision.
One common tool is the Moving average which is as a calculation to analyse data points by creating a series of averages of different subsets of the full data set, it is also a type of finite impulse response filter and blab la bla blab la blab bla, we don’t need any of this knowledge, but let’s see how the Technology can help you to invest.
Technology helped to convert this horrible calculation:
In this beautiful and clear red line called Moving average:
Maybe it is still difficult to understand the meaning of this red line, But for an average investor, the only info he requires is:
The MA needs to be exponent, set at 200 periods(days), and if there is a Bullish Trend, as in this case, never stay under the red line.
Let see other tools to use for your investment strategy using the power of Technology.
Technical analysis help traders to forecast the future of the price movement and market trend by studying the past behaviour of the market and comparing them with the current market condition.
The market has few rules to follow to achieve good results :
1. The trend is your friend
2. History repeats itself
If you want to do some technical analysis by yourself, you need to read pages and pages of the Annual Report of the company including past and current activity, go on the chart and do something like this:
The above chart analyses the highest and lowest level of activity and all the patterns that the trend has created, remember the rule “History repeat itself? Yes, this is a great example.
Lucky if you are a virgin investor and you don’t know how to do this analysis or where to start from, don’t worry the Technology can help you solve this problem.
The RSI Indicator
The RSI or Relative Strength Index can be your best friend when comes to do some technical analyses, but what is an RSI indicator???
RSI is the ratio of the up-trend and down-trend of the market and simplifies the calculation in a way that the index is expressed in the range between 0–100.
In short, words mean that when the RSI is close to 70 or higher, assume that the price is overbought and when is lower or close to 30 is oversold and is a situation which the market compared with the past was lower or higher than expectations.
This RSI is a great instrument to evaluate an entry or exit in the market, or a signal to keep an eye on individual shares.
Let’s see how the RSI simplified the previous analysis:
How you can see from the above chart is better to read this analyse that the previous one.
In this case, the RSI has a range close to the 70 which means the stock is overbought and the investor may start to sell and in this case, is not a good idea to enter because as you can see is up-trend and is overbought and we need to wait until it gets to the 30 and buy, remember the essential rules? The trend is your friend never go against the trend.
As you can see in a few paragraphs and thanks to Technology, you have an idea on how to read a chart and take partial decision based on simple tools.
However, you still need a lot of knowledge, reading and more experience to invest your money. This blog is to demonstrate how new Technology can help the average investor and is not financial advice.
