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.
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
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!
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.
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.
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.
In Forex, an Ask is the price at which it is possible to buy the base currency of the selected currency pair. In trading, Ask Price or Offer Price are the lowest price at which a seller will sell their stock.
Ask is used in conjunction with Bid price, which is what the buyer is offering and is by definition lower than the price the selling is asking for. The difference between the buyer’s bid and a seller’s ask is called a “Spread”.
What Is the Bid Ask Spread?
Financial instruments have 2 key public prices: a bid and an ask. When traders wish to buy (a Buy Position), they effectively pay the Ask price. When traders open a sell position, then they are offered the bid price by potential buyers. For obvious reasons, the bid price tends to be lower than the ask price. This price differential is the bid ask spread.
The 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.
The VanEck Vectors Social Sentiment ETF (BUZZ) will track the BUZZ NextGen AI US Sentiment Leaders Index. This index consists of the most-favourably talked about stocks online, whether on blogs, social media or Reddit.
The iShares ESG MSCI USA Leaders ETF (SUSL) seeks to track the investment results of an index composed of U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider.
The Vanguard Value Fund (VTV) seeks to track the performance of a benchmark index that measures the investment return of large-capitalization value stocks. The Fund employs a "passive management"-- or indexing --investment approach designed to track the performance of the CRSP US Large Cap Value Index.
The US Global JETS ETF tracks the performance, before fees and expenses, of the US Global Jets Index. The Index is composed of the common stock of US and international passenger airlines, aircraft manufacturers, airports, and terminal services companies listed on well-developed securities exchanges across the globe.
The Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG) holds a basket of companies that score highly for environmental, social, and governance (ESG) factors, with roughly marketlike sector exposure. The fund’s index uses MSCI’s ESG rating methodology to assign a score to all US large- and midcap stocks.
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.
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.
The WisdomTree Emerging Markets High Dividend ETF (DEM) tracks the WisdomTree Emerging Markets Dividend Index. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index. This provides it with some downside protection from market volatility.
DEM is an equity fund, and has a mix of market sectors. It includes stocks from key emerging markets such as Russia and China, with assets including China Contruction Bank, China Mobile and Norilsk Nickel.
The Vanguard Total Stock Market ETF (VTI) tracks the total US market and is designed for traders looking for comprehensive, inexpensive exposures to full-market equities. It encompasses the entire market-cap spectrum and provides neutral coverage, with no sector or size bets.
This ETF looks to match the performance of the CRSP US Total Market Index. The sector breakdown is largely the same as its benchmark: Financials make up 19.70%, Tech is 19.10%, with consumer good, health care and industrials all around the 13% mark.
UPRO, ProShares Ultra Pro S&P500, provides 3x daily exposure to the S&P 500 Index. The ETF aims to deliver daily returns that are three times that of the S&P 500 Index, which comprises US large cap equities. The S&P 500 represents some of the largest and most liquid US stocks on the market.
This is a leveraged product and, as such, carries more risk. It is an aggressive instrument, design for intraday trading, and should not be used as part of a buy-and-hold strategy.
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.
The S&P MidCap 400 ETF (MDY) looks to replicate the performance of the S&P Midcap 400 Index. The most widely-followed mid-cap index in existence, it serves as a good barometer for the performance and directional trends of US equities. The fund provides a good representation of the market and is popular in the midcap space.
Stocks in this index cover all major sectors including technology, health care, financial industries and manufacturing, and include many household names. Holdings include Teleflex, Dominos Pizza, Lamb Weston Holdings and Atmos Energy.
SPY, also known as the SPDR S&P 500 ETF Trust, is one of the oldest and best-recognised ETFs. Unsurprisingly, given the name, it seeks to replicate the results of the S&P500 index. SPY tracks large and midcap US stocks.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
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.
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.
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.
WisdomTree U.S. LargeCap Dividend (DLN) consists of the 300 largest companies ranked by market capitalisation from the WisdomTree Dividend Index. The Index is a fundamentally weighted index that measures the performance of large-cap dividend-paying US companies.
The top ten stock holdings account for 26.76% of the index and include Microsoft, Apple, Exxon Mobil and Verizon Communications. Four sectors (Information Technology, HealthCare, Consumer Staples and Financials) account for 56.4% of the index’s holdings. This ETF is a good option for traders looking for exposure to large cap equity from dividend-paying companies.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
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 Tech 100 (NQ) is a market capitalization-weighted stock market index that includes the hundred largest non-financial domestic and international companies.
The index is constituted by sectors such as Technology, Consumer Services, Healthcare, Industrials, Consumer Goods and Telecommunications.
The US Tech 100 index contains some of the largest companies in the world, including Apple, Amazon, Microsoft, Facebook, Google parent Alphabet and Netflix.
The US Tech 100 index futures allow you to speculate on, or hedge against, changes in the price of some of the world’s biggest stocks. Contracts rollover on the second Friday of March, June, September and December.
IWM, also known as iShares USA2000 ETF which seeks to mirror the performance of the USA2000 Index. The ETF has a basket of shares that is similarly weighted to the USA2000 Index, and comprises well-diversified small-cap stocks. It has around 2,000 holdings, all small cap stocks with market capitalisation of less than $1bn.
The portfolio is made up of multiple sectors including 24.52% financials, 16.60% information technology, 16.47% health care, 14.72% consumer discretionary and 12.71% industrials. The remainder is split between materials, energy, utilities, consumer staple and telecoms. Stocks include Etsy, Hubspot and Planet Fitness Inc.
ProShares Ultra QQQ (QLD) aims to deliver daily investment results that are twice the performance of the Nasdaq 100 Index. This ETF provides leveraged exposure to a market-cap weighted index of 100 non-financial stocks listed on the NASDAQ. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. All leveraged products carry more risk than unleveraged products.
The Nasdaq 100 is dominate by tech firms, so the performance of the index is closely tied to the sector. Top holdings include Apple, Amazon, Facebook and Tesla.
ProShares UltraPro 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.
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.
ACWI stands for All Country World Index and this ETF is designed to provide a broad reflection of the performance of equity markets around the world comprising stocks from 23 developed and 24 emerging markets. It’s owned by Morgan Stanley Capital International (MSCI).
The ETF tracks nearly 2,500 stocks, including Apple, Microsoft, Amazon and Facebook. Stocks from five countries make up 72.6% of the ACWI, those being the USA, Japan, the UK, France and China. The remaining 27.4% comprises stocks from the other 42 countries. The ACWI is used as a benchmark of performance by fund managers, and is considered a good way to diversify a portfolio.
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 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.
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.
Dow Jones Industrial Average - SPDR (DIA) mirrors the USA 30, which tracks 30 large-cap blue-chip companies – many of which are household names. The Dow Jones is one of the oldest indices in the world and is not considered to be volatile. However, because it is only 30 companies it is heavily influenced by the fortunes of those firms and is not a good indicator of the economy as a whole.
Stocks in the fund include Coca-Cola, Disney, Apple and Visa. The ETF is a good way to invest in the index. However, it is not ideal for those looking for broad exposure to US caps, as it only follows the top 30 companies. It is extremely liquid with a strong track record.
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.
The FTSE/JSE index, also known as the South Africa 40, is a market capitalisation-weighted index of the largest and most liquid 40 companies trading on the Johannesburg Stock Exchange.
The index was launched on 24th June 2002, with a base date of 21st June 2002 and a base value of 10300.31.
The largest sector in the index is Media, which accounts for 22.27% of the total index weighting. Basic Resources is the second largest, accounting for 19.9% of the total weighting, followed by Personal & Household Goods and Banks, with 12.43% and 12.35% respectively.
South Africa 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Johannesburg Stock Exchange. Contracts rollover on the second Friday of March, June, September, and December.
The USA 2000 Index, also known as the USA 2000, is a small cap index of the US stock market. It represents the bottom 2,000 companies in the Russell 3,000 stock market index, accounting for around 8% of the Russell 3,000's market capitalisation.
The index was created in 1984 and was the first index of small cap stocks; it has since become the benchmark of choice, along with its variants, for around 84% of small cap assets. The index first broke 1,000 points on May 20th 2013, and hit a record high of 1,737.63 in August 2018.
USA2000 index futures allow you to speculate on, or hedge against, changes in the price of thousands of small-cap US stocks. Contracts rollover on the second Friday of March, June, September, and December.
High frequency trading (HFT) is an automated form of algorithmic trading which uses computer programs to execute large numbers of orders at incredibly high speeds. This allows traders to capitalize on small price discrepancies in the market by exploiting arbitrage opportunities that exist due to different pricing among different exchanges. HFT is widely used today as a way for investors to make quick and efficient trades with a lower cost of entry.
How does high-frequency trading work?
High-frequency trading is an automated system of buying and selling stocks within fractions of a second. By using complex algorithms, traders can analyze and make decisions about the markets at a much faster rate than traditional methods. As a result, high-frequency trading enables firms to take advantage of short-term price fluctuations and generate significant profits.
The 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.
Volatility is the amount of uncertainty or risk associated with the size of changes in a security's value. It is measured by calculating the standard deviation of returns over a given period. High volatility means the price of an asset can change dramatically over a short time period in either direction. Traders often take advantage of volatility by speculating on stocks, options, and other financial instruments.
What causes market volatility?
Market volatility can be caused by a variety of factors including economic data releases, political events, changes in interest rates, and unexpected news or events. It can also be caused by changes in investor sentiment, speculation and market manipulation.
How do you know if a market is volatile?
A market is considered volatile if prices change rapidly, unpredictably, and significantly. This can be measured using volatility indices or by analyzing price movements and fluctuations over time.
The NIFTY 50 Index, also known as the India 50, is a free-float market capitalisation computed index of 50 top companies trading on the National Stock Exchange of India.
The index was launched on April 22nd, 1996, with a base value of 1,000, calculated as of November 3rd, 1995.
Financial Services is the largest component of the index, with a weighting of 37.09%, while Energy and IT are the second and third largest sectors, accounting for 15.01% and 13.27% respectively. The index covers 12 sectors of the Indian economy; Financial Services, Energy, IT, Consumer Goods, Automobile, Construction, Metals, Pharma, Cement & Cement Products, Telecom, Media & Entertainment, Services, and Fertilisers & Pesticides.
India 50 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the National Stock Exchange of India. Futures rollover on the fourth Friday of each month.
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.
A quoted price is the most recent price at which an asset was traded at. Global and local events, either of a financial nature or completely unrelated to finances continually affect the quoted prices of assets such as stocks, bonds, commodities, and derivatives changes continually throughout a trading. Additionally, It is often the price point where buyers and sellers agree on, the most up-to-date agreement between buyers and sellers, or the bid and ask prices. It is also where supply meets demand.
Is a quoted price legally binding?
In most cases, when trading in an exchange, the quoted price is binding and the trade is executed at the quoted price, with the exchange acting as a counterparty to the trade. However, when trading OTC (over-the-counter), the quoted price is not necessarily binding as the parties have more flexibility in negotiating the final price, and the counterparty risk is higher.
The 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 Romanian leu exchange rate is identified by the abbreviation USD/RON. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion. The Romanian leu the 34th most-active currency, accounting for just 0.1% of average daily turnover.
Romania is an emerging market economy and is one of Europe's poorest nations. The country wanted to adopt the euro, but has so far failed to meet the criteria. USD/RON appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower-yielding, lower risk, currencies.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD. It is the most popular reserve currency, meaning central banks stockpile dollars to use in times of domestic currency weakness.
Working orders, also known as pending orders, include Stop orders and Limit orders. Essentially, they’re instructions for a broker to perform a trade when an asset hits a certain price. These orders inform brokers that traders wish to make that trade only if something happens to the asset price.
What is the best order type when buying stock?
The best order type depends on the individual's specific needs and market conditions. It's important to understand the trade-off between speed and price certainty when choosing an order type. Market orders provide immediate execution but at the current market price, while limit orders offer price certainty but may not be executed if the desired price is not reached.
What is an open work order?
An open work order in trading is an outstanding order to buy or sell a security that has not yet been executed. It remains open until it is either filled or cancelled by the trader.
The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.
The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.
The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.
Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.
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.
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.
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.
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.
The Swiss Market Index (SMI), also known as the Swiss 20, is a blue-chip index of the 20 largest and most-liquid companies traded on the SIX Swiss Exchange, covering around 80% of the total market capitalisation of Swiss equities. The index is weighted so that no component can exceed 20%, enabling it to be a key barometer of the Swiss stock market.
The index was launched on 30th June 1988, and has the same base date. It has a base value of 1,500 points, reached a high in January 2018 of 9,611.61, and an all-time low of 1,287.60 in January 1991.
Healthcare is the largest index sector, accounting for 37.5% of the total weighting, followed by Consumer Goods with 24%, and Financials with 21.6%. Industrials is the fourth-largest sector with 13.6%.
Swiss Market Index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the SIX Swiss Exchange. Contracts rollover on the second Friday of March, June, September, and December.
The CBOE Volatility Index, also known as the VIX Index, is a benchmark index which tracks market expectations of future volatility. Markets consider it a leading indicator of volatility on the US equity market. It is often known colloquially as the “Fear Index”.
The VIX Index is calculated based upon the price of options for the S&P 500, which is considered a barometer of the US stock market. Changes in the price of options reflect upon the demand for hedging or speculating tools and therefore upon market expectations of volatility.
By aggregating the weighted bid/ask prices of put and call options for the S&P 500, the VIX creates a simple, trackable measure of expected volatility over the next 30 days.
The VIX itself is not a tradable product, but it is used as the basis for options and futures. Our VIXX futures allow you to hedge against volatility, speculate on changes in US market conditions, or diversify your indices portfolio.
Futures rollover on the second Friday of every month.
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.
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 Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve System (the Fed) which is responsible for making monetary policy decisions. The FOMC is made up of 12 members, including the seven governors of the Federal Reserve Board and five of the 12 Reserve Bank presidents.
What does the Federal Open Market Committee impact?
The FOMC meets eight times a year to set the target for the federal funds rate, which is the interest rate at which banks lend and borrow money from each other overnight. The FOMC's decisions can have a significant impact on interest rates, the economy, and the stock market. The FOMC makes key decisions about interest rates and the growth of the United States money supply. It also directs operations undertaken by the Federal Reserve System in foreign exchange markets. They consider a wide array of factors such as trends in prices and wages, employment and production, business investment and inventories, foreign exchange markets, and fiscal policy.
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.
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 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 IBEX 35, or Spain 35, is the benchmark index for the Spanish stock market and tracks the performance of the top 35 most-traded and most-liquid companies on the Bolsa de Madrid (Madrid Stock Exchange).
The index is market capitalisation-weighted and free float-adjusted. It was launched on 14th January 1992 but has a base date of 30th December 2010 and a base level of 1,000. Selection is based upon liquidity, but there is a maximum weighting limit of 40%.
Financial & Real Estate Services is the most-represented sector in the index, accounting for around 34% of the weighting. The next-largest sector is Oil & Energy, with just over 20%, followed by Technology & Telecommunications with just over 15%. Consumer Goods, Basic Materials, Industry & Construction, and Consumer Services complete the list of sectors covered in descending order of weighting.
Spain 35 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Bolsa de Madrid. Contracts rollover on the second Friday of every month.
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.
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 STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
The FTSE MIB Index, also known as the Italy 40, is Italy's leading benchmark index. It comprises the large cap components of the FTSE Italia All-Share Index; the 40 most-capitalised and liquid Italian shares account for around 80% of the market cap of the total domestic market.
The index was launched in the second quarter of 2009, but its base date is 31st December 1997. It has a base value of 24,401.54, peaked at 50,108.56 in March 2000 and struck a record low of 12,362.50 in July 2012.
Just over a quarter of the index is comprised of banks, with Utilities the second-largest category with a weighting of 16.51%. Oil & Gas is the third-largest sector, with a 12.67% share of the index.
A 15% weighting cap is in operation to ensure that no single component can dominate the index.
Italy 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Italian stock market. Futures rollover on the 2nd Friday of March, June, September, and December.
The WIG 20 Index, or Poland 20, is a blue-chip stock market index of the 20 most actively traded and liquid companies on the Warsaw Stock Exchange. Constituents are chosen from the top 20 companies trading on the Warsaw Stock Exchange as of the third Friday of February, May, August, and November.
The ranking is based upon turnover values for the previous 12 months and a closing price from the previous five trading sessions is used to calculate free float capitalisation.
The index has been calculated since 16th April, 1994 as a base value of 1,000 points. To keep the index diverse, no more than five companies from a single sector may be included in the index at any one time. Sectors covered by the index includes Commercial Banks, Oil & Gas Exploration & Production, Insurance, Metals Mining, and more.
Poland 20 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Warsaw Stock Exchange. Futures rollover on the 2nd Friday of March, June, September, and December.
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.
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.
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.
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.
Trading trends refer to the overall direction of a security or market, often revealed through chart patterns or indicators. Traders use these trends to identify potential entry and exit points, as well as possible trading opportunities. Analyzing the financial markets in order to identify trends is an essential skill for successful traders. With knowledge of historical trends, investors can spot emerging ones and plan accordingly.
How do you identify a trend in trading?
Analyzing past market movements, changes in asset prices and economic data can be used to identify short-term and long-term trends. Using technical indicators such as moving averages, MACD, and stochastics can also help you spot potential trading opportunities and take advantage of prevailing market trends.
What are the 3 types of trends?
When analyzing the stock market, there are three primary trends that can be observed: short-term, intermediate-term, and long-term. Short-term trends generally last within one to three weeks, intermediate-term trends can range from one to four months, and long-term trends last more than a year. Being able to identify these different trend patterns will help investors maximize their potential returns.
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 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.
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.
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.
A market order is a type of stock order that allows an investor to purchase or sell securities at the current market price. It is one of the most common types of orders and it is executed as soon as it is placed, meaning the investor will get whatever price is currently available on the exchange.
Is it good to use market order?
A market order is an order to buy or sell a security at the best available current price. This type of order may provide an advantage over other types of orders by executing quickly, but it could also mean that the trade may not be filled at the desired price.
Why would you use a market order?
A market order is typically used when an investor wants to execute a trade quickly, and is willing to accept the current market price. This type of order is often used when an investor wants to take advantage of a price change or when they want to enter or exit a position quickly.
How long does a market order take?
A Market order is generally the fastest order to execute as it simply takes the current market price. You can expect a market order to be executed usually within seconds or minutes of being placed, as long as there is sufficient liquidity in the market.
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 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 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.
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.
Fibonacci retracement is a technical analysis tool that uses horizontal lines to indicate areas where a stock's price may experience support or resistance at the key Fibonacci levels before it continues to move in the original direction. These levels are derived from the Fibonacci sequence and are commonly used in conjunction with trend lines to find entry and exit points in the market. The key levels are 23.6%, 38.2%, 50%, 61.8% and 100%.
Unlike moving averages, Fibonacci retracement levels are static prices. They do not change. This allows quick and simple identification and allows traders and investors to react when price levels are tested. Because these levels are inflection points, traders expect some type of price action, either a break or a rejection.
Why do people use Fibonacci in trading?
Fibonacci retracement is used in trading as it enables traders to identify long-term trends by determining when an asset's price is likely to change direction. This is useful to traders since it can help them to decide when to open or close trading positions, or when to apply stops and limits to their trades.
Is Fibonacci retracement a good strategy?
Fibonacci retracement can be a powerful trading tool when used correctly. It is based on the principle of support and resistance levels and can help identify key levels of entry and exit. When combined with other technical indicators it can help traders take better informed decisions.
The risk/reward ratio is a known concept for those engaging in business. So, what is a Risk/Reward Ratio in trading, and does it follow the same guidelines and practices of the business world?
In trading, the Risk/Reward Ratio measures the expected gains of a given trade, asset, or position against the risk of potential loss. It is typically shown as a figure for the assessed risk separated by a ':' from the figure for the prospective reward.
What is a good Risk/Reward Ratio?
Acceptable ratios can vary, based on multiple factors. You can calculate this by dividing your "reward" (the end result or net profit) by the price of your maximum risk. It is generally accepted that if a risk is equal or greater than the corresponding reward, the trade position will not be worth the risk. Equally generally acceptable is the notion that a ratio greater than 1:3 is minimally required in order to justify the risk, i.e. a good risk/reward ratio.
By definition, this ratio quantifies the relationship between the potential currency lost, if the trade or action taken do fail, versus realized sum (gained) if all goes as planned.
Traders make use of the Risk/Reward Ratio to as one of the means to determine viability or worthiness of a given investment. One way to limit risk is to issue stop-loss orders, which trigger automatic sales of stock or other assets when they hit a specific value. This enables traders to limit potential risks.
The closing price is the final price at which a security is traded during a trading session. It is used to determine the settlement price for trades and the value of securities at the end of the trading day.
Why is closing price important?
The closing price is important for several key reasons. Market players such as traders, investors, banks and financial institutions as well as regulators use the closing price as a reference point for determining a stock’s performance over time (which can range from a as little as seconds or minutes prior or past the closing price to durations such as a week, through a month and over the course of a year).
What is 'after-hours' trading?
After hours trading refers to the buying and selling of securities outside of the regular trading hours of the major stock exchanges, typically 4:00 PM to 8:00 PM Eastern Standard Time. This can include both electronic trading and trading by phone. It is usually less liquid than regular trading hours and prices may be more volatile.
Can you sell at closing price?
Yes, you can sell a security at the closing price. The closing price is the final price at which a security is traded during a trading session, and can be used as a reference point for determining the settlement price for trades. If you sell a security at the closing price, you will receive the price of the security at the end of the trading day.
The Opening Price is the price at which a security first trades upon the opening of an exchange on a trading day. It is important to note that it may not identical to the previous day’s closing price. Also, for new stock offerings (IPO etc), Opening Price refers to the initial share price at the beginning of trade of the first day. Yet there are some cases when an opening price will also be the share price which was established by the first trade of the day, instead of being based on a price that was already in place when at the beginning of trade of that day at that specific exchange.
How is opening price calculated?
The opening price is can be calculated by taking the first trade price executed in that trading session. In case of stock trading it is the price of the first trade executed on the exchange when the market opens. Opening price is usually used to calculate the performance of the stock or any other asset for the day.
What is the difference between opening price and closing price?
The opening price is the price of an asset at the start of a trading session, while the closing price is the price of an asset at the end of a trading session.
Who sets the opening price of a stock?
The opening price of a stock is typically set by the stock exchange or market maker responsible for trading that stock.
What is a Rally in Trading?
A rally in trading refers to a period of time when the price of an asset, such as a stock or commodity, rises significantly. A rally is often characterized by an increase in buying activity and positive investor sentiment, which drives the price upward. Rallies can be short-lived or last for an extended period, depending on the underlying factors driving the market.
How long does a stock rally last?
Rallies can be short-term or long-term depending on factors like market sentiment and the performance of underlying stocks. On average, stock rallies can last anywhere from a few days to several weeks or even months. The length of any given rally is impossible to predict and it’s up to individual investors to do their research and make their own decisions on whether they want to invest during a stock rally.
How do you identify a stock rally?
Rallies can be identified by several factors including an increase in price, strong trading volume, positive news stories and upbeat investor sentiment. To accurately determine if there is a stock rally, look at the index chart of the overall market, specific sectors or individual stocks. Additionally, keep an eye on economic indicators such as gross domestic product, employment data and consumer confidence to assess if conditions are conducive for a rally. Doing research and regularly monitoring the stock market can help investors identify potential opportunities during a rally.
A long position is a market position where the investor has purchased a security such as a stock, commodity, or currency in expectation of it increasing in value. The holder of the position will benefit if the asset increases in value. A long position may also refer to an investor buying an option, where they will be able to purchase an underlying security at a specific price on or before the expiration date.
What is riskier a long or a short position?
A short position is considered riskier than a long position because the potential loss is theoretically unlimited, while the potential profit is limited to the amount of depreciation in the value of the security. When an investor short sells a stock, they borrow shares from someone else and sell them, with the hope that the price will drop so they can buy the shares back at a lower price and return them to the lender, pocketing the difference. In case the price of the stock rises instead, the loss for the short seller is theoretically unlimited as there is no limit to how high the stock price can go.
When should I buy a long position?
When an investor believes that the market will rise, they could consider purchasing a long position.
How can I protect my long position?
Protecting a long position often involves setting up a stop-loss order, which automatically sells the asset at a predetermined price. This ensures that any sharp market drops don't result in excessive losses for the investor.
Spread Betting is a type of financial speculation which allows you to take a position on the future direction of the price of a security, such as stocks, commodities or currencies. You can choose to speculate whether an asset will go up or down in value, without having to buy or sell it. Spread Betting enables you to take a view on the markets and gain access to the financial markets with limited capital outlay.
How does a spread bet work?
A spread bet is placed by betting on whether the asset's price will rise or fall. The investor can set their own stake size, which means they can take more or less risk according to their preferences. Spread bets are flexible and convenient, allowing you to benefit from even the slightest market movements.
What does a negative spread mean?
A negative spread in trading refers to a situation where the ask price for a security is lower than the bid price. This means that a trader could potentially sell a security for a higher price than they would have to pay to buy it. This is an unusual situation that can occur due to a temporary market anomaly or a technical error. Negative spreads are rare and they tend to be corrected quickly, as they represent an opportunity for arbitrage. Traders should be cautious when dealing with negative spreads and should consult with their broker or trading platform to understand the cause of the negative spread and its potential impact on their trade.
A range refers to the difference between the highest and lowest prices a stock may reach during a specific time frame. This range gives investors an indication of how volatile a particular asset might be in terms of its price movements, as well as what opportunities they might have to make money. By analyzing historical data and keeping up-to-date with market news, investors can develop strategies to capitalize on different ranges.
How do you use ranges in trading?
Range trading is a popular trading strategy in finance, particularly for traders looking to limit their risk and profit from a given market movement. When using ranges, traders identify support and resistance levels for a security or asset, and look to take profits when prices reach either level. By using a range-trading strategy, traders can limit the amount of capital they are willing to risk per trade, as well as capitalize on both long-term and short-term movements in the market.
What is trend in trading?
A trend in trading is the general direction of a security's price over a period of time. Trend analysis helps traders make predictions about future market movements, allowing them to enter and exit positions at optimal times. Trends can be either upward or downward and often take weeks, months or even years to develop. To identify trends, technical analysis tools such as support and resistance levels, trend lines, and chart patterns are used by traders to detect buying and selling opportunities in the markets. Fundamental analysis also plays a role in recognizing potential profitable trading opportunities since underlying economic conditions may influence a security’s price.
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.
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.
A limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders. By placing a limit order they tell a broker to buy or sell a particular stock at a certain price or better than that price (lower for buying, higher for selling). This order is executed only if the transaction can be processed at the limit set in the order.
Is a limit order a good idea?
A key benefit of using a limit order is to ensure that the stock is bought or sold at a certain price point or better than that price point. There is of course the risk of not being able to execute that order as that specific price may never reach that limit as set in the order.
What are the types of limit order?
There are several types of limit orders in trading:
Buy Limit Order: An order to buy a security at a specific price or lower.
Sell Limit Order: An order to sell a security at a specific price or higher.
Buy Stop Limit Order: A stop order to buy a security at a specific price or higher, only activated once a specified stop price has been reached.
Sell Stop Limit Order: A stop order to sell a security at a specific price or lower, only activated once a specified stop price has been reached.
Trailing Stop Limit Order: A type of stop order where the stop price is set at a fixed amount or percentage below or above the market price, and adjusts as the market price moves.
A PIP, or "point in percentage" generally refers to a unit of measurement used in the foreign exchange (Forex) market to represent the change in value between two currencies. One PIP is equal to the smallest price change that a given exchange rate can make, typically equal to 0.0001 for most currency pairs. Traders use PIPs to determine the profit or loss on a trade, as well as to set stop-loss and take-profit levels. However, in other markets, such as futures or stocks, a PIP can also refer to the smallest price change that a given contract or security can make and the terms 'PIP', 'points' and 'ticks' can be used interchangably.
What is the value of a PIP?
The value of a PIP can vary depending on the currency pair being traded and the size of the trade.
For example, if a trader buys 100,000 units of the EUR/USD currency pair at an exchange rate of 1.1850 and then sells it at an exchange rate of 1.1851, the price has increased by one PIP. The value of this one PIP movement is $0.0001 x 100,000 = $10.
However, if a trader buys or sells a mini lot (10,000 units) the value of a PIP would be $1 and if the trade is a micro lot (1,000 units) the value of a PIP would be $0.1.
It is important to note that the value of a PIP is also affected by the currency denomination of the account. For example, if the account is denominated in USD, the value of a PIP will be in USD, but if the account is denominated in JPY the value of a PIP will be in JPY.
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 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.
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.
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.
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.
NZD/CHF is the abbreviation for the New Zealand dollar to Swiss franc exchange rate. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/CHF rate lower. When dairy prices rise, the opposite happens.
The Swiss franc is strongly-correlated to euro strength; the franc was pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The NZD/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector.
The euro to Swiss franc exchange rate is identified by the abbreviation EUR/CHF. On average US$44 billion worth of euros are converted into Swiss francs every day, making up 0.9% of the total global forex volume. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. the Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The euro and the Swiss franc share a strong correlation; the franc was actually pegged to the euro until January 2014, where the Swiss National Bank shocked markets by allowing the currency to float free - a move which saw CHF surge around 30% in a single day.
The EUR/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is viewed as a safe haven asset, while the fate of the Eurozone forever hangs in the balance as political and economic developments cause tension between its constituent nations.
The pound Sterling to Swiss franc exchange rate is identified by the abbreviation GBP/CHF. GBP is the 4th most-traded currency, accounting for 13% of all daily trades; US$649 billion worth. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
Since the UK's vote in 2016 to leave the European Union, politics has become a stronger driver of movement for the GBP/CHF exchange rate. Uncertainty over the future relationship between the UK and the bloc weighs on Sterling.
The Swiss franc is strongly-correlated to euro strength; the franc was actually pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The GBP/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector and its citizens enjoy a great quality of life.
The 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.
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.
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
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.
In Forex, an Ask is the price at which it is possible to buy the base currency of the selected currency pair. In trading, Ask Price or Offer Price are the lowest price at which a seller will sell their stock.
Ask is used in conjunction with Bid price, which is what the buyer is offering and is by definition lower than the price the selling is asking for. The difference between the buyer’s bid and a seller’s ask is called a “Spread”.
What Is the Bid Ask Spread?
Financial instruments have 2 key public prices: a bid and an ask. When traders wish to buy (a Buy Position), they effectively pay the Ask price. When traders open a sell position, then they are offered the bid price by potential buyers. For obvious reasons, the bid price tends to be lower than the ask price. This price differential is the bid ask spread.
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.
ACWI stands for All Country World Index and this ETF is designed to provide a broad reflection of the performance of equity markets around the world comprising stocks from 23 developed and 24 emerging markets. It’s owned by Morgan Stanley Capital International (MSCI).
The ETF tracks nearly 2,500 stocks, including Apple, Microsoft, Amazon and Facebook. Stocks from five countries make up 72.6% of the ACWI, those being the USA, Japan, the UK, France and China. The remaining 27.4% comprises stocks from the other 42 countries. The ACWI is used as a benchmark of performance by fund managers, and is considered a good way to diversify a portfolio.
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.
Dow Jones Industrial Average - SPDR (DIA) mirrors the USA 30, which tracks 30 large-cap blue-chip companies – many of which are household names. The Dow Jones is one of the oldest indices in the world and is not considered to be volatile. However, because it is only 30 companies it is heavily influenced by the fortunes of those firms and is not a good indicator of the economy as a whole.
Stocks in the fund include Coca-Cola, Disney, Apple and Visa. The ETF is a good way to invest in the index. However, it is not ideal for those looking for broad exposure to US caps, as it only follows the top 30 companies. It is extremely liquid with a strong track record.
The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.
The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.
The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.
Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.
The S&P/ASX 200 index, or Australia 200, comprises the 200 largest qualifying stocks on the Australian Stock Exchange, weighted by float-adjusted market capitalisation. It is denominated in AUD/ and is considered the benchmark index of the Australian market.
The index was launched on 3rd April 2000, with its initial value calculated as of 31st March, 2000. The top 10 constituents account for 45.4% of the index. The ASX is dominated by the financial sector; companies in this industry make up 32.8% of the index and four of the top 10 constituents are banks.
Materials is the second largest sector, with a weighting of 17.3%, followed by Healthcare at 9.4%.
The index includes 187 Australian stocks, eight New Zealand stocks, three US stocks, one French stock, and one UK stock.
Australia 200 index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Australian Stock Exchange. Futures rollover on the 3rd Friday of March, June, September, and December.
The FTSE China A50 index, also known as the China 50, is a Chinese benchmark index that allows investors to trade A Shares, which are securities of companies that are incorporated in mainland China that are permitted to be traded by international investors thanks to government regulation.
The index comprises the 50 largest companies on the Shanghai and Shenzhen stock exchanges by market capitalisation and is free float-adjusted and liquidity screened. The instrument is priced in US Dollars on the {%brand.name%} platform.
The index was launched on 13th December 2003, with a base date of 21st July 2003 and a base value of 5,000.
The China 50 index is dominated by banks, with a weighting of 33%. The second-largest sector is Insurance, with a share of 14.58%, followed by Food & Beverage with 13.28%.
China 50 index futures allow you to speculate on, or hedge against, changes in the price of Chinese stocks. Futures rollover on the 4th Friday of every month.
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.
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.
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 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.
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.
The closing price is the final price at which a security is traded during a trading session. It is used to determine the settlement price for trades and the value of securities at the end of the trading day.
Why is closing price important?
The closing price is important for several key reasons. Market players such as traders, investors, banks and financial institutions as well as regulators use the closing price as a reference point for determining a stock’s performance over time (which can range from a as little as seconds or minutes prior or past the closing price to durations such as a week, through a month and over the course of a year).
What is 'after-hours' trading?
After hours trading refers to the buying and selling of securities outside of the regular trading hours of the major stock exchanges, typically 4:00 PM to 8:00 PM Eastern Standard Time. This can include both electronic trading and trading by phone. It is usually less liquid than regular trading hours and prices may be more volatile.
Can you sell at closing price?
Yes, you can sell a security at the closing price. The closing price is the final price at which a security is traded during a trading session, and can be used as a reference point for determining the settlement price for trades. If you sell a security at the closing price, you will receive the price of the security at the end of the trading day.
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.
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.
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.
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.
High frequency trading (HFT) is an automated form of algorithmic trading which uses computer programs to execute large numbers of orders at incredibly high speeds. This allows traders to capitalize on small price discrepancies in the market by exploiting arbitrage opportunities that exist due to different pricing among different exchanges. HFT is widely used today as a way for investors to make quick and efficient trades with a lower cost of entry.
How does high-frequency trading work?
High-frequency trading is an automated system of buying and selling stocks within fractions of a second. By using complex algorithms, traders can analyze and make decisions about the markets at a much faster rate than traditional methods. As a result, high-frequency trading enables firms to take advantage of short-term price fluctuations and generate significant profits.
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.
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 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 Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve System (the Fed) which is responsible for making monetary policy decisions. The FOMC is made up of 12 members, including the seven governors of the Federal Reserve Board and five of the 12 Reserve Bank presidents.
What does the Federal Open Market Committee impact?
The FOMC meets eight times a year to set the target for the federal funds rate, which is the interest rate at which banks lend and borrow money from each other overnight. The FOMC's decisions can have a significant impact on interest rates, the economy, and the stock market. The FOMC makes key decisions about interest rates and the growth of the United States money supply. It also directs operations undertaken by the Federal Reserve System in foreign exchange markets. They consider a wide array of factors such as trends in prices and wages, employment and production, business investment and inventories, foreign exchange markets, and fiscal policy.
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 STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
Financial Markets define any place (physical or virtual) or system which provides buyers and sellers with the means to trade financial instruments of any kind.
What are the types of financial markets?
Types of financial markets include stock markets, bond markets, foreign exchange markets, commodity markets, money markets, derivatives markets, and options markets.
What is the main function of financial markets?
The main function of financial markets is to facilitate the interaction between those who need capital with those who have capital to invest. In addition to raising capital, financial markets allow participants to transfer risk (generally through derivatives) and promote commerce. The term "market" can also be used for exchanges, or organizations which enable trade in financial securities.
Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finances. For long term finance, they are usually called the capital markets; for short term finance, they are usually called money markets. The money market deals in short-term loans, generally for a period of a year or less.
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 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.
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.
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.
The euro to Swiss franc exchange rate is identified by the abbreviation EUR/CHF. On average US$44 billion worth of euros are converted into Swiss francs every day, making up 0.9% of the total global forex volume. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. the Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The euro and the Swiss franc share a strong correlation; the franc was actually pegged to the euro until January 2014, where the Swiss National Bank shocked markets by allowing the currency to float free - a move which saw CHF surge around 30% in a single day.
The EUR/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is viewed as a safe haven asset, while the fate of the Eurozone forever hangs in the balance as political and economic developments cause tension between its constituent nations.
The pound Sterling to Swiss franc exchange rate is identified by the abbreviation GBP/CHF. GBP is the 4th most-traded currency, accounting for 13% of all daily trades; US$649 billion worth. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
Since the UK's vote in 2016 to leave the European Union, politics has become a stronger driver of movement for the GBP/CHF exchange rate. Uncertainty over the future relationship between the UK and the bloc weighs on Sterling.
The Swiss franc is strongly-correlated to euro strength; the franc was actually pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The GBP/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector and its citizens enjoy a great quality of life.
The US Global JETS ETF tracks the performance, before fees and expenses, of the US Global Jets Index. The Index is composed of the common stock of US and international passenger airlines, aircraft manufacturers, airports, and terminal services companies listed on well-developed securities exchanges across the globe.
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.
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 NIFTY 50 Index, also known as the India 50, is a free-float market capitalisation computed index of 50 top companies trading on the National Stock Exchange of India.
The index was launched on April 22nd, 1996, with a base value of 1,000, calculated as of November 3rd, 1995.
Financial Services is the largest component of the index, with a weighting of 37.09%, while Energy and IT are the second and third largest sectors, accounting for 15.01% and 13.27% respectively. The index covers 12 sectors of the Indian economy; Financial Services, Energy, IT, Consumer Goods, Automobile, Construction, Metals, Pharma, Cement & Cement Products, Telecom, Media & Entertainment, Services, and Fertilisers & Pesticides.
India 50 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the National Stock Exchange of India. Futures rollover on the fourth Friday of each month.
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 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 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.
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.
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.
A limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders. By placing a limit order they tell a broker to buy or sell a particular stock at a certain price or better than that price (lower for buying, higher for selling). This order is executed only if the transaction can be processed at the limit set in the order.
Is a limit order a good idea?
A key benefit of using a limit order is to ensure that the stock is bought or sold at a certain price point or better than that price point. There is of course the risk of not being able to execute that order as that specific price may never reach that limit as set in the order.
What are the types of limit order?
There are several types of limit orders in trading:
Buy Limit Order: An order to buy a security at a specific price or lower.
Sell Limit Order: An order to sell a security at a specific price or higher.
Buy Stop Limit Order: A stop order to buy a security at a specific price or higher, only activated once a specified stop price has been reached.
Sell Stop Limit Order: A stop order to sell a security at a specific price or lower, only activated once a specified stop price has been reached.
Trailing Stop Limit Order: A type of stop order where the stop price is set at a fixed amount or percentage below or above the market price, and adjusts as the market price moves.
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.
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.
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.
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.
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.
A market order is a type of stock order that allows an investor to purchase or sell securities at the current market price. It is one of the most common types of orders and it is executed as soon as it is placed, meaning the investor will get whatever price is currently available on the exchange.
Is it good to use market order?
A market order is an order to buy or sell a security at the best available current price. This type of order may provide an advantage over other types of orders by executing quickly, but it could also mean that the trade may not be filled at the desired price.
Why would you use a market order?
A market order is typically used when an investor wants to execute a trade quickly, and is willing to accept the current market price. This type of order is often used when an investor wants to take advantage of a price change or when they want to enter or exit a position quickly.
How long does a market order take?
A Market order is generally the fastest order to execute as it simply takes the current market price. You can expect a market order to be executed usually within seconds or minutes of being placed, as long as there is sufficient liquidity in the market.
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 PIP, or "point in percentage" generally refers to a unit of measurement used in the foreign exchange (Forex) market to represent the change in value between two currencies. One PIP is equal to the smallest price change that a given exchange rate can make, typically equal to 0.0001 for most currency pairs. Traders use PIPs to determine the profit or loss on a trade, as well as to set stop-loss and take-profit levels. However, in other markets, such as futures or stocks, a PIP can also refer to the smallest price change that a given contract or security can make and the terms 'PIP', 'points' and 'ticks' can be used interchangably.
What is the value of a PIP?
The value of a PIP can vary depending on the currency pair being traded and the size of the trade.
For example, if a trader buys 100,000 units of the EUR/USD currency pair at an exchange rate of 1.1850 and then sells it at an exchange rate of 1.1851, the price has increased by one PIP. The value of this one PIP movement is $0.0001 x 100,000 = $10.
However, if a trader buys or sells a mini lot (10,000 units) the value of a PIP would be $1 and if the trade is a micro lot (1,000 units) the value of a PIP would be $0.1.
It is important to note that the value of a PIP is also affected by the currency denomination of the account. For example, if the account is denominated in USD, the value of a PIP will be in USD, but if the account is denominated in JPY the value of a PIP will be in JPY.
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.
NZD/CHF is the abbreviation for the New Zealand dollar to Swiss franc exchange rate. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily. The Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/CHF rate lower. When dairy prices rise, the opposite happens.
The Swiss franc is strongly-correlated to euro strength; the franc was pegged to the euro until January 2014, when the Swiss National Bank shocked markets by allowing the currency to float free.
The NZD/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is a safe-haven asset because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector.
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!
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.
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.
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.
UPRO, ProShares Ultra Pro S&P500, provides 3x daily exposure to the S&P 500 Index. The ETF aims to deliver daily returns that are three times that of the S&P 500 Index, which comprises US large cap equities. The S&P 500 represents some of the largest and most liquid US stocks on the market.
This is a leveraged product and, as such, carries more risk. It is an aggressive instrument, design for intraday trading, and should not be used as part of a buy-and-hold strategy.
The S&P MidCap 400 ETF (MDY) looks to replicate the performance of the S&P Midcap 400 Index. The most widely-followed mid-cap index in existence, it serves as a good barometer for the performance and directional trends of US equities. The fund provides a good representation of the market and is popular in the midcap space.
Stocks in this index cover all major sectors including technology, health care, financial industries and manufacturing, and include many household names. Holdings include Teleflex, Dominos Pizza, Lamb Weston Holdings and Atmos Energy.
SPY, also known as the SPDR S&P 500 ETF Trust, is one of the oldest and best-recognised ETFs. Unsurprisingly, given the name, it seeks to replicate the results of the S&P500 index. SPY tracks large and midcap US stocks.
S&P500, the index that it tracks, is considered a benchmark for large-cap US equities. It comprises 500 leading companies, many of which are household names, and a broad range of sectors – although tech firms feature heavily. Holdings include Microsoft, Apple, Amazon, Berkshire Hathaway and Johnson & Johnson.
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.
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.
ProShares Ultra QQQ (QLD) aims to deliver daily investment results that are twice the performance of the Nasdaq 100 Index. This ETF provides leveraged exposure to a market-cap weighted index of 100 non-financial stocks listed on the NASDAQ. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. All leveraged products carry more risk than unleveraged products.
The Nasdaq 100 is dominate by tech firms, so the performance of the index is closely tied to the sector. Top holdings include Apple, Amazon, Facebook and Tesla.
ProShares UltraPro 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.
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.
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.
The FTSE/JSE index, also known as the South Africa 40, is a market capitalisation-weighted index of the largest and most liquid 40 companies trading on the Johannesburg Stock Exchange.
The index was launched on 24th June 2002, with a base date of 21st June 2002 and a base value of 10300.31.
The largest sector in the index is Media, which accounts for 22.27% of the total index weighting. Basic Resources is the second largest, accounting for 19.9% of the total weighting, followed by Personal & Household Goods and Banks, with 12.43% and 12.35% respectively.
South Africa 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Johannesburg Stock Exchange. Contracts rollover on the second Friday of March, June, September, and December.
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 quoted price is the most recent price at which an asset was traded at. Global and local events, either of a financial nature or completely unrelated to finances continually affect the quoted prices of assets such as stocks, bonds, commodities, and derivatives changes continually throughout a trading. Additionally, It is often the price point where buyers and sellers agree on, the most up-to-date agreement between buyers and sellers, or the bid and ask prices. It is also where supply meets demand.
Is a quoted price legally binding?
In most cases, when trading in an exchange, the quoted price is binding and the trade is executed at the quoted price, with the exchange acting as a counterparty to the trade. However, when trading OTC (over-the-counter), the quoted price is not necessarily binding as the parties have more flexibility in negotiating the final price, and the counterparty risk is higher.
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 Swiss Market Index (SMI), also known as the Swiss 20, is a blue-chip index of the 20 largest and most-liquid companies traded on the SIX Swiss Exchange, covering around 80% of the total market capitalisation of Swiss equities. The index is weighted so that no component can exceed 20%, enabling it to be a key barometer of the Swiss stock market.
The index was launched on 30th June 1988, and has the same base date. It has a base value of 1,500 points, reached a high in January 2018 of 9,611.61, and an all-time low of 1,287.60 in January 1991.
Healthcare is the largest index sector, accounting for 37.5% of the total weighting, followed by Consumer Goods with 24%, and Financials with 21.6%. Industrials is the fourth-largest sector with 13.6%.
Swiss Market Index futures allow you to speculate on, or hedge against, changes in the price of major stocks on the SIX Swiss Exchange. Contracts rollover on the second Friday of March, June, September, and December.
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.
The IBEX 35, or Spain 35, is the benchmark index for the Spanish stock market and tracks the performance of the top 35 most-traded and most-liquid companies on the Bolsa de Madrid (Madrid Stock Exchange).
The index is market capitalisation-weighted and free float-adjusted. It was launched on 14th January 1992 but has a base date of 30th December 2010 and a base level of 1,000. Selection is based upon liquidity, but there is a maximum weighting limit of 40%.
Financial & Real Estate Services is the most-represented sector in the index, accounting for around 34% of the weighting. The next-largest sector is Oil & Energy, with just over 20%, followed by Technology & Telecommunications with just over 15%. Consumer Goods, Basic Materials, Industry & Construction, and Consumer Services complete the list of sectors covered in descending order of weighting.
Spain 35 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Bolsa de Madrid. Contracts rollover on the second Friday of every month.
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.
Trading trends refer to the overall direction of a security or market, often revealed through chart patterns or indicators. Traders use these trends to identify potential entry and exit points, as well as possible trading opportunities. Analyzing the financial markets in order to identify trends is an essential skill for successful traders. With knowledge of historical trends, investors can spot emerging ones and plan accordingly.
How do you identify a trend in trading?
Analyzing past market movements, changes in asset prices and economic data can be used to identify short-term and long-term trends. Using technical indicators such as moving averages, MACD, and stochastics can also help you spot potential trading opportunities and take advantage of prevailing market trends.
What are the 3 types of trends?
When analyzing the stock market, there are three primary trends that can be observed: short-term, intermediate-term, and long-term. Short-term trends generally last within one to three weeks, intermediate-term trends can range from one to four months, and long-term trends last more than a year. Being able to identify these different trend patterns will help investors maximize their potential returns.
Stop Orders are a type of stock order that helps limit the investor’s risk. The order triggers a purchase or sale once a set price is reached, either above (stop buy) or below (stop sell). Stop Orders are used to protect investors against an unfavorable price movements and lock in potential gains.
How long do stop orders last?
Stop orders are instructions given to a broker to buy or sell an asset when its price reaches a predetermined level. Stop orders remain in effect until the stop price is triggered, at which point the order becomes a market order and will be executed. This means that stop orders may last for an indefinite amount of time. It is important to monitor the current market price closely as stop orders do not guarantee execution.
Are stop orders a good idea?
Stop orders can be useful as they can help limit an investor's loss or protect a profit on a security. They are often used to automatically exit a position when the market moves against the investor. However, the use of stop orders may be subject to market conditions and the specific investment strategy of an investor, so whether or not they are a good idea depends on the individual's financial situation and risk tolerance.
A share is a partition of the total value of a company. Each share represents a unit of ownership in that company, and therefore also the value that it holds. Should a company choose to sell shares as a means of fundraising, this is known as equity finance.
A share owner is called a shareholder (or stockholder). The ongoing value of a share, once it is introduced to the market, is its trading value at any given time, which can be either lower or higher than the original value. A share is worth whatever price it is currently trading at. An actual transaction of shares between a buyer and a seller is usually considered to provide the best market indicator as to the "true value" of that share at that time. The difference between current price and open price will represent either a profit or a loss to the investor who purchased it.
There are different types of shares in the trading domain, including Cumulative & Non-cumulative Preference Shares, Participating & Non-participating Preference Shares, Convertible & Non-convertible Preference Shares, Redeemable & Un-redeemable Preference Shares.
It is also possible to use CFDs to trade shares. This enables traders to take a leveraged position on whether a share rises or falls. This different type of share trading opens up more trading opportunities by either buying or selling the asset without physically owning it.
The risk/reward ratio is a known concept for those engaging in business. So, what is a Risk/Reward Ratio in trading, and does it follow the same guidelines and practices of the business world?
In trading, the Risk/Reward Ratio measures the expected gains of a given trade, asset, or position against the risk of potential loss. It is typically shown as a figure for the assessed risk separated by a ':' from the figure for the prospective reward.
What is a good Risk/Reward Ratio?
Acceptable ratios can vary, based on multiple factors. You can calculate this by dividing your "reward" (the end result or net profit) by the price of your maximum risk. It is generally accepted that if a risk is equal or greater than the corresponding reward, the trade position will not be worth the risk. Equally generally acceptable is the notion that a ratio greater than 1:3 is minimally required in order to justify the risk, i.e. a good risk/reward ratio.
By definition, this ratio quantifies the relationship between the potential currency lost, if the trade or action taken do fail, versus realized sum (gained) if all goes as planned.
Traders make use of the Risk/Reward Ratio to as one of the means to determine viability or worthiness of a given investment. One way to limit risk is to issue stop-loss orders, which trigger automatic sales of stock or other assets when they hit a specific value. This enables traders to limit potential risks.
What is a Rally in Trading?
A rally in trading refers to a period of time when the price of an asset, such as a stock or commodity, rises significantly. A rally is often characterized by an increase in buying activity and positive investor sentiment, which drives the price upward. Rallies can be short-lived or last for an extended period, depending on the underlying factors driving the market.
How long does a stock rally last?
Rallies can be short-term or long-term depending on factors like market sentiment and the performance of underlying stocks. On average, stock rallies can last anywhere from a few days to several weeks or even months. The length of any given rally is impossible to predict and it’s up to individual investors to do their research and make their own decisions on whether they want to invest during a stock rally.
How do you identify a stock rally?
Rallies can be identified by several factors including an increase in price, strong trading volume, positive news stories and upbeat investor sentiment. To accurately determine if there is a stock rally, look at the index chart of the overall market, specific sectors or individual stocks. Additionally, keep an eye on economic indicators such as gross domestic product, employment data and consumer confidence to assess if conditions are conducive for a rally. Doing research and regularly monitoring the stock market can help investors identify potential opportunities during a rally.
Spread Betting is a type of financial speculation which allows you to take a position on the future direction of the price of a security, such as stocks, commodities or currencies. You can choose to speculate whether an asset will go up or down in value, without having to buy or sell it. Spread Betting enables you to take a view on the markets and gain access to the financial markets with limited capital outlay.
How does a spread bet work?
A spread bet is placed by betting on whether the asset's price will rise or fall. The investor can set their own stake size, which means they can take more or less risk according to their preferences. Spread bets are flexible and convenient, allowing you to benefit from even the slightest market movements.
What does a negative spread mean?
A negative spread in trading refers to a situation where the ask price for a security is lower than the bid price. This means that a trader could potentially sell a security for a higher price than they would have to pay to buy it. This is an unusual situation that can occur due to a temporary market anomaly or a technical error. Negative spreads are rare and they tend to be corrected quickly, as they represent an opportunity for arbitrage. Traders should be cautious when dealing with negative spreads and should consult with their broker or trading platform to understand the cause of the negative spread and its potential impact on their trade.
A range refers to the difference between the highest and lowest prices a stock may reach during a specific time frame. This range gives investors an indication of how volatile a particular asset might be in terms of its price movements, as well as what opportunities they might have to make money. By analyzing historical data and keeping up-to-date with market news, investors can develop strategies to capitalize on different ranges.
How do you use ranges in trading?
Range trading is a popular trading strategy in finance, particularly for traders looking to limit their risk and profit from a given market movement. When using ranges, traders identify support and resistance levels for a security or asset, and look to take profits when prices reach either level. By using a range-trading strategy, traders can limit the amount of capital they are willing to risk per trade, as well as capitalize on both long-term and short-term movements in the market.
What is trend in trading?
A trend in trading is the general direction of a security's price over a period of time. Trend analysis helps traders make predictions about future market movements, allowing them to enter and exit positions at optimal times. Trends can be either upward or downward and often take weeks, months or even years to develop. To identify trends, technical analysis tools such as support and resistance levels, trend lines, and chart patterns are used by traders to detect buying and selling opportunities in the markets. Fundamental analysis also plays a role in recognizing potential profitable trading opportunities since underlying economic conditions may influence a security’s price.
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.
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.
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 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.
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.
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.
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.
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.
The VanEck Vectors Social Sentiment ETF (BUZZ) will track the BUZZ NextGen AI US Sentiment Leaders Index. This index consists of the most-favourably talked about stocks online, whether on blogs, social media or Reddit.
The Vanguard Value Fund (VTV) seeks to track the performance of a benchmark index that measures the investment return of large-capitalization value stocks. The Fund employs a "passive management"-- or indexing --investment approach designed to track the performance of the CRSP US Large Cap Value Index.
The Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG) holds a basket of companies that score highly for environmental, social, and governance (ESG) factors, with roughly marketlike sector exposure. The fund’s index uses MSCI’s ESG rating methodology to assign a score to all US large- and midcap stocks.
0x Token (ZRX) jusers can create markets for crypto assets representing any form of value – these could include markets for tokens representing physical real estate, to tokens representing shares of stocks and bonds, to tokens representing other crypto assets. It is priced in USD and tradebale via our platform using the ZRX/USD symbol.
The WisdomTree Emerging Markets High Dividend ETF (DEM) tracks the WisdomTree Emerging Markets Dividend Index. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index. This provides it with some downside protection from market volatility.
DEM is an equity fund, and has a mix of market sectors. It includes stocks from key emerging markets such as Russia and China, with assets including China Contruction Bank, China Mobile and Norilsk Nickel.
The Vanguard Total Stock Market ETF (VTI) tracks the total US market and is designed for traders looking for comprehensive, inexpensive exposures to full-market equities. It encompasses the entire market-cap spectrum and provides neutral coverage, with no sector or size bets.
This ETF looks to match the performance of the CRSP US Total Market Index. The sector breakdown is largely the same as its benchmark: Financials make up 19.70%, Tech is 19.10%, with consumer good, health care and industrials all around the 13% mark.
WisdomTree U.S. LargeCap Dividend (DLN) consists of the 300 largest companies ranked by market capitalisation from the WisdomTree Dividend Index. The Index is a fundamentally weighted index that measures the performance of large-cap dividend-paying US companies.
The top ten stock holdings account for 26.76% of the index and include Microsoft, Apple, Exxon Mobil and Verizon Communications. Four sectors (Information Technology, HealthCare, Consumer Staples and Financials) account for 56.4% of the index’s holdings. This ETF is a good option for traders looking for exposure to large cap equity from dividend-paying companies.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
US Tech 100 (NQ) is a market capitalization-weighted stock market index that includes the hundred largest non-financial domestic and international companies.
The index is constituted by sectors such as Technology, Consumer Services, Healthcare, Industrials, Consumer Goods and Telecommunications.
The US Tech 100 index contains some of the largest companies in the world, including Apple, Amazon, Microsoft, Facebook, Google parent Alphabet and Netflix.
The US Tech 100 index futures allow you to speculate on, or hedge against, changes in the price of some of the world’s biggest stocks. Contracts rollover on the second Friday of March, June, September and December.
The USA 2000 Index, also known as the USA 2000, is a small cap index of the US stock market. It represents the bottom 2,000 companies in the Russell 3,000 stock market index, accounting for around 8% of the Russell 3,000's market capitalisation.
The index was created in 1984 and was the first index of small cap stocks; it has since become the benchmark of choice, along with its variants, for around 84% of small cap assets. The index first broke 1,000 points on May 20th 2013, and hit a record high of 1,737.63 in August 2018.
USA2000 index futures allow you to speculate on, or hedge against, changes in the price of thousands of small-cap US stocks. Contracts rollover on the second Friday of March, June, September, and December.
The 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.
Volatility is the amount of uncertainty or risk associated with the size of changes in a security's value. It is measured by calculating the standard deviation of returns over a given period. High volatility means the price of an asset can change dramatically over a short time period in either direction. Traders often take advantage of volatility by speculating on stocks, options, and other financial instruments.
What causes market volatility?
Market volatility can be caused by a variety of factors including economic data releases, political events, changes in interest rates, and unexpected news or events. It can also be caused by changes in investor sentiment, speculation and market manipulation.
How do you know if a market is volatile?
A market is considered volatile if prices change rapidly, unpredictably, and significantly. This can be measured using volatility indices or by analyzing price movements and fluctuations over time.
The 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 Romanian leu exchange rate is identified by the abbreviation USD/RON. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion. The Romanian leu the 34th most-active currency, accounting for just 0.1% of average daily turnover.
Romania is an emerging market economy and is one of Europe's poorest nations. The country wanted to adopt the euro, but has so far failed to meet the criteria. USD/RON appreciates in times of market uncertainty, as traders move away from higher-yielding, but higher risk, emerging market currencies into lower-yielding, lower risk, currencies.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD. It is the most popular reserve currency, meaning central banks stockpile dollars to use in times of domestic currency weakness.
Working orders, also known as pending orders, include Stop orders and Limit orders. Essentially, they’re instructions for a broker to perform a trade when an asset hits a certain price. These orders inform brokers that traders wish to make that trade only if something happens to the asset price.
What is the best order type when buying stock?
The best order type depends on the individual's specific needs and market conditions. It's important to understand the trade-off between speed and price certainty when choosing an order type. Market orders provide immediate execution but at the current market price, while limit orders offer price certainty but may not be executed if the desired price is not reached.
What is an open work order?
An open work order in trading is an outstanding order to buy or sell a security that has not yet been executed. It remains open until it is either filled or cancelled by the trader.
The UK 100 is a blue-chip index of the largest 100 companies on the London Stock Exchange in terms of market capitalisation. Companies are only included if they meet relevant size and liquidity requirements.
The index was launched on 3rd January 1984, with a base date of 30th December 1983 and a base level of 1,000 points.
In terms of weighting, the three largest sectors of the UK 100 as of H2 2018 are Oil & Gas (16.56%), Banks (12.70%), and Personal & Household Goods (12.37%).
Traditionally the index has lagged its peers, such as the larger FTSE 250 and the US S&P 500. The index fluctuates in response to market risk sentiment and the strength of the pound Sterling. The UK 100 contains many international companies who report their earnings in other currencies, so a stronger pound weakens company profits.
Because of this, the UK 100 is also considered to be an unreliable indicator of the health of the UK economy because of its large international component.
The CBOE Volatility Index, also known as the VIX Index, is a benchmark index which tracks market expectations of future volatility. Markets consider it a leading indicator of volatility on the US equity market. It is often known colloquially as the “Fear Index”.
The VIX Index is calculated based upon the price of options for the S&P 500, which is considered a barometer of the US stock market. Changes in the price of options reflect upon the demand for hedging or speculating tools and therefore upon market expectations of volatility.
By aggregating the weighted bid/ask prices of put and call options for the S&P 500, the VIX creates a simple, trackable measure of expected volatility over the next 30 days.
The VIX itself is not a tradable product, but it is used as the basis for options and futures. Our VIXX futures allow you to hedge against volatility, speculate on changes in US market conditions, or diversify your indices portfolio.
Futures rollover on the second Friday 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.
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