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.
Risk management in trading is a strategy for mitigating losses. It involves understanding and analyzing risks, taking preventive steps to protect against potential losses, and having plans in place to address unanticipated situations. Good risk management practices help traders limit their downside and stay ahead of market volatility.
How do you manage risk in trading?
Traders can practise risk management in lots of different ways. It can be done by using strategies like position sizing, stop-loss orders, diversifying investments, and hedging. Through careful planning, you can set limits on your potential losses, identify potential opportunities and adjust your strategy accordingly. With disciplined risk management, you can protect your capital while you trade.
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.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
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.
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.
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.
EUR/SEK is the abbreviation for the euro to Swedish Krona exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The Swedish Krona is the 9th most-traded currency, accounting for 2.2% of daily transactions. US$112 billion worth of SEK is traded daily.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Swedish krona shares a strong correlation with its Scandinavian peers the Norwegian krone and the Danish krone. These currencies - which all translate as “crown” - came about in 1873 when Sweden and Denmark formed the Scandinavian Monetary Union, backed by the gold standard. Norway joined two years later. When the union was dissolved after World War Two, the countries independently kept the currency.
An Acquisition is a business transaction where one company buys all, or part, of another company's shares or assets. This can be done in an attempt to gain control of, and expand on, the target company's market while also gaining or at least conserving resources.
There are three main forms of “pairing business together”:
As part of the Acquisition process, the acquiring company purchases the target business's shares or assets, which gives it the authority to make use of the target’s assets as if they are its own.
Why do companies make acquisitions?
Companies make acquisitions as there are several benefits to doing so, including lower entry barriers, growth and market influence. There are also some challenges and difficulties associated with this process. These include conflicts of cultures, redundancy, contradicting objectives and unmatched businesses.
What are the four types of acquisitions?
There are four types of acquisitions that companies perform.
Futures are a specific type of derivative contract agreements to buy or sell a given asset (commodity or security) at a predetermined future date for a designated price. Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
How does the futures market work?
A futures contract includes a seller and a buyer – which must buy and receive the underlying future asset. Similarly, the seller of the futures contract must provide and deliver the underlying asset to the buyer. The purpose of futures in trading is to allow traders to speculate on the price of a financial instrument or commodity. They are also used to hedge the price movement of an underlying asset. This helps traders to prevent potential losses from unfavourable price changes.
What are examples of Futures?
There are numerous types of futures and futures contracts in the trading and financial markets. The following are a few examples of futures that can be traded on: Soft Commodities such as food or agricultural products, fuels, precious metals, treasury bonds, currencies and more.
A Reversal is when the direction of a financial market or asset moves in the opposite direction from its current trend. Reversals can occur over a period of time and can be either bullish (price increasing) or bearish (price decreasing). Being aware of these trends can help traders maximize their profits.
What is an example of reversal?
If the stock market has been rising for several weeks and then begins to fall, that's considered a reversal. Reversals are an important concept for investors to understand as they can indicate a change in sentiment that could lead to further movement in the same direction.
A “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.
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.
Ripple (XRP) is among the largest cryptocurrencies by market cap, following Bitcoin and Ethereum.
Ripple, known as XRP, is priced in USD. It saw a high of $3.20 in January 2018.
When people talk about Ripple they are not just talking about the currency, but the Ripple network which could change the way people complete currency transfers.
Unlike other crypto payment networks, Ripple allows you to make money transfers in any form - be that Ripple, Bitcoin, USD, Yen or GDP. Plus, you can receive money in a different form to how it has been sent. For example, you could be sent Bitcoin but collect your money in USD.
Payments can happen in seconds, a significant improvement on the days or weeks required for a wire transfer with a bank.
The payment network has already seen endorsements, with American Express and Santander partnering with it for cross-border payments between the US and UK.
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.
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.
A basis point (abbreviated as BP, bps or “bips”) measures changes in the interest rate of a financial instrument. It is also used describe the percentage change in the value of financial instruments or the rate change of an index. They are less ambiguous than percentages as they represent an absolute, set figure instead of a ratio.
Why do we use Basis Points?
In the bond market, a basis point is used to refer to the yield that a bond pays to the investor. They are also used when referring to the cost of mutual funds and exchange-traded funds.
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.
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.
Market Makers are financial institutions or investors that provide liquidity to the markets by placing buy and sell orders at specific prices. They are incentivized to do this in order to make profits from the bid-ask spread.
What is the difference between dealer and market maker?
A dealer and a market maker are both intermediaries in the securities market that provide liquidity and help facilitate trades. However, they have some key differences. A dealer is a person or entity that buys and sells securities for their own account and risk. They hold inventory of securities and make a profit by buying at a lower price and selling at a higher price.A market maker is a firm or individual that provides liquidity to the market by continuously buying and selling a security at publicly quoted prices. They are also called liquidity providers, and they make money by charging a bid-ask spread, the difference between the prices they are willing to buy and sell a security. They do not hold inventory of securities like dealers do.
Do market makers manipulate price?
Market makers are allowed to buy and sell securities at their own discretion, and they may adjust the prices they are willing to buy and sell a security in order to make a profit. However, they are also subject to regulatory oversight, and they must act in a fair and transparent manner. They are not allowed to manipulate prices, and any illegal activities such as insider trading, wash trading or any other form of market manipulation are strictly prohibited.
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.
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.
An interest rate is the percentage of a loan or deposit that a lender charges a borrower for the use of their money, or the percentage paid on a deposit account. It is used as a way to compensate the lender for the opportunity cost of not using their money elsewhere. The interest rate can be fixed or variable, and it is typically expressed as an annual percentage. The interest rate is used to calculate the amount of interest due on a loan or deposit over a certain period of time.
What are the 3 types of interest?
The three main types of interest are:
Simple interest: Interest calculated only on the original principal amount of a loan or deposit.
Compound interest: Interest calculated not only on the original principal but also on accumulated interest from previous periods.
Nominal interest: Interest rate stated on a loan or deposit, does not take into account the effect of compounding.
However, there are a few other types of interest as well.
How do I calculate interest rate?
Interest rate is calculated as the cost of debt for the borrower and the rate of return for the lender. This makes the total sum to be repaid to be more than the borrowed amount since lenders require compensation for the loss of use of the money during the loan period. Although many make use of the various online “interest calculators”.
Chainlink (LINK) connects contracts smartly by linking them with real world events, data, and payments. Using the LINK cryptocurrency, Chainlink is tradeable on our platform via the LINK/USD instrument.
The FXE, also known as CurrencyShares Euro Trust, tracks the changes in the value of the euro relative to the US Dollar. An ETF is the easiest way for a trader to buy exposure to foreign currency markets. These funds use cash deposits or futures contracts to track the euro's movements over time.
This ETF provides investors with an opportunity to invest in EUR/USD, such as those who think that the US Dollar is weakening or think that the Euro is strengthening. It tracks the EUR/USD exchange rate very well and is an extremely liquid fund.
A spot price is the current market value of an asset or security. It's the amount you would pay to buy or sell it at that exact moment in time. Spot prices are constantly changing, as they depend on supply and demand forces in the marketplace. Spot prices provide important insights into market trends and can be used by traders to make investment decisions.
Why is it called a spot price?
It is called a "spot" price because it refers to the price at which an asset can be bought or sold "on the spot" or immediately.
How is spot price calculated?
The spot price of a commodity, security, or currency is typically determined by supply and demand factors in the market. The price is influenced by a variety of factors such as production costs, political and economic conditions, and speculation.
ProShares UltraShort Russell2000 (TWM) is a leveraged product that seeks to deliver twice the inverse of the daily performance of the USA2000 Index. Results aims to be 200% of the opposite to the movement of the index. This is a daily-bet, so results will vary dramatically for positions held longer than one day.
The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
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.
IWO, also known as iShares USA2000 Growth ETF, replicated the performance of the USA2000 Growth Index. This ETF is comprised of small public US companies that are expected to grow at an above-average rate. The index uses two-year growth forecasts and historical sales to identify growth.
Unsurprisingly, given that the focus is on growth, technology features heavily in the sector breakdown. Health care, Information Technology and Industrials account for 62.07% of the portfolio. It has over 1,200 holdings and stocks include Etsy, Haemonetics, Hubspot and Trade Desk Inc.
ProShares UltraPro Russell2000 (URTY) seeks to deliver daily results that are three times daily performance of the USA2000 Index. This is an aggressive single-day bet and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% of the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
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.
Bitcoin is the first of the ‘cryptocurrencies' and remains the most stable. It was created in 2009 by Satoshi Nakamoto, whose identity remains a mystery.
His creation - Bitcoin - is a cashless currency. Balances are kept online and it is decentralised, allowing anonymity. Despite Bitcoin not being legal tender in most countries, it has continued to increase in popularity and its launch has sparked the creation of a number of other cryptocurrencies
It is priced in USD per Bitcoin and saw a record high of $68,789.63 in November 2021. Bitcoin futures trade as BTC.
Bitcoin has been criticised for its links to illegal activity and the dark web, as well as the high demand for energy created by ‘mining' Bitcoins. A PIN is necessary to access your Bitcoins, with as many as 20% of all Bitcoins thought to be lost to forgotten PINs
Bitcoin futures allow you to speculate on, or hedge against, changes in the price of Bitcoin. Futures rollover on the last Thursday of every month.
The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States. It is part of a wider system – known as the Federal Reserve system – with 12 regional central banks located in major cities across the US.
What does the Federal Reserve do?
The Federal Reserve performs five main functions to promote the effective operation of the U.S. economy and, more generally, the public
interest. It:
• Conducts the nation’s monetary policy
• Promotes the stability of the financial system
• Promotes the safety and soundness of individual financial institutions
• Fosters payment and settlement system safety and efficiency
• Promotes consumer protection and community development
Who Controls Federal Reserve?
The Federal Reserve is governed by a Board of Governors in Washington, DC, and 12 regional Federal Reserve Banks located throughout the country. The Board of Governors is an independent government agency appointed by the President and confirmed by the Senate. The Chairman of the Board of Governors also serves as Chair of the Federal Open Market Committee, which sets monetary policy.
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.
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.
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.
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.
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 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.
RSI stands for Relative Strength Index and is a technical analysis indicator that measures the strength of a security's price action, by comparing the magnitude of recent gains to recent losses. The RSI ranges from 0 to 100, with values above 70 indicating overbought conditions and values below 30 indicating oversold conditions. Traders often use the RSI as a buy or sell signal, depending on whether the RSI is above or below a certain level.
Is a higher RSI value better?
A higher RSI value generally indicates that a security is overbought, which means that it is trading at a relatively high price compared to its recent price history. Traders may interpret this as a signal to sell, or to be cautious about buying. Traditionally, an RSI value of 70 or above is considered to be overbought, and a value of 30 or below is considered to be oversold.
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.
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 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 Proshares Bitcoin Strategy ETF (Bitcoin ETF) offers managed exposure to bitcoin futures contracts. The Fund does not invest directly in bitcoin and may also invest in other instruments. It’s one of the first of its kind and marks a new way to get exposure to cryptocurrency price movements.
The Direxion Work From Home ETF (WFH) offers exposure to companies across four technology pillars, allowing investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment. The four pillars include Cloud Technologies, Cybersecurity, Online Project and Document Management, and Remote Communications. Companies are selected for inclusion in the index by ARTIS, a proprietary natural language processing algorithm, which uses key words to evaluate large volumes of publicly available information, such as annual reports, business descriptions and financial news.
The 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 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.
Materials Select Sector SPDR Fund (XLB) tracks US basic materials companies within the S&P 500. This asset uses the Materials Select Sector Index as its tracking benchmark. The limited spread and niche sector mean that it is heavily concentrated. Just a few holdings make up a big part of the portfolio, and there are only 24 holdings in total.
Top holdings for the benchmark index include DowDuPont Inc, Linde Plc, Ecolab Inc and The Sherwin-Williams Co.
The iShares MSCI KLD 400 Social ETF (DSI) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
Consumer Price Index or CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. It is considered as one of the most popular measures of inflation and deflation. CPI is also used to estimate the purchasing power of a country’s currency.
How is CPI Calculated?
CPI is calculated by considering Key contributors, including retail and services businesses as well as the U.S. rental housing market (housing accounts for approx. 30% of the CPI). There are several CPI variations:
• CPI-U index reviews the spending habits of urban consumers in the U.S.A. This constitutes for approx. 88% of the U.S population.
• CPI-W index for calculates changes in the costs of benefits paid to “urban wage earners and clerical workers,” which is used to calculate changes in the costs of benefits paid via Social Security.
• CPI ex-food and energy – is highly volatile and thus is excluded from the overall CPI.
Industrial Select Sector SPDR Fund (XLI) tracks US industrial companies within the S&P 500. This asset uses the Industrial Select Sector Index as its tracking benchmark. The ETF provides concentrated exposure large-cap US industrial companies, with limited small and midcap companies.
The index comprises just 70 holdings from the industrial sector. Top holdings for the benchmark index include Boeing Co, 3M Co, Union Pacific Corp and Honeywell International Inc.
ProShares UltraShort QQQ (QID) aims to deliver daily investment results that are twice the inverse daily performance of the Nasdaq 100 Index. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. This is the sister product to QLD, which delivers two times the daily performance of the Nasdaq 100.
As with most inverse and leveraged products, this fund is designed to provide inverse exposure on a daily basis, not as a long-term inverse bet against the index. All leveraged products carry more risk. Nasdaq 100 holdings include Apple, Amazon, Facebook and Tesla.
ProShares 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.
The ARK Space Exploration & Innovation ETF's (ARKX) investment objective is long-term growth of capital. ARKX is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation. The Adviser defines “Space Exploration” as leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth.
SLV, also known as iShares Silver Trust, tracks the price of silver bullion held in London. This ETF provides investors with direct exposure to silver as the ETF physically holds the precious metal in vaults in London. This fund is one of the most liquid of its peer group and is popular among retail and institutional investors.
This ETF is suitable for buy and hold strategies. Traders should consider this asset to gain exposure to the day to day price of silver bullion, to get access to physical silver or to diversify your portfolio and protect against inflation.
Consumer Staples Select Sector SPDR Fund (XLP) tracks US consumer staples companies within the S&P 500. This asset uses the Consumer Staples Select Sector Index as its tracking benchmark. The fund provides strong and representative exposure to consumer staples and the companies are large-cap in the main.
The index comprises just 34 holdings from the consumer sector and includes many household names. Top holdings include Procter and Gamble, Coca-Cola, PepsiCo and Walmart.
The Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG) holds a basket of companies that score highly for environmental, social, and governance (ESG) factors, with roughly marketlike sector exposure. The fund’s index uses MSCI’s ESG rating methodology to assign a score to all US large- and midcap stocks.
The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks US consumer discretionary companies within the S&P 500. This asset uses the Consumer Discretionary Select Sector Index as its tracking benchmark. The top ten holdings account for 66.2% of the fund’s portfolio.
The index comprises just 66 holdings from the consumer sector and includes many household names. Top holdings include Amazon, Home Depot, McDonalds and Nike.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
The iShares Global Clean Energy ETF (ICLN) seeks to track the investment results of an index composed of global equities in the clean energy sector.
The iShares MSCI USA ESG Select ETF (SUSA) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
The iShares ESG MSCI USA Leaders ETF (SUSL) seeks to track the investment results of an index composed of U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider.
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.
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.
A trader's "account balance" is the total value of the account including all and any settled profit & loss, deposits, and withdrawals.
How do I check my trading account balance?
As mentioned, your account balance is the total sum of settled positions, P&L, deposits, and withdrawals. Yet this balance does not include profit or loss resulting from any open positions. If positions are indeed open, the balance might change depending on pending losses or profits until such positions are closed. As such, it is recommended to check your trading account balance regularly as new positions open and close on a regular basis.
A bid is the highest price that a trader will pay to buy a stock or any other asset. On the other hand, the seller has a limit as to the lowest price he will accept, which is called an “ask”. The difference between the buyer’s bid and the seller’s ask is a spread. The smaller the spread, the greater the liquidity of the any asset.
What is difference between bid and offer in trading?
There are several differences between a bid and an offer in trading. One important key differentiator is that a bid describes how buyers are willing to want to buy for a lower price than what the seller indicated. While an offer represents the higher price initially requested by the seller.
Futures contracts for Orange juice (ORA) are based upon frozen concentrated orange juice (FCOJ).
Brazil is by far the world's largest producer of oranges, harvesting 20 million metric tonnes per year. China is in second spot, but still far behind, with an annual yield of 7 million, followed by the EU (6.5 million), the US (4.8 million), and Mexico (4.6 million).
Factors that can affect the supply - and therefore the price - of orange juice include weather, crop disease, and the strength of the US dollar. For instance, orange juice futures often increase in price when hurricanes travel towards Florida, a key growing region. Consumer demand often plays a role as well; orange juice is a popular breakfast staple, but a move away from drinks with high sugar content has seen demand decline in recent years.
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.
Just like many of the other cryptocurrencies, Litecoin was created to improve on some of the perceived failings of Bitcoin - primarily a higher number of tokens and a much faster processing speeds.
Litecoin (LTC) is priced in USD per coin and reached a peak of $341 in December 2017. It was launched in April 2013 by Charlie Lee, a former Google software engineer.
Lee was central to a change in attitude about Bitcoin, helping it gain approval from big names. He wanted to position Litecoin as silver to Bitcoin's gold, and knew that the success of all cryptocurrencies would be tied to stalwart Bitcoin.
Litecoin uses blockchain in a similar way to Bitcoin, but has very low transaction fees and has adopted ‘Segregated Witess (SegWit) - a process by which the size of blocks in a blockchain is reduced by removing data.
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.
NZD/CAD is the abbreviation for the New Zealand dollar to Canadian dollar exchange rate. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily. The Canadian dollar is the 6th most-traded currency, involved in 5.1% of all daily transactions.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/CAD rate lower. When dairy prices rise, the opposite happens.
The Canadian dollar is heavily-exposed to changes in the price of crude oil - Canada's primary export. Both currencies are inversely correlated with the US Dollar, so even in times of risk movement in the NZD/CAD is more driven by fundamental factors.
The Canadian dollar is more exposed because the USA is Canada's largest trading partner by far.
AUD/USD is the abbreviation for the Australian dollar and US Dollar currency pair and is the world's fourth most popular currency pairing, accounting for 5.2% of all FX trades with $266bn in trading volumes daily. The number represents how many US Dollars (the quote currency) is required to buy one Australian dollar (the base currency).
The Australian dollar is a commodity-correlated currency, because the Australian economy is still largely reliant upon mineral exports, primarily iron ore. The pairing is a good indicator of market risk sentiment with the AUD/ tending to rally along with rising commodity prices and falling when they drop.
The AUD/USD is also highly sensitive to changes in the monetary policy decisions made by the Federal Reserve and the Reserve Bank of Australia. A more hawkish US Federal Reserve can push the AUD/USD exchange rate significantly lower, whilst the pair can rally when the RBA is raising interest rates.
CAD/CHF is the abbreviation for the Canadian dollar to Swiss franc exchange rate. US$260 billion worth of Canadian dollars and US$243 billion worth of francs is traded each day. The Canadian dollar is the 6th most-traded currency, and makes up one side in 5.1% of all daily trades. The Swiss franc is the 7th most-popular trading currency in the world and is involved in nearly 5% of all forex transactions each day.
The pair is sensitive to changes in market risk appetite, as the Canadian dollar is a commodity-correlated currency and the franc is a safe-haven currency.
The producing and exporting of crude oil is vital to the Canadian economy, so changes in price can push CAD/CHF higher or lower. Oil is sensitive to changes in risk appetite, creating further volatility for the Canadian dollar.
Compounding the effect of market uncertainty upon CAD/CHF is the Swiss franc's reputation as a safe-haven, thanks to Switzerland's strong economy and developed financial sector.
USD/CZK is the abbreviation for the US Dollar to Czech koruna exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The Czech Republic economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe. Strong data from the currency bloc therefore supports CZK.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
EUR/HUF is the abbreviation for the euro to Hungarian forint exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The forint is the 26th most-active currency, accounting for just 0.3% of daily transactions. US$5 billion worth of EUR/HUF is traded each day.
The euro is the currency of the Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
EUR/HUF strengthens in times of market uncertainty. As an emerging market currency, the forint is popular in times of confidence but is sold in favour of safer, lower-yielding assets when volatility increases.
Compared to its emerging market peers, Hungary has a small level of foreign currency debt, providing some insulation for the economy and its currency against external disruption.
GBP/USD is the abbreviation for the pound Sterling to US Dollar exchange rate, also known as “cable”. It combines two very popular currencies; GBP is present in 13% of all daily forex trades, while USD is present in 88% of all trades.
On average US$649 billion worth of pound Sterling is traded every single day. The pair is highly liquid and therefore offers very low spreads.
The UK financial services industry, headquartered in London, is the financial gateway to Europe, and pound Sterling plays an important role in financial markets. Interest rate differentials are a key driver of volatility in the GBP/USD exchange rate.
Recently, political factors have seen their influence over the pairing grow. This is because the Brexit referendum, which resulted in the UK voting to leave the EU, has created significant uncertainty regarding the UK economic outlook. Meanwhile, in the United States, the protectionist policies of President Donald Trump have raised questions over the outlook for trade.
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.
USD/CAD is the abbreviation for the US Dollar to Canadian dollar exchange rate. The pair accounts for 4.3% - $218 billion - of all daily forex trades. The US Dollar is the most popular currency to trade, while the Canadian dollar is the 6th most popular. CAD, also known as the “Loonie”, after the bird depicted upon the C$1 coin, accounts for 4.6% of daily forex activity.
The majority of Canadian dollars are exchanged for US Dollars. Canada is the second-largest trade partner for the US; in 2017 the US exported $341.2 billion worth of goods to Canada and imported $332.8 billion. The two nations and Mexico are bound by the North American Free Trade Agreement (NAFTA), although its future is uncertain.
Canada is one of the world's largest oil producers, so the price of crude on the international market has a significant impact upon the USD/CAD exchange rate. In times of high risk-appetite USD/CAD weakens, while low risk-appetite pushes the pairing higher.
EUR/AUD is the abbreviation for the euro to Australian dollar exchange rate. The pairing accounts for 0.3% of the average daily forex trading volume across the globe, which equates to US$16 billion.
The euro is the currency of the Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar. However, the impact of this upon the euro is lessened when trading against the Australian dollar, because the “Aussie” also moves inversely to the US Dollar.
While not a safe-haven asset, the euro is considered more stable than the Australian dollar, meaning that the EUR/AUD/ pairing often strengthens in times of market pessimism, and weakens when risk-demand is elevated.
The Australian economy is highly-reliant upon exports of iron ore, for which Australia accounts for over 50% of the global supply. Changes in the market price can have a strong effect upon EUR/AUD.
EUR/CAD is the abbreviation for the euro to Canadian dollar exchange rate. The pairing accounts for around 0.3% of daily forex trading across the globe; the equivalent of US$14 billion.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar. However, the impact of this upon the euro is lessened when trading against the Canadian dollar, which also often moves inversely to the dollar.
The Canadian dollar is highly-sensitive to the price of crude oil, as this is Canada's main export. When oil prices fall, the outlook for the Canadian economy weakens, pushing the EUR/CAD exchange rate higher. When oil prices rise, the opposite happens.
Euro strength is influenced by the economic health of the Eurozone, which experienced a debt crisis in 2012 that saw several of its member states requiring bailouts.
EUR/CZK is the abbreviation for the euro to Czech koruna exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Czech economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
EUR/NZD is the abbreviation for the euro to New Zealand dollar exchange rate. The euro is the 2nd most-traded currency, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded every day. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily.
The euro is the currency of the 19-nation Eurozone, overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
However, the impact of this upon the euro is lessened when trading against the New Zealand dollar, which also often moves inversely to the dollar.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the EUR/NZD exchange rate higher. When dairy prices rise, the opposite happens.
LIBOR, is an acronym for “London Interbank Offer Rate”, and is the global reference rate for unsecured short-term borrowing in the interbank market. It is used as a benchmark for short-term interest rates, and is also used for pricing of interest rate swaps, currency rate swaps as well as mortgages. LIBOR can also be used as an indicator of the health of the financial system,
Who controls the LIBOR?
LIBOR is administered by the Intercontinental Exchange or ICE. It is computed for five currencies (Swiss franc, euro, pound sterling, Japanese yen and US dollar) with seven different maturities ranging from overnight to a year. ICE benchmark administration consists of 11 to 18 banks that contribute for each currency. These rates are then arranged in descending order, with top and bottom results taken of the list to exclude outliers. This data is then computed to get the LIBOR rate, which is calculated for each of the 5 currencies and 7 maturities, thereby producing 35 reference rates. A 3 month LIBOR is the most commonly used reference rate.
AUD/CHF is the abbreviation for the Australian dollar to Swiss franc exchange rate. The Australian dollar is nicknamed the “Aussie”, and is the 5th most-traded currency in the world, involved in 6.9% of all daily forex trades. The Swiss franc is the 7th most popular currency in the world and is involved in nearly 5% of all forex transactions each day.
The Australian dollar is a commodity-correlated currency and is highly sensitive to price changes in iron ore, of which Australia is the world's largest exporter. The franc is a safe-haven asset, popular because of Switzerland's strong and stable economy. In times of market uncertainty the AUD/CHF pair is liable to fall.
The franc has a strong correlation with the euro, because it used to be pegged to the common currency, and Switzerland still shares strong political and economic ties with the Eurozone. Developments in the Eurozone, such as political unrest or changes in the European Central Bank monetary policy outlook can boost AUD/CHF.
What is a margin in finance?
A margin in finance is the amount of money an investor borrows to purchase or trade securities. It is the difference between the total value of the borrowed funds and the market value of the collateral provided as security for the loan. Margin trading allows investors to buy more securities than they would otherwise be able to purchase with just their own capital.
What is margin vs profit?
Margin and profit are related but different concepts in finance and trading.
Margin refers to the amount of money or collateral that is required to open a leveraged position, such as a margin account, which allows traders to buy securities by borrowing money from a broker. Profit, on the other hand, refers to the amount of money that is gained from a trade or investment, after all costs and expenses have been subtracted. Profit is the result of a successful trade, which is the difference between the buying and selling price.
How do I calculate margin?
There are a few different ways to calculate margin, depending on the context and the type of trade or investment.
One of the most common ways to calculate margin is to use the following formula:
Margin = (Value of Trade / Leverage) x 100%
USD/CHF is the symbol for the US Dollar to Swiss franc exchange rate. The pairing accounts for 3.6% ($180 billion) of all daily forex activity. The Swiss franc is the 7th most popular trading currency in the world and is involved in nearly 5% of all forex transactions each day.
The US Dollar and Swiss franc are both safe-haven currencies, meaning that the pairing is less responsive to risk-appetite on the global market than other pairings. However, the Swiss franc shares a strong correlation with the euro, so anything that weakens the euro would benefit the US Dollar and pressure the franc lower. If the euro strengthens, the USD/CHF pairing is likely to depreciate. The franc used to be pegged to the euro, but the Swiss National Bank unexpectedly allowed the currency to float free in January 2015.
CHF is a popular choice with traders because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector and its citizens enjoy a great quality of life.
USD/NOK is the symbol for the US Dollar to Norwegian krone exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.
The krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US48 billion worth of USD/NOK - 0.9% of the total daily volume - is traded each day.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. USD/NOK therefore benefits doubly in times of low risk-appetite.
The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK.
EUR/TRY is the abbreviated form of the euro to Turkish lira exchange rate, one of the exotic currency pairs. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The lira is the 16th most active currency, accounting for 1.4% of average daily turnover.
The euro is the currency of the Eurozone, which is overseen by the ECB. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The EUR/TRY pairing appreciates in times of market uncertainty. Turkey is an emerging market and relies heavily upon the EU for both imports and exports; weakness in the Eurozone economy is therefore a bad sign for Turkey as well.
The Turkish economy is largely fuelled by foreign currency loans, so a strong euro or US Dollar can lead to further weakness in the lira as markets fear the impact of higher credit costs for Turkey's corporations.
USD/DKK is the symbol for the US Dollar to Denmark krone exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.
The Denmark krone is the 21st most-traded currency in the world and is involved in 0.8% of all forex transactions each day. On average US$42 billion worth of krone is exchanged each day.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The Danish krone is pegged to the euro through the European Exchange Rate Mechanism, also known as ERM 2. The central fixed rate is 746.038 krone per €100 but, unlike the standard +/- 15% fluctuation permitted under ERM 2, the Krone is limited to a fluctuation of just +/- 2.25%. Because it is pegged to the euro, the krone is also highly-vulnerable to USD strength - even when traded against other currencies.
Alpha is the performance measurement of a trade, or ROI (return on an investment) measured against a market index or benchmark that is considered to represent the market's movement as a whole. The positive or negative return of any given trade in relation to the return of the benchmark index is an alpha.
What does Alpha Tell you?
Traders use Alpha (α) to describe a strategy's ability to beat the market. Thus, it is also often referred to as “excess return” or “abnormal rate of return”. These terms refer to a concept that markets are efficient, and so they are earned returns that do not reflect the market’s performance.
What is alpha and beta in trading?
Alpha is often used in conjunction with beta (the Greek letter β), which measures the broad market's overall volatility or risk, known as systematic market risk.
Alpha is used in finance as a measure of performance. indicating when a strategy, trader, or portfolio manager has managed to beat the market return over some period. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement.
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.
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 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.
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.
An Acquisition is a business transaction where one company buys all, or part, of another company's shares or assets. This can be done in an attempt to gain control of, and expand on, the target company's market while also gaining or at least conserving resources.
There are three main forms of “pairing business together”:
As part of the Acquisition process, the acquiring company purchases the target business's shares or assets, which gives it the authority to make use of the target’s assets as if they are its own.
Why do companies make acquisitions?
Companies make acquisitions as there are several benefits to doing so, including lower entry barriers, growth and market influence. There are also some challenges and difficulties associated with this process. These include conflicts of cultures, redundancy, contradicting objectives and unmatched businesses.
What are the four types of acquisitions?
There are four types of acquisitions that companies perform.
A basis point (abbreviated as BP, bps or “bips”) measures changes in the interest rate of a financial instrument. It is also used describe the percentage change in the value of financial instruments or the rate change of an index. They are less ambiguous than percentages as they represent an absolute, set figure instead of a ratio.
Why do we use Basis Points?
In the bond market, a basis point is used to refer to the yield that a bond pays to the investor. They are also used when referring to the cost of mutual funds and exchange-traded funds.
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.
Chainlink (LINK) connects contracts smartly by linking them with real world events, data, and payments. Using the LINK cryptocurrency, Chainlink is tradeable on our platform via the LINK/USD instrument.
Bitcoin is the first of the ‘cryptocurrencies' and remains the most stable. It was created in 2009 by Satoshi Nakamoto, whose identity remains a mystery.
His creation - Bitcoin - is a cashless currency. Balances are kept online and it is decentralised, allowing anonymity. Despite Bitcoin not being legal tender in most countries, it has continued to increase in popularity and its launch has sparked the creation of a number of other cryptocurrencies
It is priced in USD per Bitcoin and saw a record high of $68,789.63 in November 2021. Bitcoin futures trade as BTC.
Bitcoin has been criticised for its links to illegal activity and the dark web, as well as the high demand for energy created by ‘mining' Bitcoins. A PIN is necessary to access your Bitcoins, with as many as 20% of all Bitcoins thought to be lost to forgotten PINs
Bitcoin futures allow you to speculate on, or hedge against, changes in the price of Bitcoin. Futures rollover on the last Thursday of every month.
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.
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.
Consumer Price Index or CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. It is considered as one of the most popular measures of inflation and deflation. CPI is also used to estimate the purchasing power of a country’s currency.
How is CPI Calculated?
CPI is calculated by considering Key contributors, including retail and services businesses as well as the U.S. rental housing market (housing accounts for approx. 30% of the CPI). There are several CPI variations:
• CPI-U index reviews the spending habits of urban consumers in the U.S.A. This constitutes for approx. 88% of the U.S population.
• CPI-W index for calculates changes in the costs of benefits paid to “urban wage earners and clerical workers,” which is used to calculate changes in the costs of benefits paid via Social Security.
• CPI ex-food and energy – is highly volatile and thus is excluded from the overall CPI.
The ARK Space Exploration & Innovation ETF's (ARKX) investment objective is long-term growth of capital. ARKX is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation. The Adviser defines “Space Exploration” as leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth.
Consumer Staples Select Sector SPDR Fund (XLP) tracks US consumer staples companies within the S&P 500. This asset uses the Consumer Staples Select Sector Index as its tracking benchmark. The fund provides strong and representative exposure to consumer staples and the companies are large-cap in the main.
The index comprises just 34 holdings from the consumer sector and includes many household names. Top holdings include Procter and Gamble, Coca-Cola, PepsiCo and Walmart.
The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks US consumer discretionary companies within the S&P 500. This asset uses the Consumer Discretionary Select Sector Index as its tracking benchmark. The top ten holdings account for 66.2% of the fund’s portfolio.
The index comprises just 66 holdings from the consumer sector and includes many household names. Top holdings include Amazon, Home Depot, McDonalds and Nike.
A trader's "account balance" is the total value of the account including all and any settled profit & loss, deposits, and withdrawals.
How do I check my trading account balance?
As mentioned, your account balance is the total sum of settled positions, P&L, deposits, and withdrawals. Yet this balance does not include profit or loss resulting from any open positions. If positions are indeed open, the balance might change depending on pending losses or profits until such positions are closed. As such, it is recommended to check your trading account balance regularly as new positions open and close on a regular basis.
A bid is the highest price that a trader will pay to buy a stock or any other asset. On the other hand, the seller has a limit as to the lowest price he will accept, which is called an “ask”. The difference between the buyer’s bid and the seller’s ask is a spread. The smaller the spread, the greater the liquidity of the any asset.
What is difference between bid and offer in trading?
There are several differences between a bid and an offer in trading. One important key differentiator is that a bid describes how buyers are willing to want to buy for a lower price than what the seller indicated. While an offer represents the higher price initially requested by the seller.
AUD/USD is the abbreviation for the Australian dollar and US Dollar currency pair and is the world's fourth most popular currency pairing, accounting for 5.2% of all FX trades with $266bn in trading volumes daily. The number represents how many US Dollars (the quote currency) is required to buy one Australian dollar (the base currency).
The Australian dollar is a commodity-correlated currency, because the Australian economy is still largely reliant upon mineral exports, primarily iron ore. The pairing is a good indicator of market risk sentiment with the AUD/ tending to rally along with rising commodity prices and falling when they drop.
The AUD/USD is also highly sensitive to changes in the monetary policy decisions made by the Federal Reserve and the Reserve Bank of Australia. A more hawkish US Federal Reserve can push the AUD/USD exchange rate significantly lower, whilst the pair can rally when the RBA is raising interest rates.
CAD/CHF is the abbreviation for the Canadian dollar to Swiss franc exchange rate. US$260 billion worth of Canadian dollars and US$243 billion worth of francs is traded each day. The Canadian dollar is the 6th most-traded currency, and makes up one side in 5.1% of all daily trades. The Swiss franc is the 7th most-popular trading currency in the world and is involved in nearly 5% of all forex transactions each day.
The pair is sensitive to changes in market risk appetite, as the Canadian dollar is a commodity-correlated currency and the franc is a safe-haven currency.
The producing and exporting of crude oil is vital to the Canadian economy, so changes in price can push CAD/CHF higher or lower. Oil is sensitive to changes in risk appetite, creating further volatility for the Canadian dollar.
Compounding the effect of market uncertainty upon CAD/CHF is the Swiss franc's reputation as a safe-haven, thanks to Switzerland's strong economy and developed financial sector.
AUD/CHF is the abbreviation for the Australian dollar to Swiss franc exchange rate. The Australian dollar is nicknamed the “Aussie”, and is the 5th most-traded currency in the world, involved in 6.9% of all daily forex trades. The Swiss franc is the 7th most popular currency in the world and is involved in nearly 5% of all forex transactions each day.
The Australian dollar is a commodity-correlated currency and is highly sensitive to price changes in iron ore, of which Australia is the world's largest exporter. The franc is a safe-haven asset, popular because of Switzerland's strong and stable economy. In times of market uncertainty the AUD/CHF pair is liable to fall.
The franc has a strong correlation with the euro, because it used to be pegged to the common currency, and Switzerland still shares strong political and economic ties with the Eurozone. Developments in the Eurozone, such as political unrest or changes in the European Central Bank monetary policy outlook can boost AUD/CHF.
Alpha is the performance measurement of a trade, or ROI (return on an investment) measured against a market index or benchmark that is considered to represent the market's movement as a whole. The positive or negative return of any given trade in relation to the return of the benchmark index is an alpha.
What does Alpha Tell you?
Traders use Alpha (α) to describe a strategy's ability to beat the market. Thus, it is also often referred to as “excess return” or “abnormal rate of return”. These terms refer to a concept that markets are efficient, and so they are earned returns that do not reflect the market’s performance.
What is alpha and beta in trading?
Alpha is often used in conjunction with beta (the Greek letter β), which measures the broad market's overall volatility or risk, known as systematic market risk.
Alpha is used in finance as a measure of performance. indicating when a strategy, trader, or portfolio manager has managed to beat the market return over some period. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement.
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.
EUR/SEK is the abbreviation for the euro to Swedish Krona exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The Swedish Krona is the 9th most-traded currency, accounting for 2.2% of daily transactions. US$112 billion worth of SEK is traded daily.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Swedish krona shares a strong correlation with its Scandinavian peers the Norwegian krone and the Danish krone. These currencies - which all translate as “crown” - came about in 1873 when Sweden and Denmark formed the Scandinavian Monetary Union, backed by the gold standard. Norway joined two years later. When the union was dissolved after World War Two, the countries independently kept the currency.
Futures are a specific type of derivative contract agreements to buy or sell a given asset (commodity or security) at a predetermined future date for a designated price. Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
How does the futures market work?
A futures contract includes a seller and a buyer – which must buy and receive the underlying future asset. Similarly, the seller of the futures contract must provide and deliver the underlying asset to the buyer. The purpose of futures in trading is to allow traders to speculate on the price of a financial instrument or commodity. They are also used to hedge the price movement of an underlying asset. This helps traders to prevent potential losses from unfavourable price changes.
What are examples of Futures?
There are numerous types of futures and futures contracts in the trading and financial markets. The following are a few examples of futures that can be traded on: Soft Commodities such as food or agricultural products, fuels, precious metals, treasury bonds, currencies and more.
The FXE, also known as CurrencyShares Euro Trust, tracks the changes in the value of the euro relative to the US Dollar. An ETF is the easiest way for a trader to buy exposure to foreign currency markets. These funds use cash deposits or futures contracts to track the euro's movements over time.
This ETF provides investors with an opportunity to invest in EUR/USD, such as those who think that the US Dollar is weakening or think that the Euro is strengthening. It tracks the EUR/USD exchange rate very well and is an extremely liquid fund.
In the financial and trading domains, the Grey Market enables traders to take positions on a company’s potential via yet-to-be-released Initial Public Offering (IPO). Asset and share prices in this market are more of a prediction of what the company’s total market capitalization will be at the end of its first trading day than any official or sanctioned price.
How do grey markets make money?
Grey markets make money by providing liquidity for new IPOs by allowing buyers and sellers to trade in newly issued stocks without the issuer's consent. This provides the issuer with a way to gain quick access to capital without relying on banks or other traditional sources of funding.
How do I get into grey market?
A grey market also refers to public companies and securities that are not listed, traded, or quoted in a U.S. stock exchange. Grey market securities have no market makers quoting the stock. Also, since they are not traded or quoted on an exchange or interdealer quotation system, investors' bids and offers are not collected in a central spot, so market transparency is diminished, and effective execution of orders is difficult.
The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States. It is part of a wider system – known as the Federal Reserve system – with 12 regional central banks located in major cities across the US.
What does the Federal Reserve do?
The Federal Reserve performs five main functions to promote the effective operation of the U.S. economy and, more generally, the public
interest. It:
• Conducts the nation’s monetary policy
• Promotes the stability of the financial system
• Promotes the safety and soundness of individual financial institutions
• Fosters payment and settlement system safety and efficiency
• Promotes consumer protection and community development
Who Controls Federal Reserve?
The Federal Reserve is governed by a Board of Governors in Washington, DC, and 12 regional Federal Reserve Banks located throughout the country. The Board of Governors is an independent government agency appointed by the President and confirmed by the Senate. The Chairman of the Board of Governors also serves as Chair of the Federal Open Market Committee, which sets monetary policy.
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.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
The 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.
Equity is the value of a trader's account, representing the total assets minus any margin used to open trades. It reflects their financial position and potential financial outcomes from any trading activities as they currently stand. Traders can use equity to decide when to enter or exit positions and what size positions to take.
What is difference equity and stock?
For traders, stock and equity are synonymous terms as stocks represent equity ownership in a company. Assets, liabilities, and shareholders' equity are items found on the balance sheet.
What is difference between equity and account balance?
Equity is the total account balance including profits/losses from open positions, whereas the account balance is simply the total money deposited in an account before any trades have been made.
EUR/HUF is the abbreviation for the euro to Hungarian forint exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The forint is the 26th most-active currency, accounting for just 0.3% of daily transactions. US$5 billion worth of EUR/HUF is traded each day.
The euro is the currency of the Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
EUR/HUF strengthens in times of market uncertainty. As an emerging market currency, the forint is popular in times of confidence but is sold in favour of safer, lower-yielding assets when volatility increases.
Compared to its emerging market peers, Hungary has a small level of foreign currency debt, providing some insulation for the economy and its currency against external disruption.
GBP/USD is the abbreviation for the pound Sterling to US Dollar exchange rate, also known as “cable”. It combines two very popular currencies; GBP is present in 13% of all daily forex trades, while USD is present in 88% of all trades.
On average US$649 billion worth of pound Sterling is traded every single day. The pair is highly liquid and therefore offers very low spreads.
The UK financial services industry, headquartered in London, is the financial gateway to Europe, and pound Sterling plays an important role in financial markets. Interest rate differentials are a key driver of volatility in the GBP/USD exchange rate.
Recently, political factors have seen their influence over the pairing grow. This is because the Brexit referendum, which resulted in the UK voting to leave the EU, has created significant uncertainty regarding the UK economic outlook. Meanwhile, in the United States, the protectionist policies of President Donald Trump have raised questions over the outlook for trade.
EUR/AUD is the abbreviation for the euro to Australian dollar exchange rate. The pairing accounts for 0.3% of the average daily forex trading volume across the globe, which equates to US$16 billion.
The euro is the currency of the Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar. However, the impact of this upon the euro is lessened when trading against the Australian dollar, because the “Aussie” also moves inversely to the US Dollar.
While not a safe-haven asset, the euro is considered more stable than the Australian dollar, meaning that the EUR/AUD/ pairing often strengthens in times of market pessimism, and weakens when risk-demand is elevated.
The Australian economy is highly-reliant upon exports of iron ore, for which Australia accounts for over 50% of the global supply. Changes in the market price can have a strong effect upon EUR/AUD.
EUR/CAD is the abbreviation for the euro to Canadian dollar exchange rate. The pairing accounts for around 0.3% of daily forex trading across the globe; the equivalent of US$14 billion.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar. However, the impact of this upon the euro is lessened when trading against the Canadian dollar, which also often moves inversely to the dollar.
The Canadian dollar is highly-sensitive to the price of crude oil, as this is Canada's main export. When oil prices fall, the outlook for the Canadian economy weakens, pushing the EUR/CAD exchange rate higher. When oil prices rise, the opposite happens.
Euro strength is influenced by the economic health of the Eurozone, which experienced a debt crisis in 2012 that saw several of its member states requiring bailouts.
EUR/CZK is the abbreviation for the euro to Czech koruna exchange rate. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The euro is the currency of the 19-nation Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Czech economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
EUR/NZD is the abbreviation for the euro to New Zealand dollar exchange rate. The euro is the 2nd most-traded currency, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded every day. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily.
The euro is the currency of the 19-nation Eurozone, overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
However, the impact of this upon the euro is lessened when trading against the New Zealand dollar, which also often moves inversely to the dollar.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the EUR/NZD exchange rate higher. When dairy prices rise, the opposite happens.
EUR/TRY is the abbreviated form of the euro to Turkish lira exchange rate, one of the exotic currency pairs. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. US$1.59 trillion worth of euros are traded daily. The lira is the 16th most active currency, accounting for 1.4% of average daily turnover.
The euro is the currency of the Eurozone, which is overseen by the ECB. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The EUR/TRY pairing appreciates in times of market uncertainty. Turkey is an emerging market and relies heavily upon the EU for both imports and exports; weakness in the Eurozone economy is therefore a bad sign for Turkey as well.
The Turkish economy is largely fuelled by foreign currency loans, so a strong euro or US Dollar can lead to further weakness in the lira as markets fear the impact of higher credit costs for Turkey's corporations.
An interest rate is the percentage of a loan or deposit that a lender charges a borrower for the use of their money, or the percentage paid on a deposit account. It is used as a way to compensate the lender for the opportunity cost of not using their money elsewhere. The interest rate can be fixed or variable, and it is typically expressed as an annual percentage. The interest rate is used to calculate the amount of interest due on a loan or deposit over a certain period of time.
What are the 3 types of interest?
The three main types of interest are:
Simple interest: Interest calculated only on the original principal amount of a loan or deposit.
Compound interest: Interest calculated not only on the original principal but also on accumulated interest from previous periods.
Nominal interest: Interest rate stated on a loan or deposit, does not take into account the effect of compounding.
However, there are a few other types of interest as well.
How do I calculate interest rate?
Interest rate is calculated as the cost of debt for the borrower and the rate of return for the lender. This makes the total sum to be repaid to be more than the borrowed amount since lenders require compensation for the loss of use of the money during the loan period. Although many make use of the various online “interest calculators”.
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.
Industrial Select Sector SPDR Fund (XLI) tracks US industrial companies within the S&P 500. This asset uses the Industrial Select Sector Index as its tracking benchmark. The ETF provides concentrated exposure large-cap US industrial companies, with limited small and midcap companies.
The index comprises just 70 holdings from the industrial sector. Top holdings for the benchmark index include Boeing Co, 3M Co, Union Pacific Corp and Honeywell International Inc.
The iShares Global Clean Energy ETF (ICLN) seeks to track the investment results of an index composed of global equities in the clean energy sector.
Just like many of the other cryptocurrencies, Litecoin was created to improve on some of the perceived failings of Bitcoin - primarily a higher number of tokens and a much faster processing speeds.
Litecoin (LTC) is priced in USD per coin and reached a peak of $341 in December 2017. It was launched in April 2013 by Charlie Lee, a former Google software engineer.
Lee was central to a change in attitude about Bitcoin, helping it gain approval from big names. He wanted to position Litecoin as silver to Bitcoin's gold, and knew that the success of all cryptocurrencies would be tied to stalwart Bitcoin.
Litecoin uses blockchain in a similar way to Bitcoin, but has very low transaction fees and has adopted ‘Segregated Witess (SegWit) - a process by which the size of blocks in a blockchain is reduced by removing data.
The Nikkei 225, also known as the Japan 225, is the leading barometer of the Japanese stock market. It is a price-weighted index, comprising of stocks selected from the 1st section of the Tokyo Stock Exchange.
The rankings are calculated using a method called ‘Dow Adjustment', in which stock prices, adjusted by a par value, are divided by a divisor, helping eliminate the impact of external influences.
The index was introduced on the 7th September 1950, using a base date of May 16th 1949 and a base value of 176.21. The Nikkei 225 peaked at 38,915.87 in December 1989 and hit a low of 85.25 in July 1950.
Technology dominates the Nikkei 225 index with a total weighting of 44.62%. Consumer Goods is the second-largest category with a weighting of 21.80%, while Materials is the third-biggest sector at 16.96%.
Japan 255 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Japanese stock market. Futures rollover on the 1st Friday of March, June, September, and December.
LIBOR, is an acronym for “London Interbank Offer Rate”, and is the global reference rate for unsecured short-term borrowing in the interbank market. It is used as a benchmark for short-term interest rates, and is also used for pricing of interest rate swaps, currency rate swaps as well as mortgages. LIBOR can also be used as an indicator of the health of the financial system,
Who controls the LIBOR?
LIBOR is administered by the Intercontinental Exchange or ICE. It is computed for five currencies (Swiss franc, euro, pound sterling, Japanese yen and US dollar) with seven different maturities ranging from overnight to a year. ICE benchmark administration consists of 11 to 18 banks that contribute for each currency. These rates are then arranged in descending order, with top and bottom results taken of the list to exclude outliers. This data is then computed to get the LIBOR rate, which is calculated for each of the 5 currencies and 7 maturities, thereby producing 35 reference rates. A 3 month LIBOR is the most commonly used reference rate.
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 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.
Market Makers are financial institutions or investors that provide liquidity to the markets by placing buy and sell orders at specific prices. They are incentivized to do this in order to make profits from the bid-ask spread.
What is the difference between dealer and market maker?
A dealer and a market maker are both intermediaries in the securities market that provide liquidity and help facilitate trades. However, they have some key differences. A dealer is a person or entity that buys and sells securities for their own account and risk. They hold inventory of securities and make a profit by buying at a lower price and selling at a higher price.A market maker is a firm or individual that provides liquidity to the market by continuously buying and selling a security at publicly quoted prices. They are also called liquidity providers, and they make money by charging a bid-ask spread, the difference between the prices they are willing to buy and sell a security. They do not hold inventory of securities like dealers do.
Do market makers manipulate price?
Market makers are allowed to buy and sell securities at their own discretion, and they may adjust the prices they are willing to buy and sell a security in order to make a profit. However, they are also subject to regulatory oversight, and they must act in a fair and transparent manner. They are not allowed to manipulate prices, and any illegal activities such as insider trading, wash trading or any other form of market manipulation are strictly prohibited.
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.
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.
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.
The Proshares Bitcoin Strategy ETF (Bitcoin ETF) offers managed exposure to bitcoin futures contracts. The Fund does not invest directly in bitcoin and may also invest in other instruments. It’s one of the first of its kind and marks a new way to get exposure to cryptocurrency price movements.
Materials Select Sector SPDR Fund (XLB) tracks US basic materials companies within the S&P 500. This asset uses the Materials Select Sector Index as its tracking benchmark. The limited spread and niche sector mean that it is heavily concentrated. Just a few holdings make up a big part of the portfolio, and there are only 24 holdings in total.
Top holdings for the benchmark index include DowDuPont Inc, Linde Plc, Ecolab Inc and The Sherwin-Williams Co.
The iShares MSCI KLD 400 Social ETF (DSI) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
The iShares MSCI USA ESG Select ETF (SUSA) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
iShares MSCI Mexico ETF (EWW) offers traders exposure to a broad range of companies in Mexico and access to targeted Mexican stocks. It has 58 holdings, which include America Movil L, Formento Economico Mexicano, Walmart de Mexico and GPO Finance Banorte.
The fund has almost no technology, energy or utilities stocks as these sectors are government-run in Mexico. The sector-mix is 29.57% Consumer Staples, 21.13% Communication, 15.48% Financials, 12.27% Materials, 10.92% Industrials and the remaining split between real estate, consumer discretionary and health care.
Futures contracts for Orange juice (ORA) are based upon frozen concentrated orange juice (FCOJ).
Brazil is by far the world's largest producer of oranges, harvesting 20 million metric tonnes per year. China is in second spot, but still far behind, with an annual yield of 7 million, followed by the EU (6.5 million), the US (4.8 million), and Mexico (4.6 million).
Factors that can affect the supply - and therefore the price - of orange juice include weather, crop disease, and the strength of the US dollar. For instance, orange juice futures often increase in price when hurricanes travel towards Florida, a key growing region. Consumer demand often plays a role as well; orange juice is a popular breakfast staple, but a move away from drinks with high sugar content has seen demand decline in recent years.
NZD/CAD is the abbreviation for the New Zealand dollar to Canadian dollar exchange rate. The New Zealand dollar is the 10th most-traded currency, accounting for 2.1% of daily transactions. US$104 billion worth of NZD is traded daily. The Canadian dollar is the 6th most-traded currency, involved in 5.1% of all daily transactions.
The New Zealand dollar is highly-sensitive to commodity prices. Dairy is the country's main industry; when dairy prices fall, the outlook for the New Zealand economy weakens, pushing the NZD/CAD rate lower. When dairy prices rise, the opposite happens.
The Canadian dollar is heavily-exposed to changes in the price of crude oil - Canada's primary export. Both currencies are inversely correlated with the US Dollar, so even in times of risk movement in the NZD/CAD is more driven by fundamental factors.
The Canadian dollar is more exposed because the USA is Canada's largest trading partner by far.
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.
What is a margin in finance?
A margin in finance is the amount of money an investor borrows to purchase or trade securities. It is the difference between the total value of the borrowed funds and the market value of the collateral provided as security for the loan. Margin trading allows investors to buy more securities than they would otherwise be able to purchase with just their own capital.
What is margin vs profit?
Margin and profit are related but different concepts in finance and trading.
Margin refers to the amount of money or collateral that is required to open a leveraged position, such as a margin account, which allows traders to buy securities by borrowing money from a broker. Profit, on the other hand, refers to the amount of money that is gained from a trade or investment, after all costs and expenses have been subtracted. Profit is the result of a successful trade, which is the difference between the buying and selling price.
How do I calculate margin?
There are a few different ways to calculate margin, depending on the context and the type of trade or investment.
One of the most common ways to calculate margin is to use the following formula:
Margin = (Value of Trade / Leverage) x 100%
Risk management in trading is a strategy for mitigating losses. It involves understanding and analyzing risks, taking preventive steps to protect against potential losses, and having plans in place to address unanticipated situations. Good risk management practices help traders limit their downside and stay ahead of market volatility.
How do you manage risk in trading?
Traders can practise risk management in lots of different ways. It can be done by using strategies like position sizing, stop-loss orders, diversifying investments, and hedging. Through careful planning, you can set limits on your potential losses, identify potential opportunities and adjust your strategy accordingly. With disciplined risk management, you can protect your capital while you trade.
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.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
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.
A Reversal is when the direction of a financial market or asset moves in the opposite direction from its current trend. Reversals can occur over a period of time and can be either bullish (price increasing) or bearish (price decreasing). Being aware of these trends can help traders maximize their profits.
What is an example of reversal?
If the stock market has been rising for several weeks and then begins to fall, that's considered a reversal. Reversals are an important concept for investors to understand as they can indicate a change in sentiment that could lead to further movement in the same direction.
A “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.
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.
Ripple (XRP) is among the largest cryptocurrencies by market cap, following Bitcoin and Ethereum.
Ripple, known as XRP, is priced in USD. It saw a high of $3.20 in January 2018.
When people talk about Ripple they are not just talking about the currency, but the Ripple network which could change the way people complete currency transfers.
Unlike other crypto payment networks, Ripple allows you to make money transfers in any form - be that Ripple, Bitcoin, USD, Yen or GDP. Plus, you can receive money in a different form to how it has been sent. For example, you could be sent Bitcoin but collect your money in USD.
Payments can happen in seconds, a significant improvement on the days or weeks required for a wire transfer with a bank.
The payment network has already seen endorsements, with American Express and Santander partnering with it for cross-border payments between the US and UK.
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.
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.
A spot price is the current market value of an asset or security. It's the amount you would pay to buy or sell it at that exact moment in time. Spot prices are constantly changing, as they depend on supply and demand forces in the marketplace. Spot prices provide important insights into market trends and can be used by traders to make investment decisions.
Why is it called a spot price?
It is called a "spot" price because it refers to the price at which an asset can be bought or sold "on the spot" or immediately.
How is spot price calculated?
The spot price of a commodity, security, or currency is typically determined by supply and demand factors in the market. The price is influenced by a variety of factors such as production costs, political and economic conditions, and speculation.
ProShares UltraShort Russell2000 (TWM) is a leveraged product that seeks to deliver twice the inverse of the daily performance of the USA2000 Index. Results aims to be 200% of the opposite to the movement of the index. This is a daily-bet, so results will vary dramatically for positions held longer than one day.
The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
IWO, also known as iShares USA2000 Growth ETF, replicated the performance of the USA2000 Growth Index. This ETF is comprised of small public US companies that are expected to grow at an above-average rate. The index uses two-year growth forecasts and historical sales to identify growth.
Unsurprisingly, given that the focus is on growth, technology features heavily in the sector breakdown. Health care, Information Technology and Industrials account for 62.07% of the portfolio. It has over 1,200 holdings and stocks include Etsy, Haemonetics, Hubspot and Trade Desk Inc.
ProShares UltraPro Russell2000 (URTY) seeks to deliver daily results that are three times daily performance of the USA2000 Index. This is an aggressive single-day bet and results will vary if positions are held for longer than a day.
This ETF is a leveraged product, which carry more risk. It aims to deliver results that are 300% of the returns of the USA2000 Index. The USA2000 Index covers US small cap companies and a broad range of sectors including finance and tech. Holdings include Etsy, Planet Fitness and Hubspot.
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.
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 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.
RSI stands for Relative Strength Index and is a technical analysis indicator that measures the strength of a security's price action, by comparing the magnitude of recent gains to recent losses. The RSI ranges from 0 to 100, with values above 70 indicating overbought conditions and values below 30 indicating oversold conditions. Traders often use the RSI as a buy or sell signal, depending on whether the RSI is above or below a certain level.
Is a higher RSI value better?
A higher RSI value generally indicates that a security is overbought, which means that it is trading at a relatively high price compared to its recent price history. Traders may interpret this as a signal to sell, or to be cautious about buying. Traditionally, an RSI value of 70 or above is considered to be overbought, and a value of 30 or below is considered to be oversold.
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.
ProShares UltraShort QQQ (QID) aims to deliver daily investment results that are twice the inverse daily performance of the Nasdaq 100 Index. This is a single-day bet and traders are advised that returns can vary dramatically if they hold positions for longer than one day. This is the sister product to QLD, which delivers two times the daily performance of the Nasdaq 100.
As with most inverse and leveraged products, this fund is designed to provide inverse exposure on a daily basis, not as a long-term inverse bet against the index. All leveraged products carry more risk. Nasdaq 100 holdings include Apple, Amazon, Facebook and Tesla.
ProShares 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.
SLV, also known as iShares Silver Trust, tracks the price of silver bullion held in London. This ETF provides investors with direct exposure to silver as the ETF physically holds the precious metal in vaults in London. This fund is one of the most liquid of its peer group and is popular among retail and institutional investors.
This ETF is suitable for buy and hold strategies. Traders should consider this asset to gain exposure to the day to day price of silver bullion, to get access to physical silver or to diversify your portfolio and protect against inflation.
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.
WisdomTree U.S. LargeCap Dividend (DLN) consists of the 300 largest companies ranked by market capitalisation from the WisdomTree Dividend Index. The Index is a fundamentally weighted index that measures the performance of large-cap dividend-paying US companies.
The top ten stock holdings account for 26.76% of the index and include Microsoft, Apple, Exxon Mobil and Verizon Communications. Four sectors (Information Technology, HealthCare, Consumer Staples and Financials) account for 56.4% of the index’s holdings. This ETF is a good option for traders looking for exposure to large cap equity from dividend-paying companies.
The Direxion Work From Home ETF (WFH) offers exposure to companies across four technology pillars, allowing investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment. The four pillars include Cloud Technologies, Cybersecurity, Online Project and Document Management, and Remote Communications. Companies are selected for inclusion in the index by ARTIS, a proprietary natural language processing algorithm, which uses key words to evaluate large volumes of publicly available information, such as annual reports, business descriptions and financial news.
The 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 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.
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.
USD/CZK is the abbreviation for the US Dollar to Czech koruna exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion. The koruna is the 28th most-traded currency, accounting for just 0.3% of daily transactions.
The Czech Republic economy is strongly intertwined with that of the Eurozone; in particular Germany, which receives the bulk of Czech exports. Recent strength in the Eurozone has benefited the Czech Republic, contributing to an unemployment rate that is amongst the lowest in Europe. Strong data from the currency bloc therefore supports CZK.
In April 2017, the Czech National Bank exited its exchange rate commitment to cap CZK strength, implemented in November 2013, allowing the currency to fluctuate unrestrained.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
USD/CAD is the abbreviation for the US Dollar to Canadian dollar exchange rate. The pair accounts for 4.3% - $218 billion - of all daily forex trades. The US Dollar is the most popular currency to trade, while the Canadian dollar is the 6th most popular. CAD, also known as the “Loonie”, after the bird depicted upon the C$1 coin, accounts for 4.6% of daily forex activity.
The majority of Canadian dollars are exchanged for US Dollars. Canada is the second-largest trade partner for the US; in 2017 the US exported $341.2 billion worth of goods to Canada and imported $332.8 billion. The two nations and Mexico are bound by the North American Free Trade Agreement (NAFTA), although its future is uncertain.
Canada is one of the world's largest oil producers, so the price of crude on the international market has a significant impact upon the USD/CAD exchange rate. In times of high risk-appetite USD/CAD weakens, while low risk-appetite pushes the pairing higher.
USD/CHF is the symbol for the US Dollar to Swiss franc exchange rate. The pairing accounts for 3.6% ($180 billion) of all daily forex activity. The Swiss franc is the 7th most popular trading currency in the world and is involved in nearly 5% of all forex transactions each day.
The US Dollar and Swiss franc are both safe-haven currencies, meaning that the pairing is less responsive to risk-appetite on the global market than other pairings. However, the Swiss franc shares a strong correlation with the euro, so anything that weakens the euro would benefit the US Dollar and pressure the franc lower. If the euro strengthens, the USD/CHF pairing is likely to depreciate. The franc used to be pegged to the euro, but the Swiss National Bank unexpectedly allowed the currency to float free in January 2015.
CHF is a popular choice with traders because of Switzerland's strong and stable economy. It is a wealthy nation with a strong banking sector and its citizens enjoy a great quality of life.
USD/NOK is the symbol for the US Dollar to Norwegian krone exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.
The krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US48 billion worth of USD/NOK - 0.9% of the total daily volume - is traded each day.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. USD/NOK therefore benefits doubly in times of low risk-appetite.
The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK.
USD/DKK is the symbol for the US Dollar to Denmark krone exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.
The Denmark krone is the 21st most-traded currency in the world and is involved in 0.8% of all forex transactions each day. On average US$42 billion worth of krone is exchanged each day.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The Danish krone is pegged to the euro through the European Exchange Rate Mechanism, also known as ERM 2. The central fixed rate is 746.038 krone per €100 but, unlike the standard +/- 15% fluctuation permitted under ERM 2, the Krone is limited to a fluctuation of just +/- 2.25%. Because it is pegged to the euro, the krone is also highly-vulnerable to USD strength - even when traded against other currencies.
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