What is the Stock Market? A Beginners Guide to Stock Trading

Trading Blog | 5 min read 

What is the Stock Market? A Beginners guide to Stock Market trading

This guide provides a detailed overview of the top tools and techniques within the stock market

Written by Mitchell Roach
Follow Me – @mvtchh

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How to trade the stock market

When making any investment it is important to gain some understanding in what you’re getting into. This will allow you to achieve the best results possible and limits the amount of mistakes made. If you want to actually learn how to trade stocks you’ll need a basic understanding to begin with, on how stock trading works which will be explained in this article. After reading this stock market guide you will have an a basic understanding to get started trading stocks, if you want to take your trading tot he next level a trading mentor is very beneficial, especially if you are looking to make money from stocks in the long run.  Book a FREE consultation with one of our trading mentors for more information.

What is Stocks?

A stock is a type of investment which allows you to have a share in a company. When you buy a stock from a business you’re essentially purchasing a small piece of that company which is called a share. Shareholders contribute to the company’s’ profits as they are investing into the company’s future as long as they own their shares. Investors typically buy stocks from companies that they predict will increase in value over time. If this happens then the stock brought can be sold for a profit. For many businesses distributing stock creates an opportunity to raise money to invest and expand in their company. Whilst for investors or potential investors like yourself, stocks enable a growth in your money and outpace inflation in due course.

The main goal when investing into the stock market is to make a profit by selling the stock for more than you paid for.

What is stock trading?

The stock market provides a secure and regulated environment for traders to participate in regular activities of buying, selling of shares in publicly held companies with a zero to low operational risk. The supply and demand of each company’s stock is tracked through stock exchanges which directly affects stock prices. Public companies sell their stock through a stock market exchange like the New York Stock Exchange (NYSE) or Nasdaq for example although there are many other stock markets exchanges all over the globe. Investors are then able to buy and sell these shares among themselves through stockbrokers.  Stockbrokers are individuals or firms who are licensed to trade stocks through the exchange-this allows them to buy and sell at your request. In exchange for dealing with individuals trades the broker collets a commission or a fee. You can sign up to a stock broker here >

Long –term vs. Short term Stock Trading

With fluctuations in the market happening on a daily basis there are two main strategies used by investors: short-term trading or long term trading also known as buying and holding. Investors who do best over the long term have a diversified portfolio of many stocks which they hold onto through good and bad times. This approach requires you to wait until the stock’s value has increased over an extended period of time – also known as passive trading. Having patience and the ability to overlook short term fluctuations is needed with long term trading as it is the ongoing performance of the stock which is important not the recent ups and downs happening on a daily basis.

On the other hand, short term trading is about using the constant volatility and fluctuating prices in the market to your advantage.  Investors who use this method of trading watch the markets for opportunities to buy low and sell high making numerous of trades in a short time period- also known as active trading. This type of trading comes with a potential for easy profit but is also associated with risks such as there may not be rise in value of a low stock price over a short period of time or it may actually lose value. Investors also end up paying more capital tax the more frequently they sell their shares. This was pretty much done to encourage traders to trade over a long term scale. There are many styles of short term trading such as day trading, intraday trading and sclaping.

How to invest in stocks

Before you start trading or investing in stocks it is essential that the money you are investing is NOT more than you can afford to loose. This is due to the fact that you will need to be willing to lose some or all of that money as a beginner. The stock market is forever fluctuating and you can never be in control of business setbacks. You also have to consider that the riskier the investment, the higher the potential rewards and losses. With active trading timing the market is a tricky thing to do as you have to choose the right opportunities twice – once when you buy the stock then another when you sell it.

Traders using this approach will benefit from short term changes in the market by frequently buying and selling based on trends. At start trading we offer copy trading services, which thousands of beginners people are using on a daily basis, who don’t have the time watch to the market but are looking for short-term rewards. Copy-trading allows you to copy the trades of experienced professionals who have high success rates for every trade they make.

As an investor your choice in a broker is important because it has huge implications for how much you’ll pay in fees, the types of investments you have access to and what your eventual returns will amount to. You can sign up to a stock broker here >

Some brokers are known as discount brokers who execute trades inexpensively but typically don’t provide any personalised guidance. Full service brokers offer a comprehensive variation of services including investment advice however the higher quality of service will require a higher fee which some find worth every penny. Both services have pros and cons but it depends on what approach in investing works best for you and what your goals are.

Many first time investors believe that to make money in the market you have to pick individual stocks but this is not the case. It takes time and patience to build a diversified portfolio of individual stocks as you need to do your research in each area of investment.  Alternatively many investors especially those with experience have made their successes through using mutual funds and exchange-traded funds which is also a good place for beginners to get started in trading. This provides automatic diversification that helps to protect your portfolio from inevitable market setbacks even if you have little money to invest. Mutual funds and exchange-traded funds provides a basket of investments in different areas of the markets in one single package.

What determines stock price?

As I have mentioned a few times the prices in the stock market constantly fluctuate on a day to day basis, you might be asking yourself, what makes stock prices fall and rise?

The very straightforward answer is supply and demand. The price changes in the market reflect the supply and demand in that present moment so when a stock is seen as desirable then the stock price will increase. Factors could include a company’s recent success, a strong industry sector or just plain and simple popularity.

On the other hand investors may be unwilling to purchase a stock due to a weak industry sector, company failings or the fact that the price is too high. This is called a lack of demand which will inevitably cause the stock price to drop. When this happens at some point the price will reach a point low enough for investors to start buying again where the cycle will repeat itself, this is known as market cycles. These are the trends which active traders will be looking out for.  Passive traders who take on a long term approach to trading would invest in stocks which have strong earnings and a bright future and wait for the price to rise over a long period of time.

Advantages of trading the Stock market? 

Investment gains

The most prominent advantage of buying or selling stocks is investment gains. Overtime the stock market tends to increase in value despite the prices of individual stocks fluctuating daily. Investments in steady companies that are able to grow to give investors returns on investment through profits. With the potential to grow wealth through value appreciation of assets the stock market attracts those with efforts to secure their financial future.

There are two trading methods to make money

The stock market gives you the option to make money on both a long term and short term basis. Some stocks also offer the opportunity to earn dividends which provides additional investment income. Dividends can be defined as a payment made by a business to its shareholders. The payouts are usually made in cash although they can also be distributed in stock dividends where stock shares are allocated to shareholders.  In essence a dividend is basically a reward given to shareholders for owning stock in the corporation.

Easy to buy

Buying stocks isn’t as formal as it used to be, with electronic and technological advancements buying stocks online literally takes minutes. You can purchase your shares through a broker, financial planner or online.

The Best way to outpace inflation

Historically stocks have averaged an annualised return of 10 percent although it does mean you must have a longer time scope. Nevertheless stock investments still out runs the average annualised inflation rate of 3.2 percent.

These are only some of the advantages to name

Disadvantages of trading the Stock market? 

You could lose all your investment

When a corporation does poorly, the investors will sell allowing the stock prices to plummet. As you sell during the company’s hardship you are exposed to losing your initial investment. If losing your initial investment is something you can’t afford to do then you should consider buying bonds. This provides an income tax break if you lose money on your stock loss.

Can be very time consuming

Before buying a stock you have to research every company to determine how profitable it will be for you in the long run. You have to learn how to read financial statements, annual reports and keeping up to date with your company’s developments in the news. It is also required to monitor the stock itself as even the best company’s price will fall in the market.

Stock trading can be an emotional rollercoaster

Stock prices increase and decrease second by second and many individuals buy high out of greed and sell low out of fear. Focusing on the price fluctuations of stocks can be damaging to your investment especially without patience. It is best to check on a regular basis rather than constantly watch the prices.

You are competing with professionals

Along with Knowledge and time professional traders and institutional investors have refined trading tools, computer systems and financial models at their disposal which some find intimidating.

Conclusion

To conclude although there are risks to investing into stocks, these can all be minimised with the right guidance and approach to what method of trading is best suited to your goals. Start trading provides services which can both teach and guide you into the right direction of a bright financial future in the stock market. With our mentoring services available you’ll be able to gain the confidence necessary in making sound trades and investments in the Stock, Forex and even Cryptocurrency markets. Book a FREE consultation with one of our trading mentors today for more information or to discuss any of the topics mentioned in this article in further detail.

  • Cryptocurrency’s website, channel or blog

One of the next places you as an investor or trader would want to have a look at is the cryptocurrency’s website, channel or blog, depending on the platform used by the userbase. This could represent the official and main channel of communication of the core development team. Our cryptocurrency market cap is the best all-in-one tool to keep in the loop on any specific cryptocurrency activity, news or any form of communication.

These channels could also be on platforms such as Telegram, WhatsApp or Discord channels and it is necessary to join them and ask questions to get more information on the cryptocurrency you are analysing. This is also a great way to interact directly with the developers and find out if they are trusted and moving the cryptocurrency forward. Be sure to follow the updates given by the developers in their official blog to track the progress and see if the developers are truly following their roadmap usually found on their website.

  • Community Forums

This is probably one of the places traditional investors would’ve never considered on gathering information for their fundamental analysis but in the cryptocurrency space, forums are a great way to get a better understanding of the cryptocurrency, as well as the sentiments surrounding the cryptocurrency. This is also a great platform to speak with other possible investors in the cryptocurrency space and discuss and share information with each other.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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What is Forex? Forex Trading for Beginners

Trading Blog | 5 min read 

What is forex? Forex trading for beginners

The foreign exchange market, also known as Forex or “FX”, is the largest financial market in the world. There are many benefits of trading forex, which include convenient market hours, high liquidity and the ability to trade on margin. This ultimate beginners guide to trading forex will help you to start trading like a pro. 

Written by Mitchell Roach
Follow me – @mvtchh

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If you’re looking to start trading forex online and feel as though it is a potential opportunity for you make money, you’re properly wondering about the best way to get your feet wet and learn how to get started in forex trading.

It’s important to have an understanding of the markets and trading strategies used to trade so that you can more effectively manage your risk, make winning trades, and set yourself up for success in the financial markets.

 

How does Forex trading work?

In the Forex (FX) market, you essentially buy or sell currencies with the aim of making a profit from the changes in their value. Forex, also known as foreign exchange, is a decentralised global market where all the world’s currencies trade. 

If you’ve ever travelled to another country, you usually had to find a currency exchange broker and then exchange (swap) your local currency into the currency of the country you are visiting. This is the basic principle of the Forex market, buying currencies when the price is going up and selling currencies when the price is going down.

You may have heard of the New York stock exchange (NYSE) and thought to yourself that this is where the real money is being made. It may be a surprise to you to find out that the Forex market is actually the giant when it comes to trading, transacting over $5 Trillion per day compared to $22.4 Billion per day on the NYSE.

With an average daily trading volume of $5 trillion, Forex is one of the most actively traded markets in the world. Due to this huge popularity, the Forex market attracts many UK traders, both beginners and experienced traders alike.

 

Why trade Forex and what are the main advantages of being a Forex trader?

Forex market hours

Certain markets such as stocks often have opening and closing times meaning you can’t place orders outside of these times. However, the Forex market is a 24-hour market, 5 days week from the Australian Open to the New York Close. The Forex market closes on Friday night at 10pm (UK time) and does not open again until 9pm (UK time) on Sunday evening. However, because the market is only closed to retail traders (not central banks and related organisations), Forex trading actually does take place over the weekend. This means that there can be a difference in price between Friday close and Sunday open – known as a gap.

This is an advantage for those who want to trade part time because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep. Because Forex is a truly global market, you can always take advantage of different active session’s forex trading hours.

Traders need to be highly aware of the weekend Forex trading hours and alter their positions accordingly. If you do not want to expose your position to the risk of gapping, you may want to consider closing your position on Friday evening or placing stops and limits to manage this risk.

Tax-efficiency

Both spread betting and trading CFDs on forex can offer significant tax benefits:

  • Spread betting is completely tax free.* There is no capital gains tax (CGT), as you never own the underlying asset
  • CFDs are not exempt from CGT. However, you can offset your losses against your profits for your CGT liability, which makes CFDs useful for hedging

Trade a wide range of currency pairs

Forex trading gives you the opportunity to trade a wide variety of currency pairs, speculating on global events and the relative strength of major and minor economies.

With most Forex brokers you can choose from over 80 currency pairs, including:

  • Major currency pairs, eg GBP/USD, EUR/USD, and USD/JPY
  • Minor pairs, eg USD/ZAR, SGB/JPY, CAD/CHF
  • Emerging currency pairs, eg USD/CNH, EUR/RUB and AUD/CNH
  • Exotic pairs, eg EUR/CZK, TRY/JPY, USD/MXN

Learn more about currency pairs and how to trade them in our Forex currency pair guide

Leverage can make your money go further

Leverage or margin trading offers the ability to make large profits from a relatively small investment. Leverage in Forex enables you to open a position against a currency pair by paying just a small proportion of the full value up front, similar to a deposit. The profit or loss you make will reflect that of the full position, not just the deposit (margin). However, this can also amplify losses, meaning losses could exceed your initial deposit. For this reason, it’s important to refer to our 6 risk management tips to stay as safe as possible whilst trading.

Hedge with Forex

Hedging is a technique that can be used to reduce the risk of unwanted moves in the forex market, by opening multiple strategic positions. 

There are a variety of strategies you can use to hedge forex, but one of the most common is hedging with multiple currency pairs. By choosing forex pairs that are positively correlated, such as GBP/USD and EUR/USD, but taking positions in opposite directions, you can limit your downside risk. For example, a loss on a short EUR/USD position could be mitigated by a long position on GBP/USD.

Alternatively, you could use forex to hedge against loss in other markets, such as commodities. For example, because the USD/CAD generally has an inverse relationship with crude oil, it is commonly used as a hedge against falling oil prices.

Why trade Forex instead of Stocks?

Deciding whether to start trading Forex or Stocks is an important decision that you should base on which asset you are interested in trading – currencies or shares. Here are a few reasons why some traders prefer to trade Forex than Stocks:

  • Market opening hours: The stock market is limited to an exchange’s opening hours, whereas the Forex market is open 24-hours a day. However, it is worth noting that certain stock indices are available for weekend trading
  • Higher liquidity: the Forex market sees an average daily turnover of $5 trillion, whereas the stock market sees comparatively fewer trades per day
  • Greater volatility: the stock market tends to have more stable prices that change over a longer period of time. Although this is great for investing and some trading styles, the volatility of the Forex market can create an exciting range of opportunities for shorter-term traders.

When you are deciding whether you want to start trading the Forex or the Stock market, you should consider your attitude to risk and your financial goals.

 

Learn about the currencies you are trading

Before you start, you’ll need to understand what you’re trading. A vast majority of new traders tend to jump in and start trading anything that looks like it moves. Usually using high leverage and trade sporadically in either direction, ultimately leading to loss of money.

Understanding the currencies you are buying and selling makes all the difference. For example, a currency may be beginning to increase in value after a large fall in price. Encouraging inexperienced traders to “try to catch the bottom.” The currency itself may have been falling due to bad employment reports for multiple months. Ask yourself, you would you buy something like that? Most likely not, this is why you need to know and understand what you buy and sell.

Currency trading is great because there are so many different currency pairs to trade. However, it doesn’t mean that you need to trade them all. It’s better to pick a few and focus on those, at Starttrading.com we’d recommend 3-6 if you are starting out. Having only a few will make it easy to keep up with economic news, politics and tendencies of the countries involved. 

 
 

What are the main currencies in Forex?

Across the globe, there are hundreds of different currencies in use. Each of them are divided into two main sorts, major and exotics. All of the major currencies have been derived from the most powerful economies. These nations include the US (USD), Japan (JPY), the UK (GBP), the Euro Zone (EUR), Canada (CAD), Australia (AED), Switzerland (CHF) and New Zealand (NZD). These seven currency pairs make up almost 80% of the total daily trading volume.

 

What are the major FX pairs?

Trading EUR/ USD 

This is the most popular traded currency pair in the world, representing the two largest economies (Euro vs US Dollar) and has faced the most volatility since the inception of the euro in 1999.

Due to the high popularity of this conversion means that is always highly liquid, offering the potential for the competitiveness of price as offers to buy or sell are easy to find.

Trading USD/ JPY 

Being the second most popular trading pair in the world, the characteristics of this pair make it perfect for both the beginner and experienced Forex trader. Day traders have plenty of opportunities to turn a profit due to its high levels of volatility. The popularity of this pair also means that finding trading tips and Forex signals is relatively easy.

Although volatility is a benefit, traders should be aware that sudden price fluctuations can occur – so it can be easy for seemingly winning scenarios to become a loss. By conducting a thorough market analysis before trading, you can understand the patterns in price action and movements that may threaten economic growth in the market.

Trading GBP/ USD

Compared to other major pairs, there is often a much wider price range to play with, due to its unpredictability and volatility. It can move extremely quickly, which means professionals need to employ effective risk and money management strategies to avoid losing money when trading.

It is thought approximately 35% of the volume traded in the FX markets goes through London. However, when working with British pounds and the London Stock Exchange, traders with less experience may fall victim to misleading signals.

Trading USD/ CHF

In times of economic uncertainty or market turmoil, the Swiss franc has become a very safe investment. This is an excellent choice for traders who seek markets that are perceived as lower risk, as Switzerland has an exceptional reputation for stability, safety and neutrality.

The Swiss franc is also very similar to the British pounds in terms of volatility, price shifts, and technical characteristics. Therefore, if you are a beginner of trading with this currency there are plenty of bar charts, graphs, and forums which have been developed from experienced traders available for you to use.

What moves the Forex market?

The forex market consists of currencies from all over the globe, which can make exchange rate predictions extremely difficult as there are many factors that could add up to price movements. However, like most financial markets, forex is primarily driven by the forces of supply and demand, and it is important to gain an understanding of the influences that drive price fluctuations.

The banks

The central banks control the currency supply, they can announce measures that will have a significant effect on their currency’s price. For example, quantitative easing involves injecting more money into an economy, causing the currency price to drop.

News reports

Commercial banks and other investors tend to want to invest their capital into economies that have a strong outlook. If a positive piece of news hits the markets about a certain country, it will encourage investment and increase demand for the local currency.

On the other hand, a negative piece of news can cause investors to pull their money and sell positions, in turn lowering a currency’s price. This is why currencies tend to reflect the reported economic health of the region they represent.

Market sentiment

Market sentiment, which is often in reaction to the news, can also play a major role in driving currency prices. If traders believe that a currency is headed in a certain direction, they will trade accordingly and may convince others to follow suit, increasing or decreasing demand.

How to learn Forex trading

Here at starttrading.com, our main aim is to provide individuals with the information and educational content they need to become a more successful trader. We have an entire team of professionals who would be more than happy to guide and support you on your trading journey, turning your wealth into success.

To learn more about our online trading and Forex trading courses, you are more than welcome to complete the contact form on our website. Include all of your relevant information and a member of our staff will get back to you as soon as possible, to discuss how we can best meet your requirements.

The importance of Forex education

To start trading effectively, it’s critical to get the right forex education. You can find a lot of useful information on forex here at Starttrading.com. Spend time reading up on how forex trading works, forex pips, forex NFP, and risk management, for starters.

As you may learn over time, nothing beats experience, and if you want to learn forex trading, experience is the best teacher. A trading mentor is always great to guide to and stop you making those rookie mistakes.

When starting out it is always recommended to open a forex demo account and try out some demo trading. It will give you a good technical understanding of the mechanics of making forex trades and getting used to trading on a trading platform.

No amount of trading books or networking can teach you better than experience the value of closing your trades and getting out of the market when your reasoning for getting into a trade becomes invalid. It is very easy for traders to think the market will come back around in their favor, letting their emotions get the better of them and cloud their judgement. You would be surprised how many traders fall prey to this trap and are left heartbroken and often out of pocket when the market only continues to trade against their anticipated direction.

This emphasises the famous and painfully true statement from John Maynard Keynes, “The market can stay irrational, longer than you can stay solvent.” Meaning, it does little to no good to say the market is acting irrationally and think it will come back in your favour (direction of your trade).

 

How to start trading Forex

Step 1

Open a NAGA or MT4 trading account 

You need to open a trading account in order to start trading. The application process is simple and secure and you can apply for an online account at any time by filling in the online application form.

Once you have successfully completed the verification process, you will receive a confirmation email to confirm that your account is open.

You may receive a call from an account manager, in case you have any additional questions.

Step 2

Fund your trading account

Once your account is open, you’ll need to deposit funds into it to start trading. You can do this in a variety of ways via the ‘Account’ tab in the trading platform

Your initial deposit must be at least $1.

For more information on how you can transfer funds in and out of your account, visit NAGA

Step 3

Start trading

Now you have an online trading account and have deposited funds, you can utilize all of NAGAs innovate features to start trading. The social trading tool that takes your trading experience to another level. Beginner traders can benefit from automatically copying the professional traders live trades and strategies.

You can access live price feeds, streaming charts and news instantly and trade 24-hours a day. Good luck and safe trading.

Book a Professional Trading Mentor

With this blog you now have an understanding of Forex and how to get started trading. But as a beginner, it is still important to gain trading skills, knowledge, do’s and dont’s from someone with experience. At Startttrading.com we are here to support you on your journey to trading success! We offer live support whenever you need it, trading strategies and skills, mindset mentoring and much more. Tailoring you into successful trader. We are currently offering 50% OFF on your first trading mentoring session so now is the best time to get started!

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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Top Stock Picks for 2019 – What Stocks to Buy?

Trading Blog | 5 min read 

Top Stock Picks for 2019 – What Stocks to Buy?

This article includes an exploration of what is on the stock market including upcoming IPO’s, industries, growth and dividend stocks along with other information which is handy to know about the performance of the market.

Written by Mitchell Roach
Follow me – @mvtchh

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Best stocks to trade 2019 - starttrading.com

2019 is shaping up to be another great year for trading and investing in stocks. With the seemingly endless list of stocks and shares available to buy on exchanges and brokers, it can often be confusing which stocks to buy. In this article, we have laid out the best stocks and IPOs to look into and are likely to see positive price movements.

Upcoming IPO’s

This year brings opportunities with the IPO calendar filled with unicorns which is the Wall Street lingo for fast growing start up companies valued over $1 billion. Below we will list some new upcoming IPO’s as well recently listed.

Airbnb

This company had talks to go public later this year with Amazon veteran to serve as the company’s chief financial officer; however news through the most recent buzz indicated that the company may not be going public in 2019 after all. Nevertheless Airbnbcontinues to grow beyond basement apartments, spare bedrooms and second home rentals with a valuation of $31billion. The firm is a online marketplace which allows people to rent out spaces on a short term basis. As a private corporation last year the company raised $4.4 billion. There are strong ambitions to make Airbnb a global travel community which is built on experiences and content so if interested keep an eye out on the plans behind when and if the IPO will still be in process.

WeWork

Founded in 2010 WeWork is an American company that provides shared workspaces for start up firms, large and small businesses, entrepreneurs and freelancers. After a cash investment from the Japanese SoftBank the company was valued at $47billion. We work is now in view of an IPO later this year a lot sooner than investors expected having filed paperwork with the SEC on 29th April. With an exceptional growth increase the WeWork Company now operates three branches: The WeWork shared workplace provider, WeLive- a flexible apartment and rental provider and a WeGrow- an entrepreneurial school.  There has been some speculation on the exact IPO date and share price due to the fact that SoftBank reduced the initial funding proposal from $12billion to $2billion but despite this We Works CEO has made clear that reduced funds will not affect the company’s IPO. The company has said to have turned over the $2billion during the course of one year. This IPO may provide an interesting opportunity for traders regardless of the concept of the company not being a new idea.  WeWork use of bars, events and fashionable interior seems to appeal to a larger audience than the more traditional providers such as the likes of Regus- a business which has been around for decades.

Palantir

Palantir is a data mining company co-founded by Peter Theil who is one of the brains behind the PayPal payment processing. Reports indicate an IPO in the second half of 2019. It was last valued at £20billion under fundraising around 2015. The company is known for being one of the biggest competitors in Big Data and has earned its reputation from being highly secretive. In 2017 a Guardian headline suggested that Palantir holds as much real world power as Google, while a more recent Bloomberg article revealed that Palantir ‘knows everything about you’. Although the company may face challenges with going public particularly with concerns of transparency on how data is used, the 14 year old company is predicted to turn a profit this year- a rare achievement for many tech IPOs.

Levi Strauss

The world-renowned jeans maker is expected to raise between $600 million and $800 million although this has not yet been confirmed. The business was listed for 13 years before being taken private for $1.4 billion in 1984 after experiencing a decline. Levi now wants to capitalise after working hard to improve its performance dramatically with debt reduced to over half in the period of a couple years. Revenue towards the ending of November 2018 had grown by 14%to $5.6 billion with a net income increasing to $283.1 million. Retail particularly in fashion is one of the most challenging industries at the moment, mostly due to online competition which in turn is starting to show signs of saturation. Levi has 2,900 stores but primarily sells through 50,000 partners across the world with 105 of its business considered to be online. Nevertheless Levi believes there’s room for expansion in the likes of Asia, proving it with ample chances to grow.

Livongo

Founded in 2014, Livongo is a company in the health care industry that sells smart devices and software which is designed to help manage behavioural health, diabetes, hypertension and other chronic diseases. The corporation has integrated its platform with Apple, Fitbit and Samsung Smart watches last month.   Investor interest in Livongo Health inc is considered to be hot, prompting the healthcare technology company to boost its price targets by 13% ahead of the offering taking place Thursday on the NASDAQ. Livongo plans to raise up to $320 million in an offering which could value at about $2.3 billion, that’s more than double of the company’s valuation of $850 million in April 2018. The company plans to sell $10.7 million shares to public investors for between $24-$26 per share and has also set aside $1.3 million to sell to underwriters.

Recently Listed IPO’s

Uber

Uber Technologies inc was one of the highly anticipated offerings of 2019 with a valuation over $80 billion. Uber went public in May at a price of $45 per share on the New York Stock Exchange (NYSE) – a price well short and lower than the anticipated $100 billion valuation. At the start of the year Uber and Lyft were in competition in launching their first IPO where Lyft won. Although the IPO was oversubscribed, Uber settled for a lower price to avoid a repeat of Lyft’s IPO experience late in March where prices were strong then later fell in trade. Uber placed orders for a lower price which fell in the lower end of the $44-$50 per share price range.

However despite Uber making the efforts to moderate its IPO expectations, some still felt the stock was overpriced. Orders were also put in at a lower price to accommodate mutual fund.  Paypal holdings agreed to invest $500 million at the IPO price in a private placement where associations of the SoftBank vision Fund, Toyota Motor Corp and Denso Corp would together invest $1 billion for Ubers autonomous driving efforts adding more to Ubers total intake.

Beyond Meat

Founded in El Segundo California 2009 this company took the Wall Street by storm when it went public in May making it one of the exciting IPO’s of 2019. Beyond Meat is a food company which makes plant-based meat where it’s premier product is the Beyond Meat which sells at Whole Foods and TGI Fridays to name a couple. Shares rocketed 163% higher on the first day of trading where the company managed to raise $240 miliion at $25 per share resulting in a $1.5 billion valuation.

Upcoming Industries

Cannabis

With a push for legalisation in recent years, cannabis is one of the fastest growing industries in the US with 33 states currently permitted to use medical cannabis and recreational use being legal in 10 states including Washington DC for adult use. This Cannabis boom is expected to affect more than just medical patients.  By 2020 more people are predicted to be working in the legal cannabis industry than the manufactory industry where revenue is expected to grow from $7.2 billion in 2016 to over 24 Billion by 2020. Investment activity boomed last year increasing to 13.8 billion in total value from $3.6 billion the year before.  As the industry is still moderately new and volatile, it allows plenty of room for companies with inventive growing and plant breeding techniques to shape the market. If the public continues to favour legalisation then the legal cannabis industry will most certainly continue to grow and thrive.

Artificial Intelligence

The global artificial intelligence market size is expected to reach $170 million by 2025 from $4065 million in 2016. The AI market is segmented by technology, geography and industry vertical. The ranges of technologies are broken up into machine learning, natural language processing, image processing and speech recognition. From driverless cars to virtual doctors, AI is transforming the way work, live, travel and how we do business in the 21st century.  In 2016 the machine learning category dominated the market in terms of revenue and is expected to maintain its trend in the upcoming years looking to increase in demand for artificial intelligence industry solutions. Based on industry vertical the market for artificial intelligence is categorised into media and advertising, telecom and IT, healthcare, retail, automotive and transportation whereby the IT and telecom sector is expected to dominate the global artificial intelligence throughout the forecast period. Geographically the market is analysed across North America, Asia-pacific and Europe. During 2017 the North America region contributed to the highest revenue share in the artificial intelligence market and is predicted to secure the leading position with presence of key companies and large investment in the AI market. Key corporations profiled include Google Inc, Apple, Microsoft Corporation, IPsoft and that’s just to name a few. AI have a Rapid growing presence in today’s world with applications ranging from heavy industry to education, it has become prevalent that this technology has the potential to revolutionise how the everyday world operates.

To name a few some of the most popular use of AI today includes Apples personalised assistant Siri which uses machine-learning technology in becoming smarter and better at predicting and understanding our natural language, questions and requests.  Alexa who was introduced by Amazon took the world by storm with its ability to decipher speech from anywhere in a room helping us to search the web for information, shop, schedule appointments, set alarms as well as many other things. It also helps power our smart homes and has been useful for those with limited mobility. Tesla which could possibly be the best car ever made has received so many rewards and recognition due to its predictive capabilities, self-driving features and technological advances. As time goes on these cars are only getting smarter thanks to their over the air updates. Netflixprovides highly accurate predictive technology based on customers choices and response to films. Netflix analyses billions of records allowing it to make recommendations to suit your film preferences and as the dataset grows, this tech will become smarter and adaptive.

While AI can be applied to most sectors once the technology advances enough there are many fields that will soon be reaping the benefits of AI if they already aren’t! According to Forbes industries that will soon be revolutionised by AI are the following:

  1. Cyber security
  2. DevOps and Cloud Hosting
  3. Manufacturing
  4. Healthcare
  5. Construction
  6. Education
  7. Retail
  8. Business intelligence
  9. Mental Health diagnosis and treatment
  10. Supply Chain Management

2018 Best Performing Stocks

When it comes to trading & investing, history typically repeats itself. It is important to look back at previous trends to give you a better understanding and picture of what is likely to happen. Here is a list of last years best forming stocks:

ABIOMED, inc.

This company made a gain of almost 120 per cent where at the start of the year investors could have more than doubled their money in the space of 10months. The company had later delivered successful earnings in November which had reversed a recent downtrend.

Advanced Micro Devices (AMD)

At the start of last year opening share prices for Semiconductor Company Advanced Micro Devices were £10.42. Since then AMD stock have doubled where during September the stock actually managed to peak at $30 a share before it fell back down in October. However once announcements was made that the company’s chips were being used by Amazons cloud computing diversion the stock increased.

TripAdvisor, Inc (TRIP)

During 2018 the stock rocketed up the charts. Although it remains inadvisable for investors or beginners to make stock picks based on this sites advice, investing in this company would have been a very wise move at the start of last year. Those who did would of ended up doubling every dollar they invested by Early November.

Netflix, Inc (NFLX)

During 2018 Netflix experienced a 60 percent gain in just 10 months and has shares well over $300 each as the company continues to stream money into its shareholders accounts.

HCA Healthcare (HCA)

HCA Healthcare is a company which operates small care hospitals and surgical services providing for patients at its 179 hospitals and 120 freestanding surgical centres. Its stock performance and earning last year allowed the company to add 60percent to its market value and as admissions arise this should continue to grow.

Best Stock picks for beginner investors

Finding the best stock to watch and buy comes from having basic understanding on stocks itself and knowing what a potential market winner looks like. Take a read on our beginners guide to stock trading to gain some enlightenment on exactly what stock trading is and how to invest in the market.

Doing your research is a huge part of investing in stocks, it is important to look for traits like increased earnings and sales growth, strong return on equity and a fast growing and industry leading product or service. When getting started sticking with company’s which you know can be a reasonable approach to take especially if you’re interested in a long term investment.  Here is a list of a few top quality companies which everyone is familiar with worth investing into.

  1. Alphabet (Google)
  2. com
  3. Apple
  4. Facebook
  5. Nike
  6. Disney

 

 

Best Dividend Stocks

dividend stock allows an investor to gain regular passive income simply from owning shares in a company. Historically stocks that pay dividends have outperformed those that don’t.  Businesses who are generating a strong cash flow and who have strong financials are most likely to produce high returns which attracts investors. Some of the best companies who pay dividends includes:

Altria Group (MO)

The giant tobacco Altria Group is able to provide major capital back to its shareholdersthrough dividend and buy backs. Altria which owns Philip Morris USA (who also owns other brands) pays a huge 5.7% dividend due to strong margins, customer loyalty and low reinvestment requirements. Pursuing growth Altria Group invested $1.8 billion in a Canadian Cannabis Company known as the Cronos Group. Altria’s steadiness and ability to promptly take new growth opportunities makes it a good investment for dividend stock.

Target Corp.

With competitors such as Walmart and Amazon, Target offers something for their investors which none of its competition does and that a yield of 3.6%. Targets payout ratio sits on about 41% revealing that without a doubt the company can sustain its dividend payments while also retaining enough to reinvest in growth as well. Despite Amazon’s expansion, sales continue to grow and with a track record of increasing quarterly payments for 50 consecutive years why not invest in this stock which proves to be steady and reliable.

Starbucks 

The company continues to undertake its massive international expansion, increasing its growth phrases and in turn rapidly boosting its dividend payouts. With a free cash flow of over $3.34 Billion and 8 years of uninterrupted payout growth the company attracts a lot of investors looking for a company with dividend growth.

Aqua America Inc

Trading on the New York stock exchange this water company serves around 3 million customers in Ohio, New Jersey, Texas, Pennsylvania, Virginia, North Carolina and Indiana. With a quarterly dividend rate of 0.219 per share, Aqua America has an annual yield of 2.3%. Although the yield itself may not be exciting, investors who are risk averse should consider this company due to longevity and growth in its payout. Aqua America has been paying out quarterly cash dividends  for more than 73 years and in the past 27 years the company has consecutively raised its payout.

Johnson & Johnson

Aside from being a company to hold an AAA credit rating this company has one of the safest dividend payouts in the world. Johnson & Johnson relies on its three businesses to bring something beneficial to the table which each individual segment lacks. With its business sectors broken down into healthcare products, medical device units and the pharmaceutical segment the company has been able to raise its quarterly payout for 57 consecutive years and has grown its adjusted earnings over the course of 35 years straight. The J&J 2.9% yield attracts investors with their continuous uninterrupted payouts.

NextEra Energy

One of the easiest ways of securing a safe and passive payout is through purchasing companies that deal with a basic need. Historically utilities are viewed as a defensive investment that is turned to when the stock market is struggling or when the economy is wavering as they are slow growing.  Nevertheless NextEra isn’t like your average utility stock as the company proactively develops the way utilities operate and is on the leading edge of a renewable energy shift.

Best Growth Stocks

Growth stocks are beneficial of outsized gains compared to the averages. When investing in the upside of stock investopedia has provided us with some main things to look out for. These include improving fundamentals, good entry points and a history of bullish trading patterns in the shares. The top five stocks viewed as long term potentials are as followed:

Chipotole Mexican Grill Inc

Chipotole has a very strong fundamental history which means that it supports a long term investment approach. The 2019 year over year revenue growth rate increased by +13.9% and the 2019 year over year diluted earnings growth rate was at an increase by +59.6%.  Considering the technical areas also referred to as good entry points a year to date outperformance vs the market indicates +49.12% vs SPDR S&P 500 ETF with recent bullish trading signals.

Facebook Inc, (FB)

With over 1 billion users on its platforms: InstagramFacebook and Whatsapp this company is considered a top social network platform. Facebook stock stands out due to the technical factors of:

  • The company has a year to date outperformance vs Market: +28.34% vs SPY
  • Year to date outperformance vs technology sector: +19.8% vs Technology Select Sector SPDR fund
  • Recent Bullish trading signals

Looking into the fundamental picture of the company it does support a long term investment with the 2019 revenue growth rate increasing by +26%  however the 2019 diluted EPS growth rate -50% which includes $3billion legal expenses related to the FTC.

Illumina, Inc

Illumina is a leading genome and DNA sequencing firm with a year to date outperformance vs market of +0.69% vs SPY and year to date outperformance vs healthcare sector of +10.63 vs health care select sector.  In addition to this Illumina’s growth rate has been impressive with a 2019 revenue growth rate of +8% and a 2019 GAAP net income growth rate of +11%

Paypal Holdings Inc

The leading e-commerce payment company which is also known for its payments through Venmo has a year to date outperformance of +19.96% vs SPY. The year to date outperformance vs technology sector equates to+11.10% vs XLK. Growing rates have been steady with a +12% revenue growth rate and +34% for GAAP EPS growth rate.

Visa Inc

This payment firm also known for being one of the largest globally has been a growth predator over the years. The technical’s’ of the company shows that the outperformance is +13.61% vs market (SPY) and the outperformance vs the financial sector is +17.22% vs Financial Select sector SPDR fund. The company’s stock has been up steadily  since January and visa remains in growth mode with a 2019 net revenue growth rate of +8% net income per share growth rate of +17%.

These 5 companies discussed represent a potential buying opportunity for investors looking to take a long-term approach. Considering the strong historical revenue and earnings growth, along with the bullish usual trading signals which they all share; these stocks would be worth a place in the growth orientated portfolio and a good buy.

Conclusion

To conclude, when getting involved in any investments within the stock market the most important thing to do is your research! Taking the initiative to do your background researches on companies allows you to track the organisations performances where you are then able to discover information which you were unaware of. Research allows you to make more of an informed decision on whether the investment is for you or not. Looking for traits such as a consistent increase in revenue growth and earnings in a company can help give you a gage of progression, although it is important to note that there is always risks in investments and some things can happen within a organisation unexpectedly and out of their control. For guidance or any information related to the topics discussed in the article or trading and investing in the stock market, get in touch with one of our trading mentors today for a free consultation.

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At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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What Is An Initial Public Offering (IPO)?

Trading Blog | 5 min read 

What is an initial Public offering (ICO)

IPO is one of the most popular terms when it comes to trading and investing the stock market. In this guide, you will get to know everything about an IPO, how they work and how to participate in them.

Written by Mitchell Roach
Follow me – @mvtchh

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What is an IPO - starttrading.com

An Initial Public Offering is a term used to refer to the first time a company publically sells shares of its stock on the open market. Public shares allow a company to raise/ earn capital from public investors, providing a major boost for business growth. This makes the idea of initial public offering attractive.

Understanding Initial Public Offering (IPO)

Before an IPO, a company is considered private. A private company’s growth has occurred with a fairly small number of shareholders. This is likely to include early investors such as the founders, friends, family and any professional investors like angel investors or venture capitalists. Angel investors are individuals of a high net worth who provides financial help for small businesses or entrepreneurs in the start up process in taking their first steps. Venture capitalists are investors who provide capital to businesses with a high growth potential for success in exchange for an equity stake.

In order for a business to become a public company, the company must reach a stage in its growth process where it is able to get the necessary approvals and meet the listing requirements for going public. This will typically occur when a company has reached a private valuation of $1 billion, however it is known for private companies with strong fundaments and proven profitability potential to qualify for an IPO. With the required approvals a company can then offer some of its shares for sale to general public where once completed the company’s shares are openly traded on a stock exchange.

Initial public offering creates an immense opportunity for a company to raise more funds from the market both through debt as well as equity. This allows greater ability for growth and expansion. Favourably as a public company needs to meet strict reporting requirements there is an increased transparency and share listing credibility in the sense that the market is completely aware of the company’s performance. Such a factor helps when seeking borrowed funds as lenders trust these companies

Largest Initial Public Offerings

The following are some of the biggest IPO’s around the world:

Alibaba Group Holding Limited ($25 Billion)

In 2014 the Alibaba group, a diversified online e-commerce company based in China choose the New York Stock Exchange as oppose to the Hong Kong Stock Exchange to go public and sell shares. This brought their total IPO to $25 Billion making it the biggest in the world.

Agricultural Bank of China Ltd ($22.1 Billion)

The Agricultural Bank of China also referred to AgBank is the second-largest recorded IPO around the world. The AgBank went public in 2010.

General Motors ($20.1 Billion)

This is the name behind one of the USA’s largest IPO’s which debuted 2010 after bankruptcy a year earlier.  General Motors owns Chevrolet, GCM, Buick and Cadillac.

Visa ($19.7 Billion)

Visa is a debit and credit card company which set a record in 2008 by raising $19.7 Billion when they entered the public market. Many investors liked the fact that Visa didn’t directly carry customer debt at the time of rising defaults.

Enel SpA ($17.4 Billion)

This Italian electric company went public in 1999 after raising $17.4 billion. The Italian company competes in the gas and electric market in Europe and America and works in 34 countries accumulating 72 million end users around the world.

Facebook ($16.1 Billion)

Facebook was one of the most hyped IPO’s in history. Traded in the NASDAQ it was listed in 2012 and raised just over $16 billion. The social media company’s launch came with trading issues and questionable information sharing breaches. However as of June 2018 Facebook has an average of 1.47 billion active daily users.

Steps to an IPO

When a company is interested in an IPO they first need to secure the services of an underwriter. Essentially an underwriter commits to sell a particular fraction of a company’s stock in line of a certain fee. The underwriter chosen by the company will lead the IPO process, participating in every aspect from due diligence, document preparation, marketing, filing and issuance. The company can choose one or several underwriters to manage different sections of the IPO process collectively however typically investment banks provide underwriting services.

Once an underwriter is chosen a formal underwriting agreement is made and IPO teams are formed consisting of underwriters, lawyers, certified public accountants and the Securities and Exchange Commission experts.

Information about the company is required for IPO documentation. The S-1 Registration statement is the main IPO document which consists of two parts- information about the date of filing and the prospectus. This is known as a red herring prospectus which is a document that provides essential information about the company such as its business, the management, revenue and income over the last few years, important shareholders and so forth. The information giving in the prospectus can be subject to change as there is continuous revision throughout the process.

After the release of the red herring prospectus a company would typically release its final version. Final information about the company is enclosed and underwriters and executives market the share issuance to calculate demand and establish a final offering price along with the period in which the public can apply for the shares.  However throughout the marketing process underwrites can make revisions to their financial analysis as they see fit through changing the IPO price or issuance date.

Companies must take precaution in meeting the specific public share offering requirements and adhere to both listing requirements and the Securities and Exchange Commission (SEC) requirements for public companies.  The company can then issue its shares on an IPO date which concludes the typical process for an IPO.

IPO Advantages and Disadvantages

Advantages:

  • IPO’s provide companies with a huge financial opportunity to raise large amounts of capital. This can help towards funding research and developing or even used to pay off existing debts.
  • IPO’s promotes growth in public awareness which can subsequently lead to an increase in market share for the company through their products being known to new groups of customers.
  • Listing shares in the exchange increases company’s credibility in banking and money market which enables them to obtain loans cheaper and easier.
  • Shares offered to the public can be bought and sold in a transparent manner at prices determined by the markets supply and demand. Liquidity is provided to the shares and an important opportunity is presented to existing shareholders.
  • Being in the stock exchange market can promote global recognition through global press, data broadcasting and other visual broadcasting information.

Disadvantages:

  • Companies are required to disclose sensitive information about financial, tax, accounting and other factors previously discussed which reveals secrets and business strategies. This gives competitors an advantage.
  • Conducting an IPO is expensive and the cost of running a public company is ongoing and typically is unrelated to other costs of running the business.
  • Management for reporting requires an increase in time, effort and attention.
  • There’s the risk that required funding may not be raised if the market does not accept the IPO price.
  • There is a growing risk of legal issues such as private securities class lawsuits and shareholder actions.
  • There is a sense of loss of control and stronger agency issues due to new shareholders who have voting rights and have the power to control company decisions via the board of directors.

Investing in IPO’s

A company deciding to go public stems from careful consideration and high belief that an IPO will maximise the returns of early investors and raise the most capital for the business. With that being said, when an IPO decision is reached the potential for future growth is high with many public investors interested to get their hands on some shares for the first time. IPO’s are typically discounted to generate sales and ensure success on the IPO day. The IPO prices are based on the valuation of the company using strategic techniques. The most common technique adopted is the discounted cash flow which is used to estimate the value of an investment based on its future cash flow. Interested investors and underwriters analyse this value on a per share basis. The prospectus provides a lot of useful information and should be available as soon as a company files for its S-1 registration. This should be the main source of information to analyse the fundaments and technical’s of a company’s IPO issuance. Investors should pay special attention to the quality of underwriters as well as a company’s management team and commentary. Most successful IPO’s are supported by large investment banks.

It is important to understand that there is a difference in the IPO offering price and the price you actually pay for your stock. Usually the offering price is announced ahead of the IPO and a fixed price is allocated to a limited group of investors who meet certain eligibility requirements and the company’s employees. Orders are filled before the opening bells ring on IPO day and to entice investors the IPO price is lower than what the company believes shares will sell for in the open market. Investors in the public don’t become involved until the final offering day. This means that the price you pay will hugely reflect the demand for the stock the day it debuts and could differ dramatically from the offering price and the opening day hype only increases to the price volatility.

IPO’s Volatility

After an IPO there is usually a lock up period which prevents insiders from trading stock immediately after the IPO. The lock period is essential to ensure that early investors such as CEO’s or venture capitalists are able to sell their shares which could also equally cause other shareholders to lose confidence in the company. Once the lock up period is over which could range from 3-24months, shareholders are free to trade the company’s shares as they please. The enthusiasm and attention that the stock receives immediately after the IPO can cause wild volatility as early investors start selling their shares to take profits. Short-term fluctuations should not be disregarded as volatility can be used to find good buying opportunities for stocks that would like to be owned for the long term.

The monthly volatility of IPO initial returns is significant and fluctuates dramatically over time. Initial public offerings are underpriced on average where the secondary market trading price of the stock is much higher than on average than the IPO price.

IPO Trading Styles

IPO Long-term

The IPO opening day is recognised for having volatile returns which can attract investors looking to benefit from the discounts involved. On a long –term scale the IPO price will steadily settle into a value which can be followed by traditional stock price moving averages. The type of company going public and their future prospects should be the determining factor of whether to buy for the long-term. Getting a stock on the first day it goes public and being able to buy into the IPO price could be an investment of a lifetime, it just all depends on the stock. Imagine those who invested into Microsoft, apple or Google when they first went public and held onto their shares.  Investors who are interested in the IPO opportunity but are apprehensive about taking the individual stock risk may look into managed funds focused on IPO index funds.

IPO Short-term “Flipping”

Buying an IPO for the short-term makes sense if you’re interested in quick profits. Many investors consider this to be flipping which is a practice that is generally discouraged. However on the flip side expert analysts and stock market researchers have observed that IPO returns on listing day tends to be higher than 1-3 years returns in most cases. This approach requires an investor to sell an IPO stock in the first few days to a week and is common when the stock is discounted and soars on its first day of trading due to the hype and attention. The flipper generally relies on the short-term volatility of the IPO in the hope of making a quick profit. As mentioned before it is important to invest where the long term prospectus of a company looks good. There are however opportunities where flipping your shares could be the most profitable move. This is advisable when the stock gains are ranging between 70-80% in the pre-market session. With such a high return it is best to exit as historically the IPO may not reach that height for a couple of years.

Five Tips to investing in IPOS

  1. Do your research on the company you plan to invest in

Finding information on companies planning to go public can be difficult because although most companies do try to disclose all information regarding the business in the prospectus , it is still written by them and not by an unbiased third party so cracks in the corporate may be downplayed. It is advised to search online for the company you are planning to invest in and its competitors, past press releases, finances and its overall industry health. Even though information can be limited, researching as much as you can is a crucial step in making a wise investment. You may even discover through research that not acting on that investment opportunity is in your best interests.

  1. Pick a company with a strong broker

It’s best to select a company that has a strong underwriter. In general quality brokerages bring good quality companies when going public. It is important to move cautiously when selecting smaller brokerages as they may be willing to underwrite any company.

  1. Read the prospectus

Although it is good to do your own research on the company you plan to invest in, always ensure that you read the prospectus as it lays out the company’s opportunities and risks along with the purposes of the money raised from the IPO whether that’s to repay loans, expand or conduct research find out what the money will be used for and how the company plans to generate revenues to increase the value of shares you are buying. In addition keep a lookout for a overly optimistic future earnings outlook when reading a prospectus as those eager for market success in the past has made mistakes from over-promising and under delivering. Always read the accounting figures carefully and thoroughly.

  1. Wait for the lock up period to end

Waiting until the lock up period is over where insiders are free to sell their shares is not a bad approach to take. One way to look at things is if insiders decide to hold stock after the lock up period then it could be a signal that the company has a bright and sustainable future. Its best to wait out and let the market run its course. A good company will still be a worthwhile investment regardless of if the lock up period expires.

  1. Be weary

When approaching IPO’s it is important to be cautious as there is a lot of scepticism around the approach mostly due to the lack of information available. A broker approaching you with a recommended IPO is not the ideal opportunity to take a jump at as this can be an indication that most institutions and money managers has politely refused the underwriters attempt to sell them stock. In a situation like this investors are likely to be getting a stock that wasn’t wanted. It is very much unlikely for a company going public which is deemed to be a worthwhile investment to have shares available. Unless you are a favoured investor, chances are you won’t be able to get in.

Conclusion

To conclude, when investing in IPO’s it is important to move cautiously simply for the fact that not all IPO’s guarantee returns. Although some investors who have brought stock have made good financial gains from the investment and have been rewarded from the company in turn it is difficult to find investments with the most potential in growing into success. With that being said when it comes to the IPO market, being a cynical and informed investor who moves cautiously will work more in your favour than someone who is not. For more insight in understanding and investing in IPO’s get in touch with one of our trading mentors today who will help guide you through the processes of IPO’s. Start trading provides services which can both teach and guide you into the right direction of a bright financial future in the stock market. With our mentoring services available you’ll be able to gain the confidence necessary in making sound trades and investments in the Stock, Forex and even Cryptocurrency markets. Book a FREE consultation with one of our trading mentors today for more information or to discuss any of the topics mentioned in this article in further detail.

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At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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Stock Market Trading Hours

Trading Blog | 5 min read 

Stock Market trading hours

Opening and closing times for stock market exchange varies from country to country but they usually close in the evenings expect on holidays. A stock market exchange is an open market where stocks are traded during specific hours on business days. There are 60 major stock exchanges around the world which range in size and trading volume from well known stock exchanges such the New York Stock Exchange to small local exchanges. In this article we will explore some of the top stock exchanges in the world by market capitalisation.

Written by Mitchell Roach
Follow me – @mvtchh

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Stock Market Trading Hours - starttrading.com

Trading in the cryptocurrency markets can be very daunting due to the infancy of the cryptocurrency space and the lack of a long history, which typically acts as a solid foundation for traders to build decisions upon. In traditional markets such as the stock market people do not base their trading decision solely on the technical side but make use of fundamental analysis techniques as well. However, a vast amount of cryptocurrency traders lack or dismiss the importance of fundamental analysis whilst trading cryptocurrency, this is why we have created a comprehensive guide to help you trade cryptocurrencies using the fundamental information available at this moment in time.

Top Stock Exchanges Around the World

The New York Stock Exchange (NYSE)

Located on Wall Street in New York City, the NYSE is one of the largest stock exchanges in the world by market capitalisation ever since the end of World War 1 where it outpaced the London Stock Exchange. With a market capitalisation of over $20 trillion the NYSE is almost 40% of the total world stock market value. Over 2400 companies are listed on the NYSE which represents sectors such as finance, healthcare, customer goods and energy. These are primarily United States based companies and trade in the US dollar. The NYSE has normal trading hours from 9:30am to 16:00pm local time unless there is an early close due to a holiday.

National Association of Securities Dealers Automated Quotations (NASDAQ)

The NASDAQ stock exchange is also based in New York located in Times Square. NASDAQserves as a global electronic marketplace for securities trading. This stock exchange has always adapted a computer and telephone- based system of trading making it the first electronic stock exchange. This is the second largest stock exchange reaching $11 trillion and has the largest market capital in technology stocks. Some of NASDAQ’s stop listed companies include Apple, Microsoft, Facebook and Tesla. The NASDAQ stock exchange normal trading hours are from 9:30am-16:00pm local time; however they run pre-market trading hours from 4:00am to 9:30am and after trading hours which extends from 4pm-8pm.

Tokyo Stock Exchange (TSE)

Tokyo Stock exchange is the largest stock exchange in Japan with a market capitalisation over $5 trillion. The Japan exchange group was formed in 2013 when there was an emergence between Osaka Securities Stock Exchange and TSE. TSE also has partners with other exchanges around the world including the London Stock Exchange and has over 3500 listed companies. These include top companies such as Honda Motor Co, Toyota Motor Corp and Sony Corp. Japan’s Tokyo Stock Exchange trading hours is different from the other exchanges discussed as it has a daily hour closure for lunch break. Trading hours are from 9:00am until 15:00pm and lunch break is from 11:30 -12:30pm.

Shanghai Stock Exchange, China (SSE) 

The Shanghai Stock Exchange is one of three independent stock exchanges in China and is the largest. The other two stock exchanges are Hong Kong and Shenzhen. Shanghai Stock Exchange is the fourth largest stock exchange in the world where its history dates back to 1866 but it was suspended following the Chinese revolution in 1949. The Shanghai Stock Exchange was then founded in 1990 and now has a market capitalisation of over $4trillion. Stocks listed at SSE have ‘A’ shares which trade in local currency and ‘B’ shares which is priced at the US dollar for foreign investors.  SSE opens at 9:30am local time and closes at 3pm with a lunch break from 11:30am- 1:00pm.

London Stock Exchange (LSE)

London Stock Exchange is the primary stock exchange of the U.K and the largest in Europe. The history goes as far back as 1700’s where services were no more than paper publications of market prices twice a week. This makes it one of the oldest stock exchanges in the world. The London Stock Exchange used to be the largest stock exchange in the world until First World War when it lost its title to New York Stock Exchange.  In 2007 the LSE merged with the Milan stock exchange, Borsa Italiana forming the London exchange Group. With a market capital of over $4 trillion it is the most international stock exchange with over 3000 companies among 70 countries. Trading hours is from 8:00am- 16:30pm

Toronto Stock Exchange (TSX)

Toronto Stock Exchange is the largest stock exchange in Canada with over 1500 listed companies. Toronto stock exchange merged with Montreal Stock Exchange in 2009 and was renamed from the TSX group to TMX group with a market capitalisation over $ 2.2 trillion.  This makes it the ninth largest stock exchange in the world. Canada’s Toronto Stock Exchange opens at 9:30 am and closes at 4pm America/Toronto time zone with no break for lunch included.

Can I buy Stocks Outside Of Market Hours?

In the past decade, extended trading has become increasingly popular due to electronic communications network becoming more widely available and investors embracing this. In fact a number of brokers now provide after hours trading services for all their investors.

Pre Market and Post Market Trading

What some new traders may not know is that the stock market is also open before and after normal trading hours. The pre market allows investors to trade stocks between the hours of 4am and 9:30am. Post market trading can take place between 4pm to 8pm.

How Does Stock Prices Change After Hours?

After hours trading is the timeframe after the market closes where an investor can buy and sell outside normal trading hours. Post market trading typically takes place between 4pm and 8pm while pre-market trading sessions ends at 9:30am. Before the 1990’s, after hours trading was reserved for institutional investors where the average trader could only trade during normal trading times. Fortunately today’s market is more open than ever giving individuals the freedom to trade during the extended hours .This wouldn’t of been possible without electronic communication networks which match potential buyers and sellers without a traditional stock exchange. Trading after hours is seen as convenient as it allows investors to react immediately to breaking news however risks are also associated. After hour trading comes with less liquidity, there is more competition from institutional investors and more exposure to volatility which can impact dramatically the price you end up receiving for your shares. In general price changes in the after hour trades have the same effect on stock like how changes in the regular market do. So a $1 or increase in the regular market is the same as a $1 increase during after hours trading. That being said you can make gains off of trading during after hours if there is an increase in your stock price. However it is important to note that once the regular market opens for the next day trading, the stock may not be open at the same price it was being traded for in after hours. Price change in the after hours are much more volatile than regular hours prices so they shouldn’t be used as a reliable reflection of what a stock will trade for once the regular market opens. Instead it is useful in the sense that it reveals how the market reacts to new information released after the regular market has closed.

Pros and Cons to After Hours Trading

Advantages 

Flexibility:

Some investors may prefer to trade at off-peak times. The after-hours trading market provides that additional option creating flexibility.

Trading with new information: 

After hours trading gives you the opportunity to act quickly to breaking news stories or new information before the next day’s market opens.

Pricing Opportunities: 

Despite the risk of volatility present in the after- hours trading market, it is still possible to find prices you find appealing and make profits. It is just important to approach with caution and do your research!

Disadvantages 

Less Liquidity:

During regular trading hours there are plenty more buyers and sellers so trading after hours means there may be less trading volume for your stock. This makes it difficult to exchange your shares to cash.

More competition from institutional investors: 

Although individual investors now have freedom to trade in the after-hours market the fact of matter is that they must compete against large institutional investors who have the advantage of having access to more resources. Large investors also interact anonymously, which gives them hidden agendas.

Volatility: 

After hours trading is used less in comparison to normal trading hours which means that you are more likely to experience harsh price fluctuations which can have a huge impact on the price you end up receiving for your shares. With that being said it is important to use a limit order on any shares you buy or sell outside of normal trading hours. A limit order allows you to set a minimum or maximum price which you are willing to buy or sell. This gives traders more control especially when fearful of using the market throughout periods of heightened volatility.

Conclusion

To conclude after-hours trading can provide benefits to traders trying to profit on new information or allow the ability of buying or selling stocks if unexpected news is announced. However regularly practicing after hours trading is not usually recommended for traders as the risks discussed throughout this article is associated. Normal trading hours offers efficient markets and better liquidity which makes all prices fair value. For more insight in understanding and investing in the Stock Market get in touch with one of our trading mentors today who will help guide you through the processes of IPO’s. Start trading provides services which can both teach and guide you into the right direction of a bright financial future in the stock market. With our mentoring services available you’ll be able to gain the confidence necessary in making sound trades and investments in the StockForex and even Cryptocurrency markets. Book a FREE consultation with one of our trading mentors today for more information or to discuss any of the topics mentioned in this article in further detail.

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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5 Steps to Start Trading Cryptocurrency Like a Pro

Trading Blog | 5 min read 

5 Steps to Start Trading Cryptocurrency Like a Pro - Trading Ultimate Guide

This beginners trading ultimate guide provides a quick overview of how to start trading cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC). By the end of this trading guide, you will know how to buy and sell cryptocurrencies like a pro.

Written by Mitchell Roach
Follow me – @mvtchh

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How to start trading cryptocurrencies

If you are reading this, you have probably heard of cryptocurrencies or more specific, the top trending cryptocurrency called Bitcoin. Another concept that has probably led you to this article is trading, whether it is stocks, the foreign exchange market or cryptocurrencies. However, this trading ultimate guide mainly focuses on cryptocurrencies and how to get started trading them.

Instead of going into all the details and lengthy discussions of the blockchain, bubbles, regulations, temporary hype etc, the fact remains that people are making money trading cryptocurrencies and you could be amongst them. It can be extremely difficult to find an accurate step by step guide on how to start trading cryptocurrencies but let’s just say you came to the right place.

Here is a step-by-step guide for you to follow so that you can enter into the cryptocurrency markets and start earning today.

Step 1

Choose a cryptocurrency exchange.

Selecting a cryptocurrency exchange in 2019 to purchase your first cryptocurrencies can be a daunting and overwhelming process. After all, there are over 200 cryptocurrency exchanges in today’s market, with 24-hour trade volume in the billions. So, how do you make your choice?

Here are a few attributes to look at while choosing your exchange of choice:

  • Geographical location and their constraints;
  • Transaction fees;
  • Security, anonymity, and customer support;
  • Ease of use and user interface;
  • Volume and liquidity of the exchange.

Note that the above list does not cover all needed attributes to consider while choosing an exchange but are a good solid basis to start off with. We will now take a closer look at each attribute named above:

Geographical location and constraints – Two key things to consider while looking at the Constraints of Geographical locations of a crypto exchange is: Firstly, is the exchange limited to a specific geographical location or is it open to most countries, including yours. Secondly, is the exchange legal in your country. It would not help you anyhow if you register on an exchange which you cannot access or trade legally.

Depositing cryptocurrencies onto an exchange located in a highly politicized or anti-crypto country probably isn’t the smartest idea and could potentially cause more headache and strife in the future than its worth.

Transaction fees – Another factor to consider is the fee’s charged by the exchange. If you plan on placing multiple trades on the exchange, this is an important factor to look out for.

Security, anonymity, and customer support – It is important to investigate the exchange’s history to find out whether the exchange has been subject to any past malicious attacks or phishing scams and also whether they engage with their community on a regular basis. While this may seem like common sense, avoid signing up for exchanges which have a known history of financial and security breaches, and who have disabled withdrawals for long periods of time.

It is advisable to look for exchanges with Two Factor Authentication (2FA) and Know-Your-Customer-Verification (KYC)

Volume and liquidity of the exchange – An exchange with a large volume of trading is usually a good indicator of a crypto exchange’s liquidity and overall ability to fill a user’s order at any point in time. Based on the type of trading you’re looking to do, liquidity is an extremely important factor.

Ease of use and User Interface – If an exchange has a good User Interface, it is a good indication that they care about their user base and ease of buying and selling.

A few exchanges to choose from are:

Step 2

Choose a cryptocurrency wallet.

After choosing your exchange, you need to create a crypto wallet to store and control your funds with. A cryptocurrency wallet is a place where you store encrypted passwords that represent your coins, it is the equivalent to storing money in a bank account.

There are several types of cryptocurrency wallets that provide different ways to store and access your digital currencies. To understand more about cryptocurrency wallets and how to decide which wallet is best for you, please read our guide on cryptocurrency wallets.

For beginners, we would recommend an online wallet for the ease of use and accessibility that they offer. An online wallet can be set up in a matter of minutes and function somewhat similar to online or mobile banking.

A few cryptocurrency wallets to choose from are:

It’s important to note that most exchanges have built-in wallets but it is best practice to store digital funds off exchanges as exchanges have fallen victim to hacks in the past. However, insurance companies are beginning to offer cryptocurrency insurance against theft.

Step 3

Learn the skills of trading the crypto markets.

You may or may not have some experience in trading the Stock or Forex (FX) markets, but the Cryptocurrency market is a whole different ‘game’. It is advised to study the cryptocurrency charts first before starting to trade them. It is advised not to assume that your skills attained by trading other markets will be sufficient and that your trading strategies will work the same in the crypto market. Traders often assume that skills and trading strategy’s developed in alternative financial markets can be applied to others, you need to take time and research each market respectively and it would help to have an experienced mentor! Book a FREE consultation with a mentor today.

If you are a new trader in general, it is advised that you either start with a demo trading account and train yourself, or get a expierence cryptocurrency trader as a mentor, such as the 1-1 bespoke mentorship service offered by our trading team which will make you familiar with the differences between the crypto and other markets. Whilst also getting you involved with the cryptocurrency markets to the point where you understand its movements and can predict it to start trading more effectively.

It is important to find a strategy for each trade you will make and apply these strategies in the cryptocurrency market. We have spent years developing ours, it may seem daunting at first but once you pick up the basics, picking up the rest of the knowledge can become a walk in the part.

Step 4

Find a cryptocurrency to trade.

After setting up your wallet, finding your exchange, and getting familiar with trading and the cryptocurrency markets you can now log onto your exchange and start trading. The fourth step includes choosing the cryptocurrency to trade. Before putting your money into any cryptocurrency, it is a good idea to first study the asset. Read our guide on how to evaluate different cryptocurrencies.

One of the best tools for this research is our cryptocurrency market cap page where you can find information on every coin and token available around the world. The data found there includes market capitalization, news, supply and trade volume. Listing them in chronological order of top cryptocurrency and can be used to know exactly what each coin represents and compare different cryptocurrencies with each other.

If you want to better understand what market capitalization means and how it affects assets such as the price of Bitcoin or Ethereum feel free to refer to our what is cryptocurrency marketcap guide.

Tracking the latest cryptocurrency news daily is essential if you want to be successful in trading cryptocurrencies. Trading the news is very important when it comes to cryptocurrency trading, it’s important to use verified sources such as CoinDesk and CoinTelegraph. Learn how to start trading cryptocurrency news in our in-depth article. 

Be aware of false market hype and cryptocurrency scams, such as false ICOs. It is advised to study the token or coin thoroughly to make sure that you are buying a legitimate asset which will not disappear overnight. If you are still hesitant in which coin to buy you can always start on the top cryptocurrencies listed by market cap as they are the most popular at the moment with most people trusting them.

Step 5

Start Trading.

After you have completed all the above steps, you are ready to start trading. Here are a few steps to remember before setting off into the cryptocurrency trading universe:

Tip #1

You don’t have to buy a whole coin. cryptocurrencies allow traders to buy fractions of coins. This is a feature not a lot of new traders know, thus demotivating them not to start trading due to the high price of coins such as Bitcoin (BTC). You simply do not need to buy 1 whole Bitcoin (BTC) and can simply buy a fraction of a Bitcoin (BTC). This is the same across most of the tokens created in the cryptocurrency market.

Most of the top coins are expensive, so consider buying fractions of these coins to start if you don’t want to start trading with enormous amounts of money. Rather consider and predict which cryptocurrency is most likely to increase in and retain value and focus less on its current price.

If you would like to own for example 10 Litecoin (LTC), you can periodically buy additional fractions and grow your portfolio whilst still keeping your balance. This is also a good strategy to optimize the average price, known as dollar cost averaging.

Tip #2

Keep in mind that the cryptocurrency market is volatile at this stage of its life! There is always the chance that the market will move rapidly in any single moment. Thus, include this into your trading strategies and adapt as the market changes.

Tip #3

Don’t trade with money that you cannot afford to lose! If you have been in the trading scene for a while you will hear this phrase a lot. This term must not be misinterpreted. This phrase does not mean that you must be willing to lose this money, it only means that if the worst-case scenario plays out, you will not feel the impact of losing this money and still be able to live your life as before losing this money.

If you have the mentality that you can lose this money, you have already made your first mistake. The aim is not to be comfortable with losing money, but if this happens, you still have a basis to work from and not have to start from scratch again.

Conclusion

Cryptocurrency trading is still in its infant stage, if you can stick out the learning curve, you will be glad you started. Always stay calm and do not attach emotions to trading, have a strategy and follow it. Stay open-minded and do not let your emotions stop you from making trades.

The hardest part of cryptocurrency trading is that all important first step to getting started. At starttrading.com we make this step that little bit easier, you have to start trading alone. We provide the right guidance and support through 1-1 bespoke accredited mentoring to take your trading to the right level. Simply book a FREE consultation with a mentor so that we can give you the help you need today!

Start trading the right way

At starttrading.com, our goal is to empower you to become a more successful trader and unlock financial freedom. We provide you with the information and educational content needed to learn how to trade.

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