What does the Efficiency Ratio Mean?
The efficiency ratio is a metric that measures how effectively a company uses its assets and liabilities to run the business smoothly. There are several types of efficiency ratios that can give an analyst insight into a company: accounts receivable turnover, fixed asset turnover, sales to inventory, and and stock turnover ratio. Continue reading...
How Do You Mine Ethereum?
When mining on the Ethereum blockchain, you are rewarded in Ether, but you may need to do some calculations to find out it if will be profitable for you. Ethereum mining can still be done profitably, as of the time of this writing, by individuals on their home computers, as long as they have decent hardware. This is no longer the case for Bitcoin, Litecoin, and a few other coins, due to the development of ASIC (application-specific integrated circuits) mining rigs used by the nascent mining industry, which have rendered home computers obsolete and have begun to present a significant centralization threat on the decentralized blockchain. Continue reading...
What is Tokenization?
Tokenization is a concept that can take several forms, but essentially it means to create a tradeable item which holds value anchored in an asset which is not itself readily tradeable. If something of value is not easily traded, it is natural that a token is created which represents part or all of such value, which can then be held until redemption or circulated as currency. Historically, some things, such as hours of labor, could not easily be accounted for without a physical token. Continue reading...
What is the Symmetrical Triangle Top (Bullish) Pattern?
The Symmetrical Triangle Top pattern forms when the price of a pair fails to retest a high or low and ultimately forms two narrowing trend lines. The price is expected to move up or down past the triangle depending on which line is broken first. The price movement inside the triangle should fill the shape with some uniformity, without leaving large blank areas. This pattern is commonly associated with directionless markets, since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). Continue reading...
What is the Broadening Wedge Ascending (Bearish) Pattern?
The Broadening Wedge Ascending pattern forms when a pair price progressively makes higher highs (1, 3, 5) and higher lows (2, 4), following two widening trend lines. This pattern may form when large investors spread their buying over a period of time. When initial buying occurs, other market participants react to rising price and jump on the bandwagon to participate. Then value investors begin to sell, believing the price has risen too much, which spurs the original large investor to resume buying again. Once these activities stop, the price may break out in either direction. Continue reading...
How to use the Arms Index (TRIN) in trading
Richard Arms invented the analysis tool that bears his name in 1967. The Arms Index, a technical analysis indicator, is also called the TRIN (short for “Trading Index”) because it seeks to indicate overbought or oversold conditions by serving as an index of trading activity relative to price. The Arms index is calculated using readily available data from major indexes such as the S&P 500 or NASDAQ. The ratio of the number of advancing stocks (stocks whose prices are increasing) to the number of declining stocks (stocks whose prices are decreasing) is computed to give us the A/D Ratio, a market breadth indicator that is one way of viewing the daily breadth of a security. The Advance/Decline Ratio uses the same numbers as the Advance/Decline Line but presents them as a ratio instead. The AD Ratio is sometimes more useful than an AD Line, including in instances where comparing AD for different indexes which have different metrics; the ratio is the standardization with which comparisons can be made. Continue reading...
What is Profit and Loss (P&L) Statement?
A Profit and Loss Statement, also referred to as an “income statement,” is a corporate statement that summarizes the revenues, costs and expenses incurred by a company during a specific time period, such as a quarter or a fiscal year. The main difference between a P&L statement and a balance sheet is that the P&L is designed to show changes in line items over the period analyzed, versus a balance sheet which simply shows a comprehensive snapshot of a company’s asset and liabilities on a set date. Continue reading...
What is a commodity etf?
Commodity ETFs are focused on tracking the performance of commodity prices and their derivatives contracts. ETFs are like mutual funds that trade intra-day like stocks, but the volatility of commodities prices can make these equally unpredictable. Commodity ETFs are intended to track the performance and price movements of commodities and their derivatives. All sorts of commodities can and have become part of an ETF offering, from gold to grain, cattle, and coffee, and even US and foreign currencies. Each commodity has its peculiarities and it would be good to know about the market for each commodity that you intend to invest in. Continue reading...
What is commodity pice risk?
Agricultural and mining businesses are exposed to commodity price risk, which is the possibility that the price of the commodity will change unfavorably by the time the commodity is ready to be delivered. They avoid unnecessary risk by using futures contracts, forward contracts, and possibly other derivative instruments. Commodity price risk means that an agricultural or mining business might not be able to predict the revenue that they can generate from the production or extraction of commodities. Continue reading...
What is the random walk hypothesis?
The Random Walk Hypothesis states that in an efficient market, prices will correlate around the intrinsic value of securities, but there will always be a randomization and unpredictability to it. The Random Walk Hypothesis suggests that technical analysis and the efforts of chartists cannot beat the market over time, because the market will move randomly and unpredictably, and past results cannot predict future returns. Continue reading...