How to Trade Three Black Crows Candlestick Pattern[

Author: Maks Artemov

Dear Clients and Partners,

In candlestick analysis, all patterns can be divided into two groups – trend continuation patterns and reversal patterns. Today, the article is about the Three Black Crows pattern belonging to the second group. This is definitely not the most frequent pattern on the chart yet experienced traders who use candlestick analysis are well acquainted with it.

How Three Black Crows pattern forms

After a lengthy ascending impulse and a lot of purchases market players start closing their positions. The price forms a minor gap, and the first candlestick out of the three comprising the pattern opens above the previous closing price or at the same level.

Then the second candlestick opens at the close level of the first one, and after it closes in its turn, the third candlestick opens. The opening price of the third one coincides with the closing price of the second one or belongs somewhere close to this level. Next, the trend reverses.

Conditions for Three Black Crows

• There is a lengthy ascending movement of the quotes.

• The pattern forms at the resistance level.

• The three candlesticks are of roughly the same size.

• Three candlesticks successively forming on a smaller timeframe, form one big Engulfing candlestick on a larger one.

• Each next candlestick opens at the close level of the previous one or a bit higher.

• Shadows of the candlesticks are relatively small or totally lacking.

Examples of using Three Black Crows

This pattern can be used both alongside other means of analysis and on its own. Indicators act as additional filters that enhance trade efficacy.

Example of selling by the pattern without indicators

• On the EUR/AUD chart, there has formed a Hanging Man.

• After that, at the top of the uptrend, there formed Three Black Crows.

• When the third candlestick closes, open a selling position at the fourth candlestick.

• Stop Loss is to be placed at the nearest high.

• Place the TP as 1:3 against the SL. In this case, the SL is 900 points and the TP 1, accordingly – 2,700 points.

• Later, when the price approaches the TP 1, the trader can place a TP 2 at the next support level.

• The trader can monitor the position and move the SL to the positive zone when necessary.

Bottom line

Before using Three Black Crows, the trader needs to study all of its conditions and peculiarities. The strategy is t be tested alongside other means of market analysis.

For example, the trader can try out those indicators they are used to. This will help filter signals from Three Black Crows.

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Sincerely,
RoboForex team

How to Calculate ROA: Formula and Examples

Author: Maks Artemov

Dear Clients and Partners,

This article is devoted to the market multiplier called ROA: what it is necessary for, how it is calculated, what peculiarities, drawbacks, and advantages it has, and how it can be used.

What is ROA multiplier

ROA (Return on Assets) is the multiplier that shows the profitability of assets. It expresses the ratio of the net profit and the average-weighted size of the assets, demonstrating the efficacy of using the capital of a company. It is expressed in percent.

Calculation formula of ROA

ROA = Net Profit / Average Assets

Where:

• Net Profit is the net profit of the company over the calculation period. The latter is usually a year or a quarter.

• Average Assets is the average-weighted size of the assets of the company.

Average Assets calculation formula:

Average Assets = (Assets 1 + Assets 2) / 2

Where:

• Assets 1 is the size of the assets at the beginning of the calculation period.

• Assets 2 is the size of the assets at the end of the calculation period.

Nowadays it is hardly necessary to calculate the ROA manually because this information is available in open sources.

Peculiarities of ROA

The ROA differs depending on the sector in which the company works and the nature of its business. For example, in services, the ROA will be higher than in the oil industry.

The reason is the working capital that companies need for functioning and production. The more the company spends on development, the smaller ROA it will have over a calculation period.

The intermediate conclusion is that comparison by the ROA can be accurate and correct only for companies working in one sphere of business. And the higher the ROA, the better for the company and its investors.

Closing thoughts

As many other multipliers, the ROA has its drawbacks and advantages. The multiplier can only give a prelim evaluation of the return on investments in the company, Optimum analysis should include several multipliers and financial reports of the company.

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Sincerely,
RoboForex team

How to Trade Three White Soldiers Pattern

Author: Victor Gryazin

Dear Clients and Partners,

This article deals with a candlestick pattern called Three White Soldiers: what it looks like, what signals it gives, how it forms, what types it has, and, of course, how it can be used in trading.

How Three White Soldiers pattern forms

Three White Soldiers is a reversal bullish candlestick pattern that predicts a change of a downtrend to an uptrend. This pattern can be encountered on price charts rather often.

When the Three White Soldiers pattern appears, it gives a signal to buy. The pattern has a bearish counterpart called Three Black Crows that was previously described in our blog.

The Three White Soldiers pattern consists of three white candlesticks with large bodies and almost no shadows. The pattern shows that the bulls have managed to capture the initiative and close trading sessions near the daily highs for three days in a row.

Conditions for Three White Soldiers to form

• As long as this is a reversal pattern, it forms on the local lows after a descending movement. This can either be a reversal of a downtrend or the end of a correction in an uptrend.

• Three white candlesticks go one after another and have large bodies.

• Each next candlestick opens at the closing level of the previous one or a bit lower.

• The shadows of the candlesticks are short. Sometimes candlesticks in Three White Soldiers have no shadows at all: such candlesticks are called Marubozu and make the whole pattern stronger.

• The second and third candlesticks must be roughly of the same size. If the third candlestick is obviously smaller than the other two, this means bulls are weak.

Types of Three White Soldiers

There are two more candlestick patterns that also consist of three white candlesticks and resemble Three White Soldiers. These are the Advance Block pattern and the Stalled pattern; however, instead of giving a signal to buy, they warn the trader of the ascending momentum coming to an end.

Advance Block

If the second and third candlesticks of the Three White Soldiers have small bodies and long upper shadows, the pattern is called Advanced Block. As the name of the pattern shows us, the advance of the bulls was blocked and the bears fight back.

The ascending impulse meets serious resistance, and it becomes extremely possible that the quotations will reverse downwards. This pattern is not good for buying because bulls turn out weak. If the trader has open buying positions, they should take the profit in them.

Closing thoughts

The reversal candlestick Three White Soldiers pattern forms after a downward movement and predicts an upward reversal of the quotes. It can be traded on its own or alongside tech analysis instruments and indicators.

Before using the pattern for real, test it on a demo account. See more about candlestick patterns in our Blog.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

How to Trade Three Line Strike Candlestick Pattern

Author: Victor Gryazin

Dear Clients and Partners,

This article is devoted to a candlestick pattern called Three Line Strike, its type, forming principles, and use in trading.

How Three Line Strike forms

The Three Line Strike candlestick pattern is not a frequent guest on price charts. It appears at the local high/low in an uptrend/a downtrend.

The pattern consists of four candlesticks: the first three candlesticks have medium-sized bodies and the same colour, while the fourth one has a different colour, demonstrating a reversal, and a big body that fully covers the bodies of the first three candlesticks.

Some sources describe this one as a trend continuation pattern, but the logics of candlestick analysis suggest that this is a reversal one.

This article is based on the approach of a famous trader Thomas Bulkowski and his book “Encyclopedia of Candlestick Charts”. He considers this pattern to be a reversal pattern: according to his research, the price has a 84% probability of a reversal after this pattern appears on the chart.

When the pattern appears on the chart, this means the current trend is getting weaker as it has encountered strong opposition. The large reversal candlestick that with its body covers up the three preceding candlesticks forecasts a correction that can later turn into a real reversal.

Types of Three Line Strike

Depending on the place where the pattern appears and the colors of its candlesticks, two types of the Three Lines Strike can be singled out – the bullish and bearish ones.

Bullish Three Lines Strike

It forms after an ascending price movement at the local highs of the chart. It consists of three white candlesticks with middle-sized bodies and a large black candlestick, whose bode covers all the three preceding ones.

The large black candlesticks means that bears have captured the initiative and are ready to counterattack. Further decline of the quotes means the beginning of a descending correction. The decline should be confirmed by the price falling below the last low of the bearish candlestick of the pattern.

Bearish Three Line Strike

It appears in a descending movement at the local lows of the chart. It consists of three black bearish candlesticks with medium-sized bodies and one white large candlestick, whose body covers up the bodies of the three preceding candlesticks.

The large white candlestick means that bulls have managed to stop bears and are ready to reverse the quotes. Further growth of the price leads to the beginning of an ascending correction. The ascending movement should be confirmed by growth of the quotes above the high of the last white candlestick.

Bottom line

The Three Lines Strike pattern forms after a descending or an ascending movement and forecasts a reversal of the quotes. In certain sources, this pattern is considered a trend continuation pattern, yet Thomas Bulkowsli in his research has demonstrated that the probability of a reversal after this pattern appears is 84%.

The pattern can be used for trading either on itself or alongside other instruments of tech analysis and indicators. Before using the Three Lines Strike for real, make sure you back-test it.

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Sincerely,
RoboForex team

Investor Risk Profile: What It Is and How to Determine It

Author: Maks Artemov

Dear Clients and Partners,

Work in financial markets and investing have always been associated with risks. Every investor should keep in mind that they might not only gain but also lose due to price declines and irreparable losses.

Before beginning to invest, decide for yourself what risks you are ready for on the way to your goal. This article is devoted to the risk profile of an investor and controlling risks and losses.

What risk and risk profile are

Risk is the possibility of partially or completely losing your investments. The main task of each investor is to decrease risks and limit possible losses by any acceptable level.

Risk profile, or investment profile is the individual attitude of the investor to possible risks in his work.

Types of risk profile

An investment profile depends on the personality of the investor, the aims and length of investing. In trading and investing, there are three types of risk profile: conservative, moderate, and aggressive.

Conservative risk profile

This approach suggests that the investor is not ready for big risks and agrees on a minimal profit from ivesting. Their goal is to make a profit that will compensate for inflation and this save their capital.

As a rule, a conservative investor has a calm, balanced character and analytical mind. They take any losses very seriously and avoid unnecessary risks. Their approach to choosing instruments is scrupulous and takes time.

Moderate risk profile

By this approach, the investor assumes certain risks to increase profitability. Current minor losses are considered normal and can be withstood for the sake of better perspectives.

Low profitability does not satisfy the investor, so they look for the ways to improve it, disregarding higher than conservative risks.

Aggressive risk profile

Aggressive approach is good for risky people. They are ready to suffer serious controlled losses to get super profits fast.

In other life spheres, such people are also prone to risks and making fast decisions. Such investors have well-trained and developed intuition. Losing a part of their capital is a normal part of work for them and does not influence their future investment projects. The main goal of risky investors is highly risky assets that yield impressive revenue.

How to determine investor risk profile

The main goal of determining a risk profile is checking whether a future investor is prone to risks. If they are ready for all sorts of risks having no experience, this might be a real problem. Fast loss of the capital might undermine their future investment process.

There exist special tests for determining investor risk profiles. One should answer the questions based on their emotions and experience. It is vital to be honest because this is the only way to select your best investment strategy.

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Sincerely,
RoboForex team

RoboForex lowers margin requirements for trading Gold

Dear Clients and Partners,

Effective 8 May 2022, the margin requirements for positions in the XAUUSD pair will be reduced by two. If you already have open positions in this asset or are planning to open new positions, please note the following changes.

How will this affect positions and orders?

On real MetaTrader 4 / MetaTrader 5 accounts:

• On 8 May 2022, the margin requirements for positions opened in XAUUSD will be halved.

• After this date, all new positions will be opened with margin requirements twice lower than before.

Pay attention to Expert Advisors (EA)

If you are using trading algorithms, check their settings to make sure they are working correctly after the lowering of the margin requirements for the XAUUSD instrument comes into effect.

The rest of the trading conditions remain unchanged. Please take this information into consideration when planning your trading activity.

Invest with RoboForex on Prime accounts

When trading on Prime accounts, you get the best conditions available in the company.

• Low spreads from 0 pips
  Trade with the lowest average spread amongst all RoboForex account types.

• Maximum leverage 1:300
  Choose the most suitable leverage value – from 1:1 to 1:300.

• Reduced commission
  Pay less commission for the trading volume of Currencies, Metals, Indices and other instruments.

Sincerely,
RoboForex team

How to Set Up Charts on MetaTrader 4

Author: Victor Gryazin

Dear Clients and Partners,

This article is devoted to working with charts on a popular platform MetaTrader 4. Charts help to track and analyze quotes movements of financial instruments, as well as to forecast their future behaviour.

How to open chart window

A new chart on MetaTrader 4 can be created several ways:

• Click File – New Chart, and then choose a financial instrument.

• In the Market Watch window, choose a financial instrument, left-click and drag it to the work area of the terminal.

• Right-click a ticker in Market Watch, and then click Chart Window.

• Click Window – New Window – an instrument from the list.

Adding indicators to the chart

To add indicators to the chart click Insert – Indicators and choose the one you need. Alternatively, click an active button with a green cross in the upper menu.

MT 4 features many popular indicators of the following groups:

• Trend

• Oscillators

• Volumes

• Bill Williams

• Custom (indicators added by the user).

How to save chart template and profile

After editing is complete, you can save your settings as a template. Saved settings will then be applied to newly opened charts.

To save your settings, right-click the chart and choose Template – Save Template – enter name. The template can than be uploaded to the chart the same way: right-click – Template – Load Template – choose the one you need.

You can create different templates with various settings: chart design, indicators, and instruments. The whole set of open charts with their properties and templates is saved to a different profile.

To save the profile, click File – Profiles – Save As – enter name. Alternatively, click a button with the name of the active profile at the bottom of the terminal and choose the one you need from the unfolding list.

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Sincerely,
RoboForex team

How to Trade by Cup and Handle Pattern

Author: Victor Gryazin

Dear Clients and Partners,

This article is devoted to the Cup and Handle graphic pattern, providing the main information, such as how it forms and how to trade it.

What one should now about Cup and Handle

Cup and Handle is a tech analysis pattern that forecasts the continuation of the current trend after the price stops consolidating.

The pattern was discovered and popularised by a famous trader and investor, author of several books on the stock market and the founder of a business newspaper Investors Business Daily William O’Neil.

Cup and Handle forms in an uptrend or downtrend; it is a correctional price movement that consists of two parts. The first part is the Cup and the biggest part of the correction, and the second part – the Handle – is the smaller finishing part.

The pattern can be bullish or bearish. The first one is the actual Cup and Handle that appears on the chart in an uptrend and signals about further growth of the quotes.

The bearish pattern is called Inverted Cup and Handle; it appears on the hart in a downtrend and signals about the continuation of the latter.

How does bullish Cup and Handle form

1. After a downward correction starts on the chart, a price range forms that looks like a bowl or a rounded bottom. Ideally, the Cup has two same highs on both sides but this is a rare occasion.

2. After the second high of the Cup forms, the price pulls back, forming the second correctional phase that resembles a Handle. This will be a minor decline (from 1/3 to ½ of the Cup) before a subsequent breakaway.

3. An entry point for a buy appears when the Handle is complete and the quotes break the resistance level away upwards. It goes through the second high and links the Cup to the Handle.

4. The first rough goal for the pattern after the breakaway will be the height of the Cup. Losses should be limited if the price drops below the low of the Handle.

How to use Cup and Handle for trading

William O’Neil who discovered the pattern used it for trading stocks and preferred longer timeframes. He stated that the pattern on D1 should take 7 to 8 weeks to form.

However, this pattern is rather universal and can be used on various TFs with currency pairs, stock indices, oil, gold, and other liquid assets.

There are several factors potentially supporting the pattern:

• both highs or lows of the Cup are on more or less the same level;

• the Handle is no higher than the ½ of the Cup;

• the breakaway of the resistance/support level increases the volumes.

Example of buying by Cup and Handle

1. On D1 of Brent oil, in an uptrend, a Cup and Handle pattern formed.

2. After the resistance level drawn through the second high of the pattern (point 2) is broken away, the trader can buy.

3. A Stop Loss is placed behind the low of the Handle.

4. Profit can be taken when the quotes rise for the height (H) of the Cup.

Bottom line

The Cup and Handle pattern became popular thanks to a famous trader and investor William O’Neil. This tech analysis pattern of trend continuation is quite a rare occasion on charts.

Cup and Handle can be used for trading stocks and other liquid assets. Before using the pattern for real, practicing on a demo account is recommended.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

How to Avoid Traps for Bulls and Bears

Author: Victor Gryazin

Dear Clients and Partners,

You must have heard about traps for bulls and bears appearing on charts. This article tries to get into more detail of the issue, telling you how to detect places of such traps and how to avoid them.

What are traps for bulls/bears

A bullish/bearish trap is a chart situation when the quotes pretend to break through an important price level and then reverse sharply and go in the opposite direction. As such an important level, we can see support/resistance levels, trend lines, or graphic patterns. Bullish/bearish traps are frequent in financial markets.

The idea is that traders open their positions by formed price signals by the current price movement. However, for various reasons, the opposite side turns out much stronger and suddenly reverses the price in the opposite direction.

This makes traders panic and close initial positions, which only enhances the opposite movement. In other words, bulls or bears get trapped and close their positions at a sudden price reversal, thus supporting the movement in the opposite direction.

How to detect traps for bulls

Most often, bullish traps rest near important resistance levels that have already been tested by the price. The price seems to break through such a level upwards, and bulls open long positions, expecting the price to keep growing. However, it reverses and goes down.

The sign that the trap has been triggered is the return of the price to the area below the broken resistance level. Bulls are playing long and have to make decisions about closing their trades.

Reversing the quotes down, bears have proved their power and readiness to fight back. Bulls start closing their buying trades, Stop Losses get triggered, so the downward momentum gets stronger, and the trap locks.

Another place where a trap can form on the chart is a strong resistance line. The situation is similar to the one above: the resistance line is broken through upwards, bulls hurry to open buying trades, but all of a sudden, the quotes reverse downwards, and the price drops below the line. Then the decline may continue.

How to detect bearish traps

A trader can get into a bearish trap when they open a selling position at a breakaway of a strong support level. Inspired bears open short positions, counting upon further decline, but the quotes suddenly reverse and start going up.

Bears have open short positions that they need to close. As a rule, they do so if the price secures again above the support level, broken previously. Then bearish Stop Losses get triggered. As a result, the quotes get supported in their growth, and the trap locks.

Bottom line

Bearish and bullish traps are quite frequent on ptice charts. As a rule, they appear near important support/resistance levels or lines.

It is almost impossible to avoid traps altogether, but knowing their peculiarities, one can minimise chances of getting trapped and decrease possible losses.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

How to Trade EUR/JPY

Author: Victor Gryazin

Dear Clients and Partners,

This overview shares with you some important and useful information about the EUR/JPY currency pair: what it is, what trading characteristics it has, and how to trade it.

What is EUR/JPY currency pair

This currency pair is a cross rate of two popular Forex majors – EUR/USD and USD/JPY. They have already been described in our blog.

A cross rate is the price of a country’s currency expressed in the currency of another country and defined via the currency of a third one. As the latter, the US dollar is used, which is the main international reserve currency.

EUR/JPY represents the dynamics of the EU currency through the Japanese yen. The euro is the base currency of the pair, so the current price represents for how many yens one can buy or sell one euro. If the quotes of the pair go up, this means the European currency gets stronger. If the quotes go down, the euro gets cheaper against the yen.

Ways of trading EUR/JPY

EUR/JPY is quite a universal pair, so various trading strategies are applicable to it. The most widespread ways of trading it are technical and fundamental analyses and indicator trading.

How to trade EUR/JPY by fundamental analysis

This approach means fundamental factors are analysed. Both short-term trading on important news and long-term trading on expectations of changes in the CB’s policy are possible.

Here is an example. At the beginning of 2022, due to the growing inflation the US and EU started winding up their QE programmes and gradually increasing interest rates to counter inflation. The US have already started increasing the rates, while the EU is getting ready for toughening the monetary policy.

Unlike these two, the Japanese economy has long rested in the state of deflation (the opposite to inflation), so the BoJ does not plan to increase the interest rate anywhere soon. Hence, the Carry Trade strategy has become popular again: it implies making a profit on the difference of interest rates, when a currency with a high interest rate is bought against one with a low interest rate.

Investors and traders started buying the USD and EUR against the JPY actively, hence, since the beginning of the year there has been a strong uptrend in the USD/JPY and EUR/JPY.

Closing thoughts

EUR/JPY is the relationship of two very popular international currencies — the euro and the yen. Thanks to good volatility and a small spread, this currency pair is popular among traders. It can be traded by fundamental or tech analysis and with the help of indicators.

Beginners need to practice on a demo account first and switch to real trading only when they get a stable positive result.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Fiat Currency: All One Needs to Know

Author: Andrey Goilov

Dear Clients and Partners,

This article is devoted to the idea of fiat currency and everything behind this notion. What is fiat money? When and what for it appeared? What value does it have? Which advantages and drawbacks does it have? Answers to these questions and more are in the article below.

What is fiat money

Fiat money is the banknotes we keep in the wallet and the sums we look at happily, logging in the mobile app of our bank on the smartphone. It is not suported by the country’s gold reserves or other precious metals. It does not have any internal cost, and its face value is set and guaranteed by the state.

Today almost all popular currencies, such as the dollar and euro, are fiat. Their value is based on the opportunity to exchange them for goods and services, to be used as means of saving and account unit of the country’s economy.

Some think that as long as fiat money is not bound to any goods, a risk of inflation emerges, which, in turn, makes goods and services pricier. For example, in the times of gold standard, the amount of money depended on the amount of assets in the country’s reserves: more gold – more money.

Fiat money is substantilly influenced by the demand and trust of local people. If they stop believing in the national currency, they will reject it, and the demand for other assets and currencies will increase.

Advantages of fiat currencies

• Fiat money is used for exchanging and storing value, which is essential for the functioning of the national economy;

• Making fiat money is more economic than making currencies bound to certain assets;

• Fiat money lets the government and Central bank stimulate the economy in times of crises and smooth out the aftermaths of sky-rocketing;

• Fiat money is not a scarce or limited resource: the government can print as much as needed;

• Central banks have full control over the supply of fiat money, which lets them manage liquidity and interest rates.

Drawbacks of fiat money

The strong economic crisis of 2008 demonstrated that Central banks cannot always hold back serious consequences of recession by directly regulating the money mass. Hence, global crises will come back from time to time, having absolutely different nature.

A currency bound to gold looks more stable compared to fiat money because of limited gold supply. Fiat money, on the contrary, has value as long as the government supports it. Tiniest problems in either economy or politics can provoke a surge of inflation.

There are examples of trying to get out of economic trouble by active money printing that le to hyperinflation and the national currency fully losing value.

Bottom line

Fiat money is not perfect as it has serious drawbacks, yet it has no better alternative that would fast and smoothly replace it as a means of exchange, payment, and value storage.

One could bring up cryptocurrencies that has been acquiring popularity recently. They are limited in quantity, its cost must be growing until the last coin is mined, and this is a victory over the inflation of fiat money. However, due to high volatility and virtuality this type of money has not yet become a full replacement for the “normal” one.

Experiments with tightly binding money to gold have not yet yielded satisfactory results either; and hyperinflation may occur to any printed currency. With all the drawbacks, however, fiat money lets the government and Central banks react timely to the changes of the economic environment and keep markets stable and makes it easier for consumers to buy and sell goods and services.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

What One Needs to Know about REPO

Author: Maks Artemov

Dear Clients and Partners,

This article is devoted to REPO — Repurchase Agreements — and everything about them: their peculiarities, advantages and drawbacks, risks and how to avoid them.

What are REPOs

REPO, aka Repurchase Agreement, is an agreement on selling securities that presumes their obligatory buyback at a certain price after certain time. Such agreements let the seller loan money quite fast.

A REPO consists of two part:

• The owner of securities sells them to the buyer for a certain term and takes on the responsibility to buy them back as soon as the term ends. The term and the sum of the buyback are agreed upon by the parties beforehand.

• When the term ends, the buyer is to give the securities back to the seller, receiving their money plus commission fee is exchange.

As a result, a REPO has two agreements inside: an operation with securities and a forward contract.

Advantages of REPOs

• The seller can loan money quickly on market conditions without addressing a bank. Moreover, the operation itself does not take long.

• The buyer can make a profit on short-term placement of free cash without the risk of losing it because they get securities in exchange. If the seller refuses to buy back their assets, the buyer can sell them freely in the stock market and get back their money.

Are there risks in REPOs

One of the risks is falling of the market price of the securities that the buyer has bought. In such a case, the seller can refuse to complete the second part of the agreement and never buy back the asset.

The seller will have to get rid of the securities at a lower price and suffer losses, or leave it in the portfolio and wait for the price to grow.

Another risk is the growth of the security price, so that the buyer can refuse to give them back.

Moreover, it might so happen that at the REPO expiry the buyer will have no necessary securities available. For example, they might have sold them at a better price. The buyer may always refuse to give the asset back to the seller for various reasons including bankruptcy.

Who gets dividends from shares in REPOs

All income from the securities — dividends, coupons, etc. — belongs to the seller because they own the shares. The buyer receives the securities as a temporary guarantee. That is why the buyer must pass all the income from the securities to the seller.

Also, the agreement can have other conditions, such as the buyer can receive dividends instead of the seller but the security price will fall accordingly.

Example of REPO

A market player has 100 shares of a company, 10 USD each. At a certain point, they need money, and they find a buyer ready to buy 100 shares right now but for 8 USD each.

Signing a REPO, the buyer agrees on selling (or returning) 100 shares for 8 USD each plus 10%. When the contract expires, the seller buys their shares back at the said price. As a result they got a loan for 10% a year, and the buyer got their money back and earned 10% of the whole sum.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team