Take a look at our list of the financial terms associated with trading and the markets. From beginners starting their trading journey to experts with decades of experience, all traders need to clearly understand a huge number of terms.
A bearish market is a condition in the stock market where prices are on a downward trend, characterized by widespread pessimism and investor fear. This often results in a decline in the value of securities, leading to a decline in the overall market.
How long do bear markets last?
The duration of a bear market can vary and can last anywhere from a few months to several years. It depends on a number of factors, including the underlying cause of the market downturn, the state of the overall economy, and government or central bank interventions.
How do you know if a market is bearish?
A market is considered bearish if there is a persistent downward trend in the prices of securities, typically accompanied by increased selling pressure and declining market indices such as the S&P 500. This can be indicated by technical analysis, such as chart patterns showing lower highs and lower lows, or by broader economic indicators such as declining gross domestic product (GDP) and rising unemployment.
What is the longest bear market in history?
The longest bear market in history is the Great Depression, which lasted from 1929 to 1939. During this time, the stock market experienced a severe decline, with the Dow Jones Industrial Average losing 89% of its value. The Great Depression was a global economic downturn that had far-reaching impacts and was marked by high levels of unemployment, homelessness, and economic hardship.
A 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.
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.
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.
Dash was launched in January 2014 as a rival to Bitcoin. Its popularity is largely down to a focus from designer Evan Duffield on transaction speed and user anonymity.
Dash is priced in USD per coin, and reached a peak value of $1,370.16 in December 2017.
One of the major complaints against stalwart crypto Bitcoin is its painfully slow transactions speed (a big factor in its hard fork into Bitcoin Cash in 2017). Dash has a highly favourable processing speed compared to Bitcoin and other cryptos.
Processing is so quick that two days after its launch, almost 10 percent of the total capacity had already been mined.
Dash is a portmanteau of the words Digital and Cash. It was originally called Xcoin, followed by Darkcoin, before Dash was settled on.
Since its launch, Dash has become increasingly popular and is accepted as a payment method by over 300 organisations around the world - including Apple. CEO Ryan Taylor has stated his belief that Dash will soon overtake Bitcoin in popularity.
The euro to Swiss franc exchange rate is identified by the abbreviation EUR/CHF. On average US$44 billion worth of euros are converted into Swiss francs every day, making up 0.9% of the total global forex volume. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. the Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The euro and the Swiss franc share a strong correlation; the franc was actually pegged to the euro until January 2014, where the Swiss National Bank shocked markets by allowing the currency to float free - a move which saw CHF surge around 30% in a single day.
The EUR/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is viewed as a safe haven asset, while the fate of the Eurozone forever hangs in the balance as political and economic developments cause tension between its constituent nations.
The term Spreads in trading is defined as the gap between the highest price to be paid for any given asset, to the lowest price the current asset holder is willing to sell at. Different markets and assets generate different spreads. For example, the Forex market, where both buyers and sellers are very active with this “gap” or spread will be small.
In trading, a spread is one of the key costs of online trading. Generally, the tighter the spread, the better value traders get from their trades. Also, spreads are implied costs, where it is presented to traders in subsequent trades, as the assets traders buy on leverage must increase above the level of the Spread, rather than the above the initial price, for traders to make profit.
What is the importance of a Spread?
The Spread is important, even a crucial piece of information to be aware of when analysing trading costs. An instrument’s spread is a variable number that directly affects the value of the trade. Several factors influence the spread in trading:
• Liquidity. How easily an asset can be bought or sold.
• Volume. Quantity of any given asset that is traded daily.
• Volatility. How much the market price changes in a given period.
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.
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.
For Forex trading, a “Base Currency” is the first currency in any currency pair, representing the traded currency. The second currency in the pair is the quote currency. Example: in EUR/USD, the Euro is the base currency, and you can buy 1 EUR by paying 1.1 USD.
An exchange rate attached to a currency pair indicates how much of the quote currency is needed to buy a single unit of the mentioned base currency. For example, reading EUR/USD = 2.15 means that 1 Euro is equal to $2.15.
What is Base vs. Local currency?
When viewing or receiving a direct quote, the base currency = foreign currency. Likewise, the local currency in a pair is the quote currency.
The Fund seeks to track the investment results of the MSCI Brazil 25/50 Index (EWZ) composed of Brazilian equities. The Fund invests, under normal circumstances, at least 95% of its assets in the securities of its Underlying Index and in depositary receipts representing securities in its Underlying Index.
Yearn.finance (YFI) is another Ethereum-led yield aggregator using the YFI token. Cryptos deposited on Yearn are leant out at the highest lending rate possible across a number of other platforms. Holders of YFI can participate in the protocol's governance and earn a percentage of the fees generated on the various Yearn Finance products through staking. Yearn is available on our platform via the YFI/USD symbol and is priced in USD.
Heating Oil is a low-viscosity petroleum product derived from crude oil. Around 25% of the yield of crude oil is devoted to heating oil, the second most after gasoline products. As a result, prices often closely follow those of WTI crude.
It is priced in USD per gallon, and has a historic high of $3.32 in April 2011. The record low was $0.87 in January 2016.
Heating oil is used as a fuel for furnaces and boilers to heat homes and businesses. It is especially popular in the British Isles and the North-eastern US. As a result, demand fluctuates seasonally, peaking in the colder months between October and March.
Price is, as a result, also affected by cold weather. Other factors affecting price include the price of alternative heating options, energy efficiency and insulation, refining costs and government regulations.
Heating Oil futures allow you to speculate on, or hedge against, changes in the price of Heating Oil. Futures rollover on the third Friday of every month.
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.
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.
Treasury stock, also known as reacquired stock, is stock which a company has repurchased from shareholders. This stock is issued and bought back by the company for various reasons including to improve financial statements and reward shareholders through dividend payments. Companies must keep records of their treasury stock in order to report them on financial statements.
How is treasury stock different from common stock?
Treasury stock, also known as "buyback," is a corporation's own stock that has been purchased back by the issuing company from shareholders. Treasury stock does not give voting rights or dividend payments. In contrast, common stock gives owners voting rights and entitles them to dividends, when declared. Treasury stocks are used to offset dilution and strengthen balance sheets while still giving shareholders an opportunity to sell shares without market risk.
What is the benefit of treasury stock?
By purchasing their own stock, companies can benefit from reducing risk, enhancing corporate governance and even increasing profits. In addition, the stock may be held in reserve for future issuance or to protect against takeover attempts.
Is treasury stock debt or equity?
Treasury stock is a form of equity, rather than debt. It is a company's own shares which have been bought back and held by the company, resulting in the number of outstanding shares being reduced. The buyback is often used to increase shareholder value, reduce the supply of outstanding stock, or as part of employee compensation programs.
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”.
Earnings Per Share (EPS) is a financial metric that measures the amount of profit a company makes for each outstanding share of its common stock. It's calculated by dividing net income by the number of shares outstanding. Investors use EPS to measure how profitable a company is and to compare different companies in the same sector.
What is a good earnings per share? Is it better to have a high or low earnings per share?
There is no definitive answer to what constitutes a "good" earnings per share (EPS) as it can vary depending on the industry, the size of the company, and the expectations of the market. Generally, a higher EPS is considered better, as it indicates that a company is generating more profit per share of stock.
What is earnings per share vs dividend?
A dividend is a payment made by a company to its shareholders out of its profits or reserves. Whereas EPS is an indicator of a company's profitability.
Basic Attention Token (BAT) crypto was built to improve the security, fairness, and efficiency of digital advertising through the use of blockchain technology. Users are rewarded with BAT for viewing ad content, publishers can deliver higher-impact ads and advertisers can be assured their messaging is being viewed by a willing audience. Trade BAT in USD using the BAT/USD symbol.
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.
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.
An Overnight Index Swap (Swap Fee) is a process where the settlement of a deal is rolled forward to another value date, and a charge is levied based on the difference in the interest rates of the two currencies. Every day at 21:00 GMT, open positions are rolled over to the next day and the positions gain or lose interest based on the interest differential between the bought and sold currencies.
What is OIS compound?
The index rate is typically the rate for overnight lending between banks, either non-secured or secured. The fixed rate of OIS is typically an interest rate considered less risky than the corresponding interbank rate (LIBOR) because there is limited counterparty risk.
The LIBOR–OIS spread is the difference between IRS rates, based on the LIBOR, and OIS rates, based on overnight rates, for the same term.
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.
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.
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.
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.
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.
What do hawkish and dovish mean?
Hawks and doves are terms used by analysts and traders to categorise members of Central Bank committee ahead of their votes on monetary policy.
Hawkish: Refers to a monetary policy that is seen as being more aggressive and leaning towards higher interest rates. It implies a strong stance from the monetary authorities in order to keep inflationary pressures in check and provide an incentive for businesses to invest.
Dovish: Refers to a monetary policy that is seen as being less aggressive and leaning towards lower interest rates. It implies a softer stance from the monetary authorities, allowing businesses to have access to cheap credit, which can help stimulate the economy.
Does hawkish mean bullish?
No, hawkish does not mean bullish. Hawkish is an economic term that describes a central bank policy stance that is believed to favor higher interest rates and tighter monetary policy. It contrasts with dovish which is used to describe policies which favor lower interest rates and more accommodative monetary policy.
Is hawkish good for a currency?
Generally, yes. A hawkish monetary policy can be beneficial for a currency as it typically causes an increase in demand and prices of goods and services produced within the country.
The Health Care Select Sector SPDR Fund (XLV) tracks US health care companies within the S&P 500. This asset uses the Health Care Select Sector Index as its tracking benchmark. The fund is caps weighted and only includes companies from the S&P 500, which means there are a lot of very large companies.
The index comprises just 62 holdings from the health care sector – lower than many in this segment - and includes many household names. Top holdings include Johnson & Johnson, Pfizer Inc, UnitedHealth Group and Merck & Co Inc.
The iShares Global Clean Energy ETF (ICLN) seeks to track the investment results of an index composed of global equities in the clean energy sector.
The iShares MSCI KLD 400 Social ETF (DSI) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
The iShares MSCI USA ESG Select ETF (SUSA) seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider.
The iShares ESG MSCI USA Leaders ETF (SUSL) seeks to track the investment results of an index composed of U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider.
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.
Soybeans are a “soft” commodity - referring to those that are grown and not mined. It is one of the world's most important legumes and is an essential source of protein. It is used extensively in cooking, both soybeans and soy oil, and is also used for animal feed in the form of soy meal.
Soybean is priced in USD per bushel. In July 2012, Soybeans reached an all-time high of $1790, while it reached a low of $208 in September 1959.
The US are the biggest producers of Soybeans, followed by Brazil, Argentina and Paraguay. Together they account for 85% of total production, and 94% of total exports. China is the biggest importer of soybeans.
The price of soybeans is affected by a number of factors, including growing conditions, the demand for biofuel and the strength of USD.
Soybean futures allow you to speculate on, or hedge against, changes in the price of soybeans. Futures rollover on the fourth Friday of February, April, June, October, and December.
A share buyback, also known as a stock repurchase, is when a company buys back its own shares from the open market. This reduces the number of outstanding shares and increases the ownership stake of existing shareholders. Buybacks can be used as a way for a company to return excess cash to shareholders, increase earnings per share, or signal confidence in the company's future prospects.
Is share buyback a good thing?
Share buybacks can have both positive and negative effects on a company and its shareholders. On one hand, buybacks can be seen as a sign of a company's financial strength, as they suggest that the company has excess cash and believes its own stock is undervalued. Additionally, buybacks can help to boost earnings per share, which can increase the company's valuation. On the other hand, buybacks can also be criticized for diverting resources away from investments in growth or other opportunities, or for being used as a way to artificially boost the stock price. It's important for investors to evaluate the company's financial situation and the reason behind the buyback before making a decision on whether it is good or not.
What happens to share price after buyback?
Share price can be affected by a buyback in different ways, it will depend on the market conditions, the company's financial situation and the reason behind the buyback. In general, a buyback can help to boost the share price by increasing earnings per share and reducing the number of outstanding shares. Additionally, the announcement of a buyback can also signal confidence in the company's future prospects, which can attract more buyers to the stock. However, a buyback doesn't guarantee an increase in the stock price, if the market conditions are not favorable or if the company's financial situation is not good, the stock price could remain unchanged or even decrease.
What is the reason for share buyback?
A company may choose to buy back its own shares for a variety of reasons, including:
-Returning excess cash to shareholders: A buyback can provide shareholders with a more direct benefit from the company's cash reserves, rather than leaving the money idle or reinvesting it in less profitable ventures.
-Increasing earnings per share: By reducing the number of outstanding shares, buybacks can increase earnings per share, which can make the company look more valuable to investors.
-Signaling confidence: A buyback can signal to the market that the company's management believes the stock is undervalued, which can attract more buyers to the stock.
-Boosting stock price: By purchasing shares in the open market, a buyback can help to boost the stock price, which can benefit existing shareholders.
-Mitigating dilution: If a company issues new shares, it can dilute the value of existing shares, buying back shares can help to mitigate this dilution.
It's important to note that buybacks can also be used as a tool by management to artificially boost the stock price in the short term, rather than for the benefit of long-term shareholders.
A bearish market is a condition in the stock market where prices are on a downward trend, characterized by widespread pessimism and investor fear. This often results in a decline in the value of securities, leading to a decline in the overall market.
How long do bear markets last?
The duration of a bear market can vary and can last anywhere from a few months to several years. It depends on a number of factors, including the underlying cause of the market downturn, the state of the overall economy, and government or central bank interventions.
How do you know if a market is bearish?
A market is considered bearish if there is a persistent downward trend in the prices of securities, typically accompanied by increased selling pressure and declining market indices such as the S&P 500. This can be indicated by technical analysis, such as chart patterns showing lower highs and lower lows, or by broader economic indicators such as declining gross domestic product (GDP) and rising unemployment.
What is the longest bear market in history?
The longest bear market in history is the Great Depression, which lasted from 1929 to 1939. During this time, the stock market experienced a severe decline, with the Dow Jones Industrial Average losing 89% of its value. The Great Depression was a global economic downturn that had far-reaching impacts and was marked by high levels of unemployment, homelessness, and economic hardship.
A 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.
Dash was launched in January 2014 as a rival to Bitcoin. Its popularity is largely down to a focus from designer Evan Duffield on transaction speed and user anonymity.
Dash is priced in USD per coin, and reached a peak value of $1,370.16 in December 2017.
One of the major complaints against stalwart crypto Bitcoin is its painfully slow transactions speed (a big factor in its hard fork into Bitcoin Cash in 2017). Dash has a highly favourable processing speed compared to Bitcoin and other cryptos.
Processing is so quick that two days after its launch, almost 10 percent of the total capacity had already been mined.
Dash is a portmanteau of the words Digital and Cash. It was originally called Xcoin, followed by Darkcoin, before Dash was settled on.
Since its launch, Dash has become increasingly popular and is accepted as a payment method by over 300 organisations around the world - including Apple. CEO Ryan Taylor has stated his belief that Dash will soon overtake Bitcoin in popularity.
For Forex trading, a “Base Currency” is the first currency in any currency pair, representing the traded currency. The second currency in the pair is the quote currency. Example: in EUR/USD, the Euro is the base currency, and you can buy 1 EUR by paying 1.1 USD.
An exchange rate attached to a currency pair indicates how much of the quote currency is needed to buy a single unit of the mentioned base currency. For example, reading EUR/USD = 2.15 means that 1 Euro is equal to $2.15.
What is Base vs. Local currency?
When viewing or receiving a direct quote, the base currency = foreign currency. Likewise, the local currency in a pair is the quote currency.
The Fund seeks to track the investment results of the MSCI Brazil 25/50 Index (EWZ) composed of Brazilian equities. The Fund invests, under normal circumstances, at least 95% of its assets in the securities of its Underlying Index and in depositary receipts representing securities in its Underlying Index.
Basic Attention Token (BAT) crypto was built to improve the security, fairness, and efficiency of digital advertising through the use of blockchain technology. Users are rewarded with BAT for viewing ad content, publishers can deliver higher-impact ads and advertisers can be assured their messaging is being viewed by a willing audience. Trade BAT in USD using the BAT/USD symbol.
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.
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.
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.
The euro to Swiss franc exchange rate is identified by the abbreviation EUR/CHF. On average US$44 billion worth of euros are converted into Swiss francs every day, making up 0.9% of the total global forex volume. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. the Swiss franc is the 7th most-traded currency, and is involved in 4.8% of all daily trades.
The euro and the Swiss franc share a strong correlation; the franc was actually pegged to the euro until January 2014, where the Swiss National Bank shocked markets by allowing the currency to float free - a move which saw CHF surge around 30% in a single day.
The EUR/CHF pair is likely to weaken in times of market uncertainty; the Swiss franc is viewed as a safe haven asset, while the fate of the Eurozone forever hangs in the balance as political and economic developments cause tension between its constituent nations.
Heating Oil is a low-viscosity petroleum product derived from crude oil. Around 25% of the yield of crude oil is devoted to heating oil, the second most after gasoline products. As a result, prices often closely follow those of WTI crude.
It is priced in USD per gallon, and has a historic high of $3.32 in April 2011. The record low was $0.87 in January 2016.
Heating oil is used as a fuel for furnaces and boilers to heat homes and businesses. It is especially popular in the British Isles and the North-eastern US. As a result, demand fluctuates seasonally, peaking in the colder months between October and March.
Price is, as a result, also affected by cold weather. Other factors affecting price include the price of alternative heating options, energy efficiency and insulation, refining costs and government regulations.
Heating Oil futures allow you to speculate on, or hedge against, changes in the price of Heating Oil. Futures rollover on the third Friday of every month.
Earnings Per Share (EPS) is a financial metric that measures the amount of profit a company makes for each outstanding share of its common stock. It's calculated by dividing net income by the number of shares outstanding. Investors use EPS to measure how profitable a company is and to compare different companies in the same sector.
What is a good earnings per share? Is it better to have a high or low earnings per share?
There is no definitive answer to what constitutes a "good" earnings per share (EPS) as it can vary depending on the industry, the size of the company, and the expectations of the market. Generally, a higher EPS is considered better, as it indicates that a company is generating more profit per share of stock.
What is earnings per share vs dividend?
A dividend is a payment made by a company to its shareholders out of its profits or reserves. Whereas EPS is an indicator of a company's profitability.
The Health Care Select Sector SPDR Fund (XLV) tracks US health care companies within the S&P 500. This asset uses the Health Care Select Sector Index as its tracking benchmark. The fund is caps weighted and only includes companies from the S&P 500, which means there are a lot of very large companies.
The index comprises just 62 holdings from the health care sector – lower than many in this segment - and includes many household names. Top holdings include Johnson & Johnson, Pfizer Inc, UnitedHealth Group and Merck & Co Inc.
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.
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.
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.
An Overnight Index Swap (Swap Fee) is a process where the settlement of a deal is rolled forward to another value date, and a charge is levied based on the difference in the interest rates of the two currencies. Every day at 21:00 GMT, open positions are rolled over to the next day and the positions gain or lose interest based on the interest differential between the bought and sold currencies.
What is OIS compound?
The index rate is typically the rate for overnight lending between banks, either non-secured or secured. The fixed rate of OIS is typically an interest rate considered less risky than the corresponding interbank rate (LIBOR) because there is limited counterparty risk.
The LIBOR–OIS spread is the difference between IRS rates, based on the LIBOR, and OIS rates, based on overnight rates, for the same term.
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.
What do hawkish and dovish mean?
Hawks and doves are terms used by analysts and traders to categorise members of Central Bank committee ahead of their votes on monetary policy.
Hawkish: Refers to a monetary policy that is seen as being more aggressive and leaning towards higher interest rates. It implies a strong stance from the monetary authorities in order to keep inflationary pressures in check and provide an incentive for businesses to invest.
Dovish: Refers to a monetary policy that is seen as being less aggressive and leaning towards lower interest rates. It implies a softer stance from the monetary authorities, allowing businesses to have access to cheap credit, which can help stimulate the economy.
Does hawkish mean bullish?
No, hawkish does not mean bullish. Hawkish is an economic term that describes a central bank policy stance that is believed to favor higher interest rates and tighter monetary policy. It contrasts with dovish which is used to describe policies which favor lower interest rates and more accommodative monetary policy.
Is hawkish good for a currency?
Generally, yes. A hawkish monetary policy can be beneficial for a currency as it typically causes an increase in demand and prices of goods and services produced within the country.
The 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.
The term Spreads in trading is defined as the gap between the highest price to be paid for any given asset, to the lowest price the current asset holder is willing to sell at. Different markets and assets generate different spreads. For example, the Forex market, where both buyers and sellers are very active with this “gap” or spread will be small.
In trading, a spread is one of the key costs of online trading. Generally, the tighter the spread, the better value traders get from their trades. Also, spreads are implied costs, where it is presented to traders in subsequent trades, as the assets traders buy on leverage must increase above the level of the Spread, rather than the above the initial price, for traders to make profit.
What is the importance of a Spread?
The Spread is important, even a crucial piece of information to be aware of when analysing trading costs. An instrument’s spread is a variable number that directly affects the value of the trade. Several factors influence the spread in trading:
• Liquidity. How easily an asset can be bought or sold.
• Volume. Quantity of any given asset that is traded daily.
• Volatility. How much the market price changes in a given period.
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.
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.
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.
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.
Treasury stock, also known as reacquired stock, is stock which a company has repurchased from shareholders. This stock is issued and bought back by the company for various reasons including to improve financial statements and reward shareholders through dividend payments. Companies must keep records of their treasury stock in order to report them on financial statements.
How is treasury stock different from common stock?
Treasury stock, also known as "buyback," is a corporation's own stock that has been purchased back by the issuing company from shareholders. Treasury stock does not give voting rights or dividend payments. In contrast, common stock gives owners voting rights and entitles them to dividends, when declared. Treasury stocks are used to offset dilution and strengthen balance sheets while still giving shareholders an opportunity to sell shares without market risk.
What is the benefit of treasury stock?
By purchasing their own stock, companies can benefit from reducing risk, enhancing corporate governance and even increasing profits. In addition, the stock may be held in reserve for future issuance or to protect against takeover attempts.
Is treasury stock debt or equity?
Treasury stock is a form of equity, rather than debt. It is a company's own shares which have been bought back and held by the company, resulting in the number of outstanding shares being reduced. The buyback is often used to increase shareholder value, reduce the supply of outstanding stock, or as part of employee compensation programs.
A reverse stock split, also known as a "reverse split," is a corporate action in which a company reduces the number of outstanding shares by canceling a portion of its shares and increasing the par value of its remaining shares. This means that for every N shares that a shareholder owns, they will end up owning 1 share, where N is the reverse split ratio. For example, if a company performs a 1-for-2 reverse stock split, a shareholder who previously owned 100 shares would now own 50 shares.
Is it better to buy before or after a reverse stock split?
It is not necessarily better to buy before or after a reverse stock split, as it depends on the specific circumstances of the company and the stock. A reverse stock split does not change the underlying value of the company, it only changes the number of shares outstanding and the stock price. However, it is important to understand that in general, companies that perform reverse stock splits tend to be struggling and have a low stock price. Buying before a reverse stock split may allow you to buy shares at a lower price, but it also means you're probably buying into a struggling company.
Is a reverse stock split good?
As with all things in the market, the answer is that it depends. The main reason for a company to perform a reverse stock split is to increase the per-share price of the stock, which can make the stock appear more attractive to investors and also bring it above a certain listing requirement in stock exchanges. Additionally, a reverse split can also help to reduce the number of shareholders and increase the liquidity of the stock, making it easier to trade. However, a reverse stock split can also be a sign of a struggling company, and it can also dilute the value of shares for the existing shareholders.
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.
Soybeans are a “soft” commodity - referring to those that are grown and not mined. It is one of the world's most important legumes and is an essential source of protein. It is used extensively in cooking, both soybeans and soy oil, and is also used for animal feed in the form of soy meal.
Soybean is priced in USD per bushel. In July 2012, Soybeans reached an all-time high of $1790, while it reached a low of $208 in September 1959.
The US are the biggest producers of Soybeans, followed by Brazil, Argentina and Paraguay. Together they account for 85% of total production, and 94% of total exports. China is the biggest importer of soybeans.
The price of soybeans is affected by a number of factors, including growing conditions, the demand for biofuel and the strength of USD.
Soybean futures allow you to speculate on, or hedge against, changes in the price of soybeans. Futures rollover on the fourth Friday of February, April, June, October, and December.
A share buyback, also known as a stock repurchase, is when a company buys back its own shares from the open market. This reduces the number of outstanding shares and increases the ownership stake of existing shareholders. Buybacks can be used as a way for a company to return excess cash to shareholders, increase earnings per share, or signal confidence in the company's future prospects.
Is share buyback a good thing?
Share buybacks can have both positive and negative effects on a company and its shareholders. On one hand, buybacks can be seen as a sign of a company's financial strength, as they suggest that the company has excess cash and believes its own stock is undervalued. Additionally, buybacks can help to boost earnings per share, which can increase the company's valuation. On the other hand, buybacks can also be criticized for diverting resources away from investments in growth or other opportunities, or for being used as a way to artificially boost the stock price. It's important for investors to evaluate the company's financial situation and the reason behind the buyback before making a decision on whether it is good or not.
What happens to share price after buyback?
Share price can be affected by a buyback in different ways, it will depend on the market conditions, the company's financial situation and the reason behind the buyback. In general, a buyback can help to boost the share price by increasing earnings per share and reducing the number of outstanding shares. Additionally, the announcement of a buyback can also signal confidence in the company's future prospects, which can attract more buyers to the stock. However, a buyback doesn't guarantee an increase in the stock price, if the market conditions are not favorable or if the company's financial situation is not good, the stock price could remain unchanged or even decrease.
What is the reason for share buyback?
A company may choose to buy back its own shares for a variety of reasons, including:
-Returning excess cash to shareholders: A buyback can provide shareholders with a more direct benefit from the company's cash reserves, rather than leaving the money idle or reinvesting it in less profitable ventures.
-Increasing earnings per share: By reducing the number of outstanding shares, buybacks can increase earnings per share, which can make the company look more valuable to investors.
-Signaling confidence: A buyback can signal to the market that the company's management believes the stock is undervalued, which can attract more buyers to the stock.
-Boosting stock price: By purchasing shares in the open market, a buyback can help to boost the stock price, which can benefit existing shareholders.
-Mitigating dilution: If a company issues new shares, it can dilute the value of existing shares, buying back shares can help to mitigate this dilution.
It's important to note that buybacks can also be used as a tool by management to artificially boost the stock price in the short term, rather than for the benefit of long-term shareholders.
Yearn.finance (YFI) is another Ethereum-led yield aggregator using the YFI token. Cryptos deposited on Yearn are leant out at the highest lending rate possible across a number of other platforms. Holders of YFI can participate in the protocol's governance and earn a percentage of the fees generated on the various Yearn Finance products through staking. Yearn is available on our platform via the YFI/USD symbol and is priced in USD.
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