Friday, 14 September 2018

Stocks, Indexes & ETFs - What's The Difference?

Stocks, Indexes & ETFs - What's The Difference?
Hey everyone. This is Kirk, here again from optionalpha.com. In this video tutorial, I want to talk about stocks, indexes and ETFs. We know there’s three main types of underlying securities that we will trade options on. Regardless of your trading experience, it's important that you really understand the benefits and drawbacks of each of these three different types, stocks, indexes and ETFs. That’s what we’re going to go over in this video. With stocks, here are the main benefits. First, there’s thousands of possible companies to trade and I think the keyword here is “possible companies to trade.” That doesn’t mean that they’re all great trading opportunities, but there are so, so many different securities out there that we can trade when it comes to stocks, so there’s a lot of choice. Earnings trading opportunities are huge with stock because they don’t happen on ETFs and indexes, so the ability to trade a stock every quarter around earnings and profit from that implied volatility crush is actually a huge benefit to trading stocks.

Number three is that there always are new players to trade, so there’s always new companies that are coming out and they’re going to be hot stocks and they’re going to have a lot of open interest and volume and liquidity and they’re going to be really great trading vehicles. Things like right now that are new and still hot are still Twitter and GoPro. Tesla is relatively new to the market, still a very hot stock. These new stocks and companies that come out, they give us more trading opportunities in the market. Obviously, some of the big drawbacks to trading stocks is the unsystematic risk, so that risk of immediate bankruptcy overnight or a company getting bought out in an M&A deal, something like that that might cause the stock to make a huge gap in one direction.

The lack of liquidity in most cases is actually a really big problem. Like I said before, there's a lot of companies out there, but they’re not all great trading opportunities. In fact, probably less than 1% of the market has enough liquidity that we would even be interested in trading that stock and the options on it. Fewer trading opportunities because generally, there’s just less companies out there that have options and of those companies that have options available, even less of those companies have options that are really liquid and highly traded, so there’s a lot fewer opportunities in stocks. Then we also do have earnings to contend with, so that throws things through a loop every quarter when we go through that earning cycle. When we talk about index benefits, I think the biggest benefit to trading indexes is that they’re usually huge and liquid markets.

Everybody trades them, they have a lot of liquidity because they’re used from with institutions and hedge funds and private equity shops, so there’s a lot of market players in there which creates a very deep market. They’re easy because most of them settle to cash. Indexes like SPX and RUT and NDX all settle to cash, so there’s not a lot of trouble that you have to go through at expiration if your position is in the money or out of the money. It’s just all settled to cash, so there’s no underlying stock to trade hence. The other major benefit is that it gives us a lot of hedging potential. We often will use in our own portfolio the SPY or SPX as a hedge against some of our other positions. If we get a little bit too overbalanced in one area or another, a little bit too bullish or too bearish, we’ll come in and use one of the major indexes as a way to hedge some of our positions because it’s very liquid, easy to get in and out of and it’s settled to cash.

Some of the major index drawbacks are that option contracts are just larger in value. On the SPX we know this is true, on the RUT we know this is true, NDX we know this is true. Those are just larger valued contracts, so they tend to scare away some of the smaller retail traders. We also tend to see lower implied volatility because these are index options and they’re baskets of securities. They’re not making dramatic moves up and down every single day, we’re not seeing 5% or 10% moves every other day, so they tend to have overall lower implied volatility which just makes it a little bit harder to trade with regard to getting an edge in the market. They don’t have the ability to trade earnings on and that can sometimes be a good thing, but if markets are really calm and implied volatility is really low, then it's really bad because we can’t trade a lot of stocks, we also can’t trade indexes because implied volatility is low.

We don’t have that potential to trade earnings throughout that low implied volatility market. When we talk about ETF benefits, the first and major benefit of trading an ETF or a basket of securities is that it has less tail risk compared to a single stock. When we talk about tail risk, that’s the risk that we mentioned earlier in this video, the risk that a stock just has a huge move up or down because of a bankruptcy or an M&A deal. With ETFs, since they’re baskets of securities, they don't tend to see huge moves in one direction or another and that's why people like to trade them and that's also a really big benefit.

They’re mostly liquid and have deep markets because if you focus on some of the bigger ETFs, (and there are bigger ETF markets than others) they’re pretty liquid and they have pretty deep markets, meaning there’s a lot of participants at different strike prices, it makes it really beneficial for options traders. Number three is you can have focused risk across different industries. If we wanted to go in to say financials and just trade financials, instead of doing it in 10 different securities, we could go into an ETF like XLF and trade just focused in the financial sector. I think that's a really big benefit, is you can target different industries and sectors in your portfolio. Obviously, some of the major drawbacks to ETFs are some of the double and triple inverse choices. Some of those securities aren’t priced well and most people don't understand how they're actually priced, we’ve got a video tutorial inside the membership area that goes through how some of those are priced and the errors that are made in pricing that people don’t understand and I think that’s a huge drawback if you trade just those double or triple inverse choices.

In most cases, there’s too many illiquid options. Like we said, the ones that are really popular have great liquidity, but the ones that are not so popular because there’s a lot of choices, don't have good liquidity at all. Number three is that re-pricing often occurs and what we tend to see is that in some of these double or triple inverse ETFs, when the security gets so low that it becomes almost non-tradable, they’ll re-price it back up to a higher level, reset the clock all over again and that just creates a lot of confusion with some of your positions and some of the strike prices that you have and definitely creates a lot of capital requirement issues because now you’re trading a stock that’s 10 or 5 times higher than where it was before. That's a major drawback that you don't see with stocks or indexes.

I hope you guys enjoyed this video just going through these three different categories of underlyings that we can trade, both the benefits and the drawbacks. As always, if you have any comments or questions, please ask them right below this video on the lesson page. Happy trading! .

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Securities, Commodities, and Financial Services Sales Agents

Securities, Commodities, and Financial Services Sales Agents
Scrolling by on the side of a building… or at the bottom of the news… the stock exchange update can look like random lists of numbers. Securities, commodities, and financial services sales agents use their knowledge to translate those numbers into investment advice for their clients. These sales agents make trades, advise clients, and sell securities. Sales agents spend much of their time with clients, and deal with a wide range of products. Products they sell include commodities— usually an electronic transaction rather than a face-to-face sale— of agricultural products like wheat or cocoa, or resources such as oil and gold; securities—different types of tradable assets such as stocks, bonds and options; and financial services— essentially, the service of investing clients’ money to increase it, using a variety of investments. These agents differ based on the types of products they trade, the services they provide and the licenses they hold: Brokers sell directly to individual clients and give financial advice. Investment bankers connect businesses that need financing with investors, and may travel extensively.

Investment banking sales agents and traders buy and sell stocks, bonds, and commodities for clients and make trades on behalf of firms. Floor brokers make trades directly at a securities or commodities exchange. All of these sales agents closely monitor and analyze markets to stay informed and make strong decisions. They usually work full time and many work overtime, including weekends. Entry-level positions require a bachelor’s degree in business, finance, accounting, or economics. An MBA is helpful for advancement. .

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Commodities: Best Investment of 2019

Commodities: Best Investment of 2019
Hello and welcome to the Morningstar series ask the expert I'm Emma wool and I'm joined today by fund analyst for Morningstar Fatima Kazu to talk about commodities hi farmer hi EEMA so after five very long and hard years for commodities we've had a bit of a rebound in 2019 haven't we yes certainly mates been an interesting year for the commodities sector and we've seen since January which marked low bottom for so many commodities we've seen the sector bounced off strongly from those levels and actually the natural resources related equities have outperformed the broader equity and fixed income markets so far this year so it's been an interesting year so far and then drilling down into those commodities we've got to talk about gold it's an investor favorite how it's gold done in 2016 gold actually has been the star performer this year and there's many reason that explains such strong returns it's predominantly the uncertainty around the global economy this years but also political events and also the diminishing probability of interest rate hikes in the US as you remember at the start of the year the markets priced in full air interest rate hikes in the US and as we go on over the months that probability has diminished and we've saw a flight into that safe haven assets for from many investors and the demand has increased substantially this year and other factor that actually explained that a return of trust from investor is that we've seen many companies in the sector seen their financial states improved significantly from periods in 1213 and that has also helped drove Gold's higher I'm looking then at the couple of couple of days where gold spike we saw gold spike over after brexit and this week we saw the price of gold spiked after the election of Donald Trump for the next u.s.

President what then looking at another commodity at energy because this has been quite a volatile year for the oil price but it has moved up hasn't it yeah energy is another sector that has been continue to make headlines this year and we've seen that downward trend that started in June 14 and we've seen the prices bottom up to below 13 January however we've seen a return or reversed of that trend over the past few months and actually the sector is up this year and there is a lot of factor that have helped on the supply side but also on the demand side the freeze in February announced that OPEC has helped and more recently the announcement by OPEC again to cut production has further helped the sector and the prices in that upward trajectory the demand is also strong and we've seen the production fall in areas as well and all those development have helped the prices in that sector so if investors are still feeling bullish about the commodity sector which funds do we rate highly that can offer them exposure to this space we have a quite a good selection in that area so if investor wants purely exposure to gold equities we have the black Gordon General which is run by an experienced manager in that field with an energy we have a Guinness global energy which is also managed by a highly experienced team and if you if I'm going to investor wish to access this the over complex we very first state global resources which we highly rate as well or TPM global resources which is a more smaller cut fun so that is quite a good selection Fatima thank you very much Thank You Emma this is Emma wolf for Morningstar thank you for watching

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Volatile Commodities Trading

Volatile Commodities Trading

Volatile Commodities Trading   Today's volatile commodities trading can lead to profits if traders follow fundamentals and trade with trading cues such as Candlestick analysis signals. Gold futures were going up and now they are going down. Industrial commodities are in retreat as global recession threatens again. The dollar is strengthening as Forex investors seek safe haven in the US dollar which in turn makes every dollar denominated commodity cheaper. Stocks have fallen as well as traders concern themselves with the prospect of Europe not really fixing its debt dilemma and leading the world back into negative growth. Amid all of this mess traders will do well to remind themselves that volatile commodities trading can be profitable commodity trading. The value of trading commodities, stocks, options, futures, and foreign currencies as opposed to long term buy and hold investing is that there is profit to be made when equities go down as well as when they go up in price. Reading the Signs As the world anticipates another dip to the recession stock prices are down, the US Dollar is rising, and volatile commodities trading is trending to the down side.

How in commodities trading can one profit in this environment? Is it time to sit on the sidelines, trade commodity futures options, only sell commodities? All might be possibilities but the most important part of trading commodities in today's environment is to have a clear view of market sentiment. Using Candlestick charts, traders have successfully traded commodities going back centuries to when there were Samurai in Japan. Rice traders recognized price patterns and learned that they could buy or sell rice based upon recognizable Candlestick patterns. Today traders buy commodities futures or sell commodities futures based upon the same Candlestick pattern formations that traders have long used. Gold and silver futures are trading more like commodities these days than like safe havens for wealth. Both precious metals hit their highest levels a couple of years ago and have steadily fallen as the dollar has strengthened.

The driving force behind the rise of these metals, especially gold, has been the belief that the dollar and Euro were headed for the abyss. As the dollar strengthened many traders have moved in, assessed the markets with the technical analysis insight provided by Candlestick charting and profited by selling gold or silver futures or selling short on gold exchange traded funds. Although volatile markets can be chaotic they can also be profitable.

Successful traders can approach volatile commodities trading very objectively with statistically based Candlestick charting techniques. Volatile Oil Prices, or Not? As oil futures fall traders concern themselves with the unrest in the Middle East and the Ukraine as well as a stronger dollar. Fundamentals are always discounted by the market but in times of volatile commodities trading traders must rely more strongly on the unbiased assessment provided by Japanese Candlestick charting in successfully anticipating commodity price changes. Candlesticks help traders see new market trends early and anticipate market reversal before being caught in a market correction. As in the days of ancient Japan when rice traders profited by following Candlestick signals traders of today can use advanced technical trading to avoid being caught up in market psychology and objectively trade during periods of volatile commodities trading.

For more insights and useful information about trading stocks, options, futures or Forex,
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When to Buy Gold // seasonal investing patterns // seasonality trading strategy

When to Buy Gold // seasonal investing patterns // seasonality trading strategy

When to Buy Gold // seasonal investing patterns // seasonality trading strategy David Moadel welcome to looking at the markets with David Modell wanted to talk about gold when's a good time to buy gold well I'm not talking about day trading today I'm talking about buying and holding some gold maybe for a swing trade a few months something like that or perhaps even for long term because even if you're gonna hold gold for years you still want to get in at the right time at a good price you want to buy at a lower price and you want to buy at a time when you expect it to go up no matter what your whole time is well let's talk about that I'm gonna put some links in the description of this video here's one it's from equity o'clock calm I want to give them credit and it's a pretty cool website they have a lot of seasonality charts here and here is a seasonality chart for gold or gold futures which reflects gold prices and notice that at the toward the end of the year gold tends to go up we see that alright and notice in the beginning of the year as well so what months are best if you're going to go buy seasonality well notice that September is fantastic in terms of seasonality for gold or at least gold futures prices and also January look at that big big move in January and the timeframe here is for 20 years so this is a pretty big range here alright so it looks like September and January are great months and then if we go over to and I'll put this link in the description of the video as well this is from Casey research calm I like these guys as well they have good charts here and look again September and January are really fantastic and this is average gold performance since 1975 this is a little bit older of a chart but still it's over a long period of time and it still reflects monthly seasonality patterns or trends and we see September and January are really great when we look at this one we see some other great months as well looks like November is really strong looks like February might be really strong but the one or two I should say that they both have in common are September and January they both agree on that one now why September and January well there are a number of theories behind that I think the strongest one that I've seen is that there's a lot of fear surrounding October let me think about it think about the stock market crashes that occurred in October of 1929 October in 2008 October of 1987 it's burned into people's memories especially if they've been investing for a long time that October can have a lot of problems in the stock market in the the Dow and the S&P and so on and so that's one possible reason that people load up on gold perhaps as a protective or hedging measure in September in anticipation of October and also February is known as a weak month seasonally speaking for the stock market for the Dow the SP and so on and so that could account for why people Lo and people and or institutions load up on gold in January perhaps they're anticipating a week February just like perhaps they load up on gold in September in anticipation of a week October how much truth there is to that I don't know for sure but that seems to me at least right now as a possible explanation and we we have September coming up very soon that's why I'm putting this video out now but no matter when you're watching this these are seasonal patterns to think about if you're going to get into gold and I certainly have no problem with people purchasing precious metals for a hedge against a long equities portfolio I don't think it's a bad idea at all of course you have to make your own decision about these things but if you're going to do it why not do it at the right time and while I'm making this video September's coming up very soon and so that's something to think about when you look at these charts okay so I want to give thanks to equity clock comm and Casey research comm links are in the description of this video and if you'd like some help putting together a trading or investing plan my name is David Modell you can email me anytime at David Modell at gmail.com hey if you like this video if it made you think if it gave you an idea or two please give this video a thumbs up on YouTube and leave comments what do you think about Gould do you think it's a good way an effective way to hedge your portfolio and is there a time that you like to buy it are you a stacker of gold or silver or both and if you have not subscribed to my youtube channel yet why don't you go ahead and do that please subscribe that way you can receive the latest updates on my financial educational videos thank you so much for watching and listening and I'll talk to you again soon

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