Take a look at our list of the financial terms associated with trading and the markets. From beginners starting their trading journey to experts with decades of experience, all traders need to clearly understand a huge number of terms.
Market capitalization, commonly referred to as market cap, is a measure of a company's size and is calculated by multiplying the total number of its shares outstanding by the current market price of each share. Market cap can be used to help assess how much a company is worth in the eyes of investors.
Is high market cap good?
A high market capitalization (market cap) generally indicates that a company is well-established, has a strong financial performance, and is considered to be a reliable investment by the market. High market cap companies are often considered to be blue-chip stocks and are more stable and less risky than lower market cap companies.
However, a high market cap does not guarantee that a company will perform well in the future, it just reflects the current market's perception of the company, the stock price and the number of shares outstanding. The company may still be facing internal or external challenges, and the stock may be overvalued. Therefore, it's always important to do your own research and analysis before investing in any stock regardless of its market capitalization.
What is a good market capitalization?
A good market capitalization for an investment depends on the investor's individual preferences and goals. Generally, companies with a high market capitalization are considered to be well-established and financially stable, making them a more reliable investment. However, it is important to note that high market capitalization does not always guarantee future performance.
Is it better to have a small or large market cap?
Small-cap companies tend to be more risky but have higher growth potential. Large-cap companies are considered to be more stable but have lower growth potential. At the end of the day it will all depend on the investor's preference for risk and tolerance for profit/loss.
The iShares ESG MSCI USA Leaders ETF (SUSL) seeks to track the investment results of an index composed of U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider.
The Vanguard Value Fund (VTV) seeks to track the performance of a benchmark index that measures the investment return of large-capitalization value stocks. The Fund employs a "passive management"-- or indexing --investment approach designed to track the performance of the CRSP US Large Cap Value Index.
The Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG) holds a basket of companies that score highly for environmental, social, and governance (ESG) factors, with roughly marketlike sector exposure. The fund’s index uses MSCI’s ESG rating methodology to assign a score to all US large- and midcap stocks.
Industrial Select Sector SPDR Fund (XLI) tracks US industrial companies within the S&P 500. This asset uses the Industrial Select Sector Index as its tracking benchmark. The ETF provides concentrated exposure large-cap US industrial companies, with limited small and midcap companies.
The index comprises just 70 holdings from the industrial sector. Top holdings for the benchmark index include Boeing Co, 3M Co, Union Pacific Corp and Honeywell International Inc.
Lithium and Battery Tech ETF (LIT) tracks a market-cap weighted index of global lithium miners and battery producers. The asset invests in the full cycle of lithium, from mining to refining and battery production.
For this reason, it doesn't offer the exposure of other assets to metals and mining sectors, instead is an investment for niche lithium exposure. Holdings in the ETF include Tesla, Albemarle corp, Panasonic, Samsung SDI and Enersys.
Financial Select Sector SPDR Fund (XLF) tracks US financial companies within the S&P 500. This asset uses the Financial Select Sector Index as its tracking benchmark. The ETF offers concentrated exposure large-cap US financial companies.
Just a few holdings make up a big part of the portfolio, and there are only 68 holdings in total. Top holdings for the benchmark index include Berkshire Hathaway Inc, JPMorgan Chase & Co and Bank of America.
ProShares UltraShort Russell2000 (TWM) is a leveraged product that seeks to deliver twice the inverse of the daily performance of the USA2000 Index. Results aims to be 200% of the opposite to the movement of the index. This is a daily-bet, so results will vary dramatically for positions held longer than one day.
The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
The Vanguard Total Stock Market ETF (VTI) tracks the total US market and is designed for traders looking for comprehensive, inexpensive exposures to full-market equities. It encompasses the entire market-cap spectrum and provides neutral coverage, with no sector or size bets.
This ETF looks to match the performance of the CRSP US Total Market Index. The sector breakdown is largely the same as its benchmark: Financials make up 19.70%, Tech is 19.10%, with consumer good, health care and industrials all around the 13% mark.
UPRO, ProShares Ultra Pro S&P500, provides 3x daily exposure to the S&P 500 Index. The ETF aims to deliver daily returns that are three times that of the S&P 500 Index, which comprises US large cap equities. The S&P 500 represents some of the largest and most liquid US stocks on the market.
This is a leveraged product and, as such, carries more risk. It is an aggressive instrument, design for intraday trading, and should not be used as part of a buy-and-hold strategy.
The S&P MidCap 400 ETF (MDY) looks to replicate the performance of the S&P Midcap 400 Index. The most widely-followed mid-cap index in existence, it serves as a good barometer for the performance and directional trends of US equities. The fund provides a good representation of the market and is popular in the midcap space.
Stocks in this index cover all major sectors including technology, health care, financial industries and manufacturing, and include many household names. Holdings include Teleflex, Dominos Pizza, Lamb Weston Holdings and Atmos Energy.
SPY, also known as the SPDR S&P 500 ETF Trust, is one of the oldest and best-recognised ETFs. Unsurprisingly, given the name, it seeks to replicate the results of the S&P500 index. SPY tracks large and midcap US stocks.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
SSO, also known as ProShares Ultra S&P500, is a leveraged product that looks to deliver twice the daily performance of the S&P500. This is a single-day product so the returns over periods of more than one day will differ.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
ProShares UltraPro Russell2000 (URTY) seeks to deliver daily results that are three times daily performance of the USA2000 Index. This is an aggressive single-day bet and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% of the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
WisdomTree U.S. LargeCap Dividend (DLN) consists of the 300 largest companies ranked by market capitalisation from the WisdomTree Dividend Index. The Index is a fundamentally weighted index that measures the performance of large-cap dividend-paying US companies.
The top ten stock holdings account for 26.76% of the index and include Microsoft, Apple, Exxon Mobil and Verizon Communications. Four sectors (Information Technology, HealthCare, Consumer Staples and Financials) account for 56.4% of the index’s holdings. This ETF is a good option for traders looking for exposure to large cap equity from dividend-paying companies.
The Health Care Select Sector SPDR Fund (XLV) tracks US health care companies within the S&P 500. This asset uses the Health Care Select Sector Index as its tracking benchmark. The fund is caps weighted and only includes companies from the S&P 500, which means there are a lot of very large companies.
The index comprises just 62 holdings from the health care sector – lower than many in this segment - and includes many household names. Top holdings include Johnson & Johnson, Pfizer Inc, UnitedHealth Group and Merck & Co Inc.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
SPDR S&P ASX 50 Fund (SFY.AX) seeks to track the returns of the S&P/ASX 50 Index. The S&P/ASX 50 is an index of Australia’s large-cap equities. Traders can use it as a way to access the Australian Stock Market or gain exposure to Australian companies.
The index has a mix of sectors, and contains the 50 largest ASX listed stocks with the cut-off being a market capitalisation of around $5billion (AUD/). The portfolio accounts for 62% of Australia’s sharemarket capitalisation. Top holdings include Commonwealth Bank, BHP Billiton Limited, Woolworths Group and Telstra Corp.
ProShares UltraShort S&P500 (SDS) looks to deliver daily investment results that are twice the inverse of the daily performance of the S&P500. This is a leveraged product and designed as a single-day bet. Returns for periods longer than one day could expose investors to performance drift.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
US Tech 100 (NQ) is a market capitalization-weighted stock market index that includes the hundred largest non-financial domestic and international companies.
The index is constituted by sectors such as Technology, Consumer Services, Healthcare, Industrials, Consumer Goods and Telecommunications.
The US Tech 100 index contains some of the largest companies in the world, including Apple, Amazon, Microsoft, Facebook, Google parent Alphabet and Netflix.
The US Tech 100 index futures allow you to speculate on, or hedge against, changes in the price of some of the world’s biggest stocks. Contracts rollover on the second Friday of March, June, September and December.
IWM, also known as iShares USA2000 ETF which seeks to mirror the performance of the USA2000 Index. The ETF has a basket of shares that is similarly weighted to the USA2000 Index, and comprises well-diversified small-cap stocks. It has around 2,000 holdings, all small cap stocks with market capitalisation of less than $1bn.
The portfolio is made up of multiple sectors including 24.52% financials, 16.60% information technology, 16.47% health care, 14.72% consumer discretionary and 12.71% industrials. The remainder is split between materials, energy, utilities, consumer staple and telecoms. Stocks include Etsy, Hubspot and Planet Fitness Inc.
Direxion Daily Small Cap Bear 3x Shares (TZA) seeks to deliver daily results that are three times the inverse of the daily performance of the USA2000 Index. This is an aggressive single-day bet against the USA2000, and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% opposite the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
ProShares Ultra QQQ (QLD) aims to deliver daily investment results that are twice the performance of the Nasdaq 100 Index. This ETF provides leveraged exposure to a market-cap weighted index of 100 non-financial stocks listed on the NASDAQ. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. All leveraged products carry more risk than unleveraged products.
The Nasdaq 100 is dominate by tech firms, so the performance of the index is closely tied to the sector. Top holdings include Apple, Amazon, Facebook and Tesla.
ProShares UltraPro Short S&P500 (SPXU) seeks daily investment results that are 300% the inverse of the daily performance of the S&P 500. This is a single day bet for traders looking to go short on S&P500 or hedge other trades. Like any leveraged product, there is more risk involved in this ETF than in unleveraged products.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
ACWI stands for All Country World Index and this ETF is designed to provide a broad reflection of the performance of equity markets around the world comprising stocks from 23 developed and 24 emerging markets. It’s owned by Morgan Stanley Capital International (MSCI).
The ETF tracks nearly 2,500 stocks, including Apple, Microsoft, Amazon and Facebook. Stocks from five countries make up 72.6% of the ACWI, those being the USA, Japan, the UK, France and China. The remaining 27.4% comprises stocks from the other 42 countries. The ACWI is used as a benchmark of performance by fund managers, and is considered a good way to diversify a portfolio.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
Risk management in trading is a strategy for mitigating losses. It involves understanding and analyzing risks, taking preventive steps to protect against potential losses, and having plans in place to address unanticipated situations. Good risk management practices help traders limit their downside and stay ahead of market volatility.
How do you manage risk in trading?
Traders can practise risk management in lots of different ways. It can be done by using strategies like position sizing, stop-loss orders, diversifying investments, and hedging. Through careful planning, you can set limits on your potential losses, identify potential opportunities and adjust your strategy accordingly. With disciplined risk management, you can protect your capital while you trade.
Automated trading is also referred to as Algo Trading (Algorithmic is abbreviated to Algo) – is the use of algorithms for executing orders utilizing automated and pre-programmed trading instructions via advanced mathematical tools. Trading variables such as price, timing and volume are factors in Algo trading.
How does algo trading work?
Algo trading works by capitalizing on fast decision-making processes as human intervention is minimized. As such, Algo Trading enables automated trading systems to take advantage of opportunities arising in the market even before human traders can even spot them. It uses processes- and rules-based algorithms to employ strategies for executing trades. Algo trading is mostly used by large institutional investors and traders
The Direxion Daily Financial Bull 3X (FAS) Shares ETF is a leveraged ETF, aiming to secure traders three times the daily returns on the performance of the Russell 1000 Financial Services Index. This increased exposure also increases risk, so this ETF is more suited to traders with the capital to withstand volatility and with a high risk tolerance.
The portfolio is composed of 70% stocks. Sector exposure is mostly financial services, which make up 77.21% of holdings, with another 15.99% in Real Estate. Commercial banks account for a high proportion of this ETF, with stocks including Berkshire Hathaway Inc, JPMorgan Chase & Co, Bank of America Corp, Visa, Wells Fargo and Citigroup all featuring.
In trading, rollover refers to the process of extending the settlement date of a trade by rolling it forward to the next available delivery date. This is typically done for futures contracts and currency trades. Rollover allows traders to maintain an open position beyond the initial settlement date without having to close and re-open the trade.
What are rollover and swap?
When rolling over a trade, a trader may also be required to pay or receive the difference in the interest rate between the two currencies involved in the trade. This is known as "swap" or "overnight financing". Rollover is typically done when traders expect market conditions to remain favorable for their position, allowing them to capture more potential profit.
JNUG, also known as Direxion Daily Junior Gold Miners Index Bull 3X Shares, aims to deliver three times the daily returns of junior gold and silver mining companies from developed and emerging markets. It seeks 300% of the performance of the MVIS Global Junior Gold Miners Index. The term junior refers to the size of the firms, which are considered to be small-cap.
This is a single-day fund, and funds should not be expected to provide three time the return of the benchmark index if positions are held for longer than one day. As a leveraged ETF, this asset carries more risk than ETFs that are not leveraged. This asset is aimed at intraday traders and is not suitable for all investors.
Dow Jones Industrial Average - SPDR (DIA) mirrors the USA 30, which tracks 30 large-cap blue-chip companies – many of which are household names. The Dow Jones is one of the oldest indices in the world and is not considered to be volatile. However, because it is only 30 companies it is heavily influenced by the fortunes of those firms and is not a good indicator of the economy as a whole.
Stocks in the fund include Coca-Cola, Disney, Apple and Visa. The ETF is a good way to invest in the index. However, it is not ideal for those looking for broad exposure to US caps, as it only follows the top 30 companies. It is extremely liquid with a strong track record.
Ethereum was launched in 2015, after founder Vitalik Buterin decided to improve on perceived problems with Bitcoin.
He wanted a cryptocurrency that could deliver outstanding functionality, especially in terms of processing speed. Ether's transaction speed is just 15 seconds, much faster than the 10 minutes Bitcoin transactions can take.
When most people talk about Ethereum, they are really talking about Ether (ETH), the underlying token currency of the Ethereum platform.
Ether is priced in USD. It was worth just $2.80 when it first launched, and hit an all-time high of $4,891.70 in November 2021.
Ethereum is the world's second-largest cryptocurrency by market cap. The cryptocurrency relies on blockchain, just like Bitcoin, but it is used in a different way. This has led many to view Ethereum has having real-world uses.
The FTSE/JSE index, also known as the South Africa 40, is a market capitalisation-weighted index of the largest and most liquid 40 companies trading on the Johannesburg Stock Exchange.
The index was launched on 24th June 2002, with a base date of 21st June 2002 and a base value of 10300.31.
The largest sector in the index is Media, which accounts for 22.27% of the total index weighting. Basic Resources is the second largest, accounting for 19.9% of the total weighting, followed by Personal & Household Goods and Banks, with 12.43% and 12.35% respectively.
South Africa 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Johannesburg Stock Exchange. Contracts rollover on the second Friday of March, June, September, and December.
The USA 2000 Index, also known as the USA 2000, is a small cap index of the US stock market. It represents the bottom 2,000 companies in the Russell 3,000 stock market index, accounting for around 8% of the Russell 3,000's market capitalisation.
The index was created in 1984 and was the first index of small cap stocks; it has since become the benchmark of choice, along with its variants, for around 84% of small cap assets. The index first broke 1,000 points on May 20th 2013, and hit a record high of 1,737.63 in August 2018.
USA2000 index futures allow you to speculate on, or hedge against, changes in the price of thousands of small-cap US stocks. Contracts rollover on the second Friday of March, June, September, and December.
High frequency trading (HFT) is an automated form of algorithmic trading which uses computer programs to execute large numbers of orders at incredibly high speeds. This allows traders to capitalize on small price discrepancies in the market by exploiting arbitrage opportunities that exist due to different pricing among different exchanges. HFT is widely used today as a way for investors to make quick and efficient trades with a lower cost of entry.
How does high-frequency trading work?
High-frequency trading is an automated system of buying and selling stocks within fractions of a second. By using complex algorithms, traders can analyze and make decisions about the markets at a much faster rate than traditional methods. As a result, high-frequency trading enables firms to take advantage of short-term price fluctuations and generate significant profits.
The NIFTY 50 Index, also known as the India 50, is a free-float market capitalisation computed index of 50 top companies trading on the National Stock Exchange of India.
The index was launched on April 22nd, 1996, with a base value of 1,000, calculated as of November 3rd, 1995.
Financial Services is the largest component of the index, with a weighting of 37.09%, while Energy and IT are the second and third largest sectors, accounting for 15.01% and 13.27% respectively. The index covers 12 sectors of the Indian economy; Financial Services, Energy, IT, Consumer Goods, Automobile, Construction, Metals, Pharma, Cement & Cement Products, Telecom, Media & Entertainment, Services, and Fertilisers & Pesticides.
India 50 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the National Stock Exchange of India. Futures rollover on the fourth Friday of each month.
A dividend is a payment made by a company to its shareholders out of its profits. It's typically paid quarterly, with the amount of each dividend depending on how profitable the company is and how much the board of directors chooses to distribute. Dividends can be used as income or reinvested back into the company to purchase additional shares.
How many shares do you need to get dividends?
The exact number of shares you need to get dividends depends on the company's policy and dividend payout rate. Generally, owning at least one share qualifies you for receiving dividends.
Is a dividend a good thing for traders?
Yes. Dividends provide traders with regular income and the potential for capital gains if the dividend is reinvested into more shares. This can be beneficial to traders, as it can create a passive stream of income and add to their overall yeild.
Ripple (XRP) is among the largest cryptocurrencies by market cap, following Bitcoin and Ethereum.
Ripple, known as XRP, is priced in USD. It saw a high of $3.20 in January 2018.
When people talk about Ripple they are not just talking about the currency, but the Ripple network which could change the way people complete currency transfers.
Unlike other crypto payment networks, Ripple allows you to make money transfers in any form - be that Ripple, Bitcoin, USD, Yen or GDP. Plus, you can receive money in a different form to how it has been sent. For example, you could be sent Bitcoin but collect your money in USD.
Payments can happen in seconds, a significant improvement on the days or weeks required for a wire transfer with a bank.
The payment network has already seen endorsements, with American Express and Santander partnering with it for cross-border payments between the US and UK.
The S&P 500 Index, also known as the USA 500, is a benchmark index of large-cap US stocks. It accounts for around 80% of the total capitalisation of the US stock market. Around $10 trillion is indexed or benchmarked to the S&P 500.
The index was created in 1957 and was the first US stock market index weighted by market capitalisation. To be eligible, companies must have a market cap greater than US$6.1 billion and have at least 50% of shares traded publicly.
Although launched on 4th March 1957, the initial value data is 3rd January 1928. The index hit a record high in August 2018 of 2,914.04, while the lowest-recorded level was 676.53 in March 2009.
The largest industry represented on the S&P 500 is Information Technology, which accounts for 26.5% of the total index weighting. Healthcare is the second-largest sector, with 14.6% of the index weighting, followed by Financials with 13.8%.
The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.
The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.
The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.
Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.
USD/CZK is the abbreviation for the US Dollar to Czech koruna exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The Czech Republic economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe. Strong data from the currency bloc therefore supports CZK.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The S&P/ASX 200 index, or Australia 200, comprises the 200 largest qualifying stocks on the Australian Stock Exchange, weighted by float-adjusted market capitalisation. It is denominated in AUD/ and is considered the benchmark index of the Australian market.
The index was launched on 3rd April 2000, with its initial value calculated as of 31st March, 2000. The top 10 constituents account for 45.4% of the index. The ASX is dominated by the financial sector; companies in this industry make up 32.8% of the index and four of the top 10 constituents are banks.
Materials is the second largest sector, with a weighting of 17.3%, followed by Healthcare at 9.4%.
The index includes 187 Australian stocks, eight New Zealand stocks, three US stocks, one French stock, and one UK stock.
Australia 200 index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Australian Stock Exchange. Futures rollover on the 3rd Friday of March, June, September, and December.
The FTSE China A50 index, also known as the China 50, is a Chinese benchmark index that allows investors to trade A Shares, which are securities of companies that are incorporated in mainland China that are permitted to be traded by international investors thanks to government regulation.
The index comprises the 50 largest companies on the Shanghai and Shenzhen stock exchanges by market capitalisation and is free float-adjusted and liquidity screened. The instrument is priced in US Dollars on the {%brand.name%} platform.
The index was launched on 13th December 2003, with a base date of 21st July 2003 and a base value of 5,000.
The China 50 index is dominated by banks, with a weighting of 33%. The second-largest sector is Insurance, with a share of 14.58%, followed by Food & Beverage with 13.28%.
China 50 index futures allow you to speculate on, or hedge against, changes in the price of Chinese stocks. Futures rollover on the 4th Friday of every month.
EUR/CZK is the abbreviation for the euro to Czech koruna exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Czech economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
The UK 100 is a blue-chip index of the largest 100 companies on the London Stock Exchange in terms of market capitalisation. Companies are only included if they meet relevant size and liquidity requirements.
The index was launched on 3rd January 1984, with a base date of 30th December 1983 and a base level of 1,000 points.
In terms of weighting, the three largest sectors of the UK 100 as of H2 2018 are Oil & Gas (16.56%), Banks (12.70%), and Personal & Household Goods (12.37%).
Traditionally the index has lagged its peers, such as the larger FTSE 250 and the US S&P 500. The index fluctuates in response to market risk sentiment and the strength of the pound Sterling. The UK 100 contains many international companies who report their earnings in other currencies, so a stronger pound weakens company profits.
Because of this, the UK 100 is also considered to be an unreliable indicator of the health of the UK economy because of its large international component.
The Swiss Market Index (SMI), also known as the Swiss 20, is a blue-chip index of the 20 largest and most-liquid companies traded on the SIX Swiss Exchange, covering around 80% of the total market capitalisation of Swiss equities. The index is weighted so that no component can exceed 20%, enabling it to be a key barometer of the Swiss stock market.
The index was launched on 30th June 1988, and has the same base date. It has a base value of 1,500 points, reached a high in January 2018 of 9,611.61, and an all-time low of 1,287.60 in January 1991.
Healthcare is the largest index sector, accounting for 37.5% of the total weighting, followed by Consumer Goods with 24%, and Financials with 21.6%. Industrials is the fourth-largest sector with 13.6%.
Swiss Market Index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the SIX Swiss Exchange. Contracts rollover on the second Friday of March, June, September, and December.
Dash was launched in January 2014 as a rival to Bitcoin. Its popularity is largely down to a focus from designer Evan Duffield on transaction speed and user anonymity.
Dash is priced in USD per coin, and reached a peak value of $1,370.16 in December 2017.
One of the major complaints against stalwart crypto Bitcoin is its painfully slow transactions speed (a big factor in its hard fork into Bitcoin Cash in 2017). Dash has a highly favourable processing speed compared to Bitcoin and other cryptos.
Processing is so quick that two days after its launch, almost 10 percent of the total capacity had already been mined.
Dash is a portmanteau of the words Digital and Cash. It was originally called Xcoin, followed by Darkcoin, before Dash was settled on.
Since its launch, Dash has become increasingly popular and is accepted as a payment method by over 300 organisations around the world - including Apple. CEO Ryan Taylor has stated his belief that Dash will soon overtake Bitcoin in popularity.
The CAC 40, also known as the France 40, is a blue-chip index and stock market barometer comprising of the 40 companies listed in Paris with the highest liquidity and free-float market capitalisation. It is the most-traded index administered by Euronext.
The index has a base level of 1,000, taken from the 31st December 1987. It was launched on 15th June 1988. The index hit a record high of 6,922.33 in September 2000, with an all-time low of 893.82 recorded in January 1988.
Personal & Household Goods is the biggest sector in the index, comprising around 13% of the total weighting, followed closely by Industrial Goods & Services. Oil & Gas is the third-biggest sector, with a weighting of just under 12%. Healthcare and Banks are the fourth and fifth largest sectors respectively. Companies are limited to a 15% weighting.
CAC 40 index futures allow you to speculate on, or hedge against, changes in the price of major French stocks. Futures rollover on the second Friday of each month.
Maintenance Margin, or “variation margin,” is considered as the minimum amount of equity (i.e., funds) which needs to be maintained in a trader’s margin account before a margin call is issued as due to the account value being below a minimum threshold and not being able to support open margin trade positions. Margin accounts are what leveraged trades use to trade, where they can purchase securities such as stocks, bonds, or options with funds borrowed from the brokerage.
How do you avoid maintenance margin?
To avoid maintenance margin issues, traders should monitor their account closely and adjust their leverage if needed. If your maintenance margin is not maintained it will result in a margin call, which may indicate that the trader should reconsider the risk exposure of their portfolio.
Why are maintenance margins important?
Maintenance margins are important to protect against losses due to fluctuations in the market. They ensure that traders maintain adequate capital reserves and can cover any potential losses.
The IBEX 35, or Spain 35, is the benchmark index for the Spanish stock market and tracks the performance of the top 35 most-traded and most-liquid companies on the Bolsa de Madrid (Madrid Stock Exchange).
The index is market capitalisation-weighted and free float-adjusted. It was launched on 14th January 1992 but has a base date of 30th December 2010 and a base level of 1,000. Selection is based upon liquidity, but there is a maximum weighting limit of 40%.
Financial & Real Estate Services is the most-represented sector in the index, accounting for around 34% of the weighting. The next-largest sector is Oil & Energy, with just over 20%, followed by Technology & Telecommunications with just over 15%. Consumer Goods, Basic Materials, Industry & Construction, and Consumer Services complete the list of sectors covered in descending order of weighting.
Spain 35 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Bolsa de Madrid. Contracts rollover on the second Friday of every month.
The STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
The FTSE MIB Index, also known as the Italy 40, is Italy's leading benchmark index. It comprises the large cap components of the FTSE Italia All-Share Index; the 40 most-capitalised and liquid Italian shares account for around 80% of the market cap of the total domestic market.
The index was launched in the second quarter of 2009, but its base date is 31st December 1997. It has a base value of 24,401.54, peaked at 50,108.56 in March 2000 and struck a record low of 12,362.50 in July 2012.
Just over a quarter of the index is comprised of banks, with Utilities the second-largest category with a weighting of 16.51%. Oil & Gas is the third-largest sector, with a 12.67% share of the index.
A 15% weighting cap is in operation to ensure that no single component can dominate the index.
Italy 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Italian stock market. Futures rollover on the 2nd Friday of March, June, September, and December.
The WIG 20 Index, or Poland 20, is a blue-chip stock market index of the 20 most actively traded and liquid companies on the Warsaw Stock Exchange. Constituents are chosen from the top 20 companies trading on the Warsaw Stock Exchange as of the third Friday of February, May, August, and November.
The ranking is based upon turnover values for the previous 12 months and a closing price from the previous five trading sessions is used to calculate free float capitalisation.
The index has been calculated since 16th April, 1994 as a base value of 1,000 points. To keep the index diverse, no more than five companies from a single sector may be included in the index at any one time. Sectors covered by the index includes Commercial Banks, Oil & Gas Exploration & Production, Insurance, Metals Mining, and more.
Poland 20 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Warsaw Stock Exchange. Futures rollover on the 2nd Friday of March, June, September, and December.
Financial Markets define any place (physical or virtual) or system which provides buyers and sellers with the means to trade financial instruments of any kind.
What are the types of financial markets?
Types of financial markets include stock markets, bond markets, foreign exchange markets, commodity markets, money markets, derivatives markets, and options markets.
What is the main function of financial markets?
The main function of financial markets is to facilitate the interaction between those who need capital with those who have capital to invest. In addition to raising capital, financial markets allow participants to transfer risk (generally through derivatives) and promote commerce. The term "market" can also be used for exchanges, or organizations which enable trade in financial securities.
Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finances. For long term finance, they are usually called the capital markets; for short term finance, they are usually called money markets. The money market deals in short-term loans, generally for a period of a year or less.
While all traders know that crypto is traded online, they may not be aware that they can also trade more traditional markets such as bonds. So, what are Bonds, what is a bond, and where can you trade them?
A bond is a form of financial derivative trading. Traders take position on the price of the underlying instrument and not purchasing the instrument itself. As such, they buy a Bond CFD or Contract for Difference of that instrument. If a Bond CFD is expected to go up in value, traders can take a long position. The opposite is true of course and if the value of a bond is expected to fall, traders can take a short position.
A bond is a loan that the trader (now bond holder) makes to the issuer. Bonds can be issued by governments, corporations or companies looking to raise capital. When traders buy a bond, they are providing the issuer with a loan in return for that bond. The issuer takes on a commitment to pay the bondholder interest and to return the principal sum when the bond matures.
Exposure in finance and trading refers to the potential financial loss or gain that an individual or entity may incur as a result of changes in market conditions or prices. It can refer to the overall risk of a portfolio, or to the specific risk associated with a particular security or market.
What is Leverage? How does leverage effect exposure?
Leverage refers to the use of debt or other financial instruments to increase the potential return on an investment. In trading, leverage allows an investor to control a larger position with a smaller amount of capital. Leverage can increase exposure to potential losses as well as gains, as a small change in the value of the underlying asset can have a larger impact on the value of a leveraged position.
How do you calculate exposure in trading?
Exposure in trading can be calculated by multiplying the size of a position by the current market price of the underlying asset. The VaR method also can be used by taking into account the volatility of the market and any potential correlation with other assets in the portfolio.
Currency appreciation in relation to Forex trading is defined as when one currency in a forex pair increases in value relative to the other currency in that pair. As such, the now “stronger” currency will cost more of the “weaker” one to buy. The reverse is also true, as that same stronger currency can now buy more of the weaker one when sold.
Is it good if a currency appreciates?
As one of the currencies in a currency pair goes up (or down), as the demand for it drives it up (or lack of it) or demand for the other currency) drives it down, than the supply does also follows – either less (when in demand) or more of it (when not in demand).
There are several reasons for Currency Appreciation, including the balance of trade, speculation on any of the currencies in that pair, or issues occurring within the international capital market. Traders may attempt to predict currency appreciation by utilizing the economic calendar. This calendar details economic issues which might determine the strengths and weaknesses of the global or local economies and currencies.
The term Ex-Dividend date refers to a cut-off date where shareholders buying shares from a company will not be eligible for upcoming dividends for those shares.
Why is it important to know the ex-dividend date?
Knowing the ex-dividend date is important for investors as it determines whether they are eligible to receive the next dividend payment. On this day, stocks typically drop in price by an amount equal to the dividend paid, so understanding this date is essential for making informed decisions.
The Ex-Dividend Date is one of four dates relevant to a company’s dividends: The other three are:
• Declaration Date – When a company announces that it plans to issue dividends in the foreseeable future
• Record Date - When the dividend issuing company examines and closes its list of shareholders
• Payable Date - When the eligible shareholders are to be paid by the company
What happens if I sell on ex-dividend date?
If you sell the stock on its ex-dividend date, you will not receive the next dividend. The buyer of the stock will receive the dividend and any capital gains, but you as the seller will miss out on this benefit.
In the financial and trading domains, the Grey Market enables traders to take positions on a company’s potential via yet-to-be-released Initial Public Offering (IPO). Asset and share prices in this market are more of a prediction of what the company’s total market capitalization will be at the end of its first trading day than any official or sanctioned price.
How do grey markets make money?
Grey markets make money by providing liquidity for new IPOs by allowing buyers and sellers to trade in newly issued stocks without the issuer's consent. This provides the issuer with a way to gain quick access to capital without relying on banks or other traditional sources of funding.
How do I get into grey market?
A grey market also refers to public companies and securities that are not listed, traded, or quoted in a U.S. stock exchange. Grey market securities have no market makers quoting the stock. Also, since they are not traded or quoted on an exchange or interdealer quotation system, investors' bids and offers are not collected in a central spot, so market transparency is diminished, and effective execution of orders is difficult.
Stock dilution is the decrease in existing shareholders' ownership of a company as a result of the issuance of new shares. It typically occurs when companies raise capital by issuing additional shares, thereby reducing the stake of existing shareholders.
Why do companies dilute stock?
Companies dilute stock to raise capital for future growth and investments, often through the sale of additional shares. This allows companies to raise money without having to take out loans or issue bonds. Diluting stock can help reduce overall debt and create a healthier financial situation for the company.
Is stock dilution a good thing?
It depends. If done properly, diluting stock can help raise funds for business operations and growth. It also encourages investors to purchase shares due to the lower price per share. However, too much dilution can weaken shareholder equity and damage investor confidence.
What does dilution do to stock price?
Dilution decreases a stock's price by decreasing its earnings per share (EPS). This happens when a company issues new shares to the public, increasing the total number of shares outstanding and resulting in lower EPS for existing shareholders. Dilution can also occur through corporate acquisitions, mergers or issuing debt that is converted into equity.
What is a margin in finance?
A margin in finance is the amount of money an investor borrows to purchase or trade securities. It is the difference between the total value of the borrowed funds and the market value of the collateral provided as security for the loan. Margin trading allows investors to buy more securities than they would otherwise be able to purchase with just their own capital.
What is margin vs profit?
Margin and profit are related but different concepts in finance and trading.
Margin refers to the amount of money or collateral that is required to open a leveraged position, such as a margin account, which allows traders to buy securities by borrowing money from a broker. Profit, on the other hand, refers to the amount of money that is gained from a trade or investment, after all costs and expenses have been subtracted. Profit is the result of a successful trade, which is the difference between the buying and selling price.
How do I calculate margin?
There are a few different ways to calculate margin, depending on the context and the type of trade or investment.
One of the most common ways to calculate margin is to use the following formula:
Margin = (Value of Trade / Leverage) x 100%
Spread Betting is a type of financial speculation which allows you to take a position on the future direction of the price of a security, such as stocks, commodities or currencies. You can choose to speculate whether an asset will go up or down in value, without having to buy or sell it. Spread Betting enables you to take a view on the markets and gain access to the financial markets with limited capital outlay.
How does a spread bet work?
A spread bet is placed by betting on whether the asset's price will rise or fall. The investor can set their own stake size, which means they can take more or less risk according to their preferences. Spread bets are flexible and convenient, allowing you to benefit from even the slightest market movements.
What does a negative spread mean?
A negative spread in trading refers to a situation where the ask price for a security is lower than the bid price. This means that a trader could potentially sell a security for a higher price than they would have to pay to buy it. This is an unusual situation that can occur due to a temporary market anomaly or a technical error. Negative spreads are rare and they tend to be corrected quickly, as they represent an opportunity for arbitrage. Traders should be cautious when dealing with negative spreads and should consult with their broker or trading platform to understand the cause of the negative spread and its potential impact on their trade.
A range refers to the difference between the highest and lowest prices a stock may reach during a specific time frame. This range gives investors an indication of how volatile a particular asset might be in terms of its price movements, as well as what opportunities they might have to make money. By analyzing historical data and keeping up-to-date with market news, investors can develop strategies to capitalize on different ranges.
How do you use ranges in trading?
Range trading is a popular trading strategy in finance, particularly for traders looking to limit their risk and profit from a given market movement. When using ranges, traders identify support and resistance levels for a security or asset, and look to take profits when prices reach either level. By using a range-trading strategy, traders can limit the amount of capital they are willing to risk per trade, as well as capitalize on both long-term and short-term movements in the market.
What is trend in trading?
A trend in trading is the general direction of a security's price over a period of time. Trend analysis helps traders make predictions about future market movements, allowing them to enter and exit positions at optimal times. Trends can be either upward or downward and often take weeks, months or even years to develop. To identify trends, technical analysis tools such as support and resistance levels, trend lines, and chart patterns are used by traders to detect buying and selling opportunities in the markets. Fundamental analysis also plays a role in recognizing potential profitable trading opportunities since underlying economic conditions may influence a security’s price.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
Financial instruments are a way to place money into financial markets, they can take many forms such as stocks, bonds, derivatives, currencies, commodities, etc. They are used by investors, companies and governments as a means of raising capital, hedging risk, and/or generating additional income. They represent a claim on some type of underlying asset or cash flow. They can be traded on financial markets and their value can fluctuate with market conditions.
What are the 5 financial instruments?
The five main types of financial instruments are: money market instruments, debt securities, equity securities, derivatives, and foreign exchange instruments. There are many more subsets of financial instrument but all of them will fall into one of these 5 broad categories.
1. Money market instruments (also known as Cash Instruments). These are financial instruments where their values are influenced by the condition of the markets (the value given to any given cash currency at any specific point in time).
2. Debt securities – Which are negotiable financial instruments. Debt securities provide their owners with regular payments of interest and guaranteed repayment of principal.
3. Equity securities - Equity securities are another form of financial instruments and represent the ownership of shares of stock.
4. Derivative instruments – These are instruments which are linked to a specific financial instrument or indicator or commodity, and through which specific financial speculative actions can be traded in financial markets in their own right.
5. Foreign Exchange Instruments - Which are represented on the foreign market and mainly consist of currency agreements and derivatives.
Is cash a financial instrument?
Yes, cash is the most basic form of financial instrument. It is widely accepted and can be used to purchase goods and services as well as other investments. Cash is an essential part of most financial transactions, allowing people to pay for their purchases with ease.
A “Rights Issue” is when a company offers an issue of its shares at a special price by to its existing shareholders. This new and reduced price is in proportion to their existing holding of the company’s “old” shares. An after effect common to offering a Rights Issue is that the share price is further reduced due to additional dilution of the share value. A typical reason for any given company to offer a rights issue would be to raise capital.
Is a rights issue a good thing?
It depends on the specific circumstances and the reasons for the rights issue. A rights issue can provide a company with additional funding to invest in growth or to address financial difficulties. However, if a company is issuing new shares at a lower price than the current market value, existing shareholders may feel diluted and the stock price may decrease. Additionally, if the company is issuing new shares to address financial difficulties, it may be a sign of financial distress.
Does share price fall after a rights issue?
A share price may fall after a rights issue due to dilution of existing shareholders' ownership in the company, as more shares are issued, thus reducing the value of each individual share. Additionally, if the new shares are issued at a lower price than the current market value, the stock price may decrease. However, this is not always the case as the company may have a good reason for the rights issue such as investing in growth opportunities or raising funds to pay off debt, that could also boost the stock price.
Can a rights issue be sold to anyone?
A rights issue is typically offered to existing shareholders of a company, allowing them to purchase additional shares in proportion to their current holdings. However, the company may choose to offer the rights issue to a broader group of investors, such as institutional investors or the general public. The terms of the rights issue will be outlined in the prospectus and the decision of who can participate will be made by the company.
ACWI stands for All Country World Index and this ETF is designed to provide a broad reflection of the performance of equity markets around the world comprising stocks from 23 developed and 24 emerging markets. It’s owned by Morgan Stanley Capital International (MSCI).
The ETF tracks nearly 2,500 stocks, including Apple, Microsoft, Amazon and Facebook. Stocks from five countries make up 72.6% of the ACWI, those being the USA, Japan, the UK, France and China. The remaining 27.4% comprises stocks from the other 42 countries. The ACWI is used as a benchmark of performance by fund managers, and is considered a good way to diversify a portfolio.
Automated trading is also referred to as Algo Trading (Algorithmic is abbreviated to Algo) – is the use of algorithms for executing orders utilizing automated and pre-programmed trading instructions via advanced mathematical tools. Trading variables such as price, timing and volume are factors in Algo trading.
How does algo trading work?
Algo trading works by capitalizing on fast decision-making processes as human intervention is minimized. As such, Algo Trading enables automated trading systems to take advantage of opportunities arising in the market even before human traders can even spot them. It uses processes- and rules-based algorithms to employ strategies for executing trades. Algo trading is mostly used by large institutional investors and traders
Dow Jones Industrial Average - SPDR (DIA) mirrors the USA 30, which tracks 30 large-cap blue-chip companies – many of which are household names. The Dow Jones is one of the oldest indices in the world and is not considered to be volatile. However, because it is only 30 companies it is heavily influenced by the fortunes of those firms and is not a good indicator of the economy as a whole.
Stocks in the fund include Coca-Cola, Disney, Apple and Visa. The ETF is a good way to invest in the index. However, it is not ideal for those looking for broad exposure to US caps, as it only follows the top 30 companies. It is extremely liquid with a strong track record.
A dividend is a payment made by a company to its shareholders out of its profits. It's typically paid quarterly, with the amount of each dividend depending on how profitable the company is and how much the board of directors chooses to distribute. Dividends can be used as income or reinvested back into the company to purchase additional shares.
How many shares do you need to get dividends?
The exact number of shares you need to get dividends depends on the company's policy and dividend payout rate. Generally, owning at least one share qualifies you for receiving dividends.
Is a dividend a good thing for traders?
Yes. Dividends provide traders with regular income and the potential for capital gains if the dividend is reinvested into more shares. This can be beneficial to traders, as it can create a passive stream of income and add to their overall yeild.
The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.
The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.
The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.
Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.
The S&P/ASX 200 index, or Australia 200, comprises the 200 largest qualifying stocks on the Australian Stock Exchange, weighted by float-adjusted market capitalisation. It is denominated in AUD/ and is considered the benchmark index of the Australian market.
The index was launched on 3rd April 2000, with its initial value calculated as of 31st March, 2000. The top 10 constituents account for 45.4% of the index. The ASX is dominated by the financial sector; companies in this industry make up 32.8% of the index and four of the top 10 constituents are banks.
Materials is the second largest sector, with a weighting of 17.3%, followed by Healthcare at 9.4%.
The index includes 187 Australian stocks, eight New Zealand stocks, three US stocks, one French stock, and one UK stock.
Australia 200 index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Australian Stock Exchange. Futures rollover on the 3rd Friday of March, June, September, and December.
The FTSE China A50 index, also known as the China 50, is a Chinese benchmark index that allows investors to trade A Shares, which are securities of companies that are incorporated in mainland China that are permitted to be traded by international investors thanks to government regulation.
The index comprises the 50 largest companies on the Shanghai and Shenzhen stock exchanges by market capitalisation and is free float-adjusted and liquidity screened. The instrument is priced in US Dollars on the {%brand.name%} platform.
The index was launched on 13th December 2003, with a base date of 21st July 2003 and a base value of 5,000.
The China 50 index is dominated by banks, with a weighting of 33%. The second-largest sector is Insurance, with a share of 14.58%, followed by Food & Beverage with 13.28%.
China 50 index futures allow you to speculate on, or hedge against, changes in the price of Chinese stocks. Futures rollover on the 4th Friday of every month.
Dash was launched in January 2014 as a rival to Bitcoin. Its popularity is largely down to a focus from designer Evan Duffield on transaction speed and user anonymity.
Dash is priced in USD per coin, and reached a peak value of $1,370.16 in December 2017.
One of the major complaints against stalwart crypto Bitcoin is its painfully slow transactions speed (a big factor in its hard fork into Bitcoin Cash in 2017). Dash has a highly favourable processing speed compared to Bitcoin and other cryptos.
Processing is so quick that two days after its launch, almost 10 percent of the total capacity had already been mined.
Dash is a portmanteau of the words Digital and Cash. It was originally called Xcoin, followed by Darkcoin, before Dash was settled on.
Since its launch, Dash has become increasingly popular and is accepted as a payment method by over 300 organisations around the world - including Apple. CEO Ryan Taylor has stated his belief that Dash will soon overtake Bitcoin in popularity.
While all traders know that crypto is traded online, they may not be aware that they can also trade more traditional markets such as bonds. So, what are Bonds, what is a bond, and where can you trade them?
A bond is a form of financial derivative trading. Traders take position on the price of the underlying instrument and not purchasing the instrument itself. As such, they buy a Bond CFD or Contract for Difference of that instrument. If a Bond CFD is expected to go up in value, traders can take a long position. The opposite is true of course and if the value of a bond is expected to fall, traders can take a short position.
A bond is a loan that the trader (now bond holder) makes to the issuer. Bonds can be issued by governments, corporations or companies looking to raise capital. When traders buy a bond, they are providing the issuer with a loan in return for that bond. The issuer takes on a commitment to pay the bondholder interest and to return the principal sum when the bond matures.
Currency appreciation in relation to Forex trading is defined as when one currency in a forex pair increases in value relative to the other currency in that pair. As such, the now “stronger” currency will cost more of the “weaker” one to buy. The reverse is also true, as that same stronger currency can now buy more of the weaker one when sold.
Is it good if a currency appreciates?
As one of the currencies in a currency pair goes up (or down), as the demand for it drives it up (or lack of it) or demand for the other currency) drives it down, than the supply does also follows – either less (when in demand) or more of it (when not in demand).
There are several reasons for Currency Appreciation, including the balance of trade, speculation on any of the currencies in that pair, or issues occurring within the international capital market. Traders may attempt to predict currency appreciation by utilizing the economic calendar. This calendar details economic issues which might determine the strengths and weaknesses of the global or local economies and currencies.
The iShares ESG MSCI USA Leaders ETF (SUSL) seeks to track the investment results of an index composed of U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider.
Financial Select Sector SPDR Fund (XLF) tracks US financial companies within the S&P 500. This asset uses the Financial Select Sector Index as its tracking benchmark. The ETF offers concentrated exposure large-cap US financial companies.
Just a few holdings make up a big part of the portfolio, and there are only 68 holdings in total. Top holdings for the benchmark index include Berkshire Hathaway Inc, JPMorgan Chase & Co and Bank of America.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
The Health Care Select Sector SPDR Fund (XLV) tracks US health care companies within the S&P 500. This asset uses the Health Care Select Sector Index as its tracking benchmark. The fund is caps weighted and only includes companies from the S&P 500, which means there are a lot of very large companies.
The index comprises just 62 holdings from the health care sector – lower than many in this segment - and includes many household names. Top holdings include Johnson & Johnson, Pfizer Inc, UnitedHealth Group and Merck & Co Inc.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
The Direxion Daily Financial Bull 3X (FAS) Shares ETF is a leveraged ETF, aiming to secure traders three times the daily returns on the performance of the Russell 1000 Financial Services Index. This increased exposure also increases risk, so this ETF is more suited to traders with the capital to withstand volatility and with a high risk tolerance.
The portfolio is composed of 70% stocks. Sector exposure is mostly financial services, which make up 77.21% of holdings, with another 15.99% in Real Estate. Commercial banks account for a high proportion of this ETF, with stocks including Berkshire Hathaway Inc, JPMorgan Chase & Co, Bank of America Corp, Visa, Wells Fargo and Citigroup all featuring.
Ethereum was launched in 2015, after founder Vitalik Buterin decided to improve on perceived problems with Bitcoin.
He wanted a cryptocurrency that could deliver outstanding functionality, especially in terms of processing speed. Ether's transaction speed is just 15 seconds, much faster than the 10 minutes Bitcoin transactions can take.
When most people talk about Ethereum, they are really talking about Ether (ETH), the underlying token currency of the Ethereum platform.
Ether is priced in USD. It was worth just $2.80 when it first launched, and hit an all-time high of $4,891.70 in November 2021.
Ethereum is the world's second-largest cryptocurrency by market cap. The cryptocurrency relies on blockchain, just like Bitcoin, but it is used in a different way. This has led many to view Ethereum has having real-world uses.
High frequency trading (HFT) is an automated form of algorithmic trading which uses computer programs to execute large numbers of orders at incredibly high speeds. This allows traders to capitalize on small price discrepancies in the market by exploiting arbitrage opportunities that exist due to different pricing among different exchanges. HFT is widely used today as a way for investors to make quick and efficient trades with a lower cost of entry.
How does high-frequency trading work?
High-frequency trading is an automated system of buying and selling stocks within fractions of a second. By using complex algorithms, traders can analyze and make decisions about the markets at a much faster rate than traditional methods. As a result, high-frequency trading enables firms to take advantage of short-term price fluctuations and generate significant profits.
EUR/CZK is the abbreviation for the euro to Czech koruna exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Czech economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
The CAC 40, also known as the France 40, is a blue-chip index and stock market barometer comprising of the 40 companies listed in Paris with the highest liquidity and free-float market capitalisation. It is the most-traded index administered by Euronext.
The index has a base level of 1,000, taken from the 31st December 1987. It was launched on 15th June 1988. The index hit a record high of 6,922.33 in September 2000, with an all-time low of 893.82 recorded in January 1988.
Personal & Household Goods is the biggest sector in the index, comprising around 13% of the total weighting, followed closely by Industrial Goods & Services. Oil & Gas is the third-biggest sector, with a weighting of just under 12%. Healthcare and Banks are the fourth and fifth largest sectors respectively. Companies are limited to a 15% weighting.
CAC 40 index futures allow you to speculate on, or hedge against, changes in the price of major French stocks. Futures rollover on the second Friday of each month.
The STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
Financial Markets define any place (physical or virtual) or system which provides buyers and sellers with the means to trade financial instruments of any kind.
What are the types of financial markets?
Types of financial markets include stock markets, bond markets, foreign exchange markets, commodity markets, money markets, derivatives markets, and options markets.
What is the main function of financial markets?
The main function of financial markets is to facilitate the interaction between those who need capital with those who have capital to invest. In addition to raising capital, financial markets allow participants to transfer risk (generally through derivatives) and promote commerce. The term "market" can also be used for exchanges, or organizations which enable trade in financial securities.
Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finances. For long term finance, they are usually called the capital markets; for short term finance, they are usually called money markets. The money market deals in short-term loans, generally for a period of a year or less.
Exposure in finance and trading refers to the potential financial loss or gain that an individual or entity may incur as a result of changes in market conditions or prices. It can refer to the overall risk of a portfolio, or to the specific risk associated with a particular security or market.
What is Leverage? How does leverage effect exposure?
Leverage refers to the use of debt or other financial instruments to increase the potential return on an investment. In trading, leverage allows an investor to control a larger position with a smaller amount of capital. Leverage can increase exposure to potential losses as well as gains, as a small change in the value of the underlying asset can have a larger impact on the value of a leveraged position.
How do you calculate exposure in trading?
Exposure in trading can be calculated by multiplying the size of a position by the current market price of the underlying asset. The VaR method also can be used by taking into account the volatility of the market and any potential correlation with other assets in the portfolio.
The term Ex-Dividend date refers to a cut-off date where shareholders buying shares from a company will not be eligible for upcoming dividends for those shares.
Why is it important to know the ex-dividend date?
Knowing the ex-dividend date is important for investors as it determines whether they are eligible to receive the next dividend payment. On this day, stocks typically drop in price by an amount equal to the dividend paid, so understanding this date is essential for making informed decisions.
The Ex-Dividend Date is one of four dates relevant to a company’s dividends: The other three are:
• Declaration Date – When a company announces that it plans to issue dividends in the foreseeable future
• Record Date - When the dividend issuing company examines and closes its list of shareholders
• Payable Date - When the eligible shareholders are to be paid by the company
What happens if I sell on ex-dividend date?
If you sell the stock on its ex-dividend date, you will not receive the next dividend. The buyer of the stock will receive the dividend and any capital gains, but you as the seller will miss out on this benefit.
In the financial and trading domains, the Grey Market enables traders to take positions on a company’s potential via yet-to-be-released Initial Public Offering (IPO). Asset and share prices in this market are more of a prediction of what the company’s total market capitalization will be at the end of its first trading day than any official or sanctioned price.
How do grey markets make money?
Grey markets make money by providing liquidity for new IPOs by allowing buyers and sellers to trade in newly issued stocks without the issuer's consent. This provides the issuer with a way to gain quick access to capital without relying on banks or other traditional sources of funding.
How do I get into grey market?
A grey market also refers to public companies and securities that are not listed, traded, or quoted in a U.S. stock exchange. Grey market securities have no market makers quoting the stock. Also, since they are not traded or quoted on an exchange or interdealer quotation system, investors' bids and offers are not collected in a central spot, so market transparency is diminished, and effective execution of orders is difficult.
Financial instruments are a way to place money into financial markets, they can take many forms such as stocks, bonds, derivatives, currencies, commodities, etc. They are used by investors, companies and governments as a means of raising capital, hedging risk, and/or generating additional income. They represent a claim on some type of underlying asset or cash flow. They can be traded on financial markets and their value can fluctuate with market conditions.
What are the 5 financial instruments?
The five main types of financial instruments are: money market instruments, debt securities, equity securities, derivatives, and foreign exchange instruments. There are many more subsets of financial instrument but all of them will fall into one of these 5 broad categories.
1. Money market instruments (also known as Cash Instruments). These are financial instruments where their values are influenced by the condition of the markets (the value given to any given cash currency at any specific point in time).
2. Debt securities – Which are negotiable financial instruments. Debt securities provide their owners with regular payments of interest and guaranteed repayment of principal.
3. Equity securities - Equity securities are another form of financial instruments and represent the ownership of shares of stock.
4. Derivative instruments – These are instruments which are linked to a specific financial instrument or indicator or commodity, and through which specific financial speculative actions can be traded in financial markets in their own right.
5. Foreign Exchange Instruments - Which are represented on the foreign market and mainly consist of currency agreements and derivatives.
Is cash a financial instrument?
Yes, cash is the most basic form of financial instrument. It is widely accepted and can be used to purchase goods and services as well as other investments. Cash is an essential part of most financial transactions, allowing people to pay for their purchases with ease.
Industrial Select Sector SPDR Fund (XLI) tracks US industrial companies within the S&P 500. This asset uses the Industrial Select Sector Index as its tracking benchmark. The ETF provides concentrated exposure large-cap US industrial companies, with limited small and midcap companies.
The index comprises just 70 holdings from the industrial sector. Top holdings for the benchmark index include Boeing Co, 3M Co, Union Pacific Corp and Honeywell International Inc.
Lithium and Battery Tech ETF (LIT) tracks a market-cap weighted index of global lithium miners and battery producers. The asset invests in the full cycle of lithium, from mining to refining and battery production.
For this reason, it doesn't offer the exposure of other assets to metals and mining sectors, instead is an investment for niche lithium exposure. Holdings in the ETF include Tesla, Albemarle corp, Panasonic, Samsung SDI and Enersys.
JNUG, also known as Direxion Daily Junior Gold Miners Index Bull 3X Shares, aims to deliver three times the daily returns of junior gold and silver mining companies from developed and emerging markets. It seeks 300% of the performance of the MVIS Global Junior Gold Miners Index. The term junior refers to the size of the firms, which are considered to be small-cap.
This is a single-day fund, and funds should not be expected to provide three time the return of the benchmark index if positions are held for longer than one day. As a leveraged ETF, this asset carries more risk than ETFs that are not leveraged. This asset is aimed at intraday traders and is not suitable for all investors.
The NIFTY 50 Index, also known as the India 50, is a free-float market capitalisation computed index of 50 top companies trading on the National Stock Exchange of India.
The index was launched on April 22nd, 1996, with a base value of 1,000, calculated as of November 3rd, 1995.
Financial Services is the largest component of the index, with a weighting of 37.09%, while Energy and IT are the second and third largest sectors, accounting for 15.01% and 13.27% respectively. The index covers 12 sectors of the Indian economy; Financial Services, Energy, IT, Consumer Goods, Automobile, Construction, Metals, Pharma, Cement & Cement Products, Telecom, Media & Entertainment, Services, and Fertilisers & Pesticides.
India 50 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the National Stock Exchange of India. Futures rollover on the fourth Friday of each month.
The FTSE MIB Index, also known as the Italy 40, is Italy's leading benchmark index. It comprises the large cap components of the FTSE Italia All-Share Index; the 40 most-capitalised and liquid Italian shares account for around 80% of the market cap of the total domestic market.
The index was launched in the second quarter of 2009, but its base date is 31st December 1997. It has a base value of 24,401.54, peaked at 50,108.56 in March 2000 and struck a record low of 12,362.50 in July 2012.
Just over a quarter of the index is comprised of banks, with Utilities the second-largest category with a weighting of 16.51%. Oil & Gas is the third-largest sector, with a 12.67% share of the index.
A 15% weighting cap is in operation to ensure that no single component can dominate the index.
Italy 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Italian stock market. Futures rollover on the 2nd Friday of March, June, September, and December.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
Market capitalization, commonly referred to as market cap, is a measure of a company's size and is calculated by multiplying the total number of its shares outstanding by the current market price of each share. Market cap can be used to help assess how much a company is worth in the eyes of investors.
Is high market cap good?
A high market capitalization (market cap) generally indicates that a company is well-established, has a strong financial performance, and is considered to be a reliable investment by the market. High market cap companies are often considered to be blue-chip stocks and are more stable and less risky than lower market cap companies.
However, a high market cap does not guarantee that a company will perform well in the future, it just reflects the current market's perception of the company, the stock price and the number of shares outstanding. The company may still be facing internal or external challenges, and the stock may be overvalued. Therefore, it's always important to do your own research and analysis before investing in any stock regardless of its market capitalization.
What is a good market capitalization?
A good market capitalization for an investment depends on the investor's individual preferences and goals. Generally, companies with a high market capitalization are considered to be well-established and financially stable, making them a more reliable investment. However, it is important to note that high market capitalization does not always guarantee future performance.
Is it better to have a small or large market cap?
Small-cap companies tend to be more risky but have higher growth potential. Large-cap companies are considered to be more stable but have lower growth potential. At the end of the day it will all depend on the investor's preference for risk and tolerance for profit/loss.
Maintenance Margin, or “variation margin,” is considered as the minimum amount of equity (i.e., funds) which needs to be maintained in a trader’s margin account before a margin call is issued as due to the account value being below a minimum threshold and not being able to support open margin trade positions. Margin accounts are what leveraged trades use to trade, where they can purchase securities such as stocks, bonds, or options with funds borrowed from the brokerage.
How do you avoid maintenance margin?
To avoid maintenance margin issues, traders should monitor their account closely and adjust their leverage if needed. If your maintenance margin is not maintained it will result in a margin call, which may indicate that the trader should reconsider the risk exposure of their portfolio.
Why are maintenance margins important?
Maintenance margins are important to protect against losses due to fluctuations in the market. They ensure that traders maintain adequate capital reserves and can cover any potential losses.
The WIG 20 Index, or Poland 20, is a blue-chip stock market index of the 20 most actively traded and liquid companies on the Warsaw Stock Exchange. Constituents are chosen from the top 20 companies trading on the Warsaw Stock Exchange as of the third Friday of February, May, August, and November.
The ranking is based upon turnover values for the previous 12 months and a closing price from the previous five trading sessions is used to calculate free float capitalisation.
The index has been calculated since 16th April, 1994 as a base value of 1,000 points. To keep the index diverse, no more than five companies from a single sector may be included in the index at any one time. Sectors covered by the index includes Commercial Banks, Oil & Gas Exploration & Production, Insurance, Metals Mining, and more.
Poland 20 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Warsaw Stock Exchange. Futures rollover on the 2nd Friday of March, June, September, and December.
What is a margin in finance?
A margin in finance is the amount of money an investor borrows to purchase or trade securities. It is the difference between the total value of the borrowed funds and the market value of the collateral provided as security for the loan. Margin trading allows investors to buy more securities than they would otherwise be able to purchase with just their own capital.
What is margin vs profit?
Margin and profit are related but different concepts in finance and trading.
Margin refers to the amount of money or collateral that is required to open a leveraged position, such as a margin account, which allows traders to buy securities by borrowing money from a broker. Profit, on the other hand, refers to the amount of money that is gained from a trade or investment, after all costs and expenses have been subtracted. Profit is the result of a successful trade, which is the difference between the buying and selling price.
How do I calculate margin?
There are a few different ways to calculate margin, depending on the context and the type of trade or investment.
One of the most common ways to calculate margin is to use the following formula:
Margin = (Value of Trade / Leverage) x 100%
ProShares UltraShort Russell2000 (TWM) is a leveraged product that seeks to deliver twice the inverse of the daily performance of the USA2000 Index. Results aims to be 200% of the opposite to the movement of the index. This is a daily-bet, so results will vary dramatically for positions held longer than one day.
The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
UPRO, ProShares Ultra Pro S&P500, provides 3x daily exposure to the S&P 500 Index. The ETF aims to deliver daily returns that are three times that of the S&P 500 Index, which comprises US large cap equities. The S&P 500 represents some of the largest and most liquid US stocks on the market.
This is a leveraged product and, as such, carries more risk. It is an aggressive instrument, design for intraday trading, and should not be used as part of a buy-and-hold strategy.
The S&P MidCap 400 ETF (MDY) looks to replicate the performance of the S&P Midcap 400 Index. The most widely-followed mid-cap index in existence, it serves as a good barometer for the performance and directional trends of US equities. The fund provides a good representation of the market and is popular in the midcap space.
Stocks in this index cover all major sectors including technology, health care, financial industries and manufacturing, and include many household names. Holdings include Teleflex, Dominos Pizza, Lamb Weston Holdings and Atmos Energy.
SPY, also known as the SPDR S&P 500 ETF Trust, is one of the oldest and best-recognised ETFs. Unsurprisingly, given the name, it seeks to replicate the results of the S&P500 index. SPY tracks large and midcap US stocks.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
SSO, also known as ProShares Ultra S&P500, is a leveraged product that looks to deliver twice the daily performance of the S&P500. This is a single-day product so the returns over periods of more than one day will differ.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
ProShares UltraPro Russell2000 (URTY) seeks to deliver daily results that are three times daily performance of the USA2000 Index. This is an aggressive single-day bet and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% of the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
SPDR S&P ASX 50 Fund (SFY.AX) seeks to track the returns of the S&P/ASX 50 Index. The S&P/ASX 50 is an index of Australia’s large-cap equities. Traders can use it as a way to access the Australian Stock Market or gain exposure to Australian companies.
The index has a mix of sectors, and contains the 50 largest ASX listed stocks with the cut-off being a market capitalisation of around $5billion (AUD/). The portfolio accounts for 62% of Australia’s sharemarket capitalisation. Top holdings include Commonwealth Bank, BHP Billiton Limited, Woolworths Group and Telstra Corp.
ProShares UltraShort S&P500 (SDS) looks to deliver daily investment results that are twice the inverse of the daily performance of the S&P500. This is a leveraged product and designed as a single-day bet. Returns for periods longer than one day could expose investors to performance drift.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
IWM, also known as iShares USA2000 ETF which seeks to mirror the performance of the USA2000 Index. The ETF has a basket of shares that is similarly weighted to the USA2000 Index, and comprises well-diversified small-cap stocks. It has around 2,000 holdings, all small cap stocks with market capitalisation of less than $1bn.
The portfolio is made up of multiple sectors including 24.52% financials, 16.60% information technology, 16.47% health care, 14.72% consumer discretionary and 12.71% industrials. The remainder is split between materials, energy, utilities, consumer staple and telecoms. Stocks include Etsy, Hubspot and Planet Fitness Inc.
Direxion Daily Small Cap Bear 3x Shares (TZA) seeks to deliver daily results that are three times the inverse of the daily performance of the USA2000 Index. This is an aggressive single-day bet against the USA2000, and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% opposite the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
ProShares Ultra QQQ (QLD) aims to deliver daily investment results that are twice the performance of the Nasdaq 100 Index. This ETF provides leveraged exposure to a market-cap weighted index of 100 non-financial stocks listed on the NASDAQ. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. All leveraged products carry more risk than unleveraged products.
The Nasdaq 100 is dominate by tech firms, so the performance of the index is closely tied to the sector. Top holdings include Apple, Amazon, Facebook and Tesla.
ProShares UltraPro Short S&P500 (SPXU) seeks daily investment results that are 300% the inverse of the daily performance of the S&P 500. This is a single day bet for traders looking to go short on S&P500 or hedge other trades. Like any leveraged product, there is more risk involved in this ETF than in unleveraged products.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
Risk management in trading is a strategy for mitigating losses. It involves understanding and analyzing risks, taking preventive steps to protect against potential losses, and having plans in place to address unanticipated situations. Good risk management practices help traders limit their downside and stay ahead of market volatility.
How do you manage risk in trading?
Traders can practise risk management in lots of different ways. It can be done by using strategies like position sizing, stop-loss orders, diversifying investments, and hedging. Through careful planning, you can set limits on your potential losses, identify potential opportunities and adjust your strategy accordingly. With disciplined risk management, you can protect your capital while you trade.
In trading, rollover refers to the process of extending the settlement date of a trade by rolling it forward to the next available delivery date. This is typically done for futures contracts and currency trades. Rollover allows traders to maintain an open position beyond the initial settlement date without having to close and re-open the trade.
What are rollover and swap?
When rolling over a trade, a trader may also be required to pay or receive the difference in the interest rate between the two currencies involved in the trade. This is known as "swap" or "overnight financing". Rollover is typically done when traders expect market conditions to remain favorable for their position, allowing them to capture more potential profit.
The FTSE/JSE index, also known as the South Africa 40, is a market capitalisation-weighted index of the largest and most liquid 40 companies trading on the Johannesburg Stock Exchange.
The index was launched on 24th June 2002, with a base date of 21st June 2002 and a base value of 10300.31.
The largest sector in the index is Media, which accounts for 22.27% of the total index weighting. Basic Resources is the second largest, accounting for 19.9% of the total weighting, followed by Personal & Household Goods and Banks, with 12.43% and 12.35% respectively.
South Africa 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Johannesburg Stock Exchange. Contracts rollover on the second Friday of March, June, September, and December.
Ripple (XRP) is among the largest cryptocurrencies by market cap, following Bitcoin and Ethereum.
Ripple, known as XRP, is priced in USD. It saw a high of $3.20 in January 2018.
When people talk about Ripple they are not just talking about the currency, but the Ripple network which could change the way people complete currency transfers.
Unlike other crypto payment networks, Ripple allows you to make money transfers in any form - be that Ripple, Bitcoin, USD, Yen or GDP. Plus, you can receive money in a different form to how it has been sent. For example, you could be sent Bitcoin but collect your money in USD.
Payments can happen in seconds, a significant improvement on the days or weeks required for a wire transfer with a bank.
The payment network has already seen endorsements, with American Express and Santander partnering with it for cross-border payments between the US and UK.
The Swiss Market Index (SMI), also known as the Swiss 20, is a blue-chip index of the 20 largest and most-liquid companies traded on the SIX Swiss Exchange, covering around 80% of the total market capitalisation of Swiss equities. The index is weighted so that no component can exceed 20%, enabling it to be a key barometer of the Swiss stock market.
The index was launched on 30th June 1988, and has the same base date. It has a base value of 1,500 points, reached a high in January 2018 of 9,611.61, and an all-time low of 1,287.60 in January 1991.
Healthcare is the largest index sector, accounting for 37.5% of the total weighting, followed by Consumer Goods with 24%, and Financials with 21.6%. Industrials is the fourth-largest sector with 13.6%.
Swiss Market Index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the SIX Swiss Exchange. Contracts rollover on the second Friday of March, June, September, and December.
The IBEX 35, or Spain 35, is the benchmark index for the Spanish stock market and tracks the performance of the top 35 most-traded and most-liquid companies on the Bolsa de Madrid (Madrid Stock Exchange).
The index is market capitalisation-weighted and free float-adjusted. It was launched on 14th January 1992 but has a base date of 30th December 2010 and a base level of 1,000. Selection is based upon liquidity, but there is a maximum weighting limit of 40%.
Financial & Real Estate Services is the most-represented sector in the index, accounting for around 34% of the weighting. The next-largest sector is Oil & Energy, with just over 20%, followed by Technology & Telecommunications with just over 15%. Consumer Goods, Basic Materials, Industry & Construction, and Consumer Services complete the list of sectors covered in descending order of weighting.
Spain 35 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Bolsa de Madrid. Contracts rollover on the second Friday of every month.
Stock dilution is the decrease in existing shareholders' ownership of a company as a result of the issuance of new shares. It typically occurs when companies raise capital by issuing additional shares, thereby reducing the stake of existing shareholders.
Why do companies dilute stock?
Companies dilute stock to raise capital for future growth and investments, often through the sale of additional shares. This allows companies to raise money without having to take out loans or issue bonds. Diluting stock can help reduce overall debt and create a healthier financial situation for the company.
Is stock dilution a good thing?
It depends. If done properly, diluting stock can help raise funds for business operations and growth. It also encourages investors to purchase shares due to the lower price per share. However, too much dilution can weaken shareholder equity and damage investor confidence.
What does dilution do to stock price?
Dilution decreases a stock's price by decreasing its earnings per share (EPS). This happens when a company issues new shares to the public, increasing the total number of shares outstanding and resulting in lower EPS for existing shareholders. Dilution can also occur through corporate acquisitions, mergers or issuing debt that is converted into equity.
Spread Betting is a type of financial speculation which allows you to take a position on the future direction of the price of a security, such as stocks, commodities or currencies. You can choose to speculate whether an asset will go up or down in value, without having to buy or sell it. Spread Betting enables you to take a view on the markets and gain access to the financial markets with limited capital outlay.
How does a spread bet work?
A spread bet is placed by betting on whether the asset's price will rise or fall. The investor can set their own stake size, which means they can take more or less risk according to their preferences. Spread bets are flexible and convenient, allowing you to benefit from even the slightest market movements.
What does a negative spread mean?
A negative spread in trading refers to a situation where the ask price for a security is lower than the bid price. This means that a trader could potentially sell a security for a higher price than they would have to pay to buy it. This is an unusual situation that can occur due to a temporary market anomaly or a technical error. Negative spreads are rare and they tend to be corrected quickly, as they represent an opportunity for arbitrage. Traders should be cautious when dealing with negative spreads and should consult with their broker or trading platform to understand the cause of the negative spread and its potential impact on their trade.
A range refers to the difference between the highest and lowest prices a stock may reach during a specific time frame. This range gives investors an indication of how volatile a particular asset might be in terms of its price movements, as well as what opportunities they might have to make money. By analyzing historical data and keeping up-to-date with market news, investors can develop strategies to capitalize on different ranges.
How do you use ranges in trading?
Range trading is a popular trading strategy in finance, particularly for traders looking to limit their risk and profit from a given market movement. When using ranges, traders identify support and resistance levels for a security or asset, and look to take profits when prices reach either level. By using a range-trading strategy, traders can limit the amount of capital they are willing to risk per trade, as well as capitalize on both long-term and short-term movements in the market.
What is trend in trading?
A trend in trading is the general direction of a security's price over a period of time. Trend analysis helps traders make predictions about future market movements, allowing them to enter and exit positions at optimal times. Trends can be either upward or downward and often take weeks, months or even years to develop. To identify trends, technical analysis tools such as support and resistance levels, trend lines, and chart patterns are used by traders to detect buying and selling opportunities in the markets. Fundamental analysis also plays a role in recognizing potential profitable trading opportunities since underlying economic conditions may influence a security’s price.
A “Rights Issue” is when a company offers an issue of its shares at a special price by to its existing shareholders. This new and reduced price is in proportion to their existing holding of the company’s “old” shares. An after effect common to offering a Rights Issue is that the share price is further reduced due to additional dilution of the share value. A typical reason for any given company to offer a rights issue would be to raise capital.
Is a rights issue a good thing?
It depends on the specific circumstances and the reasons for the rights issue. A rights issue can provide a company with additional funding to invest in growth or to address financial difficulties. However, if a company is issuing new shares at a lower price than the current market value, existing shareholders may feel diluted and the stock price may decrease. Additionally, if the company is issuing new shares to address financial difficulties, it may be a sign of financial distress.
Does share price fall after a rights issue?
A share price may fall after a rights issue due to dilution of existing shareholders' ownership in the company, as more shares are issued, thus reducing the value of each individual share. Additionally, if the new shares are issued at a lower price than the current market value, the stock price may decrease. However, this is not always the case as the company may have a good reason for the rights issue such as investing in growth opportunities or raising funds to pay off debt, that could also boost the stock price.
Can a rights issue be sold to anyone?
A rights issue is typically offered to existing shareholders of a company, allowing them to purchase additional shares in proportion to their current holdings. However, the company may choose to offer the rights issue to a broader group of investors, such as institutional investors or the general public. The terms of the rights issue will be outlined in the prospectus and the decision of who can participate will be made by the company.
The Vanguard Value Fund (VTV) seeks to track the performance of a benchmark index that measures the investment return of large-capitalization value stocks. The Fund employs a "passive management"-- or indexing --investment approach designed to track the performance of the CRSP US Large Cap Value Index.
The Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG) holds a basket of companies that score highly for environmental, social, and governance (ESG) factors, with roughly marketlike sector exposure. The fund’s index uses MSCI’s ESG rating methodology to assign a score to all US large- and midcap stocks.
The Vanguard Total Stock Market ETF (VTI) tracks the total US market and is designed for traders looking for comprehensive, inexpensive exposures to full-market equities. It encompasses the entire market-cap spectrum and provides neutral coverage, with no sector or size bets.
This ETF looks to match the performance of the CRSP US Total Market Index. The sector breakdown is largely the same as its benchmark: Financials make up 19.70%, Tech is 19.10%, with consumer good, health care and industrials all around the 13% mark.
WisdomTree U.S. LargeCap Dividend (DLN) consists of the 300 largest companies ranked by market capitalisation from the WisdomTree Dividend Index. The Index is a fundamentally weighted index that measures the performance of large-cap dividend-paying US companies.
The top ten stock holdings account for 26.76% of the index and include Microsoft, Apple, Exxon Mobil and Verizon Communications. Four sectors (Information Technology, HealthCare, Consumer Staples and Financials) account for 56.4% of the index’s holdings. This ETF is a good option for traders looking for exposure to large cap equity from dividend-paying companies.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
US Tech 100 (NQ) is a market capitalization-weighted stock market index that includes the hundred largest non-financial domestic and international companies.
The index is constituted by sectors such as Technology, Consumer Services, Healthcare, Industrials, Consumer Goods and Telecommunications.
The US Tech 100 index contains some of the largest companies in the world, including Apple, Amazon, Microsoft, Facebook, Google parent Alphabet and Netflix.
The US Tech 100 index futures allow you to speculate on, or hedge against, changes in the price of some of the world’s biggest stocks. Contracts rollover on the second Friday of March, June, September and December.
The USA 2000 Index, also known as the USA 2000, is a small cap index of the US stock market. It represents the bottom 2,000 companies in the Russell 3,000 stock market index, accounting for around 8% of the Russell 3,000's market capitalisation.
The index was created in 1984 and was the first index of small cap stocks; it has since become the benchmark of choice, along with its variants, for around 84% of small cap assets. The index first broke 1,000 points on May 20th 2013, and hit a record high of 1,737.63 in August 2018.
USA2000 index futures allow you to speculate on, or hedge against, changes in the price of thousands of small-cap US stocks. Contracts rollover on the second Friday of March, June, September, and December.
The S&P 500 Index, also known as the USA 500, is a benchmark index of large-cap US stocks. It accounts for around 80% of the total capitalisation of the US stock market. Around $10 trillion is indexed or benchmarked to the S&P 500.
The index was created in 1957 and was the first US stock market index weighted by market capitalisation. To be eligible, companies must have a market cap greater than US$6.1 billion and have at least 50% of shares traded publicly.
Although launched on 4th March 1957, the initial value data is 3rd January 1928. The index hit a record high in August 2018 of 2,914.04, while the lowest-recorded level was 676.53 in March 2009.
The largest industry represented on the S&P 500 is Information Technology, which accounts for 26.5% of the total index weighting. Healthcare is the second-largest sector, with 14.6% of the index weighting, followed by Financials with 13.8%.
USD/CZK is the abbreviation for the US Dollar to Czech koruna exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The Czech Republic economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe. Strong data from the currency bloc therefore supports CZK.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The UK 100 is a blue-chip index of the largest 100 companies on the London Stock Exchange in terms of market capitalisation. Companies are only included if they meet relevant size and liquidity requirements.
The index was launched on 3rd January 1984, with a base date of 30th December 1983 and a base level of 1,000 points.
In terms of weighting, the three largest sectors of the UK 100 as of H2 2018 are Oil & Gas (16.56%), Banks (12.70%), and Personal & Household Goods (12.37%).
Traditionally the index has lagged its peers, such as the larger FTSE 250 and the US S&P 500. The index fluctuates in response to market risk sentiment and the strength of the pound Sterling. The UK 100 contains many international companies who report their earnings in other currencies, so a stronger pound weakens company profits.
Because of this, the UK 100 is also considered to be an unreliable indicator of the health of the UK economy because of its large international component.
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