Trade12 – GARP A Hybrid Investment Strategy

Growth at a Reasonable Price: A Hybrid Investment Strategy

There are a lot of benefits that one could get by applying certain strategies in investing. Some may prefer stocks that are bought at a discounted price, while others may want to secure profits from growth stocks regardless of their current price. Recently, we have talked about growth and value investing strategies. But how about investors who like the ideas presented on both strategies, but don’t want to consider some of their concepts? In this article, we are going to talk about a hybrid investment strategy called GARP or Growth at a Reasonable Price.

Trade12 - What is GARP

What is Growth at a reasonable price (garp)?

There are some investors who argue that growth and value investing should not be separated. GARP simply means growth at a reasonable price. It is literally a hybrid investment strategy that seeks balance of both growth and value investing. This investment strategy seeks stocks that are believed to have the potential to deliver above-average growth in a relatively low price range. It emphasizes picking investments that are slightly undervalued, but still expect to grow consistent earnings in the coming years.

GARP investing was widely popularized by Fidelity manager Peter Lynch. He was able to achieve an average return of 29% from 1977-1990 by using the strategy’s fundamentals. It is not like growth investing, which only aims to buy growth stocks regardless of the price because they think it would still grow more than that.

GARP eliminates the risk of buying high priced securities in the hopes of high growth. It focuses more on older companies with consistent growth rates that trades at a reasonable price at the same time.

GARP investors are not necessarily looking for bargain investments or expensive growth stocks; instead, they are more interested in stocks with potential for realistic and attainable growth while also looking for slightly undervalued stocks.

How to compute for the GARP

The formula for finding GARP is by computing the price/earnings growth ration (PEG). This ratio divides the company’s current P/E ratio by the earnings growth rate. It is designed to measure the balance between growth and the valuation of the company. The ideal PEG ratio is one or less. But based on studies, a PEG closer to 0.5 is considered the best.

The main objective of this strategy is to select companies that have both low relative P/E ratios and high EPS growth rates. In bear markets, stocks selected through GARP strategy are said to outperform both pure growth and value investing stocks.

Trade12 - Why Choose GARP

Why choose GARP?

GARP seeks to avoid the disadvantages brought by using pure growth and pure value investing strategies. Growth stocks can result to a bubble in stock value, which can eventually pop and crash in an instant. Value investing, on the other hand, can go nowhere for a very long time and may even go against the predictions of the investor if calculations are not done properly, similar to investing in penny stocks.

Through GARP, investors find the middle ground of both strategies. They can seek to enjoy rising prices without being too vulnerable to a sudden price crash. It may usually underperform growth stocks in a growth market and value stocks in a value market. Nevertheless, it can also outperform both in mixed markets and over the longer term.

Stay updated on market news, trends, and tips by regularly visiting Trade12. It is a reputable online trading broker that offers tight spreads, flexible margins and high leverage. Read about Trade12 reviews to ensure you trust only the best. Register an account now and enjoy a wonderful trading experience!

Trade12 - An Approach to Investing in Growth Stocks

Growth Investing: An Approach to Investing in Growth Stocks

What is growth investing?

Growth investing is an investment strategy that is focused on the growth of the capital invested. Some of its concepts often oppose that of value investing. A growth investor typically invests in growth stocks or in companies. These are firms with above-average projected earnings compared to others of the same industry. Investors interested in these stocks focus on capital appreciation and future earnings potential. They firmly believe that growth stocks will eventually outperform the market over time.

Thomas Rowe Price, Jr. is considered as the “father of growth investing” after his company, T. Rowe Price, was able to prove the effectivity of the concepts of growth investing.

Growth stocks are often found on technology-related companies or other emerging markets. These kinds of firms are presumed to make a great impact in the market later on. Most growth companies are made up of smaller and younger companies. They usually have the capacity to show faster value progressions than older and bigger companies.

Growth companies are also oftentimes the ones that do not pay dividends to their shareholders. Rather, they focus on reinvesting their profits back to the company in order to develop and improve the business further.

As promising as it seems to invest in growth stocks, there is no formula that could guarantee that the said stocks will continue to grow in the direction it is predicted to go. Thus, this uncertainty presents a very high risk of making misjudgments and wrong decisions.

Trade12 - Key Characteristics of Growth Funds

Key characteristics of growth funds

Higher priced than other common stocks – Unlike value investors who look for bargained but high quality investments, growth investors don’t mind having to pay higher priced stocks as long as their value is expected to grow even more over time.

Higher earnings growth record – Growth stocks are said to be immune from economic depressions. They are observed to continue to flourish and achieve high earnings regardless of the current economic conditions.

More volatile than the rest of the market – The downside of growth stocks is its high price which can suddenly plunge down due to negative news about the company or any major changes it can undergo, thus resulting in disappointing investments.

Trade12 - Factors to Consider

Factors to consider

Return on Equity (ROE) – It is the measure of the profitability of a business in relation to the investment of its shareholders. The efficiency of the business can be quantified by observing the ROE of the company. A general rule of growth stocks is the ability of the company to at least double its value within five years.

Earnings per Share (EPS) – It is the portion of the company’s profits that is allocated per outstanding share of a common stock. They should be able to present a significant annual growth rate of the EPS to be considered a growth company.

Projected Earnings – The projected earnings of a growth company is expected to reach 10-15% within 5-10 years. Although this may only be estimates, the company should have grounds plans to meet the said future value increase.

Stay updated on market news, trends, and tips by regularly visiting Trade12. It is a reputable online trading broker that offers tight spreads, flexible margins and high leverage. Read about Trade12 reviews to ensure you trust only the best. Register an account now and enjoy a wonderful trading experience!

Trade12 - Get Your Trustworthy Broker with Trade12

Get Your Trustworthy Broker With Trade12!

Trustworthy Broker

Are you new to trading? If you are, then you have a lot to get in order when looking for a broker.

Trading is a field where people spend more time preparing than executing. After all, most of the execution is about placing an order. This doesn’t take more than a minute, depending on the medium you’re using.

There are things you have to get in order before every trading session. But, there are also preparations you need to make before starting your trading journey. One of those is to find a trustworthy broker.

Unfortunately, traders tend to face a lot of obstacles in their broker search.

Trade12 - Losing Trades

Brokers: A History of Scamming.

If you’ve ever decided to study the darker aspects of the field, you’ll find that there have been a lot of broker scams throughout the history of trading.

Broker scams include anything from fake trading firms to churning. Additionally, markets where use of high leverage is common tend to involve the largest scam attempts.

As you may have guessed, we are talking about the forex market.

In forex markets, price motions are minimal, and thus you need a lot of leverage to make money. While leverage can multiply your gains fast, it is unfortunately a double-edged sword. You can lose money just as fast in forex.

This is something that scamming brokers tend to capitalize on.

A lot of scamming brokers will recommend orders in horrible markets disadvantageous to the trader. This is while “pretending” to place an order for them in the market of choice.

As you may have guessed again, the pretend orders are fake.

Thus, when the trader loses money on the trade, their account sinks due to the high leverage. The lost money is taken by the broker, since there were no orders to begin with in the first place.

By Now, You Might be seeking the Location of Trustworthy Broker.

Who doesn’t?

Trade12 Review Logo

No worries though. Trade12 can provide you a list of trustworthy brokers for a safe trading experience.

Trade12 is a company that has been offering trading services to traders for close to 12 years. It is actually the oldest online forex and metals trading platform, and the most famous.

Read more about Trade12, a platform that will give you a free lifestyle.

Trade12 regularly scouts brokerage news to find and list scammers as warning signs to traders. With Trade12, you are sure to receive a broker who works for you best interests.

The trustworthiness of Trade12 as a platform can be seen through many online reviews. Trade12 reviews not only praise the platform’s safety, but they also praise the educational value provided through it.

Even Brokers Benefit too Through Trade12.

Trade12 allows brokers to recommend clients onto the website through an affiliate program. You earn a commission for every successful client recruited.

Also, brokers can recommend other brokers onto the platform. As a bonus, you will receive a commission every time the recruited broker recommends a trading client!

That’s a lot of money to gain just through commissions!

So why not start with the platform now? Broker or client, you definitely won’t be disappointed!

 

Trade12 - Trade12 is the Platform that Will Give You a Free Lifestyle

Trade12 is the Platform that Will Give You a Free Lifestyle

Trading is an unorthodox field for a business startup

You’re doing all of the work from an office, possibly your bedroom. There are no sales calls to make. Instead, there’s only a broker who handles all of your order for you – Trade12.

You don’t own or store stock in a warehouse to merchant. Everything you buy is documents, whether it be stocks of shares in a market. The transactions are executed in minutes, possibly seconds.

Not only that, but you have the opportunity to work alone, without annoyances or interruptions from someone else.

This is the trader lifestyle. It’s a lifestyle where you run your own business with no physical effort exerted beyond occasional visits to a broker.

Trade12 - Platform

The Trader Lifestyle in the 21st Century

A few decades back, you didn’t have the technologies we have today. There was no internet, no home computers, and no trading software.

You didn’t get free or easily accessible materials to help you learn the art of mastering the markets. You had to buy everything from a bookstore, or attend expensive seminars.

Today, you can do everything from a laptop. You can learn from a laptop, place orders from a laptop, and manage your money from a laptop.

Thus, you have the ability to work wirelessly. Additionally, since you’re working from a computer, you have mobility. You can actually travel anywhere you want, whenever you want.

Unlike traditional brick and mortar businesses, you’re not tied to a specific location. You’re not stuck for hours a day (everyday) attempting to manage a small store or service location.

You can move around. You can live wherever you want to even. There are no restrictions, as long as you have a good internet connection.

Setting Your Own Work Hours

Beyond mobility, you can work whenever you want. Do take into consideration that trading mostly involves doing homework. You’re logging into your computer to both study indicators and make decisions, and to look for information.

The actual process of placing traders is effortless. In a few clicks, you can buy whatever you want, or sell whatever you hold. You can do it by phone too if you’re a little old fashioned. There’s absolutely nothing wrong with that.

It all seems well doesn’t it? Who wouldn’t want to live that kind of lifestyle!

Unfortunately, the preparation to get to that point is intensive. There’s a lot to master from risk management strategies, to a long learning curve, and mastering psychology.

No worries though. We know who can help you out with the process.

trade12 Website

Trade12 Will Guide You Through Your New Career

Trade12 is a platform that has been around for almost 12 years. It’s a trading platform where you can trade currencies, metals, and more!

Read more about Trade12, big, strong, reliable, and world -class.

Over the years, Trade12 has provides many services to traders, launching them on a path of success. You can check Trade12 reviews as a testimonial to that.

You can be one of those success too! Aim to be an individual whose positive experiences convert into a Trade12 review someday!

So why not start your path of freedom now?

Trade12 - Breaking the Myths about Value Investing

Breaking the Myths about Value Investing

What is value investing?

Value investing is defined as a stock-picking strategy that aims to invest in stocks that are considered as undervalued compared to their true value. It generally involves some aspects of fundamental analysis. Benjamin Graham is widely known as the “father of value investing” after he had succeeded in investing by applying the principles he founded. His most famous student, Warren Buffet, is currently the second wealthiest person in the world, also admittedly applied the concepts of value investing.

Investors who use this strategy believe that the market tend to overreact to good and bad news, resulting to stock price movements that are not relative to the company’s long-term fundamentals. Thus, value investing paves way for investors to enter the market when the price is deflated and be able to ride the rising trend when the market is due for correction.

Trade12 - Investing in Good Undervalued Stocks

Investing in “good” undervalued stocks

Value investing is different from simply investing in undervalued stocks. It does not mean to just buy any stock that declines and therefore seems cheaply priced. There is a huge difference between a value company and a company that has a declining price. Learning how to identify the intrinsic value of a company is a must in order to see its true potential.

Read about growth investing: an approach to investing in growth stocks.

Value investors look for stocks with strong fundamentals. These include earnings, dividends, book value, and cash flows. Value investors seek value stocks that are selling at a bargain price despite having a good quality.

A value investor’s mentality also lets him see stocks as a vehicle to owning a company. A value investor makes a profit by investing in a quality company, not by trading it. Because of this, value investing is only applicable for a long-term holding period. It does not aim to recognize instant gains. Value investors don’t mind the external factors affecting a company, such as market volatility and short-term price fluctuations. They firmly believe that a quality company will be able to bounce back after some downturns.

Trade12 - Investing on Bargained Prices

Investing on bargained prices

We may understand value investing better by thinking of it as a sale. A lot of consumers buy smartphones nowadays. A wise consumer, however, knows that there are certain times that a smartphone will be on sale. Thus, the wise consumer waits for a sale to happen before he or she buys the smartphone, unlike the others who willingly bought the smartphone at its original price. Regardless of the price paid, both consumers availed the same product, but only one was able to maximize their gains.

Margin of safety

Of course, like any other stock-picking strategy, value investing does not guarantee to make profits. Because of this, value investors always have a margin of safety. Following the steps of Benjamin Graham, value investors only buy stocks when they are two-thirds of their original price or less of their intrinsic values. Thus, letting the investors earn the best returns while minimizing investment downsides as well.

Trade12 - Margin of Safety

Bottom line

Value investing is a long-term strategy. It does not give investors instant gratification of their decisions. Undervalued stocks may crawl slowly upwards, but patience will eventually pay off. Discipline is also a must in value investing. There may be times that the market looks as if it’s going against you, but holding for a long time normally helps investors ride out the short-term price downturns. An investor needs to have discipline in sticking to their investment policy in order to reap good harvests out of it.

Stay updated on market news, trends, and tips by regularly visiting Trade12. It is a reputable online trading broker that offers tight spreads, flexible margins and high leverage. Read about Trade12 reviews to ensure you trust only the best. Register an account now and enjoy a wonderful trading experience!

Trade12 - A Quick Overview of Mutual Funds

A Quick Overview of Mutual Funds

Investing is a good alternative to simply keeping money in the bank with little to no significant returns. There is a common misconception that investing is only for those who have the knowledge and time to constantly monitor the market. But how about the people who doesn’t have either? In this article, we are going to talk about mutual funds.

Trade12 - What are Mutual Funds

What are mutual funds?

A mutual fund is an investment fund that composes of pools of money from a number of investors. Mutual funds are used to purchase a portfolio of different securities. They are managed by a fund manager.  The manager invests the fund’s capital and attempt to produce gains in behalf of the investors. The securities bought through the funds are called holdings, which, when combined form a portfolio.

Mutual funds are like baskets. All securities bought are put inside the basket. If the mutual funds are used to buy some shares of Company ABC, the investors do not directly them. Rather, they own a representation of the securities held in the basket.

Unlike in stocks, shares bought from mutual funds do not give its holders any voting rights. Income from dividend stocks and interests are often sent to the fund owners in the form of a distribution. Fund owners have the choice to receive these through checks or reinvest them to get more shares.

Trade12 - Benefits of Mutual Funds

Benefits of mutual funds

  • Professional management – There are a lot of people who are interested in investing, but they do not have the time and knowledge to build their own portfolio. Mutual funds are managed by professionals who do the analysis and decisions in order to maximize profits from the invested capital.
  • Portfolio diversificationThis is considered as one of the best ways to avoid the high risks in investing. However, diversification is hard to achieve, especially if the investor doesn’t have a huge amount of money to start with. Mutual funds make diversification easier to achieve since the money from investors are combined to accumulate bigger funds that can purchase investments across a number of diverse assets.
  • Affordability – Most mutual funds require a relatively low initial deposit. Sometimes even with as low as $100, investors already have the chance to invest in a number of securities that are held by the funds.
  • Convenience – Mutual funds allow investors to cash out their shares at any time at their current net asset value or NAV plus any redemption fees. Although unlike normal stocks, mutual fund redemptions take place only at the end of each trading day.
  • Transparency – Even though mutual funds are managed by a different person, investors have the rights to review all transactions made through their accounts to ensure fairness and accountability.

Read more about the importance of financial investing.

Stay updated on market news, trends, and tips by regularly visiting Trade12. It is a reputable online trading broker that offers tight spreads, flexible margins and high leverage. Read about Trade12 reviews to ensure you trust only the best. Register an account now and enjoy a wonderful trading experience!

Trade12 - Are Successful Traders Made or Born to Become One

Are Successful Traders Made or Born to Become One?

There had been a number of heated debates that aim to determine if successful traders are made or born to become one. Let’s take a professional pianist for example. A child is not born with the talent for playing piano; instead, the child trains, studies, and practices in order to play beautifully. Although this metaphor is not the same as a successful trader, it gives us a hint of how successful individuals come into existence.

Trade12 - The Turtles Experiment

The Turtles experiment

In the past, there were 2 men namely William Eckhardt and Richard Dennis, who were involved in a debate on whether successful traders are born or made. Eckhardt believed that becoming a successful trader comes from within and it cannot be taught, while the latter argued that anybody can become a successful trader with enough education and practice.

In order to prove their theories, they made an experiment involving 21 men and 2 women without prior trading experience. Dennis spent 2 weeks to train the recruits which he named “Turtles”. For 2 weeks, he taught them about a simple trend following system, trading different commodities, currencies, and bond markets, buying when prices increased above their previous range, and selling below their previous range. They were taught different techniques in cutting loses and maximizing profits.

After their training, they were given a month of trial trading period. After the trial ended, Dennis gave each of the recruits who showed a successful performance a trading account ranging from $250, 000 to $2 million from his own money.

Five years later, the Turtles reportedly earned a total profit of $175 million. Take note that these people are all beginners in the market before they started with the trading. This experiment is just a living proof that a successful trader is made and is not inborn.

Trade12 - What Does it Take to Become a Successful Trader

What does it take to become a successful trader?

Although one cannot succeed in trading without access to the proper resources, through the experiment, we can conclude a few pointers. Trading requires knowledge, perseverance, patience, and discipline.

There are a lot of people who simply want to throw themselves into a den full of lions by trading without proper training. Preparation makes the difference between trading and gambling. That is why demo accounts are important in shaping a beginner’s mind and strategies. Research is another key to gain the required knowledge.

Perseverance is also a requirement as it is unavoidable for beginners to experience a few losses at the start. One needs to learn how to stand back up again after falling a few times.

The market doesn’t shoot straight up or stumble at an instant in a single day. Some trends tend to have a long span and minimal movements so patience is a must in order to make significant profits.

Discipline is one of the cores. You need discipline to stick through your trading rules and strategies. It keeps you from swaying far from what you planned in the beginning and become a systematic trader.

Read about the importance of following a trading plan.

Conclusion

Everyone should stop believing in the notion that becoming a successful trader is innate. Instead, they should focus on shaping themselves and training to become one. Whatever a person sets in his mind, he should keep with it and persevere until he reaches his goal. It is nurture, not nature that is essential in the making of a successful trader.

Stay updated on market news, trends, and tips by regularly visiting Trade12. It is a reputable online trading broker that offers tight spreads, flexible margins and high leverage. Read about Trade12 reviews to ensure you trust only the best. Register an account now and enjoy a wonderful trading experience!

Trade12 - Backtesting Your Trading Strategies

Backtesting Your Trading Strategies

It is a common practice to apply some strategies in trading in order to increase the chances of becoming successful. There are various strategies to choose from, yet there is no proven one that is applicable for all kinds of trades. How can we even be sure that these strategies are profitable for us? What are the ways to proving gainful strategies? In this article, we would talk about a technique in testing trading strategies called backtesting.

Trade12- What is Backtesting

What is backtesting?

Backtesting is the process of testing a trading strategy based on past data to ensure that it is profitable. Backtesting software can be reconstructed with different situations to test the strategies’ effect in various conditions.

It gives out statistical results that can be used to determine the effectiveness of the strategy. If the results meet the set criteria, then the strategy is deemed viable. But if it ends up lacking in some parts, then it can be modified and adjusted to achieve the desired results.

The idea of this test is if a strategy has worked in the past, then it has a great possibility to also work in the future. The key is to test it out on all possible conditions that are likely to happen again later on.

Nowadays, a huge number of traders are opting to use computer automated strategies. To ensure the viability of these strategies, backtesting became an integral part of developing an automated trading system.

Trade12 - Significant Backtesting Data

Significant backtesting data

There is a lot of backtesting software available on the internet that can be used to analyze strategies. Most of which can be modified to meet some conditions. A backtest should involve enough data to get acceptable results. For example, the duration of the sample time should be long enough to include periods of varying market trends. The sample size to be tested is also crucial because including only a small portion may not be statistically significant. Thus, backtesting should be optimized well in order to avoid making false conclusions.

Analysts should also take into consideration the gains and losses made throughout the whole time frame, the exposure or the percentage of the capital invested, wins-to-losses ratio, and the percentage of return over the course of the strategy.

Why is it important?

It is easy to pick a strategy or apply someone else’s strategy on our own trades, but we can’t expect them to work just the same as theirs. All traders have different preferences, trading lifestyles, and decisions. Backtesting, if implemented and applied properly, can help traders improve their strategies to become more profitable. That’s why it is important to apply a strategy that is drafted only for you.

Read more about the importance of following a trading plan.

Stay updated on market news, trends, and tips by regularly visiting Trade12. It is a reputable online trading broker that offers tight spreads, flexible margins and high leverage. Read about Trade12 reviews to ensure you trust only the best. Register an account now and enjoy a wonderful trading experience!