What is the Falling Wedge (Bullish) Pattern?
The Falling Wedge pattern forms when the price of a pair appears to be spiraling downward, and two down-sloping lines are created with the price hitting lower lows (1, 3, 5) and lower highs (2, 4). The two pattern lines intersect to form a narrow triangle. Unlike Descending Triangle patterns, however, both lines need to have a distinct downward slope, with the top line having a steeper decline. 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 Bond Market?
You might not know it, but the Bond Market is about twice the size of the Stock Market. It’s true; in the US and internationally, the bond market, which includes municipal bonds, corporate bonds, government bonds, v, etc, has almost twice the amount invested in it than the Stock Market. Within these categories, there are many subsets. Bonds are widely used by individual investors as well as corporations and governments. Continue reading...
What is the Prime Rate
The prime rate is the lowest interest rate that banks will charge on loans at a given time, based on the Federal Funds Rate. Individual banks set their own prime rate, which they may also call their "Reference Rate" or "Base Lending Rate." It is the least they will charge for a loan at a given time, based on the creditworthiness of the customer, and the only clients whose risk of default is low enough to approach the prime rate are very large commercial clients. Continue reading...
What does it mean to 'exercise an option?'
An options contract does not affect the underlying securities until the option is exercised, meaning that the option or buy or sell the security is utilized. Many options trades do not directly touch the underlying securities – investors worldwide make plenty of money buying and selling the options contracts themselves. Options have time-value inherent in them based on how the underlying securities are priced and when the options expire, and traders will speculate on when and if someone might actually “exercise the option,” and thereby use the rights of the contract holder to buy or sell the underlying securities. The contract names the strike price at which the holder of a call option can buy a security; or, for a put option, the price at which the holder can sell the security. Continue reading...
What should I compare the performance of my portfolio with?
Benchmark indices are used to gauge the performance of an investment portfolio. In order to evaluate the performance of your portfolio for any given period of time, find the corresponding index for each investment in your portfolio. For example, for US Equities, use the S&P 500 For your Small Cap portion, use the Russell 2000 Index, etc. You can also compute weighted index blends that correspond to your index allocation (e.g., 40% MSCI / 60% S&P). If your manager or the portion of your portfolio significantly (by more than a couple percent) underperforms the corresponding index, be sure to carefully monitor this manager or portion of your portfolio. Continue reading...
How many financial advisors do I need?
It’s good to have the opinion of advisors who are knowledgeable in various areas of your planning and portfolio, but for most portfolios this can be reasonably accomplished with one advisor. It’s a good idea to have one Financial Advisor who oversees all of your assets, and if the individual parts of your portfolio are of significant size, you might consider having a specialist in those fields to oversee them. Continue reading...
What are All-Cap Mutual Funds?
All-cap mutual funds invest in companies of all sizes. All-capitalization mutual funds invest in companies without a bias towards the capitalization of the company. In every mutual fund’s prospectus, the stated objective of the fund will be outlined, as well as the agreed-upon asset allocation guidelines. Deviation from these parameters can put fund managers in hot water with regulatory groups like the SEC. Continue reading...
Trader Clubs
Tickeron’s Trader Clubs is a great opportunity to be a part of a community, interact with fellow traders, exchange ideas, and compare your skills. These clubs also help create an audience if you want to monetize your skills in the future. To access from the menu bar, simply click on the marketplace and then select Trader Clubs. Here in Trader’s club, you have two options You can start your own club or join any club that suits your trading or investing plan. Continue reading...
What is Sharpe Ratio?
The Sharpe Ratio is a risk-weighted metric for returns on investment. It measures whether an investment offers a good return for the amount of risk assumed by the investor. The risk/return trade-off is a positive linear relationship in most theoretical depictions – if an investor seeks greater returns, they will have to take on greater risk. For more stability and less risk, an investor will have to sacrifice some potential returns. Continue reading...
What is Effective Annual Interest Rate?
Also known as the annual equivalent rate (AER), the effective annual interest rate is the actual annual interest rate on a bond or loan when it compounds more than once a year. The effects of compounding will make the AER higher than the annual interest rate if the security compounds greater than annually. Continue reading...