A PIP is the standard smallest increment of change or precision at which a currency is quoted and tracked in Forex markets. One ‘PIP’ equals .0001 of the size of a lot of currency being exchanged, in terms of the counter currency. A PIP stands for Percentage in Point and is the integer which appears in the 10,000th place when quoting currency exchange rates. It is actually the same as a Basis Point, used in bond and equity markets, which is 1/100th of 1%. If we were exchanging GBP (British Pounds) for USD (US Dollars), in a Mini-lot of 10,000, one PIP would equal $1. Continue reading...
A pivot point is a technical indicator used by traders to determine overall market trends over various windows. This indicator used to be solely the average of the high, low, and closing prices of the previous day, but modern trading utilizes different versions of this concept for day trading and short term analysis. In many cases, pivot points are now quick-reference tools used in intra-day trading that give the trader benchmarks and perspective as short-term price movements happen. How the trader calculates the pivot point depends on whether the point is going to be part of a chart with a scope of several minutes or the present day or present week. Continue reading...
When percentages being used to describe a security are very small, basis points are often used to describe the numbers. A Basis Point (bp) is 1/100th of a percent, so 1% = 100 bps. This metric is used when discussing financial instruments for which very small changes in percentages can make a difference. For example, rates on single premium immediate annuities change weekly, and generally only by a few basis points. These small changes can make a difference competitively week-to-week, because a few basis points can translate to thousands of dollars of income over time. Other places where basis points are used include: advisory and management fees, moves in indexes and securities, bonds, and so on. Continue reading...
Pivot points are quick-reference tools used in intra-day trading that give the trader benchmarks and perspective while short-term price movements happen. Pivot points are set by taking the high, low, and close price levels of a stock market index or individual security for the previous day or week and basing support and resistance levels from there by multiplying those numbers by simple factors. These multiple might be very simple, such as 2x or 3x, or using Fibonacci numbers, which is still a simple calculation if you have the Fibonacci numbers. These are meant to be very quickly generated on a piece of scratch paper, and because of their simplicity, they were a favorite among floor traders. Continue reading...
Often referred to in the media as “New Highs and New Lows,” the High-Low Index is an observation of the number of stocks which hit 52-week highs or lows in the current day. The High-Low Index is usually expressed as a simple moving average (10-day or longer) of the Record High Percent. A Simple Moving Average (SMA) is a technical indicator that can help traders determine whether a bull or bear trend will continue or reverse course. It typically adds up closing prices for a given time period, then divides that figure by the number of time periods used for the average. Simple moving averages are effective in their simplicity, but their efficacy is most closely tied to how they are used. By giving equal weight to each data point, SMAs can limit bias towards any specific point in a specific time period. Continue reading...
The Volume Weighted Average Price (VWAP) helps traders consider the influence of volume on prices. VWAP is calculated by taking the average of prices from a time period and dividing it by the trading volume for the current day. Traders use VWAP to confirm trends and decide whether to take long or short positions, while large institutions are likely to use VWAP to avoid disrupting market prices, finding the liquid and illiquid price points and trading so as not to move prices away from the averages. Continue reading...
Employers make the decision to establish a 40(k), but it has to be good enough for employees to want to participate. An employer is responsible for establishing a 401(k) and for overseeing it as the sponsor and fiduciary. A self-employed individual can also establish an Individual 401(k), which has the same contribution limits and requires none of the testing or auditing of a regular plan. Other options for work-site retirement plans are SIMPLE IRAs, SEP IRAs, and various kinds of profit-sharing and deferred compensation arrangements. Continue reading...
Overlays are technical supplements which help to interpret the data of a normal price chart. Often a chart program will allow the user to pick a few different overlays at a time, to help him or her get a better idea of what is going on with the price. Some common overlays include moving average lines, Bollinger Bands, Ichimoku clouds, and channel lines. An overlay or series of overlays will appear as additional lines, shading, or other graphics on a price chart. An overlay helps a trader or analyst interpret the price data in the context of other data, by putting the other data right on top of it. Continue reading...
Lenders have a different par rate for different types of borrowers, which is the base around which they have the ability to negotiate deals. The par rate will be based on the prevailing interest rate environment, with factors changing it slightly for different potential borrowers and the risk associated with them based on creditworthiness. Par rate is the fair market value of a loan for a person with certain risk characteristics, from a lending institution of certain size and qualities. The par rate is the reference point around which a borrower and a lender will strike a deal, even though this is often unknown to the borrower. If the lender, which might be a bank loan officer or a mortgage broker, gives the borrower a break on the front-end cost of the loan, the borrower might have some interest tacked on to the par rate to make up for it. Continue reading...
The Consumer Price Index (CPI) is calculated using prices of sample goods from predetermined urban areas. According to the Bureau of Labor Statistics (BLS), the CPI is a product of a series of interrelated samples. First, using data from the 1990 Census of Population, BLS selected the urban areas from which data on prices were collected and chose the housing units within each area that were eligible for use in the shelter component of the CPI. The Census of Population also provided data on the number of consumers represented by each area selected as a CPI price collection area. Continue reading...
A company might use this maneuver in order to keep their debt to equity levels in check. The most frequently used types of off-balance-sheet-financing are joint ventures, research and development partnerships, and operating leases. Continue reading...
Payout options in the realm of annuities tend to be guaranteed by the insurance company providing the annuity, and may come in many forms depending on the investor’s preference. Annuities can pay income to the annuitant in a few ways. One of the ways is to turn the entire balance of the annuity into a pension-like income stream for life, or jointly on two lives. The payout tends to be higher than the safe withdrawal rate than investors can use in an investment account, and it provide guarantees and surety where it wouldn’t exist otherwise. You can also elect to have these payments start off slightly lower, and then to increase at a guaranteed rate, to keep up with the cost of living. Continue reading...
Income annuities are used by people in retirement to give them a steady, dependable stream of income until they die. It is a financial product sold by a life insurance company, which serves as a kind of longevity insurance, so that people cannot outlive their money. People often roll lump sums from 401(k)s into these plans. Though inflexible, the income payout rate is designed to be appealing when compared to most retirement investments. Continue reading...
If an annuity or pension will pay your spouse a survivor’s benefit that is adequate to support his or her lifestyle, then you may not need to a life insurance policy to cover this need. Annuities are seen as longevity insurance which protect against outliving money, while life insurance protects beneficiaries if the insured person dies younger than expected. If something happens to you and you have an annuity, your surviving spouse would either continue to receive periodic benefits or take a lump-sum distribution, depending on what kind of payout option you chose when you signed the contract. In the case of the lump sum it may only be for the amount of principal that had not been paid out yet in annuity payments. Continue reading...
APY is an annualization of an interest rate which may be assessed on a different schedule, such as on a monthly basis, and is useful for comparing debt and loan agreements that use different schedules. Annual Percentage Yield is a way to compare products and loans with different interest rates and different schedules for calculating the interest. It is a calculation of the effective annual rate, and it takes into account the effects of compounding interest, which a similar calculation for APR (Annual Percentage Rate) does not do. Continue reading...
Lifetime income annuities provide a guaranteed payout over the life of the annuitant. “Payout” is not a term used officially, but it denotes that the principal amount invested in the annuity is designed to be paid out and depleted over the life expectancy of the annuitant. The payout rate is competitive with other sources of retirement income. Life insurance companies created annuity products as a way to guarantee a client never runs completely out of money. Statistically, according to some surveys, elderly people are more afraid of outliving their money than of nearly anything else. Today medicine can keep people alive longer and longer but not functioning at full capacity, and certainly not able to generate more income in most cases. Continue reading...
There are fixed annuities, fixed/indexed annuities, variable annuities, hybrid annuities, income annuities, period income annuities, and possibly more. Insurance companies, and the insurance subsidiary wings of investment companies, have had many years to develop strategies and marketing ploys that help clients accumulate, protect, and distribute assets within various kinds of annuities. Variable annuities allow the annuitant to participate in the market through mutual funds — or, more accurately, “separate accounts” that mimic mutual funds. Continue reading...
Annuities are primarily designed to pay a substantially similar sum at regular intervals until the annuitant dies. Life insurance companies write these contracts since they are designed as a kind of longevity insurance. A lifetime income annuity, sometimes called a life annuity, is a stream of guaranteed payments for the duration of the annuitant’s life, based on the sum used to purchase the lifetime income and the age of the annuitant at the time of purchase. Life annuities can also be joint-life, meaning the contract will pay an amount to either of two people as long as one is alive. Continue reading...
Step into the future of finance with our comprehensive guide to cryptocurrency trading. Uncover the secrets of Bitcoin, Ethereum, and Binance Coin, and master trading strategies powered by AI. From technical analysis to risk management, learn how to navigate the volatile crypto market and harness the power of AI-driven tools for smarter investments. Join us on a journey through the innovative landscape of digital currencies, where technology meets opportunity. Continue reading...
Global markets plummeted as investors sold off U.S. stocks and withdrew from yen positions. The Dow dropped 1,033 points, S&P 500 fell 3%, and Nasdaq declined 3.4%. Discover the key factors behind the downturn, including the yen-carry trade unwind and tech stock selloff. Continue reading...