OTC, or over-the-counter trading, provides chances like the affordable purchase of a new, high-potential company.
In this method, financial instruments like as stocks, bonds, and other securities are exchanged directly between two parties as opposed to on a stock exchange for the general public like the New York Stock Exchange (NYSE) or Nasdaq.
Michael Bertov, the author of The Evergreen Startup, adds that OTC gives you access to high-growth growing businesses, especially startups.
Additionally, as OTC investments often cost less than their public market counterparts, you receive more investment for your money.
What does OTC mean?
They are referred to as dealer markets or networks. Stock exchanges, in contrast, are auction marketplaces. Investors submit offers for stocks after an asking price (the “ask”) is posted, competing with one another.
This indicates that although its stock can be purchased and traded publicly, it is not listed on a significant exchange like the NYSE or Nasdaq. Therefore, these equities are bound by the guidelines and standards set by these exchanges for the listed corporations.
In fact, SEC rules were revised in September 2020 to improve disclosure and investor safety by requiring broker-dealers to refrain from publishing price quotes for a security when up-to-date information about that security is not immediately accessible to the general public.
OTC trading is also typically conducted through a registered broker-dealer. The Financial Industry Regulatory Authority (FINRA) oversees broker-dealers.
What kinds of investments trade OTC?
Since they don’t trade enough shares or their shares don’t sell over a minimum price, many small-company equities that are listed on major exchanges are OTC securities. They trade for less than $5 per share and are frequently referred to as penny stocks.
Other OTC companies are bigger, but they are unable to pay the listing fees that the major exchanges want (or don’t want to). For instance, organisations that meet the requirements can pay up to $167,000 to list on NASDAQ.
In addition to equities and bonds, investments that trade OTC frequently consist of:
Private agreements between two parties known as derivatives are frequently arranged by brokers. These can include forwards, futures, options, or other contracts whose value is determined by the value of an underlying asset, such as a stock.
international money. Every day, the Forex, an over-the-counter currency market, trades more than $6.6 trillion in currencies from various countries.
digital money, such as bitcoin and ethereum.
What are the major OTC markets?
OTC Markets Group is a significant over-the-counter (OTC) network. Depending on your broker, you as an investor will have access to this market. The Grey Market is another option, which we’ll discuss below.
OTC Markets Group
According to their size, share price, and frequency of financial reporting and transparency, over-the-counter equities are categorised into three categories by OTC Markets.
The following is the OTCQB® Venture Market, which is for start-up or growing enterprises and requires a minimum bid price of $0.01.
This category contains shell companies, overseas businesses, penny stocks, and other enterprises that opt not to publish their financial data.
Grey Market
The term “grey market,” sometimes known as “other OTC,” refers to any security that is traded over-the-counter but is not quoted by broker-dealers for a variety of reasons, including a lack of investor interest, a lack of financial information, or a failure to comply with regulatory requirements.
Is it safe to buy OTC stocks?
OTC trading has had a shady reputation. Partly that’s because of the basic way it operates. OTC is a secret negotiation between a buyer and a seller, in contrast to the complete transparency of stock exchanges, where prices are made public.
It is not surprising that OTC markets have been the scene of fraud and illegal activity. Dealing in penny stocks allows for illicit pump and dump schemes, in which a stock is promoted (pumped up).
They genuinely run like “discount” stock exchanges, enforcing regulations, exercising monitoring, and, in the case of OTC Markets, categorising equities according to tiers.
Risks of OTC trading
Aside from fraudulent activity, OTC trading is also fraught with dangers.
Lack of price transparency. As mentioned above, a vendor might hypothetically charge one customer one amount for a security and name a different price to another.
Low liquidity. There isn’t much demand because many OTC equities are barely traded. This makes it challenging to sell them when you want to.
Volatility. OTC securities have a lower trading volume, which could cause sudden price changes.
Instagram is a well-liked social media site that can be an effective tool for business marketing.Make a business account on Instagram, and then promote your company using images, live videos, and hashtags.Use Instagram advertisements to promote your brand while using the platform’s shopping feature to sell your goods.
Only by setting up a company or artist account can you access Instagram’s robust business capabilities. We’ll go over how to set up your Instagram business account and demonstrate how to use the platform’s best capabilities for sales, connections, and engagement.
Candlestick charts are a technical tool that packs data for multiple time frames into single price bars. This makes them more useful than traditional open, high, low, close (OHLC) bars or simple lines that connect the dots of closing prices. Candlesticks build patterns that may predict price direction once completed.
Doji candle
Dojis are a tool used in technical analysis to find patterns in the price of securities. A trading session is known as a “doji” when a security’s open and close are almost equal, like a candlestick on a chart. The Japanese expression “the same thing” is where the word “doji” originates.
Example:
Spinning Top
The spinning top candlestick pattern has the same meaning as the Doji, which stands for market uncertainty.
The true body of a spinning top is larger than a Doji, which is the only structural distinction between the two.
Example:
Disclaimer : The information mentioned above is merely an opinion and should only be treated for educational purposes. If you have any questions or feedback about this article, you can write us back. To reach out, you can use our contact us page.
This is a major issue. You may obtain built-in analytics about your account and its performance by switching to an Instagram business account. You can review the effectiveness of your posts, following activity, and audience analytics.
I’ve heard a lot of people say that personal accounts have a far wider reach than company accounts. This isn’t actually true, at least not right now, according to a thorough investigation. According to the report, the reach for commercial accounts was 6.7%, while the reach for personal accounts was 7%.
Being a good trader depends on a variety of elements, one of which is maintaining the proper mindset. Learn how to enhance your trading psychology to lessen the impact of emotions and biases when you are trading.
What is Trading Psychology?
The term “trading psychology” describes a trader’s frame of mind while they are actively trading. It might decide how much of a profit they are able to secure or it can explain why a trader suffered significant losses.
In trading psychology, innate human traits like biases and emotions are crucial. The major goal of studying trade psychology is to increase one’s awareness of the different dangers linked to bad psychological traits and to cultivate more positive traits. Trading psychology experts typically do not operate out of bias or emotion. Therefore, they have a better possibility of making money while trading or, at the very least, of limiting their losses.
Trading psychology is different for every trader, as it is influenced by each individual’s own emotions and pre-determined biases. Some of the emotions which impact trading are:
Happiness
Impatience
Anger
Fear
Pride
How to improve your Trading Psychology
Knowing your own emotions, prejudices, and personality factors will make it easier for you to improve your trading psychology. Once you are aware of these, you may create a trading strategy that takes them into consideration in an effort to lessen their potential impact on your choice-making.
For instance, if you naturally possess confidence, you can discover that overconfidence and pride impair your ability to make decisions. For instance, instead of taking a slight loss on your trading account, you can choose to let losses accumulate in the hopes that the market will turn around. Greater losses or the eventual demise of your trading account could result from this.
Stops are a means to limit your losses and decide when to close a particular trade before you initiate the position, which can be used to counteract this. By doing this, you have become mindful of your own prejudices and emotions because you have chosen to take action against them rather than acting on them.
How does Bias affect Trading?
Biases have an impact on trade since they are, by definition, a decidedly biased preference for one product over another. They may therefore impair your judgement and drive you to act on instinct rather than logical fundamental or technical analysis, which can make your decision-making difficult when you are trading.
This is because trading bias means that you could be more likely to trade an asset that you have had past success on, or to avoid an asset on which you have incurred a historic loss. It is important that traders are aware of their conscious biases as this can help them overcome them and approach the markets with a more rational and calculated mindset.
There are five main types of bias:
Representative bias means that you will stick to or be more inclined to replicate previously successful trades. You might do this without carrying out analysis for every trade of this type because in the past, it has paid off for you. However, even if two trades seem similar, it is important to approach every trade on its own merits rather than on historical success
Negativity bias makes you more inclined to only look at the negative side of a trade, rather than acknowledging what went right. This could mean that you scrap an entire strategy when, in fact, you might only have needed to tweak it slightly to turn a profit
Status quo bias means that you will continue to use old strategies or trades rather than exploring new ones – you will stick to the status quo. The danger arises when you fail to assess whether those old methods are still viable in the current market
Confirmation bias is when you seek out, or give greater weight to, news and analysis that confirms your pre-formulated ideas. It may also be that you don’t seek out, or disregard, information which disproves your convictions
Gambler’s fallacy is where you assume that because an asset has been increasing, it will continue to rise. There is no reason to believe that it should, similar to how there is no reason that a coin should land tails side up – rather than heads – after doing so a few times in a row.
The ability to recognize your personality traits early on is one of the keys to establishing good trading psychology. You must be completely honest with yourself and acknowledge any impulsive inclinations or a propensity for irrational behavior’s.
If this is the case, it is critical to keep these characteristics in check when you are actively trading as they may drive you to make snap judgements that lack sufficient analytical support. However, it’s also crucial to utilize your unique strengths.
Recognizing your biases, as described above, is just as crucial as recognizing your personality traits and emotions. Although biases are a natural part of human nature, you should be conscious of them before entering or exiting any deals.
2 Develop and follow a trading plan
A trading strategy is essential to helping you reach your objectives. The blueprint for your trading, a trading plan should include your time commitments, available trading capital, risk-to-reward ratio, and a trading method you are at ease with.
For instance, a trading plan might specify that you’ll dedicate an hour to trading every morning and evening and that you won’t risk more than 2% of your portfolio’s entire worth on any one trade. As the guidelines for entering or closing a trade are already stated for you, this can help you minimize losses and limit the impact of emotions on your trading.
Trading plans should also take into account individual factors that could affect your trading discipline such as your emotions, biases and personality traits. If you make clear what your biases are before you start trading, you might be less inclined to act on them.
3 Have patience
It is essential that you have patience with your positions because patience is a fundamental component of discipline. When you make decisions based on emotions like fear, you run the risk of closing a position too soon and losing money. Have faith in your analysis, and practice patience and self-control. Similarly, it is crucial to exercise patience when trying to enter a trade and to do so at the correct time rather than immediately.
For instance, you could want to wait until right before a Bank of England (BoE) announcement if you wanted to speculate on particular GBP currency pairs like EUR/GBP or GBP/USD because there is typically more volatility at this time.
4 Be adaptive
While it is important to have a trading plan, remember that no two days on the markets are the same, and winning streaks don’t exist in trading. With this in mind, you should become comfortable in assessing how the markets are different from day to day and adapt accordingly.
If there is more volatility on one day compared to the day before and the markets are moving particularly unpredictably, you may decide to put your trading activity on hold until you’re sure you understand what is happening. Being adaptive can help to limit your emotions and rule out representative and status quo biases, enabling you to assess each situation on its own merits – ensuring that you are pragmatic during your time on the markets.
5 Take a break after a loss
Sometimes, rather than immediately entering another trade in an effort to make up some of your losses, it is preferable to take a brief break from your trading account to collect your thoughts and compose yourself.
The most successful traders are those that accept losses and use them as teaching experiences. Before returning to their platform, they usually take a few minutes to themselves. During this time, they evaluate what went wrong with that specific trade in the hopes of learning from it so they won’t make the same mistake again.
6 Accept your winnings
Quitting when you’re ahead and taking your winnings is just as crucial as taking a break after a setback. You might feel invincible after a run of victories or one particularly sizable victory, at which point you might move into another position and try to repeat the process.
Since today is “your day” on the markets, you can even initiate a string of fresh positions in the hope that none of them would lose money. Due to this, you can end up taking unwarranted risks or diversifying your portfolio too quickly without first researching each market.
7 Keep a trading log
You can keep track of all your wins and losses, as well as the feelings you had during each trade, by keeping a trading journal. As a result, it represents the conclusion of all the earlier ideas discussed in this essay. You can use it to determine whether or not the decisions you made at any given time were wise ones.
A trading journal can be used, for example, to note the moment you decided to reduce your losses and the final price the asset reached. You can determine if you made the proper choice or not by doing this.
Trading psychology summed up
Trading psychology is all about your mindset during your time on the markets and it can inform an explanation of your profits or losses
It is important for you to be aware of your own weaknesses and biases before entering a position but, equally, it is important that you understand your own strengths
Learn from your wins as much as your losses, but remember that winning streaks don’t exist in trading and that each position should be assessed on its own merits
Knowing when to take a profit or cut a loss can be the difference between a good day and a bad day on the markets
Keep a trading log as a record for you to see what worked, what didn’t work, and whether your decision at the time was correct in hindsight. Use this information to improve your decision making in the future.
Disclaimer : The information mentioned above is merely an opinion and should only be treated for educational purposes. If you have any questions or feedback about this article, you can write us back. To reach out, you can use our contact us page
Candlestick charts are a technical tool that packs data for multiple time frames into single price bars. This makes them more useful than traditional open, high, low, close (OHLC) bars or simple lines that connect the dots of closing prices. Candlesticks build patterns that may predict price direction once completed. Proper color coding adds depth to this colorful technical tool, which dates back to 18th century Japanese rice traders.
Falling Three Methods
The “falling three methods” is a five-candle bearish continuation pattern that denotes a break in the current downward trend but not a turn around.
The candlestick pattern consists of three shorter counter-trend candlesticks in the Centre and two longer downtrend candlestick charts at the beginning and finish of the pattern.
Example:
Rising Three Methods:
The “rising three methods” is a bullish, five-candle continuation pattern that denotes a break in the current uptrend without a trend reversal.
Two lengthy candlesticks in the direction of the trend, in this example an uptrend, make up the candlestick pattern. three shorter counter-trend candlesticks in the middle, with two longer candlesticks at the start and end.
Example:
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A technical technique known as a candlestick chart condenses data from many time frames into a single price bar. They are therefore more beneficial than conventional open, high, low, close (OHLC) bars or straightforward lines that connect closing price dots. Candlesticks create patterns that, when finished, may be used to forecast price movement.
The Morning Star
After a slump, the Morning Star multiple candlestick chart pattern forms, signaling a bullish reversal.
It consists of three candlesticks: a bearish candle in the first, a Doji in the second, and a bullish candle in the third.
The first candle indicates that the downward trend is still in effect. A Doji on the second candle suggests market uncertainty. The market’s bulls are back, and a reversal will occur, according to the third bullish candle.
The true bodies of the first and third candles should be entirely clear of the second candle.
Example:
The Evening Star
The numerous candlestick pattern known as the Evening Star is formed after an uptrend and indicates a negative reversal.
It consists of three candlesticks: a bullish candle, a doji candle, and a bearish candle.
The first candle represents the uptrend continuing, the second candle is a Doji and represents market uncertainty, and the third bearish candle represents the return of the bears and the impending reversal.
The true bodies of the first and third candles should be entirely clear of the second candle.
Example:
Disclaimer : The information mentioned above is merely an opinion and should only be treated for educational purposes. If you have any questions or feedback about this article, you can write us back. To reach out, you can use our contact us page.Support@learningsharks.in
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Each share of stock in a publicly traded corporation, or one whose stock is exchanged on markets like the New York Stock Exchange and the Nasdaq, has a price. An investor owns a portion of the business for each share they purchase.
The price per share of a stock is mostly determined by supply and demand. The stock price often increases if demand for a constrained number of shares exceeds supply. Additionally, the stock price normally declines if supply exceeds demand.
Setting stock prices
William Haight, a director at Capital Choice Financial Group in Phoenix, said that the amount of a stock and how many people want it influence its price. “The price of a stock will increase if more people desire to acquire it. However, the price will decrease if more people decide to sell.
On the other hand, let’s take a look at RXYZ Co., a fictitious healthcare organisation. The stock might be trading at $45 per share on Monday. The next day, a Wall Street analyst publishes a negative report on the healthcare industry, which prompts some investors to sell their shares in RXYZ and causes the stock price to fall to $40 a share. That represents an 11% drop in one day.
What factors affect the share prices of listed companies?
Stock price variations are caused by a variety of factors, not just supply and demand. In actuality, a number of factors may combine to cause up and down swings in price.
Company activity
According to Haight, his increased demand may cause the stock price to climb. In contrast, if RXYZ reports poor financial results for the third quarter, investors may lose faith in the company and sell some or all of their RXYZ shares.
In addition, the following corporate events could cause a rise or fall in the stock price:
grant of a patent for a novel and exciting commodity or service.
international expansion’s launch.
unexpected demise of the CEO.
a significant client is lost.
The state of the economy
Investors may feel more optimistic about the path of the economy, for instance, if the U.S. Bureau of Labour Statistics releases data showing that the unemployment rate decreased and the nation added a significant number of jobs the previous month.
They might therefore be more motivated to invest in the stock market, which would raise the price of some companies’ shares. Contrarily, poor employment and unemployment data may frighten some investors, triggering a stock sell-off that lowers share prices.
Inflation
As a result, investors may decide to sell some of their shares if the inflation rate is rising and they start to feel uneasy about the state of the economy. Investors may become more optimistic about the economy and increase their stock-buying activities, however, if the rate of inflation is declining.
Furthermore, a company’s financial performance could be negatively impacted by excessive inflation because purchasing goods and services will cost more. A company’s profits may be reduced by an increase in costs, which would deter investors and cause the stock price to fall.
Interest rates
The price that businesses pay to borrow money is significantly influenced by interest rates. High interest rates may increase the cost of company borrowing. As a result, company earnings might decline, which would lower stock prices overall.
In addition, stocks may not be as appealing as CDs, bonds, and other assets whose yields benefit from increased interest rates due to the higher interest rates on their stock market. Stock prices would decline if investors sold out.
Consumer spending
The Congressional Research Service asserts that “consumer spending is a key driver of short-run economic growth in the U.S. economy.”
The same holds true for company sales, earnings, and stock prices, which can all suffer from sluggish consumer spending.
World events
In 20 significant geopolitical crises, such as the attack on Pearl Harbour, President John F. Kennedy’s assassination, and the 9/11 terrorist attacks, between 1941 and 2020, the S&P 500 stock index declined on average by 5%, according to data from LPL Research.
According to IMF data, geopolitical risks between 1985 and 2020 caused a drop in stock returns ranging from 10.53% to 42.14%, which is consistent with this finding.
Major investors
Haigh remarked that changes in stock prices might be influenced by the behaviour of big institutional investors like mutual funds and hedge funds.These investors possess a lot of shares, so their buying and selling activities can have a big impact on stock prices, he said.
Why do stock prices change every second?
Investors may decide to purchase or sell a company’s stock when they learn new information about it, according to Haight. “The stock’s price increases if more individuals purchase it. The stock’s price will decrease if more individuals sell it.
Lean on professional advice
Your broker’s financial advisor can assist you if you’re unsure about what’s occurring in the stock market or whether to buy or sell shares. These experts can help guide you in the right way by attentively monitoring the ups and downs of the stock market.
Stock chart patterns often signal transitions between rising and falling trends. A price pattern is a recognizable configuration of price movement identified using a series of trendlines and/or curves.
When a price pattern signals a change in trend direction, it is known as a reversal pattern; a continuation pattern occurs when the trend continues in its existing direction following a brief pause. There are many patterns used by traders.
Hammer
At the end of a downtrend, the single candlestick pattern known as a hammer is formed, which denotes a bullish turn.
This candle’s genuine body, which is little and near the top, has a lower shadow that ought to be twice as large. There is minimal to no top shadow in this candlestick chart pattern.
The psychological explanation for this candle formation is that as soon as prices opened, sellers pushed them lower.
As soon as buyers entered the market, prices shot up and the trading session ended with prices higher than they had started.
Example:
Inverted Hammer
At the bottom of the downtrend, an Inverted Hammer forms, signaling a bullish reversal.
The actual body of this candlestick is at the very end, and its upper shadow is quite long. The Hammer Candlestick pattern is the opposite of this motif.
When the starting and closing prices are close to one another and the upper shadow is greater than double the true body, this pattern is generated.
Example:
Disclaimer : The information mentioned above is merely an opinion and should only be treated for educational purposes. If you have any questions or feedback about this article, you can write us back. To reach out, you can use our contact us page Support@learningsharks.in
Stock chart patterns often signal transitions between rising and falling trends. A price pattern is a recognizable configuration of price movement identified using a series of trendlines and/or curves.
When a price pattern signals a change in trend direction, it is known as a reversal pattern; a continuation pattern occurs when the trend continues in its existing direction following a brief pause. There are many patterns used by traders.
Bullish Engulfing
After a decline, the multiple candlestick chart pattern known as “Bullish Engulfing” forms, signaling a bullish turnaround.
Two candlesticks are used to make it, with the second candlestick enveloping the first. The decline is expected to continue as the first candle is negative.
The first candle is entirely engulfed by the second candlestick, which indicates that the bulls have returned to the market.
Example:
Bearish Engulfing
A numerous candlestick pattern called a “bearish engulfing” forms after an uptrend and denotes a bearish reversal.
Two candlesticks are used to make it, with the second candlestick enveloping the first. The fact that the first candle is bullish suggests that the uptrend will continue.
The lengthy bearish candle on the second candlestick chart totally engulfs the first candle, signaling the return of the bears to the market.
Example:
Disclaimer : The information mentioned above is merely an opinion and should only be treated for educational purposes. If you have any questions or feedback about this article, you can write us back. To reach out, you can use our contact us page Support@learningsharks.in
