Uber Is Coming

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It’s that time again. With the rarity of such events, this is surely one to watch.

Ride-hailing giant Uber is expected to conduct its Initial Public Offering (IPO) this Friday – May 10th.

The company’s valuation is predicted to reach nearly $90 billion, with share price ranges likely to be between $44 and $50 per share. This would make it one of the biggest IPOs ever and surely in recent years, since Alibaba raised just over $25 billion in 2014 at $68 per share, shooting their valuation up in the range of $170 billion at the time.

As always, Trading 212 will be sure to offer Uber for both CFD and Invest accounts as soon as possible, once its debut on Wall Street is a fact.

 

Risk warning: Investments can fall and rise. Your capital may be at risk.

We’re Now At 300,000

300subs

Three hundred thousand.

What is that? 300,000 of you have now chosen to subscribe to our YouTube channel, which means that we’re now roughly the size of Kingston. Or that we could fill the Olympic Stadium in London about 5 times, or more than 720 Boeing 747 planes.. it’s clear where we’re headed.

Ever since we uploaded our first video five years ago, our goal has remained the same – to provide quality content, that can help both experienced, as well as beginner traders. Are you starting just now, and still learning about the different types of graphics and instruments? Or perhaps you’ve been trading for the past few years? There is a video for you, that can help you grow and hone your skills.

Our YouTube community has now become a great place, where you can find other like-minded individuals and have an open discussion on the newest trends in the stock market, or simply ask a question and have it answered by us right then and there.

We’re thankful for all 300,000 of you, who have joined us over the past five years and would like to welcome all of you, who are yet to do that. Here’s to the next five.

Explaining How Star Wars and Avengers Impact Disney’s Stock Performance

Explaining How Star Wars and Avengers Impact Disney’s Stock Performance

The Force Awakens and Age of Ultron are expected to easily break the one billion barrier

With Avengers: Age of Ultron coming out last week and the high expectations for the sequel to the original trilogy – Star Wars: The Force Awakens, traders are wondering how their success, or lack of it, will impact the stock price of one of the entertainment giants – Walt Disney Co.

Avengers is looking to make between $1-1.5 bln in revenue, the the bar is set higher for the Force Awakens, despite some negative feelings created by the last three installments in the franchise. Some even expect the movie to surpass the current record holder Avatar, that has grossed approximately $2.7 bln.

The sums themselves aren’t actually that big when you compare them with the overall company performance. 75% of Disney’s revenue comes from its media division, where the ESPN network and ABC are the main cash cows. But the remaining 25% are what drive emotion trading.

Not only Star Wars (purchased with the acquisition of Lucasfilm for $4 bln in 2012), but the Marvel Universe and other hits like Frozen and Pixar’s Big Hero Six, bring in some serious cash. Even more importantly, they provide revenue streams for many more years to come (for more on the method of creating films at a set price and managing the duds among them you can read here). These come from three main sources:

Amusement parks and rides – the potential for creating something that attracts families to visit theme parks and immerse themselves in the atmosphere of a movie, interact with its heroes is what makes the difference between spending hundreds to thousands on a family trip and tickets.

Merchandise – Toys are a high margin business, but the challenge there is to find a scalable line that has enough appeal to warrant mass production. George Lucas’ famous deal to keep ownership of Star Wars toys before the first movie came out, is one of the main sources of his personal wealth

Cross media products – With more channels popping up where spinoffs and “by-products” can be promoted, this revenue stream has increased its importance. 3D animated cartoons over Cartoon Network and now NETFLIX, as well as TV series like The Flash, Green Arrow and Daredevil are turning into steadier and more predictable products. They can even boost the previous two sources.

While expectations for this part of the business are, let’s say optimistic, things aren’t so rosy for the rest. The media business is facing some new threats from the development of cable tv distribution and how it’s sold to customers, mainly in the US. With TV packages sold in bundles the consumers pay a certain amount in order to get the most desired content, but they get the feeling of overspending for channels that don’t necessarily watch.

For operators this is a good deal, as there are still clients that expand their viewership and get exposed to more advertising. But in an age of on-demand viewing the math isn’t adding up.

Verizon, another company available in Trading 212, recently announced an “unbundling” of how they will be selling viewing packages, responding to consumer pressure. Disney are currently suing them to stall this development, as they pitch their whole media package to advertisers and create content that can be used (and recycled) across multiple platforms, but it seems like the tide has turned.

The main impact of movies, and especially such a large universe like Star Wars, is that it promises to attract the money of an extremely large audience who will be making purchases based on emotion. Buying based on emotion is what sells for larger margins and looks good on a balance sheet. It has its risks though – the first hint of disappointment among fans of either movie might limit the force’s impact on trader’s sentiment. But come December 18th, we sense a strong presence of moviegoers.

Cyclical and non-cyclical stocks and ETF’s – how to trade them?

Cyclical and non-cyclical stocks and ETF’s – how to trade them 1

Cyclical and non-cyclical stocks and ETF’s – how to trade them 1

We delve deep into one of the most popular stock and index filters

Two terms that frequently surface when talking about stocks and funds are “cyclical” and “non-cyclical”. But what do they mean exactly – when do these cycles happen, what governs them and more importantly, how can this help a trader make a decision on what and when to buy or sell?

Lets start with a couple of definitions. When a cycle is mentioned it means an economic one. One of the inherent traits of capitalism is that it never develops in a constant upward movement, but rather has periods of progress and regress due to its built in inefficiencies (although some argue that having periods when the going gets tough makes things better in the long run).

When a company stock, or a country, or a fund for a sector is referred to as cyclical, then that would mean their performance is connected with the larger economic cycle in the respective country, or even the global economy. If they are mentioned as non-cyclical then they would be considered as an instrument whose performance is largely independent of what is going on in the respective economy.

Examples of cyclical sectors are those business areas for which people spend when they have more disposable income. The amount of this money in the population is usually in a correlation with large economic indicators like GDP, inflation, employment and manufacturing. A prime example of such sectors are tourism and cars. You won’t go on an expensive vacation if you’re barely making your rent and meeting your food expenses and you won’t buy a new car if the old one still gets you from A to B. But other sectors and companies depend solely on themselves when it comes to performance.

A prime example of a non-cyclical sector (occasionally referred to as “defensive”) is healthcare. A company like the British Astra Zeneca is shielded from the ups and downs of the local economy, as it produces medicine that is of vital necessity for its end-clients. This is the main differentiator – companies and sectors that produce things of vital need for our existence like pharmaceuticals, utility and food companies are non-cyclical, while those who make goods and services who are upgrades on our basic needs – entertainment, luxury cars, chocolate, etc. – are cyclical.

Cyclical and non-cyclical stocks and ETF’s – how to trade them 2

Country ETF’s are another great addition to our instrument range. They provide a straightforward way to trade the economic fortunes of countries whose largest indexes are either less developed or are harder to access. Contrary to what some might believe, these ETFs can be used for short-term trading. They are connected with the largest global economies and react in different ways to the key announcements coming for example from the Fed and ECB. Additionally, most of them have their own developments that generate sharper moves, examples being our ETFs for China, Canada and Korea.

Let’s see how researching a German auto company in terms of it being cyclical might play out. You check out their website, their products and like what you see. Then you see the stock price – it’s stuck in a range and is currently moving downward. What are the reasons for this, the new model is excellent and sales are great?

Another bit of research is needed. Checking the German and European economic indicators (you can go to our calendar for these), as well as the level of the euro, are factors that influence the activities of large companies, regardless of their own innovation, efficiency and talent. You could say that this German automaker is too large for its own good, but the markets don’t care about that. They care about the bottom line.

These other factors, announced regularly, are influences on cyclicals. They permeate and influence the specific results and performance of such companies, proving the connectivity of the global economy. Currencies, interest rates, inflation, big shifts in how companies work, coupled with technological advances are the context in which they exist.

Think of these stocks and ETFs as ships in an ocean. Some are strong and fast, but sometimes they have to pass through a storm. Others can just wait it out.

Setting Targets in Trading

Setting Targets in Trading 1

Setting Targets in Trading 1

How to arrange your trading experience and get the most out of your efforts

Why do people trade? To make a profit? To learn something new? To compete against others? All can be true with making a profit the one present among them, but reaching that goal is actually more of a process than a final goal. Just like the cliche, it’s the journey that matters, not the destination.

To make this journey more sensible and worthwhile, a small number of objectives need to be set. The first part of the process is to identify what other targets beside profits make sense and are realistic. These are the building blocks of trading and no trader can mount a serious challenge on the markets without them.

It starts with something easy and straightforward – understanding what you are seeing and doing. The first part of this consists of the terminology involved in trading. This should be the initial target you set your sights on – understanding the most frequently used terms and concepts involved in trading. Without this you are at a disadvantage, even if you do manage to achieve a good win ratio by guessing price directions. By not knowing things like stop loss, take profit and margins, you’re limiting yourself in terms of what you can do. Our advice is to go through the tutorial and stop and look up anything new that you come across, this way placing it in context.

Next are the tools you have at your disposal. Price alerts, trailing stops, sentiment indicators, technical analysis tools – all of them have a role to play and its up to you to choose how much emphasis they get. Their mix forms your trading behaviour and style, but making choices about them can only be done by understanding what they do.

One example of such a tool would be the news feed in the Trading 212 PRO platform – it provides information on what is happening in terms of planned and unplanned news events that influence the markets. A purely technical trader wouldn’t bother with that as s/he relies only on indicators to determine entry and exit points, but for anyone trading shorter timeframes, they would definitely add something to the picture. It’s up to you to test both and find the exact predictability you feel they provide.

Setting Targets in Trading 2

A more direct example of a target has to do with something many traders overlook – the size of their deposit. Although trading on margin gives you the chance to trade volumes larger than what you’ve put into your account, that doesn’t mean you should expect to double it every day with genius trades. Just for comparison – until several years ago, banks offered interest rates on deposits of around 3-4% annually and that was considered a nice return, as long as inflation was lower than that level. Successful hedge funds bang the drum if they manage anything above 20-30%.

Of course an individual investor can turn over their deposit many more times and make “sell” positions far more freely than these institutions, respectively the potential for profits is far greater, but so is the risk. So this should be one of the first things you do – set a target for yourself and risk according to your deposit. Compounding profits and increasing the room for error is what trading is all about, not a constant 100% win ratio.

The next target you should try and formulate is the number of trades you’ll be making. This is an important component and one that is closely connected with your trading system if you choose to use one. Depending on the time and effort you can devote to trading, you should predetermine either a number or range of trades you’ll be making per day, week or month. The reason for this is that overtrading is a risk, especially if you start winning or losing more than expected. If the conditions that seem suitable come around more often, then maybe something was wrong with your initial calculations.

Another target is to monitor your time and efforts. Trading is much more like a profession than many people think. Although powerful mobile apps and online tools let you perform analysis that previously took hours of pouring over data, in our fast-paced society time has turned into a scarce commodity. For someone who has a job or other main activity beside trading, a reasonable plan of how much time you’ll spend is something to prepare in advance so that you don’t start putting pressure on yourself while trading (and while resting). Pressure leads to stress, stress leads to mistakes on and off the trading charts.

By making choices about these targets you will, in the end, form your own trading style. It will be adjusted for your own risk tolerance, the time you have available, your deposit, etc. If at some point you have more time or you’ve found a better system or instrument, you can rinse and repeat with every change you try out. In any case you should always lay the wide foundations of knowledge before thinking of the towers of success.