Tag: trading

All trading related articles are found here. Educative, informative and written clearly.

  • European ETFs: Invest in the World’s Biggest Regional Economy

    European ETFs: Invest in the World’s Biggest Regional Economy

    European ETFs

    by Guy Avtalyon

    European ETFs give a large diversification in mutual funds and with a bit of the fee. If you buy one security as a foreign investor you will have exposure to a lot of firms in the EU. Why Europe is interesting for investors? First of all, some of the biggest companies are located in Europe. So, it is a great opportunity for foreign investors to invest in EU ETFs. The European Union factors about 20% of the world GDP, therefore it looks like one of the most valuable investment targets in the world. 

    Benefits of Investing in European ETFs

    Europe is one of the best-shielded business areas around the globe. To be honest, there are still some risks after the crisis in 2009. The companies in Eastern Europe have better growth potential than Western Europe. Anyway, having EU ETFs in your investment portfolio is a great choice and I’ll try to explain why that is.

    First of all, in Europe are some of the most successful companies. For example, a lot of US investors are very interested in them. Moreover, Europe is consists of several areas. That makes European ETFs very good for diversifying a stock portfolio without the risk which developing markets may give. The added quality is that the EU is honestly low-risk. Just compare it with Asia, for example.

    Many investors are now attempting to enter the European Union market through mergers and acquisitions. Also, by investing in its main businesses. The EU is, in fact, welcoming foreign investment. 

    Here is full information that will help investors about investing in European Union.

    Risks of investing

    Of course, there are some risks involved. 

    The main risk is that the members of the EU are very connected and dependent on each other. At first glance, nothing is bad with that but if a crisis occurs it will spillover among them, and business in the union may fall down like a house of cards. As I mentioned above, Wester Europe economies have slower growth and they may seem less attractive for investing. Especially for investors who want more risky investments.

    Where to find: Top European ETFs

    MSCI European ETF (NYSE: VGK)

    Vanguard is available in Europe. Its European funds are based in Ireland. Vanguard allows non-residents to buy their ETFs/funds through a broker. So you can not directly do it through them. Vanguard’s ETF is a good option but it involves currency exchange. You can simply open an account with any broker with access to the NYSE ARCA. That is the stock exchange where Vanguard ETFs trade. The rest is simple, buy it just like with any other international stock.

     

    iShares MSCI United Kingdom ETF (EWU)

    A lot of investors favor “tracker” funds. They allow you low-cost investments. But not all tracker funds are low cost. Moreover, the fund charge is not all you pay, you will have to pay the broker or fund platform too. The good news is that as your portfolio grows the broker will charge you less on a sliding scale.

     

    SPDR DJ Euro STOXX 50 ETF (NYSE: FEZ)

    FEZ includes the 50 biggest EU companies but the large-caps from countries that don’t use the euro, including the UK, Switzerland, and Sweden, are not included. But, FEZ’s portfolio includes companies from France and Germany. As a difference from other EU funds, it does not hedge euro exposure. 

     

    European ETFs provide the most comfortable approach to get exposure to European markets and the easiest access to invest in Europe. In comparison to buying foreign stocks directly, it is for sure.

    Further, European ETFs are an excellent method to diversify your stock portfolio with low-risk investments. To be honest, I have to say that European ETFs will not suit every investor. Risk seeking investors wouldn’t like them, or for younger investors, European markets are not volatile enough. Yes, there is pretty much a lack of excitement.

  • Trailing Stop Loss Definition and Examples

    Trailing Stop Loss Definition and Examples

    3 min read

    Trailing Stop Loss Definition and Examples

    The trailing stop loss may be practiced with stock, options, and futures exchanges that support regular stop-loss orders. It is a variety of stop-loss order. A trailing stop-loss order is executed when the price of the trading asset drops by the trailing value which can be expressed in percentage or currency amount. 

    For example, you might place a trailing stop order to sell your stock with a trailing stop loss of 4%. When the stock dropped 4% from its nearest high the trailing stop order will be executed.

    For example, assume that ABC stock is in its uptrend and hits $100 per share. If you placed a trailing stop loss of 4% it would be triggered when the price drops to $96 or below. Hence, your trailing stop loss at 96%, the sell order at $96 would be a market order. Instead, you can set a trailing stop limit which would provide you to gain a specified price placed in advance.

    Also, instead of placing percentages you may enter a trailing stop loss in currency. It is more favorable. Let’s do some math.

    Let’s say, ABC shares increase to $120, a $4 trailing stop would trigger at $116, which is a 3,3 % drop. If you entered a 4% trailing stop, it wouldn’t trigger until the shares fell 4% to $115.
    \

    The mistakes about using a trailing stop

    A typical mistake is to set a trailing stop too close to the current price. For example, 1% or 2% trailing stop loss. Most stock prices are changing by at least a few cents per minute. If you set the trailing stop loss too tied to the entry it will be stopped out before any significant price moves occurred. 

    The best way is to set a trailing stop distance enough from the current price. If you keep in mind that that the market regularly fluctuates inside a 10 cent span, you would like to set it a bit far from that amount. But be aware, if you set it more from that range because it could happen that you never reach the placed point. The consequence is that the trailing stop could be invalidated and never executed.

    The point of using the trailing stop loss is to get you out of the trade if there is a high possibility of the price changing and destroying your profit on your trade. 

    Trailing stops are useful because they secure in profit when the price moves in our beneficial. The disadvantage is that sometimes they get us out of a trade when the price isn’t really changing, but simply pulling back a little. A good option to a trailing stop loss is to apply a profit target, have that in your mind.

    How to move a trailing stop loss 

    It is easy to find a lot of brokers that provide this type of orders. It’s up to you to choose how much space you want to in your trade. Think twice would you like to set it in percentages or currencies (you have both examples above). When you confirm the order it will move as the market moves because that is the nature of trailing stops: to move as the prices move. You can set it automatically or manually.

    Bottom line

    Traders use different systems to improve their profits and diminish the losses. One of these methods is the trailing stop order. It allows you to define the circumstances that will trigger an order to exit your position. It safeguards your trade against unexpected downturns.

    No matter if you are trading stocks, bonds or whatever, you must have a solid exit strategy. Moreover, you must have it before you buy the position. We already wrote about emotional trading. A good exit strategy will allow you to diminish fears. Let’s say your exit strategy is to wait for the price of your stocks to drop by 15%. You’ll be able to avoid trading in a panic if your stocks drop by 10%. That is the main purpose of applying a trailing stops and other stop-loss orders, to give you a plan to realize your exit strategy.

    Don’t miss this: Trading With Success – A FULL guide for beginners

  • Negative Balance Protection

    Negative Balance Protection

    4 min read

    Negative Balance Protection

    by G. Gligorijevic

    Negative balance protection signifies that you will not lose more than your deposited money. Or to put it simply, you won’t owe money to your broker. Sounds great, indeed. You will not end up with a cash debt on your account.

    At first glance, this looks like a great thing. For example in spread betting, that lets traders take leveraged short-term bets on stocks could end in tremendous losses.

    Here is one example.

    Assume you put $10,000 to your account and want to buy stock. Let’s say the leverage is 5:1 which would provide you a position of $50,000. But, the market is really volatile those days and the price of your stock drops, for example, 8%. Remember, your leverage is 5:1, so this drop would make you a loss of 40%. It is $20,000 of lost. This lost would destroy your deposit of $10,000 and you have to pay back to your broker what you owe. Yes, this is an unpleasant situation but if you are trading with a broker who lets you negative balance protection, your loss would be exactly the amount you deposited, $10,000. Nothing more, nothing less. 

    It is a great thing for traders.

    Negative balance protection is a proposal that brokers practice in order to protect their customers. This method guarantees that traders will not lose more than their deposit is if their account moves into negative as a result of their trading activity. This is a great reason to choose the broker that provides it. You will not owe the money to your broker if you made the wrong trading choice.

    Yes, the brokers always have a margin call to protect. The truth is that this option isn’t the best choice when the market’s shift quickly and the stock prices are in high-speed movements. If the price moves too fast and moves beyond your margin call out level you may lose more than it is expected.

    Negative balance protection in Forex

    Negative Balance Protection

    It protects your account balance never to falls under zero. How is possible for your Forex trading account to go under zero?

    Don”t be worried. Your broker has protection, in the first place it is margin call. But, the same occurs as it is with stocks. When some incredible drastic move happens in the currency markets, your broker may not be able to close your trade immediately. Also, your stop-loss order will not be executed due to the high speed of the market movement.

    Therefore, the price may run beyond your stop loss or margin call close out level. That may cause a larger loss that exceeds the size of your account balance. So, you would have a negative balance.

    This is where negative balance protection comes to the scene. The broker can overlook or forgive your negative balance and lets your account to begin from zero again.

    Why traders need this?

    Forex and CFD markets are volatile. That makes traders unprotected in sudden price movements and gaps. When extreme price movements happen in open trade, this may have an important influence on the value of your open positions. It is particularly dangerous when your position is highly leveraged.

    If you hold a leveraged long position, you would lose more than your initial deposit. And as I said before, this would put you in a position where you would have to pay your debt back to your broker.

    Negative balance protection resets your account balances to zero.

    Is there anything bad?

    In short, yes.
    When you enter the market you are dealing with some unresponsible people who don’t pay attention to the risk involved because their goal is to beat the market. Sic!
    When you set negative balance protection heaven isn’t the limit. This safety net wouldn’t let you take additional risks just because you have the belief that you can make easy money. Stay in the safe zone, it is smarter and better for your trading account.
    Also, if you put negative balance protection, you have to pay increased margin rates. 

    The history of negative balance protection 

    It grew more prominent after the Swiss franc crisis in 2011. That was when the Swiss National Bank (SNB) closed holding its currency against the EUR at a fixed currency rate. The Swiss franc rapidly soared against the EUR. The consequence was that numerous traders shorting the franc ended up with enormous negative balances losing more than they had deposited on their account.
    The Swiss market had great losses and many traders ended up with the fear that their brokers would ask to get paid to cover their losses.
    The brokers that provide the leverage are obliged to apply for negative balance protection on a per-account basis, thanks to ESMA regulation for the EU.

  • How Often to Check The Investments?

    How Often to Check The Investments?

    2 min read

    How Often to Check The Investments

    by Guy Avtalyon

    Your investments should certainly be periodically checked but not every day. Even though it is your money invested. You have a bigger chance to lose money if you check your investments every single day.

    How?

    Well, you know that the price changes occur very frequently due to the stock market volatility. The stock price can rise and drops hourly. Watching that, you may feel a bit more nervous about your investments and provoke you to sell instead to hold and wait for the price to increase. Also, you have to know that daily fluctuation in stock prices does not influence your investments. The most important is how your stocks perform in a bigger time frame.

    If you check your investment too frequently, you will end up acting irrationally to market movements and sell your stock at a low price.

    Yes, I know,  our investments may give us the impression that we will never end up with sufficient money. You have to know how often to check your investments so that you don’t destroy them. 

    For new investors, quick gains can cause investing to look impressive. It is normal to check your investment every night. I can understand that. I know some investors are checking several times a day. If you need to be worried about your investment it is a sign you made the wrong choice. 

    If your portfolio loses just a bit in a few days or weeks there is no reason to panic. The statistic shows that fresh investors usually put money in mutual funds or ETFs because they are afraid to invest in more volatile stocks and they avoid them. The truth is that holding stocks requires more attention, time to track them, and knowledge.

    But you can’t have only mutual funds or ETFs in your portfolio and check them once a year. You would like to have stocks as well. And a lot of things will be changed.

    So, how often to check the investments?

    With stocks, things are pretty different. You have to check them at least once a week to notice if something, some event, for example, influences your investment.

    If you are holding or trading individual stocks, try to check them quarterly. OK, maybe monthly if you are so nervous. It is reasonable to check your investments from time to time. But too much checking can make you panic and sell at a lower price. And you will start that chain. That frequently checking will cause trading, fast trading will cause over-selling, over-selling will produce more fees and costs. Also, if you have too much trades you will have low returns.

    It is smart to pick a good investment strategy and stay with it. Check the progress of your investment quarterly and check the price, for example, monthly.

    With mutual funds and ETFs, you have wide diversification, so once a year is enough. 

    With stocks, check it out by online approval or in the paper version. Most of the financial websites such as  Yahoo Finance and some others offer stock research data. Also, your broker has quotes available.

    How often to check your investments? Less is better. You are investor, investing is a marathon, it is for a long run. Make a reasonable plan, according to your risk tolerance, be patient. Rebalance your investments once a year and let your money work for you.

     

  • Market Timing – A Way to Beat The Stock Market

    Market Timing – A Way to Beat The Stock Market

    market timing
    How is market timing possible? Read to the end.

    By Guy Avtalyon

    Market timing is the method of buying and selling in the market based on financial inclinations, business information, and market circumstances. 

    It is a kind of investment or trading strategy. It is an effort to beat the stock market by prognosticating its movements and buy and sell according to that data. While you are making moves in the financial market, changing the asset classes, you need some predictions. To make predictions you need tools, for example, technical indicators, financial and economic data, to be able to estimate how the market will move. 

    From these tools needed you can easily see that the market timing is in contrast to a buy-and-hold strategy.

    Some investors don’t believe that is impossible to time the market. But on the other side, you have a whole range of investors, especially traders that are sure in it. Well, both sides are right, at some point. It is pretty hard to time the market, but it is possible for the short run. Seeking to time the market over the long run can be difficult and may show a lack of consistency.

    Is market timing possible?

    If you are a short-term trader or full-time investor, you may have some good results but you have to be an exceptional one to notice the right time to buy and sell in the market. The statistic is explicit, there is no notable success in comparison with the buy-and-hold investor.

    Market timing is related to tactical asset allocation or dynamic investing.

    Let’s say you want to invest $10,000 and you put $5,000 in the stock, $3,00 in the bonds, and $2,000 in the cash. 

    The market timer tries to sell when the price is the highest and to sell when the price is at the lowest level. So, the trader or investor confidence to market time will sell some part of stocks in case the interest rates are increasing and buy bonds. Such an investor wants to profit from something called a market “peak” for stocks and the start of growth for bonds.

    The believer in market timing is sure that price movements in short-time are essential and usually predictable. That’s why the market anomalies are important to them to support their opinion. Chart patterns that are repeating are also important to them. Their investment horizon is shorter, it can be minutes, days, or months. On the other side, long-term investors, so-called buy-and-hold, prefer to estimate the long-term potential of their investments by employing fundamental analysis. They are estimating the company’s strategies, products, etc.

    Market time investors will use leverage to gain returns. This will add more risk to their portfolios but their returns could be higher too.

    Are there any costs for it?

    Investors that practice this strategy claim that by using this method they are able to diminish losses. The principle is quite simple, they just have to move one sector before drawbacks. You see, their aim is to find a safe investment and avoid market volatility while they are holding volatile investments. Market timing investors that attempt to time entries and exits very often may underperform the long-term investors. The reason behind, it is extremely hard to gauge the next direction of the market. Despite their optimism, the real costs for the majority of them are higher than the possible gain of moving in and out of the market. 

    There are also extra trading commissions and capital gains taxes. The continuous analysis linked with market timing requires frequent asset reallocation and a lot of trading activity. Much more than passive investing. If you want to practice this method you will need more time and an excellent education.

    Market timing is a questionable approach. You can find a lot of very serious studies that have revealed that the market’s bottoms and tops are pretty hard to find consistently.

    Moreover, long-term investors truly support the efficient market hypothesis, which claims that the prices are random and reflect all available data, so it is impossible to outperform the market in the long run. It is especially too hard in a short time since it is impossible to forecast stock prices. Although, market timing has huge and faithful followers among investors. Can we say they are enjoying the challenge to consistently produce higher-average returns? Maybe.

    The most important thing for all investors is the fact that they have to watch their investments, to watch charts and they have to know the market timing method.

  • Stocks Under 5 Dollars Per Share to Buy Right Now

    Stocks Under 5 Dollars Per Share to Buy Right Now

    Stocks under 5 dollars
    Stocks under $5 can be a good opportunity, they are low-cost but can generate a large percentage gains

    By Guy Avtalyon

    Why should anyone invest in stocks under 5 dollars per share? Just read this post to the end. There is no excuse for not investing. You can do it with just $5 per share. Traders-Paradise presents you three stocks under 5 dollars per share with pretty great potential. There is a great risk involved too since they are really volatile. Be aware, all stocks under $5 are volatile. Because of their nature, these stocks may provide you great returns but large losses too.

    So, these are our tips on stocks to buy right now and make a profit.

    Reebonz Holding Limited 

    Ticker – RBZ
    Market cap – $16.053M

    Reebonz is an online platform with a focus on buying and selling luxury products. Headquarter is in Singapore. The company was founded in 2009, today it is the leading online platform for buying and selling luxury products in the Asia Pacific region. It has offices in Singapore, Thailand, Hong Kong, Korea, Taiwan, Japan, China, Australia, the United States, and many other countries.

    On Friday it stated that will release its unaudited business results for the first half of 2019, before the opening of U.S. markets on September 23. So, we will see. 

    Until then, let’s see what do we know about this company.

    This platform operates as an eco-system of B2C e-tail and B2C marketplace covering more than 1,000 brands. It is supported by C2C which provides private members to sell luxury products. Shopping is very easy since the company’s UI is user-friendly. Reebonz sources collections of many brands from luxury boutiques from all over the world.

    The current price per share is $2.58. The analysts estimated the RBZ stock will be one year from now at $11. Our suggestion is to buy its shares.

     

    ReneSola Ltd 

    Ticker – SOL
    Market cap – $71.59M

    ReneSola Ltd was founded in 2005. ReneSola Ltd is headquartered in Shanghai, China. The company is listed on the New York Stock Exchange in 2008. It is an international technology provider of green energy products. 

    It is a Chinese producer of the range one solar panel with a 10-year product and 25-year performance warranties. Their panels are corrosion resistant, and that fact makes them very convenient for installation by the sea. Renesola has offices in Sydney and Melbourne too.

    The company produces string inverters, microinverters, and LED lighting too. It provides the highest quality green energy products and services for EPC, installers, and green energy projects all over the world.

    The current price per share is $1,88. So, our suggestion is to purchase since the shares are undervalued for no reason. These shares are good. They already beat analysts’ expectations.

     

     

    Trevi Therapeutics Inc.

    Ticker TRVI
    Market cap $82,930,751

    Trevi Therapeutics was founded in 2011. Its headquarter is in New Haven, the U.S. state of Connecticut. They are developing nalbuphine ER, treatment for uremic pruritus, improving “the quality of life of patients suffering from the serious symptoms associated with chronic neurologically mediated conditions” as they stated on the official website.

    The Trevi Therapeutics’ team is highly engaged and experienced in life science clinical development, successful commercialization, and building companies of exceptional value. 

    Since launching, Trevi has raised $92.2 million in the financing, according to the filing for its IPO this May. 

    Trevi Therapeutics, Inc. is focused on the development and commercialization of nalbuphine ER to treat serious neurologically mediated conditions. The company’s nalbuphine ER  is in a clinical trial. The purpose is for the treatment of chronic pruritus, chronic cough in patients with idiopathic pulmonary fibrosis, and levodopa-induced dyskinesia in patients with Parkinson’s disease.

    The current price per share is $4,5 but analysts predict that easily can be over $16 in the next 12 months

    These are only three stocks under 5 dollars worth to buy right now. There are more, of course. The price per share is low, the growth potential is reasonably good. But remember, the low-cost stocks are extremely volatile. The high potential risk is involved but the reward can be great also. Everything is up to you when it comes to stocks under $5. This is just a suggestion. But I would like to give more info on trading so-called penny stocks.

    Why trade penny stocks?

    As I just gave you a suggestion of stocks under $5 I would like you to know that these are so-called penny stocks. So, penny stocks represent the companies whose stocks are valued under $5. You can find that definition can vary but, in essence, this is the right explanation. At least, it isn’t wrong. So, let’s put aside the definition. You may ask yourself why should you trade penny stocks.
    Trading penny stocks has one reasonable goal: to turn a little money into the big money. Traders’ profit comes from small changes in stock price but from large percentage gains. They trade with large leverage. That’s the point. Also, that’s the way how you can trade with a little money and earn very nice. Once I said don’t be shy to buy cheap stocks, stocks under 5 dollars. This is especially valuable for the penny and undervalued stocks.

    At the end of the day what really matters is your profit. Happy investing!

  • Spread Betting With Examples

    Spread Betting With Examples

    3 min read

    Spread Betting With Examples

    Let’s be frank.

    Spread betting is extremely risky. It’s highly dangerous. It’s not for beginners and people with lack of knowledge. 

    But to be totally honest, it is one of the simplest ways for an individual investor to support their ideas with hard cash. If you treat the market proper, you can get big gains, very fast.

    What is spread betting and how it works?

    Spread betting simply lets you guessing will the price of some stock climb or drop. You can speculate from stocks to house values.

    Moreover, you don’t need to purchase the stock you want to trade. You just take a look at the prices submitted by the spread betting provider and speculate if the price will increase or decrease.

    Spread betting brokerages give you a quote. The quote contains a bid price and an offer price which is a bit higher. Let’s see how it works on this example.

    Your brokerage quoted some stock price at $5,000 and a spread betting provider will give you a bid price of $4,990, for example, and an offer price of, let’s say $5,010.

    If you think the price will increase you can “buy” for $10 per point at $5,010. Every time the point is rising up you will earn $10. Say the price increased to $5,030. It is reasonable to close up the bet. 

    It is time to calculate your profit

    5030 – 5010 = 20

    20 x 10 = 200

    So, your profit is $200.

    This is in case you believe the market will grow, but if you think the market will drop, you can sell your stock at $4,990.

    But you have to know that the risk is involved here. You can indeed make a lot of money with betting on small amounts but you may lose a lot too.

    Let’s assume that you sell your stock for $10 per point at $4,990.

    How big your loss will be if the price increase to a spread at 4,990/5,020?

    Let’s calculate this.

    4990 – 5030 = 40

    20 x $10 = $400

    Your loss is $400.

    You see, you can make huge losses if your trade goes in the wrong direction. And this isn’t the only loss you may gain. Spread betting brokers will demand you to pay margin. Usually, it is about 10% but can be less or more. 

    The dangerous situation can arise if your losses on the trade approach near to the margin. In such a case, the broker may require more money from you and activate a margin call. What will happen if you can not come with that? The spread betting provider may close and will do, your position at a current price.

    You don’t want a margin call to control your losses or you’ll be broke. Instead, set stop-loss order to close your trade at a particular price.

    Let’s use our example again.

    For example, you sold stock at $4,990 but you placed a stop loss at an offer price of $5,010, how big your loss would be?

    4990 – 5010 = -20 

    -20 x $10 = loss $200

    Your loss would be $200 which is pretty much less than $400. 

    But there is a problem with markets moving. What if it is too fast? It is gapping. A normal stop-loss order will not prevent your trade since a lot of stop-loss orders are triggered together. That will cause the trades to be closed at the market price closest to the defined price and it usually isn’t the level you wanted or expected.

    The better choice is to set a guaranteed stop. This will cost you more since your broker will ask more money to get you out at a settled price. In this case, it isn’t in the question how many other stop-loss orders are activated beside yours. Actually, your broker will buy you out of the trade. This is very important when the market is highly volatile and you would like to pay a bit more to stay in a safe zone.

    But there must be advantages also

    One end is the tax break. In many countries (we are sure for the UK), you will not pay taxes on profits gained in spread betting or on capital gains from it. The other reason is that you don’t need to pay a fee to your broker when spread betting. Your broker will earn money from the difference between the bid and offer price.

    But spread betting isn’t all about money. It is all about the opportunity to speculate on a full spectrum of markets. Even if you don’t have regular access to them. As it is said in the beginning, you can bet on almost everything. Currency pairs, stocks, commodities, whatever.

  • How to Invest in Marijuana Stocks?

    How to Invest in Marijuana Stocks?

    Marijuana Stocks and How to Invest
    Here are some tricks and tips on how to invest in marijuana stocks. They are in trend now.

    By Guy Avtalyon

    Marijuana stocks easily can be one of the most interesting industries in the coming decade. The sector is growing with very volatile stocks that can give possibly marvelous trades.  

    This sector is already expanding. But it may explode even more. We already have a lot of listed stocks, but new ones launching IPOs also.

    How to invest in marijuana stocks?

    Let’s be clear on what precisely a marijuana stock is.

    Marijuana stocks are the stocks of companies that are included in the marijuana industry. Such companies are focused on growing, others on selling, and some on researching marijuana. Marijuana stocks you can find under the name pot stocks. Not only producers or merchants businesses are pot stocks. Pot stocks also refer to companies that are servicing firms in the marijuana or cannabis industry, for example, distribution companies. Any company that acquires more than 30% of its income from any business linked with marijuana can be a pot stock.

    Tricks and tips

    The marijuana sector is really hot. So, you have to be aware that it is a volatile industry. This is the reason more to read and watch the news like any other stock. The news is important because that is what makes changes in the market. The truth is that the news can make an enormous turnaround in the market, the prices may jump or drop on news, the stock may be tremendous or useless thanks to the news.

    What you have to do is to watch your favorite marijuana stock tickers. Be very careful with that because some mistakes may appear.

    Is trading marijuana stocks easy

    It’s almost the same as any other stock. Use the charts. By using stock charts, you’ll be able to know where to enter a trade, where to set stop-loss order, what is the market sentiment about your stocks. A lot of data you may gather from charts.

    To know how to invest in marijuana stocks you have to watch a stock scanner to find trade setups that match your standards and your goals. But one suggestion first. Since there is a bulk of marijuana tickers tracking all of them is simply wasting your time by watching all of them. Moreover, there is no need to do so since we have the technology to work for us. Yes, I am talking about stock scanners. All you have to do is to set up the criteria that you are looking for and after a few clicks, the technology will do the rest.

    Adjust your portfolio to trade long and short. Of course, if you are an investor and not a trader, you don’t need this. Just buy and hold, you are already long and you are waiting for the price to rise. But if you are a trader, to be short means that you have to borrow the stock, sell them at a higher price and wait for the price to drop, and buy the stocks again at a lower price.

    In the coming years, the marijuana industry might grow. But with stocks, we are talking about winners and losers. To be honest, it is much easier to find dropping stocks. So, the short-selling can be very tricky and you must have a really good strategy and be well educated to practice this.

    How to find good marijuana stocks? 

    The main problem is that most investors habitually don’t have access to adequate sources to estimate a company. But still, there are choices. For example, you can invest in ETFs. There you can find pre-selected marijuana stocks. 

    Teams of analysts paid the required attention and chose to add some companies in these ETFs. The other solution is to engage some advisors and stock pickers.

    Whatever you decide to do, keep in mind that marijuana stocks are volatile.

  • Taking A Position While Investing

    Taking A Position While Investing

    3 min read

    Taking A Position While Investing
    What is the definition of taking a position? How to accurately control your portfolio positions?

    By Gorica Gligorijevic

    Taking a position in the stock market indicates that a trader is ready to make choices, to go long or short. These are two positions that an investor can take. Going long means to buy, short to sale.
    When you hold a long position that means you own the stock. Why is this important? I like to say investing is a marathon.
    Investing takes time to grow. It requires a relatively moderate risk and moderate returns in the short run. But investing may produce bigger returns by placing both, interests and dividends to hold for a longer period of time. So, we are taking a long position when investing.
    You would like to hold your stock for several years and have a decent return. In most circumstances, you should take the profit when a stock grows 20% to 25% of the buy price.
    A “short” position relates to the sale of a stock you really don’t own. You have to borrow shares from a stockbroker. You will have the open position of shares and that has to be closed after some time. Investors who sell short believe the price of the stock will go down. And they are selling, meaning they go short.  After you go short, the price of the same stock may go down more and you can buy it back and make a profit. Never wait to the price of that stock to increase and then buy, you will catch the loss.

    If the stock’s price fell to $0, you owe the stockbroker zero and your profit would 100%. What if the stock price grows doubles when you close the position? Calculate! You may gain loss to 200%, double more of your buying price.

    But keep one thing in your minds, short selling isn’t for beginners.

    Taking a position in the investment

    You are facing the horror: that stock you bought go lower, from hour to hour, day after day.

    If it fails 5%, you may say the market is changeable, so why to be worried. But the dropping is continuing. Your stock is 10% down, after a few days 25%. To defeat a 50% loss you will actually need a 100% gain.

    How do you feel now? What are you going to do? To wait until it drops 50%?

    So, what to do?

    When to get out in the investment?

    There are several possible scenarios on taking a position but at first, try not to get panicked.

    You should get out in your investment when your stock no longer meets your goal. Or you purchased it by mistake, it can happen.

    The other reason for selling a stock can be you need money, or you would like to get out your investment because of asset allocation or reallocation.

    The general rule of investing is never getting out of your investment just because the stock price is dropping. The rule “buy high and sell low” isn’t relevant while investing. Otherwise, you will never earn money in the stock market.

    A selling an investment too quickly can hurt your portfolio.

    Can you “ensure” some positions?

    All beginners, no matter how smart they are, have illusions, so they have losses. You have to keep your losses small, don’t let them scare you and survive.

    The rules for managing the risk that we’ll show you may feel disturbing for beginners because they have small accounts. Well, the proper risk control may limits trade size. I know that. But it is important for you to know that it is a protection in the first place.

    The crucial rule of risk control is the 2% rule: never risk more than 2% of your account investment on any opened trade.

    Start by writing down three numbers for every trade: your entry, target and stop. Without them, a trade may become a gamble.

    I want to share with you one of the best advice I got when I become an investor.

    If you see your stock rises by 40% you should sell 20% of your position. When the stock later increases 49% more, sell the other 20%. That will provide you to have 125% of your primary position.

    You have 100% of the initial position. And it grows 40%:

    100%*1.4=140%

    You sell 20% of it, which means that now in your hands you have 80% left:

    140%*0.8=112%

    Stocks rise for another 40% progressively:

    112%*1.4=156.8%

    Now you sell 20% of the stock you have in your hands:

    156.8%*0.8=125.44%

    You end up with a 125.44% value of the initial position.

    To make this simpler, when you buy some stock you have 100% in your hands. After some time they rise by 40%, so you have 140% of the value. And you sell 20% of that 140% and you have 80% of that 140% in your hands which is 112%.
    After some time that 112% rise for another 40% – that means you have 156,8% in your hands. And you make another selling of 20% from that 156,8% which means you will have, after second selling, 125,44% of your initial position.
    Also, you may apply a 20% stop loss on all positions. This serves to block whipsawed. If you are properly handling your portfolio positions you could reduce lower-performing positions before the 20% level is scored.
    Taking a position in trading and investing is always in the question, so you must know how to handle your portfolio. On some assets, you are taking a long position but on others, you are taking a short position. It is necessary because you would like to protect your investments as a whole.

  • Oil Stocks Rose After The Attack on Saudi Arabia’s Oil Facilities

    Oil Stocks Rose After The Attack on Saudi Arabia’s Oil Facilities

    2 min read

    Oil Stocks Rose After The Attack on Saudi Arabia’s Oil Facilities

    Oil stocks rose and all energy stocks rose but Wall Street fell on Monday after weekend attacks on Saudi Arabia’s oil facilities. Investors’ are concerned about this geopolitical risk and its influence on the global economy.

    The attack carried oil prices up more than 20%. But easing came after many countries stated they would use crisis reserves to ensure stable supplies.

    The Dow Jones Industrial Average dropped 0.52% to end at 27,076.82 points. At the same time, the S&P 500 fell 0.31% to 2,997.96. The Nasdaq Composite fell 0.28% to 8,153.54. Eight of the 11 main S&P sectors moved lower.

    Also, oil futures rose10% Monday morning as a consequence of the attack. Saudi Arabia suspended 5.7 million barrels of daily production, which is more than 5% of the total production in the whole world.

    Brent crude, the international benchmark, rose 10% to $66.27 in first-day trading. For example, West Texas futures increased by 10.2% to $60.44.

    Oil companies and industrial stocks will benefit from new higher prices. Industrial companies that sell substances, pumps, and vehicles, processors, and sellers or auto parts companies. 

    As energy prices increase, investors may need to evaluate some of these energy stocks.

    Oil Stocks Are Rising Which Ones to Buy

    Some oil companies hit much larger gains as investors hurried to close their positions and avoid losses. For example, Carrizo Oil & Gas CRZO stock rose 19.53%, it had 39% of shares open for trading sold-short, reported FactSet. The shares climbed up 19.5% and close at $10.22. But, it is lower 62% from the 52-week intraday high of $26.67 placed in September last year.

    MarketWatch published a list of energy companies in the S&P 1500 favorable to invest in now. 

    THE LIST IS HERE

    How to determine the good one 

    Investors have to estimate the company’s balance sheet to reveal is it in stable financial status. Does the company have the money to satisfy its business obligations, if market conditions worsen? This is important data. Secondly, investors have to check companies leverage ratio. But the most important factor for oil investors when choosing the oil stock has to be its debt to EBITDA ratio and net debt to capital ratio.

    If a company produces or uses crude oil a debt-to-EBITDA ratio should be below 2.0 times and net debt to capital ratio should be less than 30%. Although, if the company has fee-based cash flow net debt to capital ratio can be 50%.

    Majority of oil companies will issue their current leverage metrics on their website so it is easy to check. 

    Investors should take care of the company’s liquidity. 

    That is money to which a company has immediate access to satisfy its financial obligations. The company must have enough cash for that purposes, a fund for several months, for example. How will you know that? Just divide a company’s declared capital budget by its cash on accounts. 

    An oil stock that is enough protected against a big fall in oil prices owns a stable credit rating, low leverage ratio, and much liquidity. Such companies are good investments, despite the oil prices droppings.