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Using Instalments in a Dividend Yield Play

Use Instalment Warrant with Dividend Yield Play

The stock market is an unpredictable world, profits can soar and drop like dead weight in a matter of minutes. Traders employ their own personal tactics and make profit as much as they can. With a consistent strategy, any John Doe can make money in the stock market. One of the most popular gearing form is instalment warrant, coupled with dividend yield play you can make some smart moves at a fraction of the cost.

What is Instalment Warrant?

Introduction to Instalment Warrant

Essentially Instalment warrant can be summarised in one sentence, buy now and pay the rest later. As it name suggests, investors can pay in instalments - partially pay for a share now then pay the outstanding amount in another instalment late on.

The main feature of this strategy is that the investor can pay an initial outlay of 20-50 percent and receive all the benefits during the time period, namely all dividends and franking credits. They can also buy and sell their warrants just like ordinary shares.

What is Dividend Yield Play?

Learn about Dividend Yield Play.

Dividend yield play is a strategy suited for investors with a moderate risk profile. However, this requires monitoring your investment portfolio on a regular basis. The strategy aims to generate a regular stream of income by using the same capital investment of the company.

Calculating Share Price

Everything about share price calculation.

Share price is the price of one share of stock. Although it can appear like an arcane value, fluctuating with the market, share price is simply market capitalisation (company value) divided by number of shares issued by the company. A company with an IPO will usually have advisors to determine share price value for the company. Share price is determined before it is subjected to buyer and seller impact.

Franked Dividends

Learn about franked dividends.

In Australia, franked dividends is the practice of issuing a dividend with a personal tax credit attached. Franked dividends serve the purpose of avoiding the anomaly of double taxation of dividends. The amount of the tax credit depends upon the issuer's tax rate and the amount of the dividend.

Trade Options

Everything about trade options.

Shares and options are both traded on the ASX. Shares are evidenced by a stock certificate, while options are contracts.

An option is the right to buy or sell property at an agreed price; the right is purchased. It is also a contract between a buyer and a seller that gives the buyer of the option the right, but not the obligation, to buy/sell a specified asset. If not exercised by a stated date the money is forfeited.


Trading Timeframes from Entry to Exit Points

Learn about trading timeframes, entry and exit points.

Strategy is essential when you start trading, and part of that strategy is using timeframes. A timeframe is the relative amount of time that you expect to spend in a share. Each time frame displays the same data, but in different intervals. Examples of intraday timeframes are 60-minute, 30-minute, 15-minute, 10-minute, 5-minute, 3-minute, and 1-minute. Typical preferred share trading time frames are longer: monthly, weekly and daily.

Picking the Right Stock

Learn about picking the right stock.

You trade because you want to profit, and you do this by picking the right stock or taking advantage of a stock moving in the "right" direction. Stock selection requires a lot of research and knowledge about the stock market. It's akin to choosing a great cricket team.

For the beginner trader, the 2000 companies listed on the ASX can be daunting. Research is your friend, and make sure to have a goal so you can develop the strategy to help you reach it.

Here are some tips to select the right stock:

Share Dilution

Learn about share dilution and how to calculate it.

You can invest in a business by buying stocks (equity) or bonds (debt). You become part owner of the business when you buy stock, and you loan money to a corporate or government entity when you buy bonds. Profits are paid to shareholders in the form of dividends, and earnings are calculated on a per-share basis. Sometimes a company will issue a lot of shares, resulting in shareholder earning less. This is when share value becomes diluted.

Bots or Technical Robots

Learn about technical robots or bots

The chess magnate Gary Kasparov's career went downhill when he faced his greatest nemesis - Deep Blue. And were not even talking to a human player but a chess software that made the giant fell on his knees. Truly, artificial intelligence is a force to reckon with not just with sports but with gambling, and now in stock trading. These trading robots are known as "bots."

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