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.
The definition of Assets in trading is as resources which provide an economic value. Assets include but are not limited to cash, property, rights, as well as resources that have the potential of generating. Assets are what businesses require and use to operate. Assets are considered as one of the three fundamentals of any financial calculation, together with liabilities and equity.
Trading Assets Definition
There are several ways of defining and classifying assets:
• Convertible – Liquidity based, as in how fast they can be converted into cash.
• Current Assets – Liquid assets that are expected to be converted to cash within a year.
• Fixed Assets – Cannot be easily and readily converted into cash.
• Physical Existence – Tangible or intangible assets defined by their material presence.
• Tangible Assets – Having physical substance, such as hardware, cash, & inventory.
• Intangible Assets – Resources without physical substance patents, licenses, & copyrights.
• Operating Assets – Necessary to the ongoing operation of a business.
• Non-Operating Assets – Non-functional such as idle equipment & vacant land.
Founded in 2014, NEO is a non-profit, open source blockchain and crypto project. It supports its own cryptocurrency, enabling development of digital assets and smart contracts. Trade the NEO/USD instrument using the latest spot rate.
The Fund seeks to track the investment results of the MSCI Brazil 25/50 Index (EWZ) composed of Brazilian equities. The Fund invests, under normal circumstances, at least 95% of its assets in the securities of its Underlying Index and in depositary receipts representing securities in its Underlying Index.
0x Token (ZRX) jusers can create markets for crypto assets representing any form of value – these could include markets for tokens representing physical real estate, to tokens representing shares of stocks and bonds, to tokens representing other crypto assets. It is priced in USD and tradebale via our platform using the ZRX/USD symbol.
Synthetix (SNX) is a decentralized protocol that lets users gain exposure to assets like other cryptos, gold, and stocks, without actually holding the underlying resource. These synthetic assets are backed by the platform's cryptocurrency, Synthetix Network Token (SNX), which is staked as collateral in order to generate rewards. It is priced in USD and can be traded using the SNX/USD symbol.
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.
The ARK Space Exploration & Innovation ETF's (ARKX) investment objective is long-term growth of capital. ARKX is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation. The Adviser defines “Space Exploration” as leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth.
The WisdomTree Emerging Markets High Dividend ETF (DEM) tracks the WisdomTree Emerging Markets Dividend Index. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index. This provides it with some downside protection from market volatility.
DEM is an equity fund, and has a mix of market sectors. It includes stocks from key emerging markets such as Russia and China, with assets including China Contruction Bank, China Mobile and Norilsk Nickel.
AAVE is a decentralised lending system, letting users lend, borrow, and earn interest on crypto assets. It uses the Ethereum blockchain and works via a system of smart contracts that enables these assets to be managed by a distributed network of computers running its software. AAVE users don’t need to trust a particular person or institute to manage their assets. They only need to know the code will execute as written. AAVE is priced in USD and tradeable on our platform via the AAVE/USD symbol.
Equity is the value of a trader's account, representing the total assets minus any margin used to open trades. It reflects their financial position and potential financial outcomes from any trading activities as they currently stand. Traders can use equity to decide when to enter or exit positions and what size positions to take.
What is difference equity and stock?
For traders, stock and equity are synonymous terms as stocks represent equity ownership in a company. Assets, liabilities, and shareholders' equity are items found on the balance sheet.
What is difference between equity and account balance?
Equity is the total account balance including profits/losses from open positions, whereas the account balance is simply the total money deposited in an account before any trades have been made.
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 US Dollar to South African rand exchange rate is identified by the abbreviation USD/ZAR. 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 rand is the 20th most active currency, accounting for 1% of average daily turnover. Around $40 billion worth of USD/ZAR is traded each day.
USD/ZAR appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower-yielding, lower risk, assets. The South African rand is a highly-volatile currency thanks to the country's unstable economy, high levels of government debt, poor credit rating, and the political ramifications of apartheid.
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. It is the most popular reserve currency.
A quoted price is the most recent price at which an asset was traded at. Global and local events, either of a financial nature or completely unrelated to finances continually affect the quoted prices of assets such as stocks, bonds, commodities, and derivatives changes continually throughout a trading. Additionally, It is often the price point where buyers and sellers agree on, the most up-to-date agreement between buyers and sellers, or the bid and ask prices. It is also where supply meets demand.
Is a quoted price legally binding?
In most cases, when trading in an exchange, the quoted price is binding and the trade is executed at the quoted price, with the exchange acting as a counterparty to the trade. However, when trading OTC (over-the-counter), the quoted price is not necessarily binding as the parties have more flexibility in negotiating the final price, and the counterparty risk is higher.
The US Dollar to Hungarian forint exchange rate is an exotic currency pair known by the abbreviation USD/HUF. 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 forint is the 26th most-active currency, accounting for just 0.3% of daily transactions.
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.
As an emerging market currency, the forint is popular in times of confidence and is sold in favour of safer, lower-yielding assets when volatility increases.
Compared to its emerging market peers, Hungary has a small level of foreign currency debt, providing some insulation for the economy and its currency against external disruption. Hungary enjoys a strong economy, with low payroll and corporate taxes and growth that outpaces the EU average.
The US Dollar to Romanian leu exchange rate is identified by the abbreviation USD/RON. 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 Romanian leu the 34th most-active currency, accounting for just 0.1% of average daily turnover.
Romania is an emerging market economy and is one of Europe's poorest nations. The country wanted to adopt the euro, but has so far failed to meet the criteria. USD/RON appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower-yielding, lower risk, currencies.
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. It is the most popular reserve currency, meaning central banks stockpile dollars to use in times of domestic currency weakness.
The US Dollar to Swedish Krona exchange rate is identified by the abbreviation USD/SEK. 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 Swedish Krona is the 9th most-traded currency, accounting for 2.2% of daily transactions. US$112 billion worth of SEK is traded daily.
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 Swedish krona shares a strong correlation with its Scandinavian peers the Norwegian krone and the Danish krone. These currencies - which all translate as “crown” - came about in 1873 when Sweden and Denmark formed the Scandinavian Monetary Union, backed by the gold standard. Norway joined two years later. When the union was dissolved after World War Two, the countries independently kept the currency.
The US Dollar to Singapore dollar exchange rate is identified by the abbreviation USD/SGD. 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 Singapore dollar accounts for 1.8% of all daily forex transactions, making it the 12th most-traded currency on the globe.
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 Singapore dollar has been allowed to float free by the Monetary Authority of Singapore (MAS) since 1985, but the range in which it is permitted to trade has never been disclosed. SGD has a weak correlation with the Chinese yuan. This, combined with a solid financial sector and property market, has made Singapore an attractive place for offshore investors, helping to keep the appeal of the local currency elevated.
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 US Dollar to Mexican peso exchange rate is identified by the abbreviation USD/MXN. 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 Mexican peso is the 11th most-traded currency, accounting for 1.9% of daily transactions.
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. It is the most popular reserve currency
MXN is tied to the price of crude oil because of Mexico's high reserves, which the government uses as collateral when borrowing to fund spending. 10% of Mexico's GDP comes from oil production, so when prices fall it not only pushes up borrowing costs, but also weakens the outlook for growth.
Cross-border trade with the US also generates strong demand for pesos. The currency therefore weakens when trade comes under threat.
EUR/HUF is the abbreviation for the euro to Hungarian forint 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 forint is the 26th most-active currency, accounting for just 0.3% of daily transactions. US$5 billion worth of EUR/HUF is traded each day.
The euro is the currency of the 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.
EUR/HUF strengthens in times of market uncertainty. As an emerging market currency, the forint is popular in times of confidence but is sold in favour of safer, lower-yielding assets when volatility increases.
Compared to its emerging market peers, Hungary has a small level of foreign currency debt, providing some insulation for the economy and its currency against external disruption.
The US Dollar to Polish zloty exchange rate is identified by the abbreviation USD/PLN. 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 Polish zloty the 22nd most active currency, accounting for 0.7% of average daily turnover. Approximately $19 billion worth of USD/PLN is traded each day.
Poland is an emerging market economy, favoured by investors in times of market certainty because of its higher yielding assets.
The zloty reflects the strength or weakness of the Eurozone economy due to the strong trading relationship between Poland and the Eurozone, as well as the fact that Poland could eventually become a member of the bloc. Positive Eurozone data can therefore support the zloty.
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. It is the most popular reserve currency.
The US Dollar to Turkish lira exchange rate is identified by the abbreviation USD/TRY. 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 lira is the 16th most active currency, accounting for 1.4% of average daily turnover.
Turkey is an emerging market and relies heavily upon the EU for both imports and exports; weakness in the Eurozone economy is therefore a bad sign for Turkey as well. USD/TRY appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower risk currencies.
The Turkish economy is largely fuelled by foreign currency loans, a strong USD can prompt further lira selling on fear of higher credit costs for Turkey's corporations.
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 Swiss franc to Japanese yen exchange rate has the acronym CHF/JPY. The Swiss franc is the 7th most traded currency on global markets, accounting for 4.8% of daily turnover. The Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades.
Both the Swiss franc and the Japanese yen are safe-haven assets, so the pairing is less susceptible to the influence of market uncertainty as pairings that trade a high-yield asset against a safe-haven. However, markets prefer the Japanese yen to the Swiss franc in times of uncertainty; the pair hit a low of ¥74.65 in 2008 during the financial crisis.
Since then the franc has gained much ground thanks to the Bank of Japan's ultra-loose monetary stimulus package.
The Swiss franc is closely correlated to the euro, meaning that it has an inverse correlation by proxy to the US Dollar. The Japanese yen is sensitive to commodity price movements as Japan lacks many of the natural resources used to fuel industry.
The Swiss franc to Polish zloty exchange rate has the abbreviation CHF/PLN, and is classed as an exotic currency pair. The franc is the 7th most active currency in the FX market, accounting for nearly 5% of average daily turnover. The Zloty the 22nd most active currency, accounting for 0.7% of average daily turnover.
The CHF/PLN pair is likely to strengthen in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. Poland is an emerging market economy; it's assets are higher-yielding, but also more volatile.
The Swiss franc is strongly-correlated to euro strength; the franc was pegged to the euro until January 2014, when the SNB shocked markets by allowing the currency to float free. However, the zloty also reflects the strength or weakness of the Eurozone economy due to the strong trading relationship between Poland and the Eurozone, as well as the fact that Poland could eventually become a member of the currency bloc.
USD/NOK is the symbol for the US Dollar to Norwegian krone 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 krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US48 billion worth of USD/NOK - 0.9% of the total daily volume - is traded each day.
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 Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. USD/NOK therefore benefits doubly in times of low risk-appetite.
The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK.
The euro to Polish zloty exchange rate has the abbreviation EUR/PLN, and is classed as an exotic currency pair. 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 Polish Zloty is the 22nd most active currency, accounting for 0.7% of average daily turnover. US$13 billion worth of EUR/PLN is traded each day.
The euro is the currency of the Eurozone, which is overseen by the ECB. The euro has an inverse correlation with the US Dollar.
EUR/PLN strengthens in times of market uncertainty. Poland is an emerging market economy; it's assets are higher-yielding, but also more volatile.
The zloty also reflects the strength or weakness of the Eurozone economy due to the strong trading relationship between Poland and the Eurozone, as well as the fact that Poland could eventually become a member of the currency bloc. This can soften the upside impact of positive Eurozone data upon the EUR/PLN pairing.
USD/DKK is the symbol for the US Dollar to Denmark krone 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 Denmark krone is the 21st most-traded currency in the world and is involved in 0.8% of all forex transactions each day. On average US$42 billion worth of krone is exchanged each day.
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 Danish krone is pegged to the euro through the European Exchange Rate Mechanism, also known as ERM 2. The central fixed rate is 746.038 krone per €100 but, unlike the standard +/- 15% fluctuation permitted under ERM 2, the Krone is limited to a fluctuation of just +/- 2.25%. Because it is pegged to the euro, the krone is also highly-vulnerable to USD strength - even when traded against other currencies.
The US Dollar to Brazilian real exchange rate is known by the acronym USD/BRL. 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 Brazilian real is the 19th most actively traded currency, accounting for 1% of all average daily turnover. US $45 billion worth of over-the-counter USD/BRL trades are made every day.
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 real was adopted in July 1994 and was pegged against the US Dollar until 1999. The USD/BRL exchange rate is a popular one with carry traders; those who borrow dollars, convert them into real and then use the proceeds to buy debt issued in Brazil, where interest rates are significantly higher than in the United States. Times of market uncertainty can deter carry traders, as high USD/BRL volatility can weaken profits made from exploiting the interest rate differential.
An Order in trading is a request sent by a trader to a broker or trading platform to make a trade on a financial instrument such as shares, Crypto, CFDs, currency pairs and assets. This can be done on a trading venue such as a stock market, bond market, commodity market, financial derivative market, or cryptocurrency exchange
What are the most common types of orders?
Common types of orders are:
• Market Orders. A market order is given by traders and investors as an order to immediately buy or sell an asset, security, or share. Such an order guarantees that the order will be executed, yet the actual execution price is not guaranteed.
• Limit Orders. A limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders.
• Stop Orders. Stop orders instruct brokers to execute a trade when the asset’s price reaches a certain level.
Amortization is the process of charging the cost of an asset to expense over a specific timeframe. Amortization also defines the practice of spreading the repayment of a loan. This shifts the asset from the balance sheet to the income statement.
Amortization reflects the consumption of an intangible asset over what is considered a useful timeframe. It is used for the gradual write-down of the cost of those intangible assets that have a specific useful life. It is common to charge interest which is calculated based on the duration and other variables.
Amortization should not be confused with Depreciation. The difference between them is that amortization is about charging “Intangible Assets” to expense over time. While depreciation is about charging “Tangible Assets” to expense over time.
How to calculate amortization?
As we do not provide economic or trading advice we can only include here what is considered to be a generally agreed upon explanation. As stated, generally an Amortization can be calculated by using a straight-line formula such as: (book value - residual value) / useful life.
Financial Derivatives are financial products that derive their value from the price of an underlying asset. These derivatives are often used by traders as a device to speculate on the future price movements of an asset, whether that be up or down, without having to buy the asset itself.
What are the four financial derivatives?
The four most common types of financial derivatives are futures contracts, options contracts, swaps and forward contracts.
What are the advantages of financial derivatives?
Financial derivatives can provide several benefits such as hedging, leveraging and portfolio diversification. These financial instruments help in managing risk by protecting investors from price volatility, enable high leverage to increase profits and also allow for better portfolio diversification through a wider range of investments.
Financial Derivatives examples
The most common underlying assets for derivatives are:
• Stocks
• Bonds
• Commodities
• Currencies
• Interest Rates
• Market Indexes (Indices)
Note: In CFD Trading traders get access to all the above Financial Derivatives as well as additional ones more suitable for trading CFDs. As such, CFDs enable traders to buy a prediction on a stock (up or down) without owning the stock itself.
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 Spreads in trading is defined as the gap between the highest price to be paid for any given asset, to the lowest price the current asset holder is willing to sell at. Different markets and assets generate different spreads. For example, the Forex market, where both buyers and sellers are very active with this “gap” or spread will be small.
In trading, a spread is one of the key costs of online trading. Generally, the tighter the spread, the better value traders get from their trades. Also, spreads are implied costs, where it is presented to traders in subsequent trades, as the assets traders buy on leverage must increase above the level of the Spread, rather than the above the initial price, for traders to make profit.
What is the importance of a Spread?
The Spread is important, even a crucial piece of information to be aware of when analysing trading costs. An instrument’s spread is a variable number that directly affects the value of the trade. Several factors influence the spread in trading:
• Liquidity. How easily an asset can be bought or sold.
• Volume. Quantity of any given asset that is traded daily.
• Volatility. How much the market price changes in a given period.
Exchange Traded Funds (ETFs) are a type of security that tracks a basket of underlying assets, like stocks, bonds, or commodities. They can provide diversification and lower costs compared to other investment types. ETFs are traded on stock exchanges and offer more liquidity than traditional investments.
How do ETFs work?
In trading, Exchange-Traded Funds or ETFs, combine the features of funds and equities into one instrument. Like other investment funds, they group together various assets, such as stocks or commodities. This helps the ETF track the value of its underlying market as closely as possible.
ETFs can be useful in diversifying trading portfolios, or for active trader, they can be used to make use of price movements. ETFs are traded on an exchange like shares or stocks, traders can also take "short" or "long" positions. CFD trading on ETFs enables traders to sell or buy an ETF they don't actually own to make use of price movements, and not a lot of money is needed to start trading in ETFs.
How much money do you need to start trading ETFs?
The minimum amount you need to start trading ETFs depends on the brokerage you are using, the minimum amount to deposit for markets.com is the equivalent of 100 in the following currencies: USD, EUR and GBP.
Liquidity refers to how easily or quickly an asset can be bought or sold in a secondary market. Liquid investments can be sold readily and without paying considerable fees. This enables their holders to trade them for cash when needed.
What are the three types of liquidity?
Traders and business owners use three types of liquidity ratio to assess an enterprise. Quick ratio, cash ratio and current ratio. These different measures of liquidity are often used in tandem, but each have their own merits and applications independently.
What happens when liquidity is low?
Stocks with low liquidity are more difficult to sell. Traders may take a bigger loss if they cannot sell the shares when they want to. Liquidity risk is the risk that traders won’t find a market for their assets. This may prevent them from entering or exiting at the desired moment.
What is a good liquidity for a stock?
A stock is considered to have good liquidity when it can be easily bought or sold without significantly affecting the stock's price. This means that there are a large number of buyers and sellers actively trading the stock, and the bid-ask spread (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept) is small.
Day trading is the practice of buying and selling financial securities, such as stocks or futures, with the aim of making short-term profits within a single day's trading session. It requires a good understanding of markets and an ability to take advantage of opportunities in the right timing. Professional day traders are typically very experienced and have a deep understanding of the markets, products, strategies, and the risks.
How does day trading work?
Day Trading works in the same way any other trading process, yet at times the intervals between positions are short to very short. Day traders buy and sell batches of various assets within the same day, or even within very short periods within that day. It can be said that the process is based on exploiting the inevitable up-and-down price movements which occur during a trading session.
How do I start day trading?
To start day trading, you need to have an account with a broker like markets.com, basic knowledge of the stock market and financial markets, and the ability to access the markets online or via an app. You should also educate yourself on risk management strategies, study different investment styles, and use technical analysis when deciding what stocks to buy and sell. Finally, make sure to set realistic goals and keep records of your trades.
Arbitrage is trading that makes use of small differences in price between identical assets in two or more markets. An asset will most likely be sold in different markets, forms or via a different financial products.
Arbitrage is one alternative trading strategy that can prove exceptionally profitable when leveraged by sophisticated traders. It also carries risks which need to be considered prior and during an arbitrage.
Arbitrage as a trading strategy is when an asset is simultaneously bought and sold in different markets, thus taking advantage of a price difference, and generating a potential profit. Arbitrage is commonly leveraged by hedge funds and other sophisticated investors.
What is an example of arbitrage?
Without going into actual trading advice, here are several examples of Arbitrage in Trading:
• Exchange rates
• Offshore operations
• Cryptocurrency
And perhaps the most obvious and common form of arbitrage which is acting as a go between or affiliate, earning commission on price differences between the seller and the buyer.
Types of arbitrage traders use:
• Pure arbitrage - Traders simultaneously buying and selling assets in different markets to take advantage of a price differences.
• Merger arbitrage – When two publicly traded companies merge. If the target is a publicly traded company, the acquiring company must purchase its outstanding shares Convertible arbitrage.
• Convertible Arbitrage. It is related to convertible bonds, also called convertible notes or convertible debt.
A CFD is a derivative financial instrument based on the price movements of an underlying asset. CFDs enable traders to trade shares, Forex, indices, bonds, or commodities without actually owning the assets being traded.
A CFD (Contract for Difference) is made between two parties, typically described as "buyer" and "seller", stating that the buyer will pay the seller the difference between the current value of an asset and its value when the contract was initially made. If the closing trade price is higher than the opening price, then the seller (the broker) will pay the buyer (the trader) the difference, and that will be the buyer’s profit. The opposite is also true. That is, if the current asset price is lower at the exit price than the value at the contract’s opening, then the seller, rather than the buyer, will benefit from the difference.
What is the difference between CFD trading and share trading?
While both “regular stock trading” and CFD Share trading are executed via trading platforms and applications, there are key differences between them. As indicated above, the main difference between stock share and CFD trading is that when you trade a CFD you are speculating on an asset’s price without actually owning the underlying asset. While regular stock trading requires the parties to have ownership of the underlying stocks.
The risk/reward ratio is a known concept for those engaging in business. So, what is a Risk/Reward Ratio in trading, and does it follow the same guidelines and practices of the business world?
In trading, the Risk/Reward Ratio measures the expected gains of a given trade, asset, or position against the risk of potential loss. It is typically shown as a figure for the assessed risk separated by a ':' from the figure for the prospective reward.
What is a good Risk/Reward Ratio?
Acceptable ratios can vary, based on multiple factors. You can calculate this by dividing your "reward" (the end result or net profit) by the price of your maximum risk. It is generally accepted that if a risk is equal or greater than the corresponding reward, the trade position will not be worth the risk. Equally generally acceptable is the notion that a ratio greater than 1:3 is minimally required in order to justify the risk, i.e. a good risk/reward ratio.
By definition, this ratio quantifies the relationship between the potential currency lost, if the trade or action taken do fail, versus realized sum (gained) if all goes as planned.
Traders make use of the Risk/Reward Ratio to as one of the means to determine viability or worthiness of a given investment. One way to limit risk is to issue stop-loss orders, which trigger automatic sales of stock or other assets when they hit a specific value. This enables traders to limit potential risks.
Short selling is a trading strategy where an investor borrows shares of a stock or security they believe will decrease in value, and then sells it on the market. If the price of the stock or security falls as expected, the investor can then buy the shares back at the lower price, return the borrowed shares, and keep the difference as profit. Short selling is considered a high-risk strategy because theoretically there is no limit to how high the price of a stock can go, so the potential loss is theoretically infinite.
What is the benefit of short selling?
The benefit of short selling is that it allows investors to benefit from a decline in the value of a security. While traditional investors can only benefit when the prices of the assets they hold increase, short sellers can do well when the prices decrease as well. This allows investors to potentially profit in both rising and falling markets. Additionally, short selling can also be used as a hedging tool, to offset the risk of long positions in a portfolio.
Is Short Selling a good idea?
Short selling can be a good idea for some investors, but it is considered a high-risk strategy and is not suitable for all investors. It requires a great deal of knowledge and experience to correctly identify the securities that are likely to decrease in value and to correctly time the trade. Additionally,because the potential losses from short selling can be theoretically infinite as explained above it is important for investors to fully understand the risks and potential rewards associated with short selling before engaging in this strategy.
An Acquisition is a business transaction where one company buys all, or part, of another company's shares or assets. This can be done in an attempt to gain control of, and expand on, the target company's market while also gaining or at least conserving resources.
There are three main forms of “pairing business together”:
As part of the Acquisition process, the acquiring company purchases the target business's shares or assets, which gives it the authority to make use of the target’s assets as if they are its own.
Why do companies make acquisitions?
Companies make acquisitions as there are several benefits to doing so, including lower entry barriers, growth and market influence. There are also some challenges and difficulties associated with this process. These include conflicts of cultures, redundancy, contradicting objectives and unmatched businesses.
What are the four types of acquisitions?
There are four types of acquisitions that companies perform.
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.
BitcoinSV uses original Bitcoin protocol, as laid out by inventor Satoshi Nakamoto’s 2008 whitepaper. Thus, BitcoinSV should be stable, and enjoy high scalability. It is priced in USD and the instrument is tradeable using the BSV/USD spot rate.
The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks US consumer discretionary companies within the S&P 500. This asset uses the Consumer Discretionary Select Sector Index as its tracking benchmark. The top ten holdings account for 66.2% of the fund’s portfolio.
The index comprises just 66 holdings from the consumer sector and includes many household names. Top holdings include Amazon, Home Depot, McDonalds and Nike.
ProShares Ultra Bloomberg Crude Oil ETF (UCO) is a leveraged asset that seeks to deliver twice the daily investment results of the Bloomberg WTI Crude Oil Subindex. This is a single-day bet and is not suitable for buy-and-hold investors. Results can vary significantly if held for periods longer than one day. This is a leveraged ETF so traders take on more risk than with an unleveraged product.
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.
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.
Consumer Staples Select Sector SPDR Fund (XLP) tracks US consumer staples companies within the S&P 500. This asset uses the Consumer Staples Select Sector Index as its tracking benchmark. The fund provides strong and representative exposure to consumer staples and the companies are large-cap in the main.
The index comprises just 34 holdings from the consumer sector and includes many household names. Top holdings include Procter and Gamble, Coca-Cola, PepsiCo and Walmart.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
Materials Select Sector SPDR Fund (XLB) tracks US basic materials companies within the S&P 500. This asset uses the Materials Select Sector Index as its tracking benchmark. The limited spread and niche sector mean that it is heavily concentrated. Just a few holdings make up a big part of the portfolio, and there are only 24 holdings in total.
Top holdings for the benchmark index include DowDuPont Inc, Linde Plc, Ecolab Inc and The Sherwin-Williams Co.
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.
Technology Select Sector SPDR Fund (XLK) tracks US tech companies within the S&P 500. This asset uses the Technology Select Sector Index as its tracking benchmark. As the tech firms in the index are just drawn from the S&P 500, there are some odd inclusions such as financial payment processors and telecoms companies.
The index comprises just 69 holdings from the tech sector, with two accounting for more than a third of the index – Microsoft Corp and Apple Inc. Other holdings include Visa, Intel and Cisco.
A commodity is a raw material asset such as oil, gas, gold, or wheat. Commodities can be categorised into either hard commodities or soft commodities.
What are Soft Commodities?
Soft commodities typically refer to raw materials that are grown rather than mined such as coffee beans or sugar.
What Are Hard Commodities?
Whereas hard commodities must be extracted such as natural gas or crude oil.
A commodity is often exchangeable for other commodities of the same type and can be purchased through either the spot market using cash, or through derivatives like futures.
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.
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.
A basis point (abbreviated as BP, bps or “bips”) measures changes in the interest rate of a financial instrument. It is also used describe the percentage change in the value of financial instruments or the rate change of an index. They are less ambiguous than percentages as they represent an absolute, set figure instead of a ratio.
Why do we use Basis Points?
In the bond market, a basis point is used to refer to the yield that a bond pays to the investor. They are also used when referring to the cost of mutual funds and exchange-traded funds.
SLV, also known as iShares Silver Trust, tracks the price of silver bullion held in London. This ETF provides investors with direct exposure to silver as the ETF physically holds the precious metal in vaults in London. This fund is one of the most liquid of its peer group and is popular among retail and institutional investors.
This ETF is suitable for buy and hold strategies. Traders should consider this asset to gain exposure to the day to day price of silver bullion, to get access to physical silver or to diversify your portfolio and protect against inflation.
A Reversal is when the direction of a financial market or asset moves in the opposite direction from its current trend. Reversals can occur over a period of time and can be either bullish (price increasing) or bearish (price decreasing). Being aware of these trends can help traders maximize their profits.
What is an example of reversal?
If the stock market has been rising for several weeks and then begins to fall, that's considered a reversal. Reversals are an important concept for investors to understand as they can indicate a change in sentiment that could lead to further movement in the same direction.
Hedging, or to hedge, in the trading domain is defined as traders reducing their exposure to risk. Hedging is done by taking an offsetting position in an asset or investment that reduces the price risk of an existing position.
Why is it called hedging?
"Hedge your bets" is a term which originated in the 1600s and means to decrease or limit one's risk. The origin of the phrase is thought to be derived from the action of literally fencing off an area with hedges
How does hedging work?
Hedging involves taking offsetting positions in different markets, such as futures contracts or derivatives to diversify risk if one instrument falls.
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 Bank of England is the central bank of the U.K. Its mandate is to support the economic policies of the government, being independent in maintaining price stability. The Bank of England is authorized to issue banknotes in the United Kingdom, with a monopoly on the issue of banknotes in England and Wales. It also regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland. The Bank's Monetary Policy Committee has the responsibility of managing monetary policy.
What services does the Bank of England provide?
In addition to issuing bank notes, the Bank of England’s provides the following services:
• Monitoring banks and the financial system
• Setting interest rates
• Maintaining the UK’s gold repository
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.
A bid is the highest price that a trader will pay to buy a stock or any other asset. On the other hand, the seller has a limit as to the lowest price he will accept, which is called an “ask”. The difference between the buyer’s bid and the seller’s ask is a spread. The smaller the spread, the greater the liquidity of the any asset.
What is difference between bid and offer in trading?
There are several differences between a bid and an offer in trading. One important key differentiator is that a bid describes how buyers are willing to want to buy for a lower price than what the seller indicated. While an offer represents the higher price initially requested by the seller.
SPDR Gold Shares (GLD) is an investment fund incorporated in the USA. The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trust's expenses. The Trust holds gold and is expected from time to time to issue Baskets in exchange for deposits of gold and to distribute gold in connection with redemptions of Baskets.
The first US traded gold ETF and the first US-listed ETF backed by a physical asset
For many investors, the costs associated with buying GLD shares in the secondary market and the payment of the Trust's ongoing expenses may be lower than the costs associated with buying, storing and insuring physical gold in a traditional allocated gold bullion account.
Volatility is the amount of uncertainty or risk associated with the size of changes in a security's value. It is measured by calculating the standard deviation of returns over a given period. High volatility means the price of an asset can change dramatically over a short time period in either direction. Traders often take advantage of volatility by speculating on stocks, options, and other financial instruments.
What causes market volatility?
Market volatility can be caused by a variety of factors including economic data releases, political events, changes in interest rates, and unexpected news or events. It can also be caused by changes in investor sentiment, speculation and market manipulation.
How do you know if a market is volatile?
A market is considered volatile if prices change rapidly, unpredictably, and significantly. This can be measured using volatility indices or by analyzing price movements and fluctuations over time.
Non-farm payrolls are a monthly statistic representing how many people are employed in the US, in manufacturing, construction and goods companies. These statistical reports also known as non-farms, or NFP. The name is derived from jobs that aren’t included in these statistics, which are : agricultural workers and those employed by private households or non-profit organizations. The NFP report data is generally released on the 1st Friday of any calendar month and has the potential to significantly impact multiple markets, including on a global level.
The NFP report is comprised of the following three segments:
• The numbers: jobs created or lost.
• Unemployment rate.
• Average Hourly Earnings. Reflecting the changes in wages enterprises pay for labour.
NFPs are very important to Forex traders as they follow it to see how the USD currency pairs react. Gold is also a popular asset to trade on NFP results.
A spot price is the current market value of an asset or security. It's the amount you would pay to buy or sell it at that exact moment in time. Spot prices are constantly changing, as they depend on supply and demand forces in the marketplace. Spot prices provide important insights into market trends and can be used by traders to make investment decisions.
Why is it called a spot price?
It is called a "spot" price because it refers to the price at which an asset can be bought or sold "on the spot" or immediately.
How is spot price calculated?
The spot price of a commodity, security, or currency is typically determined by supply and demand factors in the market. The price is influenced by a variety of factors such as production costs, political and economic conditions, and speculation.
Bollinger Bands® are a helpful technical analysis tool. They assist traders to identify short-term price movements and potential entry and exit points.
A Bollinger Band typically consists of a moving average band (the middle band), as well as an upper and lower band which are set above and below the moving average. This represents the volatility of reviewed asset. When comparing a share’s position relative to these bands, traders may be able to determine if that share’s price is low or high. Bollinger bands are good indicators and are good for day trading.
Additionally, the width of this band can serve as an indicator of the share’s volatility. Narrower bands indicate less volatility while wider ones indicate higher volatility. A Bollinger Band typically uses a 20-period moving average. These “periods” can represent any timeframe from 5 minutes per frame to hours or even days.
In Forex, an Ask is the price at which it is possible to buy the base currency of the selected currency pair. In trading, Ask Price or Offer Price are the lowest price at which a seller will sell their stock.
Ask is used in conjunction with Bid price, which is what the buyer is offering and is by definition lower than the price the selling is asking for. The difference between the buyer’s bid and a seller’s ask is called a “Spread”.
What Is the Bid Ask Spread?
Financial instruments have 2 key public prices: a bid and an ask. When traders wish to buy (a Buy Position), they effectively pay the Ask price. When traders open a sell position, then they are offered the bid price by potential buyers. For obvious reasons, the bid price tends to be lower than the ask price. This price differential is the bid ask spread.
The US Dollar to Indian rupee exchange rate is an exotic currency pair known by the abbreviation USD/INR. 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 rupee is the 18th most-active currency, accounting for 1.1% of daily transactions.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. As an emerging market currency, the rupee is popular in times of confidence and is sold when volatility increases. As a result of rising global trade tensions, INR weakened to record lows in the second half of 2018.
India is a net oil importer, so rising crude prices increase import costs, widening the current account deficit. Foreign direct investment (FDI) is key for the Indian economy, which benefits from overseas businesses looking to take advantage of the tax exemptions and lower labour costs.
The euro to Romanian leu exchange rate has the abbreviation EUR/RON, and is classed as an exotic currency pair. 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 Romanian leu the 34th most-active currency, accounting for just 0.1% of average daily turnover.
The euro is the currency of the 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.
While not a safe-haven asset, the euro is considered more stable than the Romanian leu, meaning that the EUR/RON strengthens in times of market uncertainty. Romania is an emerging market economy and is one of Europe's poorest nations. The country wanted to adopt the euro, but has so far failed to meet the criteria.
In trading, “Volume of Trade” (Volume) refers to the total quantity of shares or contracts traded for a specific security, share or even to the market as a whole. Volume of trade can be measured through any type of asset traded during a specific duration, usually a trading day.
How is trade volume calculated?
Trade volume is calculated by adding together the number of shares or contracts traded during a specified time period.
What is a good volume to trade?
A good trade volume for a security varies and can depend on factors such as the type of security, market conditions, and overall liquidity. Generally, higher trade volume indicates greater liquidity, which can make it easier to buy and sell the security.
What does it mean when trade volume is high?
High trade volume means there is a high number of shares or contracts being bought and sold in a security or market, indicating high levels of interest and liquidity.
Working orders, also known as pending orders, include Stop orders and Limit orders. Essentially, they’re instructions for a broker to perform a trade when an asset hits a certain price. These orders inform brokers that traders wish to make that trade only if something happens to the asset price.
What is the best order type when buying stock?
The best order type depends on the individual's specific needs and market conditions. It's important to understand the trade-off between speed and price certainty when choosing an order type. Market orders provide immediate execution but at the current market price, while limit orders offer price certainty but may not be executed if the desired price is not reached.
What is an open work order?
An open work order in trading is an outstanding order to buy or sell a security that has not yet been executed. It remains open until it is either filled or cancelled by the trader.
NZD/CHF is the abbreviation for the New Zealand dollar to Swiss franc exchange rate. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/CHF rate lower. When dairy prices rise, the opposite happens.
The Swiss franc is strongly-correlated to euro strength; the franc was pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The NZD/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector.
The Australian dollar to Japanese yen exchange rate goes by the abbreviation AUD/JPY. The Australian dollar is often known as the “Aussie”, and is the 5th most-traded currency in the world, being involved in 6.9% of all daily forex trades. The Japanese yen is the 3rd most-traded currency, accounting for 22% of all daily trades.
The Australian dollar is a commodity-correlated currency and is sensitive to price changes in iron ore, of which Australia is the world's largest exporter. The Japanese yen is a safe-haven asset, and is popular in times of uncertainty. Falling risk appetite undermines the AUD/JPY pairing, while market confidence pushes it higher.
A key driver of AUD/JPY volatility is the interest rate differential between the two nations. Like other central banks, the Reserve Bank of Australia cut interest rates in response to the 2008 financial crisis, but Australia's strong economy limited the need for easing. In contrast, the Bank of Japan still maintains ultra-loose stimulus.
EUR/AUD is the abbreviation for the euro to Australian dollar exchange rate. The pairing accounts for 0.3% of the average daily forex trading volume across the globe, which equates to US$16 billion.
The euro is the currency of the 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. However, the impact of this upon the euro is lessened when trading against the Australian dollar, because the “Aussie” also moves inversely to the US Dollar.
While not a safe-haven asset, the euro is considered more stable than the Australian dollar, meaning that the EUR/AUD/ pairing often strengthens in times of market pessimism, and weakens when risk-demand is elevated.
The Australian economy is highly-reliant upon exports of iron ore, for which Australia accounts for over 50% of the global supply. Changes in the market price can have a strong effect upon EUR/AUD.
The euro to Swiss franc exchange rate is identified by the abbreviation EUR/CHF. On average US$44 billion worth of euros are converted into Swiss francs every day, making up 0.9% of the total global forex volume. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. the Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The euro and the Swiss franc share a strong correlation; the franc was actually pegged to the euro until January 2014, where the Swiss National Bank shocked markets by allowing the currency to float free - a move which saw CHF surge around 30% in a single day.
The EUR/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is viewed as a safe haven asset, while the fate of the Eurozone forever hangs in the balance as political and economic developments cause tension between its constituent nations.
The pound Sterling to Swiss franc exchange rate is identified by the abbreviation GBP/CHF. GBP is the 4th most-traded currency, accounting for 13% of all daily trades; US$649 billion worth. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
Since the UK's vote in 2016 to leave the European Union, politics has become a stronger driver of movement for the GBP/CHF exchange rate. Uncertainty over the future relationship between the UK and the bloc weighs on Sterling.
The Swiss franc is strongly-correlated to euro strength; the franc was actually pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The GBP/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector and its citizens enjoy a great quality of life.
The pound Sterling to Japanese yen exchange rate is identified by the abbreviation GBP/JPY. GBP is the 4th most-traded currency, accounting for 13% of all daily trades; US$649 billion worth. The Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades.
Recently, political factors have seen their influence over the pound grow. This is because the Brexit referendum, which resulted in the UK voting to leave the EU, has created significant uncertainty regarding the UK economic outlook. Signs of upheaval in government as Downing Street tries to negotiate a Brexit deal that pleases all sides of the debate, as well as fears that the UK will crash out of the EU with no deal in place, weigh heavily on Sterling.
The GBP/JPY exchange rate is heavily-influenced by movement in the US Dollar. The Japanese yen is a safe-haven asset, meaning that it appreciates in times of low risk-appetite. However, when USD is strong the lower-yielding yen is less appealing.
An economic calendar is a schedule of dates when significant news releases or events are expected, which may affect the global or local financial markets volatility as well as currency exchange rates. Traders and all functions involved in the markets and financial issues make use of the economic calendar to follow up and prepare on what is going to happen, where and when.
Due to the impact of financial events and announcements, on exchange rates, the forex market is highly affected by monetary and fiscal policy announcements. As such, traders make use the economic calendar to plan ahead on their positions and trades and to be aware of any issues that may affect them.
What is Financial Market volatility?
Financial Market volatility is the degree of variation of a trading price series over time. Many traders will consider the historic volatility of a stock. This is the fluctuations of price in a given time frame. Historic volatility creates forward looking implied volatility. This allows us to predict price variation in the future.
AUD/CHF is the abbreviation for the Australian dollar to Swiss franc exchange rate. The Australian dollar is nicknamed the “Aussie”, and is the 5th most-traded currency in the world, involved in 6.9% of all daily forex trades. The Swiss franc is the 7th most popular currency in the world and is involved in nearly 5% of all forex transactions each day.
The Australian dollar is a commodity-correlated currency and is highly sensitive to price changes in iron ore, of which Australia is the world's largest exporter. The franc is a safe-haven asset, popular because of Switzerland's strong and stable economy. In times of market uncertainty the AUD/CHF pair is liable to fall.
The franc has a strong correlation with the euro, because it used to be pegged to the common currency, and Switzerland still shares strong political and economic ties with the Eurozone. Developments in the Eurozone, such as political unrest or changes in the European Central Bank monetary policy outlook can boost AUD/CHF.
Bitcoin is the first of the ‘cryptocurrencies' and remains the most stable. It was created in 2009 by Satoshi Nakamoto, whose identity remains a mystery.
His creation - Bitcoin - is a cashless currency. Balances are kept online and it is decentralised, allowing anonymity. Despite Bitcoin not being legal tender in most countries, it has continued to increase in popularity and its launch has sparked the creation of a number of other cryptocurrencies
It is priced in USD per Bitcoin and saw a record high of $68,789.63 in November 2021. Bitcoin futures trade as BTC.
Bitcoin has been criticised for its links to illegal activity and the dark web, as well as the high demand for energy created by ‘mining' Bitcoins. A PIN is necessary to access your Bitcoins, with as many as 20% of all Bitcoins thought to be lost to forgotten PINs
Bitcoin futures allow you to speculate on, or hedge against, changes in the price of Bitcoin. Futures rollover on the last Thursday of every month.
A Day Order, or 'good for day order' is a stock market order which remains valid only for the day on which it was entered and is canceled automatically at the end of the trading day. Day orders are used when an investor does not want their order to remain open after the close of trading.
Day Order vs. Market Order
A Day Order is to be filled if and when the indicated asset reaches the specified price as per the order. In the event that the asset does not hit the price specified in the order, the order is then allowed to expire without any further action required. As such day orders are easy for traders to issue, follow up and process they are considered a default trading method both by the traders as well as by trading platforms.
A Market Order on the other hand, is an order to buy or sell a security immediately. While a market order does provide for immediate execution, it does not guarantee the execution price.
What are Support Levels?
Support levels refer to the levels at which the price of an asset tends to stop falling and stabilize. These levels are determined by analyzing past price movements and identifying a floor at which buying pressure is strong enough to prevent the price from falling further. Traders and investors use support levels as a guide for placing buy orders, and as a signal for potential buying opportunities.
What does support level mean in Crypto?
Support levels mean the same thing regardless of the asset class in question.
What is the best indicator for support and resistance?
There are several indicators that can be used to identify support and resistance levels in a market. Some commonly used indicators include moving averages, Fibonacci retracements, and pivot points. However, no single indicator is considered to be the "best" as different indicators may work better in different market conditions and for different traders. Ultimately, the best indicator is the one that works best for you and fits your individual trading style and strategy.
The Cboe Volatility Index (VIX) represents the market’s expectations for near-term price changes of the S&P 500 Index (SPX). The Cboe Volatility Index is used to track volatility within that index. As it is derived from the prices of SPX index options, it generates a 30-day forward potential of volatility.
How is the CBOE volatility index calculated?
Volatility is often seen as a way to measure and speculate on market sentiment, as well as assessing risks. The VIX is calculated through the prices of SPX index options and is represented as a percentage. If the VIX value increases, it is likely that the S&P 500 is falling, and if the VIX value declines, then the S&P 500 is likely to be experiencing stability.
How do you trade the CBOE VIX?
The CBOE VIX can be traded on most major financial markets. To trade it, you need to buy or sell contracts for the futures, options or exchange-traded products linked to it. Trading in these contracts can be done through a broker and usually requires a margin account.
A trade execution is the process of executing a trading order in the financial markets. This typically involves verifying all of the parameters for the order, sending the request to the market or exchange, monitoring execution, and ensuring all transaction requirements have been met.
Brokers execute Trade Execution Order in the following ways:
• By sending orders to a Stock Exchange
• Sending them to market makers
• Via their own inventory of securities
Why is execution of trade important?
Trade execution is important due to the fact that even digital orders are not fully instantaneous. Trade orders can be split into several batches to sell since price quotes are only for a specific number of shares. The trade execution price may differ from the price seen on the order screen.
What is trade execution time?
Trade execution time is the period of time between a trade being placed and the completion of the trade. This includes market access, pricing, liquidity sourcing, risk management and settlement of funds. Trade execution time can vary depending on asset class, liquidity levels and other factors.
A Cryptocurrency is a digital currency supported by decentralised cryptographic technology. It does not rely on any central authority such as a central bank or government like a traditional currency. Instead, transactions are verified by multiple independent computers along a network. This creates several benefits including speed and general transparency.
Cryptocurrency ownership is recorded in a digital ledger. This ledger then uses strong cryptography to maintain the integrity of transaction records. This controls the creation of more digital currency within the network and to verifies the transfer of coin ownership. Cryptocurrencies are generally viewed as a distinct asset class, yet do not exist in physical form.
What is an example of a cryptocurrency?
Some examples of popular cryptocurrencies are Bitcoin (BTC), Litecoin (LTC) and Ethereum (ETH).
What is cryptocurrency CFD trading?
Cryptocurrency CFD trading is using CFDs to trade crypto. This enables traders to take a position on whether a cryptocurrency rises or falls. Cryptocurrency CFD trading opens up more trading opportunities as it allows traders to buy or sell the asset without physically owning it.
Stock trading is the practice of buying and selling stocks, or shares of ownership in a publicly-traded company, with the goal of making a profit through price appreciation or by receiving income in the form of dividends. Stock traders buy and sell shares in the stock market using a brokerage account, and they use a variety of strategies and techniques to determine when to enter and exit trades. Stock trading is a popular form of investment, but it also comes with risks and profits are in no way guaranteed. You should acquire a good understanding of the market and individual stocks before making trading decisions.
How are Stocks Different from Other Securities?
Stocks, also known as equities, represent ownership in a corporation, while other securities represent claims on an underlying asset. Other types of securities include bonds (debt securities), options, and derivatives.
How Do I Start Trading Stocks?
You can trade stocks using a stock exchange. Platforms like markets.com offer CFDs on stocks and other securities so you can start assembling and get trading outcomes of your own!
Trading trends refer to the overall direction of a security or market, often revealed through chart patterns or indicators. Traders use these trends to identify potential entry and exit points, as well as possible trading opportunities. Analyzing the financial markets in order to identify trends is an essential skill for successful traders. With knowledge of historical trends, investors can spot emerging ones and plan accordingly.
How do you identify a trend in trading?
Analyzing past market movements, changes in asset prices and economic data can be used to identify short-term and long-term trends. Using technical indicators such as moving averages, MACD, and stochastics can also help you spot potential trading opportunities and take advantage of prevailing market trends.
What are the 3 types of trends?
When analyzing the stock market, there are three primary trends that can be observed: short-term, intermediate-term, and long-term. Short-term trends generally last within one to three weeks, intermediate-term trends can range from one to four months, and long-term trends last more than a year. Being able to identify these different trend patterns will help investors maximize their potential returns.
Futures are a specific type of derivative contract agreements to buy or sell a given asset (commodity or security) at a predetermined future date for a designated price. Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
How does the futures market work?
A futures contract includes a seller and a buyer – which must buy and receive the underlying future asset. Similarly, the seller of the futures contract must provide and deliver the underlying asset to the buyer. The purpose of futures in trading is to allow traders to speculate on the price of a financial instrument or commodity. They are also used to hedge the price movement of an underlying asset. This helps traders to prevent potential losses from unfavourable price changes.
What are examples of Futures?
There are numerous types of futures and futures contracts in the trading and financial markets. The following are a few examples of futures that can be traded on: Soft Commodities such as food or agricultural products, fuels, precious metals, treasury bonds, currencies and more.
Brent Crude is a physically and financially traded oil market based around the North Sea of Northwest Europe. In finance and trading the term refers to the price of the ICE (Intercontinental Exchange) or Brent Crude Oil futures contracts. The original Brent Crude referred only to a trading classification of sweet light crude oil extracted from the Brent oilfield in the North Sea. Additional oil blends from other oil fields have been added to the trade classification as time went by. The current Brent Crude blend consists of crude oil produced from the Forties, Oseberg, Ekofisk, and Troll oil fields.
Why is Brent crude so important?
Brent Crude is important to the financial and trading domains as it is a leading global price benchmark for Atlantic basin crude oils. It is used to set the price of two-thirds of the world's internationally traded crude oil supplies. It is one of the two main benchmark prices for purchases of oil worldwide, the other being West Texas Intermediate (WTI).
The Brent Crude oil marker is also known as Brent Blend, London Brent, and Brent petroleum.
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.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
Currency futures are legally binding agreements that are traded on exchanges, where traders can buy or sell a specific currency at a fixed exchange rate on a future date. These contracts allow traders to hedge against foreign exchange risks by fixing the price at which a currency can be obtained (exchanged). On the expiration date of the contract, the "counterparties" to the agreement must deliver the specified currency amount at the agreed-upon price.
What is the benefit of buying a currency futures contract?
The main benefit of buying a currency futures contract is that it allows traders to fix the price of a currency and thus hedge against foreign exchange risks.
What is a futures contract in simple terms?
A futures contract is a legally binding agreement to buy or sell a specific asset at a fixed price on a future date.
What happens when currency futures expire?
At expiration, the counterparties to the contract must deliver the specified currency amount at the agreed-upon price. Traders are responsible for having enough capital in their account to cover margins and losses which result after taking the position. If they wish to exit their obligation prior to the contract's delivery date, they need to close out their positions.
The Heikin Ashi chart is a type of chart pattern used in technical analysis. Heikin Ashi charts are similar to a candlestick charts, but the main difference is that a Heikin Ashi chart uses the daily price averages to show the median price movement of an asset.
How do you use a Heikin-Ashi chart?
Heikin-Ashi charts resemble candlestick charts, yet have a smoother appearance as they track a range of price movements, instead of tracking every price movement the way candlestick charts do. As with the standard candlestick charts, a Heikin-Ashi candle has a body and a wick. Yet , these candles do not have the same purpose as on a candlestick chart. The last price of a Heikin-Ashi candle is calculated by the average price of the current bar or timeframe.
Is it better to use Heikin-Ashi or candlestick?
Heikin-Ashi averages out price data to create a smoother, easier-to-read chart, while traditional candlestick charts provide more detailed price information. It ultimately depends on the investor's preferences and trading strategy which chart type is better.
Are Heikin-Ashi candles accurate?
Heikin-Ashi candles can be an accurate tool for gauging market trends, although they are often regarded to be less accurate than standard candlestick charts.
Index Trading is a type of trading that involves trading a specific financial index such as the S&P 500. It is considered to be a passive investment strategy, where the investor seeks to match their performance with the broader market, instead of attempting to beat it.
What is an index?
An index is a measure of a portion of the stock market that reflects changes in the value of a basket of stocks within it. This can provide an overall snapshot of how a specific market is performing. For example, the US Tech 100 gives a broad overview of the US tech market performance at any given time.
What are indexes used for in finance?
Indexes are used in finance to measure the performance of portfolios and to benchmark the performance of investments against a predetermined set of criteria. They also help investors assess and analyze market trends, risks, and opportunities.
What are different types of index in stock market?
There are different types of indices in the stock market. Some indices used in Index trading are often used as benchmarks to evaluate performance in financial markets. Some of the most important indices in the U.S. markets are the Dow Jones Industrial Average and the S&P 500.
A MetaTrader is an electronic trading platform widely used by online retail traders. The MetaTrader application consists of both a client and server component. The server component is run by the broker and the client software is provided to the broker’s customers, who use it to see live streaming prices and charts, to place orders, and to manage their accounts.The platform works on Microsoft Windows-based applications as well as on Andriod and Mac OS applications.
Marktets.com supports the use of both the MetaTrader 4 and MetaTrader 5 trading platforms with its traders.
Metatrader 4 is still one of the most popular and easy-to-use trading platforms. With Expert Advisors, micro-lots, hedging and one-click trading.
Metatrader 5 is a powerful upgrade and the most advanced online trading platform It is a multi-asset derivatives platform for trading on CFDs and enables traders to perform hedging and netting, and delivers more technical indicators as well as more insight with market depth and a wider number of timeframes.
Can I trade on MetaTrader without a broker?
While you can download and use the MetaTrader software without a broker, it is not possible to trade without one. In order to execute trades on MetaTrader, you will need to open an account with a broker that offers the platform and deposit funds into that account.
Stop Orders are a type of stock order that helps limit the investor’s risk. The order triggers a purchase or sale once a set price is reached, either above (stop buy) or below (stop sell). Stop Orders are used to protect investors against an unfavorable price movements and lock in potential gains.
How long do stop orders last?
Stop orders are instructions given to a broker to buy or sell an asset when its price reaches a predetermined level. Stop orders remain in effect until the stop price is triggered, at which point the order becomes a market order and will be executed. This means that stop orders may last for an indefinite amount of time. It is important to monitor the current market price closely as stop orders do not guarantee execution.
Are stop orders a good idea?
Stop orders can be useful as they can help limit an investor's loss or protect a profit on a security. They are often used to automatically exit a position when the market moves against the investor. However, the use of stop orders may be subject to market conditions and the specific investment strategy of an investor, so whether or not they are a good idea depends on the individual's financial situation and risk tolerance.
A share is a partition of the total value of a company. Each share represents a unit of ownership in that company, and therefore also the value that it holds. Should a company choose to sell shares as a means of fundraising, this is known as equity finance.
A share owner is called a shareholder (or stockholder). The ongoing value of a share, once it is introduced to the market, is its trading value at any given time, which can be either lower or higher than the original value. A share is worth whatever price it is currently trading at. An actual transaction of shares between a buyer and a seller is usually considered to provide the best market indicator as to the "true value" of that share at that time. The difference between current price and open price will represent either a profit or a loss to the investor who purchased it.
There are different types of shares in the trading domain, including Cumulative & Non-cumulative Preference Shares, Participating & Non-participating Preference Shares, Convertible & Non-convertible Preference Shares, Redeemable & Un-redeemable Preference Shares.
It is also possible to use CFDs to trade shares. This enables traders to take a leveraged position on whether a share rises or falls. This different type of share trading opens up more trading opportunities by either buying or selling the asset without physically owning it.
Fibonacci retracement is a technical analysis tool that uses horizontal lines to indicate areas where a stock's price may experience support or resistance at the key Fibonacci levels before it continues to move in the original direction. These levels are derived from the Fibonacci sequence and are commonly used in conjunction with trend lines to find entry and exit points in the market. The key levels are 23.6%, 38.2%, 50%, 61.8% and 100%.
Unlike moving averages, Fibonacci retracement levels are static prices. They do not change. This allows quick and simple identification and allows traders and investors to react when price levels are tested. Because these levels are inflection points, traders expect some type of price action, either a break or a rejection.
Why do people use Fibonacci in trading?
Fibonacci retracement is used in trading as it enables traders to identify long-term trends by determining when an asset's price is likely to change direction. This is useful to traders since it can help them to decide when to open or close trading positions, or when to apply stops and limits to their trades.
Is Fibonacci retracement a good strategy?
Fibonacci retracement can be a powerful trading tool when used correctly. It is based on the principle of support and resistance levels and can help identify key levels of entry and exit. When combined with other technical indicators it can help traders take better informed decisions.
The closing price is the final price at which a security is traded during a trading session. It is used to determine the settlement price for trades and the value of securities at the end of the trading day.
Why is closing price important?
The closing price is important for several key reasons. Market players such as traders, investors, banks and financial institutions as well as regulators use the closing price as a reference point for determining a stock’s performance over time (which can range from a as little as seconds or minutes prior or past the closing price to durations such as a week, through a month and over the course of a year).
What is 'after-hours' trading?
After hours trading refers to the buying and selling of securities outside of the regular trading hours of the major stock exchanges, typically 4:00 PM to 8:00 PM Eastern Standard Time. This can include both electronic trading and trading by phone. It is usually less liquid than regular trading hours and prices may be more volatile.
Can you sell at closing price?
Yes, you can sell a security at the closing price. The closing price is the final price at which a security is traded during a trading session, and can be used as a reference point for determining the settlement price for trades. If you sell a security at the closing price, you will receive the price of the security at the end of the trading day.
Expiry date, also known as expiration date or maturity date, is the date on which a financial contract, such as a futures contract or option, will expire and can no longer be traded. At the expiry date, the terms of the contract, such as the price and quantity, will be settled or exercised. For options, if the holder of the option chooses to exercise it, they will buy or sell the underlying asset at the strike price. For futures contracts, the holder will have to buy or sell the underlying asset at the agreed-upon price.
How does a expiry date work?
One key takeaway about Expiration Dates is that the further away they are the better. In this aspect, the potential value of an option can benefit from a longer time an option prior to expiring. I.e., the said option is more likely it is to hit its strike price and actually become valuable the longer it is on the market.
Are Expiry dates good for day trading?
expiry dates can be an important factor to consider for day trading options and futures contracts as they determine when the contract must be settled or exercised. Day traders should take into account the expiration date when planning their trades and adjust their strategy accordingly. It's important to remember that expiry dates are just one of many factors that can influence the price of financial instruments, and traders should always consider multiple factors when making trades.
The Opening Price is the price at which a security first trades upon the opening of an exchange on a trading day. It is important to note that it may not identical to the previous day’s closing price. Also, for new stock offerings (IPO etc), Opening Price refers to the initial share price at the beginning of trade of the first day. Yet there are some cases when an opening price will also be the share price which was established by the first trade of the day, instead of being based on a price that was already in place when at the beginning of trade of that day at that specific exchange.
How is opening price calculated?
The opening price is can be calculated by taking the first trade price executed in that trading session. In case of stock trading it is the price of the first trade executed on the exchange when the market opens. Opening price is usually used to calculate the performance of the stock or any other asset for the day.
What is the difference between opening price and closing price?
The opening price is the price of an asset at the start of a trading session, while the closing price is the price of an asset at the end of a trading session.
Who sets the opening price of a stock?
The opening price of a stock is typically set by the stock exchange or market maker responsible for trading that stock.
What is a Rally in Trading?
A rally in trading refers to a period of time when the price of an asset, such as a stock or commodity, rises significantly. A rally is often characterized by an increase in buying activity and positive investor sentiment, which drives the price upward. Rallies can be short-lived or last for an extended period, depending on the underlying factors driving the market.
How long does a stock rally last?
Rallies can be short-term or long-term depending on factors like market sentiment and the performance of underlying stocks. On average, stock rallies can last anywhere from a few days to several weeks or even months. The length of any given rally is impossible to predict and it’s up to individual investors to do their research and make their own decisions on whether they want to invest during a stock rally.
How do you identify a stock rally?
Rallies can be identified by several factors including an increase in price, strong trading volume, positive news stories and upbeat investor sentiment. To accurately determine if there is a stock rally, look at the index chart of the overall market, specific sectors or individual stocks. Additionally, keep an eye on economic indicators such as gross domestic product, employment data and consumer confidence to assess if conditions are conducive for a rally. Doing research and regularly monitoring the stock market can help investors identify potential opportunities during a rally.
A long position is a market position where the investor has purchased a security such as a stock, commodity, or currency in expectation of it increasing in value. The holder of the position will benefit if the asset increases in value. A long position may also refer to an investor buying an option, where they will be able to purchase an underlying security at a specific price on or before the expiration date.
What is riskier a long or a short position?
A short position is considered riskier than a long position because the potential loss is theoretically unlimited, while the potential profit is limited to the amount of depreciation in the value of the security. When an investor short sells a stock, they borrow shares from someone else and sell them, with the hope that the price will drop so they can buy the shares back at a lower price and return them to the lender, pocketing the difference. In case the price of the stock rises instead, the loss for the short seller is theoretically unlimited as there is no limit to how high the stock price can go.
When should I buy a long position?
When an investor believes that the market will rise, they could consider purchasing a long position.
How can I protect my long position?
Protecting a long position often involves setting up a stop-loss order, which automatically sells the asset at a predetermined price. This ensures that any sharp market drops don't result in excessive losses for the investor.
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 limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders. By placing a limit order they tell a broker to buy or sell a particular stock at a certain price or better than that price (lower for buying, higher for selling). This order is executed only if the transaction can be processed at the limit set in the order.
Is a limit order a good idea?
A key benefit of using a limit order is to ensure that the stock is bought or sold at a certain price point or better than that price point. There is of course the risk of not being able to execute that order as that specific price may never reach that limit as set in the order.
What are the types of limit order?
There are several types of limit orders in trading:
Buy Limit Order: An order to buy a security at a specific price or lower.
Sell Limit Order: An order to sell a security at a specific price or higher.
Buy Stop Limit Order: A stop order to buy a security at a specific price or higher, only activated once a specified stop price has been reached.
Sell Stop Limit Order: A stop order to sell a security at a specific price or lower, only activated once a specified stop price has been reached.
Trailing Stop Limit Order: A type of stop order where the stop price is set at a fixed amount or percentage below or above the market price, and adjusts as the market price moves.
Fill order (“Fill”) is the term used to refer to the satisfying of an order to trade a financial asset. It is the foundation of any and all market transactions. When an order has been 'filled', it means it was executed. There are also “Partial fills”, which are orders that have not been fully executed due to conditions placed on the order such as a limit price.
What is minimum fill order?
A minimum fill order is an order placed with a brokerage or trading platform that specifies the minimum number of shares or units that must be executed, otherwise the order will not be executed at all. This type of order is commonly used in situations where a trader wants to ensure that they receive a certain number of shares or units, but is willing to accept a less favorable price in order to ensure that they receive the minimum quantity.
What is unfilled order in trading?
An unfilled order in trading is a buy or sell order that has been placed with a brokerage or trading platform, but has not yet been executed. This can happen if the order is not able to be matched with a counterparty willing to trade at the specified price or quantity. Unfilled orders remain active until they are either executed, canceled or expire.
How long does it take to fill stock order?
The time it takes to fill a stock order can vary depending on a number of factors, including the size and type of the order, the liquidity of the stock, and the overall market conditions. In general, orders for highly liquid stocks with small quantities can be filled in seconds, while orders for less liquid stocks or larger quantities may take longer.
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.
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.
Slippage is a common occurrence in trading when the price of an asset changes before an order can be filled. Slippage often happens when large orders are placed and market conditions change quickly, meaning that traders must accept the new price for their order or risk having it rejected. It’s important for traders to factor slippage into their trading strategies as unexpected slippage can affect trade outcomes.
What is a good slippage tolerance?
A good slippage tolerance is a matter of personal preference and depends on the trading strategy and risk tolerance. Generally, a low slippage tolerance is preferred as it allows for more precise execution of trades at the desired price. A high slippage tolerance allows for more flexibility in trade execution, but may result in less favorable prices. A slippage tolerance of 1-2% is considered to be reasonable for many traders.
How do traders avoid big losses when it comes to slippage?
Traders can avoid big losses due to slippage by using proper risk management strategies, such as setting stop-loss orders, using smaller position sizes, and using limit orders instead of market orders. Additionally, traders can look for a trustworthy and reliable broker with low slippage levels. Trading during less volatile periods can also help to minimize slippage.
What is maximum slippage?
Maximum slippage in trading refers to the largest difference between the expected price and the actual execution price of a trade. It is a measure of the worst-case scenario for slippage and can represent the largest potential loss a trader may face due to slippage. It is usually set by the trader in advance and if the slippage exceeds that level, the trade will not execute. The level of maximum slippage a trader is willing to accept is generally based on their individual risk tolerance.
Moving Average Convergence/Divergence, also known as MACD , is an analytical trading indicator. Its function is to show changes in the strength, direction, momentum, and duration of a trend in a share’s price. The MACD indicator is comprised of three time series charts based on historical price data. For example, closing price.
How can you tell if MACD is bullish?
If the MACD line (the blue line) is above the signal line (the red line), it is considered to be bullish and suggests that the security's price is likely to rise. This is because the MACD line is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA, and when the 12-day EMA is above the 26-day EMA, it indicates that short-term momentum is bullish and the stock is likely to rise.
Is MACD a good indicator?
MACD is a widely used technical indicator that can be a useful tool for identifying trends and potential buy or sell signals in the market. However, like any indicator, it has its limitations and should be used in conjunction with other technical analysis tools and fundamental analysis to make informed trading decisions.
Which is better MACD or RSI?
Both the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) are popular technical indicators used in trading. They are both useful tools for identifying trends and potential buy or sell signals, but they are based on different calculations and are used for different purposes.
The MACD is a momentum indicator that is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. It is used to identify bullish or bearish trends and potential changes in momentum.
The RSI, on the other hand, is a momentum oscillator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.
Both indicators can be useful, but they can also give different signals, so once again, it's important to use them in conjunction with other indicators and analysis techniques to make informed trading decisions.
The definition of Assets in trading is as resources which provide an economic value. Assets include but are not limited to cash, property, rights, as well as resources that have the potential of generating. Assets are what businesses require and use to operate. Assets are considered as one of the three fundamentals of any financial calculation, together with liabilities and equity.
Trading Assets Definition
There are several ways of defining and classifying assets:
• Convertible – Liquidity based, as in how fast they can be converted into cash.
• Current Assets – Liquid assets that are expected to be converted to cash within a year.
• Fixed Assets – Cannot be easily and readily converted into cash.
• Physical Existence – Tangible or intangible assets defined by their material presence.
• Tangible Assets – Having physical substance, such as hardware, cash, & inventory.
• Intangible Assets – Resources without physical substance patents, licenses, & copyrights.
• Operating Assets – Necessary to the ongoing operation of a business.
• Non-Operating Assets – Non-functional such as idle equipment & vacant land.
The Fund seeks to track the investment results of the MSCI Brazil 25/50 Index (EWZ) composed of Brazilian equities. The Fund invests, under normal circumstances, at least 95% of its assets in the securities of its Underlying Index and in depositary receipts representing securities in its Underlying Index.
The ARK Space Exploration & Innovation ETF's (ARKX) investment objective is long-term growth of capital. ARKX is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation. The Adviser defines “Space Exploration” as leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth.
AAVE is a decentralised lending system, letting users lend, borrow, and earn interest on crypto assets. It uses the Ethereum blockchain and works via a system of smart contracts that enables these assets to be managed by a distributed network of computers running its software. AAVE users don’t need to trust a particular person or institute to manage their assets. They only need to know the code will execute as written. AAVE is priced in USD and tradeable on our platform via the AAVE/USD symbol.
The Swiss franc to Japanese yen exchange rate has the acronym CHF/JPY. The Swiss franc is the 7th most traded currency on global markets, accounting for 4.8% of daily turnover. The Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades.
Both the Swiss franc and the Japanese yen are safe-haven assets, so the pairing is less susceptible to the influence of market uncertainty as pairings that trade a high-yield asset against a safe-haven. However, markets prefer the Japanese yen to the Swiss franc in times of uncertainty; the pair hit a low of ¥74.65 in 2008 during the financial crisis.
Since then the franc has gained much ground thanks to the Bank of Japan's ultra-loose monetary stimulus package.
The Swiss franc is closely correlated to the euro, meaning that it has an inverse correlation by proxy to the US Dollar. The Japanese yen is sensitive to commodity price movements as Japan lacks many of the natural resources used to fuel industry.
The Swiss franc to Polish zloty exchange rate has the abbreviation CHF/PLN, and is classed as an exotic currency pair. The franc is the 7th most active currency in the FX market, accounting for nearly 5% of average daily turnover. The Zloty the 22nd most active currency, accounting for 0.7% of average daily turnover.
The CHF/PLN pair is likely to strengthen in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. Poland is an emerging market economy; it's assets are higher-yielding, but also more volatile.
The Swiss franc is strongly-correlated to euro strength; the franc was pegged to the euro until January 2014, when the SNB shocked markets by allowing the currency to float free. However, the zloty also reflects the strength or weakness of the Eurozone economy due to the strong trading relationship between Poland and the Eurozone, as well as the fact that Poland could eventually become a member of the currency bloc.
Amortization is the process of charging the cost of an asset to expense over a specific timeframe. Amortization also defines the practice of spreading the repayment of a loan. This shifts the asset from the balance sheet to the income statement.
Amortization reflects the consumption of an intangible asset over what is considered a useful timeframe. It is used for the gradual write-down of the cost of those intangible assets that have a specific useful life. It is common to charge interest which is calculated based on the duration and other variables.
Amortization should not be confused with Depreciation. The difference between them is that amortization is about charging “Intangible Assets” to expense over time. While depreciation is about charging “Tangible Assets” to expense over time.
How to calculate amortization?
As we do not provide economic or trading advice we can only include here what is considered to be a generally agreed upon explanation. As stated, generally an Amortization can be calculated by using a straight-line formula such as: (book value - residual value) / useful life.
Day trading is the practice of buying and selling financial securities, such as stocks or futures, with the aim of making short-term profits within a single day's trading session. It requires a good understanding of markets and an ability to take advantage of opportunities in the right timing. Professional day traders are typically very experienced and have a deep understanding of the markets, products, strategies, and the risks.
How does day trading work?
Day Trading works in the same way any other trading process, yet at times the intervals between positions are short to very short. Day traders buy and sell batches of various assets within the same day, or even within very short periods within that day. It can be said that the process is based on exploiting the inevitable up-and-down price movements which occur during a trading session.
How do I start day trading?
To start day trading, you need to have an account with a broker like markets.com, basic knowledge of the stock market and financial markets, and the ability to access the markets online or via an app. You should also educate yourself on risk management strategies, study different investment styles, and use technical analysis when deciding what stocks to buy and sell. Finally, make sure to set realistic goals and keep records of your trades.
Arbitrage is trading that makes use of small differences in price between identical assets in two or more markets. An asset will most likely be sold in different markets, forms or via a different financial products.
Arbitrage is one alternative trading strategy that can prove exceptionally profitable when leveraged by sophisticated traders. It also carries risks which need to be considered prior and during an arbitrage.
Arbitrage as a trading strategy is when an asset is simultaneously bought and sold in different markets, thus taking advantage of a price difference, and generating a potential profit. Arbitrage is commonly leveraged by hedge funds and other sophisticated investors.
What is an example of arbitrage?
Without going into actual trading advice, here are several examples of Arbitrage in Trading:
• Exchange rates
• Offshore operations
• Cryptocurrency
And perhaps the most obvious and common form of arbitrage which is acting as a go between or affiliate, earning commission on price differences between the seller and the buyer.
Types of arbitrage traders use:
• Pure arbitrage - Traders simultaneously buying and selling assets in different markets to take advantage of a price differences.
• Merger arbitrage – When two publicly traded companies merge. If the target is a publicly traded company, the acquiring company must purchase its outstanding shares Convertible arbitrage.
• Convertible Arbitrage. It is related to convertible bonds, also called convertible notes or convertible debt.
A CFD is a derivative financial instrument based on the price movements of an underlying asset. CFDs enable traders to trade shares, Forex, indices, bonds, or commodities without actually owning the assets being traded.
A CFD (Contract for Difference) is made between two parties, typically described as "buyer" and "seller", stating that the buyer will pay the seller the difference between the current value of an asset and its value when the contract was initially made. If the closing trade price is higher than the opening price, then the seller (the broker) will pay the buyer (the trader) the difference, and that will be the buyer’s profit. The opposite is also true. That is, if the current asset price is lower at the exit price than the value at the contract’s opening, then the seller, rather than the buyer, will benefit from the difference.
What is the difference between CFD trading and share trading?
While both “regular stock trading” and CFD Share trading are executed via trading platforms and applications, there are key differences between them. As indicated above, the main difference between stock share and CFD trading is that when you trade a CFD you are speculating on an asset’s price without actually owning the underlying asset. While regular stock trading requires the parties to have ownership of the underlying stocks.
An Acquisition is a business transaction where one company buys all, or part, of another company's shares or assets. This can be done in an attempt to gain control of, and expand on, the target company's market while also gaining or at least conserving resources.
There are three main forms of “pairing business together”:
As part of the Acquisition process, the acquiring company purchases the target business's shares or assets, which gives it the authority to make use of the target’s assets as if they are its own.
Why do companies make acquisitions?
Companies make acquisitions as there are several benefits to doing so, including lower entry barriers, growth and market influence. There are also some challenges and difficulties associated with this process. These include conflicts of cultures, redundancy, contradicting objectives and unmatched businesses.
What are the four types of acquisitions?
There are four types of acquisitions that companies perform.
BitcoinSV uses original Bitcoin protocol, as laid out by inventor Satoshi Nakamoto’s 2008 whitepaper. Thus, BitcoinSV should be stable, and enjoy high scalability. It is priced in USD and the instrument is tradeable using the BSV/USD spot rate.
The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks US consumer discretionary companies within the S&P 500. This asset uses the Consumer Discretionary Select Sector Index as its tracking benchmark. The top ten holdings account for 66.2% of the fund’s portfolio.
The index comprises just 66 holdings from the consumer sector and includes many household names. Top holdings include Amazon, Home Depot, McDonalds and Nike.
ProShares Ultra Bloomberg Crude Oil ETF (UCO) is a leveraged asset that seeks to deliver twice the daily investment results of the Bloomberg WTI Crude Oil Subindex. This is a single-day bet and is not suitable for buy-and-hold investors. Results can vary significantly if held for periods longer than one day. This is a leveraged ETF so traders take on more risk than with an unleveraged product.
Consumer Staples Select Sector SPDR Fund (XLP) tracks US consumer staples companies within the S&P 500. This asset uses the Consumer Staples Select Sector Index as its tracking benchmark. The fund provides strong and representative exposure to consumer staples and the companies are large-cap in the main.
The index comprises just 34 holdings from the consumer sector and includes many household names. Top holdings include Procter and Gamble, Coca-Cola, PepsiCo and Walmart.
A commodity is a raw material asset such as oil, gas, gold, or wheat. Commodities can be categorised into either hard commodities or soft commodities.
What are Soft Commodities?
Soft commodities typically refer to raw materials that are grown rather than mined such as coffee beans or sugar.
What Are Hard Commodities?
Whereas hard commodities must be extracted such as natural gas or crude oil.
A commodity is often exchangeable for other commodities of the same type and can be purchased through either the spot market using cash, or through derivatives like futures.
A basis point (abbreviated as BP, bps or “bips”) measures changes in the interest rate of a financial instrument. It is also used describe the percentage change in the value of financial instruments or the rate change of an index. They are less ambiguous than percentages as they represent an absolute, set figure instead of a ratio.
Why do we use Basis Points?
In the bond market, a basis point is used to refer to the yield that a bond pays to the investor. They are also used when referring to the cost of mutual funds and exchange-traded funds.
The Bank of England is the central bank of the U.K. Its mandate is to support the economic policies of the government, being independent in maintaining price stability. The Bank of England is authorized to issue banknotes in the United Kingdom, with a monopoly on the issue of banknotes in England and Wales. It also regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland. The Bank's Monetary Policy Committee has the responsibility of managing monetary policy.
What services does the Bank of England provide?
In addition to issuing bank notes, the Bank of England’s provides the following services:
• Monitoring banks and the financial system
• Setting interest rates
• Maintaining the UK’s gold repository
A bid is the highest price that a trader will pay to buy a stock or any other asset. On the other hand, the seller has a limit as to the lowest price he will accept, which is called an “ask”. The difference between the buyer’s bid and the seller’s ask is a spread. The smaller the spread, the greater the liquidity of the any asset.
What is difference between bid and offer in trading?
There are several differences between a bid and an offer in trading. One important key differentiator is that a bid describes how buyers are willing to want to buy for a lower price than what the seller indicated. While an offer represents the higher price initially requested by the seller.
Bollinger Bands® are a helpful technical analysis tool. They assist traders to identify short-term price movements and potential entry and exit points.
A Bollinger Band typically consists of a moving average band (the middle band), as well as an upper and lower band which are set above and below the moving average. This represents the volatility of reviewed asset. When comparing a share’s position relative to these bands, traders may be able to determine if that share’s price is low or high. Bollinger bands are good indicators and are good for day trading.
Additionally, the width of this band can serve as an indicator of the share’s volatility. Narrower bands indicate less volatility while wider ones indicate higher volatility. A Bollinger Band typically uses a 20-period moving average. These “periods” can represent any timeframe from 5 minutes per frame to hours or even days.
In Forex, an Ask is the price at which it is possible to buy the base currency of the selected currency pair. In trading, Ask Price or Offer Price are the lowest price at which a seller will sell their stock.
Ask is used in conjunction with Bid price, which is what the buyer is offering and is by definition lower than the price the selling is asking for. The difference between the buyer’s bid and a seller’s ask is called a “Spread”.
What Is the Bid Ask Spread?
Financial instruments have 2 key public prices: a bid and an ask. When traders wish to buy (a Buy Position), they effectively pay the Ask price. When traders open a sell position, then they are offered the bid price by potential buyers. For obvious reasons, the bid price tends to be lower than the ask price. This price differential is the bid ask spread.
The Australian dollar to Japanese yen exchange rate goes by the abbreviation AUD/JPY. The Australian dollar is often known as the “Aussie”, and is the 5th most-traded currency in the world, being involved in 6.9% of all daily forex trades. The Japanese yen is the 3rd most-traded currency, accounting for 22% of all daily trades.
The Australian dollar is a commodity-correlated currency and is sensitive to price changes in iron ore, of which Australia is the world's largest exporter. The Japanese yen is a safe-haven asset, and is popular in times of uncertainty. Falling risk appetite undermines the AUD/JPY pairing, while market confidence pushes it higher.
A key driver of AUD/JPY volatility is the interest rate differential between the two nations. Like other central banks, the Reserve Bank of Australia cut interest rates in response to the 2008 financial crisis, but Australia's strong economy limited the need for easing. In contrast, the Bank of Japan still maintains ultra-loose stimulus.
AUD/CHF is the abbreviation for the Australian dollar to Swiss franc exchange rate. The Australian dollar is nicknamed the “Aussie”, and is the 5th most-traded currency in the world, involved in 6.9% of all daily forex trades. The Swiss franc is the 7th most popular currency in the world and is involved in nearly 5% of all forex transactions each day.
The Australian dollar is a commodity-correlated currency and is highly sensitive to price changes in iron ore, of which Australia is the world's largest exporter. The franc is a safe-haven asset, popular because of Switzerland's strong and stable economy. In times of market uncertainty the AUD/CHF pair is liable to fall.
The franc has a strong correlation with the euro, because it used to be pegged to the common currency, and Switzerland still shares strong political and economic ties with the Eurozone. Developments in the Eurozone, such as political unrest or changes in the European Central Bank monetary policy outlook can boost AUD/CHF.
Bitcoin is the first of the ‘cryptocurrencies' and remains the most stable. It was created in 2009 by Satoshi Nakamoto, whose identity remains a mystery.
His creation - Bitcoin - is a cashless currency. Balances are kept online and it is decentralised, allowing anonymity. Despite Bitcoin not being legal tender in most countries, it has continued to increase in popularity and its launch has sparked the creation of a number of other cryptocurrencies
It is priced in USD per Bitcoin and saw a record high of $68,789.63 in November 2021. Bitcoin futures trade as BTC.
Bitcoin has been criticised for its links to illegal activity and the dark web, as well as the high demand for energy created by ‘mining' Bitcoins. A PIN is necessary to access your Bitcoins, with as many as 20% of all Bitcoins thought to be lost to forgotten PINs
Bitcoin futures allow you to speculate on, or hedge against, changes in the price of Bitcoin. Futures rollover on the last Thursday of every month.
A Day Order, or 'good for day order' is a stock market order which remains valid only for the day on which it was entered and is canceled automatically at the end of the trading day. Day orders are used when an investor does not want their order to remain open after the close of trading.
Day Order vs. Market Order
A Day Order is to be filled if and when the indicated asset reaches the specified price as per the order. In the event that the asset does not hit the price specified in the order, the order is then allowed to expire without any further action required. As such day orders are easy for traders to issue, follow up and process they are considered a default trading method both by the traders as well as by trading platforms.
A Market Order on the other hand, is an order to buy or sell a security immediately. While a market order does provide for immediate execution, it does not guarantee the execution price.
The Cboe Volatility Index (VIX) represents the market’s expectations for near-term price changes of the S&P 500 Index (SPX). The Cboe Volatility Index is used to track volatility within that index. As it is derived from the prices of SPX index options, it generates a 30-day forward potential of volatility.
How is the CBOE volatility index calculated?
Volatility is often seen as a way to measure and speculate on market sentiment, as well as assessing risks. The VIX is calculated through the prices of SPX index options and is represented as a percentage. If the VIX value increases, it is likely that the S&P 500 is falling, and if the VIX value declines, then the S&P 500 is likely to be experiencing stability.
How do you trade the CBOE VIX?
The CBOE VIX can be traded on most major financial markets. To trade it, you need to buy or sell contracts for the futures, options or exchange-traded products linked to it. Trading in these contracts can be done through a broker and usually requires a margin account.
A Cryptocurrency is a digital currency supported by decentralised cryptographic technology. It does not rely on any central authority such as a central bank or government like a traditional currency. Instead, transactions are verified by multiple independent computers along a network. This creates several benefits including speed and general transparency.
Cryptocurrency ownership is recorded in a digital ledger. This ledger then uses strong cryptography to maintain the integrity of transaction records. This controls the creation of more digital currency within the network and to verifies the transfer of coin ownership. Cryptocurrencies are generally viewed as a distinct asset class, yet do not exist in physical form.
What is an example of a cryptocurrency?
Some examples of popular cryptocurrencies are Bitcoin (BTC), Litecoin (LTC) and Ethereum (ETH).
What is cryptocurrency CFD trading?
Cryptocurrency CFD trading is using CFDs to trade crypto. This enables traders to take a position on whether a cryptocurrency rises or falls. Cryptocurrency CFD trading opens up more trading opportunities as it allows traders to buy or sell the asset without physically owning it.
Brent Crude is a physically and financially traded oil market based around the North Sea of Northwest Europe. In finance and trading the term refers to the price of the ICE (Intercontinental Exchange) or Brent Crude Oil futures contracts. The original Brent Crude referred only to a trading classification of sweet light crude oil extracted from the Brent oilfield in the North Sea. Additional oil blends from other oil fields have been added to the trade classification as time went by. The current Brent Crude blend consists of crude oil produced from the Forties, Oseberg, Ekofisk, and Troll oil fields.
Why is Brent crude so important?
Brent Crude is important to the financial and trading domains as it is a leading global price benchmark for Atlantic basin crude oils. It is used to set the price of two-thirds of the world's internationally traded crude oil supplies. It is one of the two main benchmark prices for purchases of oil worldwide, the other being West Texas Intermediate (WTI).
The Brent Crude oil marker is also known as Brent Blend, London Brent, and Brent petroleum.
Currency futures are legally binding agreements that are traded on exchanges, where traders can buy or sell a specific currency at a fixed exchange rate on a future date. These contracts allow traders to hedge against foreign exchange risks by fixing the price at which a currency can be obtained (exchanged). On the expiration date of the contract, the "counterparties" to the agreement must deliver the specified currency amount at the agreed-upon price.
What is the benefit of buying a currency futures contract?
The main benefit of buying a currency futures contract is that it allows traders to fix the price of a currency and thus hedge against foreign exchange risks.
What is a futures contract in simple terms?
A futures contract is a legally binding agreement to buy or sell a specific asset at a fixed price on a future date.
What happens when currency futures expire?
At expiration, the counterparties to the contract must deliver the specified currency amount at the agreed-upon price. Traders are responsible for having enough capital in their account to cover margins and losses which result after taking the position. If they wish to exit their obligation prior to the contract's delivery date, they need to close out their positions.
The closing price is the final price at which a security is traded during a trading session. It is used to determine the settlement price for trades and the value of securities at the end of the trading day.
Why is closing price important?
The closing price is important for several key reasons. Market players such as traders, investors, banks and financial institutions as well as regulators use the closing price as a reference point for determining a stock’s performance over time (which can range from a as little as seconds or minutes prior or past the closing price to durations such as a week, through a month and over the course of a year).
What is 'after-hours' trading?
After hours trading refers to the buying and selling of securities outside of the regular trading hours of the major stock exchanges, typically 4:00 PM to 8:00 PM Eastern Standard Time. This can include both electronic trading and trading by phone. It is usually less liquid than regular trading hours and prices may be more volatile.
Can you sell at closing price?
Yes, you can sell a security at the closing price. The closing price is the final price at which a security is traded during a trading session, and can be used as a reference point for determining the settlement price for trades. If you sell a security at the closing price, you will receive the price of the security at the end of the trading day.
Equity is the value of a trader's account, representing the total assets minus any margin used to open trades. It reflects their financial position and potential financial outcomes from any trading activities as they currently stand. Traders can use equity to decide when to enter or exit positions and what size positions to take.
What is difference equity and stock?
For traders, stock and equity are synonymous terms as stocks represent equity ownership in a company. Assets, liabilities, and shareholders' equity are items found on the balance sheet.
What is difference between equity and account balance?
Equity is the total account balance including profits/losses from open positions, whereas the account balance is simply the total money deposited in an account before any trades have been made.
EUR/HUF is the abbreviation for the euro to Hungarian forint 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 forint is the 26th most-active currency, accounting for just 0.3% of daily transactions. US$5 billion worth of EUR/HUF is traded each day.
The euro is the currency of the 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.
EUR/HUF strengthens in times of market uncertainty. As an emerging market currency, the forint is popular in times of confidence but is sold in favour of safer, lower-yielding assets when volatility increases.
Compared to its emerging market peers, Hungary has a small level of foreign currency debt, providing some insulation for the economy and its currency against external disruption.
The euro to Polish zloty exchange rate has the abbreviation EUR/PLN, and is classed as an exotic currency pair. 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 Polish Zloty is the 22nd most active currency, accounting for 0.7% of average daily turnover. US$13 billion worth of EUR/PLN is traded each day.
The euro is the currency of the Eurozone, which is overseen by the ECB. The euro has an inverse correlation with the US Dollar.
EUR/PLN strengthens in times of market uncertainty. Poland is an emerging market economy; it's assets are higher-yielding, but also more volatile.
The zloty also reflects the strength or weakness of the Eurozone economy due to the strong trading relationship between Poland and the Eurozone, as well as the fact that Poland could eventually become a member of the currency bloc. This can soften the upside impact of positive Eurozone data upon the EUR/PLN pairing.
Financial Derivatives are financial products that derive their value from the price of an underlying asset. These derivatives are often used by traders as a device to speculate on the future price movements of an asset, whether that be up or down, without having to buy the asset itself.
What are the four financial derivatives?
The four most common types of financial derivatives are futures contracts, options contracts, swaps and forward contracts.
What are the advantages of financial derivatives?
Financial derivatives can provide several benefits such as hedging, leveraging and portfolio diversification. These financial instruments help in managing risk by protecting investors from price volatility, enable high leverage to increase profits and also allow for better portfolio diversification through a wider range of investments.
Financial Derivatives examples
The most common underlying assets for derivatives are:
• Stocks
• Bonds
• Commodities
• Currencies
• Interest Rates
• Market Indexes (Indices)
Note: In CFD Trading traders get access to all the above Financial Derivatives as well as additional ones more suitable for trading CFDs. As such, CFDs enable traders to buy a prediction on a stock (up or down) without owning the stock itself.
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.
Exchange Traded Funds (ETFs) are a type of security that tracks a basket of underlying assets, like stocks, bonds, or commodities. They can provide diversification and lower costs compared to other investment types. ETFs are traded on stock exchanges and offer more liquidity than traditional investments.
How do ETFs work?
In trading, Exchange-Traded Funds or ETFs, combine the features of funds and equities into one instrument. Like other investment funds, they group together various assets, such as stocks or commodities. This helps the ETF track the value of its underlying market as closely as possible.
ETFs can be useful in diversifying trading portfolios, or for active trader, they can be used to make use of price movements. ETFs are traded on an exchange like shares or stocks, traders can also take "short" or "long" positions. CFD trading on ETFs enables traders to sell or buy an ETF they don't actually own to make use of price movements, and not a lot of money is needed to start trading in ETFs.
How much money do you need to start trading ETFs?
The minimum amount you need to start trading ETFs depends on the brokerage you are using, the minimum amount to deposit for markets.com is the equivalent of 100 in the following currencies: USD, EUR and GBP.
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.
Hedging, or to hedge, in the trading domain is defined as traders reducing their exposure to risk. Hedging is done by taking an offsetting position in an asset or investment that reduces the price risk of an existing position.
Why is it called hedging?
"Hedge your bets" is a term which originated in the 1600s and means to decrease or limit one's risk. The origin of the phrase is thought to be derived from the action of literally fencing off an area with hedges
How does hedging work?
Hedging involves taking offsetting positions in different markets, such as futures contracts or derivatives to diversify risk if one instrument falls.
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.
SPDR Gold Shares (GLD) is an investment fund incorporated in the USA. The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trust's expenses. The Trust holds gold and is expected from time to time to issue Baskets in exchange for deposits of gold and to distribute gold in connection with redemptions of Baskets.
The first US traded gold ETF and the first US-listed ETF backed by a physical asset
For many investors, the costs associated with buying GLD shares in the secondary market and the payment of the Trust's ongoing expenses may be lower than the costs associated with buying, storing and insuring physical gold in a traditional allocated gold bullion account.
The euro to Romanian leu exchange rate has the abbreviation EUR/RON, and is classed as an exotic currency pair. 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 Romanian leu the 34th most-active currency, accounting for just 0.1% of average daily turnover.
The euro is the currency of the 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.
While not a safe-haven asset, the euro is considered more stable than the Romanian leu, meaning that the EUR/RON strengthens in times of market uncertainty. Romania is an emerging market economy and is one of Europe's poorest nations. The country wanted to adopt the euro, but has so far failed to meet the criteria.
EUR/AUD is the abbreviation for the euro to Australian dollar exchange rate. The pairing accounts for 0.3% of the average daily forex trading volume across the globe, which equates to US$16 billion.
The euro is the currency of the 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. However, the impact of this upon the euro is lessened when trading against the Australian dollar, because the “Aussie” also moves inversely to the US Dollar.
While not a safe-haven asset, the euro is considered more stable than the Australian dollar, meaning that the EUR/AUD/ pairing often strengthens in times of market pessimism, and weakens when risk-demand is elevated.
The Australian economy is highly-reliant upon exports of iron ore, for which Australia accounts for over 50% of the global supply. Changes in the market price can have a strong effect upon EUR/AUD.
The euro to Swiss franc exchange rate is identified by the abbreviation EUR/CHF. On average US$44 billion worth of euros are converted into Swiss francs every day, making up 0.9% of the total global forex volume. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. the Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The euro and the Swiss franc share a strong correlation; the franc was actually pegged to the euro until January 2014, where the Swiss National Bank shocked markets by allowing the currency to float free - a move which saw CHF surge around 30% in a single day.
The EUR/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is viewed as a safe haven asset, while the fate of the Eurozone forever hangs in the balance as political and economic developments cause tension between its constituent nations.
The pound Sterling to Swiss franc exchange rate is identified by the abbreviation GBP/CHF. GBP is the 4th most-traded currency, accounting for 13% of all daily trades; US$649 billion worth. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
Since the UK's vote in 2016 to leave the European Union, politics has become a stronger driver of movement for the GBP/CHF exchange rate. Uncertainty over the future relationship between the UK and the bloc weighs on Sterling.
The Swiss franc is strongly-correlated to euro strength; the franc was actually pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The GBP/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector and its citizens enjoy a great quality of life.
The pound Sterling to Japanese yen exchange rate is identified by the abbreviation GBP/JPY. GBP is the 4th most-traded currency, accounting for 13% of all daily trades; US$649 billion worth. The Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades.
Recently, political factors have seen their influence over the pound grow. This is because the Brexit referendum, which resulted in the UK voting to leave the EU, has created significant uncertainty regarding the UK economic outlook. Signs of upheaval in government as Downing Street tries to negotiate a Brexit deal that pleases all sides of the debate, as well as fears that the UK will crash out of the EU with no deal in place, weigh heavily on Sterling.
The GBP/JPY exchange rate is heavily-influenced by movement in the US Dollar. The Japanese yen is a safe-haven asset, meaning that it appreciates in times of low risk-appetite. However, when USD is strong the lower-yielding yen is less appealing.
An economic calendar is a schedule of dates when significant news releases or events are expected, which may affect the global or local financial markets volatility as well as currency exchange rates. Traders and all functions involved in the markets and financial issues make use of the economic calendar to follow up and prepare on what is going to happen, where and when.
Due to the impact of financial events and announcements, on exchange rates, the forex market is highly affected by monetary and fiscal policy announcements. As such, traders make use the economic calendar to plan ahead on their positions and trades and to be aware of any issues that may affect them.
What is Financial Market volatility?
Financial Market volatility is the degree of variation of a trading price series over time. Many traders will consider the historic volatility of a stock. This is the fluctuations of price in a given time frame. Historic volatility creates forward looking implied volatility. This allows us to predict price variation in the future.
Futures are a specific type of derivative contract agreements to buy or sell a given asset (commodity or security) at a predetermined future date for a designated price. Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
How does the futures market work?
A futures contract includes a seller and a buyer – which must buy and receive the underlying future asset. Similarly, the seller of the futures contract must provide and deliver the underlying asset to the buyer. The purpose of futures in trading is to allow traders to speculate on the price of a financial instrument or commodity. They are also used to hedge the price movement of an underlying asset. This helps traders to prevent potential losses from unfavourable price changes.
What are examples of Futures?
There are numerous types of futures and futures contracts in the trading and financial markets. The following are a few examples of futures that can be traded on: Soft Commodities such as food or agricultural products, fuels, precious metals, treasury bonds, currencies and more.
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.
The Heikin Ashi chart is a type of chart pattern used in technical analysis. Heikin Ashi charts are similar to a candlestick charts, but the main difference is that a Heikin Ashi chart uses the daily price averages to show the median price movement of an asset.
How do you use a Heikin-Ashi chart?
Heikin-Ashi charts resemble candlestick charts, yet have a smoother appearance as they track a range of price movements, instead of tracking every price movement the way candlestick charts do. As with the standard candlestick charts, a Heikin-Ashi candle has a body and a wick. Yet , these candles do not have the same purpose as on a candlestick chart. The last price of a Heikin-Ashi candle is calculated by the average price of the current bar or timeframe.
Is it better to use Heikin-Ashi or candlestick?
Heikin-Ashi averages out price data to create a smoother, easier-to-read chart, while traditional candlestick charts provide more detailed price information. It ultimately depends on the investor's preferences and trading strategy which chart type is better.
Are Heikin-Ashi candles accurate?
Heikin-Ashi candles can be an accurate tool for gauging market trends, although they are often regarded to be less accurate than standard candlestick charts.
Fibonacci retracement is a technical analysis tool that uses horizontal lines to indicate areas where a stock's price may experience support or resistance at the key Fibonacci levels before it continues to move in the original direction. These levels are derived from the Fibonacci sequence and are commonly used in conjunction with trend lines to find entry and exit points in the market. The key levels are 23.6%, 38.2%, 50%, 61.8% and 100%.
Unlike moving averages, Fibonacci retracement levels are static prices. They do not change. This allows quick and simple identification and allows traders and investors to react when price levels are tested. Because these levels are inflection points, traders expect some type of price action, either a break or a rejection.
Why do people use Fibonacci in trading?
Fibonacci retracement is used in trading as it enables traders to identify long-term trends by determining when an asset's price is likely to change direction. This is useful to traders since it can help them to decide when to open or close trading positions, or when to apply stops and limits to their trades.
Is Fibonacci retracement a good strategy?
Fibonacci retracement can be a powerful trading tool when used correctly. It is based on the principle of support and resistance levels and can help identify key levels of entry and exit. When combined with other technical indicators it can help traders take better informed decisions.
Expiry date, also known as expiration date or maturity date, is the date on which a financial contract, such as a futures contract or option, will expire and can no longer be traded. At the expiry date, the terms of the contract, such as the price and quantity, will be settled or exercised. For options, if the holder of the option chooses to exercise it, they will buy or sell the underlying asset at the strike price. For futures contracts, the holder will have to buy or sell the underlying asset at the agreed-upon price.
How does a expiry date work?
One key takeaway about Expiration Dates is that the further away they are the better. In this aspect, the potential value of an option can benefit from a longer time an option prior to expiring. I.e., the said option is more likely it is to hit its strike price and actually become valuable the longer it is on the market.
Are Expiry dates good for day trading?
expiry dates can be an important factor to consider for day trading options and futures contracts as they determine when the contract must be settled or exercised. Day traders should take into account the expiration date when planning their trades and adjust their strategy accordingly. It's important to remember that expiry dates are just one of many factors that can influence the price of financial instruments, and traders should always consider multiple factors when making trades.
Fill order (“Fill”) is the term used to refer to the satisfying of an order to trade a financial asset. It is the foundation of any and all market transactions. When an order has been 'filled', it means it was executed. There are also “Partial fills”, which are orders that have not been fully executed due to conditions placed on the order such as a limit price.
What is minimum fill order?
A minimum fill order is an order placed with a brokerage or trading platform that specifies the minimum number of shares or units that must be executed, otherwise the order will not be executed at all. This type of order is commonly used in situations where a trader wants to ensure that they receive a certain number of shares or units, but is willing to accept a less favorable price in order to ensure that they receive the minimum quantity.
What is unfilled order in trading?
An unfilled order in trading is a buy or sell order that has been placed with a brokerage or trading platform, but has not yet been executed. This can happen if the order is not able to be matched with a counterparty willing to trade at the specified price or quantity. Unfilled orders remain active until they are either executed, canceled or expire.
How long does it take to fill stock order?
The time it takes to fill a stock order can vary depending on a number of factors, including the size and type of the order, the liquidity of the stock, and the overall market conditions. In general, orders for highly liquid stocks with small quantities can be filled in seconds, while orders for less liquid stocks or larger quantities may take longer.
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.
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.
Liquidity refers to how easily or quickly an asset can be bought or sold in a secondary market. Liquid investments can be sold readily and without paying considerable fees. This enables their holders to trade them for cash when needed.
What are the three types of liquidity?
Traders and business owners use three types of liquidity ratio to assess an enterprise. Quick ratio, cash ratio and current ratio. These different measures of liquidity are often used in tandem, but each have their own merits and applications independently.
What happens when liquidity is low?
Stocks with low liquidity are more difficult to sell. Traders may take a bigger loss if they cannot sell the shares when they want to. Liquidity risk is the risk that traders won’t find a market for their assets. This may prevent them from entering or exiting at the desired moment.
What is a good liquidity for a stock?
A stock is considered to have good liquidity when it can be easily bought or sold without significantly affecting the stock's price. This means that there are a large number of buyers and sellers actively trading the stock, and the bid-ask spread (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept) is small.
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.
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.
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.
Index Trading is a type of trading that involves trading a specific financial index such as the S&P 500. It is considered to be a passive investment strategy, where the investor seeks to match their performance with the broader market, instead of attempting to beat it.
What is an index?
An index is a measure of a portion of the stock market that reflects changes in the value of a basket of stocks within it. This can provide an overall snapshot of how a specific market is performing. For example, the US Tech 100 gives a broad overview of the US tech market performance at any given time.
What are indexes used for in finance?
Indexes are used in finance to measure the performance of portfolios and to benchmark the performance of investments against a predetermined set of criteria. They also help investors assess and analyze market trends, risks, and opportunities.
What are different types of index in stock market?
There are different types of indices in the stock market. Some indices used in Index trading are often used as benchmarks to evaluate performance in financial markets. Some of the most important indices in the U.S. markets are the Dow Jones Industrial Average and the S&P 500.
A long position is a market position where the investor has purchased a security such as a stock, commodity, or currency in expectation of it increasing in value. The holder of the position will benefit if the asset increases in value. A long position may also refer to an investor buying an option, where they will be able to purchase an underlying security at a specific price on or before the expiration date.
What is riskier a long or a short position?
A short position is considered riskier than a long position because the potential loss is theoretically unlimited, while the potential profit is limited to the amount of depreciation in the value of the security. When an investor short sells a stock, they borrow shares from someone else and sell them, with the hope that the price will drop so they can buy the shares back at a lower price and return them to the lender, pocketing the difference. In case the price of the stock rises instead, the loss for the short seller is theoretically unlimited as there is no limit to how high the stock price can go.
When should I buy a long position?
When an investor believes that the market will rise, they could consider purchasing a long position.
How can I protect my long position?
Protecting a long position often involves setting up a stop-loss order, which automatically sells the asset at a predetermined price. This ensures that any sharp market drops don't result in excessive losses for the investor.
A limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders. By placing a limit order they tell a broker to buy or sell a particular stock at a certain price or better than that price (lower for buying, higher for selling). This order is executed only if the transaction can be processed at the limit set in the order.
Is a limit order a good idea?
A key benefit of using a limit order is to ensure that the stock is bought or sold at a certain price point or better than that price point. There is of course the risk of not being able to execute that order as that specific price may never reach that limit as set in the order.
What are the types of limit order?
There are several types of limit orders in trading:
Buy Limit Order: An order to buy a security at a specific price or lower.
Sell Limit Order: An order to sell a security at a specific price or higher.
Buy Stop Limit Order: A stop order to buy a security at a specific price or higher, only activated once a specified stop price has been reached.
Sell Stop Limit Order: A stop order to sell a security at a specific price or lower, only activated once a specified stop price has been reached.
Trailing Stop Limit Order: A type of stop order where the stop price is set at a fixed amount or percentage below or above the market price, and adjusts as the market price moves.
Founded in 2014, NEO is a non-profit, open source blockchain and crypto project. It supports its own cryptocurrency, enabling development of digital assets and smart contracts. Trade the NEO/USD instrument using the latest spot rate.
An Order in trading is a request sent by a trader to a broker or trading platform to make a trade on a financial instrument such as shares, Crypto, CFDs, currency pairs and assets. This can be done on a trading venue such as a stock market, bond market, commodity market, financial derivative market, or cryptocurrency exchange
What are the most common types of orders?
Common types of orders are:
• Market Orders. A market order is given by traders and investors as an order to immediately buy or sell an asset, security, or share. Such an order guarantees that the order will be executed, yet the actual execution price is not guaranteed.
• Limit Orders. A limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders.
• Stop Orders. Stop orders instruct brokers to execute a trade when the asset’s price reaches a certain level.
Materials Select Sector SPDR Fund (XLB) tracks US basic materials companies within the S&P 500. This asset uses the Materials Select Sector Index as its tracking benchmark. The limited spread and niche sector mean that it is heavily concentrated. Just a few holdings make up a big part of the portfolio, and there are only 24 holdings in total.
Top holdings for the benchmark index include DowDuPont Inc, Linde Plc, Ecolab Inc and The Sherwin-Williams Co.
Non-farm payrolls are a monthly statistic representing how many people are employed in the US, in manufacturing, construction and goods companies. These statistical reports also known as non-farms, or NFP. The name is derived from jobs that aren’t included in these statistics, which are : agricultural workers and those employed by private households or non-profit organizations. The NFP report data is generally released on the 1st Friday of any calendar month and has the potential to significantly impact multiple markets, including on a global level.
The NFP report is comprised of the following three segments:
• The numbers: jobs created or lost.
• Unemployment rate.
• Average Hourly Earnings. Reflecting the changes in wages enterprises pay for labour.
NFPs are very important to Forex traders as they follow it to see how the USD currency pairs react. Gold is also a popular asset to trade on NFP results.
NZD/CHF is the abbreviation for the New Zealand dollar to Swiss franc exchange rate. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/CHF rate lower. When dairy prices rise, the opposite happens.
The Swiss franc is strongly-correlated to euro strength; the franc was pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The NZD/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector.
A MetaTrader is an electronic trading platform widely used by online retail traders. The MetaTrader application consists of both a client and server component. The server component is run by the broker and the client software is provided to the broker’s customers, who use it to see live streaming prices and charts, to place orders, and to manage their accounts.The platform works on Microsoft Windows-based applications as well as on Andriod and Mac OS applications.
Marktets.com supports the use of both the MetaTrader 4 and MetaTrader 5 trading platforms with its traders.
Metatrader 4 is still one of the most popular and easy-to-use trading platforms. With Expert Advisors, micro-lots, hedging and one-click trading.
Metatrader 5 is a powerful upgrade and the most advanced online trading platform It is a multi-asset derivatives platform for trading on CFDs and enables traders to perform hedging and netting, and delivers more technical indicators as well as more insight with market depth and a wider number of timeframes.
Can I trade on MetaTrader without a broker?
While you can download and use the MetaTrader software without a broker, it is not possible to trade without one. In order to execute trades on MetaTrader, you will need to open an account with a broker that offers the platform and deposit funds into that account.
The Opening Price is the price at which a security first trades upon the opening of an exchange on a trading day. It is important to note that it may not identical to the previous day’s closing price. Also, for new stock offerings (IPO etc), Opening Price refers to the initial share price at the beginning of trade of the first day. Yet there are some cases when an opening price will also be the share price which was established by the first trade of the day, instead of being based on a price that was already in place when at the beginning of trade of that day at that specific exchange.
How is opening price calculated?
The opening price is can be calculated by taking the first trade price executed in that trading session. In case of stock trading it is the price of the first trade executed on the exchange when the market opens. Opening price is usually used to calculate the performance of the stock or any other asset for the day.
What is the difference between opening price and closing price?
The opening price is the price of an asset at the start of a trading session, while the closing price is the price of an asset at the end of a trading session.
Who sets the opening price of a stock?
The opening price of a stock is typically set by the stock exchange or market maker responsible for trading that stock.
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.
Moving Average Convergence/Divergence, also known as MACD , is an analytical trading indicator. Its function is to show changes in the strength, direction, momentum, and duration of a trend in a share’s price. The MACD indicator is comprised of three time series charts based on historical price data. For example, closing price.
How can you tell if MACD is bullish?
If the MACD line (the blue line) is above the signal line (the red line), it is considered to be bullish and suggests that the security's price is likely to rise. This is because the MACD line is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA, and when the 12-day EMA is above the 26-day EMA, it indicates that short-term momentum is bullish and the stock is likely to rise.
Is MACD a good indicator?
MACD is a widely used technical indicator that can be a useful tool for identifying trends and potential buy or sell signals in the market. However, like any indicator, it has its limitations and should be used in conjunction with other technical analysis tools and fundamental analysis to make informed trading decisions.
Which is better MACD or RSI?
Both the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) are popular technical indicators used in trading. They are both useful tools for identifying trends and potential buy or sell signals, but they are based on different calculations and are used for different purposes.
The MACD is a momentum indicator that is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. It is used to identify bullish or bearish trends and potential changes in momentum.
The RSI, on the other hand, is a momentum oscillator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.
Both indicators can be useful, but they can also give different signals, so once again, it's important to use them in conjunction with other indicators and analysis techniques to make informed trading decisions.
Synthetix (SNX) is a decentralized protocol that lets users gain exposure to assets like other cryptos, gold, and stocks, without actually holding the underlying resource. These synthetic assets are backed by the platform's cryptocurrency, Synthetix Network Token (SNX), which is staked as collateral in order to generate rewards. It is priced in USD and can be traded using the SNX/USD symbol.
A quoted price is the most recent price at which an asset was traded at. Global and local events, either of a financial nature or completely unrelated to finances continually affect the quoted prices of assets such as stocks, bonds, commodities, and derivatives changes continually throughout a trading. Additionally, It is often the price point where buyers and sellers agree on, the most up-to-date agreement between buyers and sellers, or the bid and ask prices. It is also where supply meets demand.
Is a quoted price legally binding?
In most cases, when trading in an exchange, the quoted price is binding and the trade is executed at the quoted price, with the exchange acting as a counterparty to the trade. However, when trading OTC (over-the-counter), the quoted price is not necessarily binding as the parties have more flexibility in negotiating the final price, and the counterparty risk is higher.
The term Spreads in trading is defined as the gap between the highest price to be paid for any given asset, to the lowest price the current asset holder is willing to sell at. Different markets and assets generate different spreads. For example, the Forex market, where both buyers and sellers are very active with this “gap” or spread will be small.
In trading, a spread is one of the key costs of online trading. Generally, the tighter the spread, the better value traders get from their trades. Also, spreads are implied costs, where it is presented to traders in subsequent trades, as the assets traders buy on leverage must increase above the level of the Spread, rather than the above the initial price, for traders to make profit.
What is the importance of a Spread?
The Spread is important, even a crucial piece of information to be aware of when analysing trading costs. An instrument’s spread is a variable number that directly affects the value of the trade. Several factors influence the spread in trading:
• Liquidity. How easily an asset can be bought or sold.
• Volume. Quantity of any given asset that is traded daily.
• Volatility. How much the market price changes in a given period.
The risk/reward ratio is a known concept for those engaging in business. So, what is a Risk/Reward Ratio in trading, and does it follow the same guidelines and practices of the business world?
In trading, the Risk/Reward Ratio measures the expected gains of a given trade, asset, or position against the risk of potential loss. It is typically shown as a figure for the assessed risk separated by a ':' from the figure for the prospective reward.
What is a good Risk/Reward Ratio?
Acceptable ratios can vary, based on multiple factors. You can calculate this by dividing your "reward" (the end result or net profit) by the price of your maximum risk. It is generally accepted that if a risk is equal or greater than the corresponding reward, the trade position will not be worth the risk. Equally generally acceptable is the notion that a ratio greater than 1:3 is minimally required in order to justify the risk, i.e. a good risk/reward ratio.
By definition, this ratio quantifies the relationship between the potential currency lost, if the trade or action taken do fail, versus realized sum (gained) if all goes as planned.
Traders make use of the Risk/Reward Ratio to as one of the means to determine viability or worthiness of a given investment. One way to limit risk is to issue stop-loss orders, which trigger automatic sales of stock or other assets when they hit a specific value. This enables traders to limit potential risks.
Short selling is a trading strategy where an investor borrows shares of a stock or security they believe will decrease in value, and then sells it on the market. If the price of the stock or security falls as expected, the investor can then buy the shares back at the lower price, return the borrowed shares, and keep the difference as profit. Short selling is considered a high-risk strategy because theoretically there is no limit to how high the price of a stock can go, so the potential loss is theoretically infinite.
What is the benefit of short selling?
The benefit of short selling is that it allows investors to benefit from a decline in the value of a security. While traditional investors can only benefit when the prices of the assets they hold increase, short sellers can do well when the prices decrease as well. This allows investors to potentially profit in both rising and falling markets. Additionally, short selling can also be used as a hedging tool, to offset the risk of long positions in a portfolio.
Is Short Selling a good idea?
Short selling can be a good idea for some investors, but it is considered a high-risk strategy and is not suitable for all investors. It requires a great deal of knowledge and experience to correctly identify the securities that are likely to decrease in value and to correctly time the trade. Additionally,because the potential losses from short selling can be theoretically infinite as explained above it is important for investors to fully understand the risks and potential rewards associated with short selling before engaging in this strategy.
Technology Select Sector SPDR Fund (XLK) tracks US tech companies within the S&P 500. This asset uses the Technology Select Sector Index as its tracking benchmark. As the tech firms in the index are just drawn from the S&P 500, there are some odd inclusions such as financial payment processors and telecoms companies.
The index comprises just 69 holdings from the tech sector, with two accounting for more than a third of the index – Microsoft Corp and Apple Inc. Other holdings include Visa, Intel and Cisco.
SLV, also known as iShares Silver Trust, tracks the price of silver bullion held in London. This ETF provides investors with direct exposure to silver as the ETF physically holds the precious metal in vaults in London. This fund is one of the most liquid of its peer group and is popular among retail and institutional investors.
This ETF is suitable for buy and hold strategies. Traders should consider this asset to gain exposure to the day to day price of silver bullion, to get access to physical silver or to diversify your portfolio and protect against inflation.
A Reversal is when the direction of a financial market or asset moves in the opposite direction from its current trend. Reversals can occur over a period of time and can be either bullish (price increasing) or bearish (price decreasing). Being aware of these trends can help traders maximize their profits.
What is an example of reversal?
If the stock market has been rising for several weeks and then begins to fall, that's considered a reversal. Reversals are an important concept for investors to understand as they can indicate a change in sentiment that could lead to further movement in the same direction.
A spot price is the current market value of an asset or security. It's the amount you would pay to buy or sell it at that exact moment in time. Spot prices are constantly changing, as they depend on supply and demand forces in the marketplace. Spot prices provide important insights into market trends and can be used by traders to make investment decisions.
Why is it called a spot price?
It is called a "spot" price because it refers to the price at which an asset can be bought or sold "on the spot" or immediately.
How is spot price calculated?
The spot price of a commodity, security, or currency is typically determined by supply and demand factors in the market. The price is influenced by a variety of factors such as production costs, political and economic conditions, and speculation.
What are Support Levels?
Support levels refer to the levels at which the price of an asset tends to stop falling and stabilize. These levels are determined by analyzing past price movements and identifying a floor at which buying pressure is strong enough to prevent the price from falling further. Traders and investors use support levels as a guide for placing buy orders, and as a signal for potential buying opportunities.
What does support level mean in Crypto?
Support levels mean the same thing regardless of the asset class in question.
What is the best indicator for support and resistance?
There are several indicators that can be used to identify support and resistance levels in a market. Some commonly used indicators include moving averages, Fibonacci retracements, and pivot points. However, no single indicator is considered to be the "best" as different indicators may work better in different market conditions and for different traders. Ultimately, the best indicator is the one that works best for you and fits your individual trading style and strategy.
A trade execution is the process of executing a trading order in the financial markets. This typically involves verifying all of the parameters for the order, sending the request to the market or exchange, monitoring execution, and ensuring all transaction requirements have been met.
Brokers execute Trade Execution Order in the following ways:
• By sending orders to a Stock Exchange
• Sending them to market makers
• Via their own inventory of securities
Why is execution of trade important?
Trade execution is important due to the fact that even digital orders are not fully instantaneous. Trade orders can be split into several batches to sell since price quotes are only for a specific number of shares. The trade execution price may differ from the price seen on the order screen.
What is trade execution time?
Trade execution time is the period of time between a trade being placed and the completion of the trade. This includes market access, pricing, liquidity sourcing, risk management and settlement of funds. Trade execution time can vary depending on asset class, liquidity levels and other factors.
Stock trading is the practice of buying and selling stocks, or shares of ownership in a publicly-traded company, with the goal of making a profit through price appreciation or by receiving income in the form of dividends. Stock traders buy and sell shares in the stock market using a brokerage account, and they use a variety of strategies and techniques to determine when to enter and exit trades. Stock trading is a popular form of investment, but it also comes with risks and profits are in no way guaranteed. You should acquire a good understanding of the market and individual stocks before making trading decisions.
How are Stocks Different from Other Securities?
Stocks, also known as equities, represent ownership in a corporation, while other securities represent claims on an underlying asset. Other types of securities include bonds (debt securities), options, and derivatives.
How Do I Start Trading Stocks?
You can trade stocks using a stock exchange. Platforms like markets.com offer CFDs on stocks and other securities so you can start assembling and get trading outcomes of your own!
Trading trends refer to the overall direction of a security or market, often revealed through chart patterns or indicators. Traders use these trends to identify potential entry and exit points, as well as possible trading opportunities. Analyzing the financial markets in order to identify trends is an essential skill for successful traders. With knowledge of historical trends, investors can spot emerging ones and plan accordingly.
How do you identify a trend in trading?
Analyzing past market movements, changes in asset prices and economic data can be used to identify short-term and long-term trends. Using technical indicators such as moving averages, MACD, and stochastics can also help you spot potential trading opportunities and take advantage of prevailing market trends.
What are the 3 types of trends?
When analyzing the stock market, there are three primary trends that can be observed: short-term, intermediate-term, and long-term. Short-term trends generally last within one to three weeks, intermediate-term trends can range from one to four months, and long-term trends last more than a year. Being able to identify these different trend patterns will help investors maximize their potential returns.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
Stop Orders are a type of stock order that helps limit the investor’s risk. The order triggers a purchase or sale once a set price is reached, either above (stop buy) or below (stop sell). Stop Orders are used to protect investors against an unfavorable price movements and lock in potential gains.
How long do stop orders last?
Stop orders are instructions given to a broker to buy or sell an asset when its price reaches a predetermined level. Stop orders remain in effect until the stop price is triggered, at which point the order becomes a market order and will be executed. This means that stop orders may last for an indefinite amount of time. It is important to monitor the current market price closely as stop orders do not guarantee execution.
Are stop orders a good idea?
Stop orders can be useful as they can help limit an investor's loss or protect a profit on a security. They are often used to automatically exit a position when the market moves against the investor. However, the use of stop orders may be subject to market conditions and the specific investment strategy of an investor, so whether or not they are a good idea depends on the individual's financial situation and risk tolerance.
A share is a partition of the total value of a company. Each share represents a unit of ownership in that company, and therefore also the value that it holds. Should a company choose to sell shares as a means of fundraising, this is known as equity finance.
A share owner is called a shareholder (or stockholder). The ongoing value of a share, once it is introduced to the market, is its trading value at any given time, which can be either lower or higher than the original value. A share is worth whatever price it is currently trading at. An actual transaction of shares between a buyer and a seller is usually considered to provide the best market indicator as to the "true value" of that share at that time. The difference between current price and open price will represent either a profit or a loss to the investor who purchased it.
There are different types of shares in the trading domain, including Cumulative & Non-cumulative Preference Shares, Participating & Non-participating Preference Shares, Convertible & Non-convertible Preference Shares, Redeemable & Un-redeemable Preference Shares.
It is also possible to use CFDs to trade shares. This enables traders to take a leveraged position on whether a share rises or falls. This different type of share trading opens up more trading opportunities by either buying or selling the asset without physically owning it.
What is a Rally in Trading?
A rally in trading refers to a period of time when the price of an asset, such as a stock or commodity, rises significantly. A rally is often characterized by an increase in buying activity and positive investor sentiment, which drives the price upward. Rallies can be short-lived or last for an extended period, depending on the underlying factors driving the market.
How long does a stock rally last?
Rallies can be short-term or long-term depending on factors like market sentiment and the performance of underlying stocks. On average, stock rallies can last anywhere from a few days to several weeks or even months. The length of any given rally is impossible to predict and it’s up to individual investors to do their research and make their own decisions on whether they want to invest during a stock rally.
How do you identify a stock rally?
Rallies can be identified by several factors including an increase in price, strong trading volume, positive news stories and upbeat investor sentiment. To accurately determine if there is a stock rally, look at the index chart of the overall market, specific sectors or individual stocks. Additionally, keep an eye on economic indicators such as gross domestic product, employment data and consumer confidence to assess if conditions are conducive for a rally. Doing research and regularly monitoring the stock market can help investors identify potential opportunities during a rally.
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.
Slippage is a common occurrence in trading when the price of an asset changes before an order can be filled. Slippage often happens when large orders are placed and market conditions change quickly, meaning that traders must accept the new price for their order or risk having it rejected. It’s important for traders to factor slippage into their trading strategies as unexpected slippage can affect trade outcomes.
What is a good slippage tolerance?
A good slippage tolerance is a matter of personal preference and depends on the trading strategy and risk tolerance. Generally, a low slippage tolerance is preferred as it allows for more precise execution of trades at the desired price. A high slippage tolerance allows for more flexibility in trade execution, but may result in less favorable prices. A slippage tolerance of 1-2% is considered to be reasonable for many traders.
How do traders avoid big losses when it comes to slippage?
Traders can avoid big losses due to slippage by using proper risk management strategies, such as setting stop-loss orders, using smaller position sizes, and using limit orders instead of market orders. Additionally, traders can look for a trustworthy and reliable broker with low slippage levels. Trading during less volatile periods can also help to minimize slippage.
What is maximum slippage?
Maximum slippage in trading refers to the largest difference between the expected price and the actual execution price of a trade. It is a measure of the worst-case scenario for slippage and can represent the largest potential loss a trader may face due to slippage. It is usually set by the trader in advance and if the slippage exceeds that level, the trade will not execute. The level of maximum slippage a trader is willing to accept is generally based on their individual risk tolerance.
0x Token (ZRX) jusers can create markets for crypto assets representing any form of value – these could include markets for tokens representing physical real estate, to tokens representing shares of stocks and bonds, to tokens representing other crypto assets. It is priced in USD and tradebale via our platform using the ZRX/USD symbol.
The WisdomTree Emerging Markets High Dividend ETF (DEM) tracks the WisdomTree Emerging Markets Dividend Index. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index. This provides it with some downside protection from market volatility.
DEM is an equity fund, and has a mix of market sectors. It includes stocks from key emerging markets such as Russia and China, with assets including China Contruction Bank, China Mobile and Norilsk Nickel.
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 US Dollar to South African rand exchange rate is identified by the abbreviation USD/ZAR. 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 rand is the 20th most active currency, accounting for 1% of average daily turnover. Around $40 billion worth of USD/ZAR is traded each day.
USD/ZAR appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower-yielding, lower risk, assets. The South African rand is a highly-volatile currency thanks to the country's unstable economy, high levels of government debt, poor credit rating, and the political ramifications of apartheid.
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. It is the most popular reserve currency.
The US Dollar to Hungarian forint exchange rate is an exotic currency pair known by the abbreviation USD/HUF. 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 forint is the 26th most-active currency, accounting for just 0.3% of daily transactions.
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.
As an emerging market currency, the forint is popular in times of confidence and is sold in favour of safer, lower-yielding assets when volatility increases.
Compared to its emerging market peers, Hungary has a small level of foreign currency debt, providing some insulation for the economy and its currency against external disruption. Hungary enjoys a strong economy, with low payroll and corporate taxes and growth that outpaces the EU average.
The US Dollar to Romanian leu exchange rate is identified by the abbreviation USD/RON. 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 Romanian leu the 34th most-active currency, accounting for just 0.1% of average daily turnover.
Romania is an emerging market economy and is one of Europe's poorest nations. The country wanted to adopt the euro, but has so far failed to meet the criteria. USD/RON appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower-yielding, lower risk, currencies.
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. It is the most popular reserve currency, meaning central banks stockpile dollars to use in times of domestic currency weakness.
The US Dollar to Swedish Krona exchange rate is identified by the abbreviation USD/SEK. 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 Swedish Krona is the 9th most-traded currency, accounting for 2.2% of daily transactions. US$112 billion worth of SEK is traded daily.
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 Swedish krona shares a strong correlation with its Scandinavian peers the Norwegian krone and the Danish krone. These currencies - which all translate as “crown” - came about in 1873 when Sweden and Denmark formed the Scandinavian Monetary Union, backed by the gold standard. Norway joined two years later. When the union was dissolved after World War Two, the countries independently kept the currency.
The US Dollar to Singapore dollar exchange rate is identified by the abbreviation USD/SGD. 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 Singapore dollar accounts for 1.8% of all daily forex transactions, making it the 12th most-traded currency on the globe.
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 Singapore dollar has been allowed to float free by the Monetary Authority of Singapore (MAS) since 1985, but the range in which it is permitted to trade has never been disclosed. SGD has a weak correlation with the Chinese yuan. This, combined with a solid financial sector and property market, has made Singapore an attractive place for offshore investors, helping to keep the appeal of the local currency elevated.
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 US Dollar to Mexican peso exchange rate is identified by the abbreviation USD/MXN. 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 Mexican peso is the 11th most-traded currency, accounting for 1.9% of daily transactions.
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. It is the most popular reserve currency
MXN is tied to the price of crude oil because of Mexico's high reserves, which the government uses as collateral when borrowing to fund spending. 10% of Mexico's GDP comes from oil production, so when prices fall it not only pushes up borrowing costs, but also weakens the outlook for growth.
Cross-border trade with the US also generates strong demand for pesos. The currency therefore weakens when trade comes under threat.
The US Dollar to Polish zloty exchange rate is identified by the abbreviation USD/PLN. 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 Polish zloty the 22nd most active currency, accounting for 0.7% of average daily turnover. Approximately $19 billion worth of USD/PLN is traded each day.
Poland is an emerging market economy, favoured by investors in times of market certainty because of its higher yielding assets.
The zloty reflects the strength or weakness of the Eurozone economy due to the strong trading relationship between Poland and the Eurozone, as well as the fact that Poland could eventually become a member of the bloc. Positive Eurozone data can therefore support the zloty.
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. It is the most popular reserve currency.
The US Dollar to Turkish lira exchange rate is identified by the abbreviation USD/TRY. 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 lira is the 16th most active currency, accounting for 1.4% of average daily turnover.
Turkey is an emerging market and relies heavily upon the EU for both imports and exports; weakness in the Eurozone economy is therefore a bad sign for Turkey as well. USD/TRY appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower risk currencies.
The Turkish economy is largely fuelled by foreign currency loans, a strong USD can prompt further lira selling on fear of higher credit costs for Turkey's corporations.
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.
USD/NOK is the symbol for the US Dollar to Norwegian krone 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 krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US48 billion worth of USD/NOK - 0.9% of the total daily volume - is traded each day.
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 Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. USD/NOK therefore benefits doubly in times of low risk-appetite.
The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK.
USD/DKK is the symbol for the US Dollar to Denmark krone 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 Denmark krone is the 21st most-traded currency in the world and is involved in 0.8% of all forex transactions each day. On average US$42 billion worth of krone is exchanged each day.
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 Danish krone is pegged to the euro through the European Exchange Rate Mechanism, also known as ERM 2. The central fixed rate is 746.038 krone per €100 but, unlike the standard +/- 15% fluctuation permitted under ERM 2, the Krone is limited to a fluctuation of just +/- 2.25%. Because it is pegged to the euro, the krone is also highly-vulnerable to USD strength - even when traded against other currencies.
The US Dollar to Brazilian real exchange rate is known by the acronym USD/BRL. 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 Brazilian real is the 19th most actively traded currency, accounting for 1% of all average daily turnover. US $45 billion worth of over-the-counter USD/BRL trades are made every day.
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 real was adopted in July 1994 and was pegged against the US Dollar until 1999. The USD/BRL exchange rate is a popular one with carry traders; those who borrow dollars, convert them into real and then use the proceeds to buy debt issued in Brazil, where interest rates are significantly higher than in the United States. Times of market uncertainty can deter carry traders, as high USD/BRL volatility can weaken profits made from exploiting the interest rate differential.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
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.
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.
Volatility is the amount of uncertainty or risk associated with the size of changes in a security's value. It is measured by calculating the standard deviation of returns over a given period. High volatility means the price of an asset can change dramatically over a short time period in either direction. Traders often take advantage of volatility by speculating on stocks, options, and other financial instruments.
What causes market volatility?
Market volatility can be caused by a variety of factors including economic data releases, political events, changes in interest rates, and unexpected news or events. It can also be caused by changes in investor sentiment, speculation and market manipulation.
How do you know if a market is volatile?
A market is considered volatile if prices change rapidly, unpredictably, and significantly. This can be measured using volatility indices or by analyzing price movements and fluctuations over time.
The US Dollar to Indian rupee exchange rate is an exotic currency pair known by the abbreviation USD/INR. 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 rupee is the 18th most-active currency, accounting for 1.1% of daily transactions.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. As an emerging market currency, the rupee is popular in times of confidence and is sold when volatility increases. As a result of rising global trade tensions, INR weakened to record lows in the second half of 2018.
India is a net oil importer, so rising crude prices increase import costs, widening the current account deficit. Foreign direct investment (FDI) is key for the Indian economy, which benefits from overseas businesses looking to take advantage of the tax exemptions and lower labour costs.
In trading, “Volume of Trade” (Volume) refers to the total quantity of shares or contracts traded for a specific security, share or even to the market as a whole. Volume of trade can be measured through any type of asset traded during a specific duration, usually a trading day.
How is trade volume calculated?
Trade volume is calculated by adding together the number of shares or contracts traded during a specified time period.
What is a good volume to trade?
A good trade volume for a security varies and can depend on factors such as the type of security, market conditions, and overall liquidity. Generally, higher trade volume indicates greater liquidity, which can make it easier to buy and sell the security.
What does it mean when trade volume is high?
High trade volume means there is a high number of shares or contracts being bought and sold in a security or market, indicating high levels of interest and liquidity.
Working orders, also known as pending orders, include Stop orders and Limit orders. Essentially, they’re instructions for a broker to perform a trade when an asset hits a certain price. These orders inform brokers that traders wish to make that trade only if something happens to the asset price.
What is the best order type when buying stock?
The best order type depends on the individual's specific needs and market conditions. It's important to understand the trade-off between speed and price certainty when choosing an order type. Market orders provide immediate execution but at the current market price, while limit orders offer price certainty but may not be executed if the desired price is not reached.
What is an open work order?
An open work order in trading is an outstanding order to buy or sell a security that has not yet been executed. It remains open until it is either filled or cancelled by the trader.
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