All you want to know but never asked about the stocks and options markets.

viernes, 26 de septiembre de 2014

What are the Pink Sheets in the stock market?

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The Pink Sheets is a system where a trader can buy and sell stocks that are not listed on an stock exchange in the United States.

Formerly known as the "Pink Sheets," the OTC Markets Group, Inc. is a privately held company that provides trading services in the stock market for shares that are not listed on an organized exchange. According to the SEC, the Pink Sheets is not a stock exchange. The company simply facilitates the exchange of shares ​​between independent brokers.

The company was founded in 1913 as National Quotation Bureau (NQB). For decades, the NQB reported  quotes for both stocks and bonds, the publication of quotations on the Pink Sheets and Yellow Sheets, respectively, where they received their names from the color of paper they are printed on.

The Pink Sheets is not a stock exchange. To be quoted by the Pink Sheets, companies do not have to meet any requirements (eg filing financial statements with the SEC). With the exception of foreign issuers, represented by ADRs, the companies which are traded on the Pink Sheet tend to be very small, illiquid or bankrupt. Most of these companies do not meet the minimum requirements for admission to be included on a stock exchange such as the NYSE. Many of these companies have no regular reports or financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information on businesses.

For these reasons, the SEC says that companies listed in the Pink Sheets are among the most risky investments and advises potential investors to carefully research before investing in these shares.

There is concern of public interest related to Pink Sheets. This may include a campaign of fraud of the promotion of dubious shares which can lead to a investigation of fraudulent activity committed by the company or its executives.

What is a good till canceled order (GTC)?

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A good till canceled order(GTC) is an order to buy or sell a security at a specific price that lasts until the order is completed or is canceled. A GTC order will not be executed until the price reaches the value. Investors often use GTC orders to put a limit price that is far from the current market price. Some brokers may limit the time of a GTC order and may charge more fees to run this type of order.

For example, if a stock is trading at $15, but  you want to buy when the price drops to $12, you can place your good till canceled order as a limit order.  Once the price arrive to the level $12 , the stock is purchased by the order. Good till canceles orders ares different from day orders, which are canceled at the end of the day.

In most cases, GTC orders are canceled by the broker 30-90 days from the date the order is place, so it is advisable to ascertain the trading terms of the broker/dealer. Such orders are used when the order is placed in a price level which is remote from the current market price (can be taken as a type of pending order).

lunes, 15 de septiembre de 2014

What is moral hazard?

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The term "moral hazard" originated in England in the 17th century, and was often used by insurance companies to involve fraudulent activity by one of its policyholders. Today, moral hazard is used in different situations, including insurance, finance and management. A moral hazard is a situation in which the behavior of one of the parties may change to the detriment of the other part after a transaction. For example, a person with a home theft insurance may be less cautious about their house, because the negative consequences of theft are now the responsibility of the insurance company. One part makes a decision about how much risk to take, while the other part absorb the costs if things go wrong. The isolated part of the risk behaves differently than it would if it were fully exposed to the risk.

jueves, 11 de septiembre de 2014

Typical frauds stock market

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Fax or email solicitations that tell about a particular stock

The fraud works like this: you receive a fax or an email describing a stock, giving the symbol and some details about the company. This fax or email is sent to many people, with the intention that they buy the stock given the impact that the fax created for the stock. What is really happening is that the fax you received came from a penny stock promoter, which was paid by the company (on company shares) to promote the stock.

domingo, 7 de septiembre de 2014

What is an initial public offering, or IPO?

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An initial public offering, or IPO is when a company sells its shares to the public for the first time. An IPO occurs in the primary market. Before the IPO, it was a private company, but now the company is allowing the public to participate in their growth and profits. In return, the company can raise money by selling its parts. 

To expand their business, increase their inventory or maintain their operations, companies need to raise money. There are two main ways to raise money: incur debt or sell shares. Debt can be in the form of line of credit, loan from a bank, or the company may sell bonds. Shares can be either common stock or preferred stock.

sábado, 6 de septiembre de 2014

What is the Nasdaq Level II?

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The Nasdaq Level II is a quoting system showing all offers and demands of the market makers, the daytraders and buyers and sellers. This system also tells the trader how many shares these market participants want to buy or sell for each stock traded on Nasdaq. For example:

jueves, 4 de septiembre de 2014

Guerrilla Trading Strategies

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In this article we will discuss a number of strategies used to trade shares on the stock market. These are the famous Pristine's guerrilla strategies which have been taught for several years. The concept on which these techniques rely the 20/20 bars. These are basically bars that have a fairly wide range in which the minimum value is very close to the opening and the maximum is close to the closing price in the case of the bullinsh bar while in the case of  the bearish bar the maximum is near to the opening and the minimum is near the closing. 

Strategies with options: Long Call, buying a call option

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Buyers of a Call option seek to benefit from the price increases of the underlying asset or protect short positions againts a possible price increase. They have a bullish view of the market and expect that price volatility to increase.

The risk of this strategy is limited to the premium price and profit potential is unlimited at maturity in a rising market.

The breakeven point in this trade, ie the point from which begins the potential for profit, is the strike price + the price of the premium. Furthermore, we note that its delta increases to +1 as the underlying asset prices rise. 

martes, 2 de septiembre de 2014

The Nirvana Fallacy in trading

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Unknown by most, the nirvana fallacy is the logical error of comparing real situations against utopian, unrealistic and idealized situations. Alternatively it can also refer to the tendency to assume that there is a perfect solution to a particular problem.

This term was coined by economist Harold Demsetz of Chicago School in 1969 and stated that:
The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing 'imperfect' institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements.
Or as Voltaire would say, "Le mieux est l'ennemi du bien" ("The best is the enemy of the good").

SpeedTrader Broker

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Broker de acciones&Forex regulado SpeedTrader

SpeedTrader is a regulated stock broker from United States which is specialized in stocks and options (options based in these shares) of the major stock exchanges in the United States and Canada. This broker offers various trading platforms (web-based and desktop) designed for buy, sell, or trade stock options & stocks. The broker noted for its low fees and its fast trade executions. The following overview shows the main features of this broker.