Technical Analysis
To make investment decisions and analyze securities, methods that fall into two very broad categories are used - the technical and fundamental analysis. While the fundamental analysis examines the characteristics of a company to establish its value, the technical analysis adopts a different approach. It does not concern itself with the value of a commodity or a company. The price movement of the market is the only matter that interest the technicians.
Technical analysis just studies the demand and the supply in a market, attempting to determine what trends will continue in the future. By studying the market itself, the technical analysis attempts to understand the market trends, not its components. Understanding the benefits and the limitations of a technical analysis gives you a set of skills and tools, enabling you to become a better investor or trader.
While there are known to exist many investment styles on the fundamental side, many different types of technical traders exist, too.
Some employ technical indicators, others oscillators or chart patterns, but most use a combination of all. What separates the technical analysis from the rest is the exclusive use of volume data and historical price. Technical analysis does not concern itself with the information such as the stock undervaluation, for example. The point that is taken into account is the past trading data of the security and the type of information it can provide about the future movement of the security.
The assumptions of the technical analysis are based on:
1. Everything is discounted by the market.
2. Price moves in trends.
3. History repeats itself.
For any security that has historical trading data, the technical analysis may be applied. Futures, stocks, fixed income securities, commodities, and Forex are included here. Most of all, technical analysis is used with Forex and commodities for which traders are the predominant participants.
http://en.wikipedia.org/wiki/Technical_analysis
Trader
In finance, individuals who buy and sell financial instruments such as bonds, stocks, and derivatives are called traders. Brokers, for example, are just executing trader’s instructions so they are not considered to be traders.
Traders work in corporations and financial institutions or trade as individuals. They trade on stock, commodity, or derivative markets. In finance, there are several categories of traders:
- Stock traders are those firms or individuals who trade stocks on the stock markets. Short term price instability is what they try to profit from. They are professionals and may be part-time or full investors/traders, often maintaining other professions as well.
- The day trader works for a financial institution and is often referred to as an institutional day trader. He has obvious advantages over the other types of traders due to his access to more equipment, tools, resources, capital, and fresh inflows of funds, allowing him to trade continuously on the market.
- A trader who executes four or more day trades in five business days will be referred to as a Pattern day trader by the Securities and Exchange Commission. Special restrictions and requirements are applied when the trader is exposed to the intraday risks and the danger of day trading.
- Swing trading is a style of trading in which an attempt to capture the gains in stock is made within four days. The trader must act quickly in order to find stock with excellent potential in a short amount of time. The stocks must have short-term price momentum.
- A rogue trader is an employee of an organization who makes unauthorized transactions on behalf of his employer. He may be conducting a criminal act because as an employee of the organization, he executes transactions without its permission. Perhaps, the most famous rogue trader in history is Nick Leeson, whose activities bankrupted the Barings Bank in 1995.
Treasury Bill
Treasury bills are the money market securities that are most marketable. Their simplicity makes them quite popular. The way the U.S. government raises money from the public is precisely through treasury bills.
T-bills are securities that are short-term and mature within one year or less from the day of their issue. Typically, this type of security has maturity of three months, six months, or one year. For this reason, the purchase price smallest than their par value. The full par value is paid to the holder by the government at the date of their maturity. The received interest is the difference between the security’s purchase price and the amount that is received at maturity. A 90 day T-bill purchased at $9800 will, for example, earn the investor $200, if he hold it until maturity. Coupon bonds are different because the interest is paid on a semi-annual basis.
Treasury bills are issued at auctions through a competitive bidding process. The investor must submit a bid in order to buy a T-bill. It must be prepared in a competitive or non-competitive manner. One will receive the full amount of the security in a non-competitive bidding at the return, determined by the auction. The return that one desires to receive must be specified in a competitive bidding. One may not receive any securities if the specified return of the investor is too high.
The T-Bills are popular mainly because they are affordable money market instruments for the individual investors. They are normally issued in denominations raging from $100 to $1 million. Another good feature is that treasury bills are known to be the safest instrument. This is naturally due to the U.S. government backing. They are, in fact, risk free and exempt from the local and state taxes.
The only negative side of the treasury bills is that the return is not as high as the treasuries are among the safest instruments. Higher interest rates are given by the certificates of deposit and the corporate bonds.
http://en.wikipedia.org/wiki/United_States_Treasury_security
To make investment decisions and analyze securities, methods that fall into two very broad categories are used - the technical and fundamental analysis. While the fundamental analysis examines the characteristics of a company to establish its value, the technical analysis adopts a different approach. It does not concern itself with the value of a commodity or a company. The price movement of the market is the only matter that interest the technicians.
Technical analysis just studies the demand and the supply in a market, attempting to determine what trends will continue in the future. By studying the market itself, the technical analysis attempts to understand the market trends, not its components. Understanding the benefits and the limitations of a technical analysis gives you a set of skills and tools, enabling you to become a better investor or trader.
While there are known to exist many investment styles on the fundamental side, many different types of technical traders exist, too.
Some employ technical indicators, others oscillators or chart patterns, but most use a combination of all. What separates the technical analysis from the rest is the exclusive use of volume data and historical price. Technical analysis does not concern itself with the information such as the stock undervaluation, for example. The point that is taken into account is the past trading data of the security and the type of information it can provide about the future movement of the security.
The assumptions of the technical analysis are based on:
1. Everything is discounted by the market.
2. Price moves in trends.
3. History repeats itself.
For any security that has historical trading data, the technical analysis may be applied. Futures, stocks, fixed income securities, commodities, and Forex are included here. Most of all, technical analysis is used with Forex and commodities for which traders are the predominant participants.
http://en.wikipedia.org/wiki/Technical_analysis
Trader
In finance, individuals who buy and sell financial instruments such as bonds, stocks, and derivatives are called traders. Brokers, for example, are just executing trader’s instructions so they are not considered to be traders.
Traders work in corporations and financial institutions or trade as individuals. They trade on stock, commodity, or derivative markets. In finance, there are several categories of traders:
- Stock traders are those firms or individuals who trade stocks on the stock markets. Short term price instability is what they try to profit from. They are professionals and may be part-time or full investors/traders, often maintaining other professions as well.
- The day trader works for a financial institution and is often referred to as an institutional day trader. He has obvious advantages over the other types of traders due to his access to more equipment, tools, resources, capital, and fresh inflows of funds, allowing him to trade continuously on the market.
- A trader who executes four or more day trades in five business days will be referred to as a Pattern day trader by the Securities and Exchange Commission. Special restrictions and requirements are applied when the trader is exposed to the intraday risks and the danger of day trading.
- Swing trading is a style of trading in which an attempt to capture the gains in stock is made within four days. The trader must act quickly in order to find stock with excellent potential in a short amount of time. The stocks must have short-term price momentum.
- A rogue trader is an employee of an organization who makes unauthorized transactions on behalf of his employer. He may be conducting a criminal act because as an employee of the organization, he executes transactions without its permission. Perhaps, the most famous rogue trader in history is Nick Leeson, whose activities bankrupted the Barings Bank in 1995.
Treasury Bill
Treasury bills are the money market securities that are most marketable. Their simplicity makes them quite popular. The way the U.S. government raises money from the public is precisely through treasury bills.
T-bills are securities that are short-term and mature within one year or less from the day of their issue. Typically, this type of security has maturity of three months, six months, or one year. For this reason, the purchase price smallest than their par value. The full par value is paid to the holder by the government at the date of their maturity. The received interest is the difference between the security’s purchase price and the amount that is received at maturity. A 90 day T-bill purchased at $9800 will, for example, earn the investor $200, if he hold it until maturity. Coupon bonds are different because the interest is paid on a semi-annual basis.
Treasury bills are issued at auctions through a competitive bidding process. The investor must submit a bid in order to buy a T-bill. It must be prepared in a competitive or non-competitive manner. One will receive the full amount of the security in a non-competitive bidding at the return, determined by the auction. The return that one desires to receive must be specified in a competitive bidding. One may not receive any securities if the specified return of the investor is too high.
The T-Bills are popular mainly because they are affordable money market instruments for the individual investors. They are normally issued in denominations raging from $100 to $1 million. Another good feature is that treasury bills are known to be the safest instrument. This is naturally due to the U.S. government backing. They are, in fact, risk free and exempt from the local and state taxes.
The only negative side of the treasury bills is that the return is not as high as the treasuries are among the safest instruments. Higher interest rates are given by the certificates of deposit and the corporate bonds.
http://en.wikipedia.org/wiki/United_States_Treasury_security