Educational articles

What does a toppy market mean?

The term “toppy” is frequently used by financial journalists to convey a market which seems to be trading at its high. In this article we talk about what a toppy market it and the strategies that can be implemented to reduce risk in this kind of market. Definition A toppy market occurs when the market has hit a level where market looks like it can’t extend from. There may be market sentiment that there is an asset bubble forming. Investors …

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Top 5 portfolio strategies

There are different types of strategies that investors can apply to their share portfolio. These are the 5 most common: 1.Growth Portfolio This strategy is appropriate for investors with varying risk profiles, where the levels of growth can be adjusted to the individual. Stocks selected for this portfolio often have a high beta. This means that they move more than the market. These types of stocks can generate a higher return than the market but can also generate a higher …

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What is the optimal diversification for your portfolio?

Diversification is a strategy that investors may use to reduce risk in their portfolio. This is achieved by holding stocks in different sectors and different market caps.  However, you can overdiversify and this can affect the performance of the portfolio. In this article we talk about the dangers of overdiversification and what the optimal number of shares is for a portfolio. Optimal Number of Shares for Diversification Twenty stocks is the optimal number to have in a share portfolio. Your …

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What is the difference between exchanged traded markets and over the counter markets?

The terms exchange traded and over the counter markets (OTC) are used frequently in the financial world but what do they both mean? Exchange traded market In an exchange traded market, there is an intermediary which acts as centralized organization. They can link up buyers and sellers of a product. Contracts are be standardized and there are rules and regulations for trading. Exchange traded instruments are highly liquid so it makes it easier for investors to buy and sell their …

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What is swing trading?

Swing trading is a short-term trading strategy where traders enter and exit trades to make a profit within days or weeks. This strategy mainly uses technical analysis to identify bullish market movements. Technical analysis is mainly used to identify entry and exit points in the trade. Swing traders are anticipating the stock to move in a certain direction and look to position themselves and profit on that expected move. Strategies for swing trading Some of the technical strategies to help …

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