Online stock trading and its benefits

When talking about stock trading, the first thing that comes to mind is the time when stock trading was conducted only in centralized places by live communications between stockbrokers and traders or by telephone and no one could ever imagine that one day it would become possible to trade stocks from home sitting in a comfortable armchair. Nevertheless, with the emergence and growing popularity of the Internet, today, anyone from any corner of the world is able to buy or sell his preferred stock online just with the simple click of a mouse and what the most important is without the need to turn to stockbrokers. Online stock trading is an efficient way of increasing capital and making a lot of money, but besides the possibility of generating a great amount of money, online stock trading offers other benefits as well.

The benefits of online stock market trading

• Absolute control of trades;
• Low commission fees;
• Trading with any amount of money;
• Instant execution of deals.

How to get involved in online stock trading?

In order to get started in stock market trading online, one will need to find a trustworthy online stock broker which will best meet his trading expectations. But how to decide which broker is the best one to cooperate with? Nowadays, the Internet is full of various online stock brokerage companies which offer unique trading services online and by a simple Internet search, it is possible to select the company which totally corresponds to one’s trading goals. There are several criteria that should be carefully taken into account while choosing an online stock broker like the trading platform or the trading instruments offered or the commission fees, but probably the most important one for a stock trader is the opportunity of having access to various stock exchange markets such as New York Stock Exchange, Nasdaq, London Stock Exchange, Xetra Deutsche Boerse, Hong Kong Stock Exchange, Tokyo Stock Exchange. In fact, the more stock exchanges, the more trading instruments one can trade, thus increasing trading opportunities and the potential of making a profit.

Online stock trading has become the inseparable part of an ongoing market trend and it has for sure made trading more comfortable and available for everyone.

OPEC is meeting today!

Healthcare stocks lead US markets higher

US stocks ended higher on Tuesday on better than expected economic reports while a drop in oil prices weighed on energy stocks. The dollar continued its slide. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed 0.17% lower at 100.977. Dow Jones industrial average edged up 0.1% to 19121.60 led by gains in UnitedHealth Group and Boeing shares. The S&P 500 gained 0.1% settling at 2204.66, with healthcare and real estate stocks posting the biggest gains. The Nasdaq Composite index rose 0.2% settling at 5379.92, after hitting an intraday record of 5403.86. Market sentiment was boosted by better than expected economic data. The second reading of gross domestic product showed the economy grew at upwardly revised annual rate of 3.2% in the third quarter, the fastest pace in over two years. And the consumer confidence index measured by Conference Board jumped from 100.8 to 107.1 in November against an expected rise to 101.5. Investors are now looking ahead for the Automatic Data Processing Inc.’s private-sector jobs growth figures to be released today, followed by weekly jobless claims figures and Institute for Supply Management’s manufacturing index for November on Thursday. Today at 13:00 CET Mortgage applications will be releases by the Mortgage Bankers’ Associations in US. At 14:15 CET November Employment Change will be released by Automatic Data Processing, Inc. The tentative outlook is positive. At 14:30 CET October Personal Consumption Expenditure Index and Personal Spending will be published, the outlook is neutral.

Rebound in Italian bank shares leads European stocks higher

European stocks closed higher on Tuesday helped by strong recovery in Italian bank shares. Both the euro and the British Pound strengthened against the dollar. The Stoxx Europe 600 ended 0.3% higher with losses in mining and energy stocks offsetting gains in banking stocks. Germany’s DAX 30 ended 0.36% higher at 10620.49. France’s CAC 40 outperformed rising 0.9% and UK’s FTSE 100 index lost 0.4% closing at 6772.00.
Stocks of Italian Monte dei Paschi bank soared 17.5% and UBI stocks jumped 5.8% Tuesday on news the European Central Bank stands ready to buy more Italian bonds if a rejection in a referendum on Prime Minister Matteo Renzi's constitutional reform this weekend results in a political and economic uncertainty in the country. Italian prime minister Renzi has said he would resign if the reform, as polls predict, is rejected. Today October Retail Sales came in better than expected in Germany. At 09:55 CET November unemployment change will be released in Germany. The November headline inflation in euro-zone will be published at 11:00 CET. And at 13:30 CET European Central Bank President Mario Draghi will speak about the future of Europe in Madrid.

Asian markets mixed as investors cautious ahead of OPEC meeting

Asian stocks are mixed today with caution ahead of OPEC meeting outcome offsetting optimism about US economic outlook spurred by solid growth and consumer confidence data overnight. Nikkei ended flat today at 18308.48 with yen edging higher against the dollar. Chinese stocks are falling on concerns about falling liquidity as China's central bank in recent days bought yuans to shore up the sliding currency. The Shanghai Composite Index is 1.1% lower while Hong Kong’s Hang Seng index is up 0.3%. Australia’s All Ordinaries Index fell 0.33% with Australian dollar edging lower against the dollar.

Oil prices rise ahead of OPEC meeting

Oil futures prices are edging higher today ahead of an OPEC meeting later in the day. January Brent crude dropped 3.7% to $46.46 a barrel on London’s ICE Futures exchange on Tuesday. It is far from certain producers can agree on output cut as OPEC, which accounts for a third of global oil production, is concerned its output cut will simply hand over market share to non-OPEC competition. The concerns are based on estimates of rising production in coming year. US crude output particularly is expected to rise as US Energy Department forecasts domestic crude production is likely to reach 8.7 million barrels a day in 2017, 100000 barrels a day higher than the previous estimate. OPEC producers Iran and Iraq are resisting pressure from Saudi Arabia to cut output, signaling they are willing to hold output steady. The meeting is expected to begin at 10:00 CET today. OPEC’s secretary-general is scheduled to hold a news conference at 12:00 CET. And at 16:30 CET today Crude Oil Inventories will be released by the Energy Information Administration.

Black Friday: the best time to go shopping!

Each year millions of Americans wake up early in the morning, bundle in their warmest winter clothes and rush into the cold. In front of various stores, they huddle together making a huge line and wait for the main event to start. This event is of course Black Friday!

Undeniably, for the majority of people Black Friday is the most long—awaited time of the year to do some serious shopping and buy Christmas presents.

Black Friday is one of the greatest and the busiest shopping day in the United States. Black Friday is the day following Thanksgiving Day in the United States and it traditionally indicates the beginning of the busy Christmas shopping season. On this day, most large retailers open doors to customers earlier offering the biggest promotional sales.

The term “Black Friday” was originated in Philadelphia in 1960s, where it was used to describe the heavy pedestrian and vehicle traffic which would occur on the day after Thanksgiving. However, more than 20 years later, there appeared another explanation of the phrase “Black Friday” according to which “black” refers to stores moving from the “red” to the “black”. In other words, “black” alludes to profitability, which is recorded in black ink and the losses are noted in red ink.

Due to its exclusive promotions, Black Friday has gained an unparalleled amount of interests from all parts of the world. Each year the number of people participating in this biggest shopping event increases significantly and nowadays, more and more customers choose to shop online rather than wait outside in the morning or fight with others for the last most-wanted item. The great variety of online retailers amongst which are the Walmart, Amazon, eBay, Alibaba and many others have completely changed the traditional way of shopping making it more comfortable.

Just a few hours left before the Black Friday! Try not to miss the greatest shopping event of the year.

What is an online broker?

A company, which gives a trader the opportunity to make transactions in the currency, stock, and commodity markets through the Internet, is called an online broker. Any trader by installing a trading terminal on his personal computer gets direct access to trades through current exchange quotations or electronic trading platforms in real-time.

Currently, there are many applications through which investors and traders get access to trades.

• Computer applications – these are the most common platforms, which are installed on the computer for free and allow managing accounts, analyzing price movements and trading in real-time. There exist well - known standard trading terminals such as MetaTrader and other terminals of online brokers developed by their own standards with additional functions, such as, NetTradeX trading terminal developed by IFC Markets, which allows trading not only individual instruments but also portfolios of various instruments.
• Web applications – these are online programs with less functionality, but they give the opportunity of trading through web browsers, which in its turn allows trading from any device.
• Mobile applications – these are platforms for devices running Android and iOS, which provide access to trades anytime and from any part of the world. Mobile platforms are particularly relevant for people who combine trading with the main job.

Advantages and disadvantages of online brokers

The main advantages of an online broker are high leverage, fixed spreads, low minimum deposit requirements and the introduction of information for making analysis and using trading signals.

The negative side is the easy and fast access to financial markets, which, may cause a trader to make quick and careless transactions in case of not having sufficient knowledge. In case of trading with the help of a classical broker through trading terminalsinstalled on the personal computer, traders may assess the situation through multiple analytical sites or consult with the managers of the brokerage company on the current situation, characteristics of different markets and trading instruments, get advice where to invest their funds.

Online brokerage services:

• Provision of access to trading platforms with instant execution of orders;
• Provision of an easy-to-use trading software for analysis and trading;
• Provision of a demo-account (for developing your trading strategy);
• Provision of leverage;
• Graphical support (for technical analysis);
• Technical support;
• Publication of the economic calendar and the daily analytical overview of the markets.

The choice of an online broker

While choosing an online broker, pay attention to the number of key features: minimum deposit, the size of the spread, swaps, order execution mode, trading terminal, restrictions on the use of several trading strategies, the quality of customer support. It is especially important to check the stability of the provided platform, instant and qualitative execution of orders and the speed of the deposit/withdrawal of funds.

US business will be short due to Thanksgiving holiday

What is CFD

CFD Definition

CFD or Contract for difference is an agreement between two parties, buyer and seller. The value of the contract is based on the underlying asset (for example, index, stock or commodity future). Upon the contract expiration or when the parties make a decision to close the position, the seller pays the buyer the difference between the current value of the asset and its opening value, if the value of the underlying asset has increased. And, vice versa, if the value of the underlying asset has decreased, and the difference between the current and initial value of the contract is negative - the buyer pays it to the seller.

CFD Explained
CFDs are derivative financial instruments by their nature that provide traders with an opportunity to make profit on price movements of various assets, allowing opening long positions when the asset prices go up and short positions, when the prices go down. The CFD value linked to the underlying asset moves in the same direction as the price of the underlying asset and depends on the same factors. At the same time being much more flexible and accessible, contracts for difference present a number of advantages compared to trading the underlying asset directly.

CFD Example
If you are still asking “What is a CFD?” it is worth to bring an example that will help you to imagine it in practice. Let's say the initial price of Apple stocks is $100. You conclude (buy) a CFD contract for 1000 Apple stocks. If the price then goes up to $105, the sum of the difference, paid to the buyer by the seller will equal to $5,000. And vice versa, if the price falls to $95, the seller will get the price difference from the buyer equal to $5,000.

The contract does not imply physical ownership and purchase/sale of the underlying stocks that enables investors to avoid the registration of the ownership rights for the assets and the associated transaction costs.

How CFDs work

CFD imitates the profit and loss for real purchase or sale of an asset. The contract provides an opportunity for trading in the underlying market and make a profit without actually owning the asset.

Let us assume that you expect the rally in metals market to continue and you want to buy 1000 stocks of Freeport-McMoRan Copper & Gold Inc. (FCX), the world's largest publicly traded copper producer. You can buy these stocks through a broker paying a considerable portion (according to the regulatory norms of the Federal Reserve, the initial margin is currently 50% in the U.S.) of the total value of these stocks and take a leverage from the broker for the other part and, moreover, to pay commission to the broker.

Instead, you can buy CFD contract for 1000 FCX stocks. To buy this contract you would have to make much lower margin deposit(2.5% of the total value of stocks provided by IFC Markets).

CFD trading

The question “what is CFD trading?” is the most frequent one among beginner traders, who have no experience in online trading. CFD is a versatile investment instrument and it is traded by the same method as currencies are done.

Alongside with these instruments, IFC Markets has developed new types of CFDs - Continuous CFDs, i.e. contracts that do not have expiration dates. These instruments imply that investors decide the dates for closing the contract and taking the profit/ loss. Besides, several below mentioned opportunities make the contracts for difference ideal instruments for online trading.

Leveraged Trading

Margin trading allows to take a higher position volume in the market by a small sum of the invested capital. When the market moves according to your expected direction the profit increases by the provided leverage, since you had deposited only a part of the total contract value but the profit will be made from the change of the total value. Certainly, in margin trading losses may also increase in case the market goes against your expected direction. That is why it is important to be careful when trading with a leverage: risk management becomes highly important.

Day Trading

Day trading is defined as the process of buying and selling various assets within the same trading day. This means that a trader or an investor is free to make as many trading transactions as he would like within a single day. As leveraged trading enables opening bigger positions with limited deposit amount, trading CFD is possible in case of slight fluctuations of the asset value during one day.

Trading Stocks, Commodities, Indices and Currencies

A CFD (Contract for Difference) is a universal trading instrument, which has gained much popularity in the last years. With the help of CFDs, it has become possible to trade on the price movements of various financial instruments, without the need to possess them physically. Nowadays, CFDs allow to trade not only stocks but also major indices, currencies and commodities.

Trading on both Rising and Falling Markets

CFD is a flexible investment instrument. When you believe the market will rise you can make a profit by buying CFD which is known as going long. You can also speculate on falling prices by selling CFDs, known as going short. Holders of open buy positions on Stock CFD get a dividend adjustment equal to the announced dividend payment amount, if they have a long position open on the instrument at the beginning of trading session on the adjustment payment day (coincides with the ex-dividend date). In contrast, the dividend adjustment is deducted from customer's account in case of a short position.

Hedging the Investment Portfolio

If you believe that stocks you own are going to fall in price but still want to hold them, you can use the hedging strategy to protect your portfolio from risks by opening a short CFD position on your stocks portfolio. Your profits from going short in CFDs will reimburse the loss from the falling prices of the assets in your portfolio. You will carry lower transaction costs compared to hedging by selling the physical stocks in order to buy them back cheaper later.

Next steps

You can study CFD trading more thoroughly and see CFD trading examples in the section How To Trade CFDs.

You can trade CFD for free, by downloading our CFD Trading Platform NetTradeX.

5 Swing Trading Tips for Beginners

Swing trading is a trading style that aims to capture gains in a stock within 1 to 4 days. A swing trader uses technical analysis in order to look for stocks with short-term price momentum. These traders are usually interested in their price trends and patterns, not in the fundamental or intrinsic value of stocks. Traders should act quickly to find situations in which a stock has the extraordinary potential to move in a short time frame. Swing trading is mostly used by at-home and day traders, as large institutions trade in sizes too big for moving in and out of stocks quickly. Swing trading can seem confusing to many beginners, as there are strategies and options to explore, also an entire language of trading terms that you should become familiar with.  Here are some valuable swing trading tips for beginners.

Pay attention to your education

In order to be a successful swing trader you should study various techniques and strategies involved in swing trading. Money management skills are important, as you should be able to budget business expenses properly and understand relevant tax consequences. You should also realize that your education will be ongoing, so you need to stay curious, vigilant, and up-to-date.

Try to accept your losses and move on

If you want to be successful with your investments, try to view swing trading as a business and accept that losses are also possible. Don’t be afraid to take a few hits. Make efforts to stay calm and control any emotion-based urges you have in favour of rational decisions.

Use paper trading

Paper trading is a practice method in which aspiring investors are only pretending that they are making real investments. They track their proposed trades on paper, note all their losses and wins, and later analyse their success after a set period of time. Paper trading is a good way for practicing your skills, and until you feel confident in your abilities and have a proven track record of profits, paper trading is recommended as it can help you hone your technique at the same protecting your trading capital.

Patience is key

If you expect immediate wins, then you will be disappointed, because the market doesn’t work that way and success takes time. It’s worth to mention that you shouldn’t hinge your financial well-being on your newfound interest in swing trading, even if you aim to become a full-time swing trader.

Find the strategy that suits you best

As a swing trader, it is essential for you to have a set of tried-and-true swing trading strategies. Swing traders usually trade the daily charts, and also often trade daily candlestick charts. Some swing traders prefer using short time-frame charts for choosing the perfect entry or exit, and others employ long time-frame charts in order to assess the general long-term sentiment surrounding the investment. Just as people are different, swing trading strategies are different—there is no “correct” way to go about it. Each trader has his or her preferred methods and strategies, so you should explore various strategies and find the one that works for you.

I hope that these swing trading tips will help you get started in swing trading as a beginner.

Dow Jones Industrial Average

The Dow Jones Industrial Average, created by Wall Street Journal editor Charles Dow, is the most popular and one of the oldest stock indices followed by investors around the world. The Dow Jones Industrial Average includes the 30 largest US companies and it actually reflects the economic condition of the country. Currently, the prefix “industrial” is not relevant and it is a tribute to the history, as there are many companies from other spheres included in the index.

The history of the Dow Jones Industrial Average

The index was first published by Charles Dow in 1896. It was calculated as an arithmetic mean of stock prices of the 12 largest US companies and was 40, 94 pips. Of these companies, only General Electric is presented in the current version of the index.

In 1928, the number of companies increased to the present 30, and the method of calculation changed as well: fixed divisor was applied.

The biggest changes in the composition of the index occurred during the Great Depression of the 1930s. The most rapid growth of the index was in the second half of the 1990s, when over 3.5 years the index rose by 5000 pips. The greatest collapse took place on October 19, 1987: 22, 6%. Moreover, this “black Monday” was not preceded by important news or events.

The calculation of the Dow Jones Industrial Average

All the indices of Dow Jones differ in the method of calculation from all the other indices: they represent weighted price and do not take into account market capitalization. The sum of stock prices of 30 companies is divided by the divisor which changes only when combining or splitting stocks included in the index. The last value of the divisor is approximately equal to 0, 14602128. Such calculation of the index is its main disadvantage and makes it not quite objective, because the company with high stock prices, but with lower capitalization has more influence on the index than the company with high capitalization and cheap stocks.

DJI index trading

The DJI stock index trading allows traders through one transaction to invest in the stocks of the 30 largest US companies, thus investing in several sectors of the economy. Therefore, by trading any index, the trader mostly follows macroeconomic events rather than the activity of each company.

The structure of Dow Jones Industrial Average

The structure of the index changes periodically depending on the position of the company on the stock market. The editorial office of the Wall Street Journal is engaged in the composition of the index.

The list of companies included in the DJI index as of November 10, 2016:

• 3M
• American Express
• Apple
• Boeing
• Caterpillar
• Chevron
• Cisco
• Coca-Cola
• E I du Pont de Nemours and Co
• Exxon Mobil
• General Electric
• Goldman Sachs
• Home Depot
• IBM
• Intel
• Johnson & Johnson
• JPMorgan Chase
• McDonald's
• Merck
• Microsoft
• Nike
• Disney
• Pfizer
• Procter & Gamble
• Travelers Companies Inc
• United Technologies
• UnitedHealth
• Verizon
• Visa
• Wal-Mart

Innovative GeWorko Method for Portfolio Trading, Analysis & Investment

The markets will get used to the new political reality in the US

Trading on the stock market

A stock market or securities market is an aggregate of people (participants), rules and operations related to the issue and circulation of securities. There exist an exchange and OTC markets of securities. The traditional stock market is an organized securities market, and trading on the stock market determines the behavior of the financial market as a whole. The securities of reliable issuers that have passed the procedure of listing are traded on a stock exchange market. The predominant part of securities is circulated on the OTC market of securities, and it is considered to be an alternative to the stock market. Those are basically securities of the companies which have not been or do not have the desire to be listed on the stock market.

Trading on the stock market started from the medieval bill of exchange fairs (precursors of contemporary stock exchanges), then, appeared the first exchanges in Antwerp and Lyon, and the first stocks of the largest companies in Europe were released. Stocks are still considered to be the most popular investment instruments.

In the past, very few people were engaged in stock trading, but, recently, with the development of electronic technology, it has become available to almost everyone. An electronic system for trading securities allows to follow stock trades in real-time, buy and sell securities by profiting on price movements.

Making deals:

Individuals have the opportunity to make deals only through an intermediary (a broker). An order to buy or sell securities is made through the stock terminal of a brokerage company. An exchange automatically checks all the received orders, finds counter orders and makes deals, as a result of which the security passes to a buyer. Information about the deal made is displayed on the exchange terminal of a user. The whole process usually lasts for 1-2 seconds.

The choice of a broker:

There are many criteria to choose a brokerage company, but the main ones are the reliability, the size of commission and the size of leverage. Actually, no one can determine the reliability of a company by 100%, but one should at least check the experience of a company on the market and traders’ reviews.

The size of commissions is very significant in case you are going to trade intensively and not to invest in securities for long-term.

Unlike the currency market, on the stock market the size of leverage is low: from 1:1 to 1:10.

In addition, it is very important that the broker provides its clients with information and analytical support, as well as a reliable and convenient program for trading.

What to trade?

The classical instruments of trading on the stock market are considered to be stocks and bonds. There are many other assets existing on the market, including derivatives, but they are much more risky.

Stocks – on the stock market, there is a great number of stocks of various companies the purchase of which should be conducted according to the following principle: illiquid shares have large spread, therefore, short-term trading would be expensive. These kinds of shares might be suitable for a long-term investment. For active trades, highly liquid stocks are more suitable. In case of long-term investments, the income is generated due to the increase of prices on stocks and dividends paid by an issuer.

Bonds are attractive due to the fixed period of circulation and fixed income which allows calculating the future size of return from investments. Unlike stocks, bonds are less risky instruments, but their profitability is less, respectively.