The uncanny trading Thesaurus

Unusual terms you may (or may not) come across while trading.

We all know that the terms bull and bear refer respectively to a rise or fall in the market. Similarly, you might also be aware of the terms hawk and dove, which refer to central bank decisions regarding the interest rate, hawkish being a more aggressive stance aimed at raising interest rates in order to curb inflation, while “dovish” referring to the considerably more soft approach, of keeping interest rates lower.

But have you ever heard, for example, of the term to the moon?

To the Moon is perhaps the one market movement expression investors want to hear over anything else; it describes an often sudden, quick and considerable rise of a stock or asset. As the name suggests, it is reserved only for extremely skyrocketing (pun intended) appreciations.

The opposite of to the moon, would be the term, tanking. Tanking refers to a rapid and significant depreciation of a stock or asset.

Now, I would like you to say the next one with me. Ready? Garbatrage!

Apart from being fun to pronounce, Garbatrage refers to trading activity that is based on rumor or “herd psychology” (a term that means following the general consensus, in our case, following the general investor sentiment). For example, a usual occurrence of Garbatrage occurs when two major companies in the same sector, are involved in a takeover.

A similar term, albeit with darker undertones, is pump and dump, a technique employed only by the lowest morally-inclined market manipulators. It describes a move to capitalize on a market’s positive movement by unethical means, such as fake news, recommendations or untrue reviews on a stock planted or fabricated by themselves. It would be worth noting that this is a crime punishable by law and should not be even considered by individuals who value ethical trading or general freedom.

Another fun, albeit disgusting term referring to market news, is cockroach theory, a term that describes the notion that once bad news is released relating to the market, more unfortunate news are lurking in the shadows. This goes back to an old saying that goes: “For every cockroach you see, there’s a 100 more you dont.

When to terms related most commonly to the stock markets, the lingo again, is rather imaginative and fails to disappoint. Terms like catching a falling knife,  which refers to the situation where a trader buys a depreciating stock, in hopes of a price rebound, which unfortunately does not come, leaving the trader with considerable losses.

And if you thought that was a bit cringy, how about the expression dead cat bounce, which in spite of the imagery of perishing felines it invokes, describes the short-lived rally of an extended downward trend in the markets?

And of course, after cats, we just had to follow up with dogs. Dogs of the Dow to be more specific, a term used to describe companies that are within the 10 highest dividend-yielding stocks from the Dow-Jones Industrial Average. 

But since we’ve talked about bulls and bears and dogs and dead cats, I would like to turn your attention to a more pleasant term, and one that is named after my favorite mythological creature: the Unicorn!

In the markets, a Unicorn is a startup that has come to be valued at 1 billion or more. Just like their magnificent legendary counterpart, they are extremely rare, and according to the more cynical amongst us, non-existent.

As an added bonus, here is a list of terms that describe various currencies or currency pairs:

  • Aussie: the Australian Dollar (AUD)
  • Kiwi: The New Zealand Dollar (NZD)
  • The Cable: The most commonly traded currency pair GBPUSD. Named after the cables that were once used for monetary transactions between Britain and America.
  • Barney: The USDRUB currency pair. The name derives from the fact that the Russian currency sounds a lot like Ruble, the last name of the famous Flintstones character.
  • Betty: You can’t have Barney and not have Betty. This is a nickname for the GBPRUB currency pair, in honor of Barney Ruble’s wife.
  • Swissy: A rather unimaginative nickname for the Swiss Franc.
  • Loonie: The CADUSD currency pair. Named after the loon, a native Canadian bird that also decorates the 1 CAD coin.
  • Ninja: The USDJPY currency pair. This is pretty much self-explanatory, but just in case, it’s because ninjas come from Japan.

Unfortunately, this article is only scratching the surface, when it comes to unusual market terms. I sincerely hope it has at least provided you with some entertainment, if not with some (probably useless) knowledge.

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Cryptocurrencies – A brief introduction to the future of financial transactions

It all started back in 2009 with the Bitcoin, and now it has evolved into a financial trend that is taking over the world. Some consider them to be the future, while others believe they will cause major disruption to many industries, including finance and law.

Unless you have been living under a rock for the past few years, you have probably heard about cryptocurrencies, the digital currencies that have forever changed the face of finance.

Cryptocurrencies are virtual money that allow transfers of funds through the internet without intermediaries.

Since their inception, they have become some of the most sought-after tradable assets, due to their high potential for profitability, compared to other assets, such as currency pairs. The hype is believed to have begun with the vast leaps in the value of the Bitcoin, as it started out in 2017 with a worth of merely 1000 USD, only to skyrocket to an impressive 19000 USD value by December of the same year.

In the online markets, Cryptocurrencies are commonly traded as CFDs, a practice that provides certain advantages over directly purchasing them.

First and foremost is the fact that when trading CFDs, you have the opportunity to profit regardless of the market’s direction. You can buy when an asset is appreciating or sell when an asset is depreciating and thus turn a profit from the changes in the price.

Secondly, with CFDs, you can use leverage, which makes trading cryptos significantly less expensive. Granted, using leverage comes with its own inherent risk; however, the potential rewards can outweigh that risk, especially for a well-seasoned trader who understands how leverage works.

Thirdly, trading Crypto as CFDs gives you access to many exchanges instead of direct exposure to only one, and diversity is the key to success.

When it comes to investing in cryptocurrency, there are a few things you should keep in mind.

First off, you need to decide whether you prefer to physically own cryptocurrency (provided you have the necessary and considerable capital), trade crypto as CFDs, or a combination of both.

Secondly, you will need to prepare for volatility, and that means both ups and downs. Regardless of whether you own crypto or simply trade on its value (CFDs), you will often witness dramatic swings in its price. If your margin and /or mental constitution cannot deal with such pressure, then for your own well-being, you should probably look to other types of assets instead.

Finally, make sure to diversify your portfolio. Don’t put all your money on Bitcoin just because that is (or was) the most popular choice. Spread your investment across several cryptos or even entirely different assets. Diversification is the best way to become a successful trader, and to achieve that, you have to ensure you are not putting all your eggs in one basket.

Here at Amega, we are happy to announce that we provide crypto trading through our Amega Markets LLC entity. You will be able to select from a wide range of popular cryptocurrencies (as well as hundreds of other assets) and trade without any restrictions to your preferred style, including scalping or the use of trading robots. 

Sign up for an account, and witness firsthand the benefits of working with a Straight Through Processing broker, offering some of the best market conditions available today!

By Mario M. Plousiou

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Black Friday and Cyber Monday, Economic indicators!

When you hear Black Friday and Cyber Monday you automatically think of great discount deals! On one hand, you’d be right; but for those versed in Economics or the financial markets, it is also something more: Both events are big indicators of a country’s economic health, inflation, and monetary cycle!

To further elaborate, let’s begin with economic health. Since both events offer huge discounts, they attract consumers to spend. And as we know, consumer spending is a sign of a healthy economy. Spending money on products that are not needed immediately, means an availability of funds that can be spent on secondary needs, which also promotes the notion that the general economy is strong.

Alternatively, a lack of consumer spending on these secondary needs shows a lack of money, or at least a focus on priority-need spending, which is a sign of negative earnings, pointing at high inflation levels, or even hyperinflation, which in turn signals a possibility for a recession.

As for the Monetary cycle, as the phrase suggests, money is supposed to eventually return to its starting point.

If a disruption or slowing down to the cycle occurs, the first signs of a recession appear.

To explain it more simply, both Black Friday and Cyber Monday are what we call “sentimental indicators”. This means, that consumers will spend if they believe their source of income is secure for the future and the economy has a steady movement.

On the opposite hand, a fear for job security and an unstable economy are factors that would hold back consumer spending. In turn, this could lead to less demand for goods and services, which would also stifle production.

It can be argued, that this also has an effect on the equities market. A large number of Economists and Financial Analysts alike, claim that negative, or low impact on both events carries a negative movement in the stock market as well, one reason being the creation of a negative sentiment, which causes investors to withdraw cash out of their stocks, out of fear for an impending downtrend in the markets.

The aftermath of Black Friday and Cyber Monday, however, whether positive or negative is only temporary, as the record shows. In some cases, so much so that it can be argued whether it had an impact on the markets at all.

Since both events have crossed the borders of the United States where they were incepted, to now become world-wide phenomena, no one can argue the importance of the outcome of both events, especially for developed countries which are household-economy driven (economies that depend significantly on household spending).

With the current state of Global economies, perhaps we should take a close look at this year’s Black Friday and Cyber Monday events, as they could be good indicators of what the New Year might hold for us.

And with a reliable broker like Amega, opportunities could be lying in wait, just around the corner…

By Neofytos Hadjineofytou

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China: Covid drops, Oil rises

The latest easing in Covid-19 measures announced by officials in China, the world’s top importer of crude oil, has had a profound effect on the oil markets, as oil prices have jumped more than 2% after the announcement.

China’s Zero-Covid policy initially relied on lockdowns and mass testing to prevent the spread of infections, which weighed heavily on the country’s economy and produced little to no positive results.

Investors have been watching the news closely in anticipation of any relaxation to the measures, which have finally been announced. The new measures include shortening quarantine times for close contacts of cases and arriving travelers by 2 days, as well as eliminating a previously imposed penalty on airlines that bring affected passengers into the country.

Other reasons for the rise of crude oil prices include a weaker U.S dollar, as well as milder than expected U.S inflation data.

It is also expected that further relaxation in the zero-covid policy in China, can be a driver for crude oil prices down the line.

At the time of this article, WTI crude oil (USOIL) futures have gained $2.24 (2.6%) to $88.71 a barrel, after climbing 0.8% in the previous session.

Brent crude oil (UKOIL)futures rose up $2.39 (2.6%) to $906.06 a barrel, prolonging the previous session’s rise of 1,1%.

Given the current data, the Crude oil price by the end of the year is speculated to remain stable, with WTI crude oil forecasted to be about $88.74 per barrel, at the end of 2022.

With everything going on in the world, as well as the recent gain of oil stocks in the S&P 500, it seems like investing in crude oil would be a… slick move.

By Mario M. Plousiou

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Elephant Vs. Donkey: How the midterm elections in the U.S. can affect the markets

As the U.S. braces for a closely-fought midterm election, investors are feverishly preparing for possible opportunities to take advantage of, as according to historical data, midterm elections tend to have a direct correlation to the markets, and especially stocks.

The midterm elections in the United States will determine the new Senate as well as the house of Congress. Historically, the president’s party is inclined to lose seats in congress, and the opposing party is likely to gain control of one or both houses of Congress, leading to what we call a “Divided” or ”Split” Government.

Speaking of historical data, the record shows that during 17 of the 19 midterm elections since 1946, there has been a spike in market performance for at least six months following the election compared to the six months leading up to it.

When it comes to the US dollar, the usual appreciation of the currency stems from investor sentiment regarding increased government spending by the new Congress. However, this year, the general expectation is that due to the high levels of spending and stimulus because of the pandemic, it would be improbable to see a significant infusion of funds.

When it comes to equities, however, it is an entirely different story.

A (likely at this point) victory of the Republican party would usher in yet another split government, which would mean that major policy changes presented by the president would be hindered, as Congress, which has to approve the motions, would be controlled by the opposing party. This outcome is, however, perceived as favorable for stocks and indices.

In the Defence sector, given the current geopolitical tensions, it is likely to see a rise in stocks related to defense contractors regardless of which party emerges victorious. In fact, the S&P 500 aerospace and defense index has already seen a 10% rise this year.

Energy stocks could also see significant movements given a Republican victory in both Congress and Senate, as they are more likely to push for more energy production in the U.S. While this could favor oil exploration companies, it may be detrimental to stock by pressuring oil prices.

When it comes to clean energy, however, a potential Democratic win could be extremely beneficial for the sector. Given that Democrats are able to maintain control of Congress, legislation favoring clean energy, including tax credits and investment, could lead to a boom in the respective market.

In the Healthcare sector, a Republican win could immensely benefit pharmaceutical companies as Democrats recently pushed through a law for lowering the price of prescription drugs.

In the end of the day, though the odds favor a Republican victory, this year’s midterm elections seem to be very closely fought, with the elephant (Republican party) holding 48 seats and the donkey (Democratic party) holding 46 seats up to the point that this article was written.

No matter what the final outcome will be, it seems that opportunities will arise in the markets, especially regarding stocks and indices. The good news is there is still plenty of time to prepare, as depending on possible recounts or legal challenges, the final results could still be weeks away.

By Mario M. Plousiou

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Ho-Ho-Hoping for the best: Is a Santa Claus Rally in the cards for 2022?

The Yuletide season is fast approaching, and while many households have already begun their Christmas shopping, investors are clenching their fists in anticipation of a different kind of gift: The hope for a Santa Claus rally in the stock market.

But what exactly is a “Santa Claus rally”, and how likely are we to see one this year?

In simple words, “Santa Claus rally” is a term that describes the tendency of the stock market to experience a sustained rise during the Christmas period, usually either during the weeks leading up to the holiday or the week after, all the way up to the 2nd of January. Other popular terms for the phenomenon are “The December effect” and  “Turn-of-year effect.”

The prevailing theories behind the “Santa Claus rally” phenomenon,  are increased holiday shopping, an (often misplaced) optimism due to the seasonal spirit, and a lack of institutional investors, who tend to be more pessimistic than their counterparts, which theoretically can lead to a bullish trend in the markets.

Some of the most popular strategies to take advantage of a potential Santa rally, include buying on the first of the last five days of the year and then closing your position at the close of the second day of the New year. This, however, poses a problem with risk management, as it is unclear where you should place your stop-loss. Although historically, the period indicates an average gain of 1.5%, it is not unlikely to experience sudden and impactful drops on certain occasions.

To counter this, some traders prefer looking at the seven-day period of the Santa Rally on lower timeframes, using day-trading strategies instead to identify patterns of a bullish price action or technical indicators to enter the market with a buy position during periods that historically tend to have more buyers than sellers.

As for which are the best stocks to keep an eye on for the Santa Claus rally, investors usually look for companies with significant gains and a history of bullish trends during the period.

But how likely are we to see a Santa Claus rally in stock markets this year? Well, the data so far is, to say the least, conflicted.

On the one hand, during the recent FED meeting, the Federal Reserve announced another 75 basis-point interest rate hike, the fourth in a row so far. A hike in interest rates is likely to lead to a decline in the stock market, despite recent positive earning reports, making a “Santa Claus rally 2022” look more like a pipe dream.

On the other hand, the upcoming mid-term elections could spark a Santa Claus rally which, according to Yardeni Research, could extend well into next year, as mid-term elections have consistently been bullish, according to historical data.

Further support for the possibility of a Santa Claus rally, comes from the recent data on major company buybacks (companies buying back their own stock).

Recent data shows that major US companies are increasing their buybacks around this season. According to Bloomberg, by the end of 2022, corporate buybacks are expected to reach up to 5 billion USD per day.

It is worth mentioning that Apple can now boast the biggest buyback in its history after the corporate giant bought back almost 90 billion USD worth of its shares, in the fiscal 2022 period, which ended in September. This has led to a bullish market as more people tend to invest in companies that perform major buybacks.

Whether a Santa Claus Rally will happen this year is still up in the air. Data suggest a 50 to (slightly over) 60% possibility for it to happen, but those are not exactly odds one could sink his teeth in.

In any case, being prepared has never hurt anyone, so remember that everyone can take advantage of some of the best market conditions available and trade on a potential Santa Claus Rally with Amega!

By Mario M. Plousiou

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Earning Season: Open season for opportunity!

“Earning season is to investors what candy is to Halloween.”

– Some random dude on the internet.

Earning season is upon us once again, and in this article, we will break down precisely what that means for investors and how they can take advantage of this ridiculously volatile period in the markets.

The definition of Earning Season

Earning Season is the period of time when most publicly traded companies release their quarterly or annual corporate earnings to the public. This usually begins one or two weeks after the last month of each quarter, so typically December, March, June, and September.

These quarterly reports are highly anticipated events, especially for traders who favor stocks over other instruments. Depending on the numbers, investors are inclined to either bid up the price of a given stock or pummel it down. Either way, it presents a unique opportunity, especially for CFD traders, who have the advantage of being able to gain from the volatility regardless of the market direction.

The Importance of Earning Season for investors

During this time, there is typically a significant movement in the market after each company releases a report regarding its respective shares. It is not entirely uncommon to see shares rise up to 20% or more or see them plummet by the same percentage.

Extensive media coverage from prominent financial news media, such as the Wall Street Journal or Bloomberg, can provide information on whether the companies have met, exceeded, or entirely missed the expectations of financial analysts.

The combination of volatility in the market and easy access to a plethora of information provides considerable opportunities to take advantage of with careful planning and educated execution.

What to look out for

Within the few weeks that the earning reports last, stock traders can get a unique insight into the fiscal performance of many large companies.

Earning reports usually include:

  • Income Statements
  • Balance Sheets
  • Cash Flow Statement 
  • Earnings per Share
  • An estimation of how the following quarters and/or the overall financial year will go.

Although all this information can help create your trading strategy for the Earning Season, the first three are perhaps the most important.

The Income Statement is, in Layman’s terms, a report of the company’s revenue or the amount of funds accumulated by sales. It also includes the net income, which is the total earnings after deducting expenses.

These numbers can help a trader estimate the income of the company currently, as well as for the next quarter.

The Balance Sheet is important to tell whether the company can afford to pay its bills. It is essentially a report that shows the amounts that the company owes and owns. It is an excellent indicator of a company’s financial health during a given period of time.
Finally, the Cash Flow Statement focuses on the amount of cash coming in and the amount of cash going out of the company. It is useful for understanding where a firm’s finances originate from and where they end up.

How to take advantage of the market during the Earning Season

To make the most of the Earning Season, preparation is essential. To begin with, you need to know which companies are releasing their reports during a given day and what time the reports will be released (can be before, during, or after the market opens). This will help you place your trades at the right time and prevent you from missing out when the movement begins.

This information can be easily found online, on financial websites, and on some Economic Calendars.

Second, you should take a keen interest in the predicted results, according to investors and /or market analysts.

Wall Street firms usually predict the revenue as well as the Earnings Per Share that a company will have by using their models, as well as historical data regarding the company’s performance in the past.

The general rule is that when a company misses the estimate, the price of the share will most likely drop.

The next thing to consider is the fundamentals that will most likely affect the stock price. These include the current Interest Rate, as a change to it can provide a trader with a clearer picture of how the stock price will change after the release. Demand and supply around the time of the earnings release are also important to look at, as they may greatly impact the stock price.

Finally, Make sure you protect your trade through clever risk management. High volatility events, such as the Earning Season, are usually high-risk, high-rewards. Make sure you place a stop-loss on every trade at a point where a potential loss will not hurt your overall investment. Make sure to take careful consideration of your risk-reward probability.

And there you have it! Many traders rub their hands with glee during the Earning Season, because they understand that the potential for profit is exponential. But remember, before you start getting blinded by those dollar signs, as with most things, preparation is the key to success!

By Mario M. Plousiou

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10 Downing Street blues: Liz Truss Resigns

In a shocking turn of events, British Prime Minister Liz Truss, who was appointed to the position by the late Queen Elizabeth II only 6 days before her passing, resigned from her position yesterday amidst a brave gamble to overturn the economic crisis in the UK, gone wrong.

Mrs. Truss now holds the title of shortest-serving Prime Minister in the history of the United Kingdom, having held the position for only 6 weeks, or 44 days.

In an effort to breathe new life into the failing GBP, Mrs. Truss had announced a series of emergency budget measures. Still, her vision of a “low tax, high growth economy that would take advantage of the freedoms of Brexit” unfortunately failed as the UK currency plunged even further.

Upon her resignation on Thursday, the British pound seemed to rally for as much as hours after the announcement, providing a unique opportunity for traders who were lucky enough or fundamentally prepared to catch the movement. The direction of the GBP has since reverted with slight fluctuations. Stocks and bonds had also seen a spike in their price following the announcement.

Depending on the general confidence in the candidate chosen to replace Mrs. Truss, it is possible to see another spike in the markets. Early information suggests this could happen as early as next week.

So far, there are three likely candidates to assume the title of the next Prime Minister.

Surprisingly enough, there have been calls for former Prime Minister Boris Johnson to resume his role merely months after his own resignation in the wake of a series of scandals.

Another possible candidate is Penny Mordaunt, an experienced individual who even stood in for Mrs.Truss in Parliament earlier this week.

However, the most likely candidate is former Finance Minister Rishi Sunak, who had publicly predicted that Liz Truss’ economic plans would fail.

Regardless of whether Liz Truss was indeed as incompetent as she is portrayed by many British media or simply set up to fail in the face of insurmountable odds, It remains to be seen whether her replacement will be able to overcome the devaluation of the British currency and prevent a looming recession.

By Mario M. Plousiou

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Winter’s coming…

No, we are not simply copying a famous catchphrase from a popular tv show, although the context of our use of the phrase may be just as grim and ominous. The reason? A shortage of Natural Gas.

Current Geopolitical events, as well as the shutdown of Nord Stream 1, have especially affected Europe, which is facing a massive deficit in Natural Gas. Since it is collected and stored over summer in order to be used in the wintertime, the lack of a major supplier causes a major problem for the upcoming season.

Though the weather conditions of the next few months will be a defining factor in the severity of the crisis, a potential cold spike mid-season could create market panic if the remaining supply of natural gas is not enough to satisfy the demand.

This could translate to energy bills taking a massive hike, which is not ideal, especially since Inflation has already been on the rise as of late.

One direct solution to the problem would be limiting the industrial use of natural gas, which could, in turn, create new problems, such as a deficiency in power, unemployment, and lower economic activity, all key factors to a potential recession.

Though certain countries like Germany have already stayed ahead of the problem, by increasing their storage levels above their target, it remains to be seen how the rest will face this issue. Government intervention in the form of reverse auctions (buying back natural gas from industrial users and adding it to the storage supply) may be a critical factor in solving this conundrum.

Until then, brace yourselves, and hope the coming winter, is a mild one.

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Is the world headed for another recession?

Brace yourselves!

A recession may be on the horizon, but not all hope is lost just yet…

In financial terms, a recession is a significant and prolonged period of downturned economic activity. This can be caused by many factors, such as inflation, structural shifts in industries, monetary and Fiscal policies, private sector decisions, oversupply, etc.

During a recession, consumer demand falls, and unemployment is on the rise. Since spending drops, depending on the severity of the recession, small businesses may start filing for bankruptcy while we also see a curb in credit access. Though most recessions don’t last more than a few months, a country’s economy could take years to recover.

Currently, all signs are pointing towards an impending recession coming in 2023, with the Geopolitical events affecting oil and natural gas prices, as well as the constantly rising Inflation.

The US dollar, which plays a huge part in global economy and international finance, is now stronger than it has been in the past 20 years, which in some ways is good news for Americans, but a huge problem for almost everyone else.

Since many global currencies such as the British pound, the Euro, and the Chinese Yuan are in decline, It is more expensive for those countries to import essential items like food and fuel.

Though a recession is never good news for anyone, some specialists speculate that the one we are about to experience will be short and mild, giving a glimmer of hope to a bleak not-so-distant future.

And though certain countries are better equipped to deal with a recession than others, it remains to be seen whether the world can be spared of this impending problem altogether with a last-minute change of course in financial and political activities.

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