Who are venture capitalists?
Venture capitalists may have been entrepreneurs themselves who are now helping newer companies achieve success in return for large equity positions in the business. They may also work for investment banks. They form firms which manage a portfolio of venture capital investments. Venture capitalists are firms whose business model is to infuse money into companies which do not have access to the capital markets, or do not want to turn to the open market, in return for equity in the business. Continue reading...
How to use Open Interest in trading
Open interest, or OI, can be a very important number for futures, options, and other derivative markets, but it can also be important to traders in the traditional stock market. Open interest in derivatives of stocks indicates that there is a deep market for the stock itself, since many of the positions may eventually require the purchase of the stock. Increases and decreases in open interest may help a trader understand if there's significant action in a security's price movements, which can determine liquidity needs as well as whether the price movements are rooted in actual supply and demand characteristics. Continue reading...
What is Profit Margin?
Profit margin is a profitability ratio that measures, as a percentage, how much a company keeps per sale. Profit margin can be calculated by dividing net income by sales. A higher profit margin means a company keeps high percentage of each dollar sold as profit. For example, a 50% profit margin means that for every dollar earned, a company retains $0.50. It is often helpful for an analyst to look at how a company’s profit margins have changed over time, to measure whether it is becoming more efficient in the sales of goods. 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 market efficiency?
Market efficiency describes the degree to which relevant information is integrated into the price of a security. With the prevalence of information technology today, markets are considered highly efficient; most investors have access to the same information with prices and industry news, updated instantaneously. The Efficient Market Hypothesis stems from this idea. Efficient markets are said to have all relevant information priced-in to the securities almost immediately. High trading volume also makes a market more efficient, as there is a high degree of liquidity for buyers and sellers, and the spread between bid and ask prices narrows. Continue reading...
What is Minimum Margin?
Minimum margin is the minimum amount needed to open a margin account. The custodian or broker typically sets the minimum margin, but it cannot be for any less than the $2,000 required by the NYSE and NASD. What is 'Buying on Margin' and Margin Trading? What is a Margin Account? Continue reading...
What is Dividend Yield?
A dividend yield is a ratio that represents how much a company pays in annual dividends relative to its share price. A dividend yield is represented as a percentage, and is easily calculated. Simply divide the annual dividends paid per year (dollar value) by the per share price of the stock. Here’s the equation in simple terms: Annual Dividends Per Share / Price Per Share = Dividend Yield A company with a higher dividend yield means they pay out more of their profits to shareholders, but it also means that company may be allocated less of their free capital towards investment, research, and other growth areas. Continue reading...
What were the Biggest Single Day Market Moves?
Since the Dow Jones Industrial Average’s creation in 1896, there have been several crashes and several days of huge gains. The biggest moves can be defined in two ways: either by percentage change or by change in points. In terms of gains, the largest single-day point gain occurred on October 13, 2008, when the Dow rose 936 points (11%) – the sudden leap occurred during a time of wild upside and downside volatility, and was in response to unexpected positive global economic news. Continue reading...
How to: Investor Clubs
Tickeron’s Investor Clubs are a great opportunity to be a part of a community and interact with fellow investors, as well as 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 the Trading tab, then click on Investor Clubs. To create an investor club you have to have a starting portfolio and ideas on how you would re-allocate it. You do not need to create a club -- you can just follow as many as you like. As soon as you join a club, you can have private discussions with club members. Continue reading...