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What Is Seasonality? In finance, the term seasonality is used to describe periodic trends in supply/demand, business performance and asset pricing. This phenomenon occurs consistently on an annual basis, in concert with regional weather patterns, economic data releases or the celebration of assorted holidays. Seasonality is an important factor to consider when crafting investment decisions. If left unchecked, the enhanced volatility and market turbulence attributable to these trends can increase…

Whether you are trading foreign currencies, futures or stocks, securing the services of a top-notch broker is an important first step. While brokerage firms are bound by extensive regulatory guidelines and required to preserve the integrity of the markets, not all brokers are created equal. Finding the one best suited to satisfy your unique trade-related needs is the name of the game. As of year-end 2018, the Financial Industry Regulatory…

The stock market has offered investors compelling returns over the years, but those rewards are certainly not without risks. Investors can potentially benefit greatly from trading stocks, but you need to research this particular market thoroughly before getting started. No investment comes without risk, and the stock market is known for being volatile. Anyone who is not familiar with this volatility only needs to study famous market crashes, like those…

The global equities markets are opportune environments for active traders and investors alike. Whether you're building a retirement portfolio or pursuing profitability from speculative endeavours, online stock trading could be a viable way of achieving any number of financial objectives. Fortunately for aspiring stock traders, getting started in the markets isn't all too difficult. In fact, it is possible to begin your journey into the marketplace by completing five basic…

What Is Contribution Margin? Contribution margin is a business accounting term that measures the difference between sales revenue and the variable costs to produce or sell a product. It shows the amount of profitability a company would achieve once it covers its fixed costs, i.e., its breakeven point. A company's fixed costs remain basically the same whether it makes or sells one unit or thousands. The most common fixed costs…

What Is A Credit Default Swap? A credit default swap (CDS) is a financial derivatives contract that acts as an insurance policy that an investor takes out in order to protect against a bond issuer defaulting on its obligations to pay interest and repay principal. The investor "swaps" their risk with an insurance company, a bank, or a hedge fund. The institution accepts the risk against the bond, defaulting in…

What Is The Bank For International Settlements? The Bank for International Settlements (BIS), also known as "the bank for central banks," defines its mission as being an "international organisation that serves central banks and other financial authorities across the globe to build a greater collective understanding of the world economy, fosters international cooperation among them and supports them in the pursuit of global monetary and financial stability." Based in Basel,…

A "pump and dump" is an illegal scheme used to artificially boost the price of a stock by making false and misleading claims about a company's business prospects. Then, the shares are sold before the fraud becomes known, at which point the stock price usually plummets and the unsuspecting investors lose their money. Pump and dump scams have been around for a long time but are now more commonly perpetrated…

The quick ratio is an accounting formula that measures a company's short-term liquidity. Also known as the "acid test" ratio, the quick ratio is a more stringent measurement than the current ratio of a company's ability to meet its most short-term obligations, usually those due within 90 days. The formula for calculating the quick ratio is: Quick Ratio = (Cash + Marketable Securities + Receivables)/Current Liabilities Basically, the quick ratio…

The current ratio is a business accounting formula that measures a company's ability to pay its short-term obligations, namely those due within a year. The mathematical formula is expressed as: Current Ratio = Current Assets/Current Liabilities Current assets include cash and cash equivalents, securities that can be sold quickly, short-term investments, accounts receivable, short-term notes receivable, inventories and supplies, and prepayments. Current liabilities, which are obligations that must be paid…

A collar strategy is a defensive equity play in which an investor seeks to limit the downside in a stock in exchange for forgoing some of the upside potential. This strategy is also known as a hedge wrapper. The investor buys a long position in a stock, in which he will benefit if the price goes up, although the strategy can also be accomplished without actually buying the underlying stock.…