Educational articles

What is momentum trading?

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Momentum trading is a financial trading strategy based on the idea that assets which have shown strong price movements in one direction (either up or down) will continue to move in that direction for some time. This approach relies on the persistence of market trends and the psychological and behavioural tendencies of market participants. Momentum traders seek to capitalise on these trends by entering positions that align with the prevailing direction of price movement—buying assets that are rising and selling …

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Why small caps have been rallying?

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The recent rally in small-cap stocks can be attributed to several key factors, many of which align with the broader macroeconomic and market trends we’ve been observing over the past few months. Here are some possible reasons for the recent small-cap rally: 1.Economic Recovery/Expansion: Growth Potential: Small-cap stocks typically represent younger, smaller companies with greater growth potential. When the economy is expanding or recovering, these companies tend to outperform their larger counterparts due to their ability to scale faster. Increased …

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8 key drivers of the rally in gold stocks

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Gold stocks have been doing well lately due to a combination of macro factors, market psychology, and industry‑specific dynamics. Below are the key drivers of the rally in the gold stocks. 1. Rising gold price / safe‑haven demand Gold itself has hit record highs in 2025, driven by inflation worries, geopolitical risk, and monetary policy uncertainty. As gold becomes more attractive, mining and exploration companies benefit disproportionately because of their leveraged exposure to gold prices. 2.Falling real interest rates / …

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Why are resources not buy and hold stocks?

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Resources — meaning companies in sectors like mining and other commodities — are generally not considered buy-and-hold stocks for a few key reasons: 1.Cyclicality and Earnings Volatility Resource companies are deeply tied to commodity cycles, which are naturally volatile and influenced by global supply and demand dynamics. These cycles are often boom and bust: When demand is high (e.g., economic expansion), prices rise, and resource companies become very profitable. When demand softens or supply increases, prices fall, and profits evaporate …

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Why do growth stocks do well with lower interest rates?

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Growth stocks do well in lower interest rate environments because their future earnings are worth more today when discounted at a lower rate, making their valuations rise. Additionally, lower borrowing costs and greater investor appetite for risk also benefit these companies. 1.Valuation Mechanics: Discounted Cash Flow (DCF) Growth stocks — like those in tech or biotech — are priced largely based on their future earnings potential, not what they earn today. Here’s how it works: Analysts use a Discounted Cash …

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