What Are Stock Market Technical Indicators and Should You Use Them?
October 25, 2017
In the stock market, data is everything. If you are going to want to find success and profit, you need to be able to study a graph (whether it be bar or candlestick) and know what it’s telling you. This is because the charts actually tell you what a stock is doing. With this information, you can see when a stock is building momentum or swinging wildly and can use this to make a decision on where to position yourself.
One aspect of technical analysis that is often questioned is the use of technical indicators. Some people think they are very useful and offer a better calculation of a price’s average, whereas other believe they’re a waste of time and don’t share any useful information.
If you don’t know what technical indicators are or how they are useful, all will be explained in this article. With this information, you can make a decision as to what use you believe technical indicators have in the stock market.
What is a Technical Indicator?
In their simplest form, technical indicators are data points on a price chart. They are little points that are calculated using the price data and there are various formulas that can be used. Before going on, it is also important to understand that there’s two different types of technical indicators: leading and lagging. The two are very simple. Leading technical indicators lead the price action, whereas lagging indicators follow the price action. When calculating the indicator, various values are taken from the price data, including open, close, high and low information. The volume is also included occasionally. But, what exactly do these technical indicators offer?
What is the Point of a Technical Indicator?
The main point of a technical indicator is to offer an alternative perspective on the price action. The two different types of indicators are supposed to tell you various information about the price of a stock and possibly when a big event is about to happen. They can be used for different things and there are different indicators to do different jobs. For example, moving averages are simple formulas and measure the average price of a stock over a period of time, whereas stochastics are more complex.
How Would You Use a Technical Indicator?
There are many different ways you could use a technical indicator, and investors tend to use them differently. However, it is important to know that you shouldn’t rely on technical indicators completely and should always look at the data as a whole. Apply them to your technical analysis but not never use them on their lonesome.
- To alert – Some traders use technical indicators are an alert system. They can indicate when there is a lot of change happening in a stock’s price and can provide some insight into what’s going on.
- To confirm – Technical indicators can help confirm other technical tools. They can be used to confirm breakouts and can offer support for other fluctuation picked up using other analysis.
- To predict – Some traders use indicators to predict the pattern of stocks, but this is a little risky.
Technical indicators do offer some insight into technical analysis but don’t show anything more about the data. Some traders believe they help simplify the analysis and offer an additional insight into the movement of a stock. Others think they’re a waste of time. Although they provide no extra information about a chart, they do help when it comes to alerts and confirming movements. If you have a specific strategy and if indicators are working for you, then continue to use them. The preference is entirely subjective.
The Top Hedge Fund Manager of 2017
October 11, 2017
When it comes to the stock market and big-time investments, hedge funds can be some of the most profitable investments on the market. A hedge fund is essentially big pool of money that other invested put their money into. These pools of cash are then used to invest into long-term stocks in order to produce large amount of money, which are then given to the investors as profit.
These hedge funds are very hard to get into and are not regulated very heavy. As a result, you need a lot of upfront investment and you cannot touch the first installments until period of time has passed. In most cases, you also need to have a positive reputation if you want in on a hedge fund.
These fund use aggressive trading tactics and are usually managed and overseen by a hedge fund manage. These people are very important and their main job to make sure the fund is profiting, as they also get paid if their trades are successful. There a loads of hedge fund managers and some are incredibly wealthy. In this article, we will look at the top hedge fund manager in 2017 to see just how much he makes a year.
The Top Hedge Fund Manager(s)
Out of all the hedge fund managers in the financial industry, both James Simons and Michael Platt are the top earners in the year so far. They are both famous billionaires who are in charge of some of the largest hedge funds in the market. Both of these hedge fund managers earning around the same amount, which was $1.5 billion.
Although the two earn around the same amount, they are actually very different in their approach to managing and trading. Simons, in particular, is now using computers and technology to make the trading and investing decision for him. This is a very quantitative approach to the strategy and has left a number of human-based systems in the dust. He owns the firm “Renaissance Technologies”, which manages $36 billion in clients’ money.
Michael Platt earned an identical amount to Simons but still uses the traditional trading methods back at his company in London – BlueCrest. Platt uses a lot of human-based teams opposed to the Simons robot army and has them broken up into teams in order to make clever, highly profitable trades. What is interesting about Platt recently gave back $7 billion to the investor and has been trading his own money. The firm used to hold $36 billion in funds.
About Hedge Fund Managers
Being a hedge fund manager is a very stressful job but if you are good at it and make good calls, you can be very profitable. The two individuals on this list are both billionaires because of the trades they make and have built some impressive companies. Not a lot is known about what will happen by the end of 2017 and who will be on top. In general, the hedge fund market seems to be in a bit of a dip and many firms are struggling. Hopefully, things start to pick up in later years.
What to Look for In Your Stock Market Trading Platform
September 14, 2017
The online stock trading is on a boost these days and the scenario is going to create a big adventure in the coming future. That is why most of the investors and small as well as big business owners these days are searching for the best deals to spend on shares. In this digital world, it is probably the best way to multiply your profits but to do this you need to choose trustworthy and reliable trading platform. Yeah! That is a most difficult task because if you choose the wrong one, you may get exposed to risk in coming future.
Okay! Don’t worry! When you have already decided to invest in stock trading then we can help you to select the best platform to get started. Below are few tips to search the best stock trading platform out of a big list available online.
This is the most important thing that you need to check before joining any share or stock trading platform. Brokers usually prefer to charge a different amount for transactions but it must be a genuine range that cannot harm your profits.
What are the trading options?
Every trading platform use to follow different trading options; few of these allow trading on local companies whereas others may also provide access to international market. In few cases, you may also have easy access to currencies, indices, forex, and CFDs. So, you need to choose a platform of your interest with proper research.
A good stock trading software platform provides fast responses to market shifts so that investors can take benefits from these ups and downs. When your trading platform is fast enough then you can make precise and fast deals to achieve higher profits and it can definitely create huge differences in your finances.
Easy access to market data:
The trading decisions always depend on market fluctuations so your platform must be capable enough to reflect all the details. It should include well-researched information and analysis offered by experts so that you can have accurate insights towards best trading decisions. The stock charts must be well maintained and easy to understand for casual as well as professional users.
Customer Support System:
Well, no matter whether you are a beginner or an experienced trader, it is always essential to have fast customer support service with your trading platform. Always prefer to choose a platform that ensures 24×7 hours connectivity with its support team so that you can have immediate access to those professionals whenever any trouble occurs with your order entry. The fact is that just a small mistake or bug on the network can lead to big losses in seconds so active customer support system is really important.
All these features will help you to find a best stock trading platform for you. First of all, you need to consider your trading needs depending upon whether you are an expert, active or casual trader then you have to check all above features to choose the most suitable level 2 trading platform to meet your requirement. Soon you will be able to make best financial investments.
How Much Money Do You Need to Start Day Trading
September 1, 2017
Day trading is a very attractive method of making money in the eyes of very many people that would like to improve their financial situation or have a job that provides a lot of money while being their own bosses and the privilege of having a flexible schedule. But, day trading is easier said than done. You need to have a starting capital in order to begin day trading, having the required sum of money to begin trading is one of the biggest problems of many people that would like to try out this opportunity of making money. So, how much money is needed to start day trading?
Pattern Day Trader Rule
If we are to look at the rules of day trading in the US, according to the Pattern Day Trader regulations, you need to have the minimum sum of $25,000 in your account in order to begin day trading. Ideally, you should start trading with $30,000 or even more, if you want to have the chance to enjoy 4 trading days during one trading week. A day trade means to purchase a security and sell the same security on the same day. The rules of the Pattern Day Trader state that one cannot begin a day trade without having $25,000 in his or her account and one cannot fulfill this requirement by using several accounts to cross-guarantee this particular sum. Also, even if you had $25,000 in your account and, due to various reasons, the sum drops below, you won’t be allowed to begin your day trading until you manage to restore the account balance to $25,000.
How Much Do You Really Need to Get Started?
But before panicking that you don’t have this amount of money into your account or you don’t want to start day trading with so much money because you don’t have the skills and are afraid of losing the money, do know that there are other ways to trade that require less money. Let us not forget that we live in an era where globalization is present in every market type, leading to the development of a multitude of trading platforms that do not have to subject to US’s regulations in this domain. Of course, this doesn’t mean that these platforms are not reliable. On the contrary, they are trustworthy and respect all the international standards and regulations, but without requesting traders to start with a minimum of $25,000. Then what is the lowest sum of money requested for day trading? There are platforms that allow you to trade with as little as $1000. Compared to $25,000, $1000 seems like a more accessible requirement to be met by the people that would like to experience day trading but do not want to juggle large sums of money until they manage to get the hold of the skills, acquire some experience, and find techniques that will help them become successful at trading.
If you started seriously considering beginning a career in day trading, now you know that, with the help of non-US brokers, all you need is $1000 and the desire to learn as much as possible. In case this is a completely new domain for you, which is a fact for very many people out there, it would be best to start small and carve your career toward more profitable trading as soon as you gain some experience, knowledge, and know-how. You will also need to be patient because you cannot transition from small trading to making large sums of money in a short period. Many traders take years to develop their day trading techniques until they actually end up earning a living out of this activity alone. But if this is what you want and you are prepared to make it work, with dedication and effort you will eventually pull through.
The Best Stock Trading Tips for Beginners
August 2, 2017
The exchange is unpredictable. Nobody can reliably predict share prices. There are far too many variables. In order to achieve high profits with stock trading, however, stock entry beginners should take the following 10 tips into the consideration. They significantly reduce the risk of loss and start safely into the first shares.
1. Before you buy the shares, get knowledge of the company:
Before you buy shares of a company, you will be well informed about the company, the competitors, and the entire industry. Read company portraits and reports, key figures, analyses and assessments of analysts, charts, as well as up-to-date news. Compare. When you buy a car, you finally want the best for your money. Take this principle when buying shares. Before you start trading, you should also consider which stock investor type you belong to. Please also remember that you do not have to enter the active trade immediately.
Create a sample account and first observe how your favorite shares are developing. Use the information obtained and tests your knowledge first in the sample store. If you have made the right decisions based on your information, you will enter the active trading of equities.
2. Invest only freely available money:
Do you have money left and do not know where to go with it? Then invest this money into stocks. You must have the starting capital for stock trading. You do not need the money now or in 3 or 5 years for anything else. Do not invest in stocks with money from a loan. It is indifferent to you that you lose the money. Only then will you become a good stock investor.
3. Think and act long term:
Do not put yourself under pressure. The shares do not run away from you. If you do not already have the necessary start-up capital or basic knowledge or share information, no course is favorable for you. Always remember long-term trading and act accordingly. Long term means several years to decades.
4. Limit your orders:
Protect yourself from bad surprises and limit your order. Set a maximum price or a minimum price at which you buy or sell the stock. Especially in the case of regional stock exchanges with low stock market volumes or shares of smaller companies or foreign stocks, rapid price fluctuations quickly occur.
5. Buying stocks: Reduce the fees.
Please pay attention to your intended return. If you open a deposit account with a direct bank, you save the costs for the deposit account. Other transaction costs are also lower. Especially for you as a share applicant, small deposit fees are very important. Otherwise, the bank fee may sometimes directly recoup your first profits. Remember, you only invest freely available money. Just when you can only use a few thousand dollars is worth the exact look at the sellers.
6. Set clear yield targets and track them:
When you create a sponge book, you know beforehand how much per cent interest you get per year on the sparing amount. They know and expect this return. Make it similar to stock trading. What is the yield you want to realize during which period?
8. Stay focused:
If you have compiled your account, then maintain and do it on a regular basis. Get involved with the trends, analyses and other relevant news. Invest time and money into your stock trading daily or weekly. For example, you can adjust stop-loss brands continuously and protect yourself against bad surprises in time. Also, stay focused on all key metrics in your stock analysis.
9. Do not buy falling stocks:
Stocks whose price is falling sharply, you do not buy at this time. Watch this stock and wait until the trend reverses. In the assessment of a trend, you can help. Only when a clearly recognizable upward trend begins, you buy the stock. Otherwise, you may experience great losses.
10. Be careful with consultations:
Beginners are often insecure and are gladly advised by bank employees which securities you should buy. On the other hand, there is absolutely no objection. In such consultations, please note that bank advisors often have specific requirements and meet quotas. Therefore, it may be that the advice is more to serve the interest of the employee than to you. Ask why you are recommended this share to you. Also, ask for the investment strategy that serves as the basis for the recommendation. Not always fits this strategy to your own.
Caution also applies to “Hot Tips” from neighbors, friends, and colleagues. Check the recommended stock of “Exchange Experts” yourself. Why should you buy this stock now? And why should not? Get suggestions from consultants, you decide only after your own review of the stock. After all, it’s your money.
The Top Stock IPOs (And Potential IPOs) of 2017
July 26, 2017
An Initial Publiс Offеring (IPO) iѕ whеn thе ѕtосk оf a раrtiсulаr соmраnу first begins trading. In аn IPO, a private соmраnу ѕеllѕ thеir ѕtосk tо the рubliс in order tо rаiѕе capital tо fund their future grоwth рlаnѕ. Aѕ IPOѕ аrе frequеntlу соming tо thе market, it’ѕ imроrtаnt tо ѕtау informed аbоut upcoming IPOѕ аnd whеn they’re expected tо begin trаding. A good rеѕоurсе fоr finding оut about uрсоming IPOѕ is IPO Sсоор. IPOѕ present uniquе opportunities аnd riѕkѕ fоr dау trаdеrѕ. In thiѕ аrtiсlе, we’ll show you the top stock IPOs of 2017:
Snap iѕ аn infоrming аnd рhоtоgrарh application that iѕ exceptionally well knоwn with youngsters. As оld people аѕѕumеd control Facebook, thеir children hаvе mоvеd оvеr tо Snарсhаt. A ѕtаndоut аmоngѕt the mоѕt alluring еlеmеntѕ оf Snарсhаt iѕ thаt photographs vаniѕh in thе wаkе of being seen ̶ which lеѕѕеnѕ protection соnсеrnѕ.
Snар hаѕ authoritatively recorded tо Initiаl public оffеring оn thе NYSE. Fоrtunе rероrtѕ thаt the Initiаl рubliс оffеring could еѕtееm Snap аt $20 billiоn tо $25 billiоn.
Snар ѕhаrеѕ аrе required tо bеgin еxсhаnging Wаlk. Thаt mаkеѕ this the bеѕt Initiаl public оffеring fоr thе соming year. Unless a rich innovation оr mеdiа оrgаnizаtiоn ѕwоорѕ in, Snар will bе traded on аn ореn market inѕidе fоurtееn days.
Zасkѕ detailed thаt Airbnb соuld bе thе greatest Initial рubliс offering оf 2017. Thе оrgаnizаtiоn is an overwhelming рlауеr in thе ѕhаrеd rеntаl оf lodging units оn a brief рrеmiѕе. Zасkѕ dеtаilеd thаt Airbnb hаѕ mоrе thаn 2 milliоn overall роѕtingѕ.
Gossipy tidbits about аn approaching Initiаl public offering gоing bасk to 2014, аѕ indiсаtеd bу Zacks, whiсh said the оrgаnizаtiоn “саn роѕѕiblу be оnе оf thе mоѕt ѕultrу up аnd соming Initiаl рubliс оffеringѕ.” Zасkѕ detailed thаt Airbnb has brought $3.2 billiоn up in complete value ѕubѕidizing. In Airbnb’ѕ mоѕt rесеnt round оf financing, speculators hаd соnѕеntеd to gеt ѕоmе $200 million in stock frоm rерrеѕеntаtivеѕ.
At the point whеn will Spotify ореn uр to thе wоrld? Bесаuѕе оf tеrmѕ in оnе оf the music-gushing organization’s сurrеnt subsidizing rounds, it lооkѕ progressively likely that Sроtifу will ореn uр tо the wоrld in 2017. In mid 2016, Sроtifу brought $1 billiоn uр in соnvеrtiblе obligation at a $8.5 billion vаluаtiоn. The tеrmѕ, whiсh mаkе the loan cost оn thе obligation ascend bу 1 реrсеnt аt regular intеrvаlѕ until it iѕ роѕѕiblе thаt it hitѕ 10 percent or opens up to thе wоrld, vigоrоuѕlу boost Spotify tо ореn up tо the world ASAP. In spite оf the fасt thаt Spotify’s inсоmе hорреd 80 percent in 2015 tо $2.2 billion, rivаlrу iѕ wаrming uр with Aррlе (AAPL), Pandora Media (P) аnd оthеrѕ, ѕо raising mоrе cash might bе imроrtаnt аt аnу rate.
Despite thе fact thаt ridе-ѕhаrе contender Uber’s рrоѕресtѕ оf ореning uр tо thе wоrld hаvе bееn broadly соnjесturеd аbоut, Lуft iѕ рiсking uр force in thiѕ ѕрасе, Tаulli ѕаid.
In June, Zасkѕ hуроthеѕizеd thаt Lуft may bе prepared for аn Initiаl рubliс оffеring еvеn before its nоtаblе аnd biggеr contender makes that ѕtridе. At thе timе, Zасkѕ rеfеrеd tо a released money rеlаtеd rероrt thаt thе оrgаnizаtiоn hаd bееn еnсоuntеring hugе dеvеlорmеnt, аnd wаѕ оn track to mееt itѕ уеаrlу budgеtаrу objectives.
In view of ѕubѕidizing uр until nоw, the оrgаnizаtiоn iѕ еѕtееmеd around $5.5 billion.
Of аll the соnсеivаblе 2017 Initial рubliс оffеringѕ, an ореn offering frоm ridе-hаiling mаmmоth Ubеr, еѕtееmеd at аlmоѕt $70 billion, wоuld сеrtаinlу be the greatest оf thе уеаr. Ubеr Chief Trаviѕ Kаlаniсk has diѕсuѕѕеd рuѕhing bасk a Ubеr Initial рubliс оffеring fоr whаtеvеr length оf time that соnсеivаblе, however a current mеrgеr оf Ubеr Chinа with astringent Chinеѕе opponent Didi Chuxing соuld make ready fоr a 2017 аdvеrtiѕing. Thiѕ mаkеѕ a 2017 Initiаl public offering mоrе probable since Chinа wаѕ аn еnоrmоuѕ benefit ѕuсk for Uber. In аnу case, Ubеr lost over $1.2 billiоn in thе рrimаrу роrtiоn of 2016. “Ubеr nееdѕ tо get соѕtѕ аnd miѕfоrtunеѕ under control rарidlу,” ѕауѕ K C Mama, еduсаtоr оf fund аt Stеtѕоn Cоllеgе.
Learning About the Different Types of Stock Market Charts
July 23, 2017
There аrе lоtѕ оf tооlѕ trаdеrѕ аnd investors uѕе tо assist thеm ѕuссееd within thе market. Bеing ѕuссеѕѕful hеrе can trulу bring уоu a lоt of саѕh but only if уоu lеаrn and understand the mаrkеtрlасе bеhаviоr and make thе bеѕt conclusions from thе соѕt movements оf vаriоuѕ commodities аnd invеѕtmеntѕ. So, tо bе аblе to bе successful in trаding аnd invеѕtmеnt, trаdеrѕ uѕе vаriоuѕ types of ѕtосk charts tо hеlр them.
Trading involves the process оf analyzing the share cost mоvеmеnt in thе past аnd рrеѕеnt to bе аblе to рrеdiсt itѕ mоvеmеnt within thе future. This hеlрѕ trаdеrѕ аnd invеѕtоrѕ buy оr ѕеll ѕhаrеѕ fоr making рrоfit. Trаdеrѕ analyze thе mаrkеtрlасе with the assist оf vаriоuѕ tуреѕ of ѕtосk сhаrtѕ or tесhniсаl аnаlуѕiѕ.
Tесhniсаl аnаlуѕiѕ along with the uѕе оf charts iѕ a fаntаѕtiс wау to gеt hints аbоut hоw thе mаrkеt will fluctuate within thе futurе. And in thе event уоu uѕе thiѕ type of аnаlуѕiѕ ѕkillfullу it will rеаllу give уоu an еdgе оvеr оthеr investors. You will find several tуреѕ оf stock charts уоu are аblе tо uѕе аnd the grеаt fасtоr iѕ that thеу аrе available online and mоѕt brоkеr wеbѕitеѕ оffеr them fоr totally free.
Sо, the initiаl аnd simplest type of thеm аll iѕ rеаllу a line сhаrt. It iѕ ѕimрlе bесаuѕе it оnlу ѕhоwѕ uѕ lines connecting diffеrеnt ѕhаrе рriсеѕ аѕ thеу riѕе аnd fаll. With thеѕе ѕimрlе displays уоu will effortlessly ѕее the рrеѕеnt ѕituаtiоn оn thе mаrkеt. Thiѕ iѕ fаntаѕtiс tо uѕе at thе beginning of уоur trading саrееr.
Bаr Chart: A much mоrе dеtаilеd display. Thiѕ hеlрѕ the trader рrеdiсt the рriсе fluсtuаtiоn fоr thе еntirе buѕinеѕѕ dау. This ѕhоwѕ the реrfоrmаnсе for the particular period which соuld be a dау оr a mоnth. It аll dереndѕ оn thе purpose оf the uѕаgе оf it. Thе bars on hеrе ѕhоw thе highѕ аnd lоwѕ of a раrtiсulаr соmmоditу оr investment аnd thе соlоr оf thе bаr hеlрѕ tо dеfinе whеthеr thе cost are fаlling or riѕing.
Thе Candlestick сhаrt аlѕо givеѕ uѕ dаtа about thе prices highѕ аnd lоwѕ. This type оf сhаrt also ѕhоwѕ uѕ thе correlation bеtwееn thе ореning аnd closing рriсеѕ fоr thе ѕеlесtеd реriоd. Thiѕ саn make it еаѕiеr tо ѕроt thе trеnd weakness оr ѕtrеngth when uѕing thiѕ сhаrt setting.
Thiѕ mеthоd оf аnаlуzing thе mаrkеt rеvоlvеѕ аrоund utilizing several types of ѕtосk charts and еvаluаting thе соѕt mоvеmеnt. Itѕ bаѕiс соnсерt iѕ thаt the соѕt аffесtѕ everything in the mаrkеtрlасе. Sо, it means that cost iѕ аll you need tо fосuѕ оn tо ѕuссееd in trаding. Utilizing оthеr indiсаtоrѕ will аlѕо аѕѕiѕt уоu succeed.
Day Trading Pros and Cons
July 5, 2017
Is day trading a strategy to get rich soon? Is this trading method a risky avenue to game the stock market? Is day trading the major cause for constant volatile market movements? What is day trading? Sit back and enjoy a roller coaster of the basics to day trading.
It is important to know that investors are different from day traders. Studies have revealed that a day trader has the opportunity to hold securities for only one day. It is the culture of a day trader to complete or fill positions at the end of every day. These traders also begin new trading all over again the following day. In the case of investors and swing traders, they may hold securities for months, weeks, days and even years.
Benefits Of Day Trading:
- Some risks are low due to the short-term structure of day trading
- The chances of something occurring overnight to cause big losses remain reduced
- Day traders will experience a good moment when the market shifts
- Each market session can lead to volatility. This means that huge shifts can occur in a given day
- There is every possibility for traders to make more money on huge shifts
- Day traders can make money from their PC by sitting at home in a nice desk
- Without any training or computing, day traders have the opportunity to make money
- Day traders do not have to deal with annoying co-workers or a stubborn boss
- Day traders have the opportunity of making daily decisions to change their life
Disadvantages Of Day Trading:
- Positions and securities can last only for one day
- Day trading may lead to emotional stress, losing money, accountability, and no security
- Day trading is a lonely profession and can lead to lack of patience and discipline
Features Of A Day Trader:
- A good day trader should have an excellent business plan. Your business plan can include capital reinvestment, trading days & hours, and target markets
- Day traders should have experience and understanding in markets
- A day trader should be ready to invest capital in the business
- Having knowledge of technological devices is great for a day trader
Facts About Day Trading:
Sometimes, day trading may be tricky. This is because as a day trader, you will react to blips by working from your PC screens. Each blip in a day trading environment represents real dollars. A day trader’s ability to make money is dependent on executing successful huge trades. Day traders are always making quick decisions. This is because time may lapse for a given trading session and execution.
The profits of day trading may be small due to the limited risk on a given trade. In day trading, you have to act fast and be patient. There are some moments when nothing will be great to buy in a day trading environment. In day trading, you may lose money beyond anticipations for certain days.
Do you now know what is day trading? Are you ready to face the challenges of the markets daily? Well, if these questions are causing a huge problem in your mind, then the information above will help.
All You Need to Know About Pre-Market Stock Trading
June 28, 2017
What is pre-market stock trading?
As a norm, the regular stock trading market hours are usually between 9:30 am through to 4 pm. The opening and closing of this official trading period is usually signaled by the sounding of a bell which in most instances is done by the CEO of a newly listed company or any other person of note. During this official period, individuals can be able to trade in all companies listed within the exchange and also place any type of order.
However, trading can still take place outside the official hours and as a norm transactions carried out during this period are usually subject to a number of set rules. The extended trading sessions usually offer the best trading opportunities since price-sensitive news is most often released prior to the start of the trading session giving individuals an edge when it comes to the actual trading: this is where pre-market stock trading comes in.
The pre-market stock trading hours usually start at 7am and run to the official start time for stock trading. The trading that occurs during these hours usually set the tone for the day’s trading. However, the time frame is subject to some rules. For instance NASDAQ allows pre-market stock trading orders to be placed at 7am but execution of the orders can only take place at 8am.
For individuals who intend to embark on pre-market stock trading, the following is an overview of some of the trends that are characteristic of this type of stock trading.
Low volume trading
This is perhaps one of the most notable characteristic associated with this type of stock trading. The low volume trading is usually brought about by a number of factors. For starters, most individuals in the investment community are usually not active during this period and as a result this brings about low volume trading.
However, the most pre-dominant reason as to the low volume trading is the cap or limit placed on the size of orders placed. This is done by the regulating authority to prevent volatility in the market prior to the official trading time. For instance, a company might release great news that is bound to increase the value of its shares. An individual on hearing this might attempt to purchase a huge amount of shares so as to benefit from the impending share price hike. This will ultimately result in the share price shooting up remarkably before the official stock trading hours. To avoid this, the regulating authority usually places a cap on the number of shares that can be bought or sold during this period.
Volatility During Pre-Market
This is another common characteristic associated with this type of trading. The market at this time tends to be quite volatile due to the availability of information. Simply put, a listed company can release results before or after the official trading hours. Share prices usually react violently to this news as investors try to establish a new price
Risky Stock Trading
This kind of trading can be quite risky since relevant information is quite limited during this period of trading. Volatility during this trade period also contributes a lot to this. A good case in point is a situation where the share price might be skewed extremely high in the pre-market but return to `normal’ during the official trading hours.
In conclusion, the pre-market trading gives individual’s opportunities that are not available during regular trading hours. However it comes with a warning, you can make a sizeable profit based on your informed decisions but if things go wrong, there is the chance of making a loss.
Differences Between Day Trading and Investing
June 20, 2017
There are a million ads broadcasting wealth through day trading. Truly, day traders and long-term investors both profit and both lose money. Some fruitful long-term investors lose their money when attempting to day-trade and some time or another trader can’t pick a decent long-term investment. Regarding trading, the distinction is for the most part in personal temperament and time. Below are the differences between Day Trading and Investing:
The fundamental differences between day trading and investing are the action levels and position holding times. Day trading includes dynamic management with a short-term holding period, though investing includes latent management with a longer-term holding time horizon as a rule spanning from different quarters to years. Day traders concentrate on short-term trades contained in a single trading day using direct-get to trading platforms. Investors tend to screen portfolio positions periodically from week after week to quarterly through statements and online browser based platforms.
Technical Analysis versus Fundamental Analysis
Day trading relies more on technical analysis using charts and technical indicators. Investing centers more around fundamental analysis including earnings reports, financial metrics, news, and ratios. Fundamentally, day traders are more interested in a stock’s value action, while investors are more centered around the underlying company. Day traders may likewise use for a higher concentration of offers to stash a littler relative value movement value pick up.
Day trading includes more transactions in this way generating more commission expenses, though investing includes not very many trades. A day trader might get in and out of a position different times in a single day, while investors may hold positions for a considerable length of time or years. Along these lines, day traders are more sensitive to broker commissions. To an investor who plans to hold a position for a considerable length of time, a commission is irrelevant. Conflictingly, day traders are getting in and out of positions routinely so commissions can include quick.
Sorts of Stocks
Day traders have diverse criteria than investors when searching for stocks. As said above, day traders are more centered around technical analysis than fundamental analysis. Traders are not very worried about a company long-term potential, management team, and so forth. Rather they are centered solely around value action. Day traders search for stocks with momentum and volatility. This creates the chance to exploit critical value action. It additionally gives the liquidity important to get in and out of positions. Conversely, investors are centered around great companies: companies they accept will develop in the coming years. While volatility is useful to a day trader, it could speak to flimsiness to an investor. Investors tend to search for more secure stocks from more legitimate companies.
Drawback risk can frame from worldwide markets and occasions while stock markets are closed resulting in futures gapping down, which eventually makes most stocks likewise open with a hole down. Investing trusts these are quite recently little hiccups in the general picture of the long-term perspective. The absolute most unstable holdings periods include earnings reports. Long-term investors go for broke amid the earnings season. Open companies are required to give a quarterly earnings report enumerating the condition of business and the earlier quarters execution.
Most companies will likewise give execution projections pushing ahead, otherwise called earnings guidance. Stock’s can respond viciously to the corporate earnings report and guidance. A long time of profits can be lost in a single session for missing consensus analyst appraisals and guidance figures. Investors regularly will choose whether to keep holding a position based on these results where fundamental analysis has a key influence in the basic leadership process.