Finoledge

Currency Trading Currency trading, often referred to as foreign exchange or Forex, is the purchasing and selling of currencies in the foreign exchange marketplace, done to make profits. It is referred to as 'speculative Forex trading.' Forex trading is the largest market in the world, with nearly $2 trillion traded daily, with quick growth projections. The main factor that differentiates currency trading from other types of trading is its liquidity. How Does the Forex Work? Currency trading is usually done through brokers and market makers. Investors who trade this way depend on the brokers to place a corresponding trade on the international market. For example, the currency exchange of US dollars to Jamaican dollars is US$1 = JA$114.59, so US$2,000 can earn the investor JA$229,180, who can then in turn reinvest. Forex trading occurs when the buying and selling of one currency for another takes place at the same time. Together, the two currencies form a currenc...

1. What are Stock Futures? Stock Futures are financial contracts where the underlying asset is an individual stock. Stock Future contract is an agreement to buy or sell a specified quantity of underlying equity share for a future date at a price agreed upon between the buyer and seller. The contracts have standardized specifications like a market lot, expiry day and unit of price quotation, tick size and method of settlement. 2. How are Stock Futures priced? The theoretical price of a futures contract is the sum of the current spot price and the cost of carrying. However, the actual price of futures contract very much depends upon the demand and supply of the underlying stock. Generally, the futures prices are higher than the spot prices of the underlying stocks. Futures Price = Spot Price + Cost of carrying The cost of carrying is the interest cost of a similar position in the cash market and carried to the maturity of the futures contract less any dividend expected ...

What is a Bull Market? A bull market is a financial market (whether it’s currencies, metals or commodities) where prices are rising or are expected to rise. General optimism, investor confidence, and expectations of continuous strong uptrends characterize a bull market. These uptrends usually last for weeks, months, or even years, but can be as short as a few days, depending on the surrounding circumstances. Predicting changing trends is sometimes difficult as trader psychology and speculator behavior can play a role. Markets become bullish generally when the economy is doing well or coming out of a previous slump. For instance, individual currencies may rise in line with a strong GDP output, or drop when unemployment figures or interest rates aren’t favorable. Supply and demand forces still govern in a bull market, so weak supply but strong demand (as in the case of commodities such as oil or natural gas) will see prices rise as more investors want to purchase the asset than ar...

What are mutual funds? A Mutual Fund (MF) is formed when capital collected by various investors is invested in purchasing company shares, stocks, or bonds. Shared by thousands of investors, mutual funds’ investments are collectively managed by a professional fund manager to earn the highest possible returns. a. Liquidity Unless you opt for close-ended mutual funds, it is relatively easier to buy and exit a mutual fund scheme. You can sell your units at any point (when the market is high). Do keep an eye on surprises like exit load or pre-exit penalty. Remember, mutual fund transactions happen only once a day after the fund house releases that day’s NAV. b. Economies of scale in transaction costs Since mutual funds buy and sell securities in large volumes, transaction costs on a per-unit basis are much lower than what retail investors may incur if they buy or sell shares through stockbrokers. c. Diversification Mutual funds have their share of risks as their pe...