Trading in the financial markets can be a lucrative endeavor, but it's not without its challenges. Many traders, especially beginners, make common mistakes that can cost them money and hinder their progress. To help you avoid these pitfalls, we've compiled a list of the top 5 trading mistakes to avoid, based on the lessons learned from experienced traders.

#1 Trading without a plan

One of the most common mistakes traders make is not having a trading plan. A trading plan should include entry and exit points, risk management strategies, and a clear understanding of the market you're trading in.

#2 Overtrading

Another mistake traders make is overtrading. Overtrading can lead to poor decision-making, emotional trading, and ultimately, losses. Stick to your plan and only trade when there are clear opportunities.

#3 Failing to manage risk

Risk management is crucial in trading. Failing to manage risk can lead to significant losses. Make sure you have stop-loss orders in place and always use appropriate position sizing.

#4 Letting emotions dictate trades

Emotions such as fear, greed, and hope can cloud judgment and lead to poor decision-making. It's important to keep emotions in check and stick to your plan.

#5 Not learning from mistakes

Finally, traders who don't learn from their mistakes are doomed to repeat them. Keep a trading journal and analyze your trades to identify areas for improvement.

By avoiding these common trading mistakes, you'll be well on your way to becoming a successful trader. Remember, trading is a marathon, not a sprint. Focus on long-term success and continually work to improve your skills and knowledge

Forex trading, also known as foreign exchange trading, is the process of buying and selling currencies with the goal of making a profit. It is the world's largest financial market, with trillions of dollars being traded every day. To be successful in forex trading, it is important to have a solid understanding of the fundamentals that drive currency prices. In this beginner's guide, we will cover the macro-economic factors that affect currency prices and how you can use this knowledge to make informed trading decisions.

Interest Rates

Interest rates play a crucial role in forex trading. Central banks, such as the US Federal Reserve, the European Central Bank, and the Bank of Japan, set interest rates that influence the value of their currencies. When a central bank increases interest rates, it makes its currency more attractive to foreign investors, as they can earn a higher return on their investment. This leads to an increase in demand for the currency, which in turn drives up its value. Conversely, when a central bank lowers interest rates, it makes its currency less attractive to foreign investors, which can lead to a decrease in demand and a decline in the currency's value.

Economic Indicators

Another important factor that affects currency prices is economic indicators. These are statistics that provide insight into a country's economic health. Some of the most important economic indicators for forex traders include:

• Gross Domestic Product (GDP): This measures the total value of goods and services produced by a country in a given period. A higher GDP typically indicates a stronger economy, which can lead to an increase in demand for the currency.
• Inflation: This measures the rate at which prices for goods and services are rising. If a country's inflation rate is high, its currency may lose value due to decreased demand.
• Unemployment: This measures the percentage of a country's workforce that is unemployed. A high unemployment rate can lead to a decrease in demand for the currency, as it indicates a weak economy.

Political and Geopolitical Events

Political and geopolitical events can also have a significant impact on currency prices. Elections, for example, can cause uncertainty and volatility in the markets. Similarly, conflicts and tensions between countries can affect the value of their currencies. Traders should stay informed about current events and their potential impact on the markets.

Using Fundamentals in Forex Trading

Now that you understand the fundamentals that drive currency prices, how can you use this knowledge to make informed trading decisions? One approach is to use fundamental analysis, which involves analyzing economic, financial, and other qualitative and quantitative factors to determine the intrinsic value of a currency. Fundamental analysis can help you identify undervalued or overvalued currencies and make informed trading decisions.

Another approach is to use technical analysis, which involves analyzing charts and other technical indicators to identify trends and patterns in currency prices. Technical analysis can complement fundamental analysis and help you identify entry and exit points for your trades.

Conclusion

In conclusion, understanding the fundamentals that drive currency prices is essential for successful forex trading. By keeping track of interest rates, economic indicators, and political and geopolitical events, you can make informed trading decisions and stay ahead of the markets. Whether you choose to use fundamental analysis, technical analysis, or a combination of both, a solid understanding of forex fundamentals is the foundation of profitable trading.

In today's fast-paced world of trading, effective communication is key. The ability to exchange ideas, discuss strategies, and receive feedback is vital for success. This is especially true for retail stock and forex traders, who often work alone and must navigate the complexities of the financial markets on their own. Chat communication can be a powerful tool for traders, offering a range of benefits that can help improve their trading performance.

One of the most important benefits of chat communication is the exchange of trading ideas. Traders can share their own ideas and learn from others, gaining new insights and perspectives on the markets. This can be invaluable for traders who are looking to develop their own strategies or refine their existing ones.

In addition to idea exchange, chat communication can also provide valuable assistance in researching asset classes. Traders can discuss their research findings with others and receive feedback and suggestions for further research. This can help traders make better-informed investment decisions and improve their overall trading performance.

Chat communication can also be a source of inspiration and validation for traders. By connecting with other traders and discussing their successes and failures, traders can gain a sense of community and support that can help them stay motivated and focused. This can be especially important for traders who may feel isolated or overwhelmed by the pressures of investing.

Another benefit of chat communication is the ability to handle the pressure that comes from investing. Trading can be a stressful and high-pressure activity, and having a support network of fellow traders can help alleviate some of that pressure. Traders can share their experiences and challenges with others, gaining valuable advice and support that can help them stay focused and confident.

Of course, effective communication is not just about chat. Trading education is also vital for success, and online financial communities can be a valuable resource for traders looking to improve their skills and knowledge. Platforms like Echofin offer a range of educational resources, including webinars, courses, and tutorials, that can help traders learn how to make smarter and better investments.

Looking to the future, the role of AI in online financial communities is likely to become increasingly important. As AI technologies continue to evolve, they will be able to assist traders in a variety of ways, from generating trading ideas to analyzing market trends and identifying investment opportunities. GPT4, the next iteration of the GPT series, is expected to offer even greater capabilities in natural language processing and content generation, making it an ideal tool for maximizing communication and content generation in online financial communities.

In conclusion, chat communication is a vital tool for retail stock and forex traders, offering a range of benefits that can help improve their trading performance. By exchanging ideas, assisting in research, finding inspiration and validation, and handling the pressures of investing, traders can gain a competitive edge in the markets. And with the help of online financial communities and AI technologies like GPT4, traders can continue to improve their skills and knowledge, paving the way for even greater success in the future.

We are excited to announce the 2022 Echofin Financial Community Award winners!

These awards recognize Echofin-powered communities that have made a positive impact on the financial industry in the past year.

Winners are:

Nominations have been exceeded our expectations and picking the winners was not an easy task.

Here are the final results:

Best Educational Community

• Winner: LCMS Traders Club
• Runner Up: Robert Rother

Content Excellence Award

• Winner: Trade The Traders
• Runner Up: Decarolis

Global Reach Award

• Winner: WallStreetBets
• Runner Up: StockTradersNET

Most Engaging Community

• Winner: Decarolis
• Runner Up: LCMS Traders Club

Most Loyal Members

• Winner: MegaPipsFX Forex
• Runner Up: IV Trades

Highest Growth

• Winner: SmartTrader
• Runner Up: MarketMasters Academy

Social Media Impact

• Winner: DrosCrew
• Runner Up: IncredibleTrades

Winners have already been contacted and they shall receive the physical awards anytime now.

We are proud to let you know we announce the first annual Echofin Financial Community Awards.

As the leader in the financial communities space, we acknowledge the hard work community building and engagement requires. We've seen communities grow from a handful people to thousands of members. We've also seen the monumental importance of these communities - they provide a safe haven for valuable investment and trading discussions, which leads to increased profits.

It's time that we recognize the value of these communities, and help out in any way we can!

Nominations now closed!

Categories - Nomination Required

• Most Engaging Community
• Content Excellence Award
• Most Loyal Members
• Global Reach Award
• Best Educational Community

Special Award Categories

• Highest Growth
• Social Media Impact

You can share your favorite nominee on social media using the #EchofinAwards2021 hashtag.

The nomination phase starts on Sep. 13th 08:00 am EST. Nominations are open until Oct. 10th 11:59 pm EST. Nominations now closed.

Winners and runner ups to be announced on Nov. 2nd.

With the need for fast and efficient online communication and collaboration solutions more acute than ever, the debate over which of the existing solutions best meet these needs has flared up considerably.

Telegram and Discord are two of the most prominent chat solutions. As such, they are at the center of the great debate about online communication platforms. By focusing on these industry front-runners, are we not looking past solutions that handily surpass both capability- and usability-wise?

But what if the answer between those two its... a third option? So lets also add in the whole comparison process Echofin.

Echofin is a platform focused on the building and development of online financial communities, is purpose-built to address issues online traders find the most pertinent. By addressing these specialized needs, however, Echofin has managed to create an online collaboration environment that is currently second to none feature-, speed-, and capability-wise.

Let us compare Telegram, Discord, and Echofin more closely, but before we do, let us establish what each of these platforms aims to achieve.

· Telegram’s focus is on speed and security. It is keen on not sharing user data with third parties. It is simple, fast, and free. Although it requires its users to provide a phone number, thus compromising their privacy to some degree, its speed is an attribute many people consider by far the most important.

· We can best depict Discord as a modern text and voice chat app. It supports multiple servers and channels, making it easier for users to organize their communication. Discord offers crystal-clear voice communications, but it is system-resource intensive. Aiming to provide to video game streamers, it has made its strengths and weaknesses obvious.

· Echofin is an online communication environment purpose-built to allow its users to create and grow communities by providing high-value services through many integrated features and supported third-party capabilities. Echofin also allows its users to manage the permissions of their community members while monetizing their efforts. It represents, by every measure, the next generation of online communication/collaboration tools.

Knowing the primary purpose of each of these platforms provides valuable context for the detailed comparison we make below. It makes sense to look at the pros and cons of each platform to determine how well they cover the online communication needs of the post-pandemic 21st century.

Pros

Telegram is a free platform with its focus on instant messaging, communication, group messaging, and internet calls.

·Telegram allows the sharing of large files including videos, gifs, pictures, and even executable files.

·In addition to encrypted messages, Telegram also supports self-destructing timers and the possibility to delete messages from the chat timeline for good.

· Telegram supports channels for one-way broadcasting.

· The user interface is simple, clean, and highly functional.

· The app allows users to search for YouTube videos, pictures, and gifs through inline bots, without the need to leave the chat.

· Telegram uses high-performance audio codecs for high-quality voice calls.

· The app lets users store an unlimited number of files on the cloud.

· It supports group voice chat as well as video messages.

Discord aims for different objectives, as mentioned, but many of its objectives coincide with Telegram’s.

·Discord comes with a user-friendly, highly functional interface.

·It allows an unlimited number of users.

·Discord does not require software installation, allowing users to invite others via a web link.

·The platform features low-latency VoIP support.

·Discord lets its users thread channels and create bots.

· There are no significant differences between the free and the paid accounts.

· The platform allows the setting and targeting of roles, featuring many controls to this end.

Echofin is a communication platform for financial communities looking to deliver a virtual trading floor experience. And with the option of your own branding, something that neither Telegram or Discord has.

· You can 100% brand your Community, using your own domain or just branding on your landing pages , custom disclaimer, logo and pics on your chatrooms.

· Using roles and permissions you can manage the community easier and users also will have a better experience as well.

· You can assign roles and permissions using Invitation Links and Invitation Automations. This feature will make your day.

· You can easily manage your community with an admin dashboard and learn more about it through the analytics.

·Users can share standardized, pre-structured trading signals post types.  So posting a signal its matter of seconds.

· Chat room owners can monetize their chat rooms directly through the platform, setting up subscription plans, etc. Echofin its an official partner with Stripe.

· Its innovative layout supports a multi-chat room view. Those who do not like the new layout can switch back to legacy view at any time.

· The platform supports low-latency audio and video chat. It allows users to share their screens in real-time. Educators can also hold online classes, delivering knowledge to their followers in real-time.

·Echofin offers great support for third-party widgets and services.

· The platform gives users the chance to share sensitive information, such as passwords, through secret messages. Such messages feature another layer of encryption, on top of the one used for regular messages.

·Group owners can access special pinboards to highlight important messages.

· The platform gives trading team owners full control over how their team members interact. Owners can even disable direct communication between members.

Cons

Telegram is not a fully open-source solution and to access it, users need to provide their phone numbers, thus compromising their personal information.

·  Only Telegram’s secret messages enjoy the protection of end-to-end encryption.

· No Branding, No custom disclaimer, No own domain.

· No monetization options.

· No dashboard and No analytics of any kind.

· Difficulty on managing a community with a lot of users.

· Lack of integrated payment system.

· No desktop App.

·  Desktop users do not have access to secret messages.

·  One cannot make Telegram his/her default text messaging app.

Discord uses proprietary software. As such, it is closed-source.

·  User privacy is not the strong suit of Discord. The previous company of the developer dealt with legal problems stemming from its privacy violations.

·  Discord is not a generic communication tool meant to help its users share information in a streamlined and efficient way. It is a tool aimed specifically at gamers, allowing them optimal communication with their team/clan members.

·  Some of the advanced features of the platform are only available via the Nitro subscription.

·  No Branding, No custom disclaimer, No own domain.

· Lack of integrated payment system.

· No monetization options.

Echofin is not a free, generic online chat solution. Instead, it is a super-charged communication solution taking full advantage of modern technology to make a meaningful difference in the lives of its users.

·  The price of the Echofin communication suite ranges from $49 to $499 per month. The available subscription plans are Pro, Business, and Enterprise.

· Having so many features means that there is a learning curve bigger than Telegram and Discord.

Verdict

·Telegram is a free instant messaging and group chat/call platform focusing on speed and security.

·  Discord offers crystal-clear voice communication to online gamers.

·  Echofin aims for a virtual trading-floor experience, covering all the needs of trading beginners and educators.

·  From the perspective of trading and group communication, Echofin’s capabilities are unparalleled.

If you are looking to put the power of technology to use, improving your trading skills, and turning a profit off the skills of your more experienced peers, Echofin is THE answer. With Echofin you can create a VIP environment for your users and give them an upgraded version of experience.  

Using Discord or Telegram its extremely easy, but its kind of unprofessional, so if you want to create your own brand its not the right tools for you.

Except that its impossible to manage your community if its big in numbers. After Wall Street Bets "ERA" we saw that community management with thousands or even hundreds of users typing at the same moment its only noise.

 And the community manager feels like:

If you are a skilled trader looking to monetize your skills online through a communication platform, Echofin is the optimal answer.

If you are currently using Telegram or Discord to maintain an online trading community, you need to make the switch to Echofin. The difference is staggering. Echofin is a professional tool with capabilities far exceeding those of any generic communication solution or a platform designed to cover other needs.

According to science, only around 20 percent of day traders can eke out a marginal profit from the activity. There are twice as many losing traders as there are profitable ones. Making money trading is not easy. If you are a profitable trader, you possess a rare and valuable ability. And you can turn this ability to profits in more ways than one.

As a profitable trader, you can:

1. Teach trading
2. Coach others who want to become capable of turning a profit
3. Strike up a partnership with a broker
4. Condense and sell your expertise online
5. Share your knowledge with the masses through social media.

So step by step:

1. Teaching Trading

If you are a profitable trader you can teach others how to become profitable. It does not matter if you feel that you have no proclivity for teaching. If you know how to do something, you can explain it to others. In the realm of online trading, substance beats style if it is indeed genuine.

To be a successful teacher, you need to cover a few bases.

You have to deliver value. As a trader who has cracked the code of profitability, delivering value should be easy for you. Let your followers know what you do to be better than 80 percent of all traders, and you will have given them plenty of value.

You need a communication environment in which you can interact with your followers/students unbridled regardless of geographical location. This environment has to support chat, video streaming, and various tools that allow you to manage your community optimally.

You have to find a way to monetize your activity. You cannot have your followers/students send you money individually. You need a solution that allows you to automate the process.

You need to customize and brand your trading academy to stand out and to create a sense of belonging in your clients.

You have to be able to deliver live- as well as recorded trading courses. For your live webinars, you need a set of online tools that allow you to interact with your followers as if you were in the same room.

And one of the best tools out there to accomplish all the above is Echofin. Echofin provides you with a robust solution, and includes all the above.

Check How Many Tools You Can Replace With Echofin!

2. Coaching Beginner Traders

Teaching, coaching, and mentoring go hand-in-hand. Beginner traders need mentoring and coaching, perhaps more than they need lexical knowledge concerning trading.

To convey moral support, the psychological skill-set to handle losses, and motivation, you need to use a trading environment akin to a virtual trading floor.

You need to be a positive person who understands the importance of mentorship and its role in shaping the personality of the coached client.

You need to possess and be capable of conveying the winner’s mindset.

Coaching is about much more than making money through your sessions. It can offer you satisfaction in ways far exceeding any material reward. By using the right communication tools, you can actively shape the personalities of your mentees and help them to achieve success against the odds.  Again that's something that you can do with Echofin platform as well.

3. Partnership with a Broker

A skilled trader, who runs a respected online trading academy that creates real value, acquires clout and influence. He/she can then use this influence to introduce traders to various brokers for a commission.

Many abuse this practice. They try to send traders to brokers without giving them any value. Often, such agents send traders to unregulated, shady brokers who then steal their deposits.

Although potentially very rewarding, this kind of activity is very risky for you. You need to be very careful not to commit a mistake with one of your partners.

Never recommend a trading destination to your clients that you have not tested yourself. If you are a genuine mentor, you will only recommend to your mentees the brokers, where you trade, and where you have built your success.

With integrity and a focus on delivering value, you can make money with such affiliate partnerships.

If you monetize your online trading academy well, you can treat such high-risk revenue streams as a side-business rather than your main focus.

4. Condensing and Selling Your Expertise

If you can provide real value for your followers, it makes sense for you to condense your knowledge and skills into a book, an online course, or a guide. You can then sell these bundles of knowledge to your followers/clients.

You can always add external links as services inside your Echofin community and send them directly to your landing page to sell your book, or your guide.

Basically if you have a vibrant trading community at your fingertips, through a platform like Echofin, you can monetize the value that you provide in many ways.

5. Launching a YouTube Channel

Being increasingly used as a replacement for television, YouTube is a social media channel you should exploit. While it can give you visibility and clout, it is unsuitable for real-time, hands-on trading and communication.

You can use it as a tool to build your trading/team and community and a channel for sharing your expertise with the world. A good YouTube channel can be profitable, with paid videos, ads etc.

Be aware of its limitations, however, and of the fact that a solution like Echofin can replace it in its entirety as far as its technical capabilities go. But in a different way. If you already have your audience in Instagram, Twitter on Medium you can send them directly to Echofin and live stream from your branded platform.

If you already using YouTube and you already have a nice strong community then you can easily drive traffic through your channel directly to your paid community that you already have or you want to create with Echofin.

In that case you can always "embed" as a widget your YouTube channel in your Echofin community and upscale your game!

For a true expert dedicated to mentoring, coaching, and teaching his/her clients, YouTube does make sense on account of the visibility it offers.

Building a community is at the heart of all these potential ways of turning your trading expertise into money. And at the heart of the community is your ability to deliver value.

If you can improve the profitability of your trading team members, you deliver value. If you can help them become the traders they wish to be, you deliver value. If you guide their steps based on your experience, you give them value. This is what Echofin is about. Building communities focused on genuine value and performance, without noise, without spam and with full control of your community in every step of the way.

Join our Demo Team and see first handed the whole experience?

The global pandemic has triggered a boom in online communication solutions. Stock values of platform providers such as Zoom and Slack skyrocketed. As more and more bosses recognized the benefits of home office work world-over, more and more people came to terms with the new realities of online communication.

Having been around for a few years, we are in the perfect position to exploit this newfound need for meaningful and productive online communication. From the perspective of traders, our platform is the best alternative for most of these new online communication “rock stars” and more.

As a trader, you have some rather special needs you can only meet by combining several of the online communication solutions that developers created for fundamentally different purposes.

With Echofin, you can easily replace a bunch of these tools and secure better value than a whole suite of such communication solutions can give you. We have purpose-built this platform for trading.

Echofin is an Alternative to Discord

Communication and collaboration are Echofin’s strong suit. It allows traders to setup multiple chat rooms and manage complex communities easily and transparently.

Sharing your TradingView charts, market analysis, and trading signals is but the tip of the iceberg. Our platform allows you to create a virtual trading floor experience, sharing real-time, low-latency video, and interacting with your viewers as you go about your trading.

Looking for an Alternative to Telegram? Echofin is the Answer.

You can share files, send messages, photos, and videos with Echofin. As a trader, you can set up communities in a few clicks and reach potentially unlimited audiences. If you are a profitable trader, you can also monetize the advice, tips, and trading signals you share through the platform.

The platform encrypts messages by default, but it also supports secret messages, adding another layer to your privacy/security.

Echofin is a More than Viable Alternative to Slack

According to its slogan, Slack is where work happens. Echofin is where trading work happens. If you are looking for effective and simple channel-based communication, Echofin is the answer. As a virtual trading floor, our platform connects all the software and tools traders may need. It facilitates the free yet controlled flow of information to enable beginners to do their best trading.

It also gives experienced traders a way to freely share and monetize their knowledge and expertise.

Looking to Replace Zoom with a Trading-focused Alternative?

Share your trading screen with your followers/team members and stream low-latency HD video. Host HD meetings and define the permissions of every participant individually. Echofin gives you full control over your online communication, creating a perfect environment for webinars and other educational activities.

Financial educators thrive here, setting up and running communities and creating trading academies from scratch, with monetization included. Echofin meetings and educational events are accessible, easy to join, and secure.

An Alternative to Cisco Webex? You Bet!

Due to its advanced communication suite and third-party integrations, Echofin creates trading experiences that are much better than in-person interactions. Through the screen-sharing, chat, trading signal delivery, and secret messaging features, our platform trumps real-life interactions in many ways.

It puts a staggering array of relevant information at the fingertips of students and educators alike. In addition to what Echofin delivers communication-wise, it integrates a wide range of third-party widgets and apps that can offer more thorough insights, lending decision-making an entirely new dimension.

Try Echofin Instead of Google Meet. You Will Love it!

Frictionless video conferencing is one of Echofin’s “superpowers.” Its power to build and maintain communities around a complex undertaking such as online trading is unparalleled.

Our platform is consistent in the quality of the services it delivers. It is also user-friendly and accessible. Messaging is encrypted from one end to the other, and the secret messages lend additional depth to on-platform security. Indeed, through Echofin, you can share passwords and other similarly sensitive information without worrying that it will fall into the wrong hands.

Unlike some of the tools it can fully replace, Echofin does not push a corporate agenda branching into other online activities, nor does it sport a spotty record privacy-wise. Echofin’s communication ecosystem is an open one. If you are looking for a solution that allows you to mold it to suit your needs in every way, it has your back.

Our platform works with Zapier, allowing high-level automation and integrations. It also allows educators, experienced traders, and everyone else to provide various trading services and monetize them directly without needing technical skills.

The advanced Customer Relations Management module of the platform supports integrations such as Stripe. It also allows you to set up custom, branded checkout pages and work out custom billing plans. If you are a trader looking to share your skills or learn from those more experienced, you do not need a bunch of tools and cumbersome software designed for a different purpose.

Do you want to join our Demo Team and see first handed the whole experience?

We have all heard the news. Whether you work in the financial industry or not, you probably know about the recent events that turned heads across countries, industries, and age groups.

"A group of Redditors trolled Wall Street which eventually led to people losing billions" is one example of clickbait news headlines popping up on the internet.

The mentioned group of Redditors comprises the members of an infamous subreddit called WallStreetBets. For those into equities trading, this name may be familiar. It is probably the largest online group of people discussing trading ideas, mostly lacking any financial background or knowledge of fundamentals and risk management. While there may be WSB users who deeply understand the markets, the vast majority consists of people having a common attitude toward investing: all-in to make it or break it. WallStreetBets is so big that it is among the largest Reddit groups across interests.

Instead of a boring analysis of how and what happened here, I will try to provide a different perspective on how these past couple of days created a vast demand for financial education for the average Joe, a demand we knew existed back when we founded Echofin.

WallStreetBets (I will refer to it as WSB going forward) had about a million users in the Reddit group. Not all of them were active traders, but regulars discussing in various rooms on their Discord team. Upon joining, you'd see hundreds of different chatrooms, from trading-related to online games. Imagine independent mini-communities inside a community. Now imagine an additional 6 million people with access to "a group of Redditors who pick stocks and skyrocket them." Absolute mayhem. People blindly rode whatever trends they saw on social media, Reddit, Twitter, each one screaming out their own picks, trying to be as loud as possible to sway the herd in their direction.

As soon as the WSB Discord group went down, clones popped up on Discord and Telegram. Joining the voice chat would be a one-of-a-kind scary experience. Thousands of voices shouted with no focus, no direction, and no coherence. Some described this as a virtual trading floor. Having been to an actual trading floor, it reminded me nothing of it. Try to imagine what it must have sounded like in the streets when the people led Louis XVI to the guillotine during the French Revolution. That's what it is for the small trader Joe, a revolution of the little guys against Hedge Funds.

Suddenly, a huge wave of trading newbies, who had never had any interest in investing before, joined the WSB subreddit in two days. A lot more joined various clones of the WSB.

I recall when we pitched VCs for our pre-seed round we were asked what the Addressable Market was; since Echofin aspired to become the dedicated communications platform for retail traders. The question is valid. There are estimates on how many retail traders there are. However, we were always confident that the estimates meant nothing, as any person with an internet connection and some savings could become a retail trader overnight. Investors - mostly west coast Venture Capitalists - were skeptical of the market size.

Over the past couple of days, we’ve had the chance to chat with hundreds of users on our platform who never invested in anything in the past, but felt that this gold rush would be a great opportunity to start exploring their financial freedom through investments. But financial education is indispensable for financial freedom. The most common statement of people who land on Echofin searching for a community to join is "I am new to this, I want to start learning". The demand is there. The time is now.

What Discord and Telegram fail to deliver is the supply side of the equation.

Echofin is the only valid supply-side solution. Unlike the IRC-like chat platforms, the workspace is designed to maximize communication efficiency, enhancing dialogue over the hubbub, incorporating tools like charts, price feeds, and others directly into the layout.  Through the meetings and webinar solution, financial educators can host their courses and by utilizing the integrated billing and subscription automation management, they can create virtual classrooms to educate this new wave of trading newbies.

To further assist on the supply-side, Echofin is the only communication platform to provide branding features to community owners, as well as a complete CRM with business analytics. We focus on providing the tools to groups of people to build and grow thriving communities. We allow them to be proud of their brand and provide an enterprise-level experience to them and their members.

The WSB hype will subside soon. However, we are as confident as when we founded Echofin that a new, larger wave of traders will get the appropriate level of support and education to make wiser decisions based on knowledge and facts rather than invest their life savings based on what a guy in a Telegram group told them.

George L.

CEO / CoFounder Echofin Inc.

NEW YORK — On Nov. 10th, 2020, Echofin Inc. was named to the Benzinga Global Fintech Listmakers and recognized as Best Financial Literacy Tool.

To honor it’s sixth anniversary, Benzinga is honoring the winners for the advancements they’re making in financial technology in a new and improved way.

The official Benzinga Fintech Listmakers is comprised of 250 carefully vetted and renowned companies and executives who are striving to revolutionize the fintech industry.

“We’re recognizing the companies that will define the future of our financial lives” says Benzinga CEO Jason Raznick.

This list of carefully selected companies will be honored each year as Benzinga continues to highlight the fintech industry’s most innovative minds.

Echofin Inc. has been pioneering the retail trading communications space by providing a state of the art platform, helping financial teams grow, engage and monetize their following. Since 2018, financial educators and trading academies have been training the new generation of traders by utilizing the Echofin platform and its functionalities.

About Echofin:

Echofin is a second-generation trading-focused online communication platform. Its services include direct chat, interactive content-sharing, scores of supported widgets and live video/audio streaming.

One of Echofin’s strengths is the fact that it lets team owners manage and monetize their trading chat rooms.

About Benzinga:

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“I see Bitcoin as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking.” – Hal Finney.

Cryptocurrencies promise effective trust minimization, pseudo-anonymity, and “permissionlessness”. The fact that the true crypto blue-chip, Bitcoin, does not fall under the control of any authority, and that by now, it is arguably immortal, is just the cherry on the cake.

For those who understood the potential of Bitcoin, it has, however, promised much more since the very beginning. Coupled with smart contracts, Bitcoin could supplant entire industries, making legal representation and the entire existing financial industry redundant and obsolete.

DeFi is short for decentralized finance and it is the first step toward a decentralized financial industry that may one day fulfill all of our financial needs from getting a loan and issuing securities to exchange services, prediction markets, trading, etc. Below we answer beginners’ most frequent DeFi questions.

• What is DeFi?
• How does DeFi work?
• The peculiarities of dapps.
• How can you access and use DeFi apps?
• DeFi apps that already work.
• What you need to know about DeFi.

What is DeFi?

DeFi is a movement that leverages the powers and features of cryptocurrencies and smart contracts to provide a global alternative to every legacy financial service people use today. That means:

• Trading
• Insurance
• Banking
• Payments
• Exchanges
• Loans and savings

…and probably more.

How Does DeFi Work?

Certain blockchains, like Ethereum’s, support smart contracts. Smart contracts are programs (lines of code) that run on the blockchain and execute certain functions when a given set of conditions is met. By combining such smart contracts, blockchain engineers can create decentralized applications (dapps).

Such dapps form the backbone of DeFi. Programmers can set dapps to fulfill any role. There are already dapps powering lossless savings games and person-to-person loans, without the interference of any third party and without the need for the borrower and lender to know and trust each other. The possibilities in this regard are limitless.

Dapps are Different from the Software Banks Currently Use

No one entity controls decentralized apps and the way they run. Once their creators deploy them on the blockchain, they require no further management. In theory, DeFi apps do not require any further human intervention at all. In practice, developers do check and update their apps now and then.

Like the blockchains on which they reside, DeFi apps are global and permissionless. This means that they give everyone all over the globe the same opportunities. No one has to request permission from anyone to use DeFi services. There are no gatekeepers. The only tool users need to interact with a DeFi environment is their crypto wallet.

The DeFi user experience is already flexible and it will become more flexible in the future. Due to the open-source nature of dapps, anyone can review the code, debug it, and rewrite it. In the future, if a user does not like a given user interface, he/she will be able to recreate/reshuffle it.

DeFi code and transactions are transparent. On the one hand, this means that anyone can review dapps and see what makes them tick. On the other hand, users can track every transaction that happens on the blockchain. While transactions are public, they do not carry any information about users’ real-life identities. Thus, the entire ecosystem, much like Bitcoin itself, is pseudo-anonymous.

Perhaps the most intriguing aspect of the dapps ecosystem is that its bits and parts are compatible and interoperable. What that means is that programmers can use various already existing programs to build new applications through their combination. A good example in this sense would be a DEX (decentralized exchange) using its dedicated stablecoin and running a trading/market prediction service.

How Can you Access and Use DeFi Apps?

To access a DeFi app and thus to become part of the DeFi movement, all you need is a cryptocurrency wallet. If you already possess some cryptocurrency, you most likely have a wallet as well. Hardware wallets are recommended, although in this case, you will need a wallet that supports a dapps browser, like the Coinbase Wallet.

Some workarounds allow you to use dapps through other wallets as well, though these entail the installation of additional software.

In the future, DeFi will likely turn your wallet into a gateway to all the financial services you need. It will work like the browser does these days, letting you access and visualize a wide range of information and apps.

Wallets developed specifically with DeFi in mind and advertised as such, exist as well. Here is what you should look for in a DeFi wallet.

Accessibility and asset support determine whether you can use a wallet to deposit ETH in tandem with ERC20, ERC721 tokens, and various stablecoins.

All DeFi wallets come with a unique key pair. If you have a hardware wallet you are likely familiar with such seed-phrases. The wallet should not be a centralized one. With DeFi wallets, users take full responsibility for the safekeeping of their private keys.

DeFi wallets are non-custodial. “Not your keys, not your Bitcoin.” – goes the saying. Your keys, your crypto – we might add.

Many wallets have recently added dapps browsing functionality. This way, they significantly simplify their connecting to a DeFi application.

DeFi Apps that Already Work

If you have a cryptocurrency wallet, you can already access a surprising range of DeFi services.

• MakerDAO has made waves in the crypto world thanks to its DAI stablecoin. This coin is a crypto-backed one, unlike some other DeFi stablecoins, that are backed by USD in audited bank accounts. Above and beyond its stablecoin, however, MakerDAO aims to become a decentralized reserve bank. It has set up a governance model toward this end, based on its MKR token.
• Compound is a decentralized lending and borrowing platform. It allows users to lend out their crypto, thus earning interest on it. Users who deposit their crypto can borrow against it. There are several other such services and even dapps that allow the easy comparing of interest rates.
• Uniswap is a DEX (decentralized exchange). With it, crypto holders can trade their coins directly from their wallets. A decentralized exchange performs automated market making, and it allows participants to become liquidity providers, rewarding them with a cut of the exchange fees.
• Synthetix is a dapp that allows users to create synthetic assets based on their real-life counterparts, such as gold, oil, and various currencies.
• PoolTogether lets users combine their DAI holdings. The interest the combined pot earns goes to a winner. The rest of the funds go back to the depositors.

What Else Do You Need to Know About DeFi?

You may have heard the expression “ETH locked in DeFI”. This is a metric that depicts the success of the DeFI sector as a whole.

Because dapps work on the Ethereum blockchain, they require ETH to run. It makes sense to lock ETH into dapps through smart contracts. Dapps may use the internal currency to exchange value, to power the consensus mechanism, to support development, and to create an economic environment in which the dapp may thrive.

The more DeFI apps there are, the more ETH they use up. Thus, the “ETH locked in DeFi” metric offers a good depiction of the proliferation of decentralized finance in general.

On July 15, 2020, an unidentified group of hackers gained access to some of Twitter’s internal admin tools and through them, to the Twitter accounts of an impressive number of high-profile users. According to Twitter, the security breach translated to full access to a small “subset” of user accounts.

This small batch included the accounts of former President Barack Obama, Democratic presidential candidate Joe Biden, influential rapper Kanye West, and his wife, Kim Kardashian-West, Elon Musk, Bill Gates, as well as crypto celebrities Changpeng Zhao, and Justin Sun.

At a closer look, the scope of the attack turned out to be worse than it had been initially thought. The hack affected more than 130 verified Twitter accounts. In damage control-mode, Twitter quickly locked the affected accounts, denying them the ability to post.

While the “party” lasted, the hackers posted messages asking for bitcoin donations and promising to send back double the amount of bitcoin received. This MO is hardly a new one. YouTube accounts masquerading as the personal accounts of various celebrities have long beaten this scam into the dust.

That said, the scheme netted more than $125,000 in a few hours before Twitter moved to counter it. Around half of those funds allegedly originated from North American exchange accounts.

• The scheme, initially dubbed “Crypto for Health”, got underway hitting Binance’s Twitter account.
• Promises of easy riches soon lit up the accounts of Gemini, Coinbase, Coindesk, Justin Sun, Charlie Lee, the Tron Foundation, and Ripple.
• About an hour into the scheme, it hit full bloom, as the accounts of Elon Musk, Bill Gates, Kanye West, Jeff Bezos, Michael Bloomberg, Joe Biden, and Barack Obama also began advertising dubious “giving back to the community” deals.
• Hackers piled extra abuse on Elon Musk’s account, returning for several rounds of tweets, further sweetening their scammy deal.

The perpetrators hacked a Twitter employee, who had master access to the social media giant’s admin tools. Twitter’s security measures were notoriously lax. Several hundred engineers had master access to the system, just like the hacked employee.

The Damage

Given the scope of the hack and its potentially dire implications, the direct damage it caused was minute.

An unknown number of people fell for the outlandish premise, making around 420 transfers. Of these only 17 contained more than $1,000 worth of bitcoin.

Compared to the total number of followers commanded by the hacked accounts, around 374 million people, the numbers were indeed quite insignificant.

As mentioned, around half of those scammed are in the US. The other half of the scam victims are from Europe and Asia.

The proceeds of the heist amounted to 12.8 well-traceable bitcoins.

The Fallout

In the wake of the hack, Twitter CEO Jack Dorsey put forth a statement, apologizing and pledging to prevent such incidents in the future. Although its material implications were limited, the hack cast a light on issues that may shake the public’s trust in Twitter and social media in general.

The future of the company is in jeopardy. Several lawmakers have already requested it to fully cooperate with law enforcement and intelligence officials to get to the bottom of the hack. Given the current situation, the social media giant is indeed likely to lend its full support to the investigation.

Far above and beyond dealing Twitter a blow, the hack is a major national security problem. Some may say that it is not a problem for them since they eschew all forms of social media. The fallout of a social media hack aimed at a high-ranking official may, however, reach everyone.  

• One of the affected accounts belongs to presidential candidate Joe Biden. It is not inconceivable that hackers could use such an exploit to give words in his mouth that could destroy his election chances.
• Furthermore, such practices may be used to sow panic and distrust on Election Day. Someone could spread a rumor concerning election fraud and have people up in arms about a non-existing problem. One could achieve the breakdown of the social fabric of any country in the world, mass-tweeting in the names of leaders and various celebrities.
• A hacker getting into President Donald Trump’s oft-used Twitter account would be nothing short of a disaster. One could start a nuclear war, making threats and tweeting about already ordered attacks on countries.
  

A Bitcoiner is Probably behind the Hack

Despite the involvement of the FBI, no one knows anything concerning the identity of the hacker(s). At this point, we do not even know whether the hack was the work of a lone wolf or a nation-state.

That said, there are some leads well worth exploring. According to krebsonsecurity.com, the hack may have been the work of SIM swappers. Before the attack, members of the community discussed the sale of the ability to swap the email tied to any Twitter address. They also mentioned full Twitter account access.

Of particular interest for this case may be a user known by the nickname “Chaewon”, who peddled hacked Twitter account access and email modification.

The person(s) behind the attack knows bitcoin, so in that sense, we may be dealing with bitcoiners. They may not be cryptocurrency experts, however. They used a single wallet address for the hack, for all the funds that they managed to steal.

Thus far, they have not put any of the resulting bitcoins through a mixer. This way, they will likely not be able to touch the stolen funds, without giving up their identities.

Together with the Twitter accounts of the mentioned politicians and celebrities, the hackers hijacked several so-called “OG” accounts – accounts using short handles such as @6 and @B. One of these accounts started tweeting out screenshots of Twitter’s internal tools panel.

What the “Hack of the Decade” Means for Bitcoin

Bitcoin’s traditional detractors were quick to blame the cryptocurrency for the hack. Some may even have called for a legal ban on cryptocurrencies. For the most part, however, lawmakers directed their ire at Twitter and not the king of the crypto sphere.

According to crypto proponents, far from having compromised bitcoin, the attack highlighted the vulnerability of systems with centralized points of failure.

According to Kristin Smith of the Blockchain Association, lawmakers’ response to the incident has been positive from the perspective of bitcoin.

Price-wise, the top cryptocurrency took the news of the hack in stride. It did register a two percent drop at one point, but it has since recovered and has resumed its sideways evolution.

According to traders such as Diginex’s Matt Blom, the hack was a no-event for the bitcoin price. Others drew up detailed analyses of how the incident might impact the price of the top crypto.

The amount of bitcoin the perpetrators swiped was minute. Thus, it cannot possibly have any impact on the price of the asset, whether sold, hodled, given up, or buried.

The hacking generated a massive amount of press for bitcoin. Since there is no such thing as negative publicity, the king of crypto may even have benefited from the upheaval.

That said, despite the positive reaction on the part of the authorities, the hack may invite additional regulatory scrutiny of bitcoin. That would not bode well for the price.

The transparency of the bitcoin blockchain may aid investigators’ efforts to identify the perpetrators. This would be a net positive for bitcoin acceptance and adoption.

Besides raising mayhem and showcasing the vulnerability of centralized systems, the hacking incident has once again underlined the fact that bitcoin has value. Instead of starting a war, attempting to wreck the stock exchange or tampering with elections, these crooks wanted to get their hands on some shiny bitcoins…

What is certain at this point is that their efforts have been unable to awaken the price of BTC from its months-long slumber. Such long periods of price consolidation often give way to violent up- or downward price action. The short-term price outlook is bearish. Over the long run, however, the hands of the bitcoin bulls appear as solid as ever.

ETH 2.0 is an upgrade to the Ethereum network that also bears the name “Serenity”. Serenity is a major update unlike any before it. It has been in the works for years now, and its first phase will likely commence in 2020.

In this article, we take a look at ETH 2.0, its timeline, technical details, and the opportunities it may offer to investors.

• What changes does ETH 2.0 introduce? What is the gist of the update?
• The unreliable ETH 2.0 timeline.
• ETH 2.0 technical details. How will the update roll out?
• ETH 2.0 investor opportunities.

What Updates does ETH 2.0 Comprise?

The Serenity update will impact the Ethereum network in two significant ways.

• It will change the consensus mechanism of the Ethereum blockchain from the current Proof of Work (PoW) protocol to Proof of Stake (PoS).
• It will improve transaction speeds, volumes, and network scalability through a solution called shard chains.

To understand the significance of the change, you need to understand the differences between PoW and PoS consensus.

The PoW protocol is the consensus mechanism bitcoin uses. It relies on physical computers, capable of churning through an ungodly amount of data every second. Such ASIC (Application-specific Integrated Circuit) miners are expensive, consume lots of electricity, and generate a lot of heat. They are, therefore, cumbersome and energy-intensive. They also grow obsolete quickly, as newer and more capable ASICs pop up all the time.

By contrast, PoS uses virtual miners called validators, instead of the physical devices. Validators deposit ETH as their stake in the network. Like physical miners, validators earn cryptocurrency rewards for their contribution to the ecosystem. PoS is more energy-efficient and better-scalable than a PoW-based network. It may not be quite as secure, however, and it may open up vulnerabilities on the decentralization front as well.

A “conventional” blockchain processes one transaction after the other. Its throughput is thus limited. Shard chains split the Ethereum blockchain into several sub-chains, allowing the parallel processing of transactions. Through this system, the network uses its processing nodes more efficiently. Adding shard chains to a single-chain blockchain like Ethereum is like adding more lanes to a single-lane road. It streamlines traffic and significantly increases throughput.

The unreliable ETH 2.0 Timeline

Three distinct phases make up the ETH 2.0 timeline. Phase 0, phase 1, and phase 2.

Of these, developers plan to launch phase 0 this year (2020).

• Phase 0 adds the Beacon chain to the equation. This chain is a PoS one, and it will run in parallel with the current PoW chain. While it does implement the PoS consensus mechanism, it does not move the entire Ethereum network to the PoS chain yet.
• Phase 1 will only land in 2021, or beyond. It implements shard chains, thereby increasing the transaction throughput of the network by a factor of at least 64. Eventually, the fully upgraded ETH 2.0 network will be capable of handling several hundred times more transactions than the current ETH network.
• Phase 2 of the upgrade is so distant, not even developers know exactly what it will comprise. It will finish up the transition, eliminating the PoW chain, and implementing a series of other changes, such as cross-shard transfers, execution environments, etc.

Why do we call the ETH 2.0 roadmap unreliable? The scope of the undertaking is so massive that developers underestimated the efforts it would take to complete several times already. The “schedule” has slipped a few times and there are no guarantees that the current roadmap will hold.

ETH 2.0 Technical Details

The first step of phase 0 of ETH 2.0 is the implementation of the Casper protocol. Casper is the mentioned PoS consensus mechanism that will run a chain parallel to the current ETH PoW blockchain.

With Casper in place, developers plan to begin rolling out the shard chains. Sharding lends itself well to PoS environments, so it is a logical second step in Casper’s wake. Together, the two upgrades will likely have a massive impact on the scalability of the ETH network.

At one point, developers will introduce a measure meant to dissuade ETH PoW miners from maintaining the PoW chain. They plan to accomplish that through a “difficulty bomb” that will scuttle the profitability of ETH PoW mining.

There is not much point in holding on to PoW from the perspective of the miners anyway. Eventually, developers will “wrap” the entire PoW blockchain into a smart contract and integrate it into the PoS ETH 2.0 blockchain.

Ethereum’s move from PoW to PoS might sound simple, but it is very complicated. There are scores of challenges that explain why developers have had so much trouble rolling out the planned updates.

In its early stages, the PoS chain will be very vulnerable to outside attacks, such as disasters, government efforts to rein in the technology, 51 percent attacks, and hacking.

Furthermore, PoS may not be the decentralization boon developers hope it might be. It may indeed lead to increased centralization.

Future ETH 2.0 blockchain forks will be much more difficult to navigate. PoS encourages stakers (the virtual miners of the future) to support both resulting chains.

The Opportunities in ETH 2.0 Staking

ETH holders are rightly excited about the opportunities ETH 2.0 will give them. By staking the ETH they currently hold, they may be able to earn handsome passive revenues in the future.

Staking is the very definition of letting your money work for you.

What do you have to know about ETH staking?

• When you stake a cryptocurrency, the amount of the rewards you reap is directly proportional to the size of your stake. The more you stake, the more you earn.
• To stake ETH, you will have to deposit your ETH into a wallet linked to a smart contract. This wallet is a special, “hot” wallet, and therefore its use will entail some risk. It is currently unclear whether there will ever be ETH cold staking.
• Getting your hands on your staked ETH is not as simple as transferring it from one wallet to another. Stakers who want to terminate their activity and withdraw their staked ETH, need to join a withdrawal queue. It may take as long as 18-20 hours to see your ETH in your cold wallet.
• To qualify as a staker, you will have to stake a minimum amount. That amount may be as reasonable as 32 ETH. It may also be as much as 1,000+ ETH, in which case, staking will only be reserved for whales.
  

How much could you earn by staking 32 ETH?

No one knows at this point. According to the updated estimations of stakingrewards.com, 32 ETH may earn you $0.13 worth of ETH per day.

That would add up to $0.9 per week and $3.9 per month. Your yearly ETH 2.0 staking yield may thus be $46.79.

The current dollar value of 32 ETH is more than $7,100. It is safe to say that regardless of what the actual numbers will be, most rank-and-file ETH holders will not get rich off staking.

ETH 2.0 staking may still be a lucrative investment for whales and large entities the size of mutual funds.

Founded in 1918, on the back of a fleet of 12 Model Ts, Hertz grew into one of the largest auto rental companies in the US. It filed for bankruptcy on May 22, 2020, after more than 100 years in business.

Saddled with around $23 billion of net debt, Hertz’s demise has been one of the most significant of the year thus far. And there have been indeed quite a few high-caliber bankruptcies in this COVID-19-ridden economy.

Back in March 2020, Hertz laid off some 12,000 workers and furloughed a further 4,000, in an effort to adapt to the new realities of the COVID-19 world. It was too little, too late. Its fleet of 700,000 vehicles left idle by lack of demand, the company had no choice but to toss in the proverbial towel.

Although COVID-19 is certainly the main trigger of Hertz’s bankruptcy, the roots of its demise reach back further in time.

Hertz’s Daring and Controversial Business Model

Hertz financed its entire operation through asset-backed securities. According to its business model, the company used an entity qualified as bankruptcy-remote, for purchases of new vehicle pools. This entity was independent of Hertz. Through its operation, it earned an excellent credit rating, so it was able to secure loans at excellent rates. It then leased the vehicles to Hertz under a master lease agreement. This way, Hertz, with its bad credit rating, gained access to low-cost borrowing.

If this sounds like a work-around, that is likely because it is one. Through it, a company undeserving of credit gained access to cheap financing.

As long as the money flowed back and forth, the scheme seemed to hold up well. The COVID-19 lull put the last nail in its coffin, however.

By late April, it had become clear that the construct would collapse like the house cards it was.

It was then that Hertz announced its inability to keep up payments in accordance with the master lease agreement, to the asset-backed securities entity. Since these payments kept the ABS entity alive, it quickly folded, triggering a whirlwind of defaults across Hertz’s debt-based empire.

Within 30 days, the company filed a Chapter 11 bankruptcy. Chapter 11 allows it to restructure its debt, to possibly consolidate it, and to attempt to resolve it, through an intricate system of procedures.

Damage control has already begun. The company announced that it would cut its new vehicle purchases by 90 percent and began selling off tens of thousands of its existing vehicles, well below market value.

The $500 Million Stock Sale and the SEC

To fund the bankruptcy proceedings of the company, Hertz executives decided to attempt to raise $500 million through a stock sale. With the sale, the company likely intended to cash in on the exceptional circumstances that had led to increased public interest in its stock.

With COVID-19 ravaging the global economy, many institutional and retail investors see value in buying up stock that now suffers. Gambling on the effects of a future rebound does make mathematical sense in some instances. This type of speculative thinking is what drove up the price of Hertz stock following the bankruptcy.

The judge presiding over Hertz’s bankruptcy signed off on the deal, deeming it a reasonable solution, given the unexpectedly buoyant stock price.

The SEC would have none of it, however. According to Hertz executives, the Commission had “comments” on the sale. What this usually means is that the proceedings stop dead in their tracks, until the entity selling the stock addresses the concerns of the Commission.

That is what happened in this instance as well and Hertz ended up calling off the sale.

The SEC was likely concerned that given the interest-spike and the exceptional circumstances, crowds of retail investors would readily buy into worthless stock. Hertz themselves have stated several times that the planned stock sale would likely hand buyers worthless stock.

The holders of common shares would only be paid after bondholders and preferred stockholders. Thus, they would most likely end up with nothing.

The Hunt for a Bankruptcy Loan

Following the termination of its much-scrutinized $500 million stock sale, Hertz began looking for money elsewhere. It needs to raise some $1 billion to finance its bankruptcy proceedings. The money could come from several lenders, with whom the company is currently engaged in discussions.

This short-term bankruptcy loan would be a debtor in possession loan, which carries high interest rates and a series of restrictions. It is the more traditional approach, certainly more mainstream than the unorthodox stock sale method the company had attempted.

What is a Debtor in Possession Loan?

DIP financing is an option available only to companies in bankruptcy. More specifically, it is an option for chapter 11 bankruptcy that allows companies to keep operating.

The goal of a DIP loan is to keep the company on life support, so it can restructure and eventually repay its debts.

The providers of DIP loans, the lenders, gain priority over the assets of the company, ahead of other lenders. The court presiding over the bankruptcy needs to approve the DIP plan, after making sure it is in line and proportional with the protection offered through bankruptcy.

A DIP loan might keep the company alive and seemingly credit-worthy, but its presence further diminishes the likelihood of common stockholders receiving anything for their shares.

The Financial Ripples of Hertz’s Bankruptcy

· Hertz’s DIP approach to bankruptcy almost certainly means that more of its employees will join the 16,000 already laid off.

· As mentioned, the company has cut its new vehicle purchases by 90 percent. This will impact car makers such as General Motors, from whom Hertz acquired its vehicle fleet.

· The day traders holding Hertz stock in hopes of its resuscitation, who drove up the price of Hertz shares post-bankruptcy, have lost money.

· The creditors of the company, against whom Hertz has gained chapter 11 bankruptcy protection, will also take some losses.

· The used car market is likely to tank, due to the overabundance of used vehicles flooding it. Even though Hertz is selling most of its vehicles under the market price, it may not make financial sense to everyone to try to pick up a bargain.

What Does All This Mean for Hertz Equity Holders?

In the wake of the bankruptcy filing, Hertz stock surprisingly rallied some 1,000 percent. Day traders and their speculative efforts were behind the rally that has since run out of steam. Despite that, Hertz shares are still surprisingly upbeat and some 350 percent up from the low they had hit in May.

The bankruptcy proceedings will most likely leave common Hertz stock worthless, as acknowledged by company management. It is one of the reasons why the SEC has stopped the planned $500 million Hertz stock sale.

On May 26, 2020, the NYSE has formally unlisted Hertz. Thus, the buying or selling of Hertz stock has become much more difficult, if not impossible for most retail equity holders.