Trading for beginners: Trading in bonds

BOTS wants to ensure that everyone in the world has the opportunity to build up a second passive income through trading. Nowhere near everyone has experience with trading. That’s why we are now sharing more information every week in our “Trading for beginners” series.

Trading for beginners: Trading in bonds

Last time in our “Trading for beginners” series, we provided further information on shares. The types of share that exist and why people choose to invest in them.

You can read the full article here.

Today in Trading for beginners, we are focusing on investing in bonds. What types of bond are there and how do you actually make a profit with bonds?

Investing in bonds is often seen as a relatively safe form of investment. But what exactly is a bond?

Put very briefly, a bond is a loan issued by a government or a company. So, you actually lend your money to this company or government and you receive interest on it, the so-called coupon rate. Just like shares, bonds are tradable on the stock exchange.

Although there are various types of bond, today we are focusing on the two best-known types.

Government bonds: a government issues government bonds mainly to cover deficits in financing or the budget. Because governments do not go bankrupt as a rule, government bonds are seen as the least risky type of bond.

Corporate bonds: as you might expect, corporate bonds are issued by companies. Interest and returns depend on the creditworthiness of the company in question and these types of bond are therefore considered to be more risky than government bonds.

There are two ways in which to make a profit if you invest in bonds: through the coupon rate and through changes in price.

Coupon rate: when you purchase a bond, you are actually lending an organisation your own money. You receive compensation for this. This is called the coupon rate, or interest. The amount of this interest depends, among other things, on the creditworthiness of the company or government from which you purchase a bond. The rule of thumb in this is often: the higher the chance that the company or government can repay the bond, the lower the coupon rate. This interest rate can also be fixed or variable.

Price increase: if you purchase a bond on the stock exchange, you pay a certain price. This price is expressed as a percentage. This price depends, for example, on the creditworthiness of the company or government issuing the bond, but also on the market interest rate and the prevailing sentiment at that time. As a rule, if the credit rating falls, the price of the associated bonds will also decrease.

In terms of trading, we currently focus on the cryptocurrency funds. And we do this automatically. With bots. In our BOTS app, you can choose a particular bot. This bot is developed by specialised developers and works using algorithms, artificial intelligence and machine learning. As a result, it is no longer necessary to invest via a (digital) fund manager. So, you don’t have to pay the costs they charge for trading on your behalf. In the long term, we would like to offer not only crypto investments, but also shares, bonds and investment funds.

A bot can achieve significantly higher returns than a human being. After all, a bot does not need to sleep and can therefore react immediately to changes in your cryptofund. A bot also has no emotions that might affect the way your investments are handled.

This is how investment, with higher returns, becomes feasible for everyone. The best trading strategies were once only available to the richest 3% of people in the world. Through our bots, they are now also available to you. You can start within 2 minutes and for as little as € 50.

Everyone must be able to trade. And now they can. With BOTS. Together, we are committed to making the world of trading fairer and more transparent. Interested, but your question hasn’t been answered yet? Then please have a look at the FAQs on our site. Or contact us, we will be happy to explain it to you in person.

Download the BOTS app on your mobile phone today! For Android click here, for Apple click here.

There is no such thing as risk-free trading. It is possible to lose (part of) your stake.

The BOTS app makes trading easy to everyone with a smartphone: http://bots.io/