An IPO and How it Affects the Stock Market

There are a number of reasons for a private company to offer its stock for sale to the public by means of an IPO or Initial Public Offering. The two main reasons seem to be a need by smaller companies to raise capital for expansion or larger privately owned companies that seek the status of being listed on an equities exchange, where their stock becomes publicly traded, accompanied by the publicity surrounding an IPO. In many cases, once a company has made an IPO, these stocks are then available to trade on many binary options trading platforms.

The IPO Process

The IPO process starts with the company obtaining the services of an underwriting firm who will typically advise on the type of security that should be issued,  whether the offer should be for common stock or preferred stock, the optimum price at which  the stock should be offered as well as the timing for its opening on the market.

Very often, a portion of the stock being offered in the IPO is placed privately shortly before the IPO date of entering in to the market. Such a private offering usually involves the sale of stock to equity or hedge funds and would generally be at a lower price than the IPO because such investments are usually pretty large. The discounted price would also typically include a lock-up period during which the purchaser would not be able to sell the stock. Companies generally view stock sold in this fashion to represent a long term investment by the fund purchasing the stock.

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The offer price is determined a few days before the IPO by the underwriter in consultation with banks and brokerage houses who are able to ascertain the expected demand for the stock from their clients who have expressed an interest in purchasing shares. The offer price will often be the price paid by institutional investors who have agreed to purchase the stock a few days before the IPO. Individual investors buying the stock after the IPO would usually have to pay a premium for the stock as the market generally opens higher than the IPO on the first day the stock is traded.

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Private Investor and the IPO

An IPO would typically generate a large amount of hype for its debut day on the market with a lot of media and investor attention focused on the company and the stock market in question. There are several fundamental questions about an IPO that should be considered by investors before getting caught in the excitement of the occasion.

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An IPO company does not have a history or a track record that can be used as basis for any investment decisions. The IPO itself is an offer to sell stock and is at the same time designed to entice investors to purchase the stock and should always be viewed with a degree of cynicism. Important factors that can be checked are the quality of the management team as well as the intended use of the capital raised from the IPO. These facts very often give pointers as to where the price of the stock is headed. The standing of the underwriter should also be taken into account as a successful and larger underwriter will generally not involve itself with a questionable IPO, while smaller investment banks might well be tempted to underwrite a risky IPO.

On the upside, many binary options brokers, such as Option.FM, usually provide detailed information on a company’s IPO which enables traders be informed before they trade. In binary options trading, a trader does not actually purchase the asset but merely makes a prediction of the direction that the price will move. Collecting as much information from your broker will help you to trade more accurately. 

The Day After

Stocks will generally close at a premium to the IPO price after the first day of trading and unscrupulous investors, who acquired stock before the IPO, can be tempted to offer the stock within a few days of opening. This practice, which is called flipping, is discouraged by brokerages and reputable investment houses alike, but it does happen as investors decide to take a profit by disposing of the stock. Remember to keep this in mind when you make your trade on the Option.FM trading platform. Stock prices fluctuate all the time but if there is an indication that the price will rise on the first day of the IPO, this might be a good opportunity to make a Call option trade.

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Flipping is the very reason why reputable underwriters would rather offer pre IPO stock to equity and other large investors who look for long term investments and are happy to have a lock-up period, rather than looking to make a quick buck. You will notice that many IPOs that have big opening days come back to earth very quickly and for this reason it’s not advisable to buy stocks of an IPO if you are a small investor.

Importance of the Lock-up Period

We discussed the importance of the lock-up period earlier in this article, where the company doing the IPO looks for long term investors who can add value to company with further investment or injections of capital. Investors do sometimes become disenchanted with investments that they have made and will try to offload the stock as soon as the lock-up period ends, which may result in the stock dropping substantially in price. The result might create a buying opportunity for smaller investors at a lower price, as well as a great investment opportunity for binary options traders to make Put option trades.

It is for this reason that some investors recommend that you stay away from an IPO during the first few months, unless you have been fortunate enough to buy at the IPO price. Professional analysts at Option.fm take the view that news of hedge fund or equity investor stock sales creates fertile ground for binary options traders as prices seem to follow a directional trend quite strongly.

 

Remain Level Headed

 

Underwriters are professional salesmen and their function is to create as much publicity as possible for the IPO to ensure that investors are queuing up to buy the stock which pushes the price up and results in a successful IPO for the underwriter. Don’t rush out to buy the stock because it’s an IPO and the underwriter says it a great investment. Check the stock out and if it looks to be a good investment then that should be the only reason to trade.

The Importance Of Live Forex Rates

Just like any professional can’t do without their tools of trade, you can’t be a successful forex trader without proper real time charts. Forex charts are more than numbers and charts; they allow traders to perform both technical and fundamental analysis of the different currency pairs and stocks. In addition, they offer valuable historic data on the current currency rates, letting the traders at XFR Financial Limited have a broader view of the market. Since different traders have different methods of trading and charting preferences, there is quite a huge selection of charts available.

What Do Live Forex Rates Offer?

Live forex rates offer a way for traders to view the general status of the foreign exchange market, in order to be in a better position to identify and predict the different markets patterns and behaviors. This is very vital for both technical and fundamental analysis in forex trading. Technical analysis usually focuses on comparing the actual event in the markets with known patterns, while fundamental analysis puts emphasis on determining the correlation between the visible trends in the charts as well as macro events like economic and political events.

For traders to profit in forex trading, it is crucial to understand the important points such as resistance and support levels as well as other indicators, which should be aligned up to indicate if a certain level will break or hold. Looking at these indicators can be essential in formulating a strategy that is applicable for that period. You can join a service that assists you in identifying, reading, and analyzing Live forex rates if you are serious about making good profits in the forex market.

XFR Financial Limited And Charting

Charting comes in many different types, and you should choose the one XFR Financial Limited provides that offer the kind of visualization that will help you best in analyzing the charts. Line charts are some of the simplest forms of charts, and are ideal in highlighting the resistance and support levels of the instruments. They are usually based on the closing rates of each time unit, and result into the formation of a single homogenous line.

Bar charts normally have three separate rates per unit of time, the closing, the high, and the low rates. Some forms of bar charts have the opening rates for each period. Point and figure charts are typically based on the price and will not offer the trader any form of linear representation of time elements. Candlesticks charts are the most commonly used, and they feature prices at the opening, high, low, and closing points in each selected period.

Dark candles show declines while transparent candles show increases. There are other charts beyond these basic types, with some providing you with a combination of data to help you analyze the market better, identify patterns and movements, and ideally strategize on your trades to enhance your predictions.

Regardless of whether you are a beginner or an advanced forex trader at XFR Financial Limited, you should have everything you need as you trade in one place. Live forex rates can be shown via software that offers real-time rates, charting, news, and advice, some even offering a chance to communicate with other traders.  Such software is ideal for you.

Running an Office: How to Cut Your Costs

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The world of commerce has never been more competitive. In the wake of the financial recession, only the strongest and most successful companies remain, and for smaller enterprises and those new to the scene, simply breaking even can be incredibly difficult.

One of the greatest costs of owning a business is running your office. Property is expensive, and maintaining it really adds up. From hiring cleaning staff to keep up appearances, to investing in the computers and desks to furnish it, the price of a place of your own is seemingly endless.

Luckily, most of us are actually spending an awful lot more than we need to. If you have to cut back, then here are a few tips to help you…

Choose a Furnished and Serviced Office

When entrepreneurs are looking to save money, most of them tend to discount furnished and serviced offices out of hand. Rental prices tend to be significantly higher than those of their more ill kept counterparts, so they walk away, and don’t stop to consider what their money is actually buying them. In fact, when you choose a furnished or serviced office, your capital is going an awfully long way. You get furniture, IT equipment, maintenance and cleaning teams, and even front of house staff. The result is that you don’t have to pay for any of this yourself, saving you a lot of cash in the long run.

Hire a Virtual Secretary

If a furnished or serviced office is still beyond your budget, then the likelihood is that the workers needed to run it are also out of your reach. Unfortunately, these employees can do an awful lot of good for your image, so doing without them entirely can be detrimental to your business in the long run. A virtual secretary could be the answer that you’re looking for. These professionals are available for bargain basement prices, and they’re experienced, capable, and knowledgeable enough to field your calls, handle your administration, and boost your brand. If you can’t afford to employ someone full time, then contacting a suitable agency might be the ideal solution to your problems.

Create the Illusion of Prosperity without the Price Tag

One of the most important functions of your office is to bolster your image, yet the best properties often come with a price tag to match. Out of town, rural, and basic buildings will do little to help your professional reputation, yet it’s possible to create the illusion of prosperity without paying for it fulltime. If you have a client to impress, then executive meeting rooms might be the ideal solution. Available from companies like LEO, these fantastically furnished set-ups will make you seem highbrow, successful, and reliable, helping you to build the bonds that you need.

Cut your costs and boost your business today with these simple tips and tricks.