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Tuesday, October 7, 2014

Use a stock trading game to master Wall Street!

Have you ever dreamed about becoming the new King (or Queen) of Wall Street, even though you may only have a very limited trading experience? Fortunately, there's a tool in town that can mimic the real stock market very closely, allowing you to develop new insights and strategies that top investors use to win the market. A stock trading game is like learning to fly without the risks of actually doing it. It can be one of the most powerful ways to learn about stock trading, without having to put thousands of dollars or any of your own money for that matter at risk.

Thursday, October 2, 2014

What you probably didn't know about ETFs...

The strength of an Exchange Traded Fund lies its simplicity, right?. By simply following the index you'll know one thing for sure: you'll never beat it. But that also means that many actively managed mutual funds don't beat them either and actually are not worth investing in, but as the saying goes: if you can't beat them, join them.


The first ETF was introduced on January 22, 1993. State Street launched the SPDR S&P 500 ETF. The portfolio consisted simply of the 500 companies of the S&P 500 index and was calculated the same way as the Index itself, and is a physical replication of the underlying index (which is called 'full replication' in trader's lingo). Simple, transparent, and cheap too!, because the ETF calculates a rate of only 0.0945% as a result of an ongoing price war in the ETF markets. You'd pay ten times the amount if you would trade an equity fund (about 1%).

A lot has changed in the world of ETFs since then. Total assets under management in ETFs has increased to $2600 billion, spread over about 4,000 ETFs. Especially in the United States there has been a strong growth. In Europe, the ETF train is starting to get going as well.

But what is it that you probably don't know about ETFs and SHOULD? 

Sunday, September 28, 2014

My hate/love relationship with Twitter...

Sure, I (often) brag about trades that went great, but sometimes there is that moment when you find out that you were entirely wrong about a company and its stock. To be honest, also that needs to be addressed I think. Twitter is one of those trades that went horribly wrong for instance. Back in November of last year, when Twitter launched its IPO, I couldn't be more skeptical. In fact, if you read the post I wrote you'd think Twitter would be out of business by now. Boy was I wrong. I should've bought it instead of going short, but luckily I had my stop-loss so my financial losses weren't that great, but still... I could've doubled my investment!


It turned out that Twitter is indeed worth its stock price. I switched to the other side and am now very bullish, although it wasn't that long ago when I was still very bearish about this company. At the end of July (as you can see on the chart above) Twitter's stock price surged and that was my conformation that it wasn't all just a hype, this stock is truly a gem. Sure I've been wrong before of course, but what was is that made me think Twitter's stock  would tank?

Risk

Any IPO carries some sort of risk. Although that's the case with a stock has been trading for some time, an IPO has that extra risk attached to it. This is mainly due to the fact that you don't know how the market will react to the newcomer. In Twitter's case, it wasn't making any money. The future prospects weren't all that rosy either with, to me, a vague businessplan and noone seemed to use Twitter as intensively as Facebook or G+ for instance. I even uttered numerous times 'how many users are actually human and not duplicate robot (automated) systems with a Twitter profile?'

Popularity

It turned out there were much more people interested in Twitter than I initially thought. It's true. Every (important/famous) person seems to have a Twitter profile. You can even follow TV shows or sporting events on Twitter with a Smart-TV that has that integrated feature... major! I should've seen that Twitter is much more prominent. That's where I went wrong. 

Lesson learned: do not short populair IPO's but rather wait a few weeks or months to see if the company can uphold its stock price.

Am I a buyer?

Interested, but not at this price. I think I can get a way better deal after a pullback but I definately want Twitter in my long term portfolio!

By: +John van der Munnik 

Tuesday, July 8, 2014

BACK TO BASICS: Are you a trader?

Welcome to the first episode of 'Back to Basics' on VDM Trading. Hopefully it's going to be one of your valuable sources to become a better trader. This information is mainly for people who want to learn to trade the financial markets themselves ('DIY' traders), without the assistance of an adviser, so they retain complete control over their portfolio, and hopefully make profitable trades consistently.

Answer my first question, and let's see if it's worth your time.

Monday, July 7, 2014

Lower unemployment, higher interest rates?

For the past couple of months, one of the main topics of conversation in the financial press is currently under which conditions the buyback program in the United States should be rolled back, and when the Fed will/should raise interest rates again. The most important aspect regarding this issue has been unemployment.

In the meantime, the official unemployment rate in the United States has decreased to 6.1 percent, according to the BLS (Bureau of Labor Statistics). For the fifth consecutive month about 288,000 jobs were created, the best progression since 2000! However, there's still the issue of low wages. One of the reasons why the Dow closed above a historic 17,000 points is that companies are raking in profits due to fact that there are low wages, and they're collecting profits from (still growing) emerging markets. Of course they're also still taking advantage of next-to-zero interest rates.

Saturday, June 28, 2014

Apple, an (almost) perfect dividend stock

Almost everyone I talk to has an opinion when it comes to Apple (AAPL). Plenty of critics out there: Apple's innovation is lacking, profits are stagnating and Tim Cook, Steve Job's successor, would not be good enough to lead the company to a better tomorrow. They're valid points that worries traders, but the fact remains that Apple is simply a great company and an almost perfect dividend stock.

Monday, June 9, 2014

Bullish on VIX, Bearish on XIV, volatility WILL happen

 TRADING ALERT 
The volatility index (VIX), also known as the panic index, or fear gauge, is at its lowest level since a long time. At 10.73 to be precise, at this time of writing. Around January 2007 it was around these levels - more than 7 years ago! In fact, I don't remember it even dipping below 10. In any case it looks very interesting to me. This is mainly due to the fact that this level strikes me as insane. Civil war in Syria, unrest in the Middle East, Europe not being able to keep its currency under control and tensions in Asia, yet the volatility index is at it lowest level (ever?). I think any range in the 10 'zone' is a reason to look at this index and be optimistic.


How to play?

But how do we play this trade? I personally like the XIV (VelocityShares' Daily Inverse VIX Short-Term ETN), the VIX backwards (get it) index. This ETN trades like a stock, and goes up when the VIX goes down. The XIV is a short term exchange traded note, which means less risk than the VXX (mid term, not inverse so keep in mind that if the VIX goes up, the VXX goes up as well). The XIV doesn't have options, unlike the VXX that does allow you to trade options contracts.

Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.