Author: Editor

The quick ratio or acid test ratio

3 min read

The quick ratio is a liquidity ratio that estimates the strength of a company to pay its current obligations when they come due with only quick assets. It is also called an acid test ratio.

Quick assets are current assets that you can change to currencies within 90 days or in the short-term.

In other words, the quick ratio is a measure of how well a company can meet its short-term financial liabilities.
It is liquidity metric and can be calculated as follows:

(Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

The quick ratio can be calculated for quick assets only.

Let’s explain why sometimes the quick ratio is known as an acid ratio?

That comes due to the historical use of acid to examine metals for gold. The early miners used it.

If the metal passes the test, they know it is pure gold. But if the result was opposite and metal was rusting, the gold miners knew there is no value.

The acid test of investment determines is a company able to instantly change its assets into cash within 90 days.
So, the acid test ratio is a more traditional variant. The other liquidity metric is a modern one – the current ratio.

They are pretty similar but the acid test ratio gives a more precise estimation.

How is that?

The acid test includes only the most liquid assets to study.

It will never examine inventory because it is almost impossible to change inventory into the cash in a short time frame. The company often sell inventory on credit.

Yes, there are some analysts that add inventory in the ratio, but if it is more liquid than some receivables.
To show you, let’s assume this information was in the balance sheet of our hypothetical firm:

Let’s apply the first quick ratio formula and the data above. So, we can figure this company acid test ratio:

($70,000+$20,000+$50,000) / $105,000 = 1,33

This means that for every dollar of this company’s current liabilities, it has $1.33 of very liquid assets to satisfy urgent obligations.

We will not take inventory into consideration. As we said, the company may require months or years to sell inventory.
Why it matters?

It is important that a company have sufficient cash to pay accounts, interests when they come to be paid. The higher ratio shows that the company is more financially secure in the short term. The companies with a quick ratio greater than 1.0 are enough capable to meet their short-term obligations.

Low or decreasing acid- test ratios usually shows that a company is fighting to keep or increase sales.

Maybe it is paying bills immediately or getting receivables too slowly. Hence, a high or increasing acid-test ratio means that a company has solid growth.

It is quickly turning receivables into cash and regularly covers its financial obligations. Such a company regularly has active inventory turnover and cash exchange periods.

However, the acid-test ratio has its possible disadvantages.

To begin, it provides no data about the level and timing of cash flows. And it is very important because it really defines a company’s ability to pay liabilities to the arranged date.

Also, the formula assumes that a company would sell its current assets to pay current obligations. That is not always pragmatic.

But this analysis can give you a solid and quick view of some company’s financial status.

It is crucial for investors to know if some company are ready to pay its bills and credits.

Some firms use their long-term assets to produce earnings. But, selling off resources will damage the company. Also, it is a signal to investors that current plans aren’t making enough profits.

Higher quick ratios are more welcome for the company.

It confirms there are more quick assets than current liabilities.

A company with a quick ratio of 1 indicates that quick assets are equal to current assets. This also shows that the company could pay off its current debts and not to sell any long-term assets.

An acid ratio of 2 indicates that the company has twice more quick assets than current liabilities.

And you can see how does it work. When the ratio increases, the liquidity of the company increases too.

This is a good sign for investors. Well, this is an even better sign for creditors. You know, creditors want to know they will be paid back on time.

One example more.

Let’s assume some company is asking for a loan. The bank asks a complete balance sheet so it can calculate the quick ratio. Company’s balance sheet carries the following accounts:

The bank can count quick ratio like this.

($20,000+$7,000+$2,000) / $21,000 = 1,38

As you can see the company’s quick ratio is 1.38. This means that the company can pay off all of the current contracts with quick assets. And moreover, it will have some quick assets left over.

For investors, it’s good news, too.

Don’t waste your money!
risk disclosure

24th April 2019
Why Recession 10 Years Later? We Have Not Learned The Lesson!

Economic experts and academics agree that there is a real possibility of the US facing a recession by the end of 2020, but how well is the US prepared for it?

By Gorica Gligorijevic

Why recession again, how is possible that we didn’t learn the lesson? April 30th will mark the 10th anniversary of Chrysler’s bankruptcy, one of the victims of the Great Recession of 2008/09.
This recession was started by the largest bankruptcy in history, by the fall of the Lehman Brothers. Which showed, along with the dot-com recession before it, that the excesses of Wall Street can cause severe economic downturns with global repercussions.

Wall Street was to be blamed for the software stock and housing bubble which brought the US and global economies to their knees.

Ten years later we are still wondering whether the US and the rest of the world are prepared for another recession.

And these worries look more pressing with the Fed’s yield curve study’s February 2019 update upping the odds for recession from 14% to 50%.

In the past couple of years many prominent economists, such as Paul Krugman, have been warning that the US regulators are ill-prepared for the next recession and that their response to the previous one was ill-suited.

Such voices of concern are now joined by the Economic Policy Institute, Washington, D.C. based think-tank, in a recent report authored by Josh Bivens, the EPI’s director of research.

Why recession ten years later

In June of this year recovery from the Great Recession will enter into the 120th month of economic expansion in the US. That way equaling the previous longest period of economic expansion which started in March of 1991. This record-setting is making people wonder when will the next recession hit?

Bivens state and many other experts agree, that there are real chances for it to happen by the end of 2020.

With Fed’s also upping their projection of chances one has to ask themselves are the US ready to tackle the next recession?

While most people think that the next recession will trigger a suboptimal response from policymakers, because of too high public debt and loo low-interest rates, it ain’t so. Though no person can successfully predict a recession, everyone can see their root causes. And the common theme is the fall of the aggregate demand, i.e. a decrease of the economy-wide spending relative to the production capacities.

EPI’s report goes to show that there are very little risks of the fiscal contraction causing the next recession.

And due to last year’s tax cuts, which are fiscal expansion measures, this is a no brainer. But that does not remove the risk of monetary contractionary policies, which could be triggered by vanning effects of Trump’s tax cuts, and is evident from the interest rates hikes in recent years.

Criticism of economic inequality in the US

EPI’s report can be read as a stern criticism of economic inequality in America, as it exposes direct connection of policymaker’s preference to aid large financial institutions and unwillingness to enact fiscal expansionary policies as a response to the economic downturn.

Simply put economic inequality and the austerity measures worsen the recession dynamics which are driven by the fall of the aggregate demand.

Bivens says that Fed’s interest rates hikes have given to regulators sense of normalcy, but robbed them of sense of urgency to provide recovery for all Americans and not just the Wall Street.

Low- and middle-income households spend a higher percentage of income than rich households, but also have a much higher propensity for spending. With the growing economic inequality being most visible in the stagnating wages of low and middle-income workers, the aggregate demand they could generate is limited, thus putting a severe limit on the recovery from a future recession, as the speed of recovery is depending upon the ability to spend.

But, according to Bivens, it’s not just household spending inability which will impede the future recovery.

“A key lesson from the Great Recession is that fiscal policy is the most effective tool for aiding recovery,” he said.

And for most of the recent recovery, the US government was very shy of the fiscal stimulus out of fears of the level of public debt. When the Fed Chair, Ben Bernanke, took unprecedented action in severely cutting interest rates he sent a very loud message to policymakers that they must do more by providing sustained fiscal stimulus.

With the recent bipartisan support to declaring the US public debt as a single greatest national security risk, the US economy looks less than ill-prepared for answering to the next recession.

Update 8/10/19

Traders-Paradise recently got this email from Andy Kearns, Content Analyst in LendEDU:
“Quite recently, our team conducted a nationally-representative survey of Americans to gauge their sentiment towards the situation of an economic recession. I believe our findings on how the risk of a recession might change consumer spending and investing habits could be an interesting addition for your readers on this page…You have my permission to use anything from the report that you liked.”
Thank you, Mr. Kearns.
So, here you, our readers, will find interactive graphs and charts that display the answers to their survey questions. Also included is an Analysis of Results section so consumers can better understand their findings.

Here is a link to the full report:

23rd April 2019
Top Stocks to Buy And Hold Forever
4 min read

So many people asked us what are the top stocks to buy in 2019.

It is on a daily base.

So, we will try to answer. This to all of you want to know and don’t have time to evaluate them.
We don’t want your one-time appearance here, we would like to build a real relationship and confidence.

This the article for you who want to enter the stock market this year.

Well, you know, Warren Buffett’s personal holding season is “forever” and look how is he.

Having that on our minds, here’s a summary of 5 stocks to buy and hold forever.

We understand, investing is difficult. Developing a portfolio of top stocks to buy is tricky even for economic experts.

There are still stocks to buy, don’t be worried. Moreover, they can give you really nice returns.
- Johnson & Johnson (JNJ)
Image Johnson & Johnson (JNJ) chart: source Yahoo Finance

Everyone needs their products. They will forever have something to sell, to us or the rest of the world. So why we, while buying their product, wouldn’t have an income?

List of Johnson & Johnson brands is so long.

J&J is a company with a long history. All can identify their best brands. For example, Johnson’s Baby Shampoo or Baby Powder.

It is founded the 1800s in New Jersey and since then Johnson & Johnson has extended its brands. Today, you can find Johnson & Johnson brands all over the world. From your bathrooms to your doctor cabinet.

The medicines, surgical products or healthcare solutions will never disappear. J&J has a really big portfolio.

No one should think even a second when it comes to investing in such a company. They have products, for example, cancer drugs that will produce good growth now and in the future.

The company is investing the robotic surgical opportunities gravely, in February announced that it’s buying robotic surgery firm Auris Health for $3.4 billion.

J&J annual yield on the dividend is 2.60% and has an 8.46% gain per year.

It is really among top stocks.
- Boeing Company (BA)
Image Boeing company chart: source Yahoo Finance

This company had hard March this year. After the fatal crash of Ethiopian Airlines, its shares fell down.

The company took the problems with their jet seriously and experts are working on new software.

On the beginning of the March this year their shares were worth $446, but now they are about $400. The stock could jump when their 737 Max types are on the sky again.

It is a very steady company. Their F-15 fighters are extremely valued.

Boeing arranged a selling of those fighters with US Air Force over the next 5 years for $8 billion.

The company raises the quarterly dividend yield for 2.6%.

Boeing announced a quarterly dividend of $2.055 per share which is $8.22 per year. This is a 20.2% rise from the previous dividend of $1.71.

The annual yield on the dividend is 2.6%.
- Colgate-Palmolive (CL)
Image Colgate-Palmolive chart: source Yahoo Finance

Why do we add Colgate here while everyone knows that this company recorded some suspicious inclinations in spending? Yes, we know that shareholders didn’t like that. That’s is changed as the company decided to make an important decrease in the costs. The advantages of that effort could last decades.

Their brands are among most buying products. For example, their toothpaste, or soap (of course Palmolive soaps), and manual toothbrush, and other pharmaceutical products for dentists.

The company is selling its products in more than 200 countries. Colgate-Palmolive includes two product sections:

ersonal, oral, and home care is one; and the second is pet nutrition.

It is a leader in the global oral care market.

Also, it is a leader in pet nutrition products for dogs and cats.

They’re all made by Colgate-Palmolive Company.

The company declared a dividend yield on 2.50% and the year-to-date gain of 16%.

Well, some can say Colgate is high-risk stock but with the big potential returns.
- Alphabet (GOOGL, GOOG)
Image Alphabet Inc. chart: source Yahoo Finance

Alphabet Inc declared $12.77 per share for the last quartal.

It looks that Alphabet is the revenue growth provider. Revenue grew 21.5% to $39.28 billion in the fourth quartal.

It is for sure one of the stocks which you have to buy and hold forever.

This tech titan is Google parent company.

Alphabet Class A and C shares have grown 15.5% and 15.4%, over the one-year period April 18. The S&P 500, including dividends, is up 9.4% over the same time frame.

Yes, the quarter’s reported earnings will be negatively influenced by a 1.5 billion euro (about $1.7 billion) penalty required by the European Commission in March.

The European Commission claimed that Google demonstrated anticompetitive methods linked to deals it had with Adsense for Search associates.

Well, the company is prepared to appeal, so investors may be sure that the penalty will be lower.

Google’s revenue grew quick.

The cost of sales would increase in the fourth quarter, forced by higher sales and projected content purchase costs at YouTube.

There are also, Fiber high-speed internet industry, and its Verily life science.

We all can see the changes because Alphabet’s self-driving vehicle tech branch Waymo recently start being monetized.
- The Walt Disney Company (DIS)
Image The Walt Disney Company (DIS) chart: source Yahoo Finance

Disney is the globe’s greatest media. They have movie studios, television networks.

Assets controlled by Disney add Disney Animation Studios, Pixar, Marvel, Star Wars, the ABC network, the Disney Channel.

Disney is close to finalizing an arrangement to take 21st Century Fox. That will combine the 20th Century Fox film studio, National Geographic, and a mixture of other media assets. But not the Fox News.

Disney has Disney Plus streaming service.

In the first half of April, it revealed the price, shows, and movies. Everything planned to overcome Netflix as a rival.

In 2018, Disney launched ESPN+, their streaming service, and in the time frame of five months had more than a million subscribers.

And don’t forget, Disney owns Hulu. Disney plans for its three platforms to be separate subscriptions, but it’s likely to connect them at a discount.

In the moment of writing this article, we are two days out from the release of Avengers: Endgame.

Predictions about how much money it will bring to Disney are fantastic.

THR – the range of $200-$250 million.

Deadline – passing $260 million, and maybe $300 million marks. ComicBook.com – prediction gathered from 3 analytics, $300 million.

Impressive.

Disney’s stock has jumped 13.6% in just five trading days in April. They will not look back now. Disney is a market sweetheart.

Not bad for an old player.

It is a good investment and one of the top stocks for sure.

Don’t waste your money!

risk disclosure
22nd April 2019
Robinhood order flow income rose thanks to HFT firms

2 min read

It looks still strange to engage HFT firms in order to increase order flow income. The skepticism is great. Also the criticism.

But the facts are that Robinhood’s order flow income rose 227% in 2018, thanks to HFT firms.

And this is a standard offer among Wall Street brokers such as E*Trade or TD Ameritrade.

What Robinhood did?

It engaged HFT firms to increase order flow.

Payment for order flow is still unknown and strange to the majority.

And somehow they read that kind of market presence as the immoral.

Traders Paradise wrote about HFT firms and strategies already.

But, let’s see what Robinhood did.

The popular millennial stock-trading app earned $69 million in order routing income in 2018. According to a survey from Alphacution Research, it three times more than the company made in 2017.

Payment for order flow is a standard offer among Wall Street brokers.

When employs HFT firm, the company is expecting more flow through its platform and it has it.

Robinhood app is very popular among the millennials.

The millennials like high-tech. And they will adopt any new product or gadget that can help them and make easier to buy anything.

When we all adopted the internet, didn’t we have the same idea on our minds? To make communication easier, to provide ourselves better access to everything.

So, where the problem is now?

High-frequency trading is called ”dark-pool” because of the absence of regulation.

Traditional traders are opponents. They say that these millisecond trades are against Wall Street and everything that is present on the markets for decades.

Actually, it is not.

High-frequency trading is based on traditional trading strategies. The main difference is the time of performance. The journey from the moment when trader see the opportunity and the moment the trader place the order is shorter. HFT algos will need millisecond while the traditional way would require much more.

Yes, it is still unknown for the majority of how this HFTs work.

Honestly, most of us will never reveal how the dishwasher works. But it isn’t the reason not to use it. Right?

We have one simple question.

Are high-frequency trading influenced based on who is paying the most?

Opponents of HFT say that it can produce big market swings.

Also, that HFT may result with an advantage for institutional investors.

Yes, engaging some HFT firm will cost you money. But, as far as we remember, only very rich houses had a dishwasher when it entered the scene. Today, it is almost impossible to find a house without it.

Even better, smaller retail investors may have benefits.

How?

HFT brings liquidity to the market.

High-frequency trading grows the market intensity and liquidity and reduces volatility.

And, there are also ordinances that require brokers to execute trades at the best price for the traders.

Considering the Robinhood’s increasing in income, well we have to say it isn’t so big as some the opponents want to say.
Also, HFT firms didn’t record such a big increase in order-routing income. For instance, TD Ameritrade had a 43% growth in this sector in one year.

And one note for the opponents of HFT.

HFT is not a trading strategy. It is the practice of advanced technology that plays traditional trading strategies. The particular trading strategies need to be evaluated rather than HFT as such.

Hence, any strategy that has a conflicting influence on market integrity or enables market abuse, has to be are completely reviewed.

And to quote our post HFT STRATEGIES – THE TIPS AND SECRETS: “Technology by itself is without morality. The people are those who can add it to high-tech.”

Don’t waste your money!

risk disclosure

22nd April 2019
HFT Strategies – The Tips and Secrets

3 min read

HFT uses practically basic and simple strategies. High-frequency trading is not about implementing the strategy, it is all about speed of execution and flexibility.

Well, the main strategy of HFT is to run faster than others. Of course, the principles of high-frequency trading (HFT) firms are secrecy, strategy, and speed.

Algo trading is linked with the execution of trade orders. But HFT refers to the implementation of proprietary trading strategies.

High-frequency trading consists of a variety of AT.

Yes, both enable traders and investors to speed up the response on market data.

The society of market participants using HFT is extremely mixed.

There is a crowd of various organizations with various business forms that use HFT and there are many hybrid models.

For example, some brokers and exchanges are utilizing HFT systems. So, in the estimation of HFT, it is essential to consider a practical perspective.

It doesn’t matter if HFT is just an add-on technology to realize trading strategies.

Liquidity providing is one of the HFT strategies.

Well, the most frequent HFT strategies are to serve as a liquidity provider.

How does HTF provide it?

HFT liquidity providers have two primary reservoirs: when they provide markets with the liquidity they pocket the spread between the bid and ask limits. Also, there is a trading income by granting discounts or lowered transaction fees. The aim is to increase market quality and attractiveness.

HFT firms will never discover their ways of acting. The significant experts linked with HFT are undercover. Well, this is not quite true. Maybe we could say they want to be in front of the public eyes less than others.

Those firms operate with various strategies to trade and earn money. The strategies are often many kinds of arbitrage. For example, volatility arbitrage, or index arbitrage.

HFT employs software that is incredibly fast. They have access to all market data and can make connections with minimum latency.

HFT firms regularly use own money, own technology and a number of special strategies to produce profits.
There are numerous strategies applied by traders to earn money for their firms.

Even the controversial strategies.

For example, HFT firms may trade from both parties.

Hence, they can place orders to sell using a limit order above the market price. Also, they can place the buy order a little bit below the market price.

And, voila! There is a profit for them. The difference between the two prices. They are market makers. All these transactions are very fast, in a millisecond by using algorithms and robust computers.

Spread capturing as HFT strategy

HFT firms are liquidity providers. They profit from the spread between the bid and ask prices.

How?

They are buying and selling securities all the time.

With each trade, they receive the spread between the price at which shareholders buy contracts and the other at which they can sell contracts.

Rebate driven strategies

The liquidity provision strategies are developed on particular stimulus systems.

In order to encourage liquidity providers, some trading venues use unsymmetric pricing. They charge a lower fee or give a rebate for market makers or passive trading.

Why?

Such traders bring liquidity to the market.

On the other side, for more aggressive tradings they charge a higher fee. Why? Such traders remove liquidity from the market.

An unsymmetric fee arrangement aims to boost liquidity provision.

Point is: traders supplying liquidity earn their profits from the market spread. Fee discounts or rebates stimulate a market‘s liquidity.

On this way, those markets look promising comparing to their rivals.

Arbitrage

Chances to perform arbitrage strategies generally survive only for fractions of a second.

But computers mission is to examine the markets in a millisecond. That feature causes the arbitrage to become the main strategy employed by HFTs.

To conduct arbitrage HFT use the same method as traditional traders. But they use an algorithm to profit from short-lived differences between securities. The other types of arbitrage are not restricted to HFT and such, they are not the subject of this post.

Latency arbitrage

The latency arbitrage is the ability of HFTs to recognize new market information before other market participants even get it.

The latency arbitrage uses direct data feeds and co-located servers to short the reaction time. Latency arbitrageurs profit from speed power. Such market participants can reduce the prices at which other traders are able to trade. That’s why you can find them under the name of predatory.

Liquidity detection

HFTs try to recognize the patterns other traders leave and adjust their actions accord to them. The focus of liquidity detectors is large orders.

Liquidity detectors are getting information about algorithmic traders is usually called sniffing out the other algos.

The bottom line

HFT is not a trading strategy. It is the usage of advanced technology that performs traditional trading strategies. The individual trading strategies need to be assessed rather than HFT as such.

HFT should never be banned. It would be contrary to market efficiency. High-frequency trading contributes to market liquidity and to the ability of the price creation.

However, any strategies that have a contradictory influence on market integrity or enable market abuse, has to be are completely reviewed.

This is particularly important for HFT. If anyone believes this technology promotes the implementation of abusing strategies, moreover, makes them more profitable and creates unfair circumstances on the market, should check the other participants too.

Our confidence in technology is huge, but we are very cautious when it comes to the people.

Technology by itself is without morality. The people are those who can add it to high-tech.

Fortunately, we, ordinary people, don’t have any access to HFT.

Don’t waste your money!

risk disclosure

21st April 2019
Where to Invest – Know How to Find

3 min read

by Gorica Gligorijevic

OK, you think it is time to start investing! But before you dive into that world you have to know several things. Very important things.

This article is not about where or how to invest. It is all about how to find what is necessary to do before you decide to invest and where to invest.

We need to know more about how should we invest our money.

Most of the time we do so without any research. That is completely wrong!

Who even try to find some information about investing was overwhelmed by the tens of thousands of stocks, bonds, mutual funds, etc out there.

You must be so scared of all the options. And you may give up.

But keeping all your money in a savings account can take you on the wrong side.

Nobody starts out as a specialist. Even the best investors were in your shoes.

For the start, you must consider two questions.

The first one is, where should you begin.

And second, how to begin.

First comes first.

Where to begin.

You may read different financial websites.

As a financial site, Traders Paradise, research all the time, collecting information from different sources. We have our tops, it is so natural.

But we would like to share with you some free websites.

The best-of-the-best that can provide you the education and news.

We can tell you to read us, but you already do that, indeed.

The best information about where to start investing we found on Cabot Wealth Network that includes a lot of free information. Their education section has valuable data about Stock Market Analysis, Market Timing, Selling Stocks, Technical Analysis and plenty of others.

The site Investopedia is a very good source too.

It is an invaluable source for definitions of financial terms. This site has tutorials and articles broken down for beginners. And all is free. Investopedia is a great site even for professional traders.

Don’t give up when you see their long long sentences, they are hiding very valuable data inside.

Among free websites, Traders Paradise highly recommends the Motley Fool. Don’t be foolish! Their name is just a good cover. These fellows are all market.

They are excellent no matter if you are seeking to make your own analysis, or like the help of an experienced specialist. The Motley Fool is ready for you.

Yes, you have to pay some of their services, but that could be a genuine opportunity for you, a beginner.
Traders Paradise wants to recommend one site more. It is AAII Investor Classroom: www.aaii.com/classroom. But it isn’t free.

It bears many lessons. They are treating everything from the risk management to the dividend stocks evaluation. The cost to join is $29 per year.

If you want to start investing, you should analyze the characteristics of a company in order to evaluate its value.

That is security analysis. You have to check a company’s financial documents and financial circumstance, its management, and rival advantage. Of course, you would like to identify its rivals and markets.
Why is this important?

The technical analysis finds that all the major parts of a business are reflected in the price of the stock. Technical analysis examines the market supply and demand. It is an effort to recognize where a stock’s price will go in the future.

Amongst sites needing paid subscriptions, we recommend Investor’s Business Daily eTables, Zacks, and

American Association of Individual Investors (AAII). They are really helpful.

For example, Zack’s does expect membership. If you want to get to the spicy material.

Well, surprise, surprise!

The membership is free. You can devote three minutes to sign up. You will have an in-depth review of both stocks and funds. Moreover, you will have access to many free reports that will help you.

And you have to read books.

There are thousands of various books about investing. One of them is everlasting and evergreen “The Intelligent Investor” by Benjamin Graham.

You can find a lot of respective books out there. You can adopt the main ideas from these books because they touch any market over the globe. Well you know, many questions are the same to all worldwide investment. The macroeconomic indicators, asset allocations, and currency risks are the same all over the world.

Investors are overwhelmed with information. Everything is trying to catch your attention. From press releases to SEC filings, for example. Yes, it’s always helpful to be informed. But how to isolate the good information from the uproar.

Press releases usually neglect bad information. They are adjusted on the good news. Analysts have spectacularly prejudices. At the same time, the official statements are tricky to be used, actually, they are not useful because of their vocabulary.

So, where to look for information before you start investing?

Corporate websites include information about a company. From financial statements to annual reports and surveys.

When you are seeking the financial information they can be easier to navigate.

What you have to look for?

First of all, financial statements.

Of course, you would like to take a look company’s presentation. Remember, never neglect this.
Company presentations can give you an important summary of the past result. Also, the predictions for the following years.

Company press releases can hold a treasure of information about progress and financial fulfillment.
Find their investor contacts. They can be an important source for investors. But always keep in your mind who is paying them.

Securities analysts can be an excellent reservoir of information for investors. Buy-side analysts are a better reservoir because they are not so biased. Analyst reports can be found in places including:

You can find analysts reports among stockbrokers.

Also, among companies.

Some companies offer analyst research to potential investors.

Find some broker with the fiduciary obligation.

A fiduciary relationship is where one person (fiduciary) undertakes to act for another, placing his or her interests ahead of their own.

We will give you a quote from the legislative site:

“Fiduciary obligations refer to the duty to avoid conflict, the duty to not make a profit, and the duty not to gain a personal benefit or a benefit for a third party, without the consent of the principal.”

But most of the necessary things you have to do by yourself.

You have to examine your needs and goals.

It’s worth to think about what you actually desire from your investments. Take your time. If you know your goals, your risk tolerance, you are on a good path.

Estimate how long you can invest.

Consider about how quickly you need to get your money back.

Or just let a robo-advisor invest your money for you.

Don’t waste your money!
risk disclosure

19th April 2019
Trading Forex at the Weekend Gaps

3 min read

Trading Forex at the weekend gaps is a growing field of investment. Forex weekend trading hours have extended away the traditional trading week.

Forex trading the weekend gaps are becoming popular because of trader’s expecting Sunday’s opening price to return to Friday’s closing price.

There is a mistake that you can’t trade over the weekends.

So, you surely can trade online at the weekend. To be honest, weekend trading in currency, stocks, CFDs, and futures is increasing fast.

Actually, the forex market is opened during the weekend.

How Trading Forex at the weekend gaps is possible if we know that the forex market is working 24/5?

Well, it is decentralized. And technically the forex market is open 24/7. It is true that the majority of dealers close transactions on the weekend. For retail traders close at around 5 p.m. EST on Friday and open around 5 p.m. EST on Sunday.

And we can see a gap during the forex open time only when the price movement is great because of some news.

But gaps are quite obvious in the forex market when the market is closed over weekends.

How does it come?

The market prices are moving over the weekend. You can not stop the currency transaction. For retail traders, the price isn’t the same on Friday when the market closes trades and on a Sunday afternoon when it opens.

If the price is higher on Sunday, we have a gap up. But we will have a gap down if it opens lower than the Friday afternoon price.

Trading Forex at the weekend gaps is very familiar to forex traders. It is a very often use strategy. Why is that?

Well, the Forex market is, in fact, open 24/7. Yes, trading ends on Friday and can be opened on Sunday evening.

But so many things can influence the currency price movement over the weekend. So, when traders are trading at weekend gaps, they are expecting the opening price will hit the closing price.

The gap traders believe that the price will continually fulfill the gap. Really? In fact, it constantly does. But it isn’t feasible always.

That’s why some traders make losses. Some gaps are tradable some are not.

For example, we recognize four varieties of gaps.

Breakaway gap

The breakaway gap regularly rises a new trend.

The price frequently develops out of the consolidation phase. Moves up or down with powerful momentum. What leave behind is the gap.

Some crucial, breaking events may cause movement. That new trend isn’t always tradable. Breakaway gaps happen at the end of the price pattern. They indicate that the new trend is starting.

The breakaway gap

Exhaustion gap

Exhaustion gap occurs close to the end of a price pattern. It indicates a definitive try to reach new highs or lows. Usually, it comes after a sudden move. It has an unnatural rise in volume and then turns strongly. Also, you have to know that it comes after some news or reports. For example, after the earnings announcement. That is the period when trading activity increase. Traders are closing their big positions. That causes an obvious reversal. You can find the exhaustion gaps no matter if it is an up or down trend.

The exhaustion gap

Common gap

It simply represents a space where the price shows a gap.

They are gaps seen on a price chart and they are very common and the most generally traded.

Also, they regularly arrive late Sunday and early Monday market openings.

They are suitable for short-term intra-day trading. You should look for a common gap around Sunday midnight and trade those Forex gaps at that time.

The Common gap

Runaway gap

Runaway gaps mark trend continuing. A runaway gap is fairly one of the most secure ways to trade. Particularly if you combine them with other price tools.

A runaway gap happens when the price is gapping into the course of the trend. When the trend is strong you may see them.
Runaway gaps regularly work inside a trend.

Traders need to recognize the gap before they find the potential increase in price. This means that runaway gaps are traded after the action.

The bottom line

The gaps can give a lot of news about market moving.

Trading at the weekend gaps is risky.

But you can use the information produced by a price gap to develop a complex trading plan. It can be helpful with other trading ideas.

risk disclosure

18th April 2019
High-frequency Trading Algorithms Characteristics

High-frequency trading algorithms or algos are rigidly secured by their owners.

By Guy Avtalyon

High-frequency trading algorithms can be amazingly easy to use. And beneficial too. Where is the catch?

By their nature, because they are so fast, those algos know the future price, they don’t even have an attempt to predict them. The slower shareholders need to predict prices, algos don’t. High-frequency trading algorithms use arbitrage, traditional technical analysis, and everything that works. Their purpose is to implement and modify well-known strategies while running with their extraordinary speedy setup.

The High-frequency trading algorithms main advantage is getting price quotes earlier and placing orders faster than the bulk of other traders.

Of course, the profit may depend on the software’s latency. Or it can be some lag between the price quote and following order execution. Latency is the most important part of an HFT algorithm.

High-frequency traders can optimize latency in two ways: if you minimize the time to reach the exchange or if you maximize the speed of your trading system.

Traders use algorithms for trading to reach higher performance to markets.

Algorithmic trading is like traditional trading.

You want to buy or sell the security. The whole process is based on the predefined collection of rules examined on past data.

That means every HFT algorithm use indicators, charts, technical analysis, etc.

HFT firms decrease latency by fastening direct market access.

As an HFT trader, you can get data from the market nonstop, and without third-party. The direct market access gives you the capability to enter market orders straight into the market’s order book. This is an important feature of a low latency trading platform.

That guarantees that you will receive data before then other traders that are not using direct market access. So, you will be able to participate in the marketplace before the competitors.

HFT methods gain an advantage via ultra-low latency

It is possible through the establishment of two important inputs:

Automated trading algorithms

It is known as “black box” trading systems. Actually, it employs multiple algorithms based on various market variables. It provides a trader to get trading signals and identify a possible trading chance. That signal is traded automatically by installed trading software.

Collocated servers

These servers are given to the trader and connected to the market or exchange. They are actually placed at the exchange or market. The advantage of collocated servers is that they give you direct market access with hugely decreased latency. That’s why they are better than remote servers.

The main task of a good HFT algorithm is to reduce the time of traders’ access to the market.

The use of the HF trading algorithm altogether with collocated servers guarantees an exact and up-to-date synergy with the market. Complex algorithms identify and execute trades build on strategies. These strategies are known as order anticipation, arbitrage opportunities, momentum.

So, is it possible to compete with algorithmic trading?

Well, we have to say it isn’t. Don’t try to beat a High-Frequency trader! You will lose that match. The HFT has plentiful supplies and is be able to keep the algo running 24/7. Can you keep alert all that time? Can you be functional and reliably?

HFT includes multiple sub-disciplines.

They are quantitative techniques with short time holdings.

It is established on technical and fundamental analysis. Yes, they use traditional patterns to make trades. They are a very fast variant of what traders have done for a long time before. Also, HFT includes algorithms to prognosticate hudge buying or selling patterns. They use high-speed connections and co-located servers or in-house exchanges. And in a millisecond places trades based on those forecasts. They know what the next will happen!

The simplest algorithm is based on technological and geographic recognition.

Remember, the length of the optical connections is very important. The HFT algorithms can evaluate the order attributes, and discover if it is an indicator that related orders will go to other markets.

And what will happen? The High-frequency trading algorithms will place the order to buy at the offer price at the other exchanges.

High-frequency trading algorithms will always take advantage of the speed of execution.

HFT knows how to force the price to a higher level. It will buy all the stocks first and push the price to grow. And?

So, if some trader places the order with the limit order on that or higher price the algo will be the winner. It will use the spread.
Because of its dominance in the rapidity of execution.on technical and fundamental analysis. Yes, they use traditional patterns to make trades. They are a very fast variant of what traders have done for a long time before. Also, HFT includes algorithms to prognosticate hudge buying or selling patterns. They use high-speed connections and co-located servers or in-house exchanges. And in a millisecond places trades based on those forecasts. They know what the next will happen!

The simplest algorithm is based on technological and geographic recognition.

Remember, the length of the optical connections is very important. The HFT algorithms can evaluate the order attributes, and discover if it is an indicator that related orders will go to other markets.

And what will happen? The High-frequency trading algorithms will place the order to buy at the offer price at the other exchanges.

HFT algorithm will always take advantage of the speed of execution.

HFT knows how to force the price to a higher level. It will buy all the stocks first and push the price to grow. And?

So, if some trader places the order with the limit order on that or higher price the algo will be the winner. It will use the spread.
Because of its dominance in the rapidity of execution.

17th April 2019
Order Flow Trading

3 min read

Order flow or transaction flow

Order flow trading is more of a mindset. We cannot say it is a trading system or trading method. It is all about how some traders are viewing and imagining the market place.

Say in this way, the orders are moving price.

So, the intent of an order flow trader is to identify patterns on which they are getting triggered.

It is also called a transaction flow.

Order flow happens when a trader believes the price of an asset will move and then the trader chooses to execute the order.

Also, order flow trading is an expression that generates a lot of mess.

Some traders believe that such trade is based on very secret information from the banks. That just a small group of people have knowledge about it.

But you can see that some of them believe that it is another kind of price performance.

To determine order flow trading you have to clarify what kind of trading you want to execute.

Many of the retail forex traders are trying to place directional bets.

That is when the trader is going long or short, speculating that prices will go up or falling.

For example, if a trader believes a currency pair will move up, he/she will set a buy order. But if such a trader prediction is a currency pair will go down, he/she will go short, meaning the trader will sell. This is directional trading.

It is one of the most traditional styles of trading.

If you choose directional trading, you may decide to be a dynamic trader. You want, for example, to execute a market order and pay the spread. That is one possible choice.

The other alternative is to set a limit order or stop order marking the order flow to be executed at a specific price or executed after the market hits a specific price.

This is different sorts of order flow.

Order flow trading is alike to price action trading

The trader who executes a market order is achieving a more dynamic order. Such doesn’t like to wait for a limit order.

It is questionable if that order will or will not be filled.

But the trader who set a limit order or stop-loss order is creating a more inactive kind of order flow. Even if the orders are not executed, they are helpful in building the order flow.

Order flow trading is alike to price action trading.

They both intend analyzing the market in a specific style.

Price action traders try to conclude which direction the market going to move in. Order flow traders think they can foretell the same thing but based on capturing the actions the other traders done in the market.

Order flow trading, so how does it work?

The basic idea lays behind that if you are able to recognize when and where traders are going to make decisions, you can presume what is the future course of the market. The main purpose is to determine when the prices are moving up or down.

To be more clear, one trade will never cause such movement.

But thousands of orders appearing at the same time can generate the price’s turn.

And we can say that the main intent of order flow traders is to find how other traders trade. On that way, such a trader can recognize when numerous orders will appear to the market, large enough to generate a price movement, either up or down.
All the trader needs to know is what is the basic goal of their trading method. Based on that knowledge, he/she can predict on which position they will make a decision which will place orders into the market.

The basics of order flow trading

Two types of order flow trading

There are two main types of orders that traders can execute in the market.

Each of them is executed for different reasons. Hence, have different influences on the market price after execution.

The traders can place market orders or limit orders.

One group will place a market order because they want to earn money as quickly as it is possible.

They place a market order to open their trade because they don’t want to miss such a great chance. This is so-called reactive strategies. Meaning, the traders are reacting on what is happening in the market at this moment.

When a trader places a limit order, that means that trader wants to have a trade at a price which he expects will be reached in the market.

Stop losses are also limit orders because they provide trader to buy or sell at a price which has to be reached in the future.
Both affect the market price but in different ways.

A market order spends some of the liquidity in the market. On the other side, the limit order is placed to add liquidity to the market.

And, here we are!

The keyword for order flow trading is liquidity.

Liquidity explains how accessible is it to buy or sell in the market.

When it is easy to sell or buy, the market is liquid.

For example, the forex market is one of the most liquid financial markets in the world.

Buying or selling on the forex market is so easy because you will always find who is going to sell to you or to buy from you.
Why is this so important for order flow trading?

When low liquidity occurs that means that most of the orders on the market are buy orders. The traders can’t achieve buy trades placed because there are not enough people in the market ready to sell.

There have to be a big amount of sell orders placing the market in order for the market to be liquid.

It is really important to learn that when low liquidity is approaching the end, it means the traders have made the decision in the market.

But which decision?

That depends on which course the low liquidity movement happened. If it was a drop-down then the traders have placed buy trades or carried profits off sell trades which have previously been placed.

If it was an up-move, traders placed sell trades or took profits off buy trades.

Price does not move because of some mysterious technical indicator. Nor moving average will move the price.

For the price to move, traders need to execute enough orders to utilize the liquidity at the best bid/offer.

If there are no orders to be executed, the price will not move.

This is the cruel truth in trading.

The market will never move to your direction if there is no order flow.

The outcome of the trade is managed by the performance of other traders. The real transaction and order flow are produced by other traders.

The bottom line

Order flow trading is not a technical analysis or fundamental analysis. They are not able to move the market.

Order flow and liquidity is the base of the market.

That’s why many traders have gained the losing tradings. Their losses happen because the technical or fundamental analysis cannot produce enough order flow to move price in your favor.

Order flow trading tries to improve the lacks in technical and fundamental analysis.

When you learn and practice enough, you will find this is the most successful approach to trade.

Don’t waste your money!

risk disclosure

16th April 2019
HFT firms that need new employees
3 min read

Numerous HFT firms are actually small companies with a small number of employees. If you want to be one of them, you will need to show a capacity to produce income bigger than your salary plus bonus share. You have to be fantastic and have unique skills.

If your knowledge is really excellent, there are no barriers to enter some HFT firm even if the firm might not be hiring right now.
Yes, you would be asked to work almost 70 hours per week when it is necessary but the salary and intellectually provocative environment will cover your engagement.

There are a few roads into HFT. Any of them you chose you MUST have a great knowledge of math, computer sciences, physics or related technical focus.

Traders Paradise wants to represent you some of the HFT firms that are looking for new workers.

Liquidnet

The position required: Liquidnet is looking for Junior Data Scientist/Quant Developer.
Skills required:
- Bachelor’s degree in Computer Science, Mathematics or similar technical field.
- 2+ years of relevant experience OR recent Masters or Ph.D. grad in Computer Science, Mathematics
- Knowledge in a mainstream programming language, such as Python, C/C++, C#, Java, JavaScript, Haskell
FIND MORE about this job HERE
Specialty: It is a world known institutional investment network which connects asset managers with liquidity.

Company Overview: Its headquarter is in New York City but has departments in San Francisco, Boston, London, Dublin, Sydney, Toronto, Hong Kong, Singapore, and Tokyo. This trading network is connecting asset managers to pools of liquidity for both equities and fixed income. Last year it was recognized as 8 out of 34 large organizations category in New York City. That means it is one of the best employers in New York City.

Salary for this position per year: $110k – $159k

Old Mission Capital

The position required: Quant Trader.
Skills required:
- Candidates must be proficient coding with one of the following languages: Python, Java, C++, VBA, R, Matlab, Ruby.
- 4-10 years of relevant trading and research experience, with a primary focus on global equities, commodities, or fixed income instruments and/or related derivatives
- Experience with systematic market-neutral strategies over a range of holding periods/forecast horizons (short, medium, and long).
FIND MORE about this job HERE
Specialty: They have high performance automated trading system that operates globally. Old Mission Capital trade equities, currencies, commodities, bonds, options, futures and other derivatives.

Company Overview: Old Mission Capital, LLC provides brokerage and trading services. That include a model for security valuation, trading algorithms, tools for risk management. Old Mission Capital was founded in 2008 and it is headquartered in Chicago, Illinois. Old Mission Capital, LLC works as a branch of Old Mission Holdings, LLC.

Salary for this position per year: $7k – $8k per month

NJF Global Holdings

The position required: Junior Quant Trader
Skills required:
- Quantitative background
- experience with a programming language Python/C++ a plus but not required
- Ability to collaborate on projects with others but also work independently when needed
FIND MORE about this job HERE
Specialty: The company provides finance, technology, legal, and financial research services.

Company Overview: NJF Global Holdings Ltd was previously recognized as NJF Search International Ltd and modified its name to NJF Global Holdings Ltd in August 2013. The company was founded in 2003 and is based in London, United Kingdom. It has offices in New York and Chicago.

Salary for this position per year: unknown

Milliman

The position required: Quantitative Analyst to work in the Portfolio Management Group in an entry-level role
Skills required:
- Strong Excel/VBA and PowerPoint skills
- coding skills, especially C# (or other Object Oriented languages) and SQL (or other database management tools)
- experience working with Bloomberg or Morningstar
FIND MORE about this job HERE
Specialty: Retirement funding and healthcare financing, risk management and regulatory compliance, data analytics and business transformation

Company Overview: Milliman Financial Risk Management LLC is a market leader in the field of portfolio management and risk management. Their focus is on trading securities and derivatives to manage capital market risks for banks, asset managers, insurance companies, and pension plans. The Portfolio Management Group, located in Chicago currently implements risk management overlay strategies on over $50 billion in assets.

Salary for this position per year: $45k – $82k

The Princeton Group

The position required: Quant Developer
Skills required:
- Advanced programming knowledge of at least 3 programming
languages, including Python
- Strong understanding of statistical and Machine-Learning methods
- experience with Tensorflow and Keras, React.js and HTML data visualization libraries
FIND MORE about this job HERE
Specialty: Technology professionals proficient in developing computing solutions and skilled in complex business activities such as trading and trading tools technology

Company Overview: Specializing in IT placement services for Startup, Fintech and Hedge Funds. IT staffing and recruiting in New York and New Jersey. Financial modeling, quantitative analysis, and development buy and hold strategies, the generation of portfolio accounting tools and report generation.

Business initiatives including risk, trade processing, trading and the development of trading instruments.

Salary for this position per year: flexible from $24 – $27 per hour

General skills to get a job at HFT firm

The positions at an HFT firm are pretty different. Almost everyone must have extremely technical experience and knowledge.
HFT is typically a technology field, so if you want to work there you must have an excellent background in programming or electronic engineering. Some of them will require deep knowledge of hardware, for example, GPU or FPGA.

Actually, every skill that can reduce the latency and improve the execution speed of algorithmic calculations will be required in HFT.

Widespread knowledge of trading exchange is a general skill for any high-frequency trader.

HFT requires large dimensions of estimates in a very short time frame. So, the advantage is to know how to increase the speed of execution.

Also, deep knowledge of hardware design such as GPU and FPGA is an advantage. A lot of HFT firms will require a background in Linux kernel modification.

Background in Linux kernel modification is beneficial to many HFT firms.

The bottom line

The top HFT firms are usually placed in New York and London. Chicago is also a large hub for HFT.

But it is very rare to find a job in those HFT firms directly. They are doing that via recruiters.

The direct application to HFT firms is possible, yes!

But the tricky element is estimating which firms are actually in HFT.

The best way is to join some recruiter.

Traders Paradise offers you several and we will continue doing that.

Stay tuned!

Don’t waste your money!

risk disclosure
15th April 2019