Mar
03
2022
Guide to Cryptocurrency Jobs

Guide to Cryptocurrency Jobs

By | Growing Wealth, invest, Investing | Comments Off on Guide to Cryptocurrency Jobs

If you’re interested in earning money with cryptocurrency, investing is one option. Seeking out jobs in crypto is another way to capitalize on this burgeoning market.

Cryptocurrency jobs are popping up in cities across the U.S. and around the world as interest in crypto trading grows. Some of the locations that offer the most opportunities for starting a career in crypto include New York, Los Angeles, San Francisco, and Chicago. For those with experience — or at the very least a passion and willingness to learn — there are a number of ways to put your skills to use.

What Sorts of Jobs Are Available in Cryptocurrency?

There are numerous possibilities for careers in crypto, each of which utilizes a different range of skills, expertise, and knowledge of how crypto works.

Some crypto jobs are more technical than others and you may need a specialized degree or training to qualify. Others may allow you to leverage the skills or experience you already have. Those are important considerations to keep in mind when researching how to get a job and earn money in cryptocurrency. Here are a bunch of different paths for exploring a career in crypto.

Blockchain Developer

Blockchain developers are responsible for developing protocols and systems related to blockchain, a decentralized system for recording and transferring information and assets between connected parties. This is the foundation on which cryptocurrency operates.

In terms of salary potential, blockchain developers earn around $155,000 per year on average , according to ZipRecruiter. You’ll need to be familiar with different types of crypto and be well-versed in various programming languages, such as C++ and Python. A degree in computer science or a related field and/or online certification in blockchain development can help you acquire the necessary skills and experience.

Journalist

Journalism jobs in crypto can include freelance writing, blogging, and content marketing. You may be paid to write articles or blog posts about the latest crypto trends for a financial website, or draft white papers and case studies for a crypto company’s marketing team.

Freelance writers earn around $63,000 per year on average , according to ZipRecruiter, though more experienced writers can easily earn in the six-figure range. You don’t necessarily need a college degree or a professional background in writing to get this kind of crypto job. You do, however, need to have solid writing skills and understand concepts like blockchain and how purchasing crypto works.

Venture Capital

Venture capital is a form of private equity financing in which individuals or investment firms provide financial backing for startups. If you’re interested in venture capital crypto jobs, there are different roles you might take on.

For example, you could join a venture capital firm that supports crypto investments as a research analyst or a business operations associate. Or you might work in corporate development or marketing. The types of jobs available — and the corresponding annual salary — can vary from one crypto venture capital firm to the next.

Miner

Crypto mining is the process in which new cryptocurrency is created. This type of crypto job involves using computer software programs to solve math problems in order to generate or “mine” new coins. As such, you’ll need to have knowledge of the different types of crypto and a background in computer programming and/or coding for this kind of crypto career.

Crypto miner jobs can pay around $89,000 a year on average , according to ZipRecruiter, though some companies may pay miners salaries of $150,000 or more. In addition to understanding how mining works, mining crypto jobs may also require research and analysis skills.

AI Developer

AI developers focus on machine learning and its application across different industries, including cryptocurrency and blockchain. This is a more technical type of crypto job and you’ll typically need either a bachelor’s degree in a related field or a strong background in computer science, programming or engineering to get hired.

Salary-wise, AI developers can command higher pay because there’s ever-increasing demand for them. On average, AI developers can make $126,000 a year though some can earn closer to $200,000 a year, according to ZipRecruiter.

Account Executive

Account executives are responsible for acting as a go-between between vendors and clients. Cryptocurrency companies can employ account executives to help attract new clients and maintain positive relationships with existing ones. This type of crypto job does require knowledge of cryptocurrency but it also relies heavily on soft skills, such as communication skills and critical thinking.

Salaries for crypto account executives can vary by company and may be based on previous experience or your track record of success with former employers. A degree in communications, marketing, and/or business management is typically required.

Software Engineer

Software engineers create software programs and work out the kinks in existing ones. In the cryptocurrency job market, software engineers may be hired to develop new products, oversee engineering projects, design databases or web applications, conduct research, or delve into data analysis. This type of crypto career requires a combination of technical and soft skills, as collaboration and communication with other departments is often essential.

Crypto engineers can earn $120,000 a year on average , based on information from ZipRecruiter, and you may be working on-site or remotely, depending on the company.

Product Manager

Product managers work to develop new digital products and find solutions that meet the needs of the company’s clients or customers. For example, you might be charged with developing a product to help a crypto platform expand into the NFT market.

This type of crypto job is all about innovation and creative thinking; depending on the company, you may not need a degree or even a lengthy work history to qualify. Base salaries may start in the high five-figures/low six-figures and go up from there, depending on how much experience you have.

Accountant

Cryptocurrency companies have to manage the books just like any other business operation. But running a growing startup can be time-consuming and founders or executives may not be able to oversee this task themselves. That’s where accountants come in.

Accountants manage financial records and accounts. Crypto accounting jobs can pay in the $100,000 a year range for accountants who specialize in working with digital currency companies, according to ZipRecruiter. You will need at least a bachelor’s degree, though an advanced degree and additional training or certification is often preferable.

Financial Analyst

Financial analysts study investments and offer financial advice to institutional or individual investors. A crypto financial analyst specializes in cryptocurrencies. Someone who works as a financial analyst for cryptocurrency may work for an investment or wealth management firm, a brokerage, or an online crypto trading platform.

It’s also possible to leverage your financial analyst skills to write articles about crypto for financial publications.

Security Architect

Security architects are charged with ensuring that an organization’s computer and network infrastructure are secure. While it’s difficult to hack the blockchain, it’s not impossible. In fact, more than $4 billion in cryptocurrencies was stolen by hackers in 2021 alone.

Cryptocurrency companies may hire security architects to keep their systems safe and secure and identify potential threats. This is an in-demand job and as such, the average salary can hover around $150,000 a year , according to ZipRecruiter.

Technical Writer

Technical writers who are knowledgeable about cryptocurrencies can take on a number of different roles. For example, they may be employed as content writers or content developers, manual writers or policy writers, documentation specialists or information designers.

All of these jobs require technical writing skills, which may be acquired through earning a bachelor’s degree or through online learning resources. Technical writers in general make around $70,000 a year on average , according to ZipRecruiter, but since cryptocurrency is a specialized field, crypto writers could potentially draw higher salaries.

Event Manager

Event managers organize and promote events for companies, including conventions, conferences, workshops, seminars, and networking events. Crypto companies can hire event managers to oversee promotional events. A background in marketing, advertising, or communications is typically desirable for this type of crypto job.

Event managers, event planners, and event coordinators make an average salary of around $55,000 a year , according to information from Payscale. But if you have an extensive network or an established reputation as an event manager, you could easily earn a six-figure income.

Web Developer

Web developers design, create, and maintain websites. If a new crypto startup wants to launch a website they’ll hire a web developer or team of developers to do it.

As far as jobs in crypto go, web development roles don’t necessarily require a college degree. Instead, you’ll need coding and programming skills to get hired, which you could learn online. On average, web developers make around $75,000 a year , according to ZipRecruiter, though some could earn closer to twice that based on skills and experience.

Tips for Getting a Job in Crypto

Figuring out how to get a job in crypto is not that different from pursuing jobs in other industries. First, you’ll need to understand the various qualifications required for different jobs, the prospect for growth in that area, salary ranges, and the duties and responsibilities involved when taking on a particular role.

You’ll also need to decide if you’re interested in landing a full-time role or working in a freelance capacity within the crypto career space. This can influence how much you’re able to earn with a crypto job and what type of benefits you may enjoy.

Networking

Networking can be an invaluable tool when trying to get a job in crypto. Who you know can be just as important as the skills and experience you’ve acquired. If you haven’t started building your crypto network yet, that’s something to prioritize.

You can network largely online through LinkedIn and social media but don’t overlook the value of in-person meetings. Crypto conventions, workshops, and conferences can all offer opportunities to meet with key players in the crypto space and increase your own visibility.

Immersion in the World of Cryptocurrencies

It goes without saying that getting jobs in crypto means you need to understand the industry and how it works. If you don’t know the difference between Bitcoin and Ethereum, for example, or you’re in the dark about how a crypto wallet works, then brushing up on your knowledge is vital.

Some of the easiest ways to get immersed in the world of crypto include:

•   Learning key crypto concepts and terminology, such as cryptography basics

•   Setting up one or more crypto wallets

•   Creating accounts with different crypto platforms

•   Trading cryptocurrencies online

•   Reading crypto news and studying the latest trends

•   Following and interacting with influencers in the crypto space on social media

•   Watching tutorial videos or guides on YouTube

Cryptocurrency is constantly evolving and changing, with new developments taking place all the time. Spending time to learn about the industry each day can help you keep pace without feeling overwhelmed.

Expected Job Growth

Cryptocurrency is still in its infancy, though the market is growing everyday. As a result, the market for jobs in crypto is also growing, creating new opportunities for people who are interested in a career in crypto.

For example, employment of software developers (which can include jobs in blockchain development) is expected to increase by 22% by 2030 , according to the Bureau of Labor Statistics (BLS). Job growth for information security analysts, which can encompass cryptography jobs, is expected to jump by 33% over that same time period, as reported by BLS.

As the Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FIRA) direct more interest toward regulating cryptocurrency, that could help to solidify its position as a viable form of currency. In turn, that could spark even more demand for jobs in crypto.

Pros and Cons of Getting a Job in Crypto

There are different benefits of crypto for investors, but what are the advantages when you’re looking for a job in crypto? Pursuing a career in crypto can offer some benefits along with some downsides to consider.

Pros

 Cons
Cryptocurrency jobs can offer a flexible schedule, especially if you work remotely or are an independent contractor. Crypto jobs can be demanding and some positions may require you to work well above the standard 40-hour workweek.
Many crypto jobs can offer competitive salaries, with some reaching into the multiple six-figure range. Entry-level positions may offer lower starting salaries and it could take time to work your way to a higher pay range.
Some cryptocurrency jobs don’t necessarily require an advanced degree to obtain; you may be able to learn the necessary skills online instead. Jobs in crypto are competitive and landing a position could be tough if you don’t have lengthy experience or the appropriate skills.

The Takeaway

Doing your research is important if you’re interested in how to get a job in cryptocurrency. There are numerous ways to put your skills and talents to work but if you’re new to crypto, learning about it firsthand can be the best place to start.

FAQ

Is it hard to get a job in crypto?

The cryptocurrency job market is competitive but there are new jobs being created every day. Some of the best ways to increase your odds of landing a job in crypto include networking and learning as much as you can about the world of cryptocurrency and how it works.

Can trading crypto be a job?

Trading cryptocurrencies could potentially be considered a career if you’re able to earn a full-time income through buying and selling. This can be an incredibly risky endeavor, given the volatility surrounding cryptocurrencies. And you wouldn’t have the basic safety nets included with a 9-to-5 job, such as health insurance or access to a 401(k).

What are some possible careers in cryptocurrency?

There are a number of ways to make money with crypto jobs, including becoming a blockchain developer or web developer, mining cryptocurrency, and getting paid to write about crypto and the latest digital currency trends. You could also earn money with crypto jobs related to venture capital, research, or AI development.

Photo credit: iStock/izusek

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Mar
03
2022
What Is Time in Force? Definition and Examples

What Is Time in Force? Definition and Examples

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Is Time in Force? Definition and Examples

Time in Force is a stock investing term referring to the length for which a trading order is good. While casual or buy-and-hold investors may not use time-in-force stock limits, they’re an important tool for active traders.

Understanding different time-in-force options can help you close out more successful positions.

What Does Time in Force Mean?

Time-in-Force is a directive, set by a trader, that defines how long a trade will remain open or “in force” before expiring. Options traders and other active traders typically want to set an appropriate end date for trades to avoid unintended trade execution. This is especially true for investors employing day trading strategies and taking advantage of volatile market conditions with rapidly changing prices.

Recommended: Understanding the Risks of Day Trading

Basics of Time In Force

Before you place a Time-in-Force stock order, you’ll want to make sure that you understand exactly how they work. As with options trading terminology, it’s important to understand the language used to describe Time-in-Force orders.

Recommended: A Guide to Trading Options

Types of Time in Force Orders

There is no specific type of stock market order called “Time in Force”. Instead, the phrase refers to the collection of order types that set how long a trade order is valid, or “in force” in order to take advantage of investment opportunities. If you are considering a buy-to-open or buy-to-close order, you can also specify the time in force for either of those types of orders.

Not all brokers or dealers support every different kind of time in force order, but here is a look at several of the most common types of time in force stock market orders.

1. Day Order

This is the most common time-in-force order, and means the trade remains open until the end of the trading day. If your order has not been executed at the close of the day’s markets, it will expire. With many brokers, day orders represent the default option, and as such, this is the time in force order with which most people are likely familiar.

2. On-Open Order

Depending on the types of order that your broker or dealer offers, there can be two different types of time-in-force-on-the-open orders.

A market-on-open (MOO) order is an order filled when the market opens, at the prevailing opening price. With a Limit-on-Open (LOO) order, you can set a limit price for the highest price you’ll pay or the lowest price at which you’ll sell. If the market opens within the constraints of your limit order, it will be executed. Otherwise, your broker will cancel the LOO order.

3. Market on Close Order

A Market-on-Close (MOC) order is one that requests the sale or purchase of a security at the final closing price of the trading day. If your brokerage offers market-on-close orders, they will generally have a cutoff time by which you need to enter in any MOC orders.

Recommended: Buy to Open vs. Buy to Close

4. What Is Good ‘Til Canceled (GTC)?

As its name suggests, a good-til-canceled (GTC) order is a type of time-in-force order that remains in force until you proactively cancel the order or it is filled. Depending on the type of options strategy you’re employing, a good-to-cancel order can make a lot of sense, if you’re waiting for a moment in the underlying stock price. Many brokerages will restrict the number of days a good-to-cancel order will be open, often to 90 days.

Examples of Time in Force

You currently own 100 shares of ABC stock that you purchased at $20 per share. ABC stock announced earnings last night, and you’re considering liquidating your position. You’re not sure how the market will react to the earnings news, so you place a Limit-on-Open (LOO) order for $30 per share. If ABC stock opens at $30 or higher, your trade will execute, otherwise your broker will cancel it.

If ABC stock’s shares have been rising all day, but you expect them to open at a lower price, you might use a market-on-close order in order to try to sell at the high price at the end of the day. If you want to hold onto your ABC stocks until they reach $40 per share, you could set a good-til-canceled order to do so. Your order would automatically execute when shares hit $40, or it would expire after reaching your broker’s time limit for such orders, typically 90 days.

Time in Force Day Order vs On-Close Order

A Day order and an On-Close order are similar, but they have some important differences. A Day order is one that is good for the entire trading day, up to and including close. If you’re placing an order in the middle of the trading day and don’t care when it executes, this is the type of order you’d use.

On the other hand, an On-Close order (either Market on Close or Limit On Close) is only good at the close of the trading day. The intent of an On Close order is to execute at the final trading price of the day. If you place an On Close order in the middle of the trading day, it will not execute until the end of the trading day, regardless of the price throughout the day.

Using Time in Force Orders

How you use the different Time-in-Force orders will depend on your options trading strategy. Most buy-and-hold investors won’t use Time-in-Force orders at all, but if you’re using a more complex strategy, such as buying to cover, you may want to have more control over how and at what price your order is executed.

Start Trading With SoFi

Using time-in-force orders can help day traders execute on specific strategies and minimize potential offers. It determines how long a trade will remain open before being canceled. Most long-term investors do not use time-in-force orders.

If you’re ready to start options trading one way to get started is with SoFi’s options trading platform. This user-friendly platform boasts an intuitive design, and you can make trades from either the mobile app or web platform. Plus, there’s a library of educational content available for reference.

Trade options with low fees through SoFi.

Photo credit: iStock/Tatomm

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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Mar
02
2022
What Is the SWIFT Banking System?

What Is the SWIFT Banking System?

By | Growing Wealth, invest, Investing | Comments Off on What Is the SWIFT Banking System?

Banks and other financial institutions require a safe and secure way to communicate to facilitate complicated cross-border transactions and payments in the global financial system. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides this secure communication network to financial institutions.

The SWIFT system is a critical piece of infrastructure for the international banking system because it allows financial institutions to talk to one another securely. Without access to the SWIFT messaging network, banks are essentially shut out of the global financial system because they cannot speak to banks in other countries to agree to transaction and payment terms.

Because SWIFT plays such a centralized role in global finance, there is potential for cryptocurrencies and blockchain technology to act as an alternative to SWIFT in a decentralized finance environment.

What Is SWIFT?

SWIFT doesn’t hold assets or move money around. Instead, it is a messaging system for banks and other financial institutions. When banks need to conduct business across borders with other financial companies, the SWIFT system allows them to communicate to one another in a secure and standardized manner to ensure reliable transaction terms.

The SWIFT messaging system relies on a standardized system of codes to transmit information and payment instructions. These codes are interchangeably called Bank Identifier Codes (BIC), SWIFT codes, SWIFT IDs, or ISO 9362 codes. Each member of the SWIFT network is assigned a BIC/SWIFT code, providing an efficient transfer of information during transactions.

The SWIFT codes are used so banks and financial institutions can communicate reliably. For example, a bank in the United States wants to make sure it is messaging the right bank in France to set up payment instructions before sending money.

Since SWIFT doesn’t send money, it requires banks to take additional steps to send money globally after communicating with their counterparty. This makes the whole process relatively slow and adds costs to the transfers. The rise of cryptocurrencies and blockchain technology may alleviate these time lags and additional costs as the technology is adopted more broadly.

Format of BIC/SWIFT Code

These codes are unique and have 8 or 11 characters, identifying the bank, country, city, and branch.

•   Bank code (0-9 or A-Z): 4 characters representing the bank.

•   Country code (A-Z): 2 letters representing the country of the bank.

•   Location code (0-9 or A-Z): 2 characters of letters or numbers for the location of the bank.

•   Branch Code (0-9 or A-Z): 3 digits specifying a particular branch. This branch code is optional.

For example, Wells Fargo, with a branch in Philadelphia, has the 11-character SWIFT code PNBPUS33PHL. The first four characters reflect the institute code (PNBP for Wells Fargo), the next two are the country code (US), the following two characters specify the location/city code (33), and the last three characters indicate the individual branch (PHL). The last three characters are optional; if the bank is the head office, the code ends with XXX.

More SWIFT Code Examples
Bank Name

 Barclays Bank Plc Toronto-Dominion Bank MUFG Bank, Ltd.
SWIFT Code

 BARCGB22 TDOMCATTTOR BOTKJPJT
Bank Code

 BARC TDOM BOTK
Country Code

 GB (United Kingdom) CA (Canada) JP (Japan)
Location Code

 22 (London) TT (Toronto) JT (Tokyo)
Branch Code

 XXX or not assigned (indicates head office) TOR XXX or not assigned (indicates head office)

History of SWIFT

Telex was an early electronic communications system used in the post-World War II period, allowing businesses to send written messages across the globe. Before SWIFT, financial institutions used Telex to communicate with one another to ensure the successful transfer of international payments. However, Telex was slow, lacked security, and was prone to human error because it didn’t run on a standardized system.

To alleviate the problems of Telex, 239 banks from 15 countries joined forces in 1973 to develop a communications network that would provide safe, secure, and standardized messaging for cross-border payments. These banks formed the Society for Worldwide Interbank Financial Telecommunication and went live with the SWIFT messaging service in 1977. Soon, SWIFT was widely adopted and became the gold standard for cross-border messaging in the global financial system.

More than 11,000 financial institutions in over 200 countries use the SWIFT system to communicate. According to SWIFT, more than 42 million messages per day were processed on its network during 2021.

Who Controls SWIFT?

Based in Belgium, SWIFT is a member-owned cooperative, meaning that member institutions have stakes in SWIFT and the right to nominate directors to its governing board. This governing board is made up of 25 people from across the globe and overseen by the G-10 country central banks (Bank of Canada, Deutsche Bundesbank, European Central Bank, Banque de France, Banca d’Italia, Bank of Japan, De Nederlandsche Bank, Sveriges Riksbank, Swiss National Bank, Bank of England, USA Federal Reserve System), the European Central Bank, and the National Bank of Belgium.

Traditionally, SWIFT acts as a neutral party, so it doesn’t make any decisions on sanctions. However, because it operates under Belgian law and European Union regulations, SWIFT will adhere to sanctions imposed by the EU if necessary. This resulted in banks from Iran being kicked off the SWIFT system in 2012 because of the country’s nuclear weapon program. Additionally, in early 2022, several Russian institutions were kicked off of SWIFT because it invaded Ukraine.

The Future of SWIFT

Because of SWIFT’s significant role in the global financial system, some believe that cryptocurrencies and blockchain technology could circumvent the need to use the SWIFT network. Proponents of decentralized finance believe that these new technologies could increase global payments’ speed, security, and transparency. Just as SWIFT replaced Telex as the standard for messaging in the global financial system, some believe that cryptocurrency and blockchain technology could do the same.

The Takeaway

SWIFT is a critical part of the global financial system. Without the secure messaging services of SWIFT, banks and other financial institutions would struggle to complete transactions and make payments in overseas business.

However, the SWIFT system is relatively slow and costly for financial institutions. Even with the safe and secure messaging of SWIFT, cross-border payments and transfers between financial institutions can still take several days to complete. In a world that desires high-speed money transfers, this lag in transaction time can be burdensome to banks and other financial institutions. As new challengers in the global financial system, like cryptocurrencies and blockchain technology, breakthrough and become a more mainstream part of the financial payments system, they could put pressure on the ubiquity of the SWIFT system and the overall global payments system.

Photo credit: iStock/Evgeniy Skripnichenko

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected]. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

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Feb
22
2022
Bollinger Bands Explained

Bollinger Bands Explained

By | Growing Wealth, invest, Investing | Comments Off on Bollinger Bands Explained

What Are Bollinger Bands?

Bollinger Bands® are popular tools used in technical analysis of securities. They are a set of three bands that measure the relative high or low of a security’s price in relation to previous trades.

These defined trend lines are the simple moving average (SMA) of the price of the security plus plotted lines two standard deviations away from the SMA. The bands are plotted positively and negatively from the SMA, which measures the volatility of a security, and the trader can adjust them based on their particular use case. When the security becomes more volatile the bands widen, when it becomes less volatile they get closer together.

Bollinger Bands were created to help investors understand whether a security is currently oversold or overbought, to help determine whether it is likely to increase or decrease in value over time. When the upper band is close to the SMA, generally traders see this as an overbought security. When the lower band is close to the SMA, the security is considered to be oversold.

The bands and a set of 22 rules about using them for trading were developed in the 1980s by John Bollinger, a well-known technical trader.

How Do Bollinger Bands Work?

Bollinger Bands are plotted using two parameters, period and standard deviation.

Period is found by calculating the simple moving average of the security a trader is interested in. The calculation generally uses a 20-day SMA, an average of a security’s closing prices over a 20 day period — or roughly a month of trading days. The first data point on the graph would be the average of the first 20 days being tracked. The second data point would be the next 20 days, and so on.

That line shows the SMA over time, and the Bollinger Bands are then placed above and below it by calculating the standard deviation of the security’s price along each data point. The standard deviation is a calculation of the average variance of the SMA value, which shows how far apart values are from the SMA.

The standard deviation is calculated by first finding the square root of the variance, which is the average of the squared differences of the mean. After finding the square root of the variance, that number is generally multiplied by two, although the number can be adjusted. The resulting value is then added and subtracted from each SMA data point to form the upper and lower Bollinger Bands.

Key Things to Know About Bollinger Bands

A few key things to understand about Bollinger Bands:

•   When volatility is low, the bands get closer together. This indicates that volatility may increase in the future and therefore there could be a significant price movement up or down.

•   When volatility is high, the bands get farther apart. This indicates that an existing price trend could be coming to a close in the future.

•   Generally the security’s price movements stay within the two bands. And once they touch one band they start moving towards the other band. But the price can also bounce off the band multiple times or it can cross over the band. If the price hits one of the bands and then crosses over the SMA line, that is an indicator that it is heading toward the opposite band’s price level.

When the price crosses to the outside of the bands, this is a strong indicator of a trend in that direction.

Formula for Bollinger Bands

Below is the formula to plot Bollinger Bands:

BOLU=MA(TP,n)+m∗σ[TP,n]

BOLD=MA(TP,n)−m∗σ[TP,n]

where:

BOLU=Upper Bollinger Band

BOLD=Lower Bollinger Band

MA=Moving average

TP (typical price)=(High+Low+Close)÷3

n=Number of days in smoothing period (typically 20)

m=Number of standard deviations (typically 2)

σ[TP,n]=Standard Deviation over last n periods of TP
​

How Do You Read Bollinger Bands?

Bollinger Bands help traders understand whether a security’s price is relatively high or low so that they might make trades based on trends. Bollinger Bands can indicate uptrends and downtrends as well as possible upcoming price reversals.

Trends can last for minutes, hours, days, weeks, months, and even years, so traders should understand how to set up the bands based on the timeline of their trading strategy. Here are some patterns and indicators traders might want to learn.

Uptrends

Traders can use Bollinger Bands to see whether there is a bullish trend in a security’s market price. If the center line hits the upper band multiple times, this indicates an uptrend. If the price hits the upper band, decreases but stays above the center line, then hits the upper band again, that is a strong indicator of an uptrend. If the price then hits the lower band, it may indicate a reversal or a loss of strength in the uptrend.

Downtrends

The lower band can indicate a downtrend or an upcoming reversal towards an uptrend. If the price hits the lower band continuously and stays below the center line, this indicates a downtrend. Traders typically avoid making trades during downtrends, but if there is an indicator of a reversal they might choose to buy.

The Squeeze

When the bands are close together, this is known as a squeeze. The squeeze happens when the security has low volatility, but it indicates that the security will probably have increased volatility in the future. Traders look for high volatility periods to find trading opportunities, so the squeeze indicates that those opportunities may be showing up soon.

Traders typically like to exit trades during periods of lower volatility, so they look for far-apart bands as a clue that volatility may soon decrease. The squeeze is not used as a trading signal and doesn’t show whether a security will increase or decrease in value, but it may help traders figure out the potential timing of upcoming trades.

Breakouts

The SMA line doesn’t always stay between the Bollinger Bands — it can also move above or below the bands. Around 90% of price changes do happen between the bands, so if the price has a breakout above or below the bands it’s a significant event. However, breakouts are not used as trading signals and are not indicators that the security price will move in a particular direction in the future.

Bollinger Band Trading Strategies

Financial analyst Arthur Merrill, who identified a set of 16 trend patterns that have M patterns and W patterns. Here are two key patterns.

M Top

The M top pattern indicates that the security price may decrease to a new low. It forms an M pattern at the upper band, where the price nearly hits or hits the upper band but doesn’t cross over it, then decreases to below the low in the center of the M pattern.

W Bottoms

W patterns can be used to identify W Bottoms, which is when the second low is lower than the first low but neither low goes below the lower band. If the security rises above the high in the center of the W, this is an indicator that the price will likely reach a new high.

Combining Bollinger Bands With Other Indicators

John Bollinger recommended that traders use Bollinger Bands in conjunction with other non-correlated indicators, such as the relative strength indicator (RSI) and the Stochastic Oscillator, in order to gain a comprehensive understanding of the security being assessed. While Bollinger Bands help traders understand price volatility and can show opportunities for upcoming trades, they aren’t strong indicators of potential upcoming price movements.

Drawbacks of Bollinger Bands

There are a number of caveats to consider when it comes to Bollinger Bands. In particular, they are best used with other stock indicators, to form a fuller picture.

•   They show old security price data with equal importance to new data, so data that is outdated may be counted with too much importance.

•   They are more of reactive indicators than predictive indicators, so they show current market conditions and can indicate trends, but are not strong indicators of what will happen to a security’s price in the future.

•   The standard settings of 20-day SMA and 2 standard deviations is an arbitrary measurement that doesn’t convey relevant information for every security and trading situation, so it’s important that traders understand how to adjust the band calculations for their particular situation.

Using Bollinger Bands for Crypto Trading

Bollinger Bands have become a popular tool for crypto traders to track volatility and trends. They can be used for trading crypto in a similar way to stocks, but some traders choose to use a 28 or 30 SMA instead of 20, to better represent a month of trading days, since the crypto markets are open 24/7.

The Takeaway

Bollinger Bands are a useful tool for technical analysis of stocks, which measure the relative high or low of a security’s price in relation to previous trades over typically the past 20 trading days. One of many trend indicators, Bollinger Bands are also sometimes used in crypto trading.

If you’re looking to get started trading options, SoFi offers an intuitive and approachable options trading platform. Investors are able to make trades from the mobile app or web platform, and they can access a library of educational resources about options.

Trade options with low fees through SoFi.

Photo credit: iStock/blackCAT

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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22
2022
What Is a Fiat Wallet & How Does It Work?

What Is a Fiat Wallet & How Does It Work?

By | Growing Wealth, invest, Investing | Comments Off on What Is a Fiat Wallet & How Does It Work?

A fiat wallet is a place to digitally store your fiat currencies. Many crypto exchanges offer fiat wallets to users because it makes it easier to buy and sell cryptocurrencies.

One of the main advantages of having a fiat wallet is that it removes the wait time for depositing fiat to an exchange. If a user wanted to get fiat currency like dollars, euros, yen into their exchange account and didn’t have a fiat wallet, it could take several business days for a bank deposit to go through.

This can be problematic for users who want to take advantage of steep corrections in the often-volatile crypto markets. If the price of a coin were to drop significantly overnight, and a user had to wait three days to have their fiat deposited, they might miss the chance to buy at a discount.

With currency held in a fiat wallet, however, the purchase can be made instantly.

How to Use a Fiat Wallet

Using a fiat wallet is not unlike using a bank account, although it functions more like a crypto wallet for a specific type of fiat currency. The only real use of a fiat wallet is to buy any number of different types of crypto or hold the proceeds of a crypto sale.

The mechanics of using a fiat wallet are even simpler than using a crypto wallet. While crypto wallets require making use of QR codes or long strings of random alphanumeric characters (known as addresses), fiat wallets only involve selecting a function and executing it.

Fiat wallets can be used to:

•   Deposit fiat currency from a bank account

•   Deposit fiat currency from the sale of crypto

•   Purchase cryptocurrency with fiat currency

•   Withdraw fiat currency to a bank account

Performing these actions often involves little more than clicking a few buttons, entering the correct number, and perhaps providing some form of two-factor authentication (2FA).

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*Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

How Do Fiat Wallets Work?

A fiat wallet works like a crypto wallet in that both hold a form of currency. But instead of corresponding to a token on a blockchain, the funds in a fiat wallet are just your standard fiat currency, like funds in a bank account.

A crypto exchange hosts a fiat wallet just like they host a cryptocurrency wallet. They do this to provide convenience to their users in the ways mentioned earlier.

Holding funds in a fiat wallet allows users to transact between fiat and crypto without having to go through their banks directly. It’s sort of like a stepping stone between the worlds of traditional finance and cryptocurrency.

Alternatives to Fiat Wallets

Fiat wallets aren’t necessary to interact with the crypto ecosystem or use an exchange. In fact, in the early days of crypto, fiat wallets didn’t even exist.

The two main ways to accomplish the same thing that fiat wallets can do would be to use either stablecoins or Bitcoin as a unit of account for other types of cryptocurrency.

In both cases, users can remain within the crypto ecosystem while exchanging funds for other cryptocurrencies. Most exchanges have a variety of trading pairs against BTC and popular stablecoins.

So, rather than cashing out to a fiat wallet, users could potentially cash out to BTC or a stablecoin like USDT or USDC. When they want to exchange for another cryptocurrency, there likely wouldn’t be a need to switch back into dollars beforehand.

The only caveat would be that to get back into the banking system, users would have to sell their BTC or stablecoin for dollars first. In this sense, there really is no exact alternative to fiat wallets, as they represent the only way to hold fiat inside an exchange.

The Takeaway

A fiat wallet is like an exchange wallet for fiat currency. The wallet allows users to hold fiat on an exchange and make use of it with ease. While you don’t need a fiat wallet to trade crypto, it can be helpful for quickly switching funds from fiat to crypto and back again.

FAQ

How can you get a fiat wallet?

Many exchanges provide a fiat wallet for free upon signing up. Users are automatically granted a wallet for their fiat currency of choice in addition to a wallet for each cryptocurrency they purchase or deposit on an exchange.

How are fiat wallets and crypto wallets different?

Crypto wallets are blockchain-based and contain the private and public keys to a user’s crypto. Fiat wallets are more like a personal checking account. They are simply one way to store, send, and receive fiat currency.

What do fiat wallets do?

Fiat wallets, like crypto wallets, allow users to store, send, and receive fiat currency. When hosted on an exchange, fiat wallets also allow users to purchase cryptocurrency, provided the exchange has trading pairs against both the fiat and the crypto in question.

Fiat wallets make it easy for users to exchange fiat currency for crypto and vice versa without having to interact directly with their bank.

Photo credit: iStock/tommaso79

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

2Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount Bonus Payout
Low High
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$100 $499.99 $15
$500 $4,999.99 $50
$5,000+ $100

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