traders

Stockbroking Essentials for 2016

We have already witnessed a substantial amount of volatility in 2016 and if the past few months can serve as any indicator, the bears may very well dominate the remainder of this year. Those who are already involved within the markets or who may be considering an entrance into this malleable environment should be aware of some of the essential takeaway points to keep in mind. Which strategies should be embraced and are there any notable pitfalls to avoid? Let us briefly examine both of these topics in greater detail.

Modern Times Require Modern Platforms

High-speed Internet access and user-friendly trading systems have opened up the investment world to anyone with a will to succeed. It is still of paramount importance to appreciate that not all platforms offer the same level of efficiency, clarity and responsiveness. Traders who hope to enjoy a substantial edge over their competitors have therefore been taking advantage of the instruments that can only be found at CMC Markets. Unlimited conditional orders, highly advanced platform features and mobile-friendly applications are but a few of the metrics which have enabled this brokerage to offer the best return on investment throughout Australia. The concept of a second-best firm has no merit within the world of stockbrokers.

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One Eye on the News

Access to real-time news feeds can be either a benefit or a disadvantage. As any late-breaking stories circulate around the global economic community in a matter of minutes, staying ahead of this curve is now a necessity. Those who fail to monitor such events are bound to find themselves at the losing end of what would have otherwise been a profitable trade. This is another motivating factor which has drawn investors of all sizes towards the systems provided by CMC Markets.

Diversification

A diversified portfolio can produce profits regardless of external market conditions. This is of particular importance when we have already observed that 2016 seems to be bordering on a bearish market. It is therefore deemed wise to spread one’s investments across a number of different sectors; some of these offering more liquidity than others. A few examples here include:

  • Currency pairs.
  • CFDs
  • Treasuries
  • Commodities
  • Warrants
  • Funds
  • ETFs

Although many will choose to adopt a more prudent stance, we should always recall that fortunes tend to be made when the markets are seen to be taking a downturn. This stance is perfectly illustrated in the expression “never buy when it is high”.

These flexible principles should always be used in synergy with more traditional methods such as hedging, the placement of automatic stop losses and chart analyses. Those who approach this year with the correct mindset should expect to enjoy superior levels of performance. When we combine the efficacious tools provided only through CMC Markets, it is clear that every (somewhat) dark cloud has a silver lining. Please browse through our site to learn more in regards to what is offered.


TFS Closed End Fund Strategy

The strategy seeks to create portfolios of Closed End Funds (CEF’s) which provide a high level of current income with the potential for capital appreciation.The strategy will invest in CEF’s which are trading at significant discounts to Net Asset Value (NAV) and provide high levels of current income. These portfolios will primarily invest in the following CEF’s sectors: Emerging Market, High Yield, and Energy/Resources. MLP’s and REIT’s may also be used.

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Closed End funds have similarities to exchange?traded funds. They are launched through an initial public offering. The proceeds of the offering are invested by the fund manager according to the fund’s strategy. The CEF is then configured into an equity security which trades on an exchange in the secondary market. Investor activity takes place in the secondary market and has no impact on the underlying assets or NAV of the fund. An ETF, on the other hand, has a market maker which can either create more shares or redeem shares to keep the value of the ETF close to its NAV. A CEF does not have this mechanism. This leads to periods when the market price of the CEF may differ substantially from the NAV. This tends to occur during periods of extreme volatility and investor sentiment in the marketplace. CEF’s are frequently leveraged into “little income producing factories”. This leverage typically may be 25%?35% of the assets of the fund.

Gold_InvestmentThe CEF is a relatively complex investment vehicle which makes it less liquid and more volatile than ETF’s or mutual funds. The dealer community does not normally follow CEF’s and the market is too small for institutional investors. This makes CEF’s a retail product which is followed by a relatively small group of sophisticated investors. This frequently creates opportunities during periods of extreme negative market sentiment when investors are desperate to liquidate their holdings.

We monitor the CEF universe for funds with high levels of current income which are trading at deep discounts to their NAV using a measure called the z?statistic to determine the relative attractiveness of the discount. When the Z?stat is ?2 it means the funds discount is 2 standard deviations from its average. We like to look at this measure for differing time periods such as 1, 3, 5, and 10 years. When this measure is ?2 or less it is considered statistically “undervalued.” This is not a common occurrence, but does happen during market extremes. After we determine a fund meets these criteria we then take into consideration the following in our bottom up analysis: Morningstar ratings and reports, the people involved in the management of the fund, the process the fund manager employs, the positioning of the fund, the risk & return characteristics of the fund, fees, and leverage. We employ top down analysis to determine which category and style to emphasize. For example, we may choose to overweight emerging market fixed income because we feel they are attractive and will outperform high yield funds. Diversification among funds is not a primary concern.

The best use of the strategy is to build up the income component of the portfolio while waiting until the CEF’s return to more normal pricing. The best time to invest in CEF’s is when market sentiment has been very negative and these funds are trading at deep discounts to NAV. Since this only happens occasionally, it is difficult for money managers to develop an ongoing stand?alone CEF strategy. We believe the best use of CEF’s is to augment existing portfolios with CEF’s when opportunities present themselves.


World Map of Trading

Trading Map

This is an infographic to describe world forex trading activity. It shows the top 15 traded currency pairs, volumes and buy and sell percentage rates. This is designed to aid new traders in getting a general overview of the forex market, which should allow them to make better use of their trading platform and maximise their potential. This infographic has been provided by Vantage FX UK who are an FX trading brokers based in London UK. Through them you can open a demo account to practice forex trading so you can acquire new skills and knowledge about forex which should give you a greater insight into the world of forex trading and may lead to you opening a live account with them so you can start trading almost immediately. If your looking for best binary brokers check them out today if you’re interested in opening an account or if you’re just looking for some trading education and tips.

Vantage FX UK are a leading forex trading brokers based in the UK in the city of London. They provide both Live and Demo accounts to forex traders, both new and experienced, as well as giving trading educational tips and advice for forex traders and brokers.


What are the Best Electronic Trading Platforms?

Know tradingIn today’s hectic financial climate, investors from all different markets are looking at the best electronic trading platforms out there in order to gain a competitive advantage. Electronic trading platforms are computer systems which allow traders to digitally perform trades without the need for human intervention in the process. Each brokerage offers their own trading platform, and in some instance, a single brokerage will offer users many different platform options.

The problem most investors run into when searching for the best electronic trading platforms is the sheer number of them available. We have weeded through the large number of online trading sites and have narrowed it down to a few of the best choices for the trading of stocks, options, futures and Forex.

TD Ameritrade’s Thinkorswim

Thinkorswim, by TD Ameritrade, is one of the internet’s most advanced electronic trading platforms. By providing you with a seemingly endless supply of financial data and analytics, this platform allows you to make researched, sound decisions across a number of different markets. With low commissions and good service, Thinkorswim has just one drawback – it is so complex and full of data that it can take some time to learn to accurately use all of the options. Once you gain mastery over the platform though, Thinkorswim becomes one of the most powerful tools that you will find

eToro

In the Forex world, one of the most prominent players is eToro. Registered out of Cyprus, eToro is oftentimes considered to be tailored towards the new to intermediate Forex investor. This company offers investors three different platforms, their WebTrader, OpenBook and the Mobile Trading Platform. The OpenBook platform is a unique concept which allows traders to follow other traders and see their trades, thus actively integrating social networking into the financial market.  By doing careful research, investors are able to find other traders with a great financial track record and study their actions in order to develop their own trading strategies.

Charles Schwab

As one of the leading players in the trading of stocks, futures and binary options,Charles Schwab offers an ideal haven for investors of all shapes and sizes. With stock trades running $9 – $13, depending on your volume, and options costing $9 + $0.75 per contract, Charles Schwab offers an affordable option with high quality service and financial information. The electronic trading platform from Charles Schwab allows you to trade numerous different financial markets and receive information, training and support 24/7.

Scottrade’s Trading Platform

For newer investors looking for their first electronic trading platform, Scottrade is often the ideal choice. The company currently offers a few different platforms, such as Scottrade, Scottrader, and also Scottrade Elite. Each platform offers more and more data and analytical tools than its predecessor. Scottrade is well known for offering top-notch training and education videos perfect for investors of all levels. Nearly all trades through their platforms are $7, making them one of the most affordable electronic trading platforms in the market. There are also over 400 retail locations, so users of Scottrade’s electronic trading platforms can easily meet with an advisor in person if needed.

When choosing an electronic trading platform, no matter if you are planning to trading stocks, bonds, options or commodities, it is important to look at all of your options. Depending on your needs, there are countless different platforms out there. If you are looking for stock trading, then consider TD Americatrade, Scottrade and Charles Schwab. Forex traders would be wise to pay attention to eToro, considered by many to be the best platform in that market. No matter where you decide to trade, make sure to pay attention to details to ensure that you know exactly what you are signing up for.

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