Although April marked the fourth consecutive month of nonfarm payroll decline in the U.S., the 20,000 loss was a far cry better than the 75,000 economists were bracing for. Following declines of 81,000 in March and 83,000 in February, the latest decrease was led by declines in construction, manufacturing, and retail trade.

While revisions to previous payroll numbers were on the down side, they were nevertheless relatively minor. The initial March estimate of an 80,000 drop was revised down 1,000, while February’s estimated decrease of 76,000 was revised down 7,000.

The dollar extended gains against major currencies on Tuesday after the Commerce Department reported that new orders at U.S. factories rose surprisingly in April at a sharper-than-expected 1.1 percent, countering Wall Street economists who had forecast that orders would decline by 0.1 percent. The rise in April’s factory orders followed an upwardly revised increase of 1.5 percent in March orders that previously was reported as a 1.3 percent gain.

In recent remarks to the International Monetary Conference in Barcelona, Federal Reserve Chairman Ben Bernanke issued a warning on the risks that a weak dollar poses for inflation, but was quick to declare that U.S. interest rates are “well positioned” for an economy facing both price pressures and threats to growth.

The downward pressures on the dollar “have contributed to the unwelcome rise in import prices and consumer price inflation,” Bernanke said. “We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations, and will continue to formulate policy to guard against risks to both parts of our dual mandate, including the risk of an erosion in longer-term inflation expectations.”

Bernanke said GDP growth in the first quarter was “apparently positive,” and that there “may be somewhat better conditions” in the second half of 2008, due in large part to the combined effects of the Fed’s rate cuts and the fiscal stimulus package.

In his remarks, Bernanke essentially left the Fed’s economic outlook unchanged and followed other recent Fed officials in indicating no desire for additional rate-cutting.

Several key factors are thought to have influenced the April NFP report. They include:

– Household employment jumped 362,000 in April while the number of unemployed fell 189,000.

– Average hourly earnings rose a very modest 0.1 percent in April, which came in well below the market forecast for a 0.3 percent gain.

– The civilian unemployment rate slipped to 5.0 percent from 5.1 percent in March and came in better than the consensus forecast for 5.2 percent.

For week ending May 24, the Labor Department reported that the advance figure for seasonally adjusted initial claims was 372,000, an increase of 4,000 from the previous week’s revised figure of 368,000. They also reported a four-week moving average of 370,500, a decrease of 2,500 from the previous week’s revised average of 373,000.

What is NFP?

Of all the world monthly economic reports, the monthly US NFP report is the most highly anticipated and has the most dramatic impact on the currency market.

The report, which is released on the first Friday of each month and states the previous month’s numbers, provides detailed industry data on employment, hours and earnings of workers on nonfarm payrolls. These numbers are the best way to gauge the current state of the US market as well as the direction that the economy is heading.

What’s more, the employment numbers provided by the report are used by the Fed to shape their interest rate policies. The health of the US economy and interest rates translate to the strength or weakness of the US dollar.

The post NonFarm Payroll Tomorrow - IBFX Poses Estimates first appeared on nobsforex.

With no brokerage fees or monthly payments, the Warren 3.0 basic plan allows investors with knowledge of the equity universe to diversify their assets, with direct and efficient experience.

Do you want to know how to do this in practice?

In this article, we have provided a separate step-by-step guide to help you understand how to buy shares in Warren.

Through this guide, you will be able to diversify your investments directly on the platform. 

How to buy shares in Warren: step by step

Here, it is important to understand that a share is the smallest part of a company’s capital. So, when you buy a share of Lojas Renner (LREN3), for example, you end up becoming a minority partner in this company.

The price of shares is determined by a number of factors, but, in the simplest terms, it is possible to say that securities follow the supply and demand for the securities.

The price you see on the screen is therefore the market consensus (buyers and sellers) for that particular asset at that time.

Do you want to know more about the stock market? Consult our complete guide to the stock market.

Here’s a reminder: the step-by-step guide listed below is intended for those who already have some knowledge of the equity universe and are prepared to take the first steps in this scenario. 

It is a guide for those who already understand concepts such as volatility, know that the long term is the ally of stock market investors and are aware of the risks they run when investing on the stock market.

If this is not your profile, we suggest you start your studies with the three basic pillars for investing in equities.

Ready? Here we go!

1. Start by clicking on the Trade tab

When you click on the ‘Commerce’ tab in your area where you are logged into Warren, the initial screen for this tab will appear. You will see that this is not a homebroker, but a space for easier and more direct trading.

Here you can see the graph with the profitability of your shares, a summary with your balance and income, a list of the assets in your portfolio and the last movements you made.

See a random example, remembering that these are images only to illustrate the content, this is not an investment recommendation:

Note that at the bottom of the screen, in the right-hand corner, there is a summary of your latest account movements on the Trading tab.

You can click on ” View all ” and check all the movements you made on your trading tab, accessing a full statement of movements:

2. Deposit an amount in your trading account

Now you know the basics of the Trading tab, but how do you go about buying Warren shares?

The first step is to transfer money to your trading account.

To do this, on the home screen, click on ‘ Carry out transaction ‘. The next screen will show the options you have: deposit, redemption and internal movement.

Click on the option “Deposit”. Then you choose the amount and you will receive the data to make the transfer.

Then, the platform will show you the instructions to deposit the money.

You can also send money to your business section by making internal transactions through your Warren account. 

To do this, choose the option “move internally” there in the account section. 

When the amount in your trading account is settled, you can start looking for your assets.

The post How to buy shares in Warren: invest in the stock market without a brokerage commission first appeared on nobsforex.

In 2020 alone, Tesla’s shares accumulated a 275% increase, which transformed the US automaker, which focuses its efforts on electric cars and renewable energy, into the most valuable automotive brand on the planet.

The company is run by Elon Musk, considered by many to be the greatest genius and visionary of his generation. 

He is also the founder and CEO of SpaceX, a company created to make aerospace transport more accessible, with the aim of colonising Mars. This year, he became the first company to send a manned spacecraft into space.

From artificial intelligence to global warming reduction, Tesla is one of the most promising and talked about companies in the world. 

But do you know what is behind this recent appreciation?

In general, investors are increasingly optimistic that the company will be able to make its operation truly sustainable, with increased vehicle production capacity and profit generation.

Until recently, all efforts were focused on the creation of new technologies, innovating and promoting research related to energy storage capacity, efficiency and vehicle autonomy. 

The market lacked a signal that the company is capable of becoming a profitable player, which generates value for shareholders on a constant basis.

This has been changing over the past few months and the release of the second quarter results this Wednesday evening may be the final proof of what the market was expecting: the company reported gains for the fourth quarter in a row, making it eligible to even compose the S&P 500 index.

In this article, you will understand some of the reasons why Tesla’s shares have appreciated so much in recent months, you will understand its lines of business and the expectations that the market has of the company.

In addition, we will detail Tesla’s earnings release and how it may affect the stock in the coming months.

Together, we will discuss the following topics.

What does Tesla do and what is his purpose?

Founded in 2003 by engineers Martin Eberhard and Marc Tarpennin, Tesla is an American company that, according to its official website, is dedicated to accelerating the global transition to sustainable energy.

Ambitious, do you agree?

Focusing primarily on electric vehicles and renewable energy, Tesla claims to have broken down several technological barriers in its history in order to offer high-performance electric cars. 

Today, Tesla’s electric vehicles are the best selling on the planet, and the company also claims that the three models currently sold (Model S, Model X and Model 3) are the most efficient and safest cars in the world.

But behind these high-performance electric sports cars there is a much greater purpose, as Elon Musk, the company’s CEO, explained in the company’s Master Plan, published in 2006: to enable an economy based on photovoltaic energy, generated by solar panels. “I believe that this is the main, but not the only, sustainable solution,” wrote Musk.

To do this, Musk used a business model inspired by the technology industry, in which each stage supports the next.

Will we understand it better?

Tesla is a car manufacturer with technological DNA

In his Master Plan, Musk writes that Tesla’s long-term goal is to build a wide range of electric cars, including entry-level models, at affordable prices, with a focus on families. 

But to do that, the company needed to start with a high-performance, higher-priced sports car. The goal was for sales of this vehicle, dubbed the Tesla Roadster, to allow for technological optimization to result in a more affordable car, and so on.

“Tesla’s strategy is to enter the highest point of the market, where customers are prepared to pay a premium for the vehicle and then move down as quickly as possible to the other segments, to increase unit volume and lower prices with each model,” Musk said. 

The first Tesla car, therefore, was the Roadster, which could reach 100 km / h in just 3.9 seconds.

Later, I would justify the choice of a sports car by arguing that customers would agree to pay more for a sports car, if they knew they were helping to finance sustainable energy projects and technological advances, but it would be much more difficult to do so by selling basic cars at higher costs.

The company’s original Master Plan, therefore, was summarized in four easy-to-understand themes:

Build a sports car;

• Use that money to produce a more affordable car;
• Use that money to produce an even more affordable car;

In doing so, we also offer options for generating electricity with zero emissions.

Ten years later, in 2016, Musk drafted a new Master Plan, commenting on the results obtained so far and setting new goals for the following years.

Musk explained that the aim of the original Master Plan was to be transparent and to show that Tesla’s actions in the following years would not be random. There would be consistency in the name of the larger objective. On the occasion, Musk reiterated the need for the planet to achieve a sustainable energy-based economy. 

“Or we will run out of fossil fuels to burn and civilization will collapse. Given that we must withdraw fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric carbon levels is crazy, the sooner we achieve sustainability, the better,” he wrote.

To make possible a future where the economy is sustained by photovoltaic energy, Musk summarized Tesla’s next steps in four points:

• Create rooftop solar panels with fully integrated storage and batteries;
• Expand the line of electrical products to serve all major segments;
• Develop autonomous driving resources ten times safer than manuals, through mass fleet learning (Tesla vehicles map the roads);
• Allow your car to generate money while you are not using it.

As you can see, the focus now is on building autonomous cars, where you can sleep, read, study or work, while you travel to your destination. Once there, it will still be possible to borrow the car so that it becomes part of the road network, generating income while others use it.

The post Tesla shares are 275% high in 2020: understand why and how to invest first appeared on nobsforex.

What is the non-farm payroll report?

Of all the world monthly economic reports, the monthly US NFP report is the most highly anticipated and has the most dramatic impact on the currency market.

The report, which is released on the first Friday of each month and states the previous month’s numbers, provides detailed industry data on employment, hours and earnings of workers on nonfarm payrolls. These numbers are the best way to gauge the current state of the US market as well as the direction that the economy is heading.

What’s more, the employment numbers provided by the report are used by the Fed to shape their interest rate policies. The health of the US economy and interest rates translate to the strength or weakness of the US dollar.

The exact figures will be released here.

We’re estimating a figure of 65 – 75K jobs this round as compared to the previous huge 166K. If it goes as forecast, we’ll probably see Mr. USD dipping against most major pairs, but I’m doubting since the ADP figures were so much better than expected. Hmm, mix feelings. Let’s explore some of the charts to see what kind of potential good trades we can get, technically.

If it were to be crappier than the forecast.

USD/CAD

It looks pretty good for a short with the fibo levels. In the general long term, USDCAD still seem to be on a major down trend.

USD/CHF

A doji is forming on the 4th hour, with 200EMA/SMA lines below. We’ll watch out for MACD reversing downwards before an entry after the news release (yes, after if you’re trading the news).

GBP/USD

Looks really good for a long now, especially after the slide with the Interest Rates figure earlier. The major trend is still upwards, let’s wait and see if it heads up back since 200EMA/SMA lines are on the top for hour 1 and hour 4 charts.

Remember, if you’re trading the news, please only do it after the news release and wait for some reaction. You’d rather make lesser than get yourself whipped in the process. Also take note that during this time, orders are more difficult to fill and you might be offered a wider spread as compared to your usual ones.

The post It’s the Time to Rumble Again For Nonfarm Payroll! first appeared on nobsforex.

 The basics for studying when you start operating

There are a lot of forex educational resources on the internet, and if you are new to forex trading, we invite you to check out our 10 videos to understand forex trading, as well as our free trading courses. Feel free to spend time there to familiarize yourself with the Forex market and understand the basics of trading. It may take a month, two or even three months to study technical and fundamental analysis.

Do you think that spending a few months learning the basics of trade is too much? Well, think again, if you can master the methods of money market analysis in just a few months, you can be very satisfied. The profession of a trader is comparable to any other profession, sometimes compared to that of a surgeon. In addition, whether you are a surgeon or a trader, you will need 5-10 years of study to excel in one of these two fields and actually achieve success. In a few months you will master the basics of Forex and probably make some money, but you will still be in the intermediate trading range and not in the expert trading range.

Apply your knowledge in a demo account

Once you have perceived and understood how the Forex market works, that you can analyse the price of currency pairs, understand the various technical indicators and have developed a trading strategy, you should move on to practice and apply your knowledge on a demo trading account. You cannot initiate real trading without having gone through the simulation and tested your trading strategy and plan for at least a few hundred hours.

Start in real life with a small deposit of money

Once you see positive results in your demo account for several consecutive weeks or months, you can finally think about entering real trading and depositing money with a forex broker. However, to make the transition between the demo account and the live account smooth, we recommend that you make a small deposit first. The difference between the demo and the real account will be perceived at the level of emotions related to trading involving your own capital and real financial risks.

Invest more money or grow your capital gradually

After several trading sessions in real mode with moderate capital, if you have comfortable savings and want to invest more money in Forex, you are completely free to do so. If you ever do not wish to make an additional deposit, simply increase your capital with the income generated by your trading. In this second case, we recommend that you try the Forex Pyramid strategy as well as the compound interest method, which will probably allow you to grow your performance curve much faster.

The post How do you become a good forex trader without knowing anything about it? first appeared on nobsforex.

These losses are often caused by traders’ inability to make maximum profit from their transactions and to know when to cut losses in an unfavourable market. In this article, we will answer two important questions about how to become a better trader and what the fundamentals of trading are for rapid growth.

What is a good trader?

A trader is a person who buys and sells financial contracts on behalf of his customers or for his own account. This word comes from the English verb “to trade”, which literally means “to negotiate”. Depending on the categories of markets traded, the trader may specialize in buying and selling securities, bonds, derivatives, currencies (forex), stocks, etc.

There are two categories of traders: the self-employed trader and the trader on behalf of customers. Traders working in a financial institution execute orders to buy and sell financial instruments for their employer’s clients without personally assuming any risk in the market.

Own-account trading or “prop trading” has been in decline since the 2007 crisis, causing significant losses to financial institutions. The owner trader takes on more risk in the market with some room for manoeuvre in his investment.

Individuals can also trade on their own account through online trading platforms in the OTC (over-the-counter) market.

Over time and experience, traders have developed principles that they can apply to improve their skills and benefit from markets. We have retained 10:

• Take the time to learn the basics of business and show curiosity,
• Establish and respect a rigorous business plan.
• Have good risk management by applying money management rules.
• Act with caution in the context of leveraged trade,
• Evaluate the action on a regular basis and make any necessary changes.
• Use a stop or “stop loss” order for each trading position,
• Negotiate only when the time is right,
• Avoid overtrade,
• Keep your emotions out of the trade,
• Knowing how to cut losses.
• The trading platform offered by IG Bank allows you to trade CFDs.

Spend time learning the basics of business and showing curiosity

As simple as it may seem, the first step to becoming a successful trader is to start by learning how to trade, because it is a profession in itself. You can’t just improvise trading after opening an account or reading some reviews and articles. You must take the time to educate and inform yourself through specialised books and training on trading. This process will take time, effort and great passion. If your desire to become a trader is motivated by the desire to get rich quickly or be famous, you will be disappointed very quickly.

Another way to learn how to trade would be to open a demo account that will allow you to practice and develop your trading skills on the platform.

Establish and adhere to a rigorous business plan

Every good trader knows the two golden rules for becoming a better trader: “have a trading plan and stick to it”. Developing a trading plan helps you to know what decision to make in each situation and to set achievable goals. This trial and error process will take as long as necessary, but it will give you a better understanding of what you are doing and the decisions you are making. So you should never go outside your business plan when making decisions based on your emotions or the heat of the moment. This requires strong discipline and personal rigour.

Among the trading strategies, you can decide to become an intraday trader, a swing trader, a long-term foreign exchange trader or even an algorithmic trader.

Have good risk management by applying money management rules.

A good trader must understand the rules of money management or the art of managing your capital while controlling risk. Beyond analysis, signals, indicators and sentiment, trading also involves the application of rules to protect the capital invested and to appreciate it over time.

Among the principles of money management, let us retain:

• diversification: avoid investing all your capital in a single transaction. You should not risk more than 1 or 2% of your account in one transaction.
• the size of your position: you should always adapt the number of your positions to the size of your wallet. Don’t fall into the trap of many traders by always taking positions of a fixed amount. The value of the amount to be committed should be a function of the volatility of the market and your capital.
• limiting your capital losses by protecting each position in your portfolio.
• the risk/return ratio: in all positions taken, the profit you seek must be greater than the risk you take.

Act wisely in a leveraged transaction

Leverage is considered a double-edged tool because in the event of problems in a major position or event (geopolitical catastrophe, weather, central bank intervention, etc.), its losses are multiplied tenfold. By using leverage on multiple losing trades, you will lose all your capital in a matter of weeks. You should think more in terms of the percentage change of a position in relation to your capital, rather than in terms of pounds invested.

To minimize losses that may arise from the use of leverage, it is recommended that you never exceed a leverage of 2 or 3 for a novice trader and limit it to 5 for a professional trader.

Evaluate the action on a regular basis and make any necessary modifications.

You should regularly take stock after each trading week trying to answer the following questions: Did I follow and respect the trading plan I developed? Did I keep my schedule? How are my positions performing in the market? All of these questions will help you adapt and challenge yourself as you make changes.

Use a stop or “stop loss” order for each trading position

A good trader should know how to protect his capital and reduce his losses by using an automatic order from the stock market called a stop order or “stop loss”. The latter is defined as the maximum loss you are willing to make on a stock market position. There are several categories of stop loss:

• the guaranteed stop loss,
• the non-guaranteed stop loss / the classic stop loss
• the trailing stop.

You should never take a position without a stop loss, even when you are personally monitoring the market. Always remember to place your stop loss before validating your order.

Negotiate only when the time is right

Trading requires a lot of patience and concentration to find the right opportunity and wait until market conditions are favourable to your strategy. You need to learn to wait for the right opportunities and control your emotions so you don’t make bad decisions.

The post How to become a better trader in the financial markets? first appeared on nobsforex.

In this article we propose an overview of trading software and offer some easy to put into practice tips to make a good choice and then buy an efficient trading software in line with your needs.

Are trading software useful?

This is the first question that comes to mind for those who, as a trader, have never used trading software. It is a more than legitimate question, the skepticism regarding the relationship between technology and trading is more than physiological, since trading and speculative investment in general have always been considered purely human activities, which require the use of intellectual energies.

In reality, the trading software, if well done, can give a hand to the trading, until to realize an increase of the chances of profit. The reason? They allow to overcome some “limits” of human nature. Here they are.

Emotivity

Emotionality is a big limit of traders, of all traders. More or less, emotionality is an obstacle, an indelible presence. No wonder, as the stakes are by definition very different. Stress is the order of the day. Nothing can be done about it but to prevent emotionality from affecting not so much the quality of life as the quality of trading actions. Very difficult to say the least.

Trading software allows you to overcome this obstacle, eliminating the problem at its root (or almost). How? Simple: they replace the trader at the moment of maximum emotional upheaval, i.e. operativeness.

Human error

The man is wrong. It is not a perfect machine. Actually, it’s not a machine at all. So the risk that he may make errors of assessment, rather than calculation, is really high. There are many factors that induce error, including the presence of cognitive bias.

Trading software makes it possible to overcome this limit, giving maximum objectivity to the trading action. Sure, as it is logical that this objectivity is compensated by a rigidity typical of machines, but for some it is a price to pay willingly.

Hedging

In this case we are talking about coverage in terms of time. Of course, no matter how strong a trader’s willpower is, he cannot cover the whole day. And even if he did, after some time his performance would drop. If for no other reason than tiredness.

Now, trading software does not get tired or show drops in performance. From this point of view, for better or for worse they are very regular. Hence one of their most important advantages: they allow the market to be present at all hours, 24 hours a day. This is no small detail, since more hours of trading means more opportunities to be seized.

How to recognise good trading software

Having said that, how do you recognise good trading software? As already mentioned, it’s not easy at all. Also because the offer is very high and quite varied. First of all, it is necessary to make one thing clear: given the need for high average efficiency, there is no better trading software in absolute terms, but software that responds better than others to your specific needs. In order to evaluate the opportunity to buy this or that software, it is necessary first of all to analyse your trading style.

However, here are some tips for choosing good trading software.

Information

First of all, it is necessary to analyse the information that the software developers or owners themselves release, obviously officially. In this way, you make an initial evaluation, however superficial, and you can guess whether or not that software can do the job for you.

The information, marketing elements aside (which are legitimate), should be precise, and clearly indicate how the software works and what it allows to do, even its limitations. This information can be found on the official website dedicated to the software, or even just on the landing pages, which often serve as a summary (as well as a marketing element).

The post Trading Software: How to Recognize first appeared on nobsforex.

In this article, we will try to answer all these questions by describing the pros and cons of each strategy and then conclude with some objective advice on the subject.

What is automatic trading and how it works

Automatic trading is a method of executing orders using pre-programmed automatic trading instructions that take into account variables such as time, price and volume to send small portions of orders to the market over time. They have been developed in such a way that traders do not have to constantly look at charts and manually repeat the kind of operations that can be done systematically.

In order to better understand how it works, let’s start from an example: consider trading on your favourite financial instrument chosen among the British stocks, you have at your disposal the chart with the candles of your horizontal time reference and some technical indicators ready to suggest the moment of entering the market, what in jargon is called signal.

The “signal” is nothing other than an impulse coming from the data processing made by our brain which translates into a movement, that of your hand index which goes to click on the “Buy” button.

Well, if you have a strategy that works most of the time, you could write it in code so that the software automatically does what you would do manually.

It is clear that not everyone has the computer skills to be able to translate your thinking into code that can be exploited by the trading software, so you need to turn to programmers or find ready-made software on the market that is compatible with your trading ideas.

An example of automatic trading software code. Market entry takes place by satisfying a certain type of hypothesis

What is trading with automatic software for and who is it for?

The automatic trading software therefore serves to reset the discretionary part of trading. Traders may have good or bad insights, but execution depends on many factors, such as control of emotionality and speed of execution. It often happens that the movements of a particular financial instrument, especially in short-term trading, are so fast that the trader does not click in time to confirm the purchase that it is no longer convenient to do so. This is because merchant banks use automatic software called HFT (high frequency trading) which execute orders in fractions of a second and therefore at a speed that is not reachable by the human eye, which then sees the movement with a fair delay.

Automatic trading therefore serves to zero discretion, because it is executed independently of our will and automatically managed by the software according to the parameters selected by the operator. As for any other software, the trading software “stupidly” executes what the programmer has written without considering other external factors of distraction.

This aspect is very important because it allows you to overcome all those barriers that do not allow the majority of traders to become profitable in the long term because you will no longer need to follow the charts for hours, stressing and making mistakes due to fatigue or executing operations dictated by the “belly”.

Where to find automatic software for online trading

Automated software is present within all trading platforms, such as the Meta Trader 4. By going to the appropriate section, you can select an infinite amount of software, which can be free or paid for. My advice is not to trust them and to perform back-tests on a demo platform. When you have enough cases on your demo account to define whether the software you have chosen is profitable and compatible with your systems, you can move on to the next step, the real account. To help you with your research, look for software that has some kind of feedback from key users and don’t rely on unknown developers who may have written software full of errors.

The post The automatic forex trading software first appeared on nobsforex.

ETF: a passive fund that replicates index performance

The ETF (or Exchange Traded Fund) is also called a “tracker”. It is a passive fund, as opposed to an active investment fund. The main objective of an active fund is to beat the stock market, while a passive fund aims to replicate the performance of indices in the market. An ETF therefore replicates the performance of certain indices, such as the CAC 40 or commodities.

For example, the CAC 40 tracker is a solution for all those who wish to position themselves in large Britain companies without knowing which one to choose. While some will choose to invest in certain index stocks, buying the tracker allows you to strictly reproduce the performance of the CAC 40 index and its stocks. The main advantage of this practice is the easy diversification of investments. In fact, the tracker places the orders for you, freeing you from having to place all 40 orders yourself.

The different techniques for investing in a stock exchange ETF

Do you want to invest in an ETF but don’t know how to proceed? There are several options available to you:

• or uses a banking establishment or a broker. This technique is generally quite limited, as you will not be able to invest in all index funds. Also be sure to consider any transaction fees that may apply.
• or you invest in an ETF that offers several fiscal envelopes: life insurance, stock savings plan or securities account. Households generally prefer life insurance, which is flexible and tax efficient.
• or you go to an investment platform.

 Which ETF to choose?

You are probably wondering which trackers to invest in. There are many in this area, which leaves you a wide choice. Encourage ETFs that replicate the performance guaranteed by large savings stock indices. You can also choose a tracker that replicates the performance of the global economy. Therefore, choosing the right trackers comes down to considering dividends and replication methods.

ETF: the different types of replication

There are two types of replication in particular:

• physical replication: these ETFs consist of stocks or shares that make up the index. They are used very often in the GBR.
• synthetic replication: these ETFs are mainly used in Europe. Performance replication is partial, meaning that the manager buys only part of the basket of stocks or shares in the benchmark index. It also means that the process assumes a quid pro quo, in the form of a forward contract.

We advise you to choose a physical replica instead, a more transparent solution that offers a better guarantee in the investment process.

Choosing an ETF and considering dividends

Before you make your final choice of ETFs, there are a few things to consider. As far as dividends are concerned, there are two types of mechanism:

the capitalisation tracker: through this, dividends are reinvested in the ETF

the distribution tracker: you receive the dividends received in your securities account, life insurance or stock savings plan.

Please note that if you opt for a funded ETF model, you will not be taxed when the dividend is paid as there will be no distribution but capitalisation. However, the ETF capitalisation formula offers the advantage of not having to reinvest the ETFs in each detachment.

The post How to invest in ETFs? first appeared on nobsforex.

ETFs are preferred investments in 2020 within your life insurance. Run an ETF investment simulation.

Still little known to the general public, ETFs (for Exchange-Traded Fund) or listed index funds, also called trackers, hide under a complicated name a simple and effective way of investing in the stock market.

They allow you to invest instantly and simultaneously in hundreds or even thousands of companies, as well as in government bonds (also called treasury bills).

Definition of an ETF

An index fund is first and foremost an investment fund that seeks to replicate the performance of a stock index. For example, an ETF with the CAC 40 as its benchmark will allow you to invest in all CAC 40 companies instantly and simultaneously. Its performance, as expected, will be equivalent to that of the CAC 40.

The management companies that manage these indexed funds offer you the opportunity to invest your capital in them. Therefore, you no longer need to choose one of the companies to create an asset portfolio, these share baskets allow you to invest in several hundred companies at once.

ETFs differ from other investment funds.

A traditional investment fund (SICAV or FCP) will seek to build up an asset basket, piece by piece, with the aim of “beating the market”, i.e. obtaining a better return than the average of other investors. This approach mobilises a large amount of resources (analysis, research, time) from the management company that markets it. In return, it will charge significant fees. These costs ultimately reduce the return obtained by the investor. As a result, the fund’s objective outperformance is rarely present.

By contrast, an index fund replicates a stock market index. A stock market index is generally composed of the largest companies in a country or industry. It therefore tends to reflect the economic development of a geographical area or an industrial sector. There are also indices for Treasury bills, which combine multi-state bond debt and eco-friendly ETFs.

The objective of an index fund is to follow the performance of its index as closely as possible. It is therefore managed passively: it costs very little.

Advantage of ETFs: low-cost diversification

By investing with a tracker, you have the advantages of a traditional fund without the disadvantages. Your investment is diversified at a lower cost:

• It benefits from the general movement of a geographical area without suffering the failures of an isolated business;
• By eliminating redundant intermediaries, the performance of index funds is not compromised by excessive fees.

Finally, please note that most index funds are traded continuously and are therefore negotiable at any time during stock market opening hours. Issuing management companies intervene regularly to ensure liquidity and a match between their price and that of the underlying index.

How do I invest in an index fund or ETF?

To invest in an index fund, you have two options. The first is to go through a broker or your bank. However, be careful, not all offer the possibility of investing in index funds. You should also be aware of the transaction fees charged by your establishment. Finally, you will need to choose carefully the index funds in which to invest. A financial investment adviser can help you build your portfolio. 

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