Tag Archives: buy/sell

Learn the Top Mistakes Investors Do

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For the fearful hearts keeping your money in cash and in the banks might be their idea of growing their wealth, but for the brave soul, investing in the stock market is their idea of wealth accumulation.

Fear would not take you anywhere. There might be unfortunate events that are uncontrollable, yet as it is always being said, increasing your knowledge and understanding about the stock market can help lessen the occurrences of unwanted incidents. Here are some of the top mistakes that investors tend to do and how you can avoid them.

 

  1. Not selling at the right moment

It is of utmost importance to know when to sell. This is the most difficult as an investor. You might be caught between selling winning investments too early and keeping losing investments with the hopes that they will soon recover. Thus, making you fear selling of stocks. To avoid such mistake, you have to establish an exit strategy and be alert if the market turns bearish.

It has been seen from history that during bear market stage even profitable companies can be severely affected. If you own a stock in a specific bearish sector, you should consider selling. No company would be safe from the growl of the bear. It is important to comply with the sale as to avoid losing money.

 

  1. Not applying objectivity

The opposite of objectivity as you know it is the quality of being subjective or being influenced by personal factors such as your feelings, tastes or opinions.

That is, being emotionally attached to your stocks might lead you to incurring losses in the end. As what experts say, only love a stock when it is making you money, and if it does not anymore generate anything for you, it is time to cut it off.

Also, it is a must to always base your decisions on reliable information rather than deciding based on emotions alone. It will produce remarkable results in the long run. Trading also using a proven methodology will prevent you from trading on emotion.

 

  1. Not taking into consideration earnings report

When you purchase a stock, you have to make it a point to be updated with the company at whatever form and cost. For publicly traded companies, they are required to announce their earnings report for four times annually. As an investor, you have to pay close attention to such events and use the following to your advantage.

Remember that it is already a bad sign when a stock fails to meet earnings expectations again and again.

 

  1. Not giving thought to high and excess fees

 

Fees are a form of spending that does not add any value to your investments. Actually, it detracts the long-term performance of your portfolio. You have to acknowledge that high fees cut your returns. Most of the time, investors tend to overlook this issue that fees can massively drag your portfolio.

 

Conclusion

Indeed, learning from the mistakes of others is one good way to avoid committing those mistakes yourself. The stock market is a complex system, you have to put in the time and effort to better prepare yourself. Always keep in mind that you have to avoid losses and take profits at whatever cost.

 

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Earnings Release Week

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This week will be a busy week up ahead for the market community, a lot will be put in the spotlight but the one thing that will stand out is the geopolitical turmoil the US created after the strikes it made in Syria last week.

Financial Institutions and Banks

This will be the first of the big weeks in the financial market, and for this week, all the highlights are focused on the top financial institutions and banks. The scheduled reports for this week, this Thursday, are from prominent banks and financial institutions JPMorgan Chase & Co, Wells Fargo & Co, and Citigroup Inc.

The banks have been on a rollercoaster of a ride from the past months under the new Trump administration. Some other factors that may have triggered the fiscal stimulus hopes for the financial institutions are; deregulations talks and the Fed’s decision to be sterner and hiking the interest rate for a couple of times this week.

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Inflation off The Bat

There will also a big debacle for Friday because of the exclusive inflation data that will be unveiled; the data include whole March’s progress. With the Fed’s recent hikes and its latest meeting last Wednesday hinted that if the inflation data continue to roll, the central bank may and will increase another three or four interest hikes this year.

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G-7 Meets in Italy

The G-7 is a group of countries that consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. These countries have started a 2-day summit meeting today in Italy after the alarming attack the US made against Syria, investors and the market community continues to keep track on what would happen in the growing geopolitical crisis.

Then entirety of the 2-day meeting is expected to be disclosed at a press conference dated this coming Tuesday Eastern Time.

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Investing Dictionary #3: Expense Ratio

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Expense Ratio is a rare word to stumble upon, it is a word prevalent in-between companies and it varies on more private talks the market community has seen. So going back to Expense Ratio, it is actually a measure of what it costs an investment company to operate a mutual fund.

You may ask how expense ratio is determined; well according to the Investopedia: An expense ratio is determined through an annual calculation, where a fund’s operating expenses are divided by the average dollar value of its assets under management (AUM). Operating expenses are taken out of a fund’s assets and lower the return to a fund’s investors. It is also known as the management expense ratio (MER).

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All You Need To Know About Expense Ratio

Expense ratio varies very differently on each type of fund, operating expenses vary widely. One of the biggest parts or the crucial component of operating expenses lies on the fee paid to a fund’s investment manager or advisor.

Further costs include recordkeeping, custodial services, taxes, legal expenses, and accounting and auditing fees. Investopedia makes a clear distinction between funds, “expenses that are charged by the fund as reflected in the fund’s daily net asset value (NAV) and do not appear as a distinct charge to shareholders.”

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Funds to Keep In Mind

There are two different expense ratio fund; Index Funds and Actively Managed Funds are both type of funds to keep a list on. Index Funds usually carry very low expense ratios; the managers who oversee these funds are plainly repeating a given index, so the need to have a full management team on staff is deliberately discarded.

Actively managed funds, on the other hand, employs teams of research analysts examining companies as potential investments. By coming up with a team, creating and managing this team adds more costs that are then get passed on to shareholders in the form of higher and bigger expense ratios.

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What is the FCA?

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If you’ve been around the Forex trading market, you’ve probably heard or saw FCA somewhere on those trading websites and what have you. First of all, FCA stands for Financial Conduct Authority; they are the regulator for over 56,000 financial services and firms and financial markets in the UK and the prudential regulator for over 24,000 of those firms.

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What Does FCA Do?

FCA is the pioneer for the safer and more honesty financial market, they promote fairness and effectiveness for all consumers all over the world. FCA said, “It is our aim to make markets work well – for individuals, for business, large and small, and for the economy as a whole.”

The FCA started on April 1, 2013. They then started to grow and grow each year, regulating over 56,000 financial and the prudential regulator for over 24,000 of these firms. FCA governs 2.2 million people that are employed in the UK financial service who contributes 65.6 billion pounds in tax to the UK economy.

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How Does FCA Do All The Regulating?

According to FCA’s website, this is how;

Our strategic objective is to ensure that the relevant markets function well and our operational objectives are to:

Protect consumers – we secure an appropriate degree of protection for consumers.

Protect financial markets – we protect and enhance the integrity of the UK financial system.

Promote competition – we promote effective competition in the interests of consumers.

The Financial Conduct Authority continues as a public body that is funded completely by the firms and financial service providers they regulate by charging those fees. They are also accountable to the Treasury, which is responsible for the UK’s financial system, and to the parliament.

Finally, they also work with several consumer groups, trade associations, and professional bodies domestic regulators, EU legislators, and a wide range of other stakeholders.

Trade12Basics is a daily updated blog about the happenings in the stock market, financial realms, and the world economy. It is also a place to find basics in trading and other sorts of tutorials that you can add to your knowledge. Subscribe to further educate yourself about the field that you are to partake in. Trade12Basics  is here for you!

The Types of Dollars in the World

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We all know that the dollar is the native currency in the United States, but there are actually more countries that call their currency the dollar. These are some countries that share the same currency name with the land of the brave!

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Canadian Dollar

Canadian Dollar or CAD for its ISC code is the currency people in Canada use! It is mostly represented as C$ to remove any confusion among other dollars, but often times it is also represented as $. Just like any other dollar CAD is also subdivided into 100 cents, CAD is one of the major Forex currencies and is currently the 7th most traded currency in the world.

The CAD, as of today, produces and circulates 5 cents, 10 cents, 25 cents, 50 cents, 1 dollar and 2 dollars. Unfortunately, the production for the 1 cent was discontinued somewhere around the year 2012, banknotes that the CAD produces and circulates are in the form of 5, 10, 20, 50, and of course 100 Canadian dollar. One more thing about the current Canadian bills is, they are made of polymer as of 2011, as opposed to paper for the previous years of production.

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Belize Dollar

Belize Dollar or BZD for its ISC code is the major currency of Belize, it is represented as BZ$ for further distinguishing from other dollar currencies. This currency dates as far as 1976; it then replaced the current currency of the country which was the British Honduras Dollar. Like any other dollar, the BZD is also subdivided to 100 cents.

Along with the transforming of British Honduras on late 1976, it also replaced its currency to Belize dollar. It was freed from the British colony in late 1981, now it trades in the rate of BZ$2 to US$1.

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Australian Dollar

One of the most popular dollar currency, the Australian dollar or AUD for its ISC code; like most of the dollar currency, AUD is also subdivided to 100 cents. It is commonly represented as A$ to disperse any further confusions.

The AUD was once known as the Australian pound in 1966. But after several years, 1983 to be exactly, the pound was then transfigured from pound to dollar. As of late, the AUD is one of the major currencies exchanged on the world’s Forex markets. It ranks as the 5th most traded currency just behind the USD, EUR, JPY, and GBP.

The AUD circulates coins at 5 cents, 10 cents, 20, cents, 50 cents, 1 dollar, and 2 dollars. While the current banknotes circulation it has is as follows; 5, 10, 20, 50, and 100. The banknotes circulated are all made from polymer instead of papers.

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New Zealand Dollar

The New Zealand Dollar or NZD for its ISO code, the most common symbol the New Zealand dollar is recognized as NZ$. Like any other dollar currency, it is also subdivided to 100 cents. A common slang the NZD has is Kiwi, because of the kiwi bird that is present on their NZ$1 coin.

The NZD replaced the New Zealand pound at 1967, it has been pegged for a quite bit through a series of different currency pegs but has been allowed to float freely since 1985. The NZD is one of the major currencies exchanged on the world’s Forex markets. NZD currently circulates coins in 10 cents, 20 cents, 50 cents, 1 dollar, and 2 dollars. It also currently circulates banknotes are 5, 10, 20, 50, and 100 dollars.

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Trading Commodities

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The commodity as the Merriam-Webster would define it;   an economic good: such as a:  a product of agriculture or mining agricultural commodities like grain and corn b:  an article of commerce especially when delivered for shipment reported the damaged commodities to officials c:  a mass-produced unspecialized product commodity chemicals commodity memory chips.

This simply puts the milk and orange juice we leisurely drink, from the means of energy to power up our homes and vehicles, commodities are a big chunk of our daily lives. In the world of investing, commodities are part of a diversified investment portfolio and they can also be traded in the global marketplace. Commodities are literally anywhere and everywhere in the world, they also garner billions and billions of dollars from investment every day.

Spot versus Future Commodities Trading

The spot price is defined as the current price of a particular market portfolio, in this case, a certain commodity, and can also be bought or sold for the most immediate delivery. One major thing to remember for spot price is that they are very susceptible and subject to extreme volatility. The main difference it has with future prices is that; future prices are increasingly higher over time and higher futures prices reflect carrying costs such as storage.

Commodities are very flexible as it is tradable both in a spot and in future markets. An increasing trend in the commodities community is trading individuals in the form of futures; this happenstance means that you won’t be buying or selling the commodity itself but rather a contract of a certain price by a stated date in the future.

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Commodity Trading Round Up

Just like any other investment goal, we would want to buy low and sell high! The only caveats with trading commodity are; 1) Commodities are highly leveraged and 2) Instead of share, commodities traded in contract sizes instead. One more thing to remember when you start trading commodities is that investors can buy and sell positions whenever the markets are open.

The bottom line is, commodities open a wide variety for your investment portfolio. It expands every portfolio from the usual stocks, bonds, and mutual funds. Every investment carries risks, but what set trading with commodity apart is the alluring high leverage it brings on the table.

Trade12Basics is a daily updated blog about the happenings in the stock market, financial realms, and the world economy. It is also a place to find basics in trading and other sorts of tutorials that you can add to your knowledge. Subscribe to further educate yourself about the field that you are to partake in. Trade12Basics  is here for you

Stock Market Basics

If you’re considering an investment in the stock market and the mere thought of losing money worries you, then don’t invest. The stock market is a web of complexity that is not suitable for the novice investor. Nonetheless, if you do decide to invest, there are some points you should keep in mind to prevent losses and rather increase your chances of making more money.

Let’s dive in the five basics of the stock markets—how they work and what do they react as they do.

And so we begin.

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  1. “Stock Market” Definition

Investopedia defines it as the market in which shares of publicly held companies are issued and traded in two ways: through exchanges or over-the-counter markets. The stock market is also one of the most essential gears of a free-market economy, being known as the equity market, and offers companies with access to capital in exchange for giving investors a part of ownership in the said company.

Plainly put, it is a complicated system where shares of publicly-traded companies are issued, bought and sold—to buy the stock, hold it for a time, and then sell the stock for more than you paid for it. Investors who hold stock for a minimum of fifteen years are the ones who usually succeed in the market. Stocks are long-term investments; however, there are no guarantees.

Does it seem like it’s a scary pit meant for gambling? Probably not—unlike in gambling where you lose everything you have at hand, when you invest in stocks, you will either win or lose just an amount. It is rare to lose it all, except for the instance you invested in a company that went bankrupt.

Be sure the company you’re buying is worth owning. Unless you simply love risk, you should probably refrain putting too much of your money in one stock.

  1. The Stock Market is an Adversary Trading System

The stock market is a group of millions of investors with, of course, utterly contrasting views and opinions. This is due to the norm that when one investor sells a specific security, someone else must willingly purchase it. And since both investors cannot be correct, it turns to be an adversarial system. One investor will profit, and the other will experience loss. So it is important to become knowledgeable and familiar on the investment you want.

  1. Factors that Make Stock Prices Rise and Fall

The media, opinions of renowned investors, natural catastrophes, risk, supply and demand, the shortage and surplus of alternatives, and political and social unrest are included in the many factors that determine the direction of stock prices. Quite complicated, actually.

Combining these factors and the all the relevant information that has been circulated, it produces either a bullish or a bearish sentiment, and a corresponding number of buyers and sellers. If there are more sellers than buyers, prices will go down. And of course, prices would go up when there are more buyers than sellers.

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  1. The Stock Market is Unpredictable

An example for this number: Stock prices have been surging for a couple of years now. Investors think that a correction will come and stock prices will fall. The dilemma is this:  nobody knows what will be the cause of the selloff or when it’s going to happen.

This causes investors to watch by the sidelines, holding cash, and jump as soon as the opportunity presents itself. Those who are willing to jump in despite the risk are triggered by the low cash return and it creates unease to earn apparently nothing while watching stocks move upwards.

The stock market’s unpredictability makes it almost impossible to know when to jump in when you’re on the sidelines, or when to get out when you’re in. This brings forth three issues for an investor to take into consideration.

  • Understanding the point at which stock prices are valued practically and fairly.

Market activity determines the actual price of a stock. When the decision comes whether to buy or sell, the investor often compares a stock’s actual price to its fair value. Overvalued stocks tend to repel the investor, if he were to make a practical choice.

Now, what is a fair value and how do measure it? Preferably, it would be based on a consistent formula. But there are many ways to calculate the number. One solution is to sum up the value of a company’s assets on its balance sheet, excluding liabilities and depreciation.  Due to the nature of these methods yielding slightly different results, sometimes it’s hard to identify if a stock is overvalued, undervalued, or fairly valued.

An important reminder as well is that overvalued stocks don’t always trigger the investor to sell and eventually drag the price down. A stock can stay overvalued for quite some time. This is why it is tricky to make buy or sell decisions based on where the price is in relation to some moving average.

  • The event that will prompt a slump, or a trend reversal.

To put in a simpler note: no one can predict what will happen and come in the future to cause a disruption and reversal in the trend.

  • Understanding the human decision-making process.

Humans oftentimes use logic to analyze a situation, and let emotions rule us in action.

In making investment decisions, you must be able to process the significant data and cast a good decision, since there will be investors on the other side prepared to buy what you’re selling and vice versa. It is impossible to know everything you would need to know and process it without a hint of bias, however, and thus it prompts us to make sub-par decisions at times. This happens even with the most logical and critical people.

  1. The Best Time to Buy and Sell

Benjamin Graham, the father of value investing, once said, “The buyer of common stocks must assure himself that he is not making his purchase at a time when the general market level is a definitely high one, as judged by established standards of common-stock values.”

The answer as to when to buy or sell stocks is this: the best time to buy is when others are pessimistic, and the best time to sell is of course, the opposite— when others are active and optimistic. Deciding on this matter is very crucial.

It should be remembered that when buying, the chance of a high return is bigger if you buy after its price has tumbled rather than after climbing, though it is still recommended to remain cautious. Why be attentive? Let’s say the stocks of Company A plummeted by 40 percent. The first thing to do is to ask questions—why did the stocks drop as it did? Did other stocks in the same industry experience a decline as well, was it severe? Did the entire market fall?  Assuming the other stocks in the same sector did relatively well, it can be assumed that the problem lies with Company A. It’s wise to take on and follow a buy or sell discipline.

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It takes years to become knowledgeable and well-versed in the field of financial markets and stocks. While it may seem like an unnecessary cost, but we recommend finding someone you trust and ask for their guidance. After all, diving head first into unfamiliar waters alone without any proper experience may actually be more expensive.

Best of luck to you, Trader!

Oh and by the way, you can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates on our official website, Trade12.com. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you develop a keen understanding of what is forex and certain trends involving stocks, currencies, indices, commodities, and metals. With all the positive Trade12 feedback from clients, you will be assured that your trading account is safe and secured!