Learning To Trade in Forex

The foreign exchange market does not have any central exchange or physical location, unlike other financial markets. The market trades whole 24 hours in a day and is connected through a wide network of banks, business, and individuals from around the globe. It means the prices of the currency will keep fluctuating in value all the time against each other and offers multiple trading opportunities. Listed below are the steps for trading in forex. Trade with legit robot

Steps to follow

Step-1- Choose the currency pair- The first thing you need to do is to choose a currency pair that you would like to trade. There are more than 65 currency pairs one can choose from. It is very much essential that you pick the right trading opportunity. You can use different fundamental and technical research tools which will guide you to choose the trading opportunities that suit your style. Also, it is critical that you understand about the price volatility that is associated with the pair you have chosen to trade so that it is easier to manage the risk.

Step-2- Settle on the forex trade type- There are mainly 3 types of forex trading:

  • CFD trading- Here, you trade the CFD quantity in the base currency unit.
  • Spread betting- In this case, the traders trade the pounds on each point movement.
  • Forex trading- In this case, in the base currency’s unit, you buy the lots.

Step-3- Decide to sell or buy- Once you have decided on the type of market, you should know the current price of the pair you are going to trade. Every currency pair has quote currency and base currency. If you feel that the base currency is going to strengthen against quote currency or the quote currency is going to weaken against base currency, then you need to buy that pair. With the increase in exchange price, the profits will only rise.

Step-4- Adding orders- The order means an instruction given to trade automatically at a particular point in future when the price reaches a stipulated level. It helps in ensuring that you are able to reap in profit and at the same time lowers the risk. There are different types of orders:

Stop loss order- It is an order given to close the trade when the price has worsened and it helps in minimizing the losses. There are 2 kinds of this order- guaranteed and standard order.

Limit order- It is an order given to close the trade when the price is far better than the current level and it helps in locking the targeted price.

Step-5-Monitor and close the trade- The profit and loss of the trades will keep fluctuating each time the market price moves. You should keep tracking the market prices, check your unrealized profits or loss updates, keep adding new orders, exit from old trades and so on.

Step-6- Close the trade- When you close the trade, the net profit or loss will be immediately get realized and it will reflect in your account.

 

 

 

 

 

Equity investing gets simpler through Mutual Funds

Financial independence has been the ultimate goal of many people living in the current economic world. It means a lot to the common people. In the present financial scenario, our revenues and expenditures tend to get equal and balanced every month. This is not a good trend. The reason is that an uncertain event can hamper our savings in a way that is so very unpredictable. It is advised that we must strategically plan and invest so that we have a safe haven at all times of the year.

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Diversified investment strategies

We have many new investment strategies being developed throughout the world. The equity market, commodity market, real estate, savings schemes and mutual funds. It is always a good option to invest in diversified platforms so that we can get our investments balanced. If there is a downfall in the way an investment moves, we can get saved from one another. When there are different options to be utilized, it is our responsibility to avail it all at the right moment.

Taking the right investment decision

Investments decisions have to be made correctly. There are many options out there in the market. We have to choose the best and decide based on its suitability to us. We have to select the option that we can accommodate well and maintain. Based on our strength and investing power and also the amount of risk we can take we have to choose the best option.

Mutual Funds

When the amount of risk one can bear increases, it is understood that equity is one of the perfect options. Equity shares of companies that tend to show a sudden increase will ultimately increase the way our investments grow. But investing in very large cap companies get difficult. We may not have sufficient funds and the required expertise to handle such equity rends. To manage and handle such situations, we have the option of Mutual Funds. It will be operated by a good company of people in a professional manner. Hence, our investment will be safe. We will have a group of people buying the fund, the necessary equity share as a whole. The income generated from it in the form of dividends will be distributed to all. This is the basic principle involved. As it is professionally managed, we have a good knowledge of the funds and how it is managed and how the price moves.

Out of all the investment strategies, the best that is considered in the market is Mutual Funds. Get yourself invested in this manner to sufficiently increase your value in a way that is advanced in concept and worth. We have different options to choose from and many new developments happening day by day. The right decision at the right time will fetch maximum benefits over a long period of time. This will be evident and understood when the amount matures and returns are earned much more than what is expected out of it as a proven reality.

What to do When you are Investing through an IPO.

 

We normally hear a lot of new companies getting listed on markets and few of them sell like cupcakes and few stumps like a no ball! IPO’s of many companies were out and we did see few them faring extremely well and have been giving great returns. But, do you know exactly why an IPO is released and how do you gain access to it?

Why is an IPO released?

IPO is normally a way company extends out seeking investments from the general public, to expand its work, or gain some new project, or hold the cash in hand for expanding the business.

How is an IPO released?

IPO is normally laid out to gain some investors for a company and listing the company on market for the first time. This makes the company become a public listed company and makes most of the info available to the common public.

The IPO is primarily issued in the primary market and then the stock and shares of it are listed in the secondary market for investors to purchase and trade using the same.

The company fixes a price analysis and then the IPO is opened. The public can place orders with their trading account at the mentioned price. It will be allotted in lots, or in some fixed amount of stocks. After the listing, the secondary market will allow the remaining public to trade and buy for a positional trade.

Here are few things that you must do before you buy the stock in an IPO:

  • Every company will be graded by a governing authority like SEBI in India, and few other credit agencies across the globe. You need to check the valuation of the IPO and its growth in the coming years. The grade to the company is given after analyzing the financial conditions, its market value in comparison to its peer companies.
  • Make sure that you read the documents available on the company website, all about its business and the reason for getting listed. Check the prospectus, the risk factors of the company, about the shareholders, any acquisitions, and other details.
  • Check for the lock-in period after the subscription happens. After an IPO is listed, lock-in period is a contract that nobody can sell the stock for a specified period. This period might range anywhere from 1 year to 3 years, or even in months.

The Skills required for Business Valuation

The process of finding the business value and its current net worth is known as business valuation and this follows some methods for the findings such as the income approach, asset approach or market approach. It is mandatory for every company to have professional help for this process and thus we need to know what are the skills a professional in this field should possess.

Let us clearly understand what skills a business valuation person should be good at so that we get our business value greatly known.

  1. Communication skills: the first and foremost quality of the professional should be that he is clear and comfortable in communicating the results, the process and the problems while evaluating the business. He should be patient enough to answer and clarify the doubts of the owners and management team. Also, they should be able to communicate with outsiders who are connected with the business like the customers, investors and legal consultants.

For developing communication skills one should get associated with an experienced person in this same field and observe his culture towards the work and the company. When this skill is good, then the entire work becomes very easy.

 

  1. Teamwork: unlike any business or any group work, teamwork is necessary for a valuation professional. This quality will ensure the smooth running of the business procedure of valuation without much confusion and clashes which might lead to the difficulty is appraising the business.

He should be cooperative, put him in other’s shoes and view a problem and finally, he should be able to talk and clarify the issues where his concern about it will be required.

 

  1. Adaptability to situations: instead of being an alien to the business, the person doing the valuation must be capable of being one among the team of members and the work he does, he should have the willingness to switchover the different appraisal techniques and adapt to every situation in this scenario. Instead of com[laining about the change he should be able to see the benefits the change will offer him.

 

  1. Ability to voice out their opinion in a strong way: the valuation of the business is subjective to many factors like the economic factors, operational factors, and the general business environment. The professional should be able to clearly support his valuation with proper facts and findings and should be able to convince others about these descriptions.

 

With such profound skills and knowledge, the professional who can evaluate the business is an asset to the organization in every manner.

Factors Ensuring Good Business Valuation

Every business has to undergo the valuation process during certain times of need. It could be the time of entering into partnerships, making a new and bigger company and even when the company will be dissolved or shut down permanently. The valuation is done by a team of professionals who use the appropriate method to do the same and also keep certain standards for every value so that they can have a general market comparison. This method of valuing the business is called a business appraisal.

In order to get an accurate business appraisal, the key factors to be satisfied are

  1. The reason for valuing the business and the concerned people who need to know the worth of the business:

You need a business valuation to set a price or worth for the business in the market. This can be for buying a business, selling a business, apply for a loan from a bank, or to defend the business value in any legal claim issue.

  1. Circumstances around the business appraisal:

Here we have two types, one is the case when you want the business to continue its operations for more time and the other is when you are expecting your business is going to completely shut down.

  1. Business ownership structure:

Here we need to know the value of the entire business, partnership contracts or the ownership structure of the business.

  1. Business financial and operational history and future track:

To know the history of the business in terms of profits and losses and also the capacity of the business to survive in the future is an important point to be considered.

  1. Approaches and methods to measure the worth of a business:

While the process of the valuation takes places, the methods used for the same should be carefully devised keeping the business and its features in mind so that the accuracy level of the solutions are closer to reality.

  1. Concluding the business valuation:

Not every business valuation can be rated a the best method. But from the findings, the one which has values which are close to the company’s real position should be considered so that the proper evaluation can be made.

 

These key standpoints are important to make the business appraisal process clear and complete to know the worth of the business. Thus every business and the professionals who conduct the business valuation procedure should keep in mind these factors and compare them with the process they follow for the valuation.

 

 

Surviving from the Inflation Effects

With a steep market burn out and a long-term effect on individuals earning capacity, industries survival all this is due to not one factor but several underlying contributors which makes the dramatic crash in the financial and economic world, surviving form it is as good as a being given a second chance in life. The after effects and the in-between show up of the impacts of inflation has to ruin effects, well coming out in bits and pieces and again moving on in the industry requires not only the girth and determination, it also the power to survive the risks of inflation in the economy.

What does inflation do?

  • reduces the profit margins in the business steeple
  • reduces the purchasing power in the economy
  • stock markets go in for a crash leaving investors in disbelief and
  • reduction in the interest of the bond and securities

From the standpoint of an investor, it is more like surviving a hurricane and continuing to live and manage all kinds of volatility and fluctuations which the financial markets experience. The portfolio effects are the major concern of an investor and the effects could be for a long-term as well as a short-term impact, which the investors have to face owing to the reduction in the purchasing power.

  • the US economy has survived even the worst market crashes and has bounced back, though it could be an impact which is there for a long-term, which investor cannot ignore and the power of money does decrease in the long run, even if it is conservatively invested, over a period of time one can see how the bank interest rates have fallen, never rises for the number of deposits one keeps in the bank.
  • The bond market was severely hit during the inflationary period and many fail to keep up with the rates as high as the prices to buy them where sky high and selling them was not any more profitable.
  • commodities could not be in the main field investment pattern, as they affect the pricing of other goods and services too during the inflationary period

Having said all the effects which could possibly be depicted in small graphs, investors are keen on the long-term investments they have made whether they will be impacted to be redundant during the long term due to the pricing.

 

 

 

How to choose a Mutual Fund

Earning money is not enough if you do not know how to save it or invest it. Besides real estate mutual funds are the most popular form of investment that individuals take for resting their funds. There are over thousands of options and schemes to choose from and it can be a daunting task for the uninitiated. But here we wish to provide you with information that will make this process simpler and fruitful and help you in choosing the right mutual fund.

There are several different types of mutual funds like the debt funds, equity funds, money market funds and so on. The objective of each fund varies; you must hence, choose a fund that is aligned with your investment plan and strategy.

Debt or equity funds

From debt funds you are assured of a regular income but which is low because these funds are low risk. They are most suited for short-term investment goals where you pay more importance to capital than potential returns.

Equity funds on the other hand yield high returns as they are invested in shares but they are subject to the fluctuations of the market and are not suitable for short-term investment. A comfortable time period would be five years or more. These funds are ideal for long-term investment goal because of their greater return potential and the lower probability of loss.

Thus for the first time a combination of debt funds and equity funds will be a suitable option to save for retirement.

Which is the specific fund to choose?

Next, you need to choose specific funds within each of these categories. Do not make the mistake of choosing randomly or by relying on others advice. The correct way to select funds is to identify funds which have been performing well over a long period.

How many funds to invest in?

To begin with, two to three funds are sufficient. Even these funds are diversified into various stocks. And choosing the growth option over dividend will be beneficial as the interest gets compounded periodically.

You can either choose a direct plan where you have to do all the groundwork, identify funds and keep tracking of them. This way you can cut the commission but if you are well versed in the market it can be intimidated and confusing and can even lead to losses.

Beginners should seek the help of an agent when investing for the first time.

 

How Fintech has been instrumental in changing the customer behavior

Do you know what the word Fintech implies?

Fintech is a combination of two words namely finance and technology. It is the culmination of these two fields that have made consumers the real kings that they are!

Information on the fingertips!

Today, information, thanks to the internet is at everyone’s fingertips. There were days not too long when people had to read books and try to understand or derive application based knowledge but today, smartphones and connectivity has brought the whole wide world of information to only a click away. Now, any chore is only a press of a button away; including making decisions as to what to buy, where to purchase, the comparison of prices and even making payments online all in a flash of a second without actually traveling anywhere – that’s Fintech for you!

Business startups have the best of times:

Startups and expansions now may look like cake walk when people can only post their ideas on the internet for the whole world to view and maybe someone who is on the other side of the globe may think that it is a brilliant idea and stake a big sum of money into the new business without even knowing from whom the idea originated. That is what is this crowdsourcing is all about?

Traditional startups had to run from pillar to the post to be able to get loans from the banks and to woo the investors to put some money into the business. But thankfully, those are the days gone by!

Checking balance in the bank account is so easy!

Since the internet has cast its net on the people and the people have become smartphone savvy banks have experienced a steep spike in the number of account holders. The fact that net banking and mobile banking is so convenient has prompted people to open bank accounts even with nominal savings because they want to keep their money stashed safely. Also, with a bank account, using the money to transfer online albeit even for smaller expenses like at the grocers, shopping malls, and even cabs is so easy. One can literally travel cashless but still be able to carry as much in their account as they can.

The other day, I saw a granny checking her account balance on the phone and I smiled and thought to myself, this is amazing. In normal circumstances, she would be checking it on the ATM or at the teller in a bank but Fintech gave her this awesome power to check anywhere even if she is waiting in a queue at the bus stop!

Arbitrage- Making Financial Market Efficient

When there is purchasing and selling of any asset which is done simultaneously so that if there is any variation in the price, it won’t affect them and there will be complete profit.

Definition of Arbitrage

The profits are got on such type of trading by taking the advantage of the difference in the price of the financial instruments that are either alike or similar which will be available on the different marketplace or sometimes present in another form. Arbitrage came into existence because there was inefficiency in the financial market. If the financial market was efficient the arbitrage would not have existed.

Arbitrage in Depth

When a trader wants a profit that is risk-free what he can do is buy a security from one marketplace and as he is doing so, simultaneously negotiate to sell it on the other marketplace for a significantly high price, this is where arbitrage takes place. There is a mechanism that is provided by arbitrage that will make sure that the price of the security does not diverge substantially from the price at which the security is sold and agreed upon for a longer time.

The errors on the pricing of the securities in a marketplace has become more and more as the technology has advanced over time leading to difficulty in gaining profits. There are traders who have started depending on systems developed for trading that are computerized which are programmed to supervise if there are any fluctuations in the financial instruments that are alike. If there are any pricing that is set and is not efficient there is an action that takes place on it immediately which will lead to the elimination of this opportunity just within a couple of seconds. Making use of arbitrage has become necessary in the financial market.

Example to Understand Arbitrage

Let’s consider an example that is very simple to explain arbitrage: Suppose there are stocks that are traded by a company A. This company trades its stock on 2 exchanges that are New York Stock Exchange and London Stock Exchange. Suppose at New York Stock Exchange the stock is traded at $30 and simultaneously the same stock is traded on London Stock Exchange at $30.05. Noticing this the trader will be buying the shares on New York Stock Exchange and sell it instantly on London Stock Exchange making of profit of 5 cents on each share. The company might continue exploiting this arbitrage till the time the New York Stock Exchange runs out of any inventories of the company or both the stock exchanges adjusts this price to remove this opportunity.

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