How Does Vesting Work?
Vesting is the schedule or process by which certain assets are eventually considered the property of an individual who uses them. If your employer provides some sort of matching, flat, or profit-sharing contribution to your retirement account at work, you will probably not be allowed keep the entire amount that they contributed if you change jobs or retire before a certain number of years have passed. Continue reading...
What is a SIMPLE IRA?
SIMPLE IRAs are like safe-harbor 401(k)s for small businesses. A SIMPLE IRA is a type of retirement plan for small businesses. A business can only start a SIMPLE IRA if they have fewer than 100 employees who earned $5,000 or more in compensation for the year. As the name implies, a SIMPLE IRA provides an easier method for making contributions to both employees’ and the employers’ retirement accounts. Employees may choose to make salary reduction contributions to their SIMPLE IRA while employers are required to make either matching or non-elective contributions. Continue reading...
What is an Earnings Call?
An earnings call is when a company opens up a teleconference line or webcast that the public can join to hear the company management talk about how the company performed recently, their plans for the future, and the market forces that exist in the current environment. Most publicly traded companies today have adopted this practice. Earnings calls may take place once a year or during earnings seasons after the quarterly earnings have been announced in a press release. Companies often have one executive whose job is to interface with the shareholders in such settings, but various executives are often given a chance to present some thoughts. Continue reading...
What is the Falling Flag (Bearish) Pattern?
The Falling Flag (or Bearish Flag) pattern looks like a flag with the mast turned upside down (the mast points up). The pattern forms when falling prices experience a consolidation period, and the price moves within a narrow range defined by the parallel lines through points 2-4 and 3-5. After the consolidation, the previous trend resumes. This type of formation happens when anticipation of a downtrend is high, and when a security’s price consolidates during a broader decline. It may indicate growing investor concern of an impending downtrend. Continue reading...
What is a Broker-Dealer?
A broker-dealer is an entity that engages in the trading of securities, and can act as both an agent and a principal. Brokerages, investment banks, commercial banks, and other financial institutions can act as a broker-dealer. Broker-dealers are important to the liquidity of the markets, since they hold inventories of securities for various amounts of time to help facilitate trading, short-selling, and margin accounts. Continue reading...
What is a Billing Cycle?
A billing cycle is the frequency with which a company creates and sends invoices for the goods or services rendered during a time period. A billing cycle is usually a month long, and may begin at the first day of the month and end on the last day. This varies depending on the structure of the business and the systems they have in place to regulate their cash cycle. A bill or invoice will be sent out to customers or debtors from whom the business can expect payment for goods or services rendered during a specific time period. Continue reading...
What are foreign exchange reserves?
Central banks and sometimes other banks and large corporations, hold reserves in foreign currencies as a hedge against exchange rate risk and perhaps to satisfy the liquidity needs of positions they may have in Forex derivatives. Central banks and large institutions which engage in international trade and Forex transactions will find it prudent and sometimes necessary to hold substantial reserves in a foreign currency. Central banks frequently engage in various types of Forex transactions to balance their exposure to trends, risks, and other effects in the currency market. Continue reading...
What are Energy Sector Stocks?
The Energy Sector contains companies that are in the business of discovering, processing, or selling (or all 3) natural resources like oil, natural gas, coal, solar and wind. Oil companies dominate the sector and are the largest players. Energy stocks are also cyclical, meaning that they tend to perform better when demand for energy is high (economic expansions). Companies in the Energy sector are also very sensitive to changes in the price of the underlying natural resource, like oil. For example, as the price of oil rapidly declined in 2015, falling by 50+%, the earnings for virtually every energy company collapsed. Continue reading...
What is intraday trading?
Intraday trading means opening and closing a position, or buying and selling (or short-selling and covering) a security within the same trading day. Intraday traders are active during market hours, buying, selling, shorting, and so forth, to capitalize on the movements of the markets during the day, and they primarily trade positions which are opened and closed during the same day. Intraday traders use technical indicators to find inefficiencies or price fluctuations that they believe will correct. Continue reading...
What is Endpoint Moving Average (EPMA)?
Moving averages are important components of many technical indicators. The Endpoint Moving Average (EPMA) is a popular method of plotting a line that uses linear regression instead of averages, which reduces the noise of market price activity and can reveal or follow trends. Compared to a simple moving average, this method hews more closely to data and lags less. A moving average line averages prices in a given time period (such as the 30 days leading up to each day), and plots that point on a chart; when connected, the collection of points becomes the moving average line. Continue reading...