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On Balance Volume Strategy An Overview

 

There are various technical indicators that traders use to place buy and sell orders. Most of them talk about the price and the value of the stock or the chosen asset. There are very few that touch on the volume aspects and on balance volume strategy or OBV is one such indicator. This one talks about the volume of the chosen stock and can be very interesting to be used along with the other indicators. Read bitcoin loophole scam review

On balance volume –

It has been decades since this strategy was introduced. It is a great idea to study the price of a stock and its relationship with the volume. A better and a more dependable order would be the one that is placed on the analysis of the price movements and the coherence with the change in the volume as well.

The method of finding the OBV is quite simple. Take the closing session and compare it with the previous day chart. If the price is higher than the previous closing session, or in other words, if it was an up day, plot the volume of that day on the OBV chart. If the next day happens to be another up day then add the day’s volume again to the previous one.

Keep doing this for a while. If there is an up day, add the volume and if there is a down day then subtract the volume from the chart. There might be days when the price movements are very high but the volume changes might be less. In these occasions taking your decisions based on the prices alone would not be a good idea. So OBV is pretty handy in these cases.

Why does the OBV really matter?

If the price drop is also accompanied by a large volume it indicates that there have been too many sellers causing the demand and thus the value to drop. This would also indicate the presence of very few buyers.

When you combine this with the RSI or relative strength index you would be able to understand the situation better. On the days where the price drops but the volume is not too high, it means that there is still a positive outlook for the stock.

There are optimistic traders trying to push the price back in the upward trend. This would be a great buying opportunity. OBV is a value that keeps rising and falling. The change in the value from the point where you started would not be very significant in this case.

When you plot the OBV on a graph you would be able to interpret it better. After all, without the graph, it would simply be a number that is positive, negative or of a value that equals zero.

When there is a huge change in the volume you would see that the OBV chart suddenly reverses and drops low. This might be a possible indicator of a price reversal on the stock chart. Thus if you compare the charts close you would find that OBV would help you double check the interpretations based on the price charts.

An analysis of the Emerging digital Market

Cryptocurrency is a virtual currency which is a digital asset that has been designated to function as a medium of exchange that makes use of strong cryptography in order to confirm the transfer of assets, safeguard financial transactions, and regulate the formation of additional units.

Cryptocurrencies are basically currencies that only exist in digital form, that normally does not have a regulating or issuing authority instead it makes use of a decentralized system that documents the transactions made and organize the distribution of new units, and it depends on cryptography to block fraudulent transactions and counterfeiting.

Bitcoin the virtual currency hit the mainstream market in 2014. ATMs for Bitcoin have sprung up all over the world, enabling investors to trade in cash for the cryptocurrency, which is a safe form of virtual payment outside the borders of the mainstream financial institutions.

So far the crypto sector has seen various exchanges boom, most of which extending a variety of cryptocurrencies even though it’s not an extensive list. This can act challenging for the investors since most of the exchanges are not compatible with the existing wallets it can lead to limitations when controlling a wide array of assets.

To reduce the constraints raised, crypto asset management platforms prefer to clarify the procedure without utilizing a manager or a third party to take care of the investments of users. As for day-to-day traders who do not have a thorough and in-depth understanding of this trade, these tools give a smoother access to get started and succeed.

Various platforms offer guarantees to streamline the asset management for crypto traders, and most of them have revealed their efficacy. In the case of Muroch’sBlox, they offer their users with an easy access to concentrate their diversified wallet and transfer accounts in a specific location.

The tools that the company offers provide users with the ability to manage various portfolios simultaneously and maintain automatic syncing so that the users’ purchases and sales will be updated always. Additionally, the traders can make use of CDT tokens to open the premium features and gain coins by engaging in the company’s portfolio tracing tools.

Latest Simple Horizon

Eventually, the optimism and acceptance of cryptocurrency will only remain if new investors in the market are able to smoothly trade. Crypto asset management tools provide traders of various skill levels in a general and more specified position to control their investments, hence paving a broader spectrum to emerge into the ecosystem.

Once these platforms develop to be more prevalent and continue to connect the presumably differentiated crypto exchange environment, the burgeoning asset class will tend to undergo refined growth. In spite of it, the affluence is based not just on providing a specific position to keep an eye on investments but as a center to study the whole market more.

The next boundary for asset management tools may be the amalgamation of the limitations of various platforms are discovered and to find out partners who can upgrade their value proposition. Promoting and building these effective platforms will enable the cryptocurrency market to participate in the wider online investment sector.

Risk management is a continuous endeavor

Risk management and aversion especially in terms of the corporate world can be imagines as walking on a tightrope. A lot of us who have given a major part of our lives to working in this field have felt at some point of time overwhelmed, even threatened about risks that can be thought to be completely debilitating so as to want resources, to overcome them. But when the risk is faced and managed well, a lot of us have also turned around and exclaimed, “Well, that was not that bad after all!”

This is precise what risk management is all about!

Corporate honchos around the world will tell you that risk management is not a one-time thing. It is an exercise that all corporate have to undertake often in order to identify the potential risk that the company can face and also be able to think upon a strategy that will help eliminate such risks without causing too much of an impact on the business processes of that corporate.

Risk management cannot be a knee-jerk reaction:

A lot of financial gurus have written pages after pages on the fact that risk management per se must never be treated as a crisis response plan. It is not something that happens once in a couple of years and that is it! On the contrary, it must be continuous and much deserving of the attention that it is able to garner as of now.

Making a plan is imminent:

Corporate must never have an attitude of crossing the river when we get to the bridge. An appreciation of risk along with the proactive thinking of being able to manage them in the best possible manner is the need of the hour. The catchword is to be “proactive” and not “reactive”.

Every corporate must strive to identify the risks that they could potentially face. Classification of risks is also important so that the employees know the seriousness of the situation and even previous experiences can be drawn in to be able to come out with a solution.

You cannot eliminate risks:

No, it is a myth that one can avoid risks at all. Every corporate whatever their size small, medium or large will invariably face risks. The idea is never to avoid the risks altogether ever but to manage them in the best of the possible ways so that the corporate comes out stronger than before!

Six tips to invest in mutual funds

 

You must invest in mutual funds with a specific goal in mind – your retirement, your children’s college education or just wealth amassment. Whatever the goals, everyone new to the field of mutual funds can do with some help.

There are different kinds of mutual funds to choose from. You can either choose them from a brokerage firm or do it directly. Mutual funds require a minimal investment amount based on the funds you choose.

Here are 6 tips to make a successful investment choice.

Identify your Risk tolerance

It is very important that you are aware of how much risk you can withstand. It is natural for stocks to go up and down and if the slightest dip in your shares causes you worry than your risk tolerance is very low and it is better for you to stick to conservative funds.

Asset allocation

Stemming from your risk tolerance is your asset allocation. How much of your investment do you want to allocate to stocks and bonds? Aggressive allocation means greater risk tolerance and conservative is low-risk tolerance. Based on your finances choose your strategy and allocation of funds.

Know your funds

While you might trust your fund manager to do everything it is crucial that you do your homework and know about the various categories and subcategories of mutual funds. This knowledge will dictate your investment style and allocation of funds.

Diversify your options

It is always advisable to diversify your funds to minimize risk. Therefore screen mutual funds that are suitable for your investment goals by comparing the performance of each fund with a benchmark. You must also take into account the related fees and other expenses.

Understand mutual funds taxation

So what happens with mutual funds is that the mutual fund’s company payouts to its shareholders usually happen at the end of each year wherein the capital gains are calculated sans the running expenses. If this belongs a taxable account than you have to pay the appropriate tax but when distribution does not happen, you do not pay any taxes.

Usually, you do not pay taxes on IRA, Roth IRA, and 401(k) earnings. But you will pay tax on dividends. It is therefore wise to know more about the taxation system with regards to mutual funds.

Thus, we see that when you have a clear objective in mind and do the necessary groundwork, mutual funds are an ideal choice for investing for a secure future.

 

Understanding the IPO

The first sale of the Company’s stock to the public is how an Initial Public Offer IPO is termed, and the most important thing to remember that the company starts its journey as a private company, and with the issue of IPO it goes public and offers the shares to the general public and becomes a public company. The process, the understanding the entire way the IPO works out is very valuable for the company in its future fundraising endeavors.

Difference between a Private and Public Company

Once we understand the difference between the private and public company it will be a lot simpler to get in depth of the IPO’s who and Why.

  • the public company are usually listed in the stock exchanges and traded openly in the exchanges, while a private company the shares may not be listed in the stock exchange as it a company founded by a group of individuals with no shares being traded or money raised from the public.
  • in order to go public, the private company must comply with the regulations and approvals to sell in their shares in the stock exchange, the first offer to the public in form of shares is the IPO
  • once the IPO is fully subscribed the company becomes a public company and its shares are traded in the stock exchanges
  • Private companies are closely held and have only a handful of shareholders, and have lesser reporting requirements than a public company which has to keep filing their operation and financial health status in the reporting metrics to the stock exchanges.
  • One advantage of going public is that it is easier to look for funding for the business as they comply with all the rules and regulations and banks have all their audited financials for their assessments.

Process of IPO

  • Once a private company intends to go public it would first require the underwriters to underwrite their shares and most of the investment banks offer this service for a percentage of commission, for committing to sell a percentage of stock in lieu of a fees
  • The application is filed with the market regulator stating the details of the intention to launch the IPO and prepare for a release of the red herring prospectus with details about the company, the revenue, business, and the profits for the previous years for the brief understanding about the management and its shareholders.
  • Sometime after the release of the red herring prospectus, the final IPO is released to the public to subscribe to the share in the company.

 

Financing A Business Through Equity

Any business can finance itself in two ways. These are equity financing and debt financing. Equity financing is where cash is paid into the business. This could either be the cash from the owner or by the investors.

The equity investment gets certified when the company issues shares. The number of shares that one gets is directly proportional to the money that the person invests.

The investor will put cash into the business and buy shares in the hope that the business will grow. This will let him enjoy the share of the profit. The investors earn dividends on the share and can also realize the profits by selling the shares.

Understand equity financing

Equity financing is where the capital raised for the business operation or for a startup by selling shares to the investors in return for the money that the investor has invested into the business.

The investor is entitled to profits in proportional to the number of shares that they hold. The equity investors do not get any monthly payments. Instead, the investors are paid through the revenue that the business earns and they eventually move out of the ownership.

What are the benefits of equity financing?

There are a number of benefits of getting finance through equity. The small businesses that have just started have a small cash flow and they need capital. When they opt for a debt finance method then the company would have to pay monthly repayments and this, in turn, impedes the cash flow.

When the business is financed through equity then the owner of the business is not compelled to any payments and they can use the capital to invest back into the business.

Also, the equity financing method does not require the business owner to provide any collateral or any personal guarantee. Instead, those investors who choose to do equity financing equally accept the risks as does the owner of the business.

In case the business fails then the investor will not get any money back from the owner.

The problem of getting equity financing

The problem with getting someone to finance your business through equity financing is that there is a lot of challenge to sell your business to someone.

Angel investors can offer higher financing but to pitch your business to them and making the investors invest in your business is the real challenge. The other method of getting investment for your business is debt financing.

The role of financial modeling in the growth of a company

A lot of times medium and large corporate outsource analysts, to make financial models for themselves. In a recent heartening trend, a lot of companies are actually setting up a financial analysis cell in the company itself that can facilitate making financial models as and when required.

But why do you think that a financial model needs to be made in the first place? And how does it look like?

A financial analyst uses financial modeling as a process by which he takes in the available information at hand and constructs financial representation using them pertaining to any one or all of the aspect of the given company.

He takes in information from the various processes and operations of the company before calculating them and then presenting them in such a manner that information is graphically but easily comprehensible and recommendations ate made on such models pertaining to the action plan and the strategy that the company needs to adopt in face of any challenge or even for the ensuing year.

Accurate forecasting is a corporation’s dream come true:

The versatility of a financial model is epic. It can either be constructed to summarize a particular event and the consequence of it on the company per se or it can be general in nature. An example of the former is a model constructed to show the positive benefits that will ensue on the corporation in case a single big investor parks his investment in the company and a classic example of the latter is the model created to project the sales of the company in the current quarter in the face of challenges such as limited cash flow and heightened competition.

A model so drawn can give a wealth of information to the analyst who along with the middle and the top management can come out with strategies to boost sales and curb various limitations.

What are the uses of the financial model?

Some of the most vital business processes warrant financial modeling. Here is a list of the main five processes that a company cannot take a decision without drawing up plans and create models to determine the input and the expected output.

  1. Business evaluation as a whole including the net worth of all the assets put together as against the net worth of the project undertaken;
  2. Scenario preparation in case of any strategic planning like a major investment or disinvestment etc;
  3. Calculating the overall cost of the project in the pipeline;
  4. Budgeting decisions with regard to the capital and the cash flow from the organization; and
  5. Allocating resources for the various processes and forecasting profits and sales after deducting the imminent overheads and other costs.

Financial modeling is an indispensable tool in today’s corporate world. It makes decision making quick, easy and empirical. More and more companies are looking at it in a way they did not even acknowledge a few years ago and that we think is a good sign!

Financial Modeling Applications in Finance

Before you do anything, you need to have a plan. You cannot star running before you start walking or even know the direction in which you need to go. Planning is the most important part of completing any task. Execution done according to a well-made plan succeeds whereas even hard work fails when there is no planning.

Explaining the complicated term

Financial modeling can be explained as the model or plan of a real financial state of affairs. The model represents a mathematical calculation, based on the present assets, schemes and future investments connected to a particular project. It has many different connotations. It is a combination of accounting, finance, and mathematics and applies to many users using different tools.

How does it help?

First, the model looks at the history of the company, the various financial decisions made by the company in the past and how they had an impact on its balance sheet and profit and loss record. Its past performance helps to predict a future model and that also helps to provide numerical values to every aspect. You can estimate the value of the company based on this mathematical model.

Applications in Finance

  1. It is the most basic method used by bankers and investment analysts. The model can help them to forecast the financial revenues of a company. Then they can advise their clients, both seller, and buyers, about the investments.
  2. In the same way when all the financial values are carefully represented in a model, then they can determine the risks associated with the fund and it can also predict the future returns to a certain extent.
  3. Any company is rated according to its past financial results and balance sheets, as the performance of the company is calculated based on the financial results. The model helps the analysts to use the history and projected results and then come up with a ranking. This rank is used by people to decide whether to invest in a particular company or not.
  4. Even within a company the financial experts and the top management have to understand the viability of various on-going and future projects. Any plan, even if very ambitious and desired, may not be feasible financially. The company has to be careful about deploying its resources by considering the debt and equity mechanism of every project.
  5. Financial models are also used by the corporate finance teams to understand the real picture of their financial status. Then they can allocate the funds to various projects accordingly.

Last but not the least at the time of selling or buying a company, this model is of extreme importance. These models are important in preparing the past performance reports, debt status, and future revenues. The mathematical component ensures precision and accurate forecasts and that is why it is recommended for use in every company.

The Basics Of Currency Trading

When a particular quotation involves two currencies then it is called a currency pair. You will always find a currency exchange rate in a given currency pair. An International Standards Organization code is assigned to all currencies and these codes denote the currencies that form the pair. A good example would be, EUR/USD that denotes The Euro and The U.S. Dollar.

Base Currency And Counter Currency

The base currency is the first currency in the currency pair and the counter currency or the quote currency is the second. It is a wise idea to know that the value of a base currency always stands as 1. The easiest way to remember this would be to ask yourself, “How many units of the counter currency will 1 unit of the base currency buy?”

How does currency trading take place?

A trader looking to make money in currency trading buys a currency pair while making an assumption that either the price of the base currency will go up in comparison to the quote currency or the exchange rate will go up. simultaneously, a trader who sells a currency pair usually does it with a hope the value of the base currency will decrease in comparison to the quote currency or the value of the quote currency will increase in comparison to the base currency.

Forex trading and currency pairs

In Forex trading, it is usually about buying one of the currency pairs and selling the other. So ideally, if someone is buying a currency pair, he or she will buy the base and sell the quite currency. The base currency is sold at a price known as the bid currency. The base currency is bought at a price known as the ask currency. It is a usual thing to note that the value of the base currency is always lower than the ask currency. This difference in price of the two currencies is the spread that often becomes the commission of the Forex broker.

Which currencies are popular?

The currencies that are high on liquidity and are from politically stable countries are the ones that are most popular. Due to the power and size of the United States Of America, its currency, the U.S. Dollar enjoys the position of the most tradable currency in the world.

If in a particular currency pair, the U.S. Dollar is the base currency and the currency quote rises up then it means that the value of the Dollar has gone up while the other currency has gone down in terms of value.