Trade12 - Building the Ideal Investment Portfolio

Building the Ideal Investment Portfolio

Investing isn’t as simple as blindly picking any stocks at your liking. It involves careful decision making, thorough analysis, and complete understanding on the risk and reward of investing. The key to making a profitable investment is to invest in a well-maintained portfolio. In line with this, asset allocation plays a very big role. It needs to conform to the investor’s risk tolerance, financial capacity, age, and goals. In order to systematically allocate assets in your investment portfolio, every investor must follow these steps:

Step 1: Determine your asset allocation

Investing doesn’t mean simply throwing all your money on stocks. There are different types of securities you can choose from, and the ideal portfolio will usually include several asset classes. Determining which asset class to invest in is entirely up to you, but make sure that you at least invest in a mixture of stocks and bonds.

Determining your asset allocation depends on several factors: your age, time horizon, financial capacity, and risk tolerance. For example, using your age to figure your assets would be:

110 – your age = the percentage of your assets that should be composed of stocks

Following the computation above, if you are at the age of 35, you would need to put 75% of your portfolio in stocks. This is also the percentage of risk that you should expose. Bonds are more of a low-risk investment, so the remaining 25% is left in good hands. Just remember that despite the high risk of stocks, they also usually end up with high rewards.

Trade12 - Determine Your Asset Allocation

Step 2: Diversify your assets

Now that you know the proper asset allocation for your age, it’s time to choose your investments. Avoid investing mostly on stocks from a single industry. Stocks are very risky investments, so the key here is to practice portfolio diversification. Try investing in a broad range of asset classes. A good tip is not to invest only on local stocks, but to international stocks as well.

Step 3: Add some index funds

To add more security for your portfolio, add in some index funds to your assets. An index fund is a pool of assets that is designed to replicate the performance of a particular market index. It provides instant diversification while paying for lower fees. Aside from these, they also guarantee higher returns over the long term.

Step 4: Rebalance annually

Once you’ve created your portfolio, it’s time to forget about it. Yes, you don’t need to check on your assets every hour. The rule of thumb is to invest for the long term to make the most out of the market. The only thing you need to do is rebalance your portfolio annually. You could sell some assets or buy some in order for it to match your original asset allocation.

Trade12 - Rebalance Annually

Step 5: Adjust your portfolio as you age

As you approach retirement age, you should adjust your portfolio to less-risky investments. The nearer you are to retirement, the more secure you should be on your investments. This is to ensure that you would have enough money once you retire. However, if you think that your investments would not generate enough money for you by the time you retire, you might as well fix it early or simply postpone your retirement until such time that you save enough.

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 - How to Conquer Your Investment Fear

How to Conquer Your Investment Fear

For anyone who has been in investing for so long, you may have seen all the different sides of the market. Currently, it is on its all-time highs. A trend that is this positive make speculators warn investors to prepare for a very devastating crash. We all know how these crashes had wreaked havoc in the past. Thus, it is normal for investors to develop market fears. But what are these market fears? How do we overcome them so as not to let them hinder us from the true potential of investing? Find out more about how to conquer investment fear as we go along this article.

Trade12 - How Did You Develop Market Fears

How did you develop Investment fear?

Fear is one of the five common emotions that go against you in trading. Before we talk about how to conquer it, let us first get to know how investment fear is developed. Investors who had bad experiences in the past usually develop a trauma that limits their investment potential. Most of those who are afraid to invest, develop market fears stemming from the fear of losing money or the fear of running into unforeseen risks. Lastly, those who are just planning to invest usually develop investment fear by not knowing where to start.

All of these are forms of investment fears. All of these are valid fears that stem from valid reasons. Running away from the cause of our fears is the common way of survival. But considering how huge the potential returns of the market, not investing would probably be the worst outcome of these fears. These fears make investors ignore logic, resulting to missed opportunities. Thus, we have to conquer them in order to fully maximize the potential of investing.

Trade12 - How Do You Conquer These Fears

How do you conquer these fears?

Accept the truth – There will always be risk involved in the market. There is nothing we can do to eliminate it. Instead, follow the steps below in order to hedge against it. Do not let your fear stop you from investing. The truth is investing in the market is the best way to grow your money over time. The only way that you would run into risk is when you start investing with no preparation at all. That’s when all your market fears come true.

Develop an action plan – There is no better way to gain the upper hand in the market than investing with enough preparation. You wouldn’t go to war without a plan, because that’s a great way to ensure a loss. Before you even start investing, educate yourself. Overcome your fears by knowing your enemy. Create a step by step plan which you would follow later on. That plan would be your road map to wherever your goal is.

Read more about the importance of a trading plan.

Be consistent – Now that you have a plan, be consistent with it and follow it slowly, but surely. You don’t have to go through the process quickly, build your pace and start from there. Becoming a systematic investor with a solid plan would help you overcome your fear of investing. Start by educating yourself and invest from there. A lot of instances would try to waver you from your plan, but the key here is to be disciplined and hold on to what you initially started.

Trade12 - How to Hedge Against The Risk of Losing Money

How to hedge the risk of losing money?

Start small – Do not go all-in when investing. Instead of simply throwing all your money in the market at once, start with whatever you are comfortable with and build from there. That way, you can start developing your strategy without risking too much if it doesn’t work out. Also make sure that you only invest what you can afford to lose. Set aside emergency funds and some cash enough to pay for your bills. Invest only the money that you aren’t planning to spend anytime soon.

Dollar Cost Averaging – The market undergo through some ups and downs. There is no assurance when is the right time to enter and exit the market. To take advantage of this behavior of the market, try investing through DCA or Dollar Cost Averaging. With this strategy, you can start with a small amount, and then automatically invest the same amount at regular intervals. Starting with any small amount could end up with a significantly huge amount after some time, while eliminating the various emotions you usually experience in investing.

Diversify your portfolio – Avoid investing heavily on a single asset. Diversify your portfolio by investing in various securities, or opt to invest on funds to get instant diversification. This way, if the market turns down one of your assets, it won’t have as much impact to your portfolio compared to focusing only on one investment.

Go long – The best way to lessen the risk in the market is by being a long-term investor. Not only would you be able to control the amount of returns that you’re already satisfied with, but you can also ride out most of the ups and downs of the market. Historically speaking, most investors had more benefit when investing over the long run.

Ignore your investments – Now that you are planning to stay invested for a long time, there is no reason to check your investments every minute since you are not planning to exit anytime soon. Lessen your anxiousness by letting your investments grow by themselves. Still, take time to rebalance your portfolio every now and then, but avoid making rash decisions over temporary market adjustments.

Read more about hedging techniques to lower your investment risks.

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 - Timing the Market Right Buy Low and Sell High Strategy

Timing the Market Right: Buy Low and Sell High Strategy

If you’re an investor who continuously looks for profitable strategies, you have most definitely heard of the advice buy low sell high. For years, this had been the mantra in market investing. But do you know what this really means and how to implement it in your trades? In this article, we are going to expound on the real way of buying low and selling high strategy.

Trade12 - The Buy Low and Sell High Strategy

The buy low sell high strategy

Without further explanation, we can get the main idea of this strategy just by looking at its name. It generally means to buy assets or enter the market when their value is low, and then selling them or exiting the trade when their value is high. However, there is a huge problem that hinders investors from fully executing this strategy. How would you know the right time of when to buy and when to sell?

Basing this strategy solely on the current price is not enough. You can’t just look at the charts and be able to recognize stocks that could be invested using this strategy. It is still important to do your research and make sure that the stocks you are looking at have the potential to make a reversal.

Buying low is basically following the principles of value investing. It involves investing in stocks that are sold at a discounted price. It doesn’t mean simply investing in cheap stocks because not all that are valued at a low price have the capacity to rise in value.

Selling high doesn’t necessarily mean trying to reach the peak of a trend. Nobody knows how far the market will reach or when it would set for a market correction. Trying to find the highest peak could just result to regret later on. Targeting a certain percentage increase in comparison to the initial value of which you entered the market could be more realistic.

Trade12 - How Hard is it to Implement

How hard is it to implement?

Seemingly, this strategy is very simple to follow. However, market fear is stopping investors from fully venturing the potential of the market. Most investors tend to follow the herd. In order to maximize the buy low sell high strategy, it is important to take lead and do not be afraid to expose yourself to certain risks. Do not just copy what others are doing. Discover the hidden gems in the market and then let the others follow suit.

Read more about the 5 emotions that go against trading.

There are also times that the trend enters a market bubble, which often drive prices to extremes. This usually results to market panics. During these times, following the buy low sell high strategy could be very beneficial. Take advantage of the extremely volatile trend to maximize your potential profits.

Bearish or bullish trends, on the other hand, tend to punish those who are looking for a good entry and exit points using the buy low sell high strategy. During these times, do not be afraid to hold on to your stocks, because as history has shown us, the market tends to ride the trend in all directions over time. Avoid making rash decisions because of fear and stick to what you initially planned. Just remember to prepare your stop loss in order to hedge your investments from declining too far.

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 - Can A Beginner Make Money in Forex Trading

Learn Hоw Tо Trаdе Fоrеx: Cаn A Beginner Make Mоnеу In Forex Trаding?

Contrary tо whаt еvеrу Fоrеx ‘еxреrt’ оut there wоuld have уоu believe, it’ѕ not easy tо lеаrn how tо trade Fоrеx аt аll. Trаding Forex iѕ оnе of the mоѕt сhаllеnging ѕkillѕ уоu саn ever ѕеt оut to learn, whiсh is еѕресiаllу daunting if you’re a bеginnеr juѕt ѕtаrting оut tо lеаrn hоw tо trade Fоrеx. If уоu’rе finding it hаrd tо lеаrn hоw to trade Fоrеx ѕuссеѕѕfullу right nоw, уоu’rе probably wоndеring: “Cаn a beginner make mоnеу in Forex trading?” By thе еnd of this article, уоu’ll knоw whаt уоu can dо tо mаkе mоnеу in Fоrеx trаding right now.

Can A Bеginnеr Make Mоnеу In Fоrеx Trading?

If you hаvе a lооk around thе mаnу Forex websites, fоrumѕ, seminars and magazines, it ѕееmѕ likе еvеrуоnе’ѕ mаking milliоnѕ оf dollars trаding Forex! Thе thing iѕ, Fоrеx trаdеrѕ love to tаlk аbоut thеir winning trаdеѕ аnd mаkе thеmѕеlvеѕ out to bе wildlу рrоfitаblе trаdеrѕ, but the rеаlitу is that оnlу 5% of Forex trаdеrѕ аrе соnѕiѕtеntlу mаking money. Yes, еvеn a bеginnеr саn mаkе money in Forex trаding, but thеrе’ѕ a big diffеrеnсе bеtwееn mаking mоnеу in Forex and making a full timе inсоmе, achieving finаnсiаl frееdоm, and building wеаlth thrоugh Forex.

What Stops Bеginnеrѕ From Mаking An Inсоmе

Sо what’s ѕtоррing beginners from making a consistent, lоng term inсоmе frоm trаding Fоrеx? Well, unlike thе рrоfеѕѕiоnаl Fоrеx trаdеrѕ working for thе big banks and hеdgе fundѕ, most bеginnеr trаdеrѕ lеаrning tо trade Fоrеx aren’t раid a full timе ѕаlаrу tо immerse thеmѕеlvеѕ in thе markets. If уоu’rе juѕt starting оut in Fоrеx, thеn уоu’vе рrоbаblу got a full timе jоb thаt уоu ѕреnd аt lеаѕt 8 hоurѕ a dау оn, аnd a family and social lifе оutѕidе оf thаt. Thаt mеаnѕ thаt you have a very rеаl ѕhоrtаgе of time tо get yourself tо thе lеvеl whеrе you саn trade like a рrо, and bеliеvе mе, it tаkеѕ a lоt оf timе and соnѕiѕtеnt еffоrt.

It tаkеѕ уеаrѕ of ѕtudу, рrасtiсе and rеаl еxреriеnсе in the mаrkеtѕ tо learn hоw tо trаdе Fоrеx ѕuссеѕѕfullу, аnd gеt tо the lеvеl where уоu can соnѕiѕtеntlу make mоnеу in Fоrеx trading. Nоt to mеntiоn thаt you’ll be tаking оn, for аll intеntѕ аnd purposes, аn unpaid раrt timе job thаt will сhаin уоu to уоur computer while уоu are trаding. It’ѕ something thаt will аliеnаtе уоu frоm уоur social circle, аnd put соnѕidеrаblе ѕtrаin оn your fаmilу rеlаtiоnѕhiрѕ as wеll. It’ѕ no wonder that mоѕt traders wаnting tо lеаrn hоw to trаdе Forex will givе up within 3 mоnthѕ, аnd nеvеr mаkе mоnеу in Fоrеx trаding.

Trade12 - What You Can Do to Make Money in Forex Trading Now

Whаt Yоu Cаn Dо Tо Mаkе Money In Fоrеx Trаding Nоw

So whаt can уоu do to mаkе money in Fоrеx trading right now? Prоfitаblе trading ѕуѕtеmѕ аrе rare, аnd уоu need to choose vеrу саrеfullу. Thаt said, if you can find a trаding system thаt wоrkѕ, you саn оvеrсоmе the biggеѕt challenges any trаdеr faces while they learn hоw tо trade Forex. Yоu’ll be аblе tо gаin vаluаblе Forex market еxреriеnсе, рrеѕеrvе уоur реrѕоnаl rеlаtiоnѕhiрѕ аnd mоѕt imроrtаntlу mаkе mоnеу in Fоrеx trаding whilе уоu learn hоw to trаdе Forex.

When you’ve built up the сарitаl аnd income оf уоur Forex ѕуѕtеmѕ ореrаtiоn, аnd have gathered up vаluаblе trading experience, уоu may dесidе tо trу оut trаding Forex for уоurѕеlf. Rеgаrdlеѕѕ оf whether you trade with аn automatic Fоrеx ѕуѕtеm in thе ѕhоrt, medium оr long tеrm, it’ѕ a роwеrful ѕоlutiоn thаt will enable уоu tо mаkе mоnеу in Fоrеx trаding еvеn if уоu’rе a bеginnеr.

Read more about what is forex and you should know about it.

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Trade12 - 5 Tips That Could Help You Analyze Earnings Reports Easier

5 Tips That Could Help You Analyze Earnings Reports Easier

One very important step in trading and investing is analyzing your prospective assets to ensure that they are profitable. For stocks, complete knowledge about the company offers a huge advantage, which is why it is not new that investors should learn how to understand earnings reports. In this article, we are going to talk about some tips that could help you analyze earnings reports easier.

Trade12 - What is an Earnings Report

What is an earnings report?

An earnings report is an official public report filed by companies that contain their profitability for a certain period of time. Earnings reports typically include information such as net sales, net income, earnings per share, etc. It is usually filed quarterly during earnings season, following the estimate of earnings issued by equity analysts.

Earnings reports act as a way to gauge the financial health of a company. A skill in understanding earnings reports is a must for investors to determine which companies are good enough for investments.

Trade12 - Tips That Could Help You Analyze Earnings Reports Easier

5 tips to that could help you analyze earnings reports easier

The most part of earnings reports compose of numerical data. Of course, not all people would want to stare at several pages full of numbers. Here are some great tips that could help you in order to analyze earnings reports easier:

Compare the results to historical data – Before anything else, you would need to compare the current results to the previous one. Determining which past results to compare with would depend on the kind of company you are looking at. Companies expected to have continuous growth all year round should be compared to the results of the previous quarter. Seasonal companies or those that have a certain strong month in a year, on the other hand, should be compared to the same quarter results of the previous year. Using this data, determine if the overall earnings had increased or decreased.

Compare the results to the expectations – Prior to the quarterly earnings reports, most companies would release an estimate expectation of the earnings that has been issued by analysts. Use this data to compare with the current results. Find out if the expected results were met and determine the reasons if they were not.

Check the factors that affected the results – Not all results are positive. Before making a final decision just because of numerical data, find out the factors that contributed to it. Some experience downturns on earnings reports are caused by temporary changes in the company and are expected to revert back to normal.

Look for other sources of information – Do not just focus on the information laid in front of you. If the company fell back this quarter, look for other information regarding the plans of the company. Some earnings may have fallen due to expenses on a new project that would be launching on the upcoming quarter. Disregarding that information can cause you to neglect a great opportunity in the future. It is likely that a representative from the company can give you guidance on these kinds of information.

Maintain a log of the company’s performance – To make your job simpler, keep notes on how the company is performing. You don’t need to keep a very formal log, just enough for you to understand it. That way, you can just look at your notes when you check the results for the next quarter without having to go through previous sets of earnings reports.

Conclusion

No matter how hard and time consuming it may seem to regularly read earnings reports, the knowledge you will gain can give you a huge advantage over those who simply trade blindly. Make use of this knowledge to help you in major decision making.  Make it a habit to trade in a strategic way. Do not just listen to what others say about the market and make sure to do your own research to avoid bias and manipulated information.

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 - 10 Crucial Points When Evaluating an Investment Opportunity

10 Crucial Points When Evaluating an Investment Opportunity

In the world of investing, opportunities come and go. It is a good practice to diversify, but it doesn’t mean simply investing in assets of different classes. The key to becoming a successful investor is by knowing how to recognize a great investment opportunity through accurate analysis. In this article, we would be focusing on 10 crucial points that an investor needs to consider when evaluating investment opportunities.

Trade12 - Crucial Points When Evaluating an Investment Opportunity

Crucial Points When Evaluating an Investment Opportunity

Security vs Growth – Decide whether you would prefer security over growth or vice versa. Usually, secured investments could offer less capital growth, while growth investments have a higher risk level involved than that of a secured investment. From there, you can start looking for an investment opportunity for your chosen kind of investment.

Market – Before starting an investment, make sure that the market you are entering has potential for growth. Analyze the current demands of the said market and make sure that the industry for your prospect asset is currently flourishing.

Opportunity window – Ask yourself, “is this the right time to invest?”. The answer may depend on the first key point. It may also pertain to the current price value and market reports regarding the prospect investment. Is it best to invest today? Are you not too late? Or how long would this opportunity window be open for investment? Make sure to identify the answers to all the said questions and determine the best time to enter an investment.

Exit points – Nobody could predict the market. You may try to completely evaluate an investment, but there could always be a chance that things may not go the way you think they will. Always prepare an exit point for unforeseen cases. You would need these exit points in order to mitigate possible losses that come with failed investments.

Returns – All kinds of investments have their corresponding risks. However, make sure to analyze whether the returns that you could potentially get from an investment is adequate relative to the risks it comes with.

Trade12 - Crucial Points When Evaluating an Investment Opportunity continued

Risk – identify the risks that come with your investment. Evaluate your comfort zone and know up to which level you can tolerate. You can also use this data when setting up your stop loss once you enter an investment.

Time value – Some investments result to good potential profits, but with greater risk. Determine if you prefer these profits over secured investments, which could generate fewer profits over time. You can also compare potential returns for a given time range with other investments to see which is best for you.

Growth potential – Analyze if your investment still has potential to grow, and the range up to which it can reach. Consistent growth that comes from marketing strategies and management is generally better than a one-time spike in value because of hype-causing market news that usually returns to normal after a while.

Avoid fraud – In the market, there are a lot of fraudulent headlines that are released to manipulate market prices. Make sure to check from unbiased news sources before you invest. Do not listen easily to news that usually results in an increase in price value. Do your research before making a major investment decision.

Price – Even great investments can result in a loss of money if you pay too much for the deal. Make sure to invest only when the price is reasonable. Fortunately, the market usually goes through a series of ups and downs. You can use this behavior of the market to enter an investment at a discounted price, and selling off at a higher price point.

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 - Stock Manipulation Through Naked Short Selling

Stock Manipulation through Naked Short Selling

Short selling had been a staple technique for investors who try to hedge against declining markets. It involves borrowing stocks from a broker to sell them at their current price, then buying them back at a lower price. However, there had been cases wherein investors do not actually possess the stocks before shorting them. This technique is called naked short selling, which would be explained in this article.

Trade12 - What is Naked Short Selling

What is naked short selling?

Naked short selling or naked shorting, is the method of short selling a security without borrowing it first from a broker. This method is already banned in most countries, as it results in a failure in delivering the shares paid by buyers. It is also known to have contributed to previous financial crises by forcing stock prices to go down through stock manipulation.

Naked short selling vs. Short selling

The usual short selling method involves borrowing a company’s stock and selling it in speculation that the stock’s value will decline. Once the stock price declines, the short seller buys the same number of stocks at a lower price to cover the original borrowed stocks. The diagram below shows the correct process of short selling.

Trade12 - Naked Short Selling VS Short Selling

On the other hand, naked short selling starts by selling stocks that are neither borrowed, nor ensured the capacity to deliver the stocks being sold. A buyer accepts the trade, but does not receive the stocks agreed upon. When the seller does not obtain the shares within the allotted time frame, it results in what we call a “fail to deliver”. However, the transaction generally remains open until the shares are acquired by the seller or the broker of the seller settles the order. Naked shorting is similar to the process of short selling, minus the part where the broker and short seller interacts.

Effects of naked short selling

Naked short selling can affect the liquidity of the securities involved. If the supply of the security is not readily available for trade, naked shorting could be used. It allows people to participate with the trade without actually possessing the share. There could be an increase in liquidity and demand for an asset with a very limited supply If more investors become interested in the same security.

It is safe to say that naked short selling generally contributes to fake price fluctuations through stock manipulation. It also results to unsettled transactions in the market that causes further problems. This is because both parties need to find a solution to obtain the shares in order to close the trade.

Because of these, numerous countries had banned naked short selling in their markets. It is also believed that the controversial method had contributed to some economic declines in the past years. However, due to various loopholes in trading systems, naked short selling continues to happen despite the strict warning of governing bodies to active investors.

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 - The Truth behind Who's Controlling Market Prices

The Truth behind Who’s Controlling Market Prices

As spectators of the market, we see a roller coaster ride of prices all year round. What triggers this phenomenon to happen? Most investors who are asked with this question would probably not know the answer. Who really controls the market prices? Let’s find out as we read this article further.

Who controls the market Prices?

Contrary to what most people believe, the market is not simply controlled or manipulated by large, powerful organizations. There are two entities that actually play the biggest roles in the market – buyers and sellers. Yes, they are composed of seemingly insignificant individual investors, companies, financial managers, etc.

Trade12 - How Do They Control the Market Prices

How do they control the market Prices?

We can compare this scenario to a game of tug of war, with the buyers on one side, and the sellers on the other side. Whoever wins the war would be in control of the market price.

Another way to view this is by looking at the supply and demand. If demand is greater than the supply, then the sellers gain control. On the other hand, if the supply exceeds the demand, then the buyers become in control.

How is it exactly? Here is a realistic scenario:

Both sides have their own goals for their investments. Buyers aim to buy at the lowest price, while sellers aim to sell at the highest price possible. The current price of a stock is determined by looking at the previously traded price. For example, if a stock has been previously traded at $500, then that would be the basis for the next price.

As a buyer, you would want to buy at a price lower than $500. Meanwhile, a seller would want to sell it at a price higher than $500. If the two parties have opposing interests, they would need to make a compromise. Whoever gives in to the other loses, and that’s how market prices are determined. The compromises made on daily trades make up the reason for market price fluctuation.

Read about an in depth guide on how the stock market operates.

Trade12 - The Role of Market Sentiment

The role of market sentiment

Buyers and sellers don’t simply enter and exit the market whenever they want. The reason why trades happen is because of what we call market sentiment. The market is controlled by human beings, who are people who act with sentiment. These sentiments are governed by different factors: market news, natural disasters, economic updates, etc. How the people react to these factors would affect how they would act in the market.

For example, if a certain company declares a huge drop on their earnings report, there is a huge chance that investors would sell their stocks because of fear that the company may not be able to snap back. This would increase supply with fairly less demand, thus resulting in a lower price in the market.

Now that the truth is clear, do not be alarmed whenever you read or hear stories that say the market suddenly rallied or fell. That is not an effect of a powerful entity that plans to control the prices to their likes. It is still on our hands on how the market will strive. Your role is to play with the trend and know how to make every turns go to your advantage.

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 - 5 Common Reasons Why Companies Go Public

5 Common Reasons Why Companies Go Public

A lot of privately owned companies go public at some point. But what does it mean to go “public”? What are the reasons why they do it? Is it only to generate money? In this article, we are going to learn about the 5 reasons why companies go public.

Trade12 - The Initial Public Offering

The Initial Public Offering

Companies going “public” undergo an IPO or an Initial Public Offering. An IPO is the first time that the stock of a previously private company is offered to the public for sale. The established shares of the company are listed on an exchange and then sold to public investors. The amount of capital that is raised is usually fixed, and the proceeds may either go directly to the company or to existing shareholders, like the founders or original investors. This process is usually done by companies seeking to generate capital in order to expand or to become traded publicly.

Read more about how the stock market operates.

Trade12 - Common Reasons for Going Public

Common reasons for going public

Generate cash – The most obvious reason for an IPO is to generate cash. A typical IPO may raise an amount of $100 million to $150 million, depending on the quality of the company. There are also some cases wherein an IPO generates up to $5 billion. This money is used by the firm for expansion, creating innovating products, and for making important business-growing acquisitions. There are also times wherein a part or even all the cash go to the existing shareholders.

Increase publicity – Going public can also help with indirectly advertising the company. An IPO means that the company would be listed on public exchanges, which could help in promoting the brand to other people by increasing its exposure. It can also indicate that the company is healthy enough to be included in such exchanges.

Raise market value – If the owners of a publicly traded company decide to sell it at some point, the market value of the company is determined by looking at its traits. A company’s worth is more than just its cash flow and cash holdings. Some other factors include its fund liquidity, all its assets, and whether all of these information is available to the public. Based on statistics, publicly owned companies are valued about 17 times their usual earnings. That is 12 times more than those which are privately owned.

Attract talents – A lot of publicly traded companies use stock and stock options programs in order to attract potential employees. These incentives help companies to entice high-quality personnel and make them competitive employers as well due to the perks in addition to the usual salary offered.

Alternative currency – The stocks of a publicly traded company are easy to convert into its cash value. Because of this, companies may sometimes use them as a form of currency when buying or merging with other companies.

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Trade12 Review – Differentiating Fixed and Floating Spreads

Differentiating Fixed and Floating Spreads

What are spreads?

In forex trading, spreads is the difference between the bid and the ask price. It represents the service cost of the brokerage or the transaction fees involved in making the order. It is usually denoted in pips or price interest point, which means the fourth decimal place in currency quotation.

Read more about what is forex and you should know about it.

If brokers do not charge commission fees, they usually make money through charging spreads. There are 2 types of spread conditions offered by brokers – floating and fixed spreads. Looking into the type of spread is very important as just a slight change in the spread size can result to a significant difference especially during active trading.

Trade12 - Fixed and Floating Spreads

Fixed Spreads

From the root word fixed, this type of spread does not change regardless of the time or market condition. Although there are some cases wherein the spread charged is adjusted, it only happens during very low or very high liquidity. This change is usually temporary and the spread returns to its general level when the market returns to its normal condition.

The fixed spread may vary across currency pairs, but most major currency pairs range from 2 to 3 pips. It may seem a bit more costly compared to the other type of spread, but fixed spreads make it easier for traders to estimate transactions cost and hedge against market fluctuations.

Floating Spreads

Also called variable spreads, this type of spread is constantly changing depending on the current market condition. During normal or inactive trading times, this spread is usually very low. It may also widen a lot during high volatility market times. Floating spreads fluctuate because of supply, demand, and the total trading activity.

Under normal market conditions, floating spreads may vary between 1 to 4 pips. This may seem very low but it may multiply and widen during volatile market conditions. Floating spreads may have the advantage of lower size compared to fixed spreads. But it is nearly impossible to trade especially during news releases as it can widen too much, thus affecting the possible profits made through the transaction.

Trade12 - Which One is For You

Which one is best for you?

Brokers usually offer both choices to their clients, but choosing which one to take depends on the kind of trading lifestyle you have. For medium to long term investors, floating spreads can be more cost effective because they tend to be lower during normal market conditions. For scalpers and active traders, fixed spreads could be more effective. This is because they can easily trade during news releases without having to pay more. It also ensures that the difference between the bid and ask levels wouldn’t change too drastically. Trading with fixed spreads can prove to be much easier and more predictable than floating spreads.

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!