गुरुवार, १३ डिसेंबर, २०१८
शनिवार, २४ नोव्हेंबर, २०१८
Stop Loss: Limit Losses On The Stock Market |Stop Loss Characteristics
What can be done to avoid that the stock market drop in value can take much of the savings invested? The small and medium investors have mechanisms that can help them in their investment strategy to solve this type of problems and, thus, avoid that the fall of a value or the downward current of the same leads to a drain of losses that may reach 20% and 30% of the capital invested and even above these percentages in bearish periods. One of them is the 'stop-loss' orders, which can help investors that the losses that could arise from the investment in equities are not high enough to ballast the investment made.
Conditioned orders
A 'stop-loss' order is an order to buy or sell shares whose delivery is subject to compliance with a condition in the price set by the user. When this is fulfilled, a limited order is sent to the market at a price that has also been reported. Thus, for example, when certain securities are purchased, at the same time they can be ordered to sell automatically if their price falls above 5%. The activation condition may be "greater or equal" or "less or equal" at a price.
The main advantage of this option is, in the opinion of Bankinter's broker department, to be able to ensure the investment since it allows the introduction of 'stop' sales orders on a purchase, depending on the expected return on investment and the maximum loss that would be willing to assume. In short, this tool helps limit the losses derived from it. In this way, the user ensures a maximum of losses, avoiding greater evils in case the stock continues to fall. It is a method recommended by most equity analysts, although others consider that this system can weigh a greater profit.
In any case, it is a service available to all financial institutions and can be processed in branches, by phone or through the Internet, which is the most appropriate channel for this type of operations due to its speed. On the contrary, it has the disadvantage of being somewhat complex for those who are not used to its mechanism, so it is advisable to ask the financial institution with which to operate a manual of basic instructions to operate properly.
The 'stop loss' orders have a series of characteristics:
·
The financial institution will respond to requests for the withdrawal of stop orders, as long as the status of the order allows it.
· A stop order cannot be modified. In this case, the order must be canceled and a new one processed with the new conditions.
· It is not possible to send a stop order "to the market" or "limited to the best price". It is necessary, therefore, to inform a limit price.
· The trading of stop loss orders is available for securities and warrants quoted in the continuous market, as well as for the securities that make up the main international indexes.
· The deductions derived from a stop order will not be made, as in the case of a normal order, when it is registered, but when the activation condition is fulfilled and sent to the market. This is the reason that allows the investor to register more than one stop sale order on a single purchase.
शनिवार, २७ ऑक्टोबर, २०१८
शुक्रवार, २६ ऑक्टोबर, २०१८
What are the dividends or profits of a company?
What are dividends?
The dividends are part of the profit - sharing or profit of a company to its shareholders. E s, if a company manages to make a profit at the end of the fiscal year may decide to allocate part of these profits to its shareholders. This deal consists of a pre-determined amount of money for each owner of an action.
So, if for example a company decides to distribute 100 million pesos of its profit obtained in a particular fiscal year, and there are one million shares, each share will receive 100 pesos of dividend. If a shareholder has a thousand shares, he will receive one hundred thousand pesos of dividend.
What is an action of a company?
An action is a part of the capital of a company, owning this action grants some rights both political (votes in the meetings), as well as economic (participation in the profits of the company), the representation of these economic rights is known as Dividends.
Who is entitled to the collection of dividends?
Anyone who owns shares before the day of distribution of the dividends of a company will be entitled to collect them. That is, if the company distributes dividends, for example, next day 19, it would be enough to own the shares on the 18th.
Is there a minimum amount to be able to collect the dividends?
There is no minimum to be able to collect the dividends, as soon as someone is the holder of an action has the right to collect the dividends generated by that action, political rights are another thing, there may be minimums of shares required to attend a together, however, this does not happen to collect dividends.
What kind of dividends are there?
Mainly there are two types of dividends: extraordinary dividends and ordinary dividends.
· The ordinary dividends relate to the benefits of exercise, and are expressed as "interim dividends for the year X".
· On the other hand, extraordinary dividends are distributed without having to do with the accounts of the year, but by some extraordinary fact such as a sale of some investee company, property, etc.
When are the dividends distributed?
When the dividends of a company are distributed depends on it, there are companies that distribute dividends only once a year, and on the other hand, others that divide dividends every four months.
What is the relationship between the price of an action and its dividends?
Virtually all indices are ex-dividend, this means that the dividend is deducted from the price on the day it is distributed, it is logical, since that money no longer belongs to the company and therefore should not be part of its capitalization.
To be understood more clearly the best will be to give an example: the previous company that distributes dividends on the 19th, closes on the 18th with a share price of $ 120 and distributes a dividend of $ 10 per share, the next day (19) will open with a reduction of $ 10 in the price of the shares, that is, open to $ 110.
For this reason the strategy does not work, for every thought investor, to buy a couple of days before the shares and sell them on the day of the distribution of dividends, since this strategy does not provide extra profitability.
Can the dividend be very high?
The dividend should not be excessively high. In fact, the legislation requires that part of the benefit becomes capital of the company (reserves).
This is so that the company is not decapitalized excessively, a very important issue for the survival of it.
Is the dividend a safe investment?
On the stock market there are companies that have a long tradition of paying good dividends (up to 10% of the value of the stock now that stocks have gone down a lot).
This could be seen as a safe investment (buy the day before dividend distribution, keep the dividend, sell the stock the day after) but the market is not stupid, of course, and once the dividend is distributed the company is worth less : he has lost money distributed from his funds.
If a company is worth 1,000 million pesos on the stock market (the sum of the price of all the shares) and distributes ten million pesos in dividends, the company will be worth 990 million pesos at that time. If the company was formed by a million shares, each share was worth one thousand pesos, and after the distribution of dividends, it will be worth $ 990.
In this way nothing is gained or lost (although afterwards the action may continue to fluctuate).
What is the advantage of investing in companies that distribute high dividends?
The main advantage of investing in companies that distribute high dividends is that it allows us to recover part of the investment we made in buying the shares, the higher the amount of the dividend, the sooner we will recover the investment of the shares and we will be able to invest those pesos in new actions or save them.
It is important not only to take into account the amount of the dividend when investing in a company since some companies that have financial or operational problems, know that there are many investors who only look for high dividends when investing, and try to attract them offering exorbitant dividends in order to stabilize its situation in the stock market, but sooner or later they usually end up aggravating their problems and losing part of their investment to their shareholders.
So what I said, when investing in a company, it is necessary to take into account more things besides the dividends it delivers, such as its indebtedness or if its business is increasing year after year, etc.
Stock Market Education Videosबुधवार, ११ जुलै, २०१८
याची सदस्यत्व घ्या:
पोस्ट (Atom)