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twitter stocks review

Twitter stocks: Too dangerous to trade

Twitter stocks

Twitter stocks are growing in value steady because off rumors

Hi guys. In today’s blog i am going to discuss of what is happening too Twitter stocks lately and why it is too dangerous to trade in them right now.

What is going on with twitter stock?

Since two weeks there  a rumor was started that Walt Disney was interesting in buying Twitter. And from there on many names of other buyers started to line up. Such as SalesForce, Alphabet (mother company of Google), Facebook, Apple, Microsoft and so on. Because of those rumors Twitter stocks has grown in value more than 25% in less than two weeks. From all those rumors it seems that Alphabet is really interested in buying Twitter.

According to Yahoo Google is seeking advice from Lazard bank for the acquisition and merge with twitter. According to most analysts from all those interested buyers, Alphabet will benefit the most from buying twitter. However I think Facebook will benefit a lot from it as well. Because if Facebook can buy twitter then they increase their dominance in the  social media industry.

Why is it so dangerous to trade in Twitter stocks right now?

twitter stocks takeover

twitter stocks takeover

As you can see in the graph, you will notice that value of twitter stocks has been growing explosive in a short period of time. With the current state of twitter stock it is impossible to determine what the resistance and support level is of twitter. Further more if the rumors are starting to fade away, then you can expect a fall back in twitter’s stock price. The fall back in twitter stocks price won’t be big but there is not much to gain now at the moment. As long there is no serious bids of other companies. I strongly believe that consolidation in twitter’s stock price will kick in when there is no new rumors about twitter’s take over. However when the bids being make official then you can expect a strong price movement.

Want to know more about twitter stock and its business? Then watch the video below.

fundamental analysis on commodities

Fundamental analysis on commodities

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Fundamental Analysis on commodities

There are types on fundamental analysis that we used here at 101trading. The first one is fundamental analysis on shares/stocks, the second one is fundamental analysis on forex and in this article we are going to discuss the fundamental analysis on commodities. In this article you will learn what a fundamental analysis on commodities is and you will learn on how to apply it for your trading.

What is a fundamental analysis on commodities?

A fundamental analysis on commodities is a analysis that is focused on the factors that have impact on the supply or demand side of a commodity. With the fundamental analysis on commodities traders and investors can try to predict of what the price of a commodity will be like in the future.

Fundamental analysis on commodities: factors that can influence the demand size

When are you are doing a fundamental analysis on commodities one of the first thing that you should be checking is the demand side of that commodity. For many commodities the general rule is that when the economy of countries are growing the demand side for commodities will grow as well. And because of that the demand side will grow faster then the supply side of the commodity. In this case the supply can not meet up with the demand so the producer will sell its commodity to the highest bidder. So in general when the demand keeps growing and the supply side stay still, the prices for commodities will increase.

What are the factors that can influence the demand size of a commodity?

There are many factors that can influence the demand side of commodities. In this article we are going to discuss the three major factors that can have influences on the demand for commodities.

Price

Price is one of the factors that has influence on the demand side of a commodity. The general thumb rule is that when the prizes of a commodity decreases the demand will increase. Its simple economics. For example if the gas price is £ 1,- per litre, you would use gas more then if the gas price was £3,- per litre. The cheaper it is to more you will use.

Economic growth

Economic growth has a impact on the demand side of the commodity as well. If they economy is growing as expected or better then expected the price of commodities will grow in value. However if the economy is growing slower then expected the price of commodities will go down. As you may guess if there is no economy growth in the present or in the future the value of a commodities will go down.

Politicians and central banks

Politicians and central banks are the ones that creates policies that should support the economy of their country. Sometimes it works well and sometimes it doesn’t. Although it may take a while before the policies get implemented the markets usually reacts first. Causing either a increase or decrease in demand.

What are the factors that can influence the supply side of a commodity?

Price

While a decrease in price creates a increase in the demand. The decrease in price of commodities has a other effect on supply. If the prices of commodities decrease  the supply will decrease as well under normal circumstances. The reason for that is that it doesn’t makes any sense for a producer to produce a lot of commodities for a low price. When the prices of commodities increases the supply will increase as well under normal circumstances. A high price is attractive for a producer to produce a lot of commodities as he can earn more money.

Economic growth

A increase in economic growth leads to a higher demand which results in a higher price for commodities. And as you know by now a high price for commodities will increase the supply of commodities. When the economic growth is below expectations the demand will decrease which leads to a lower price of commodities. As you know a lower price in commodities equals a smaller supply of commodities.

Politicians and central banks

Politicians and central banks are the ones that creates policies that should support the economy of their country. Sometimes it works well and sometimes it doesn’t. Although it may take a while before the policies get implemented the producers usually watch from the sideline what effects it has on the prices and prepare measurements to take when it is needed. Causing either a increase or decrease in supply.

How to make money with fundamental analysis on commodities?

The first thing in making money with fundamental analysis on commodities is to understand the factors that have influences on the demand and supply of commodities. The second thing on the fundamental analysis on commodities is to remember these two formula’s:

1. When the demand is bigger then the supply = a increase in prices of commodities

2. When the supply is bigger then the demand = a increase in prices of commodities

The third thing that you need know is that when the prices of commodities are too low , the producers will shrink the supply so that the demand is bigger then supply again which will lead into a increase of prices for commodities. When you hear that the producers are announcing that they will shrink the supply then you will know that a bullish trend is coming for the commodities. As a trader and investor you can make money by going long.

The opposite will happen when the producers are announcing that they are going to increase the supply. The prices of commodities in this case will go down. You as a trader and investor can make a huge profit by going short.

If you want to make money in commodities, you can open a demo account here: commodity demo trading account or open a real account here: trading commodities with a small budget

fundamental analysis on forex

Fundamental Analysis on Forex: How to use for trading forex

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Fundamental Analysis on Forex

Today in this article we are going to discuss what a fundamental analysis on forex looks like. You will gain insight and learn how to use the fundamental analysis on Forex the right way.

What does a fundamental analysis on Forex looks like?

A fundamental analysis on forex is a analysis that focus on the development of the economy of a country to trade currency more effectively. In a forex fundamental analysis you will get to know what the economy situation is of a country, what policies or plans of the government are, speeches of big politicians, economic events and plans & statement of central. All these factors can influence the value of a currency big time.

What are the key factors to look at the fundamental analysis on Forex?

#Key Factor 1

The first key factor in the fundamental analysis on forex is the interest rate. The interest rate is one of the key factor that has a lot of influence on the value of a currency pair. For example when the central bank of a certain country increase the interest rate the value of the currency of that country will go up. The reason for that is that foreign investor can get a higher return if they invest in that country assets or expand their business there. When a central bank is weakening the interest rate then the value of a currency will go down. One of the reason for that is the investor get lesser profit from his investment as the asset of the country goes down in value.

#Key Factor 2

The second key factor in the fundamental analysis on forex is the employment rate. If the unemployment rate is low it means that there are a lot of people who is working. But it also means that there are lesser people available for work. So if a company needs a employee, the company will need to offer a higher salary to beat the competition. As a result of this the salaries will increase and therefore the pricing for the goods will go up. When the prices of good are increasing it means that the inflation is increasing. If the inflation rate is too high the central bank will have to step in. The central bank will increase the interest rate to keep the inflation rate under control. As you may know when a central bank increase their interest rate the value of a currency will increase.

#Key Factor 3

The third key factor in the fundamental analysis on forex is the economic data of a country. There is a wide range of economic indicators that provides economic data of a country. The most important economic indicators are: the GDP growth, Consumer confidence index, manufacture index, service index, inflation rate index, price index , jobs growth index and the investor confidence index. The best way to get these data is to check the economic calendar of investing.com. When you look at the their economic calendar you will see on which date the economic data will be released from which country. And you will see what the forecast are from experts. You will also see the symbols of bulls. The more bulls there are the more impact that economic data will have on the markets. Usually when the economic data is way below the forecast of the experts, the markets will go extremely bearish. And when the economic data is way above the forecast of the experts, the markets will go extremely bullish.

#Key Factor 4

The fourth and the last important factor in the fundamental analysis on forex is the policies and statements from the central banks and important politicians. The policies and statements from the central banks and governments have a huge impact on the value of currencies. The reason for that is both parties are responsible for the economic health of their country. When the economy is going bad both the government and the central bank have too come up with new policies to get the economy back on his track. In the anticipation of central bank or government economic help the value of a currency will either go up in value or go down in value. As a trader you can make a lot of money in this situation.

For example:

GBP/USD

Let’s say the Federal Reserve (American central bank) is increasing his interest rate while the BoA (central bank of Britain) does nothing. In this scenario the USD will go up in value while the GBP will down in value. If you were expecting that the GBP was going bearish against the dollar, then the best way to make money was by going short on the GBP/USD. And if you were expecting that the USD was going up in the value then the best way to make money was to buy USD/GBP.

How to use the fundamental analysis on forex for trading

In my experience the best way to use fundamental analysis on forex trading is too used it with technical analysis as well. To increase the chance of trading successfully you must understand what the are causes that can cause a change in the price of a currency. In my eyes the fundamental analysis on forex provides me the best understanding of why a price change might happen. And the technical analysis provides me the insight if that news or expectation of a cause is already priced in the markets or not. In other words I use the fundamental analysis on forex for reasons to buy or sell and I use the technical analyses for which price I would buy or to sell.

 

fundamental stocks analysis

Fundamental Analysis on stocks: How do you do it?

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Fundamental Stocks Analysis

Fundamental Stocks Analysis

When you do a fundamental stocks analysis, all you want to gain out of it is to understand how the company operates, their strategy, the success rate of their strategy, the financial health of the business and the company  future plans. By reading and analysing reports you will know how the company is performing and how healthy the company is in the current market condition. If you read the reports of the competitors as well then you will what position your company is on the market.

Why do people use fundamental stocks analysis?

There is an idea in the markets that the stock market may value a company wrong from time to time. Profits can be made by finding stocks that are underpriced. According to the methodology of fundamental stocks analysis the market will eventually value the stock at the right price.

One way of performing a fundamental analysis on stocks is to analysing the financial reports from companies. Each quarter the company gives out their financial result that they have achieved in the previous quarter. By analysing these financial reports, you will gain a better understanding and insight of the value of different company and you will understand how they got priced in the stock market. By doing this you will get to know if a stock is overpriced or underpriced.

5 key factors of a fundamental stocks analysis to look at

  1. Earnings

The first key element to look at when doing a fundamental analysis on stocks is earnings. You need to know what the earnings are. When you know what the earnings are, check it and compare it to the forecasted earning that was done by the CEO of that company. This way you will know if the company strategy is working good. And if the company is profitable or not. Future earnings are a key factor as the future prospects of the company’s business and potential growth opportunities often determines the stock price.

When you are performing a fundamental stocks analysis on you will find out that the factors that determines the earnings of a company are revenue, cost , assets and liabilities. In order to get a simple view on the earnings is too look at the earnings per share (EPS). The EPS is calculated as follow: The total earnings of a company divided by the numbers of the outstanding shares of a company.

  1. Profit Margins

The next key factor to look at in the fundamental stocks analysis is the Profit Margins. Now there is one thing that you need to know first and that is that the total revenue of a company doesn’t tell you the whole story of how well the financial situation is of a company. When you look at the profit margin of company it gives you a new information insight on the financial situation of a company. For instance a profit margin can tell you how much money a company keeps from it’s revenue. This profit measure is therefore extremely useful for comparing similar companies that operates in the same markets. It’s one of the best method to determine which company performs better in a certain market

A high profit margin indicates that a company has lower cost and therefore more profit. Some professional investors and hedgefund managers use the profit margins to see which company has a better control of cost in the same market.

  1. Return on Equity (ROE)

Return on equity is a financial ratio in the fundamental stocks analysis that measure how much profit is being made with the current available equity of the company. Basically it tells how much profit is being made with your investment.

Example:

Company A and company B are both making a profit of $10 million. However company A has a equity of $100 million while company B has an equity of $500 million. In this case the ROE of company A will be 10% and the ROE of company B will be 5%. What this tell us is that company A make the same profit as company B but with lesser equity. If company A had the same equity as company B, company A would have made much more profit. In this case based only on the ROE it would be a good idea for a investor to invest in company A as he gets more profit.

  1. Price-to-Earnings (P/E)

Price to earnings (P/E) is a other very popular financial ratio in the fundamental stocks analysis. What the P/E does is that it tells you quickly what the value is of a stock. The calculation of the value P/E value goes as follow: current market price divided by the earnings per share (EPS).

What does the value of a P/E of a stock tell?

A low P/E value means that a stock is under valued. When a stock is under valued it basically means that the current stock price is cheap and it hasn’t reach the price that it should be.  A high P/E means that the current stock price is more expensive. Now you might think that when a stock has a high P/E value that the stock price will go down. But often it doesn’t go down. As the stock price includes many factors such as earnings, profit margin and growth potential. Often a high a P/E of a stock indicates that many traders and investors believes the current stock value is under valued as they believe that the company will earn a lot more in the future. Therefore although the P/E is high they still see it as cheap compare to the future worth.

  1. Price-to-Book (P/B)

Price to book ratio is a financial ratio in the fundamental analysis stocks that compare the stock market value against its book value of the company. The calculation for this financial ratio is as follow: current share price divided by the book value per share (according to the latest financial statement) or use the market capitalisation of the company and divided it by all the shareholders equity.

So what does this financial ratio tells you about the company? What the ratio tells you is that if you are paying too much or too little for a stock as it denotes the residual value if the company went bankrupt today. A higher P/B ratio than 1 denotes that the share price is higher than what the company’s assed would be sold for. The difference indicates what investors think about the future growth potential of the company.

What is the right price to buy?

The thing with fundamental stocks analysis is that in the long run the stock price will be reflected through its fundamental true value. However in the short- term the stock price of a company might go in the wrong direction. This because that there are still factors that can have influence such as news releases and changes in the future outlook of the company. Trends, investors emotions also effects the short term price fluctuations which results that the current share price is different from its true value.

What is the best way to make money with fundamental stocks analysis?

Longterm

If you are using the fundamental analysis on the right way you can make a lot of profit in the long term. For example in the article I wrote about Starbucks of why I invested it for long term was based on based on the fundamental analysis on shares/stocks. However for entering the buying price I used the technical analyses. I have bought the shares in 2014 and currently my return on investment is over 70%.

Short term 

Not many knows this but you can make a lot of money on short term with using fundamental analysis stocks especially when you are going short or when a company seems to be hit by bad news that barely effects the company revenue. For example if you that something has changed in the fundamental analysis stocks that can have influence on the companies revenue, then the first thing you need to do is check the technical analysis to see what the current price trend is of that stock. Then check if the stock price is near support level or the resistance level. A change in the fundamental analysis stocks will break many support levels or  many resistance levels.

 

The best way to make money from stocks in my experience is too use a combination of fundamental stocks analysis with technical analysis for entry and exiting. The fundamental stocks analysis is best use to determine why the stock should get more or less value in the future. And the technical analysis is best to use for understanding the price movement( that is based on the past) to determine whether it is a good time to buy or sell the stock for a certain price.

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