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.
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.
A share buyback, also known as a stock repurchase, is when a company buys back its own shares from the open market. This reduces the number of outstanding shares and increases the ownership stake of existing shareholders. Buybacks can be used as a way for a company to return excess cash to shareholders, increase earnings per share, or signal confidence in the company's future prospects.
Is share buyback a good thing?
Share buybacks can have both positive and negative effects on a company and its shareholders. On one hand, buybacks can be seen as a sign of a company's financial strength, as they suggest that the company has excess cash and believes its own stock is undervalued. Additionally, buybacks can help to boost earnings per share, which can increase the company's valuation. On the other hand, buybacks can also be criticized for diverting resources away from investments in growth or other opportunities, or for being used as a way to artificially boost the stock price. It's important for investors to evaluate the company's financial situation and the reason behind the buyback before making a decision on whether it is good or not.
What happens to share price after buyback?
Share price can be affected by a buyback in different ways, it will depend on the market conditions, the company's financial situation and the reason behind the buyback. In general, a buyback can help to boost the share price by increasing earnings per share and reducing the number of outstanding shares. Additionally, the announcement of a buyback can also signal confidence in the company's future prospects, which can attract more buyers to the stock. However, a buyback doesn't guarantee an increase in the stock price, if the market conditions are not favorable or if the company's financial situation is not good, the stock price could remain unchanged or even decrease.
What is the reason for share buyback?
A company may choose to buy back its own shares for a variety of reasons, including:
-Returning excess cash to shareholders: A buyback can provide shareholders with a more direct benefit from the company's cash reserves, rather than leaving the money idle or reinvesting it in less profitable ventures.
-Increasing earnings per share: By reducing the number of outstanding shares, buybacks can increase earnings per share, which can make the company look more valuable to investors.
-Signaling confidence: A buyback can signal to the market that the company's management believes the stock is undervalued, which can attract more buyers to the stock.
-Boosting stock price: By purchasing shares in the open market, a buyback can help to boost the stock price, which can benefit existing shareholders.
-Mitigating dilution: If a company issues new shares, it can dilute the value of existing shares, buying back shares can help to mitigate this dilution.
It's important to note that buybacks can also be used as a tool by management to artificially boost the stock price in the short term, rather than for the benefit of long-term shareholders.
Earnings Per Share (EPS) is a financial metric that measures the amount of profit a company makes for each outstanding share of its common stock. It's calculated by dividing net income by the number of shares outstanding. Investors use EPS to measure how profitable a company is and to compare different companies in the same sector.
What is a good earnings per share? Is it better to have a high or low earnings per share?
There is no definitive answer to what constitutes a "good" earnings per share (EPS) as it can vary depending on the industry, the size of the company, and the expectations of the market. Generally, a higher EPS is considered better, as it indicates that a company is generating more profit per share of stock.
What is earnings per share vs dividend?
A dividend is a payment made by a company to its shareholders out of its profits or reserves. Whereas EPS is an indicator of a company's profitability.
iShares MSCI Taiwan (EWT) ETF tracks the investment results of an index composed of Taiwanese equities. The ETF provides exposure to large and mid-sized Taiwanese companies and can be used to access to the Taiwanese stock market. EWT includes 90 of the top companies on the Taiwanese Stock Exchange. It is heavily weighted toward the information technology and finance sectors, which account for 55.5% and 18.5% of the portfolio respectively.
The top ten holdings include Taiwan Semiconductor Manufacturing, Hon Hai Precision Industry Ltd, Formosa Plastics Corp and Chunghwa Telecom Ltd.
ProShares Ultra Silver, also known as AGQ, is a single-day bet, not a buy-and-hold ETF. AGQ is a leveraged ETF that aims to deliver daily investment results that equate to twice the daily price performance of silver bullion, measured by US Dollar for delivery in London.
The Proshares Bitcoin Strategy ETF (Bitcoin ETF) offers managed exposure to bitcoin futures contracts. The Fund does not invest directly in bitcoin and may also invest in other instruments. It’s one of the first of its kind and marks a new way to get exposure to cryptocurrency price movements.
ProShares UltraShort S&P500 (SDS) looks to deliver daily investment results that are twice the inverse of the daily performance of the S&P500. This is a leveraged product and designed as a single-day bet. Returns for periods longer than one day could expose investors to performance drift.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
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.
ProShares Ultra QQQ (QLD) aims to deliver daily investment results that are twice the performance of the Nasdaq 100 Index. This ETF provides leveraged exposure to a market-cap weighted index of 100 non-financial stocks listed on the NASDAQ. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. All leveraged products carry more risk than unleveraged products.
The Nasdaq 100 is dominate by tech firms, so the performance of the index is closely tied to the sector. Top holdings include Apple, Amazon, Facebook and Tesla.
ProShares UltraShort QQQ (QID) aims to deliver daily investment results that are twice the inverse daily performance of the Nasdaq 100 Index. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. This is the sister product to QLD, which delivers two times the daily performance of the Nasdaq 100.
As with most inverse and leveraged products, this fund is designed to provide inverse exposure on a daily basis, not as a long-term inverse bet against the index. All leveraged products carry more risk. Nasdaq 100 holdings include Apple, Amazon, Facebook and Tesla.
iShares MSCI South Korea (EWT) ETF tracks the investment result of an index composed of South Korean equities. It provides traders with exposure to large and mid-sized South Korean companies and is a way to access the South Korean Stock Market. EWY follows 114 of the top companies listed in the South Korean Stock Exchange, and reflects the market well.
With Samsung as one of the major companies represented in the portfolio, it is unsurprising that Information Technology companies comprise a large part of this ETF. Almost 30% of the portfolio is IT, the next largest sector is Finance with 14.06%. Hyundai, LG and Kia also feature in this ETF.
DBC, also known as the PowerShares DB Commodity Tracking ETF, tracks 14 commodities based on the futures curve. It aims to limit the effect of contango and maximise the effect of backwardation so that investors improve their returns. The commodities included in the ETF are gasoline, heating oil, Brent crude oil, WTI crude oil, gold, wheat, corn, soybeans, sugar, natural gas, zinc, copper, aluminium and silver.
Unlike other commodity ETFs, DBC rolls future contracts based on the shape of the future curve, rather than following a schedule. This allows the ETF to generate the best roll yield by minimising losses and maximising backwardation.
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.
ProShares UltraShort Bloomberg Crude Oil (SCO), aims to deliver results that are twice the inverse daily performance of the Bloomberg WTI Crude Oil Subindex. It is an ETF product for traders looking to short crude oil in a single day bet. Trades that last for more than a day are not expected to see the same returns.
The subindex reflects WTI Crude Oil prices and only consists of futures contracts on WTI Crude Oil. This is a leveraged product, all leveraged products carry more risk than unleveraged products.
The iShares Global Clean Energy ETF (ICLN) seeks to track the investment results of an index composed of global equities in the clean energy sector.
The iShares MSCI KLD 400 Social ETF (DSI) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
The iShares MSCI USA ESG Select ETF (SUSA) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
The iShares ESG MSCI USA Leaders ETF (SUSL) seeks to track the investment results of an index composed of U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider.
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.
IXN is an iShares Global Tech ETF seeks to track the investment results of an index composed of global equities in the technology sector, offering exposure to electronics, computer software and hardware, and informational technology companies. Targeting tech stocks from around the world, you can use this ETF to get a global view of this sector.
Innovation ETF (ARKK) is based on “disruptive innovation”, focusing on technologies or services that have the potential to change the world.
Companies within ARKK cover those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies, industrial innovation in energy, automation and manufacturing, the increased use of shared technology, infrastructure and services, and technologies that make financial services more efficient.
ProShares UltraShort Russell2000 (TWM) is a leveraged product that seeks to deliver twice the inverse of the daily performance of the USA2000 Index. Results aims to be 200% of the opposite to the movement of the index. This is a daily-bet, so results will vary dramatically for positions held longer than one day.
The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
UPRO, ProShares Ultra Pro S&P500, provides 3x daily exposure to the S&P 500 Index. The ETF aims to deliver daily returns that are three times that of the S&P 500 Index, which comprises US large cap equities. The S&P 500 represents some of the largest and most liquid US stocks on the market.
This is a leveraged product and, as such, carries more risk. It is an aggressive instrument, design for intraday trading, and should not be used as part of a buy-and-hold strategy.
Companies in the Internet ETF (ARKW) are those that focus on or benefit from cloud computing technologies enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media.
Sectors covered include cloud computing & cyber security, eCommerce, Big Data & AI, mobile technology & Internet of Things, social platforms, and blockchain & P2P.
iShares MSCI Mexico ETF (EWW) offers traders exposure to a broad range of companies in Mexico and access to targeted Mexican stocks. It has 58 holdings, which include America Movil L, Formento Economico Mexicano, Walmart de Mexico and GPO Finance Banorte.
The fund has almost no technology, energy or utilities stocks as these sectors are government-run in Mexico. The sector-mix is 29.57% Consumer Staples, 21.13% Communication, 15.48% Financials, 12.27% Materials, 10.92% Industrials and the remaining split between real estate, consumer discretionary and health care.
China AMC CSI 300 Index comprises 300 stocks from A-share companies in China. A-shares are stocks trades on the Shenzhen or Shanghai stock exchanges and are generally only available to Chinese citizens. This ensures they command a significant premium compared to H-shares which are listed on the Hong Kong Stock Exchange and available primarily for foreign investors.
China AMC CSI 300 Index ETF mirrors the performance of the CSI 300 Index. It is a benchmark of the 300 largest and most liquid Chinese stocks.
SSO, also known as ProShares Ultra S&P500, is a leveraged product that looks to deliver twice the daily performance of the S&P500. This is a single-day product so the returns over periods of more than one day will differ.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
IWO, also known as iShares USA2000 Growth ETF, replicated the performance of the USA2000 Growth Index. This ETF is comprised of small public US companies that are expected to grow at an above-average rate. The index uses two-year growth forecasts and historical sales to identify growth.
Unsurprisingly, given that the focus is on growth, technology features heavily in the sector breakdown. Health care, Information Technology and Industrials account for 62.07% of the portfolio. It has over 1,200 holdings and stocks include Etsy, Haemonetics, Hubspot and Trade Desk Inc.
ProShares UltraPro Russell2000 (URTY) seeks to deliver daily results that are three times daily performance of the USA2000 Index. This is an aggressive single-day bet and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% of the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
The Direxion Daily Financial Bear 3 (FAZ) Shares ETF tracks the inverse performance of the Russell 1000 Financial Services Index by 300%. It is the opposite of the The Direxion Daily Financial Bull 3X Shares ETF (FAS). Traders benefit when the underlying stocks fall, rather than rise. It is leveraged in the same way, so comes with high levels of volatility and risk.
This ETF allows traders to take a bearish view on the performance of commercial banks, a reduction in lending is what FAZ traders will be looking for.
Gilts are issues by the British Government and are generally considered to be low-risk investments. They traditionally have maturities of five, ten and 30 years. As with shares and funds, bond prices rise and fall as their attractiveness changes, based on changes in the market, economy and currency. The price is also affected by the attractiveness of other investments, particularly other ‘safe havens’ such as cash.
The UK Gilt 10 year bond reached a historic high of 16.09% in November 1981, and a record low of 0.52% in August 2016.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
SPDR S&P ASX 50 Fund (SFY.AX) seeks to track the returns of the S&P/ASX 50 Index. The S&P/ASX 50 is an index of Australia’s large-cap equities. Traders can use it as a way to access the Australian Stock Market or gain exposure to Australian companies.
The index has a mix of sectors, and contains the 50 largest ASX listed stocks with the cut-off being a market capitalisation of around $5billion (AUD/). The portfolio accounts for 62% of Australia’s sharemarket capitalisation. Top holdings include Commonwealth Bank, BHP Billiton Limited, Woolworths Group and Telstra Corp.
US Treasury Bonds are securities issued by the US government with maturities that vary from ten to 30 years. After initial auction, the bonds can be sold on the secondary market. A number of things can affect the price of TBonds, as with other bonds, shares and funds. US Treasury Bonds are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 10Y (ZN) reached an all-time high of 15.82% in September 1981 and a record low of 1.36% in July 2016.
The FXE, also known as CurrencyShares Euro Trust, tracks the changes in the value of the euro relative to the US Dollar. An ETF is the easiest way for a trader to buy exposure to foreign currency markets. These funds use cash deposits or futures contracts to track the euro's movements over time.
This ETF provides investors with an opportunity to invest in EUR/USD, such as those who think that the US Dollar is weakening or think that the Euro is strengthening. It tracks the EUR/USD exchange rate very well and is an extremely liquid fund.
IWM, also known as iShares USA2000 ETF which seeks to mirror the performance of the USA2000 Index. The ETF has a basket of shares that is similarly weighted to the USA2000 Index, and comprises well-diversified small-cap stocks. It has around 2,000 holdings, all small cap stocks with market capitalisation of less than $1bn.
The portfolio is made up of multiple sectors including 24.52% financials, 16.60% information technology, 16.47% health care, 14.72% consumer discretionary and 12.71% industrials. The remainder is split between materials, energy, utilities, consumer staple and telecoms. Stocks include Etsy, Hubspot and Planet Fitness Inc.
Direxion Daily Small Cap Bear 3x Shares (TZA) seeks to deliver daily results that are three times the inverse of the daily performance of the USA2000 Index. This is an aggressive single-day bet against the USA2000, and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% opposite the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
ProShares UltraShort 20+ Year Treasury (TBT) aims to deliver daily investment results that reflect twice the inverse of the daily performance of the ICE US Treasury 20+ Year Bond Index. Traders would look to get a 200% return opposite to the movement of US Treasury Securities.
This is a leveraged product, and so carries more risk. As with many leveraged ETFs, it delivers daily results and it designed as a single day bet. Positions that are held for longer than a day will get differing results. This ETF can be a useful tactical position or hedge against rising interest rates.
ProShares UltraPro QQQ (TQQQ) is a leveraged ETF that tracks the performance of the Nasdaq 100 index. This ETF aims to deliver a daily output that is three times the daily performance of the Nasdaq 100. That means TQQQ will deliver results that are 300% of how the index has moved.
The Nasdaq 100 includes the largest companies on the Nasdaq stock market and holdings include Apple, 21st Century Fox Inc, Kraft Heinz and Facebook. This is a single-day bet and is not recommended for use for longer than periods of one day, as the results will differ. Leveraged products carry more risk.
ProShares UltraPro Short S&P500 (SPXU) seeks daily investment results that are 300% the inverse of the daily performance of the S&P 500. This is a single day bet for traders looking to go short on S&P500 or hedge other trades. Like any leveraged product, there is more risk involved in this ETF than in unleveraged products.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
US Treasury Bonds 30Y (UB) are securities issued by the US government with maturities that vary from ten to 30 years. The U.S Treasury suspended issuance of the 30 year bond between February 2002 and February 2006. When bonds are sold on the secondary market, they can go up and down in price in the same way that shares and funds do. US Treasury Bond prices are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 30Y reached an all-time high of 15.21% in 1981 and a record low of 2.11% in 2016.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
The Direxion Daily Financial Bull 3X (FAS) Shares ETF is a leveraged ETF, aiming to secure traders three times the daily returns on the performance of the Russell 1000 Financial Services Index. This increased exposure also increases risk, so this ETF is more suited to traders with the capital to withstand volatility and with a high risk tolerance.
The portfolio is composed of 70% stocks. Sector exposure is mostly financial services, which make up 77.21% of holdings, with another 15.99% in Real Estate. Commercial banks account for a high proportion of this ETF, with stocks including Berkshire Hathaway Inc, JPMorgan Chase & Co, Bank of America Corp, Visa, Wells Fargo and Citigroup all featuring.
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.
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.
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.
Blue-chip stocks are shares of very large, successful, and reputable and financially companies. Blue-chip companies are mostly common household names.
What is the difference between a regular stock and a blue-chip stock?
A blue-chip stock refers to a stock of a well-established, financially stable and reliable company with a long history of steady growth and stability. Regular stocks are any other stocks. Blue-chip stocks are generally considered a lower risk investment, while regular stocks can have varying degrees of risk.
How do you know if a stock is blue-chip?
Blue chip stocks are usually large, well-established and financially stable companies with a long history of steady growth, consistent profits and strong brand recognition.
What are some examples of bluechip stocks?
Some examples of blue chip stocks are:
Apple Inc.
Microsoft Corporation
Amazon.com Inc.
Berkshire Hathaway
ProShares UltraPro Short QQQ (SQQQ) is an inverse leveraged ETF that tracks the performance of the Nasdaq 100 index. This ETF aims to deliver a daily output that is three times the inverse of the daily performance of the Nasdaq 100. That means SQQQ will deliver results that are 300% opposite to how the index has moved. They are a useful product for traders looking to go short or to hedge their other positions.
The Nasdaq 100 includes the largest companies on the Nasdaq stock market and holdings include Apple, 21st Century Fox Inc, Kraft Heinz and Facebook. This is a single-day bet and is not recommended for use for longer than periods of one day, as the results will differ. Leveraged products carry more risk.
What is a Position in trading?
A position in trading refers to the amount of a security or financial instrument that is held by an investor or trader. It can be a long position, where the trader has bought the security and expects its price to rise, or a short position, where the trader has sold the security and expects its price to fall. The size of the position is typically measured in units of the security or financial instrument, such as shares or contracts. The trader or investor can then make a profit or loss based on the movement of the price of that security or instrument. In addition, an open position is one that has been entered into but not yet closed or settled, and a closed position is one that has been settled or offset by an opposing trade.
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.
A dividend is a payment made by a company to its shareholders out of its profits. It's typically paid quarterly, with the amount of each dividend depending on how profitable the company is and how much the board of directors chooses to distribute. Dividends can be used as income or reinvested back into the company to purchase additional shares.
How many shares do you need to get dividends?
The exact number of shares you need to get dividends depends on the company's policy and dividend payout rate. Generally, owning at least one share qualifies you for receiving dividends.
Is a dividend a good thing for traders?
Yes. Dividends provide traders with regular income and the potential for capital gains if the dividend is reinvested into more shares. This can be beneficial to traders, as it can create a passive stream of income and add to their overall yeild.
An IPO (initial public offering) is when a company makes its shares available to the public. This means the stock can be bought and sold by both retail and institutional investors. An IPO is usually underwritten by investment banks, who set up the sale of the shares on exchanges.
What is the difference between an IPO and a Stock?
An IPO is the process of a privately held company being transformed into a public one. The difference between stock and an IPO is that an IPO refers to public shares of a stock and not shares offered after that.
Initial public offerings can be used to raise new equity capital for a company. It monetizes the investments of private shareholders such as company founders or private equity investors. This enables easy trading of existing holdings or future capital raising. The disadvantages of IPO are the same trade-offs between equity and debt financing.
The S&P 500 Index, also known as the USA 500, is a benchmark index of large-cap US stocks. It accounts for around 80% of the total capitalisation of the US stock market. Around $10 trillion is indexed or benchmarked to the S&P 500.
The index was created in 1957 and was the first US stock market index weighted by market capitalisation. To be eligible, companies must have a market cap greater than US$6.1 billion and have at least 50% of shares traded publicly.
Although launched on 4th March 1957, the initial value data is 3rd January 1928. The index hit a record high in August 2018 of 2,914.04, while the lowest-recorded level was 676.53 in March 2009.
The largest industry represented on the S&P 500 is Information Technology, which accounts for 26.5% of the total index weighting. Healthcare is the second-largest sector, with 14.6% of the index weighting, followed by Financials with 13.8%.
The 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.
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.
The FTSE China A50 index, also known as the China 50, is a Chinese benchmark index that allows investors to trade A Shares, which are securities of companies that are incorporated in mainland China that are permitted to be traded by international investors thanks to government regulation.
The index comprises the 50 largest companies on the Shanghai and Shenzhen stock exchanges by market capitalisation and is free float-adjusted and liquidity screened. The instrument is priced in US Dollars on the {%brand.name%} platform.
The index was launched on 13th December 2003, with a base date of 21st July 2003 and a base value of 5,000.
The China 50 index is dominated by banks, with a weighting of 33%. The second-largest sector is Insurance, with a share of 14.58%, followed by Food & Beverage with 13.28%.
China 50 index futures allow you to speculate on, or hedge against, changes in the price of Chinese stocks. Futures rollover on the 4th Friday of every month.
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.
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.
EUR/SEK is the abbreviation for the euro to Swedish Krona 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 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 euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The 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.
USD/CHF is the symbol for the US Dollar to Swiss franc exchange rate. The pairing accounts for 3.6% ($180 billion) of all daily forex activity. The Swiss franc is the 7th most popular trading currency in the world and is involved in nearly 5% of all forex transactions each day.
The US Dollar and Swiss franc are both safe-haven currencies, meaning that the pairing is less responsive to risk-appetite on the global market than other pairings. However, the Swiss franc shares a strong correlation with the euro, so anything that weakens the euro would benefit the US Dollar and pressure the franc lower. If the euro strengthens, the USD/CHF pairing is likely to depreciate. The franc used to be pegged to the euro, but the Swiss National Bank unexpectedly allowed the currency to float free in January 2015.
CHF is a popular choice with traders 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 FTSE MIB Index, also known as the Italy 40, is Italy's leading benchmark index. It comprises the large cap components of the FTSE Italia All-Share Index; the 40 most-capitalised and liquid Italian shares account for around 80% of the market cap of the total domestic market.
The index was launched in the second quarter of 2009, but its base date is 31st December 1997. It has a base value of 24,401.54, peaked at 50,108.56 in March 2000 and struck a record low of 12,362.50 in July 2012.
Just over a quarter of the index is comprised of banks, with Utilities the second-largest category with a weighting of 16.51%. Oil & Gas is the third-largest sector, with a 12.67% share of the index.
A 15% weighting cap is in operation to ensure that no single component can dominate the index.
Italy 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Italian stock market. Futures rollover on the 2nd Friday of March, June, September, and December.
Delisting is the removal of a security from a stock exchange. This can happen voluntarily by the company, or involuntarily by the exchange if the security no longer meets certain listing criteria. When a security is delisted, it cannot be traded on the exchange, although investors may still hold it as an unlisted investment.
What happens when stock is delisted?
A company can undergo voluntary or compulsory delisting.
• In voluntary delisting, a company removes its own securities / shares from a stock exchange.
• In compulsory (or involuntary) delisting, the securities of a company are removed by regulatory functions, usually for not complying with Listing Agreement.
Can I sell delisted shares?
Delisted stocks often continue to trade over-the-counter. Shareholders can still trade the stock, though it is likely that the market will be less liquid.
Will I get my money back if a stock is delisted?
It depends on the type of delisting. Generally, investors receive their initial investment if a stock is voluntarily delisted. However, in cases of involuntary delisting, investors may not be entitled to any reimbursement.
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.
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.
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!
Financial Markets define any place (physical or virtual) or system which provides buyers and sellers with the means to trade financial instruments of any kind.
What are the types of financial markets?
Types of financial markets include stock markets, bond markets, foreign exchange markets, commodity markets, money markets, derivatives markets, and options markets.
What is the main function of financial markets?
The main function of financial markets is to facilitate the interaction between those who need capital with those who have capital to invest. In addition to raising capital, financial markets allow participants to transfer risk (generally through derivatives) and promote commerce. The term "market" can also be used for exchanges, or organizations which enable trade in financial securities.
Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finances. For long term finance, they are usually called the capital markets; for short term finance, they are usually called money markets. The money market deals in short-term loans, generally for a period of a year or less.
The United States Natural Gas Fund® LP (UNG) is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues shares that may be purchased and sold on the NYSE Arca.
The investment objective of UNG is for the daily changes in percentage terms of its shares' net NAV to reflect the daily changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the daily changes in the Benchmark Futures Contract, less UNG's expenses.
The Benchmark is the futures contract on natural gas as traded on the NYMEX. If the near month contract is within two weeks of expiration, the Benchmark will be the next month contract to expire. The natural gas contract is natural gas delivered at the Henry Hub, Louisiana.
UNG invests primarily in listed natural gas futures contracts and other natural gas related futures contracts, and may invest in forwards and swap contracts. These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less.
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.
Stock dilution is the decrease in existing shareholders' ownership of a company as a result of the issuance of new shares. It typically occurs when companies raise capital by issuing additional shares, thereby reducing the stake of existing shareholders.
Why do companies dilute stock?
Companies dilute stock to raise capital for future growth and investments, often through the sale of additional shares. This allows companies to raise money without having to take out loans or issue bonds. Diluting stock can help reduce overall debt and create a healthier financial situation for the company.
Is stock dilution a good thing?
It depends. If done properly, diluting stock can help raise funds for business operations and growth. It also encourages investors to purchase shares due to the lower price per share. However, too much dilution can weaken shareholder equity and damage investor confidence.
What does dilution do to stock price?
Dilution decreases a stock's price by decreasing its earnings per share (EPS). This happens when a company issues new shares to the public, increasing the total number of shares outstanding and resulting in lower EPS for existing shareholders. Dilution can also occur through corporate acquisitions, mergers or issuing debt that is converted into equity.
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.
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.
Treasury stock, also known as reacquired stock, is stock which a company has repurchased from shareholders. This stock is issued and bought back by the company for various reasons including to improve financial statements and reward shareholders through dividend payments. Companies must keep records of their treasury stock in order to report them on financial statements.
How is treasury stock different from common stock?
Treasury stock, also known as "buyback," is a corporation's own stock that has been purchased back by the issuing company from shareholders. Treasury stock does not give voting rights or dividend payments. In contrast, common stock gives owners voting rights and entitles them to dividends, when declared. Treasury stocks are used to offset dilution and strengthen balance sheets while still giving shareholders an opportunity to sell shares without market risk.
What is the benefit of treasury stock?
By purchasing their own stock, companies can benefit from reducing risk, enhancing corporate governance and even increasing profits. In addition, the stock may be held in reserve for future issuance or to protect against takeover attempts.
Is treasury stock debt or equity?
Treasury stock is a form of equity, rather than debt. It is a company's own shares which have been bought back and held by the company, resulting in the number of outstanding shares being reduced. The buyback is often used to increase shareholder value, reduce the supply of outstanding stock, or as part of employee compensation programs.
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.
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.
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.
Take profit is an order type that is used by traders to automatically exit a trade when a certain profit level is reached. Once the specified price level is hit, the trade will be closed and the profit will be locked in. Take profit can also be used in short positions, where the trader is betting on the price to decrease. In this case, the trader would set a take profit order at a price level below the current market price. Once that price level is reached, the trade will be closed and the profit will be locked in.
When should I take profit on my shares?
The decision to take profit on a stock should be based on your own personal investment strategy and goals. Some investors may choose to take profit when a stock reaches a certain level of appreciation or when it reaches a technical resistance level. Others may choose to hold onto a stock for the long-term and only take profit when they need the money for other investments or expenses.
What is the purpose of take profit?
The purpose of a take profit order is to automatically lock in profit at a specific price level, without the need for a trader to constantly monitor the market. By setting a take profit order, a trader can set a specific level at which they want to exit a trade with a profit, and then let the market run its course. Additionally, it allows the trader to set a level of risk-reward they are comfortable with, and not be affected by emotions and human biases, which could cause them to hold on to a trade for too long or exit too soon.
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.
What is a Lot in trading?
In trading, Lots are defined as the number of units of a financial instrument bought or sold on an exchange. A Round Lot is made of 100 shares, where an Odd Lot can be made of any number of shares less than 100. As for bonds, their lots follow a different set of rules. They can range from $1,000 to $100,000 or $1 million. In Forex, trade is done via lots, which are essentially the number of currency units traders buy or sell. As such, a “lot” is a unit measuring a transaction amount. The standard lot is 100K units of currency. Additionally, there are also mini lots valued at 10K units of currency, micro lots valued at 1K units of currency and nano lots that contain 100 units of currency.
What is a lot size in trading?
Lot size in trading refers to the number of units or shares of a security that are traded at once. It's a way to measure the amount of a security that is being bought or sold in a single transaction.
How many shares are in a lot?
The number of shares in a lot can vary depending on the security being traded and the exchange or platform it is traded on. For example, in the US stock market, a standard lot size is 100 shares, but it can be different in other markets or for other securities such as futures or forex.
What is a good lot size?
A good lot size in trading depends on the specific circumstances and goals of the trader. A lot size that is too small may not be cost-effective and may not allow the trader to achieve their desired position size. A lot size that is too large can be too risky and may not be affordable.
A reverse stock split, also known as a "reverse split," is a corporate action in which a company reduces the number of outstanding shares by canceling a portion of its shares and increasing the par value of its remaining shares. This means that for every N shares that a shareholder owns, they will end up owning 1 share, where N is the reverse split ratio. For example, if a company performs a 1-for-2 reverse stock split, a shareholder who previously owned 100 shares would now own 50 shares.
Is it better to buy before or after a reverse stock split?
It is not necessarily better to buy before or after a reverse stock split, as it depends on the specific circumstances of the company and the stock. A reverse stock split does not change the underlying value of the company, it only changes the number of shares outstanding and the stock price. However, it is important to understand that in general, companies that perform reverse stock splits tend to be struggling and have a low stock price. Buying before a reverse stock split may allow you to buy shares at a lower price, but it also means you're probably buying into a struggling company.
Is a reverse stock split good?
As with all things in the market, the answer is that it depends. The main reason for a company to perform a reverse stock split is to increase the per-share price of the stock, which can make the stock appear more attractive to investors and also bring it above a certain listing requirement in stock exchanges. Additionally, a reverse split can also help to reduce the number of shareholders and increase the liquidity of the stock, making it easier to trade. However, a reverse stock split can also be a sign of a struggling company, and it can also dilute the value of shares for the existing shareholders.
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.
A “Rights Issue” is when a company offers an issue of its shares at a special price by to its existing shareholders. This new and reduced price is in proportion to their existing holding of the company’s “old” shares. An after effect common to offering a Rights Issue is that the share price is further reduced due to additional dilution of the share value. A typical reason for any given company to offer a rights issue would be to raise capital.
Is a rights issue a good thing?
It depends on the specific circumstances and the reasons for the rights issue. A rights issue can provide a company with additional funding to invest in growth or to address financial difficulties. However, if a company is issuing new shares at a lower price than the current market value, existing shareholders may feel diluted and the stock price may decrease. Additionally, if the company is issuing new shares to address financial difficulties, it may be a sign of financial distress.
Does share price fall after a rights issue?
A share price may fall after a rights issue due to dilution of existing shareholders' ownership in the company, as more shares are issued, thus reducing the value of each individual share. Additionally, if the new shares are issued at a lower price than the current market value, the stock price may decrease. However, this is not always the case as the company may have a good reason for the rights issue such as investing in growth opportunities or raising funds to pay off debt, that could also boost the stock price.
Can a rights issue be sold to anyone?
A rights issue is typically offered to existing shareholders of a company, allowing them to purchase additional shares in proportion to their current holdings. However, the company may choose to offer the rights issue to a broader group of investors, such as institutional investors or the general public. The terms of the rights issue will be outlined in the prospectus and the decision of who can participate will be made by the company.
Polkadot (DOT) fuses two blockchains: the main, relay chain, where transactions are permanently agreed upon, and user-generated chains. Tradeable in USD, Polkadot is priced in USD and uses the DOT/USD spot rate.
Genomic ETF (ARKG) constituents are companies designing technologies for, or are expected to benefit from, extending & enhancing the quality of human and other life by integrating technological and scientific developments and advancements in genomics into their business. Sectors covered include CRISPR, targeted therapeutics, bioinformatics, molecular diagnostics, stem cells, and agricultural biology.
Curve acts as a liquidity pool for stable cryptocurrencies. CRV DAO Tokens are given to users who provide liquidity in their pools. Those pooled funds are used by traders to exchange different stable coins, thus avoiding slippage and high fees. Curve DAO Token are priced in USD and is tradeable via the CRV/USD symbol.
Robotics ETF (ARKQ) constituents are focused on, and are expected to substantially benefit from, the development of new products or services, technological improvements, and scientific research advancements in areas like energy, automation and manufacturing, materials, and transportation.
Companies within the ETF either develop, produce, or enable autonomous transportation, robotics & automation, 3D printing, energy storage, and space exploration.
Basic Attention Token (BAT) crypto was built to improve the security, fairness, and efficiency of digital advertising through the use of blockchain technology. Users are rewarded with BAT for viewing ad content, publishers can deliver higher-impact ads and advertisers can be assured their messaging is being viewed by a willing audience. Trade BAT in USD using the BAT/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.
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.
The Direxion Work From Home ETF (WFH) offers exposure to companies across four technology pillars, allowing investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment. The four pillars include Cloud Technologies, Cybersecurity, Online Project and Document Management, and Remote Communications. Companies are selected for inclusion in the index by ARTIS, a proprietary natural language processing algorithm, which uses key words to evaluate large volumes of publicly available information, such as annual reports, business descriptions and financial news.
SPY, also known as the SPDR S&P 500 ETF Trust, is one of the oldest and best-recognised ETFs. Unsurprisingly, given the name, it seeks to replicate the results of the S&P500 index. SPY tracks large and midcap US stocks.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
A trader's "account balance" is the total value of the account including all and any settled profit & loss, deposits, and withdrawals.
How do I check my trading account balance?
As mentioned, your account balance is the total sum of settled positions, P&L, deposits, and withdrawals. Yet this balance does not include profit or loss resulting from any open positions. If positions are indeed open, the balance might change depending on pending losses or profits until such positions are closed. As such, it is recommended to check your trading account balance regularly as new positions open and close on a regular basis.
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.
Euro Bonds (FBGL) or German Government Bonds, are issued with original maturities of 10 and 30 years. Bunds are a highly liquid debt security as they are eligible to be used as insurance reserves for trusts and are accepted as collateral by the ECB.
Bunds are often used to determine the strength of the Eurozone is doing relative to Germany: Investors who are bearish about Germany’s obligations to the Eurozone may demand higher returns, pushing bond yields higher. However, those seeking a safe haven may accept lower yields. Bunds are influenced by interest rates and ECB monetary policy. The Germany 10Y Bond reached a high of 10.80% in September 1981 and a record low of -0.19% in July 2016.
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.
The USA 30, is a blue-chip index of US companies that covers all industries excluding Transportation and Utilities.
It is the second-oldest stock market index in existence and was launched on 26th May 1896, with a base date of the same year. The index peaked at 26,616.71 in January 2018, while its lowest recorded level was 41.20 in July 1932.
The last surviving component of the original index, the Thomas Edison-founded General Electric, was removed from the Dow in 2018.
The index is predominantly made up of industrial companies, which account for 21.5% of the index. Financials are not far behind, however, with 19.2% of the total weighting. Consumer services is the third-largest sector with 16.7% of the index.
The USA 30 contains some of the world's biggest companies, including Apple, Microsoft, Disney, JPMorgan Chase and Johnson & Johnson.
Online brokers are digital trading platforms that allow users to trade stocks, options, ETFs and other financial products online. They offer convenience and competitive pricing, making them popular among individual investors and traders.
What are the three types of brokers?
Trading brokers come in three main varieties: full-service, discount, and online. Full-service brokers offer a variety of services such as research, advice, and account management. Discount brokers are low-cost and may only offer basic services. Online brokers provide customers access to the markets with limited assistance.
Are online brokers safe?
Online brokers are generally safe when used correctly. It is important to use trusted and reliable providers, keep your account secure, and be mindful of any potential risks when trading online. For example, markets.com is fully regulated and controlled for maximum security and safety while you trade.
Trading alerts are notifications or signals that are sent to traders to inform them of potential trading opportunities or market conditions that may affect their trades. These alerts can be generated by software programs, financial analysts, or other sources, and can be delivered via email, text message, or other forms of communication. They are typically used by traders to help them make more informed trading decisions and stay up-to-date on market conditions.
How do I set up trade alerts?
To set up trade alerts, you will need to use a trading platform or software that offers the alert feature. You can set up trading alerts easily on markets.com.
Can I set an alert for a stock price?
A stock price alert is just one of the types of trade alerts you can set up through markets.com.
An Overnight Index Swap (Swap Fee) is a process where the settlement of a deal is rolled forward to another value date, and a charge is levied based on the difference in the interest rates of the two currencies. Every day at 21:00 GMT, open positions are rolled over to the next day and the positions gain or lose interest based on the interest differential between the bought and sold currencies.
What is OIS compound?
The index rate is typically the rate for overnight lending between banks, either non-secured or secured. The fixed rate of OIS is typically an interest rate considered less risky than the corresponding interbank rate (LIBOR) because there is limited counterparty risk.
The LIBOR–OIS spread is the difference between IRS rates, based on the LIBOR, and OIS rates, based on overnight rates, for the same term.
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.
Bitcoin Cash is the younger, more user-friendly, brother of Bitcoin. It was born in August 2017, arising from a fork of Bitcoin Classic.
It is priced in USD per Bitcoin and saw a record high of $3,816 in December 2017. Bitcoin Cash futures trade as BCC.
The break from Bitcoin Classic came about after frustration of the one MB limit. This causes major issues with transaction processing times and limits the number of transactions the network can process.
A number of solutions were proposed, with Bitcoin Cash ‘born' in mid-2017 with an increased blocksize of eight MB. Everyone who previously owned Bitcoin Classic received the same about in Bitcoin Cash.
Despite being one of the youngest cryptocurrencies, Bitcoin Cash has soared in popularity - it is now the world's third-largest cryptocurrency by market value. However, it has experienced significant volatility in its short life so far.
NZD/CAD is the abbreviation for the New Zealand dollar to Canadian dollar 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 Canadian dollar is the 6th most-traded currency, involved in 5.1% of all daily transactions.
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/CAD rate lower. When dairy prices rise, the opposite happens.
The Canadian dollar is heavily-exposed to changes in the price of crude oil - Canada's primary export. Both currencies are inversely correlated with the US Dollar, so even in times of risk movement in the NZD/CAD is more driven by fundamental factors.
The Canadian dollar is more exposed because the USA is Canada's largest trading partner by far.
The New Zealand dollar to Japanese yen exchange rate is identified by the abbreviation NZD/JPY. 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 Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades.
The pair is highly sensitive to changes in market risk-appetite, as the New Zealand dollar is a commodity-correlated currency and the Japanese yen is a safe-haven currency.
New Zealand's main industry is diary; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/JPY exchange rate lower. When dairy prices rise, the opposite happens.
In times of market uncertainty, appetite for the safe-haven Japanese yen can increase sharply. However, the yen is often softened by the Bank of Japan's ultra-loose monetary stimulus package, which includes quantitative easing and negative interest rates.
The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom that oversees and regulates financial firms to ensure they operate in an honest and fair manner, and to protect consumers. It is responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
The FCA’s functions include:
• Regulating the conduct of 50,000 businesses
• Supervising 48,000 firms
• Setting specific standards for 18,000 firms
What are the main objectives of the FCA?
The main objectives of the Financial Conduct Authority (FCA) are to protect consumers, protect and enhance the integrity of the UK financial system, and promote competition in the interests of consumers. This includes taking action to address any conduct that falls below the standards the FCA expects and working to ensure that firms compete in ways that are fair, transparent and not detrimental to consumers.
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.
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.
The Canadian dollar to Japanese yen exchange rate is identified by the abbreviation CAD/JPY. The Canadian dollar is the 6th most-popular currency, making up one side in 5.1% of daily trades. The Japanese yen is the 3rd most-traded currency, accounting for 22%.
The pair is highly sensitive to changes in market risk-appetite, as the Canadian dollar is a commodity-correlated currency and the Japanese yen is a safe-haven currency.
The Canadian dollar is highly sensitive to changes in the price of crude oil - Canada's primary export. In turn, crude prices often respond to market appetite for risk, so the strength of the CAD/JPY exchange rate is largely dictated by whether traders are feeling optimistic or pessimistic over global conditions.
In times of market uncertainty, appetite for the safe-haven Japanese yen can increase sharply. However, the yen is often softened by the Bank of Japan's ultra-loose monetary stimulus package, which includes quantitative easing and negative interest rates.
The US Dollar to Japanese yen exchange rate is known by the abbreviated USD/JPY and is the second most-popular currency pair on the forex market. Around $901 billion worth of USD/JPY trades are conducted every day, which is nearly 18% of all forex activity. The pair is highly liquid, and therefore offers very low spreads. The pairing sees strong volatility during the Asian trading session as well as the North American session.
Interest rate differentials are a key volatility driver for the USD/JPY exchange rate. While the US Federal Reserve is currently normalising monetary policy as the economy recovers from the 2008 financial crisis, the Central Bank of Japan is maintaining an ultra-loose stimulus package. USD/JPY is therefore popular amongst carry traders.
The Japanese economy relies heavily upon trade because it lacks many of the natural resources needed for industry, so strength or weakness in global demand and commodity prices can have an impact upon the USD/JPY exchange rate.
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.
GBP/USD is the abbreviation for the pound Sterling to US Dollar exchange rate, also known as “cable”. It combines two very popular currencies; GBP is present in 13% of all daily forex trades, while USD is present in 88% of all trades.
On average US$649 billion worth of pound Sterling is traded every single day. The pair is highly liquid and therefore offers very low spreads.
The UK financial services industry, headquartered in London, is the financial gateway to Europe, and pound Sterling plays an important role in financial markets. Interest rate differentials are a key driver of volatility in the GBP/USD exchange rate.
Recently, political factors have seen their influence over the pairing 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. Meanwhile, in the United States, the protectionist policies of President Donald Trump have raised questions over the outlook for trade.
Platinum is one of the world's rarest metals, and mines are concentrates in just a handful of countries around the world.
Platinum is priced in USD per troy ounce. It saw a high of $2253 in March 2008, and a record low of $97.70 in January 1970.
Most of the world's platinum is produced in South Africa, which accounts for 80% of supply. Russia is a distant second with 11% and North America produces 6%.
Platinum is an important metal due to its ability to catalyse reactions and its strong resistance to corrosion. This makes it irreplaceable in a broad range of industrial and laboratory reactions, especially the catalytic converter which is the most widely used application of platinum.
The metal is also highly sought-after for jewellery, which is the second largest area of demand,
The concentration of platinum in South Africa (an often-volatile emerging market), combined with the importance of platinum as an industrial material, has led to instability in price.
Silver (XAG) has long-been synonymous with money, indeed, in some languages the two words are the same. The white metal has been used for investment and jewellery for thousands of years, and its distinctive characteristics ensure it continues to be in high-demand.
Silver is priced in USD per troy ounce. Its price peaked at $49.45 in January 1980, and reached an all-time low of $3.55 in February 1991.
The majority (85%) of silver production comes from mining, with the remainder sourced from scrap and stockpiles. While silver can be recycled, it is less economical to do so than with other precious metals. The top producers of silver are Mexico, Peru and China.
Silver is widely used in photographic, industrial, medical and telecommunications technology. It is also highly sought after for investment purposes. Its price is influenced by industrial demand, demand for jewellery, coins, medals and silverware, as well as the price of gold and the strength of the US Dollar.
The S&P/ASX 200 index, or Australia 200, comprises the 200 largest qualifying stocks on the Australian Stock Exchange, weighted by float-adjusted market capitalisation. It is denominated in AUD/ and is considered the benchmark index of the Australian market.
The index was launched on 3rd April 2000, with its initial value calculated as of 31st March, 2000. The top 10 constituents account for 45.4% of the index. The ASX is dominated by the financial sector; companies in this industry make up 32.8% of the index and four of the top 10 constituents are banks.
Materials is the second largest sector, with a weighting of 17.3%, followed by Healthcare at 9.4%.
The index includes 187 Australian stocks, eight New Zealand stocks, three US stocks, one French stock, and one UK stock.
Australia 200 index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Australian Stock Exchange. Futures rollover on the 3rd Friday of March, June, September, and December.
USD/CAD is the abbreviation for the US Dollar to Canadian dollar exchange rate. The pair accounts for 4.3% - $218 billion - of all daily forex trades. The US Dollar is the most popular currency to trade, while the Canadian dollar is the 6th most popular. CAD, also known as the “Loonie”, after the bird depicted upon the C$1 coin, accounts for 4.6% of daily forex activity.
The majority of Canadian dollars are exchanged for US Dollars. Canada is the second-largest trade partner for the US; in 2017 the US exported $341.2 billion worth of goods to Canada and imported $332.8 billion. The two nations and Mexico are bound by the North American Free Trade Agreement (NAFTA), although its future is uncertain.
Canada is one of the world's largest oil producers, so the price of crude on the international market has a significant impact upon the USD/CAD exchange rate. In times of high risk-appetite USD/CAD weakens, while low risk-appetite pushes the pairing higher.
EUR/CZK is the abbreviation for the euro to Czech koruna exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Czech economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
EUR/NZD is the abbreviation for the euro to New Zealand dollar exchange rate. The euro is the 2nd most-traded currency, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded every day. 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 euro is the currency of the 19-nation Eurozone, 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 New Zealand dollar, which also often moves inversely to the dollar.
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 EUR/NZD exchange rate higher. When dairy prices rise, the opposite happens.
The pound Sterling to Singapore dollar exchange rate is abbreviated to GBP/SGD. GBP is present in 13% of all daily forex trades and on average US$649 billion worth of pound Sterling is traded every single day. The Singapore dollar accounts for 1.8% of all daily forex transactions, making it the 12th most-traded currency on the globe.
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.
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.
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.
The UK 100 is a blue-chip index of the largest 100 companies on the London Stock Exchange in terms of market capitalisation. Companies are only included if they meet relevant size and liquidity requirements.
The index was launched on 3rd January 1984, with a base date of 30th December 1983 and a base level of 1,000 points.
In terms of weighting, the three largest sectors of the UK 100 as of H2 2018 are Oil & Gas (16.56%), Banks (12.70%), and Personal & Household Goods (12.37%).
Traditionally the index has lagged its peers, such as the larger FTSE 250 and the US S&P 500. The index fluctuates in response to market risk sentiment and the strength of the pound Sterling. The UK 100 contains many international companies who report their earnings in other currencies, so a stronger pound weakens company profits.
Because of this, the UK 100 is also considered to be an unreliable indicator of the health of the UK economy because of its large international component.
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 Nov 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.
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.
Cocoa is a “soft” commodity - referring to those that are grown rather than mined - and comes from the Theobroma tree, whose name translates as “God food” in Greek. Cocoa beans are primarily used to produce chocolate, cocoa powder and cocoa butter, the latter of which is widely-used in beauty products.
Cocoa is priced in USD per metric tonne. The highest price for cocoa on record is $4,361.58/MT, which was reached in July 1977. Cocoa traded at its lowest recorded level of $211/MT in July 1965.
West Africa accounts for around 70% of the global market supply, while Cote d'lvoire, Ghana and Indonesia are the top three cocoa producers. Latin America is a key market player as well.
As a “soft” commodity, cocoa prices are heavily affected by weather and climate news - adverse conditions could affect harvests.
Cocoa futures allow you to speculate on, or hedge against, changes in the price of cocoa. Futures rollover on the first Friday of February, April, June, August, and November.
Cotton is a “soft” commodity - meaning it is grown and not mined - and has for thousands of years been one of the most important crops. Its lightweight and absorbent fibres mean that cotton is the most popular natural fibre on the planet.
China, India, and the US are the top producers of cotton in the world; in the US cotton primarily comes from Florida, Mississippi, California, Texas, and Arizona.
The fibre is priced in USD per lb. It reached a record high price of $210.64 during March 2011 and struck a record low of $5.66 during December 1930.
As well as weather conditions, cotton prices are heavily influenced by demand for competing synthetic fibres and changes in government policy. Cotton farmers enjoy heavy subsidies in the US, so a change here could have significant consequences.
Cotton futures allow you to speculate on, or hedge against, changes in the price of cotton. Futures rollover on the third Friday of February, April, June, and November.
The euro to Japanese yen exchange rate has the acronym EUR/JPY. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. The Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades. EUR/JPY accounts for 1.6% of all daily currency trades; $79 billion per day.
While a strong US Dollar can weaken demand for the Japanese yen, it has a much stronger impact upon the euro. This means that in times of safe-haven demand the EUR/JPY exchange rate falls and, although the euro is not a high-beta currency, the pairing appreciates when risk-appetite is strong.
Both the European Central Bank and the Bank of Japan maintain ultra-loose monetary stimulus, but the ECB has recently taken tentative steps towards normalisation. Although negative rates are unlikely to disappear any time soon in either economy, the fact the ECB is in more of a position to adjust borrowing costs stands in the euro's favour.
The CAC 40, also known as the France 40, is a blue-chip index and stock market barometer comprising of the 40 companies listed in Paris with the highest liquidity and free-float market capitalisation. It is the most-traded index administered by Euronext.
The index has a base level of 1,000, taken from the 31st December 1987. It was launched on 15th June 1988. The index hit a record high of 6,922.33 in September 2000, with an all-time low of 893.82 recorded in January 1988.
Personal & Household Goods is the biggest sector in the index, comprising around 13% of the total weighting, followed closely by Industrial Goods & Services. Oil & Gas is the third-biggest sector, with a weighting of just under 12%. Healthcare and Banks are the fourth and fifth largest sectors respectively. Companies are limited to a 15% weighting.
CAC 40 index futures allow you to speculate on, or hedge against, changes in the price of major French stocks. Futures rollover on the second Friday of each month.
Rice is a “soft” commodity - referring to those that are grown and not mined - and is the third most-farmed grain in the world, behind cotton and wheat. It is a food staple for billions of people, spread throughout Asia, the Middle East, and Latin America.
Rice is priced in USD per hundredweight (CWT). In April 2008 prices of the grain peaked at $24.46/CWT, while in February 1982 they hit a low of $0.75/CWT.
China produces the bulk of the world's rice. India, Indonesia, Bangladesh, Vietnam, and Thailand are also big producers.
Rice prices are affected by many factors, including stock levels, the pace of demand growth, and changes in government spending on agriculture. One of the biggest drivers of volatility is crude oil prices - rising prices push up the cost of production and transportation.
Rice futures allow you to speculate on, or hedge against, changes in the price of rice. Futures rollover on the fourth Friday of February, April, June, August, October, and December.
Soybeans are a “soft” commodity - referring to those that are grown and not mined. It is one of the world's most important legumes and is an essential source of protein. It is used extensively in cooking, both soybeans and soy oil, and is also used for animal feed in the form of soy meal.
Soybean is priced in USD per bushel. In July 2012, Soybeans reached an all-time high of $1790, while it reached a low of $208 in September 1959.
The US are the biggest producers of Soybeans, followed by Brazil, Argentina and Paraguay. Together they account for 85% of total production, and 94% of total exports. China is the biggest importer of soybeans.
The price of soybeans is affected by a number of factors, including growing conditions, the demand for biofuel and the strength of USD.
Soybean futures allow you to speculate on, or hedge against, changes in the price of soybeans. Futures rollover on the fourth Friday of February, April, June, October, and December.
An exchange, market or stock exchange is a marketplace where commodities, securities, derivatives, stocks and other financial instruments are traded. The core function of an exchange is to provide for organized trading and efficient distribution of market & stock information within the exchange. Exchanges provide their users the necessary platform from which to trade.
Why should you trade on an exchange?
Trading on an exchange offers security, reliability, liquidity and low costs. Exchange-regulated markets provide transparency, where all market participants have the same access to prices and trading information. Exchanges also offer robust risk management and safety protocols to protect against any price manipulation or abuse of the system.
What are types of exchange?
There are three main types of trading exchanges: traditional exchanges, dark pools, and electronic communication networks (ECNs). Traditional exchanges provide an organized marketplace to buy and sell securities while dark pools facilitate large orders in private forums. ECNs allow investors to directly access liquidity pools and execute trades with other participants in the market.
Maintenance Margin, or “variation margin,” is considered as the minimum amount of equity (i.e., funds) which needs to be maintained in a trader’s margin account before a margin call is issued as due to the account value being below a minimum threshold and not being able to support open margin trade positions. Margin accounts are what leveraged trades use to trade, where they can purchase securities such as stocks, bonds, or options with funds borrowed from the brokerage.
How do you avoid maintenance margin?
To avoid maintenance margin issues, traders should monitor their account closely and adjust their leverage if needed. If your maintenance margin is not maintained it will result in a margin call, which may indicate that the trader should reconsider the risk exposure of their portfolio.
Why are maintenance margins important?
Maintenance margins are important to protect against losses due to fluctuations in the market. They ensure that traders maintain adequate capital reserves and can cover any potential losses.
The DAX, also known as the Germany 40, is a blue-chip index of the top 30 stocks trading on the Frankfurt Stock Exchange. The DAX boasts extreme liquidity and is one of the most-traded index derivatives across the globe.
The index has a base value of 1,000, with a base date of 31st December 1987. As of 18th June 1999, the DAX indices price has been calculated using equity prices from the Frankfurt XETRA all-electronic trading system. DAX is best-known barometer of the domestic stock exchange, representing around 80% of the total market.
Pharma & Healthcare is the biggest sector in the DAX, accounting for 14.2% of the index. Automobiles are next, with 13.9% of the total weighting, followed by Chemicals with 12.7%.
The DAX is one of only a few of the major country stock indices to factor in dividend yields.
DAX index futures allow you to speculate on, or hedge against, changes in the price of major German stocks. Futures rollover on the second Friday of March, June, September, and December.
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.
Wheat is one of the world's most important agricultural commodities, with around two-thirds of global production for food consumption. It is a “soft” commodity, which means it is grown and not mined.
Wheat is priced in USD per bushel, it reached a record high of $1194.50 in February 2008, but slumped to a record low of $192 in July 1999.
An incredibility versatile grain, wheat is harvested somewhere in the world every single month of the year. There is more land used for wheat production than any other crop worldwide, and it is behind only corn and rice in total production.
Wheat prices are affected by a number of factors, including import/export restrictions, stock levels and the strength of the USD. However, one of the biggest drivers of substantial volatility is supply-chain disruptions caused by natural disasters and extreme weather events.
Wheat futures allow you to speculate on, or hedge against, changes in the price of wheat. Futures rollover on the fourth Friday of February, April, June, August and November.
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.
EUR/TRY is the abbreviated form of the euro to Turkish lira exchange rate, one of the exotic currency pairs. 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 lira is the 16th most active currency, accounting for 1.4% of average daily turnover.
The euro is the currency of the Eurozone, which is overseen by the ECB. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The EUR/TRY pairing appreciates in times of market uncertainty. 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.
The Turkish economy is largely fuelled by foreign currency loans, so a strong euro or US Dollar can lead to further weakness in the lira as markets fear the impact of higher credit costs for Turkey's corporations.
The Nikkei 225, also known as the Japan 225, is the leading barometer of the Japanese stock market. It is a price-weighted index, comprising of stocks selected from the 1st section of the Tokyo Stock Exchange.
The rankings are calculated using a method called ‘Dow Adjustment', in which stock prices, adjusted by a par value, are divided by a divisor, helping eliminate the impact of external influences.
The index was introduced on the 7th September 1950, using a base date of May 16th 1949 and a base value of 176.21. The Nikkei 225 peaked at 38,915.87 in December 1989 and hit a low of 85.25 in July 1950.
Technology dominates the Nikkei 225 index with a total weighting of 44.62%. Consumer Goods is the second-largest category with a weighting of 21.80%, while Materials is the third-biggest sector at 16.96%.
Japan 255 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Japanese stock market. Futures rollover on the 1st Friday of March, June, September, and December.
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.
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.
Consumer Price Index or CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. It is considered as one of the most popular measures of inflation and deflation. CPI is also used to estimate the purchasing power of a country’s currency.
How is CPI Calculated?
CPI is calculated by considering Key contributors, including retail and services businesses as well as the U.S. rental housing market (housing accounts for approx. 30% of the CPI). There are several CPI variations:
• CPI-U index reviews the spending habits of urban consumers in the U.S.A. This constitutes for approx. 88% of the U.S population.
• CPI-W index for calculates changes in the costs of benefits paid to “urban wage earners and clerical workers,” which is used to calculate changes in the costs of benefits paid via Social Security.
• CPI ex-food and energy – is highly volatile and thus is excluded from the overall CPI.
A bullish market is a financial market condition where prices are rising or are expected to rise, characterized by optimism and investor confidence. It is the opposite of a bearish market, where prices are falling or expected to fall.
How long do bull markets last?
Bull markets can last anywhere from a few months to several years. The average bull market lasts about 3 years. However, the length of a bull market can vary greatly depending on various economic, political, and market factors.
How do you know if a market is bullish?
A market is considered bullish if stock prices are rising and investors are optimistic about future market performance. This is typically indicated by a sustained increase in market indexes such as the S&P 500 and the Dow Jones Industrial Average over a period of time. Additionally, high trading volume and strong investor confidence can also be indicators of a bullish market.
What is the longest bull market in history?
The longest bull market in history was the 1990-2000 bull market, which lasted for 113 months.
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.
Corn is a soft commodity - referring to those that are grown rather than mined - and is valued for its versatility. As well as being a dietary staple it has many other uses, from biofuels to animal feed.
Corn is grown in every continent on the globe with the exception on Antarctica. 40% of global corn supplies are produced in the US, while China, Brazil, the EU, and Argentina are also major players.
Corn is priced in USD per bushel. In August 2012 corn struck a record high of $849, while the lowest price ever recorded was $22.90 in November 1932.
As corn is a soft commodity, prices are vulnerable to weather conditions which can affect harvests. The strength of emerging market economies also affects prices, as demand for meat products rises as incomes rise, and much of the corn produced each year is used for animal feed.
Corn futures allow you to speculate on, or hedge against, changes in the price of corn. Futures rollover on the fourth Friday of February, April, June, and November.
The STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
The WIG 20 Index, or Poland 20, is a blue-chip stock market index of the 20 most actively traded and liquid companies on the Warsaw Stock Exchange. Constituents are chosen from the top 20 companies trading on the Warsaw Stock Exchange as of the third Friday of February, May, August, and November.
The ranking is based upon turnover values for the previous 12 months and a closing price from the previous five trading sessions is used to calculate free float capitalisation.
The index has been calculated since 16th April, 1994 as a base value of 1,000 points. To keep the index diverse, no more than five companies from a single sector may be included in the index at any one time. Sectors covered by the index includes Commercial Banks, Oil & Gas Exploration & Production, Insurance, Metals Mining, and more.
Poland 20 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Warsaw Stock Exchange. Futures rollover on the 2nd Friday of March, June, September, and December.
LIBOR, is an acronym for “London Interbank Offer Rate”, and is the global reference rate for unsecured short-term borrowing in the interbank market. It is used as a benchmark for short-term interest rates, and is also used for pricing of interest rate swaps, currency rate swaps as well as mortgages. LIBOR can also be used as an indicator of the health of the financial system,
Who controls the LIBOR?
LIBOR is administered by the Intercontinental Exchange or ICE. It is computed for five currencies (Swiss franc, euro, pound sterling, Japanese yen and US dollar) with seven different maturities ranging from overnight to a year. ICE benchmark administration consists of 11 to 18 banks that contribute for each currency. These rates are then arranged in descending order, with top and bottom results taken of the list to exclude outliers. This data is then computed to get the LIBOR rate, which is calculated for each of the 5 currencies and 7 maturities, thereby producing 35 reference rates. A 3 month LIBOR is the most commonly used reference rate.
Multilateral Trading Facilities (MTFs, also known as Alternative Trading Systems or ATS in the United States) provide investment firms and eligible traders with alternatives to traditional stock exchanges. MTFs enable the trading of a wider variety of markets than other exchanges. MTFs users can trade on securities and instruments, including those that may not have an official market. They are electronic systems controlled by approved market operators as well as large investment banks.
What are OTFs?
OTFs (Organized Trading Facilities) are a type of trading venue that is authorized by European Union (EU) legislation to operate in the EU. They are similar to Multilateral Trading Facilities (MTFs) and provide a platform for the trading of financial instruments, such as bonds, derivatives, and equities. Unlike MTFs, OTFs have more flexibility in terms of the types of instruments and trading methods that they can offer.
Is a multilateral trading facility a regulated market?
Yes it is. MTFs are authorized by EU regulators, which provides a platform for the trading of financial instruments, such as bonds, derivatives, and equities.
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.
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.
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.
Alpha is the performance measurement of a trade, or ROI (return on an investment) measured against a market index or benchmark that is considered to represent the market's movement as a whole. The positive or negative return of any given trade in relation to the return of the benchmark index is an alpha.
What does Alpha Tell you?
Traders use Alpha (α) to describe a strategy's ability to beat the market. Thus, it is also often referred to as “excess return” or “abnormal rate of return”. These terms refer to a concept that markets are efficient, and so they are earned returns that do not reflect the market’s performance.
What is alpha and beta in trading?
Alpha is often used in conjunction with beta (the Greek letter β), which measures the broad market's overall volatility or risk, known as systematic market risk.
Alpha is used in finance as a measure of performance. indicating when a strategy, trader, or portfolio manager has managed to beat the market return over some period. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement.
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.
What do hawkish and dovish mean?
Hawks and doves are terms used by analysts and traders to categorise members of Central Bank committee ahead of their votes on monetary policy.
Hawkish: Refers to a monetary policy that is seen as being more aggressive and leaning towards higher interest rates. It implies a strong stance from the monetary authorities in order to keep inflationary pressures in check and provide an incentive for businesses to invest.
Dovish: Refers to a monetary policy that is seen as being less aggressive and leaning towards lower interest rates. It implies a softer stance from the monetary authorities, allowing businesses to have access to cheap credit, which can help stimulate the economy.
Does hawkish mean bullish?
No, hawkish does not mean bullish. Hawkish is an economic term that describes a central bank policy stance that is believed to favor higher interest rates and tighter monetary policy. It contrasts with dovish which is used to describe policies which favor lower interest rates and more accommodative monetary policy.
Is hawkish good for a currency?
Generally, yes. A hawkish monetary policy can be beneficial for a currency as it typically causes an increase in demand and prices of goods and services produced within the country.
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.
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.
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.
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.
A bearish market is a condition in the stock market where prices are on a downward trend, characterized by widespread pessimism and investor fear. This often results in a decline in the value of securities, leading to a decline in the overall market.
How long do bear markets last?
The duration of a bear market can vary and can last anywhere from a few months to several years. It depends on a number of factors, including the underlying cause of the market downturn, the state of the overall economy, and government or central bank interventions.
How do you know if a market is bearish?
A market is considered bearish if there is a persistent downward trend in the prices of securities, typically accompanied by increased selling pressure and declining market indices such as the S&P 500. This can be indicated by technical analysis, such as chart patterns showing lower highs and lower lows, or by broader economic indicators such as declining gross domestic product (GDP) and rising unemployment.
What is the longest bear market in history?
The longest bear market in history is the Great Depression, which lasted from 1929 to 1939. During this time, the stock market experienced a severe decline, with the Dow Jones Industrial Average losing 89% of its value. The Great Depression was a global economic downturn that had far-reaching impacts and was marked by high levels of unemployment, homelessness, and economic hardship.
A Currency Pair is a term used in the Foreign Exchange, or Forex, domain. Currency pairs compare the value of one currency to another — the base currency versus a second comparative or 'quote' currency. A currency pair shows how much of a currency is required to buy a single unit of the currency it is being compared to. It is also known as an exchange rate and is used for all currencies traded in FX markets.
What is a foreign currency?
A foreign currency is, very simply, any currency used in a country that isn't your own.
What is the structure of a foreign exchange market?
The foreign exchange market is a decentralized market where global currencies are traded. In this market, participants buy, sell, exchange and speculate on currencies. It operates through a global network of banks, corporations, and individual traders, who buy and sell currencies for both hedging and speculative purposes. The market is open 24 hours a day and it is considered the largest and most liquid financial market in the world.
What are the most commonly traded currency pairs?
The most commonly traded currency pairs are USD/CAD, EUR/JPY, GBP/USD and AUD/CAD.
What is an ISO code?
Each currency is identified by an ISO code. An ISO code is a three-character abbreviated name that is standardised and internationally recognised. For example, the ISO code for the United States Dollar is USD.
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.
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.
Market Makers are financial institutions or investors that provide liquidity to the markets by placing buy and sell orders at specific prices. They are incentivized to do this in order to make profits from the bid-ask spread.
What is the difference between dealer and market maker?
A dealer and a market maker are both intermediaries in the securities market that provide liquidity and help facilitate trades. However, they have some key differences. A dealer is a person or entity that buys and sells securities for their own account and risk. They hold inventory of securities and make a profit by buying at a lower price and selling at a higher price.A market maker is a firm or individual that provides liquidity to the market by continuously buying and selling a security at publicly quoted prices. They are also called liquidity providers, and they make money by charging a bid-ask spread, the difference between the prices they are willing to buy and sell a security. They do not hold inventory of securities like dealers do.
Do market makers manipulate price?
Market makers are allowed to buy and sell securities at their own discretion, and they may adjust the prices they are willing to buy and sell a security in order to make a profit. However, they are also subject to regulatory oversight, and they must act in a fair and transparent manner. They are not allowed to manipulate prices, and any illegal activities such as insider trading, wash trading or any other form of market manipulation are strictly prohibited.
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.
Technical analysis is a type of financial analysis that looks at historical price movements and trading volumes to predict future price movements in the market. It involves studying trends, chart patterns, momentum indicators, and other factors to make informed decisions about trading. Technical analysis can help traders and investors gain insight into market sentiment, timing their trades for optimal returns.
Why is technical analysis important?
Technical analysis is a critical component of successful financial and trading strategies. It helps investors understand the past performance of a security, identify current trends and anticipate future price movements. Technical analysis relies on mathematical calculations and charting techniques to evaluate securities, which can be an invaluable tool for traders to optimize returns and manage risk.
Which tool is best for technical analysis?
There are many tools that can be used for technical analysis, and different traders may have different preferences. Some commonly used tools include:
Ultimately, the best tool for technical analysis will depend on the individual trader's preferences and the market conditions they are trading in. it's important to use multiple tools and indicators to validate the signals and make better decisions.
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.
In trading, resistance level is a price point at which the price of a security or financial instrument tends to encounter selling pressure, making it difficult for the price to rise above that level. The resistance level is seen as a ceiling, as the price has a hard time going above it. Traders use resistance levels to identify areas where they expect the price to stall or reverse direction. This can be determined by observing the historical price movement of a security or financial instrument, looking for areas where the price has consistently failed to break above. Resistance levels are also used in combination with support levels to identify potential price ranges and trade entry or exit points.
What happens when a stock hits resistance?
If a stock hits a resistance level it can cause the stock to stall, move sideways, or even reverse direction. At resistance level traders that have taken a long position might decide to take profits, while traders that have not yet taken a position might decide to wait for a break above the resistance before buying.
When a stock hits resistance, traders will typically observe the stock's behavior at that level to determine if the resistance level is likely to hold or if the stock is likely to break through it. If the stock breaks through resistance, it can be considered a bullish sign, indicating that the stock is likely to continue to rise. On the other hand, if the stock fails to break through resistance, it can be considered a bearish sign, indicating that the stock is likely to stall or reverse direction.
Trailing Stop Orders are a type of stock order that lets investors adjust the stop price as a security rises or falls. This order works by continuously monitoring the price of a security and dynamically adjusts the stop price with every tick. The advantage of this type of order is that it allows investors to limit their losses, while locking in profits, without having to manually modify the stop-loss point.
Are Trailing Stop Orders good?
Trailing Stop Orders can be a good way to protect profits in your trading. They allow you to set an automated stop-loss that trails the price of a stock, adjusting up as it rises, while allowing you to lock in some gains if the stock begins to fall. This is especially useful when dealing with volatile stocks, giving you more control over your position.
What is a disadvantage of a trailing stop loss?
Trailing stop losses can help minimize risk when trading, however they also limit potential gains. The stop price adjusts based on market conditions, so as the price increases, the stop loss will move up. If the stock drops significantly and your trailing stop loss is too close, it may be triggered before you have a chance to react.
Which is better stop limit or trailing stop?
It depends entirely on the trader. A stop limit will sell at the specified price, while a trailing stop will track price changes and sell when the specified amount is exceeded. Different traders may have different needs and objectives, so which type of order is best will vary. Consider your goals before deciding which option is right for you.
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.
A Stop Loss Order is a type of order that investors can use to limit losses when trading securities. This order instructs a broker to automatically sell a security when it reaches a certain price, known as the stop loss price. By using this order, investors can reduce their risk exposure by locking in gains and preventing larger losses.
How does a stop-loss order work?
A stop-loss order is an investment strategy that helps you limit losses by automatically selling your securities when they drop to a predetermined price. By setting up this order, you can avoid having to monitor the stock's performance every day and ensure that any potential losses are minimized.
What is the difference between a stop-loss and a stop limit order?
A stop-loss order is used to limit losses on a security position by automatically selling when the price drops below a specified level. Whereas a stop-limit order combines the features of a stop-loss with those of a limit order, enabling traders to specify both the price at which they are willing to sell and the maximum loss they are willing to take.
What is a good stop-loss order?
A good stop-loss order is one that is placed at a level that effectively limits potential losses on a trade. The specific level at which to place a stop-loss order will depend on the trader's risk tolerance and the price action of the security being traded. Generally, traders will place stop-loss orders at levels that are below the current price for long positions, or above the current price for short positions, in order to limit potential losses if the price moves in the opposite direction. It's important to note that stop loss orders act as a protective measure, but they don't guarantee that a trade will be executed at the exact stop loss level.
Trading charts are used to display historical price data for a security or financial instrument. They typically include a time frame on the x-axis, and the price of the security or instrument on the y-axis. Candlestick charts, bar charts and line charts are the most common types of charts used in trading. Candlestick charts are the most popular and provide a visual representation of the opening price, closing price, highest and lowest price of the security in a given period of time. It also shows the direction of the price movement, whether it went up or down. Traders use different technical analysis tools like trendlines, moving averages, and indicators to interpret the charts and make trading decisions. There is a great deal of nuance in reading charts and doing it correctly will require experience and an understanding of how your chart of choice is presenting information to you.
How do you predict if a stock will go up or down?
Traders use different technical analysis tools and techniques to predict if a stock will go up or down using trading charts. These include:
Trendlines: By connecting price highs or lows over a period of time, traders can identify the direction of the trend and predict future price movements.
Moving averages: By plotting the average price over a period of time, traders can identify trends and potential buying or selling opportunities.
Indicators: Technical indicators, such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), are mathematical calculations that are plotted on charts to help traders identify trends, momentum and potential buy or sell signals.
Chart patterns: Traders also use chart patterns such as head and shoulders, double bottoms, and triangles to identify potential reversal points in the market and make predictions about future price movements.
It's important to note that technical analysis is not an exact science and it's not a guarantee of future results. Traders should always use technical analysis in conjunction with fundamental analysis, which looks at a company's financial and economic conditions, to make informed trading decisions.
How do you know if a chart is bullish?
A chart is considered bullish if it is showing an upward trend or pattern, indicating that the price of a security or financial instrument is likely to rise. Bullish chart patterns include upward trending lines, ascending triangles, and bullish candlestick patterns such as the hammer or the bullish engulfing pattern. Traders often consider a stock to be bullish when it's trading above the moving average, especially when the moving average is trending upward.
DBC, also known as the PowerShares DB Commodity Tracking ETF, tracks 14 commodities based on the futures curve. It aims to limit the effect of contango and maximise the effect of backwardation so that investors improve their returns. The commodities included in the ETF are gasoline, heating oil, Brent crude oil, WTI crude oil, gold, wheat, corn, soybeans, sugar, natural gas, zinc, copper, aluminium and silver.
Unlike other commodity ETFs, DBC rolls future contracts based on the shape of the future curve, rather than following a schedule. This allows the ETF to generate the best roll yield by minimising losses and maximising backwardation.
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.
ProShares UltraShort Bloomberg Crude Oil (SCO), aims to deliver results that are twice the inverse daily performance of the Bloomberg WTI Crude Oil Subindex. It is an ETF product for traders looking to short crude oil in a single day bet. Trades that last for more than a day are not expected to see the same returns.
The subindex reflects WTI Crude Oil prices and only consists of futures contracts on WTI Crude Oil. This is a leveraged product, all leveraged products carry more risk than unleveraged products.
China AMC CSI 300 Index comprises 300 stocks from A-share companies in China. A-shares are stocks trades on the Shenzhen or Shanghai stock exchanges and are generally only available to Chinese citizens. This ensures they command a significant premium compared to H-shares which are listed on the Hong Kong Stock Exchange and available primarily for foreign investors.
China AMC CSI 300 Index ETF mirrors the performance of the CSI 300 Index. It is a benchmark of the 300 largest and most liquid Chinese stocks.
Blue-chip stocks are shares of very large, successful, and reputable and financially companies. Blue-chip companies are mostly common household names.
What is the difference between a regular stock and a blue-chip stock?
A blue-chip stock refers to a stock of a well-established, financially stable and reliable company with a long history of steady growth and stability. Regular stocks are any other stocks. Blue-chip stocks are generally considered a lower risk investment, while regular stocks can have varying degrees of risk.
How do you know if a stock is blue-chip?
Blue chip stocks are usually large, well-established and financially stable companies with a long history of steady growth, consistent profits and strong brand recognition.
What are some examples of bluechip stocks?
Some examples of blue chip stocks are:
Apple Inc.
Microsoft Corporation
Amazon.com Inc.
Berkshire Hathaway
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.
A dividend is a payment made by a company to its shareholders out of its profits. It's typically paid quarterly, with the amount of each dividend depending on how profitable the company is and how much the board of directors chooses to distribute. Dividends can be used as income or reinvested back into the company to purchase additional shares.
How many shares do you need to get dividends?
The exact number of shares you need to get dividends depends on the company's policy and dividend payout rate. Generally, owning at least one share qualifies you for receiving dividends.
Is a dividend a good thing for traders?
Yes. Dividends provide traders with regular income and the potential for capital gains if the dividend is reinvested into more shares. This can be beneficial to traders, as it can create a passive stream of income and add to their overall yeild.
The FTSE China A50 index, also known as the China 50, is a Chinese benchmark index that allows investors to trade A Shares, which are securities of companies that are incorporated in mainland China that are permitted to be traded by international investors thanks to government regulation.
The index comprises the 50 largest companies on the Shanghai and Shenzhen stock exchanges by market capitalisation and is free float-adjusted and liquidity screened. The instrument is priced in US Dollars on the {%brand.name%} platform.
The index was launched on 13th December 2003, with a base date of 21st July 2003 and a base value of 5,000.
The China 50 index is dominated by banks, with a weighting of 33%. The second-largest sector is Insurance, with a share of 14.58%, followed by Food & Beverage with 13.28%.
China 50 index futures allow you to speculate on, or hedge against, changes in the price of Chinese stocks. Futures rollover on the 4th Friday of every month.
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.
Delisting is the removal of a security from a stock exchange. This can happen voluntarily by the company, or involuntarily by the exchange if the security no longer meets certain listing criteria. When a security is delisted, it cannot be traded on the exchange, although investors may still hold it as an unlisted investment.
What happens when stock is delisted?
A company can undergo voluntary or compulsory delisting.
• In voluntary delisting, a company removes its own securities / shares from a stock exchange.
• In compulsory (or involuntary) delisting, the securities of a company are removed by regulatory functions, usually for not complying with Listing Agreement.
Can I sell delisted shares?
Delisted stocks often continue to trade over-the-counter. Shareholders can still trade the stock, though it is likely that the market will be less liquid.
Will I get my money back if a stock is delisted?
It depends on the type of delisting. Generally, investors receive their initial investment if a stock is voluntarily delisted. However, in cases of involuntary delisting, investors may not be entitled to any reimbursement.
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.
Curve acts as a liquidity pool for stable cryptocurrencies. CRV DAO Tokens are given to users who provide liquidity in their pools. Those pooled funds are used by traders to exchange different stable coins, thus avoiding slippage and high fees. Curve DAO Token are priced in USD and is tradeable via the CRV/USD symbol.
Basic Attention Token (BAT) crypto was built to improve the security, fairness, and efficiency of digital advertising through the use of blockchain technology. Users are rewarded with BAT for viewing ad content, publishers can deliver higher-impact ads and advertisers can be assured their messaging is being viewed by a willing audience. Trade BAT in USD using the BAT/USD symbol.
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 trader's "account balance" is the total value of the account including all and any settled profit & loss, deposits, and withdrawals.
How do I check my trading account balance?
As mentioned, your account balance is the total sum of settled positions, P&L, deposits, and withdrawals. Yet this balance does not include profit or loss resulting from any open positions. If positions are indeed open, the balance might change depending on pending losses or profits until such positions are closed. As such, it is recommended to check your trading account balance regularly as new positions open and close on a regular basis.
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.
Bitcoin Cash is the younger, more user-friendly, brother of Bitcoin. It was born in August 2017, arising from a fork of Bitcoin Classic.
It is priced in USD per Bitcoin and saw a record high of $3,816 in December 2017. Bitcoin Cash futures trade as BCC.
The break from Bitcoin Classic came about after frustration of the one MB limit. This causes major issues with transaction processing times and limits the number of transactions the network can process.
A number of solutions were proposed, with Bitcoin Cash ‘born' in mid-2017 with an increased blocksize of eight MB. Everyone who previously owned Bitcoin Classic received the same about in Bitcoin Cash.
Despite being one of the youngest cryptocurrencies, Bitcoin Cash has soared in popularity - it is now the world's third-largest cryptocurrency by market value. However, it has experienced significant volatility in its short life so far.
The Canadian dollar to Japanese yen exchange rate is identified by the abbreviation CAD/JPY. The Canadian dollar is the 6th most-popular currency, making up one side in 5.1% of daily trades. The Japanese yen is the 3rd most-traded currency, accounting for 22%.
The pair is highly sensitive to changes in market risk-appetite, as the Canadian dollar is a commodity-correlated currency and the Japanese yen is a safe-haven currency.
The Canadian dollar is highly sensitive to changes in the price of crude oil - Canada's primary export. In turn, crude prices often respond to market appetite for risk, so the strength of the CAD/JPY exchange rate is largely dictated by whether traders are feeling optimistic or pessimistic over global conditions.
In times of market uncertainty, appetite for the safe-haven Japanese yen can increase sharply. However, the yen is often softened by the Bank of Japan's ultra-loose monetary stimulus package, which includes quantitative easing and negative interest rates.
The S&P/ASX 200 index, or Australia 200, comprises the 200 largest qualifying stocks on the Australian Stock Exchange, weighted by float-adjusted market capitalisation. It is denominated in AUD/ and is considered the benchmark index of the Australian market.
The index was launched on 3rd April 2000, with its initial value calculated as of 31st March, 2000. The top 10 constituents account for 45.4% of the index. The ASX is dominated by the financial sector; companies in this industry make up 32.8% of the index and four of the top 10 constituents are banks.
Materials is the second largest sector, with a weighting of 17.3%, followed by Healthcare at 9.4%.
The index includes 187 Australian stocks, eight New Zealand stocks, three US stocks, one French stock, and one UK stock.
Australia 200 index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Australian Stock Exchange. Futures rollover on the 3rd Friday of March, June, September, and December.
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 Nov 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.
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.
Cocoa is a “soft” commodity - referring to those that are grown rather than mined - and comes from the Theobroma tree, whose name translates as “God food” in Greek. Cocoa beans are primarily used to produce chocolate, cocoa powder and cocoa butter, the latter of which is widely-used in beauty products.
Cocoa is priced in USD per metric tonne. The highest price for cocoa on record is $4,361.58/MT, which was reached in July 1977. Cocoa traded at its lowest recorded level of $211/MT in July 1965.
West Africa accounts for around 70% of the global market supply, while Cote d'lvoire, Ghana and Indonesia are the top three cocoa producers. Latin America is a key market player as well.
As a “soft” commodity, cocoa prices are heavily affected by weather and climate news - adverse conditions could affect harvests.
Cocoa futures allow you to speculate on, or hedge against, changes in the price of cocoa. Futures rollover on the first Friday of February, April, June, August, and November.
Cotton is a “soft” commodity - meaning it is grown and not mined - and has for thousands of years been one of the most important crops. Its lightweight and absorbent fibres mean that cotton is the most popular natural fibre on the planet.
China, India, and the US are the top producers of cotton in the world; in the US cotton primarily comes from Florida, Mississippi, California, Texas, and Arizona.
The fibre is priced in USD per lb. It reached a record high price of $210.64 during March 2011 and struck a record low of $5.66 during December 1930.
As well as weather conditions, cotton prices are heavily influenced by demand for competing synthetic fibres and changes in government policy. Cotton farmers enjoy heavy subsidies in the US, so a change here could have significant consequences.
Cotton futures allow you to speculate on, or hedge against, changes in the price of cotton. Futures rollover on the third Friday of February, April, June, and November.
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.
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.
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.
Consumer Price Index or CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. It is considered as one of the most popular measures of inflation and deflation. CPI is also used to estimate the purchasing power of a country’s currency.
How is CPI Calculated?
CPI is calculated by considering Key contributors, including retail and services businesses as well as the U.S. rental housing market (housing accounts for approx. 30% of the CPI). There are several CPI variations:
• CPI-U index reviews the spending habits of urban consumers in the U.S.A. This constitutes for approx. 88% of the U.S population.
• CPI-W index for calculates changes in the costs of benefits paid to “urban wage earners and clerical workers,” which is used to calculate changes in the costs of benefits paid via Social Security.
• CPI ex-food and energy – is highly volatile and thus is excluded from the overall CPI.
A bullish market is a financial market condition where prices are rising or are expected to rise, characterized by optimism and investor confidence. It is the opposite of a bearish market, where prices are falling or expected to fall.
How long do bull markets last?
Bull markets can last anywhere from a few months to several years. The average bull market lasts about 3 years. However, the length of a bull market can vary greatly depending on various economic, political, and market factors.
How do you know if a market is bullish?
A market is considered bullish if stock prices are rising and investors are optimistic about future market performance. This is typically indicated by a sustained increase in market indexes such as the S&P 500 and the Dow Jones Industrial Average over a period of time. Additionally, high trading volume and strong investor confidence can also be indicators of a bullish market.
What is the longest bull market in history?
The longest bull market in history was the 1990-2000 bull market, which lasted for 113 months.
Corn is a soft commodity - referring to those that are grown rather than mined - and is valued for its versatility. As well as being a dietary staple it has many other uses, from biofuels to animal feed.
Corn is grown in every continent on the globe with the exception on Antarctica. 40% of global corn supplies are produced in the US, while China, Brazil, the EU, and Argentina are also major players.
Corn is priced in USD per bushel. In August 2012 corn struck a record high of $849, while the lowest price ever recorded was $22.90 in November 1932.
As corn is a soft commodity, prices are vulnerable to weather conditions which can affect harvests. The strength of emerging market economies also affects prices, as demand for meat products rises as incomes rise, and much of the corn produced each year is used for animal feed.
Corn futures allow you to speculate on, or hedge against, changes in the price of corn. Futures rollover on the fourth Friday of February, April, June, and November.
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.
Alpha is the performance measurement of a trade, or ROI (return on an investment) measured against a market index or benchmark that is considered to represent the market's movement as a whole. The positive or negative return of any given trade in relation to the return of the benchmark index is an alpha.
What does Alpha Tell you?
Traders use Alpha (α) to describe a strategy's ability to beat the market. Thus, it is also often referred to as “excess return” or “abnormal rate of return”. These terms refer to a concept that markets are efficient, and so they are earned returns that do not reflect the market’s performance.
What is alpha and beta in trading?
Alpha is often used in conjunction with beta (the Greek letter β), which measures the broad market's overall volatility or risk, known as systematic market risk.
Alpha is used in finance as a measure of performance. indicating when a strategy, trader, or portfolio manager has managed to beat the market return over some period. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement.
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.
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.
A bearish market is a condition in the stock market where prices are on a downward trend, characterized by widespread pessimism and investor fear. This often results in a decline in the value of securities, leading to a decline in the overall market.
How long do bear markets last?
The duration of a bear market can vary and can last anywhere from a few months to several years. It depends on a number of factors, including the underlying cause of the market downturn, the state of the overall economy, and government or central bank interventions.
How do you know if a market is bearish?
A market is considered bearish if there is a persistent downward trend in the prices of securities, typically accompanied by increased selling pressure and declining market indices such as the S&P 500. This can be indicated by technical analysis, such as chart patterns showing lower highs and lower lows, or by broader economic indicators such as declining gross domestic product (GDP) and rising unemployment.
What is the longest bear market in history?
The longest bear market in history is the Great Depression, which lasted from 1929 to 1939. During this time, the stock market experienced a severe decline, with the Dow Jones Industrial Average losing 89% of its value. The Great Depression was a global economic downturn that had far-reaching impacts and was marked by high levels of unemployment, homelessness, and economic hardship.
A Currency Pair is a term used in the Foreign Exchange, or Forex, domain. Currency pairs compare the value of one currency to another — the base currency versus a second comparative or 'quote' currency. A currency pair shows how much of a currency is required to buy a single unit of the currency it is being compared to. It is also known as an exchange rate and is used for all currencies traded in FX markets.
What is a foreign currency?
A foreign currency is, very simply, any currency used in a country that isn't your own.
What is the structure of a foreign exchange market?
The foreign exchange market is a decentralized market where global currencies are traded. In this market, participants buy, sell, exchange and speculate on currencies. It operates through a global network of banks, corporations, and individual traders, who buy and sell currencies for both hedging and speculative purposes. The market is open 24 hours a day and it is considered the largest and most liquid financial market in the world.
What are the most commonly traded currency pairs?
The most commonly traded currency pairs are USD/CAD, EUR/JPY, GBP/USD and AUD/CAD.
What is an ISO code?
Each currency is identified by an ISO code. An ISO code is a three-character abbreviated name that is standardised and internationally recognised. For example, the ISO code for the United States Dollar is USD.
Earnings Per Share (EPS) is a financial metric that measures the amount of profit a company makes for each outstanding share of its common stock. It's calculated by dividing net income by the number of shares outstanding. Investors use EPS to measure how profitable a company is and to compare different companies in the same sector.
What is a good earnings per share? Is it better to have a high or low earnings per share?
There is no definitive answer to what constitutes a "good" earnings per share (EPS) as it can vary depending on the industry, the size of the company, and the expectations of the market. Generally, a higher EPS is considered better, as it indicates that a company is generating more profit per share of stock.
What is earnings per share vs dividend?
A dividend is a payment made by a company to its shareholders out of its profits or reserves. Whereas EPS is an indicator of a company's profitability.
The iShares ESG MSCI USA Leaders ETF (SUSL) seeks to track the investment results of an index composed of U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider.
The Direxion Daily Financial Bear 3 (FAZ) Shares ETF tracks the inverse performance of the Russell 1000 Financial Services Index by 300%. It is the opposite of the The Direxion Daily Financial Bull 3X Shares ETF (FAS). Traders benefit when the underlying stocks fall, rather than rise. It is leveraged in the same way, so comes with high levels of volatility and risk.
This ETF allows traders to take a bearish view on the performance of commercial banks, a reduction in lending is what FAZ traders will be looking for.
Gilts are issues by the British Government and are generally considered to be low-risk investments. They traditionally have maturities of five, ten and 30 years. As with shares and funds, bond prices rise and fall as their attractiveness changes, based on changes in the market, economy and currency. The price is also affected by the attractiveness of other investments, particularly other ‘safe havens’ such as cash.
The UK Gilt 10 year bond reached a historic high of 16.09% in November 1981, and a record low of 0.52% in August 2016.
The FXE, also known as CurrencyShares Euro Trust, tracks the changes in the value of the euro relative to the US Dollar. An ETF is the easiest way for a trader to buy exposure to foreign currency markets. These funds use cash deposits or futures contracts to track the euro's movements over time.
This ETF provides investors with an opportunity to invest in EUR/USD, such as those who think that the US Dollar is weakening or think that the Euro is strengthening. It tracks the EUR/USD exchange rate very well and is an extremely liquid fund.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
The Direxion Daily Financial Bull 3X (FAS) Shares ETF is a leveraged ETF, aiming to secure traders three times the daily returns on the performance of the Russell 1000 Financial Services Index. This increased exposure also increases risk, so this ETF is more suited to traders with the capital to withstand volatility and with a high risk tolerance.
The portfolio is composed of 70% stocks. Sector exposure is mostly financial services, which make up 77.21% of holdings, with another 15.99% in Real Estate. Commercial banks account for a high proportion of this ETF, with stocks including Berkshire Hathaway Inc, JPMorgan Chase & Co, Bank of America Corp, Visa, Wells Fargo and Citigroup all featuring.
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.
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 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.
EUR/SEK is the abbreviation for the euro to Swedish Krona 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 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 euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The 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.
Financial Markets define any place (physical or virtual) or system which provides buyers and sellers with the means to trade financial instruments of any kind.
What are the types of financial markets?
Types of financial markets include stock markets, bond markets, foreign exchange markets, commodity markets, money markets, derivatives markets, and options markets.
What is the main function of financial markets?
The main function of financial markets is to facilitate the interaction between those who need capital with those who have capital to invest. In addition to raising capital, financial markets allow participants to transfer risk (generally through derivatives) and promote commerce. The term "market" can also be used for exchanges, or organizations which enable trade in financial securities.
Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finances. For long term finance, they are usually called the capital markets; for short term finance, they are usually called money markets. The money market deals in short-term loans, generally for a period of a year or less.
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.
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.
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.
Genomic ETF (ARKG) constituents are companies designing technologies for, or are expected to benefit from, extending & enhancing the quality of human and other life by integrating technological and scientific developments and advancements in genomics into their business. Sectors covered include CRISPR, targeted therapeutics, bioinformatics, molecular diagnostics, stem cells, and agricultural biology.
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.
Euro Bonds (FBGL) or German Government Bonds, are issued with original maturities of 10 and 30 years. Bunds are a highly liquid debt security as they are eligible to be used as insurance reserves for trusts and are accepted as collateral by the ECB.
Bunds are often used to determine the strength of the Eurozone is doing relative to Germany: Investors who are bearish about Germany’s obligations to the Eurozone may demand higher returns, pushing bond yields higher. However, those seeking a safe haven may accept lower yields. Bunds are influenced by interest rates and ECB monetary policy. The Germany 10Y Bond reached a high of 10.80% in September 1981 and a record low of -0.19% in July 2016.
The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom that oversees and regulates financial firms to ensure they operate in an honest and fair manner, and to protect consumers. It is responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
The FCA’s functions include:
• Regulating the conduct of 50,000 businesses
• Supervising 48,000 firms
• Setting specific standards for 18,000 firms
What are the main objectives of the FCA?
The main objectives of the Financial Conduct Authority (FCA) are to protect consumers, protect and enhance the integrity of the UK financial system, and promote competition in the interests of consumers. This includes taking action to address any conduct that falls below the standards the FCA expects and working to ensure that firms compete in ways that are fair, transparent and not detrimental to consumers.
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/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.
GBP/USD is the abbreviation for the pound Sterling to US Dollar exchange rate, also known as “cable”. It combines two very popular currencies; GBP is present in 13% of all daily forex trades, while USD is present in 88% of all trades.
On average US$649 billion worth of pound Sterling is traded every single day. The pair is highly liquid and therefore offers very low spreads.
The UK financial services industry, headquartered in London, is the financial gateway to Europe, and pound Sterling plays an important role in financial markets. Interest rate differentials are a key driver of volatility in the GBP/USD exchange rate.
Recently, political factors have seen their influence over the pairing 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. Meanwhile, in the United States, the protectionist policies of President Donald Trump have raised questions over the outlook for trade.
EUR/CZK is the abbreviation for the euro to Czech koruna exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Czech economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
EUR/NZD is the abbreviation for the euro to New Zealand dollar exchange rate. The euro is the 2nd most-traded currency, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded every day. 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 euro is the currency of the 19-nation Eurozone, 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 New Zealand dollar, which also often moves inversely to the dollar.
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 EUR/NZD exchange rate higher. When dairy prices rise, the opposite happens.
The pound Sterling to Singapore dollar exchange rate is abbreviated to GBP/SGD. GBP is present in 13% of all daily forex trades and on average US$649 billion worth of pound Sterling is traded every single day. The Singapore dollar accounts for 1.8% of all daily forex transactions, making it the 12th most-traded currency on the globe.
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.
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.
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.
The euro to Japanese yen exchange rate has the acronym EUR/JPY. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. The Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades. EUR/JPY accounts for 1.6% of all daily currency trades; $79 billion per day.
While a strong US Dollar can weaken demand for the Japanese yen, it has a much stronger impact upon the euro. This means that in times of safe-haven demand the EUR/JPY exchange rate falls and, although the euro is not a high-beta currency, the pairing appreciates when risk-appetite is strong.
Both the European Central Bank and the Bank of Japan maintain ultra-loose monetary stimulus, but the ECB has recently taken tentative steps towards normalisation. Although negative rates are unlikely to disappear any time soon in either economy, the fact the ECB is in more of a position to adjust borrowing costs stands in the euro's favour.
The CAC 40, also known as the France 40, is a blue-chip index and stock market barometer comprising of the 40 companies listed in Paris with the highest liquidity and free-float market capitalisation. It is the most-traded index administered by Euronext.
The index has a base level of 1,000, taken from the 31st December 1987. It was launched on 15th June 1988. The index hit a record high of 6,922.33 in September 2000, with an all-time low of 893.82 recorded in January 1988.
Personal & Household Goods is the biggest sector in the index, comprising around 13% of the total weighting, followed closely by Industrial Goods & Services. Oil & Gas is the third-biggest sector, with a weighting of just under 12%. Healthcare and Banks are the fourth and fifth largest sectors respectively. Companies are limited to a 15% weighting.
CAC 40 index futures allow you to speculate on, or hedge against, changes in the price of major French stocks. Futures rollover on the second Friday of each month.
An exchange, market or stock exchange is a marketplace where commodities, securities, derivatives, stocks and other financial instruments are traded. The core function of an exchange is to provide for organized trading and efficient distribution of market & stock information within the exchange. Exchanges provide their users the necessary platform from which to trade.
Why should you trade on an exchange?
Trading on an exchange offers security, reliability, liquidity and low costs. Exchange-regulated markets provide transparency, where all market participants have the same access to prices and trading information. Exchanges also offer robust risk management and safety protocols to protect against any price manipulation or abuse of the system.
What are types of exchange?
There are three main types of trading exchanges: traditional exchanges, dark pools, and electronic communication networks (ECNs). Traditional exchanges provide an organized marketplace to buy and sell securities while dark pools facilitate large orders in private forums. ECNs allow investors to directly access liquidity pools and execute trades with other participants in the market.
The DAX, also known as the Germany 40, is a blue-chip index of the top 30 stocks trading on the Frankfurt Stock Exchange. The DAX boasts extreme liquidity and is one of the most-traded index derivatives across the globe.
The index has a base value of 1,000, with a base date of 31st December 1987. As of 18th June 1999, the DAX indices price has been calculated using equity prices from the Frankfurt XETRA all-electronic trading system. DAX is best-known barometer of the domestic stock exchange, representing around 80% of the total market.
Pharma & Healthcare is the biggest sector in the DAX, accounting for 14.2% of the index. Automobiles are next, with 13.9% of the total weighting, followed by Chemicals with 12.7%.
The DAX is one of only a few of the major country stock indices to factor in dividend yields.
DAX index futures allow you to speculate on, or hedge against, changes in the price of major German stocks. Futures rollover on the second Friday of March, June, September, and December.
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.
EUR/TRY is the abbreviated form of the euro to Turkish lira exchange rate, one of the exotic currency pairs. 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 lira is the 16th most active currency, accounting for 1.4% of average daily turnover.
The euro is the currency of the Eurozone, which is overseen by the ECB. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The EUR/TRY pairing appreciates in times of market uncertainty. 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.
The Turkish economy is largely fuelled by foreign currency loans, so a strong euro or US Dollar can lead to further weakness in the lira as markets fear the impact of higher credit costs for Turkey's corporations.
The STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
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.
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.
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.
iShares MSCI Taiwan (EWT) ETF tracks the investment results of an index composed of Taiwanese equities. The ETF provides exposure to large and mid-sized Taiwanese companies and can be used to access to the Taiwanese stock market. EWT includes 90 of the top companies on the Taiwanese Stock Exchange. It is heavily weighted toward the information technology and finance sectors, which account for 55.5% and 18.5% of the portfolio respectively.
The top ten holdings include Taiwan Semiconductor Manufacturing, Hon Hai Precision Industry Ltd, Formosa Plastics Corp and Chunghwa Telecom Ltd.
iShares MSCI South Korea (EWT) ETF tracks the investment result of an index composed of South Korean equities. It provides traders with exposure to large and mid-sized South Korean companies and is a way to access the South Korean Stock Market. EWY follows 114 of the top companies listed in the South Korean Stock Exchange, and reflects the market well.
With Samsung as one of the major companies represented in the portfolio, it is unsurprising that Information Technology companies comprise a large part of this ETF. Almost 30% of the portfolio is IT, the next largest sector is Finance with 14.06%. Hyundai, LG and Kia also feature in this ETF.
The iShares Global Clean Energy ETF (ICLN) seeks to track the investment results of an index composed of global equities in the clean energy sector.
IXN is an iShares Global Tech ETF seeks to track the investment results of an index composed of global equities in the technology sector, offering exposure to electronics, computer software and hardware, and informational technology companies. Targeting tech stocks from around the world, you can use this ETF to get a global view of this sector.
Innovation ETF (ARKK) is based on “disruptive innovation”, focusing on technologies or services that have the potential to change the world.
Companies within ARKK cover those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies, industrial innovation in energy, automation and manufacturing, the increased use of shared technology, infrastructure and services, and technologies that make financial services more efficient.
Companies in the Internet ETF (ARKW) are those that focus on or benefit from cloud computing technologies enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media.
Sectors covered include cloud computing & cyber security, eCommerce, Big Data & AI, mobile technology & Internet of Things, social platforms, and blockchain & P2P.
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.
An IPO (initial public offering) is when a company makes its shares available to the public. This means the stock can be bought and sold by both retail and institutional investors. An IPO is usually underwritten by investment banks, who set up the sale of the shares on exchanges.
What is the difference between an IPO and a Stock?
An IPO is the process of a privately held company being transformed into a public one. The difference between stock and an IPO is that an IPO refers to public shares of a stock and not shares offered after that.
Initial public offerings can be used to raise new equity capital for a company. It monetizes the investments of private shareholders such as company founders or private equity investors. This enables easy trading of existing holdings or future capital raising. The disadvantages of IPO are the same trade-offs between equity and debt financing.
The FTSE MIB Index, also known as the Italy 40, is Italy's leading benchmark index. It comprises the large cap components of the FTSE Italia All-Share Index; the 40 most-capitalised and liquid Italian shares account for around 80% of the market cap of the total domestic market.
The index was launched in the second quarter of 2009, but its base date is 31st December 1997. It has a base value of 24,401.54, peaked at 50,108.56 in March 2000 and struck a record low of 12,362.50 in July 2012.
Just over a quarter of the index is comprised of banks, with Utilities the second-largest category with a weighting of 16.51%. Oil & Gas is the third-largest sector, with a 12.67% share of the index.
A 15% weighting cap is in operation to ensure that no single component can dominate the index.
Italy 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Italian stock market. Futures rollover on the 2nd Friday of March, June, September, and December.
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.
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.
What is a Lot in trading?
In trading, Lots are defined as the number of units of a financial instrument bought or sold on an exchange. A Round Lot is made of 100 shares, where an Odd Lot can be made of any number of shares less than 100. As for bonds, their lots follow a different set of rules. They can range from $1,000 to $100,000 or $1 million. In Forex, trade is done via lots, which are essentially the number of currency units traders buy or sell. As such, a “lot” is a unit measuring a transaction amount. The standard lot is 100K units of currency. Additionally, there are also mini lots valued at 10K units of currency, micro lots valued at 1K units of currency and nano lots that contain 100 units of currency.
What is a lot size in trading?
Lot size in trading refers to the number of units or shares of a security that are traded at once. It's a way to measure the amount of a security that is being bought or sold in a single transaction.
How many shares are in a lot?
The number of shares in a lot can vary depending on the security being traded and the exchange or platform it is traded on. For example, in the US stock market, a standard lot size is 100 shares, but it can be different in other markets or for other securities such as futures or forex.
What is a good lot size?
A good lot size in trading depends on the specific circumstances and goals of the trader. A lot size that is too small may not be cost-effective and may not allow the trader to achieve their desired position size. A lot size that is too large can be too risky and may not be affordable.
The Nikkei 225, also known as the Japan 225, is the leading barometer of the Japanese stock market. It is a price-weighted index, comprising of stocks selected from the 1st section of the Tokyo Stock Exchange.
The rankings are calculated using a method called ‘Dow Adjustment', in which stock prices, adjusted by a par value, are divided by a divisor, helping eliminate the impact of external influences.
The index was introduced on the 7th September 1950, using a base date of May 16th 1949 and a base value of 176.21. The Nikkei 225 peaked at 38,915.87 in December 1989 and hit a low of 85.25 in July 1950.
Technology dominates the Nikkei 225 index with a total weighting of 44.62%. Consumer Goods is the second-largest category with a weighting of 21.80%, while Materials is the third-biggest sector at 16.96%.
Japan 255 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Japanese stock market. Futures rollover on the 1st Friday of March, June, September, and December.
LIBOR, is an acronym for “London Interbank Offer Rate”, and is the global reference rate for unsecured short-term borrowing in the interbank market. It is used as a benchmark for short-term interest rates, and is also used for pricing of interest rate swaps, currency rate swaps as well as mortgages. LIBOR can also be used as an indicator of the health of the financial system,
Who controls the LIBOR?
LIBOR is administered by the Intercontinental Exchange or ICE. It is computed for five currencies (Swiss franc, euro, pound sterling, Japanese yen and US dollar) with seven different maturities ranging from overnight to a year. ICE benchmark administration consists of 11 to 18 banks that contribute for each currency. These rates are then arranged in descending order, with top and bottom results taken of the list to exclude outliers. This data is then computed to get the LIBOR rate, which is calculated for each of the 5 currencies and 7 maturities, thereby producing 35 reference rates. A 3 month LIBOR is the most commonly used reference rate.
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.
The Proshares Bitcoin Strategy ETF (Bitcoin ETF) offers managed exposure to bitcoin futures contracts. The Fund does not invest directly in bitcoin and may also invest in other instruments. It’s one of the first of its kind and marks a new way to get exposure to cryptocurrency price movements.
The iShares MSCI KLD 400 Social ETF (DSI) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
The iShares MSCI USA ESG Select ETF (SUSA) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
iShares MSCI Mexico ETF (EWW) offers traders exposure to a broad range of companies in Mexico and access to targeted Mexican stocks. It has 58 holdings, which include America Movil L, Formento Economico Mexicano, Walmart de Mexico and GPO Finance Banorte.
The fund has almost no technology, energy or utilities stocks as these sectors are government-run in Mexico. The sector-mix is 29.57% Consumer Staples, 21.13% Communication, 15.48% Financials, 12.27% Materials, 10.92% Industrials and the remaining split between real estate, consumer discretionary and health care.
What is a Position in trading?
A position in trading refers to the amount of a security or financial instrument that is held by an investor or trader. It can be a long position, where the trader has bought the security and expects its price to rise, or a short position, where the trader has sold the security and expects its price to fall. The size of the position is typically measured in units of the security or financial instrument, such as shares or contracts. The trader or investor can then make a profit or loss based on the movement of the price of that security or instrument. In addition, an open position is one that has been entered into but not yet closed or settled, and a closed position is one that has been settled or offset by an opposing trade.
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.
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.
Polkadot (DOT) fuses two blockchains: the main, relay chain, where transactions are permanently agreed upon, and user-generated chains. Tradeable in USD, Polkadot is priced in USD and uses the DOT/USD spot rate.
Online brokers are digital trading platforms that allow users to trade stocks, options, ETFs and other financial products online. They offer convenience and competitive pricing, making them popular among individual investors and traders.
What are the three types of brokers?
Trading brokers come in three main varieties: full-service, discount, and online. Full-service brokers offer a variety of services such as research, advice, and account management. Discount brokers are low-cost and may only offer basic services. Online brokers provide customers access to the markets with limited assistance.
Are online brokers safe?
Online brokers are generally safe when used correctly. It is important to use trusted and reliable providers, keep your account secure, and be mindful of any potential risks when trading online. For example, markets.com is fully regulated and controlled for maximum security and safety while you trade.
An Overnight Index Swap (Swap Fee) is a process where the settlement of a deal is rolled forward to another value date, and a charge is levied based on the difference in the interest rates of the two currencies. Every day at 21:00 GMT, open positions are rolled over to the next day and the positions gain or lose interest based on the interest differential between the bought and sold currencies.
What is OIS compound?
The index rate is typically the rate for overnight lending between banks, either non-secured or secured. The fixed rate of OIS is typically an interest rate considered less risky than the corresponding interbank rate (LIBOR) because there is limited counterparty risk.
The LIBOR–OIS spread is the difference between IRS rates, based on the LIBOR, and OIS rates, based on overnight rates, for the same term.
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/CAD is the abbreviation for the New Zealand dollar to Canadian dollar 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 Canadian dollar is the 6th most-traded currency, involved in 5.1% of all daily transactions.
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/CAD rate lower. When dairy prices rise, the opposite happens.
The Canadian dollar is heavily-exposed to changes in the price of crude oil - Canada's primary export. Both currencies are inversely correlated with the US Dollar, so even in times of risk movement in the NZD/CAD is more driven by fundamental factors.
The Canadian dollar is more exposed because the USA is Canada's largest trading partner by far.
The New Zealand dollar to Japanese yen exchange rate is identified by the abbreviation NZD/JPY. 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 Japanese yen is the 3rd most-traded currency, involved in 22% of all daily currency trades.
The pair is highly sensitive to changes in market risk-appetite, as the New Zealand dollar is a commodity-correlated currency and the Japanese yen is a safe-haven currency.
New Zealand's main industry is diary; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/JPY exchange rate lower. When dairy prices rise, the opposite happens.
In times of market uncertainty, appetite for the safe-haven Japanese yen can increase sharply. However, the yen is often softened by the Bank of Japan's ultra-loose monetary stimulus package, which includes quantitative easing and negative interest rates.
Platinum is one of the world's rarest metals, and mines are concentrates in just a handful of countries around the world.
Platinum is priced in USD per troy ounce. It saw a high of $2253 in March 2008, and a record low of $97.70 in January 1970.
Most of the world's platinum is produced in South Africa, which accounts for 80% of supply. Russia is a distant second with 11% and North America produces 6%.
Platinum is an important metal due to its ability to catalyse reactions and its strong resistance to corrosion. This makes it irreplaceable in a broad range of industrial and laboratory reactions, especially the catalytic converter which is the most widely used application of platinum.
The metal is also highly sought-after for jewellery, which is the second largest area of demand,
The concentration of platinum in South Africa (an often-volatile emerging market), combined with the importance of platinum as an industrial material, has led to instability in price.
Maintenance Margin, or “variation margin,” is considered as the minimum amount of equity (i.e., funds) which needs to be maintained in a trader’s margin account before a margin call is issued as due to the account value being below a minimum threshold and not being able to support open margin trade positions. Margin accounts are what leveraged trades use to trade, where they can purchase securities such as stocks, bonds, or options with funds borrowed from the brokerage.
How do you avoid maintenance margin?
To avoid maintenance margin issues, traders should monitor their account closely and adjust their leverage if needed. If your maintenance margin is not maintained it will result in a margin call, which may indicate that the trader should reconsider the risk exposure of their portfolio.
Why are maintenance margins important?
Maintenance margins are important to protect against losses due to fluctuations in the market. They ensure that traders maintain adequate capital reserves and can cover any potential losses.
The WIG 20 Index, or Poland 20, is a blue-chip stock market index of the 20 most actively traded and liquid companies on the Warsaw Stock Exchange. Constituents are chosen from the top 20 companies trading on the Warsaw Stock Exchange as of the third Friday of February, May, August, and November.
The ranking is based upon turnover values for the previous 12 months and a closing price from the previous five trading sessions is used to calculate free float capitalisation.
The index has been calculated since 16th April, 1994 as a base value of 1,000 points. To keep the index diverse, no more than five companies from a single sector may be included in the index at any one time. Sectors covered by the index includes Commercial Banks, Oil & Gas Exploration & Production, Insurance, Metals Mining, and more.
Poland 20 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Warsaw Stock Exchange. Futures rollover on the 2nd Friday of March, June, September, and December.
Multilateral Trading Facilities (MTFs, also known as Alternative Trading Systems or ATS in the United States) provide investment firms and eligible traders with alternatives to traditional stock exchanges. MTFs enable the trading of a wider variety of markets than other exchanges. MTFs users can trade on securities and instruments, including those that may not have an official market. They are electronic systems controlled by approved market operators as well as large investment banks.
What are OTFs?
OTFs (Organized Trading Facilities) are a type of trading venue that is authorized by European Union (EU) legislation to operate in the EU. They are similar to Multilateral Trading Facilities (MTFs) and provide a platform for the trading of financial instruments, such as bonds, derivatives, and equities. Unlike MTFs, OTFs have more flexibility in terms of the types of instruments and trading methods that they can offer.
Is a multilateral trading facility a regulated market?
Yes it is. MTFs are authorized by EU regulators, which provides a platform for the trading of financial instruments, such as bonds, derivatives, and equities.
What do hawkish and dovish mean?
Hawks and doves are terms used by analysts and traders to categorise members of Central Bank committee ahead of their votes on monetary policy.
Hawkish: Refers to a monetary policy that is seen as being more aggressive and leaning towards higher interest rates. It implies a strong stance from the monetary authorities in order to keep inflationary pressures in check and provide an incentive for businesses to invest.
Dovish: Refers to a monetary policy that is seen as being less aggressive and leaning towards lower interest rates. It implies a softer stance from the monetary authorities, allowing businesses to have access to cheap credit, which can help stimulate the economy.
Does hawkish mean bullish?
No, hawkish does not mean bullish. Hawkish is an economic term that describes a central bank policy stance that is believed to favor higher interest rates and tighter monetary policy. It contrasts with dovish which is used to describe policies which favor lower interest rates and more accommodative monetary policy.
Is hawkish good for a currency?
Generally, yes. A hawkish monetary policy can be beneficial for a currency as it typically causes an increase in demand and prices of goods and services produced within the country.
Market Makers are financial institutions or investors that provide liquidity to the markets by placing buy and sell orders at specific prices. They are incentivized to do this in order to make profits from the bid-ask spread.
What is the difference between dealer and market maker?
A dealer and a market maker are both intermediaries in the securities market that provide liquidity and help facilitate trades. However, they have some key differences. A dealer is a person or entity that buys and sells securities for their own account and risk. They hold inventory of securities and make a profit by buying at a lower price and selling at a higher price.A market maker is a firm or individual that provides liquidity to the market by continuously buying and selling a security at publicly quoted prices. They are also called liquidity providers, and they make money by charging a bid-ask spread, the difference between the prices they are willing to buy and sell a security. They do not hold inventory of securities like dealers do.
Do market makers manipulate price?
Market makers are allowed to buy and sell securities at their own discretion, and they may adjust the prices they are willing to buy and sell a security in order to make a profit. However, they are also subject to regulatory oversight, and they must act in a fair and transparent manner. They are not allowed to manipulate prices, and any illegal activities such as insider trading, wash trading or any other form of market manipulation are strictly prohibited.
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.
A share buyback, also known as a stock repurchase, is when a company buys back its own shares from the open market. This reduces the number of outstanding shares and increases the ownership stake of existing shareholders. Buybacks can be used as a way for a company to return excess cash to shareholders, increase earnings per share, or signal confidence in the company's future prospects.
Is share buyback a good thing?
Share buybacks can have both positive and negative effects on a company and its shareholders. On one hand, buybacks can be seen as a sign of a company's financial strength, as they suggest that the company has excess cash and believes its own stock is undervalued. Additionally, buybacks can help to boost earnings per share, which can increase the company's valuation. On the other hand, buybacks can also be criticized for diverting resources away from investments in growth or other opportunities, or for being used as a way to artificially boost the stock price. It's important for investors to evaluate the company's financial situation and the reason behind the buyback before making a decision on whether it is good or not.
What happens to share price after buyback?
Share price can be affected by a buyback in different ways, it will depend on the market conditions, the company's financial situation and the reason behind the buyback. In general, a buyback can help to boost the share price by increasing earnings per share and reducing the number of outstanding shares. Additionally, the announcement of a buyback can also signal confidence in the company's future prospects, which can attract more buyers to the stock. However, a buyback doesn't guarantee an increase in the stock price, if the market conditions are not favorable or if the company's financial situation is not good, the stock price could remain unchanged or even decrease.
What is the reason for share buyback?
A company may choose to buy back its own shares for a variety of reasons, including:
-Returning excess cash to shareholders: A buyback can provide shareholders with a more direct benefit from the company's cash reserves, rather than leaving the money idle or reinvesting it in less profitable ventures.
-Increasing earnings per share: By reducing the number of outstanding shares, buybacks can increase earnings per share, which can make the company look more valuable to investors.
-Signaling confidence: A buyback can signal to the market that the company's management believes the stock is undervalued, which can attract more buyers to the stock.
-Boosting stock price: By purchasing shares in the open market, a buyback can help to boost the stock price, which can benefit existing shareholders.
-Mitigating dilution: If a company issues new shares, it can dilute the value of existing shares, buying back shares can help to mitigate this dilution.
It's important to note that buybacks can also be used as a tool by management to artificially boost the stock price in the short term, rather than for the benefit of long-term shareholders.
ProShares UltraShort S&P500 (SDS) looks to deliver daily investment results that are twice the inverse of the daily performance of the S&P500. This is a leveraged product and designed as a single-day bet. Returns for periods longer than one day could expose investors to performance drift.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
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.
ProShares Ultra QQQ (QLD) aims to deliver daily investment results that are twice the performance of the Nasdaq 100 Index. This ETF provides leveraged exposure to a market-cap weighted index of 100 non-financial stocks listed on the NASDAQ. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. All leveraged products carry more risk than unleveraged products.
The Nasdaq 100 is dominate by tech firms, so the performance of the index is closely tied to the sector. Top holdings include Apple, Amazon, Facebook and Tesla.
ProShares UltraShort QQQ (QID) aims to deliver daily investment results that are twice the inverse daily performance of the Nasdaq 100 Index. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. This is the sister product to QLD, which delivers two times the daily performance of the Nasdaq 100.
As with most inverse and leveraged products, this fund is designed to provide inverse exposure on a daily basis, not as a long-term inverse bet against the index. All leveraged products carry more risk. Nasdaq 100 holdings include Apple, Amazon, Facebook and Tesla.
ProShares UltraShort Russell2000 (TWM) is a leveraged product that seeks to deliver twice the inverse of the daily performance of the USA2000 Index. Results aims to be 200% of the opposite to the movement of the index. This is a daily-bet, so results will vary dramatically for positions held longer than one day.
The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
UPRO, ProShares Ultra Pro S&P500, provides 3x daily exposure to the S&P 500 Index. The ETF aims to deliver daily returns that are three times that of the S&P 500 Index, which comprises US large cap equities. The S&P 500 represents some of the largest and most liquid US stocks on the market.
This is a leveraged product and, as such, carries more risk. It is an aggressive instrument, design for intraday trading, and should not be used as part of a buy-and-hold strategy.
SSO, also known as ProShares Ultra S&P500, is a leveraged product that looks to deliver twice the daily performance of the S&P500. This is a single-day product so the returns over periods of more than one day will differ.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
IWO, also known as iShares USA2000 Growth ETF, replicated the performance of the USA2000 Growth Index. This ETF is comprised of small public US companies that are expected to grow at an above-average rate. The index uses two-year growth forecasts and historical sales to identify growth.
Unsurprisingly, given that the focus is on growth, technology features heavily in the sector breakdown. Health care, Information Technology and Industrials account for 62.07% of the portfolio. It has over 1,200 holdings and stocks include Etsy, Haemonetics, Hubspot and Trade Desk Inc.
ProShares UltraPro Russell2000 (URTY) seeks to deliver daily results that are three times daily performance of the USA2000 Index. This is an aggressive single-day bet and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% of the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
SPDR S&P ASX 50 Fund (SFY.AX) seeks to track the returns of the S&P/ASX 50 Index. The S&P/ASX 50 is an index of Australia’s large-cap equities. Traders can use it as a way to access the Australian Stock Market or gain exposure to Australian companies.
The index has a mix of sectors, and contains the 50 largest ASX listed stocks with the cut-off being a market capitalisation of around $5billion (AUD/). The portfolio accounts for 62% of Australia’s sharemarket capitalisation. Top holdings include Commonwealth Bank, BHP Billiton Limited, Woolworths Group and Telstra Corp.
IWM, also known as iShares USA2000 ETF which seeks to mirror the performance of the USA2000 Index. The ETF has a basket of shares that is similarly weighted to the USA2000 Index, and comprises well-diversified small-cap stocks. It has around 2,000 holdings, all small cap stocks with market capitalisation of less than $1bn.
The portfolio is made up of multiple sectors including 24.52% financials, 16.60% information technology, 16.47% health care, 14.72% consumer discretionary and 12.71% industrials. The remainder is split between materials, energy, utilities, consumer staple and telecoms. Stocks include Etsy, Hubspot and Planet Fitness Inc.
Direxion Daily Small Cap Bear 3x Shares (TZA) seeks to deliver daily results that are three times the inverse of the daily performance of the USA2000 Index. This is an aggressive single-day bet against the USA2000, and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% opposite the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
ProShares UltraPro QQQ (TQQQ) is a leveraged ETF that tracks the performance of the Nasdaq 100 index. This ETF aims to deliver a daily output that is three times the daily performance of the Nasdaq 100. That means TQQQ will deliver results that are 300% of how the index has moved.
The Nasdaq 100 includes the largest companies on the Nasdaq stock market and holdings include Apple, 21st Century Fox Inc, Kraft Heinz and Facebook. This is a single-day bet and is not recommended for use for longer than periods of one day, as the results will differ. Leveraged products carry more risk.
ProShares UltraPro Short S&P500 (SPXU) seeks daily investment results that are 300% the inverse of the daily performance of the S&P 500. This is a single day bet for traders looking to go short on S&P500 or hedge other trades. Like any leveraged product, there is more risk involved in this ETF than in unleveraged products.
S&P500, the index that it inversely tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
ProShares UltraPro Short QQQ (SQQQ) is an inverse leveraged ETF that tracks the performance of the Nasdaq 100 index. This ETF aims to deliver a daily output that is three times the inverse of the daily performance of the Nasdaq 100. That means SQQQ will deliver results that are 300% opposite to how the index has moved. They are a useful product for traders looking to go short or to hedge their other positions.
The Nasdaq 100 includes the largest companies on the Nasdaq stock market and holdings include Apple, 21st Century Fox Inc, Kraft Heinz and Facebook. This is a single-day bet and is not recommended for use for longer than periods of one day, as the results will differ. Leveraged products carry more risk.
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!
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.
Stock dilution is the decrease in existing shareholders' ownership of a company as a result of the issuance of new shares. It typically occurs when companies raise capital by issuing additional shares, thereby reducing the stake of existing shareholders.
Why do companies dilute stock?
Companies dilute stock to raise capital for future growth and investments, often through the sale of additional shares. This allows companies to raise money without having to take out loans or issue bonds. Diluting stock can help reduce overall debt and create a healthier financial situation for the company.
Is stock dilution a good thing?
It depends. If done properly, diluting stock can help raise funds for business operations and growth. It also encourages investors to purchase shares due to the lower price per share. However, too much dilution can weaken shareholder equity and damage investor confidence.
What does dilution do to stock price?
Dilution decreases a stock's price by decreasing its earnings per share (EPS). This happens when a company issues new shares to the public, increasing the total number of shares outstanding and resulting in lower EPS for existing shareholders. Dilution can also occur through corporate acquisitions, mergers or issuing debt that is converted into equity.
Treasury stock, also known as reacquired stock, is stock which a company has repurchased from shareholders. This stock is issued and bought back by the company for various reasons including to improve financial statements and reward shareholders through dividend payments. Companies must keep records of their treasury stock in order to report them on financial statements.
How is treasury stock different from common stock?
Treasury stock, also known as "buyback," is a corporation's own stock that has been purchased back by the issuing company from shareholders. Treasury stock does not give voting rights or dividend payments. In contrast, common stock gives owners voting rights and entitles them to dividends, when declared. Treasury stocks are used to offset dilution and strengthen balance sheets while still giving shareholders an opportunity to sell shares without market risk.
What is the benefit of treasury stock?
By purchasing their own stock, companies can benefit from reducing risk, enhancing corporate governance and even increasing profits. In addition, the stock may be held in reserve for future issuance or to protect against takeover attempts.
Is treasury stock debt or equity?
Treasury stock is a form of equity, rather than debt. It is a company's own shares which have been bought back and held by the company, resulting in the number of outstanding shares being reduced. The buyback is often used to increase shareholder value, reduce the supply of outstanding stock, or as part of employee compensation programs.
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.
Take profit is an order type that is used by traders to automatically exit a trade when a certain profit level is reached. Once the specified price level is hit, the trade will be closed and the profit will be locked in. Take profit can also be used in short positions, where the trader is betting on the price to decrease. In this case, the trader would set a take profit order at a price level below the current market price. Once that price level is reached, the trade will be closed and the profit will be locked in.
When should I take profit on my shares?
The decision to take profit on a stock should be based on your own personal investment strategy and goals. Some investors may choose to take profit when a stock reaches a certain level of appreciation or when it reaches a technical resistance level. Others may choose to hold onto a stock for the long-term and only take profit when they need the money for other investments or expenses.
What is the purpose of take profit?
The purpose of a take profit order is to automatically lock in profit at a specific price level, without the need for a trader to constantly monitor the market. By setting a take profit order, a trader can set a specific level at which they want to exit a trade with a profit, and then let the market run its course. Additionally, it allows the trader to set a level of risk-reward they are comfortable with, and not be affected by emotions and human biases, which could cause them to hold on to a trade for too long or exit too soon.
A reverse stock split, also known as a "reverse split," is a corporate action in which a company reduces the number of outstanding shares by canceling a portion of its shares and increasing the par value of its remaining shares. This means that for every N shares that a shareholder owns, they will end up owning 1 share, where N is the reverse split ratio. For example, if a company performs a 1-for-2 reverse stock split, a shareholder who previously owned 100 shares would now own 50 shares.
Is it better to buy before or after a reverse stock split?
It is not necessarily better to buy before or after a reverse stock split, as it depends on the specific circumstances of the company and the stock. A reverse stock split does not change the underlying value of the company, it only changes the number of shares outstanding and the stock price. However, it is important to understand that in general, companies that perform reverse stock splits tend to be struggling and have a low stock price. Buying before a reverse stock split may allow you to buy shares at a lower price, but it also means you're probably buying into a struggling company.
Is a reverse stock split good?
As with all things in the market, the answer is that it depends. The main reason for a company to perform a reverse stock split is to increase the per-share price of the stock, which can make the stock appear more attractive to investors and also bring it above a certain listing requirement in stock exchanges. Additionally, a reverse split can also help to reduce the number of shareholders and increase the liquidity of the stock, making it easier to trade. However, a reverse stock split can also be a sign of a struggling company, and it can also dilute the value of shares for the existing shareholders.
A “Rights Issue” is when a company offers an issue of its shares at a special price by to its existing shareholders. This new and reduced price is in proportion to their existing holding of the company’s “old” shares. An after effect common to offering a Rights Issue is that the share price is further reduced due to additional dilution of the share value. A typical reason for any given company to offer a rights issue would be to raise capital.
Is a rights issue a good thing?
It depends on the specific circumstances and the reasons for the rights issue. A rights issue can provide a company with additional funding to invest in growth or to address financial difficulties. However, if a company is issuing new shares at a lower price than the current market value, existing shareholders may feel diluted and the stock price may decrease. Additionally, if the company is issuing new shares to address financial difficulties, it may be a sign of financial distress.
Does share price fall after a rights issue?
A share price may fall after a rights issue due to dilution of existing shareholders' ownership in the company, as more shares are issued, thus reducing the value of each individual share. Additionally, if the new shares are issued at a lower price than the current market value, the stock price may decrease. However, this is not always the case as the company may have a good reason for the rights issue such as investing in growth opportunities or raising funds to pay off debt, that could also boost the stock price.
Can a rights issue be sold to anyone?
A rights issue is typically offered to existing shareholders of a company, allowing them to purchase additional shares in proportion to their current holdings. However, the company may choose to offer the rights issue to a broader group of investors, such as institutional investors or the general public. The terms of the rights issue will be outlined in the prospectus and the decision of who can participate will be made by the company.
Robotics ETF (ARKQ) constituents are focused on, and are expected to substantially benefit from, the development of new products or services, technological improvements, and scientific research advancements in areas like energy, automation and manufacturing, materials, and transportation.
Companies within the ETF either develop, produce, or enable autonomous transportation, robotics & automation, 3D printing, energy storage, and space exploration.
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.
SPY, also known as the SPDR S&P 500 ETF Trust, is one of the oldest and best-recognised ETFs. Unsurprisingly, given the name, it seeks to replicate the results of the S&P500 index. SPY tracks large and midcap US stocks.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
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.
Trading alerts are notifications or signals that are sent to traders to inform them of potential trading opportunities or market conditions that may affect their trades. These alerts can be generated by software programs, financial analysts, or other sources, and can be delivered via email, text message, or other forms of communication. They are typically used by traders to help them make more informed trading decisions and stay up-to-date on market conditions.
How do I set up trade alerts?
To set up trade alerts, you will need to use a trading platform or software that offers the alert feature. You can set up trading alerts easily on markets.com.
Can I set an alert for a stock price?
A stock price alert is just one of the types of trade alerts you can set up through markets.com.
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.
Silver (XAG) has long-been synonymous with money, indeed, in some languages the two words are the same. The white metal has been used for investment and jewellery for thousands of years, and its distinctive characteristics ensure it continues to be in high-demand.
Silver is priced in USD per troy ounce. Its price peaked at $49.45 in January 1980, and reached an all-time low of $3.55 in February 1991.
The majority (85%) of silver production comes from mining, with the remainder sourced from scrap and stockpiles. While silver can be recycled, it is less economical to do so than with other precious metals. The top producers of silver are Mexico, Peru and China.
Silver is widely used in photographic, industrial, medical and telecommunications technology. It is also highly sought after for investment purposes. Its price is influenced by industrial demand, demand for jewellery, coins, medals and silverware, as well as the price of gold and the strength of the US Dollar.
Rice is a “soft” commodity - referring to those that are grown and not mined - and is the third most-farmed grain in the world, behind cotton and wheat. It is a food staple for billions of people, spread throughout Asia, the Middle East, and Latin America.
Rice is priced in USD per hundredweight (CWT). In April 2008 prices of the grain peaked at $24.46/CWT, while in February 1982 they hit a low of $0.75/CWT.
China produces the bulk of the world's rice. India, Indonesia, Bangladesh, Vietnam, and Thailand are also big producers.
Rice prices are affected by many factors, including stock levels, the pace of demand growth, and changes in government spending on agriculture. One of the biggest drivers of volatility is crude oil prices - rising prices push up the cost of production and transportation.
Rice futures allow you to speculate on, or hedge against, changes in the price of rice. Futures rollover on the fourth Friday of February, April, June, August, October, and December.
Soybeans are a “soft” commodity - referring to those that are grown and not mined. It is one of the world's most important legumes and is an essential source of protein. It is used extensively in cooking, both soybeans and soy oil, and is also used for animal feed in the form of soy meal.
Soybean is priced in USD per bushel. In July 2012, Soybeans reached an all-time high of $1790, while it reached a low of $208 in September 1959.
The US are the biggest producers of Soybeans, followed by Brazil, Argentina and Paraguay. Together they account for 85% of total production, and 94% of total exports. China is the biggest importer of soybeans.
The price of soybeans is affected by a number of factors, including growing conditions, the demand for biofuel and the strength of USD.
Soybean futures allow you to speculate on, or hedge against, changes in the price of soybeans. Futures rollover on the fourth Friday of February, April, June, October, and December.
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 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.
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.
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.
Technical analysis is a type of financial analysis that looks at historical price movements and trading volumes to predict future price movements in the market. It involves studying trends, chart patterns, momentum indicators, and other factors to make informed decisions about trading. Technical analysis can help traders and investors gain insight into market sentiment, timing their trades for optimal returns.
Why is technical analysis important?
Technical analysis is a critical component of successful financial and trading strategies. It helps investors understand the past performance of a security, identify current trends and anticipate future price movements. Technical analysis relies on mathematical calculations and charting techniques to evaluate securities, which can be an invaluable tool for traders to optimize returns and manage risk.
Which tool is best for technical analysis?
There are many tools that can be used for technical analysis, and different traders may have different preferences. Some commonly used tools include:
Ultimately, the best tool for technical analysis will depend on the individual trader's preferences and the market conditions they are trading in. it's important to use multiple tools and indicators to validate the signals and make better decisions.
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.
In trading, resistance level is a price point at which the price of a security or financial instrument tends to encounter selling pressure, making it difficult for the price to rise above that level. The resistance level is seen as a ceiling, as the price has a hard time going above it. Traders use resistance levels to identify areas where they expect the price to stall or reverse direction. This can be determined by observing the historical price movement of a security or financial instrument, looking for areas where the price has consistently failed to break above. Resistance levels are also used in combination with support levels to identify potential price ranges and trade entry or exit points.
What happens when a stock hits resistance?
If a stock hits a resistance level it can cause the stock to stall, move sideways, or even reverse direction. At resistance level traders that have taken a long position might decide to take profits, while traders that have not yet taken a position might decide to wait for a break above the resistance before buying.
When a stock hits resistance, traders will typically observe the stock's behavior at that level to determine if the resistance level is likely to hold or if the stock is likely to break through it. If the stock breaks through resistance, it can be considered a bullish sign, indicating that the stock is likely to continue to rise. On the other hand, if the stock fails to break through resistance, it can be considered a bearish sign, indicating that the stock is likely to stall or reverse direction.
Trailing Stop Orders are a type of stock order that lets investors adjust the stop price as a security rises or falls. This order works by continuously monitoring the price of a security and dynamically adjusts the stop price with every tick. The advantage of this type of order is that it allows investors to limit their losses, while locking in profits, without having to manually modify the stop-loss point.
Are Trailing Stop Orders good?
Trailing Stop Orders can be a good way to protect profits in your trading. They allow you to set an automated stop-loss that trails the price of a stock, adjusting up as it rises, while allowing you to lock in some gains if the stock begins to fall. This is especially useful when dealing with volatile stocks, giving you more control over your position.
What is a disadvantage of a trailing stop loss?
Trailing stop losses can help minimize risk when trading, however they also limit potential gains. The stop price adjusts based on market conditions, so as the price increases, the stop loss will move up. If the stock drops significantly and your trailing stop loss is too close, it may be triggered before you have a chance to react.
Which is better stop limit or trailing stop?
It depends entirely on the trader. A stop limit will sell at the specified price, while a trailing stop will track price changes and sell when the specified amount is exceeded. Different traders may have different needs and objectives, so which type of order is best will vary. Consider your goals before deciding which option is right for you.
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.
A Stop Loss Order is a type of order that investors can use to limit losses when trading securities. This order instructs a broker to automatically sell a security when it reaches a certain price, known as the stop loss price. By using this order, investors can reduce their risk exposure by locking in gains and preventing larger losses.
How does a stop-loss order work?
A stop-loss order is an investment strategy that helps you limit losses by automatically selling your securities when they drop to a predetermined price. By setting up this order, you can avoid having to monitor the stock's performance every day and ensure that any potential losses are minimized.
What is the difference between a stop-loss and a stop limit order?
A stop-loss order is used to limit losses on a security position by automatically selling when the price drops below a specified level. Whereas a stop-limit order combines the features of a stop-loss with those of a limit order, enabling traders to specify both the price at which they are willing to sell and the maximum loss they are willing to take.
What is a good stop-loss order?
A good stop-loss order is one that is placed at a level that effectively limits potential losses on a trade. The specific level at which to place a stop-loss order will depend on the trader's risk tolerance and the price action of the security being traded. Generally, traders will place stop-loss orders at levels that are below the current price for long positions, or above the current price for short positions, in order to limit potential losses if the price moves in the opposite direction. It's important to note that stop loss orders act as a protective measure, but they don't guarantee that a trade will be executed at the exact stop loss level.
Trading charts are used to display historical price data for a security or financial instrument. They typically include a time frame on the x-axis, and the price of the security or instrument on the y-axis. Candlestick charts, bar charts and line charts are the most common types of charts used in trading. Candlestick charts are the most popular and provide a visual representation of the opening price, closing price, highest and lowest price of the security in a given period of time. It also shows the direction of the price movement, whether it went up or down. Traders use different technical analysis tools like trendlines, moving averages, and indicators to interpret the charts and make trading decisions. There is a great deal of nuance in reading charts and doing it correctly will require experience and an understanding of how your chart of choice is presenting information to you.
How do you predict if a stock will go up or down?
Traders use different technical analysis tools and techniques to predict if a stock will go up or down using trading charts. These include:
Trendlines: By connecting price highs or lows over a period of time, traders can identify the direction of the trend and predict future price movements.
Moving averages: By plotting the average price over a period of time, traders can identify trends and potential buying or selling opportunities.
Indicators: Technical indicators, such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), are mathematical calculations that are plotted on charts to help traders identify trends, momentum and potential buy or sell signals.
Chart patterns: Traders also use chart patterns such as head and shoulders, double bottoms, and triangles to identify potential reversal points in the market and make predictions about future price movements.
It's important to note that technical analysis is not an exact science and it's not a guarantee of future results. Traders should always use technical analysis in conjunction with fundamental analysis, which looks at a company's financial and economic conditions, to make informed trading decisions.
How do you know if a chart is bullish?
A chart is considered bullish if it is showing an upward trend or pattern, indicating that the price of a security or financial instrument is likely to rise. Bullish chart patterns include upward trending lines, ascending triangles, and bullish candlestick patterns such as the hammer or the bullish engulfing pattern. Traders often consider a stock to be bullish when it's trading above the moving average, especially when the moving average is trending upward.
ProShares Ultra Silver, also known as AGQ, is a single-day bet, not a buy-and-hold ETF. AGQ is a leveraged ETF that aims to deliver daily investment results that equate to twice the daily price performance of silver bullion, measured by US Dollar for delivery in London.
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.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
US Treasury Bonds are securities issued by the US government with maturities that vary from ten to 30 years. After initial auction, the bonds can be sold on the secondary market. A number of things can affect the price of TBonds, as with other bonds, shares and funds. US Treasury Bonds are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 10Y (ZN) reached an all-time high of 15.82% in September 1981 and a record low of 1.36% in July 2016.
ProShares UltraShort 20+ Year Treasury (TBT) aims to deliver daily investment results that reflect twice the inverse of the daily performance of the ICE US Treasury 20+ Year Bond Index. Traders would look to get a 200% return opposite to the movement of US Treasury Securities.
This is a leveraged product, and so carries more risk. As with many leveraged ETFs, it delivers daily results and it designed as a single day bet. Positions that are held for longer than a day will get differing results. This ETF can be a useful tactical position or hedge against rising interest rates.
US Treasury Bonds 30Y (UB) are securities issued by the US government with maturities that vary from ten to 30 years. The U.S Treasury suspended issuance of the 30 year bond between February 2002 and February 2006. When bonds are sold on the secondary market, they can go up and down in price in the same way that shares and funds do. US Treasury Bond prices are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 30Y reached an all-time high of 15.21% in 1981 and a record low of 2.11% in 2016.
The S&P 500 Index, also known as the USA 500, is a benchmark index of large-cap US stocks. It accounts for around 80% of the total capitalisation of the US stock market. Around $10 trillion is indexed or benchmarked to the S&P 500.
The index was created in 1957 and was the first US stock market index weighted by market capitalisation. To be eligible, companies must have a market cap greater than US$6.1 billion and have at least 50% of shares traded publicly.
Although launched on 4th March 1957, the initial value data is 3rd January 1928. The index hit a record high in August 2018 of 2,914.04, while the lowest-recorded level was 676.53 in March 2009.
The largest industry represented on the S&P 500 is Information Technology, which accounts for 26.5% of the total index weighting. Healthcare is the second-largest sector, with 14.6% of the index weighting, followed by Financials with 13.8%.
The 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.
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.
USD/CHF is the symbol for the US Dollar to Swiss franc exchange rate. The pairing accounts for 3.6% ($180 billion) of all daily forex activity. The Swiss franc is the 7th most popular trading currency in the world and is involved in nearly 5% of all forex transactions each day.
The US Dollar and Swiss franc are both safe-haven currencies, meaning that the pairing is less responsive to risk-appetite on the global market than other pairings. However, the Swiss franc shares a strong correlation with the euro, so anything that weakens the euro would benefit the US Dollar and pressure the franc lower. If the euro strengthens, the USD/CHF pairing is likely to depreciate. The franc used to be pegged to the euro, but the Swiss National Bank unexpectedly allowed the currency to float free in January 2015.
CHF is a popular choice with traders 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 United States Natural Gas Fund® LP (UNG) is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues shares that may be purchased and sold on the NYSE Arca.
The investment objective of UNG is for the daily changes in percentage terms of its shares' net NAV to reflect the daily changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the daily changes in the Benchmark Futures Contract, less UNG's expenses.
The Benchmark is the futures contract on natural gas as traded on the NYMEX. If the near month contract is within two weeks of expiration, the Benchmark will be the next month contract to expire. The natural gas contract is natural gas delivered at the Henry Hub, Louisiana.
UNG invests primarily in listed natural gas futures contracts and other natural gas related futures contracts, and may invest in forwards and swap contracts. These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less.
The Direxion Work From Home ETF (WFH) offers exposure to companies across four technology pillars, allowing investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment. The four pillars include Cloud Technologies, Cybersecurity, Online Project and Document Management, and Remote Communications. Companies are selected for inclusion in the index by ARTIS, a proprietary natural language processing algorithm, which uses key words to evaluate large volumes of publicly available information, such as annual reports, business descriptions and financial news.
The USA 30, is a blue-chip index of US companies that covers all industries excluding Transportation and Utilities.
It is the second-oldest stock market index in existence and was launched on 26th May 1896, with a base date of the same year. The index peaked at 26,616.71 in January 2018, while its lowest recorded level was 41.20 in July 1932.
The last surviving component of the original index, the Thomas Edison-founded General Electric, was removed from the Dow in 2018.
The index is predominantly made up of industrial companies, which account for 21.5% of the index. Financials are not far behind, however, with 19.2% of the total weighting. Consumer services is the third-largest sector with 16.7% of the index.
The USA 30 contains some of the world's biggest companies, including Apple, Microsoft, Disney, JPMorgan Chase and Johnson & Johnson.
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.
The US Dollar to Japanese yen exchange rate is known by the abbreviated USD/JPY and is the second most-popular currency pair on the forex market. Around $901 billion worth of USD/JPY trades are conducted every day, which is nearly 18% of all forex activity. The pair is highly liquid, and therefore offers very low spreads. The pairing sees strong volatility during the Asian trading session as well as the North American session.
Interest rate differentials are a key volatility driver for the USD/JPY exchange rate. While the US Federal Reserve is currently normalising monetary policy as the economy recovers from the 2008 financial crisis, the Central Bank of Japan is maintaining an ultra-loose stimulus package. USD/JPY is therefore popular amongst carry traders.
The Japanese economy relies heavily upon trade because it lacks many of the natural resources needed for industry, so strength or weakness in global demand and commodity prices can have an impact upon the USD/JPY exchange rate.
USD/CAD is the abbreviation for the US Dollar to Canadian dollar exchange rate. The pair accounts for 4.3% - $218 billion - of all daily forex trades. The US Dollar is the most popular currency to trade, while the Canadian dollar is the 6th most popular. CAD, also known as the “Loonie”, after the bird depicted upon the C$1 coin, accounts for 4.6% of daily forex activity.
The majority of Canadian dollars are exchanged for US Dollars. Canada is the second-largest trade partner for the US; in 2017 the US exported $341.2 billion worth of goods to Canada and imported $332.8 billion. The two nations and Mexico are bound by the North American Free Trade Agreement (NAFTA), although its future is uncertain.
Canada is one of the world's largest oil producers, so the price of crude on the international market has a significant impact upon the USD/CAD exchange rate. In times of high risk-appetite USD/CAD weakens, while low risk-appetite pushes the pairing higher.
The UK 100 is a blue-chip index of the largest 100 companies on the London Stock Exchange in terms of market capitalisation. Companies are only included if they meet relevant size and liquidity requirements.
The index was launched on 3rd January 1984, with a base date of 30th December 1983 and a base level of 1,000 points.
In terms of weighting, the three largest sectors of the UK 100 as of H2 2018 are Oil & Gas (16.56%), Banks (12.70%), and Personal & Household Goods (12.37%).
Traditionally the index has lagged its peers, such as the larger FTSE 250 and the US S&P 500. The index fluctuates in response to market risk sentiment and the strength of the pound Sterling. The UK 100 contains many international companies who report their earnings in other currencies, so a stronger pound weakens company profits.
Because of this, the UK 100 is also considered to be an unreliable indicator of the health of the UK economy because of its large international component.
Wheat is one of the world's most important agricultural commodities, with around two-thirds of global production for food consumption. It is a “soft” commodity, which means it is grown and not mined.
Wheat is priced in USD per bushel, it reached a record high of $1194.50 in February 2008, but slumped to a record low of $192 in July 1999.
An incredibility versatile grain, wheat is harvested somewhere in the world every single month of the year. There is more land used for wheat production than any other crop worldwide, and it is behind only corn and rice in total production.
Wheat prices are affected by a number of factors, including import/export restrictions, stock levels and the strength of the USD. However, one of the biggest drivers of substantial volatility is supply-chain disruptions caused by natural disasters and extreme weather events.
Wheat futures allow you to speculate on, or hedge against, changes in the price of wheat. Futures rollover on the fourth Friday of February, April, June, August and November.
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.
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