Trade12 - 5 Common Reasons Why Companies Go Public

Trade12 Review Blog – 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.

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, which 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.

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 Review – Differentiating Fixed and Floating Spreads

Trade12 Review Blog – Differentiating Fixed and Floating Spreads

What are spreads?

In forex trading, the spread 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.

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, while it may 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 since they can easily trade during news releases without having to pay more and it 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!

Trade12 - Enhanced Trading Environment with Trade12

Trade12 Review Blog – Enhanced Trading Environment with Trade12

Keeping it simple on internet trading is not the typical case, for it includes an immense amount of cash, time and hard work to be progressive. In any case, Trade12 draws out the most startling and productive trading background as it demonstrates a quick, basic and simple technique in conveying its services. Though it might sound like a platitude, you truly don’t realize what you can accomplish until the point when you make an attempt.

The services of Trade12 don’t end in Trading. It has an associate program which offers one of the most noteworthy commission in the forex business. Aside from this, a subsidiary offshoot program is likewise accessible wherein, you can without much of a stretch acquire through the extra commission produced by the new subsidiary. Another fortunate thing about this is you find the opportunity to help your assets while having a considerable measure of associations and connections.

Trade12 gives you a chance to get to your trading account any place you are, whenever you need. It is accessible on PCs, iPhone, iPad, and Android.

ENHANCEMENT

So as to accomplish a consistent trading platform, we invented MetaTrader 4. MetaTrader 4 is the world’s most dependable and innovative platform that gives power and adaptability to dealers around the globe in trading Forex, Metals, Energy, Futures, Stocks, Indices and more on the web.

WHAT ARE THE PERKS OF TRADE12 MT4?

    • User-friendly interface
    • Over 250 instruments to trade
    • Trade Currencies, Energy, Agricultural Commodities, Indices, and Futures.
    • Wide scope of market shares around the globe
    • One click trading ability
    • Extensive pre-packaged specialized indicator
    • Multi-dialect bolster

MT4 KEY FEATURES

    • Trailing stop
    • Wide verity of tools for technical evaluation
    • Import and Export your trading record
    • Robust Security System
    • Live price surveillance of all instruments
    • Multiple advanced charts

With your entrance to Trade12 MT4, you can execute trades in the full utilization of calculations   with least spreads, screen the market situation instantly, open and close positions with accurate timing,  exceptional trading tool resources, and improved reporting capacities.

To partner with Trade12 is something beyond profiting; it is tied in with having stability alongside your contribution in the organization. The more extensive the experience that you get into the organization the better, you simply get significantly more without seeing until the point when you see your account balance.

Trade Forex, Futures, and metals, by means of desktop, cell phone or tablet gadget quick and secure on an easy to use interface.

Utilizing our Mobile Apps for Android, iPhone, and iPad, you can in a split second get to your trading account anyplace, whenever and execute at the snap of a catch. Execute all trading orders live with real-time pricing quotes of every accessible instrument.

Trade12 - Factors Determining Stock Valuation

Trade12 Review Blog – Factors Determining Stock Valuation

What is stock valuation?

Stock valuation is the method of calculating the theoretical values of stocks. It is the determinant to which investors depend which stocks are can be potentially bought (undervalued) or sold (overvalued).

There are several stock valuation methods that can be used to determine the true value of stocks, but we are not going to elaborate on each of them. Instead, we are going to talk about the 4 factors that are commonly used in stock valuation.

Trade12 - 4 Factors that Determine Stock Valuation

4 Factors that determine stock valuation:

Price-to-Book Ratio (P/B) – The price-to-book or P/B ratio represents the value of the company if ever it is sold today. The book value usually consist of all the assets that can be sold along with the whole company which includes the equipment, building, land, bonds, stock holdings, etc.

Price-to-Earnings Ratio (P/E) – The price-to-earnings or P/E ratio is probably the most important determinant of all the ratios. If a stock price suddenly goes up even without a significant change in the company’s earnings, the P/E ratio would decide if it would stay up or not. There should always be earnings to back up the stock price in order for it to stay on its current value.

PEG Ratio – Looking at the P/E ratio on its own is not enough to determine the fair value of a stock. It is also important to use the price-to-earnings growth ratio or PEG. The PEG ratio shows the historical growth rate of the company’s earnings. The P/E ratio may indicate where the company is currently at, but the PEG ratio will show where the company has been. It also plays a big role in finding the direction to which the company is headed next.

Dividend Yield – Most investors go into stocks because of the promises of capital growth, while others prefer making fixed income from dividend stocks. Dividend-paying stocks are sought after because they provide a steady cash flow regardless of the stock’s price. The dividend yield shows how much payout you get relative to the stock you own. It is computed by dividing the annual dividend by the stock’s price. The dividend yield is usually expressed as a percentage or a ratio of which indicates the interest you get on your invested money, with more potential growth through the appreciation of the stock’s value.

A company giving out dividends doesn’t automatically mean a healthy company. Looking at the dividend history of a company should show whether it has great potential or not. A company that pays inconsistent dividends through the past years means that the dividend yield cannot be counted on.

Read more about getting to know fixed income investing.

Trade12 - Bottomline on Stock Valuation

Bottomline

These 4 factors are very important in stock valuation. It is not enough that you focus on just one because that would be too narrowly focused. Combining the 4 factors may result to a better view of the stock’s worth.

Also, keep in mind that even with thorough analysis; you won’t be able to get the exact value of a stock. What you would get is a range in which lies the possible fair value of the stock.

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 - Big, Strong, Reliable, and Word Class

Trade12 Review Blog – Big, strong, reliable and world-class

Trade12 is a worldwide brokerage brand owned and manned by Exo Capital Markets Ltd. This dependable organization, headed by a group of remarkable people with many years of involvement in the field, is thoroughly in consistency with the careful principles and standards of (money) financial related stability, and in addition legitimate services and  air-tight security of assets and funds. You do not really need any special rocket science classes to start earning consequence of how simplified the platform is.

Trade12 Review Logo

Trade12 Logo

Trade12 is an extraordinary online based trading brokerage organization that works with a goal to advance reasonably and also  project world-class trading condition for people who are into web based or online trading. This organization through years of service and professionalism has devoted its endeavors keeping in mind the end goal to help their clients and traders, in general, to accomplish their financial destinations and accomplish their dream mode of life which they have set as their target to accomplish.

Exchanging Assets

Customers who are trading with Trade12 can trade through with an extensive variety of trading resources utilizing both desktop and cell phones. It`s that flexible.  Trade12 gives its customers a chance to trade more than 50 currency pairs in combination on its platform, including all majors, minors and exotic currencies. For these currency pairs, spreads begins at 0.8 pips for EUR/USD, AUD/USD and EUR/CHF and 1 pip for GBP/USD pair. Trade12 forex broker likewise gives a leverage as high as 1:400 on currency trade.

Metals:  Trade12’s client can utilize the MetaTrader 4 platform to successfully edge their positions by trading on Spot Gold and Silver, while simultaneously taking an inverse position on the US Dollar.

CONTRACT FOR DIFFERENCE (CFDs): Trading with Trade12 gives traders an advantage to exchange on different asset types on a solitary platform which incorporates stocks making speculation easy and exact. (Google, Apple, Amazon, Alibaba, Twitter, and others), items (Gold, Silver, Copper, Crude Oil, Wheat, Coffee and Corn), and Stock indices (DAX, FTSE 100, Dow Jones, NASDAQ, Nikkei 225 and others).

The trade12 audit is a remarkable web based or online trading business organization that works with a goal to advance reasonable and additionally an ensuring and secured world-class trading condition for people who are into online based trading. This organization through years of dedicated service has committed its endeavors towards helping the merchants to accomplish their financial goals and accomplish financial freedom and independence sot for over time.  Our ever increasing client data base and positive  review and testimonies should rather be a more realistic conviction. Visit our web site today for more details. You`ll discover that Trade12 is simply big, strong, reliable and world class. Ultimately designed for your abundance and enterprise with a  style of convenience in mind.

Trade12 - The Basics of Support and Resistance Indicators

Trade12 Review Blog – The Basics of Support and Resistance Indicators

One of the most important decisions of every investor is identifying the right time to buy and sell their assets in the market. Fortunately, there is a common way of determining this. Technical analysis, which includes analyzing historical data in order to predict future price movements, holds a certain concept that could recognize potential market timings. This concept involves making use of support and resistance indicators.

What are support and resistance indicators?

Support and resistance is a concept applied in technical analysis that focuses on analyzing the price movement of a security. It shows the tendency of the market trend to stop and reverse at certain preset price levels. These levels called “support” and ‘resistance” levels are denoted by repeated marks of a certain price in the trend without a breakthrough of the level.

Trade12 - What are Support and Resistance Indicators

Support level – is a level where the price tends to find “support” in a falling trend. It acts like the floor which prevents the price from falling further. As soon as the trend hits the support level, the price is more likely to bounce back to a reverse direction instead of breaking through it. However, there is still a possibility that a support level is breached and will likely to continue falling until it hits another support level.

Resistance level – is same as the concept of the support level, but in a different direction. It is a level where the price tends to find “resistance” in a rising trend. It acts as the ceiling which prevents the trend to rise further. Again, this means that as soon as the trend hits the resistance level, the price is more likely to bounce off towards a downward direction instead of continuing the rising trend. There is also a possibility that a resistance level is breached and is likely to continue rising until meeting another resistance level.

Support and resistance levels can be identified using trend lines or by using pivot point calculations. A specific level becomes more significant as it is more often “tested” by the trend.

If a price breaks through a support level, that certain level often becomes a new resistance level. The opposite is true as well. If the price breaks through a resistance level, it is more likely to find support at that level in the future.

Investors often use the concept of support and resistance in entering and exiting a trade. A basic investment strategy is to buy a stock at a support level and then sell it at the resistance. Short sellers also use this strategy by shorting at a resistance level and then covering the short once it reaches a support level.

Trade12 - 2 Types of Support and Resistance Indicators

2 types of support and resistance indicators

The first one is called the proactive method. Proactive support and resistance methods aim to predict the levels, often in areas where price has not actually been. They are based on analyzing the current price action to predict the future price action. Some of the methods to determine proactive support and resistance levels are measured moves, swing ratio projection, trend lines and moving averages, etc.

The opposite of proactive is the reactive method. These indicators are formed directly as a result of the current price action and volume behavior. Some methods of determining these levels are price swing lows/highs, certain candle patterns, volume profile, open gaps, etc.

Bottomline

Knowing how to recognize support and resistance levels plays a crucial role when it comes to making trading decisions. It helps in identifying the right time to buy and sell a security through technical analysis. Even if support and resistance levels are merely speculations, having a solid strategy in understanding the market trend is still better than blindly making major trading decisions.

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 Glimpse on the Controversial Efficient Market Hypothesis

Trade12 Review Blog – A Glimpse on the Controversial Efficient Market Hypothesis

For a number of years, it has been a huge debate among stock market investors whether the market is actually efficient – that is, whether it fully reflects all available information through the current stock prices or not, thus opening the possibility for undervalued and overvalued stock prices. In this article, we are going to talk on what efficient market hypothesis is all about.

Trade12 - What is Efficient Market Hypothesis

What is Efficient Market Hypothesis?

Efficient Market Hypothesis or EMH is an investment theory developed by Professor Eugene Fama in the 1960s. It concludes that the market consistently operates efficiently. The theory states that it is impossible to “beat the market” because the current share prices already fully reflect all relevant information about the shares.

According to the EMH, stocks always trade on stock exchanges at their fair value, thus making it impossible to buy undervalued or overvalued stocks. It also states that it is impossible to outperform the market by expert stock selection or market timing. The only way to get high returns from the market is by purchasing riskier investments. The theory implies that you’re engaging in a game of chance each time you buy and sell securities instead of investing using your skills.

For years, EMH has been a cornerstone of modern financial theory, but it is highly controversial and often disputed especially since a lot of investors like Warren Buffet have proved to consistently beat the market over long periods of time.

However, supporters of the EMH model still believe that it is pointless to search for undervalued stocks or to predict the market trend by doing fundamental and technical analysis. They conclude that investing in a low-cost, passive portfolio is the only best way to get the upper hand in a volatile market.

Trade12 - Variants of the EMH

Variants of the EMH

Weak form – assumes that the current stock prices fully reflect all currently available market data. It also states that the past prices and volume information don’t have any connection to the probable future direction of the security price. This form concludes that the excess returns cannot be achieved through technical analysis.

Semi-strong form – assumes that the current stock prices rapidly adjust to the release of all new public data. It also states that security prices are taken from available market and non-market public information. This form concludes that the excess returns cannot be achieved through fundamental analysis.

Strong form – assumes that the current stock prices fully reflect all public and private data available. It states that market, non-market, and even inside information all contribute to the prices of the securities and that no one has sole exploitative access to relevant information. The strong form assumes a perfect market and concludes that excess returns are impossible to achieve consistently.

Conclusion

Despite the thought that the market always operate efficiently, in reality, it does not consistently behave that way. Believers of the theory could not come up of any explanation as to why the market goes through periods of volatility. Another deterrent of the theory are the countless times when investors prove to the possibility of beating the market. Despite these, the efficient market hypothesis still remains a prominent theory in financial economics.

Read more about market volatility.

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 - Getting to Know Fixed Income Investing

Trade12 Review Blog – Getting to Know Fixed Income Investing

Whether you are planning to save up for retirement, open up a new business, or simply have a stable source of extra income – each investor has their own reason for investing. It depends on their needs on how they would invest their money and which investment would be the best for them. In this article, we are going to talk about fixed income investing.

What is fixed income investing?

Fixed income investing or fixed interest investing is an investment method that focuses on generating cash flows from investment holdings instead of making capital gains. Investing using this strategy is focused on finding securities that have regular fixed returns, as well as a guaranteed principal. These securities may include holdings such as stock dividends or preferred shares, bond interests, or similar types of accumulating cash flows.

The aim of this strategy is to invest in companies that provide a steady stream of income or in stocks that pay solid dividends.

Read more about generating profits from dividend stocks.

Trade12 - Fixed Income Investments

Fixed income investments

Unlike growth investing, most income investors focus more on older, well-established companies, which have reached a certain maturity level and are no longer able to sustain higher levels of growth. These companies generally stopped rapidly expanding their business. They choose to pay out retained earnings to provide some returns for their shareholders rather than reinvesting their earnings into themselves.

But fixed income investing is not only about finding companies that pay high dividends. It is more about finding firms that generate a high dividend yield. Dividend yield measures the actual returns that a dividend gives to the shareholder. It is calculated by dividing the annual dividend per share by its price. Income investors are usually looking for a minimum of 5-6% yield per share.

The main objective of this strategy is to find companies with sustainable dividend yields that are high enough in order to receive a significant steady source of income over the long term.

Another aspect that income investors are looking for is the company’s dividend payout history. Most companies that paid dividends steadily over the past years are more likely to continue the same trend, while companies that showed a sudden over-optimistic change in dividend payouts tend to become unsustainable in the future.

Trade12 - General Reminders About Income Investing

General reminders about fixed income investing

  • Investors should not depend solely on dividends on which stocks they should invest in. A high dividend doesn’t automatically mean it is a good company. Since these dividends are paid directly from the company’s net income, higher dividends sometimes result in lower retained earnings. Problems may arise when the income would have been better reinvested than paid out as dividends. That is why to pick good companies for fixed income investing, investors must look and analyze the other aspects of the company and make sure it has good and sustainable fundamentals.
  • Even if a company is mature enough to pay high dividends, it doesn’t mean that it would result to lower investment risk compared to normal stock investments. The common risks associated with equity safety still apply even to companies with high dividend yields. The only way to minimize these risks is to invest only in companies built with strong foundations.
  • Dividend payments in most companies are taxed at the same rate as wages. Because of this, the payments tend to be taxed higher than capital gains, which can result to lower overall returns.

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 – Bond Basics Explained

Trade12 Review Blog – Bond Basics Explained

What are bonds?

A bond is a debt investment in which an investor loans money to an entity. It is a fund borrowed for a certain period of time at a fixed interest rate. When an investor purchases a bond, he or she lends money to the issuer. The most common types of bonds are corporate and governmental/municipal bonds.

Bonds are commonly traded on major exchanges, but some are only available on over-the-counter (OTC) markets. Both bonds and stocks are securities; however, their major difference is that stockholders have equity in the company, while bondholders have a creditor stake in the company. Because of this, bondholders are usually prioritized over stockholders. They are paid first before the company pays dividends to stockholders.

Most bonds have a defined maturity date except for irredeemable bonds, which is a type of bond with no maturity. This bond is also called perpetual bond, “consol”, or a “perp”. Its only drawback is that it is not redeemable, but it pays a steady stream of interest payments forever.

Trade12 - Key Terms

Key terms

Creditor – also called the debt holder or lender of the bond. Creditors are made up of investors who purchased bonds, which in turn are borrowed by entities.

Issuer – also called the borrower or debtor of the bonds. This issuer could be a corporation, government, or other entity. The issuer is obliged to pay back the bond principal plus the interest to the creditor at the maturity date.

Maturity date – it is the date on which the bond will expire and the bond issuer is required to pay the face value of the bond loaned. The maturity date or the time until the loaned funds is to be paid usually ranges from a day to more or less 30 days.

Face value – also called “principal”.  It is the price of the bond upon its maturity. It is the original price of the bond plus the interest accumulated over time.

Issue price – it is the original price of the bond at which the issuer originally sold the bond. The issue price of a bond is usually $100 or $1,000 per individual bond. Its actual market price depends on a number of factors including the credit quality of the issuer, the time until expiration, and the coupon rate compared to the general interest rate commonly issued at the time.

Coupon rate – is the interest rate of the bonds. The coupon is usually paid at annual or semi-annual intervals. The date of which the coupon is to be paid is called “coupon date”. The interest rate of a bond is computed by looking at the credit quality of the issuer and the length of time before the maturity date.

Trade12 - How do Bonds Work

How do bonds work?

Companies or entities issue bonds from investors instead of banks when they need to raise money for new projects, fund ongoing operations, or to pay other existing debts. These entities issues bonds at a certain price, which are then bought by investors through an exchange or on OTC markets.

The price of the bond paid by the investor would be used by the entity for its financial needs. The indebted entity or the issuer of bonds promises to pay a fixed interest rate or coupon at the time maturity date of the loaned funds.

When the maturity date comes, the issuer is obliged to pay the face value or the original price of the bond plus the coupon accumulated over time.

Importance of bonds

A bond is a fixed-income security. It pays a fixed interest a few times a year, thus providing a steady supply of profits. It is recommended for all investors to include a few bonds on their diversified portfolio to secure income from investments especially if is for retirement or savings funds.

Read more about portfolio diversification.

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!