Monthly Archive: September 2021

What Are LUPA Stocks? How to Trade.

Spark Global Limited reports:

You’ve probably heard stock traders talk about “LUPA” stocks. But what are they?

LUPA is a relatively new acronym for four well-known tech companies that have gone public for the first time in recent years:

Lyft company
Super tech
Pinterest company
reality
The first letter of each stock is LUPA. These stocks are also known as “Paul” stocks.

In this article, we will first look at The LUPA stock as a whole and then delve into each stock.

Leader’s stock
LUPA’s shares are often lumped together for a number of reasons. First, they are all technology companies, which means they often operate in the same market segments.

Lyft and Uber, for example, both run online ride-hailing services, Pinterest runs an image-based social media network and Airbnb is an online home-sharing giant.

Second, before they went public, these companies were “unicorns,” meaning private equity investors valued each company at more than $1 billion. Finally, they are all recent public companies with large losses and rapid growth in the public markets.

Below we take an in-depth look at each of LUPA’s stocks to help you understand their business model and growth potential.

Lyft(NASDAQ :Lyft)
Lyft began trading on NASDAQ on March 29, 2019, and became the first ride-hailing company to go public in a highly anticipated listing valued at about $18 billion.

Lyft and rival Uber have been battling for dominance in the ride-hailing industry for years.

However, Lyft is only available in Canada and the United States, unlike Uber, which spans the globe. Lyft has about 35 per cent market share in the US.

But Lyft, like Uber, is very unprofitable. The two companies offer basically the same basic services, so the competition comes down to market share, driver pay and other factors that can help them achieve positive cash flow.

Lyft’s shares soared 8.7% on their first day of trading, opening at $87.24, well above its initial public offering price of $72 a share. But the stock has taken a sizable hit since completing the IPO. The company is currently trading at $57.06 per share, giving it a market capitalization of about $18.79 billion.

Super (NYSE: Breast)
Uber went public in May 2019, 10 years after The company was founded by Garrett Camp and Travis Kalanick. Lyft’s rivals priced its IPO at $45 a share, valuing it at about $82.4 billion. The company raised $8.1 billion in its IPO.

But the company’s stock has fallen since its debut. At the time of writing, Uber shares were currently trading at $49.80.

Investors have been concerned about the company’s business model and workplace culture. Uber has been hit by a series of scandals, including sexual harassment, embarrassing leaks about executive behavior and suspected spying programs. Kalanick was ousted as CEO of the ride-hailing giant in 2017 after a shareholder revolt.

The company also faces stiff competition in ridesharing and food delivery, and the price war with Lyft and other rivals is expected to continue in each market.

While Uber CEO Dara Khosrowshahi called the first quarter of 2021 “the best quarter ever,” with all-time high gross bookings, the company still recorded a net loss of $108 million.

However, that was a huge improvement over the $968 million net loss the company recorded in the fourth quarter of 2020.

Pinterest (NYSE: Pin)
Pinterest is a social media site that allows users to discover new interests through visual sharing and by “pinning” videos or images to their own or others’ boards and viewing what users have nailed down.

People use it for all kinds of inspiration, like interior design, cooking, clothing and travel. Simply put, it is a visual platform, optimized to inspire users with new ideas and an understanding of one’s taste.

Pinterest shares began trading in April 2019, valuing the company at $10 billion.

Pinterest has been able to put together a stable business since it was founded in 2010. As of January 2021, the company ranks 14th in the world in terms of global active users. It ranks below social networks like Facebook, Snapchat, Instagram and TikTok, but above Twitter.

Pinterest added more than 100 million monthly active users in 2020, its biggest increase ever. While the company won’t pose much of a threat to social media giants Google and Facebook, some analysts believe it still has room to grow.

Its core concept is to inspire users through products, ideas and so on, and create value for shareholders and users. Over the past year, the company has improved its average revenue per user (ARPU) significantly across all markets, and user growth is reasonable.

What is a Thinly Traded Stock?

Spark Global Limited reports:

If you’re new to the trading world, you might hear traders refer to a particular stock as “thinly traded” in conversation, which leaves you a little confused.

Don’t worry, because you’ll find us traders coming up with a ton of jargon for the simplest of concepts, and most of the time, there’s no complicated explanation behind it.

In this context, a “thinly traded” stock is one that doesn’t trade very often.

The stock may have only a handful of trades a day, compared with hundreds of thousands for a stock like Apple (AAPL).

Why is this important? Because when you buy a stock, someone has to sell it to you, or if you want to sell a stock, someone has to buy it from you. If you want to buy or sell quickly, you need someone to wait in the market to buy or sell from you at a fair price.

If no one is waiting for you in the market, you may have to bid a high price to get a seller to sell you their shares.

That’s not a problem for an active stock like Apple, because at any given time there are thousands of people buying or selling at a reasonable price.

That can be a real problem for thinly traded stocks. Let’s say you already own stock and you really need to sell it. Maybe prices are falling, or you need to raise cash to buy a new home. Whatever the reason, you need the money asap!

If you really need to sell now, you must accept the highest offer in the current market. For a thinly traded stock, that could be a big discount to its recent trading price.

How do you know if a stock is thinly traded?
In financial markets, there is a concept of “liquidity”, which refers to your ability to trade (buy or sell) assets such as stocks, bonds or property quickly without getting a bad price.

Let’s use a real life example that we’re all familiar with.

Let’s say you’re a real estate flipper. You’re interested in a foreclosed house, and it’s in bad shape. The listing price is pretty attractive, and by talking to the realtor, you feel you can get a better deal. You and your team are good at fixing houses, so you’re confident about it.

But what is the next worry?

Because you’ll be mortgaging your house for the duration of the fixed N ‘flip operation, you’ll be spending money every month.

So the faster you throw, the more profit you make. In a really bad case, if you have a hard time selling it, you could lose money because you have to make a lot of mortgage payments before you can sell it.

So you really need to think about how quickly you can sell the house after you fix it.

You can determine this by looking at local real estate statistics, such as how long the average home has been on the market, how many homes are currently on the market (inventory), or how many homes in the neighborhood are dropping their listing prices (indicating buyers aren’t interested).

 

Do Trade With The Money Flow Index (MFI)

Spark Global Limited reports:

The Money Flow Index (MFI) is a revised RSI indicator with an additional quantitative component added. Simply put, think of MFI as an RSI reflecting volume differences.

The Fund Flow Index (MFI) is a widely used measure by investors and day traders. This is an example of a classification of indicators that measure flow in technical analysis.

MFI was originally developed by two analysts, Avrum Soudack and Gene Quong. Avrum and Quong applied a volumetric calculator to Wilder’s original index, the relative strength index (RSI), a common oscillator used by Wells Wilder.

MFI is one of many other metrics created by applying additional data to Wilder’s original RSI formula.

Another example of an “update” to the RSI is Constance Brown’s Composite Index, which measures momentum in RSI. It is a simple approach to think of MFI as a volume-weighted RSI.

Note that, like the RSI, the MFI is considered to be a bounded oscillator, meaning that it only measures and prints values between 100 and 0.
Money flow index (MFI) formula
MFI measures incoming and outgoing of the tool by labeling “up” and “down” days.

When you look at where the MFI line is on the chart, you’re looking at the average price over the same period times the volume over the same period. The first part of the formula is to determine the value of money flow:

MF = {(High + Low + Close) / 3} *

After the money flow quantity value, the money flow ratio (MFR) is calculated.

If the MF is larger than the previous period, this is called positive fund flow (PMF), and if it is negative fund flow (NMF). The default period of MFI is 14.

To determine the liquidity ratio, divide the sum of the total PMFs within the 14-cycle range by the sum of the total NMFs within the same range.

MFR = total PMFs/total NMF

Once MF and MFR are established, final calculations are made to provide MFI values:

Mfi = 100 – (100 / (1 + mfr))

How do I use MFI
Thankfully, all of the above calculations are automated.

While the way MFI is calculated may seem wordy, thankfully the way traders use it for analysis is more straightforward.

Since MFI is derived from the Wilder RELATIVE Strength Index, it is not surprising that MFI uses many of the same data to identify trading opportunities. This is done primarily by identifying differences.

The spread is a structural difference between an instrument’s price chart and the corresponding oscillator. The main differences in the RSI that Wilder drew attention to were:

Conventional bullish divergence
Conventional bearish divergence
Hidden bullish divergence
Hidden bearish divergence
The same type of difference exists in MFI. However, note the difference between regular divergence and hidden divergence.

The regular bullish and bearish divergence gives traders a warning that the current trend may soon end and turn into a correction or broader reversal. Conventional divergence is inverse trend analysis.

Hidden bullish and bearish divergence gives traders a warning that the market may return to its previous trend. Hidden differences almost always emerge at the end of corrective action. You’ll often see them in bullish and bearish continuation patterns, such as flags and pennants.

What are cult stocks and how should you trade them?

Spark Global Limited reports:

Browse any major financial website and you are likely to see an article about “alternative stocks”. If you’re new to stock trading, this can be very confusing. Are they talking about a company engaging in nefarious activities?

The truth is much simpler.

A ‘cult stock’ is a stock that has a loyal, vocal investor base that is very bullish on the future potential of a company despite the disconnect between its fundamentals and its stock price.

It’s the same idea as “cult movies,” where a film develops a small but significant and absolutely dedicated fan base, which then expands over time.

Read on for a deeper understanding of cult stocks and some of the ways you can trade these types of stocks.

How does a stock become a hot stock
Generally speaking, a stock is called a “cult stock” if it changes hands based on market enthusiasm and sentiment rather than traditional market fundamentals.

“Cult stocks” are often thought of as nascent stocks that tend to lie dormant for a long time. For years, traders have focused on these stocks because they expect them to deliver big returns soon.

The example of alternative stocks
GameStop
GameStop(NYSE :GME) is the perfect example of a cult stock. The video game retailer’s shares are trading at levels unimaginable just a year ago.

The stock is up more than 1,363% so far in 2021, helped by millions of small traders who teamed up on a Reddit forum called WallStreetBets to push the stock higher and squeeze large institutional investors who bet against it.

If you bought the company’s stock for $5,000 this year, you’ll have a lot to smile about: $73,166, to be exact.

However, stock traders and analysts don’t expect GameStop to be profitable this year or next. Revenue growth is slowing because gamers no longer need to go to a physical store (or even buy from online retailers) when they can download new games directly to a console, PC, tablet or phone.

While GameStop’s fundamentals may one day come into play again, for now the stock has become the most influential display for the average day trader in a market that seems more like their everyday plaything.

GameStop has undergone a major management shake-up in recent months, led by former Chewy(NYSE :CHWY) CEO Ryan Cohen. Cohen invested heavily in the video game retailer last year and joined the company’s board in January.

GameStop is a “hot stock because of Ryan Cohen’s success with Chewy,” says Michael Pachter, an analyst at Wedbush, and retail investors “seem confident in the full spectrum of things he can do that will add a lot to their earnings.”

What is day trading?

Spark Global Limited reports:

Day trading has surged in popularity in recent years, but what is it and why is it important?

According to the SECURITIES and Exchange Commission, day traders hold a stock for a few seconds or minutes in the hope that the price will continue to rise or fall in order to quickly lock in profits and quickly buy, sell, or short a stock throughout the day.

Day trading is a great way to make money and achieve financial independence. You can day trade in almost any market, though stocks, options, index futures, cryptocurrencies and forex are the most common.

But what is day trading? What is day trading? Today, we’re going to tell you the most important things you need to know about day trading.

What is day trading?
Day trading refers to buying and selling stocks or financial instruments for the purpose of making a profit during a single trading day.

When day traders trade stocks, they want to take advantage of the day’s price movements rather than trading overnight.

For example, if you buy GameStop stock (GME DOLLARS) on Monday, you have to sell it that day to be considered trading of the day.

Take a closer look at day trading and the associated risks
Day traders rely on sentiment and stock charts to generate trading ideas rather than basic data.

These traders typically trade only a small number of stocks or securities — sometimes just one — and have a detailed understanding of how those particular securities respond to events. This allows them to predict how prices will react, allowing them to trade profitably.

This type of speculation is common in stock markets and foreign exchange trading. But day traders can also trade exchange-traded funds, cryptocurrencies, bonds or commodities such as precious metals or crude oil. They can also trade futures or options — different types of derivative contracts.

Day trading is often portrayed in the media as a potentially high return and exciting endeavor. However, most junior day traders lose money because the practice carries a lot of risk that can lead to a person losing tens of thousands of dollars very quickly.

While most aspiring day traders seek financial security and freedom, one must adopt a trading strategy in order to be a successful trader.

Day traders have a wide range of trading strategies to choose from, but it is important to note that not every strategy will work in every market cycle and certain day trading styles may not be ideal.

If you don’t have a good trading strategy, you probably don’t have risk management, and you’re likely to blow up your account in a short period of time, like 90% of day traders.

Four risk factors for the accumulation of risk in financial markets

Spark Global Limited reports:

Until everyone needs liquidity at the same time, it is hard to know how much leverage there is in the market.

Leverage can gather quietly in strange corners of the market, as the 2008 financial crisis and the recent collapse of Archaegos demonstrated.

I mean, who would have thought a bunch of media stocks like Viacom or Discovery would be at the forefront of a liquidity event?

Before we continue, let’s give a rough definition of leverage, because it means different things in the software world than it does in financial markets.

In this article, we will analyze the current level of leverage in the market through transparent data sources and try to estimate where the hidden leverage is.

The dangers of leverage
The dangers of leverage bring us back to the most basic practice in finance: lending. Banks lend, customers borrow.

Unsecured loans are based entirely on credit. If the borrower defaults, the bank is in trouble. Secured loans are loans backed by collateral, meaning that in the event of a default, banks have some assets tied to the loan that they can seize to cover some of the losses. That’s how mortgages work.

When conditions worsen, as they did in 2008, the value of customer collateral falls. So banks need more collateral so they don’t lose a lot of money if they default.

When banks demand more collateral from borrowers, they either default or raise cash in other ways.

They typically raise cash by selling other liquid assets. When everyone is selling liquid assets at the same time, it puts further downward pressure on prices across the industry, leading to a recession.

Borrowers have been hollowed out, either selling their assets at rock-bottom prices just to meet loan requirements, or they have defaulted on their loans and are now bankrupt. The banks lost a lot of money because a bunch of their loans went bad.

So you can see that if we toughen up the system, people borrow far more than they can afford, and banks lend, the negative feedback loop gets even worse.

There are many fascinating explanations for how the 2008 financial crisis happened, but at the most basic level it was about too much leverage in the financial system.

Today, we look back at the sources of dangerous and potentially hidden leverage in today’s financial system.

No, we do not cite 2008 to say that the financial system is in a similar situation today. Rather, we use it to illustrate the dangers of leverage.

First, we’ll review some publicly available data from the Financial Industry Regulatory Authority.

Margin debt is at an all-time high
One number we can transparently access is the total margin debt of finRA registered broker-dealers. FINRA is the self-regulatory body that regulates the security industry, and one of its responsibilities is to regulate registered broker-dealers.

These registered broker-dealers are required by FinRA to report certain data on their clients to ensure regulatory compliance, including the level of margin used by customers.

These data basically show us how much debt investors are getting into their brokers through margin debt. It answers the question: How much money do clients use that is not their own? That number has grown steadily since FINRA began collecting data in the late 1990s.

Below is our chart using a logarithmic scale of total debit balances on margin accounts for FINRA broker-dealer customers since 1997.

As you can see, the level of margin debt fluctuates with the market itself, but overall the number has been rising steadily and is now at an all-time high.

How To Draw Fibonacci Levels

Spark Global Limited reports:

If you are an active day trader, you probably realize that Fibonacci retractions and extensions are the most important and useful tools in all price activity.

Day traders and technical analysts can use Fibonacci level analysis to identify entry levels, target profit taking, and determine stop loss levels.

In this guide, we will explain exactly how to plot Fibonacci levels so that you can better decide when to enter and exit trades.

What are Fibonacci numbers and ratios?
The Fibonacci sequence, sometimes called the Golden ratio, is a string of numbers in which each number is the sum of the first two.

For string 0,1,1,2,3,5,8,13,21,34,55, for example, if we add 0 + 1, we get 1. If I add 1 plus 1, I get 2. If we add 1 plus 2, we get 3, and so on and so on.

The resulting sequence is called the Fibonacci sequence, and each number in the sequence is called the Fibonacci sequence. The Fibonacci ratio is then calculated by divisor over the sequence. These calculations give the ratios used in the Fibonacci levels below.

0, 0.236, 0.382, 0.5, 0.618, 0.786, 1, 1.618, 2.618

These ratios are translated into percentages – 23.6%, 38.2%, 61.8%, 78.6% and so on – and then applied to charts in an attempt to identify potential levels of hidden support or resistance in the market.

The Fibonacci sequence was discovered by the Italian mathematician Pisa Leonardo in 1202 when he was considering a practical problem involving the growth of a rabbit population based on idealized assumptions.

This order governs many aspects of life; From the creation of flowers, to the formation of waves, to the proportions of human bodies. It also provides traders and technical analysts with the information they need to develop resistance and support levels that can be used in a risk management framework.

You can use the Fibonacci level on your own or in combination with other trading methods.

The Fibonacci sequence was used to form other theories, such as Elliott wave principle and Dow theory. You can also use other technical analysis tools to use the Fibonacci ratio.

How to calculate the Fibonacci callback level
One of the most common technical analysis tools derived from the Fibonacci gold ratio is the Fibonacci correction level.

The Fibonacci ratio of 61.8% and The Fibonacci ratio of 32.8% are calculated by subtracting the recent high from the recent low and targeting the upcoming rally. Most of these points can be calculated using graphing software.
As the S&P 500 chart above shows, Fibonacci retractions often act like magnets, creating a self-fulfilling prophecy.

As you can see from the chart, the realization that the coronavirus pandemic was about to hit the US economy triggered a rapid bear market that began in February and bottomed out in March. Prices fell from around 3400 to 2200 before rebounding to a 38.2% retracement level.

If we multiply the drop point by 38.2% and add that number to the low (2200), we get the Fibonacci retracement level of 38.2%, or 2647. The index starts to consolidate at this point.

After the consolidation period, prices retested the 38.2% retracement level and broke through the next level, the 50% retracement level. The merger was short-lived. The S&P 500 then began testing the 61.8% retracement and consolidated around that area.

When you draw the Fibonacci retracement line, you will measure the peak to trough of your target’s movement. Then multiply the difference between high and low by 61.8% and 38.2%.

If you measure a drop, these results are added to the low values; If you measure the rise, these results are subtracted from the high values. When prices rebound, these levels will serve as target support for your corrections or resistance levels.

How Do SVXY and VXX Work? Volatility (VIX) ETFs Explained

Spark Global Limited reports:

Outright speculation on future volatility is a fairly new phenomenon in financial markets.

The mathematicization of derivatives markets has made traders realise that they are largely betting on future volatility, not prices, encouraging Wall Street to create more “pure game” products.

The main volatility products in the US market are VIX futures/options and exchange traded products (ETPs) that mimic VIX futures positions.

Direct VIX derivatives have existed for more than a decade, but it was only after the 2008 financial crisis that they began to see sufficient liquidity.

As a result, ETF managers have created their own volatility derivatives in the form of etPs similar to those used to trade stocks. As of today, the two major VIX ETPs are SVXY and VXX.

Before we continue, let’s take a look at the VIX index and how it works.

VIX index interpretation
VIX refers to the STANDARD & Poor’s 500 Volatility Index.

The calculation shows how s&p 500 options traders expect volatility over the next 30 days.

VIX incorporates various short-term S&P options contracts into its calculations and looks at price movements.

When the VIX is 20, what does that mean? That means market expectations for volatility over the next 30 days are running at an annualised rate of 20 per cent. That’s based on the price of the option. The more expensive the options (insurance), the higher the VIX.

The financial press has dubbed the VIX the “fear index” and options traders have pounced on it, but for the most part it’s true.

Most of the time, the S&P 500 and VIX are inversely correlated, meaning that when the S&P falls, the VIX rises. Why is that? Because the market to take the stairs, take the elevator. When the market started to plummet, people started buying insurance (options) to protect their portfolios.

When everyone buys insurance at the same time, prices go up.

Remember, the VIX is just an index. You can’t trade it directly, nor is it practical to re-establish an exact option portfolio.

There are VIX futures, VIX options and VIX futures, all of which have very liquid markets. You can trade them, but they may change hands at a different price than the actual index.

What is the ETN?
It’s worth noting that VXX is not an exchange-traded fund. It’s an exchange-traded note, or ETN.

This difference may sound trivial, but it is actually very important for these purposes. An ETN is an unsecured debt note issued by an ETN manager, which means there is a credit risk, whereas a normal ETN has no credit risk.

So keep in mind that there are external factors that can affect the value of an ETN.

What is SVXY? How does it work?
SVXY is a systematic ETF that shorts the front end of the VIX futures curve, particularly in the first two months. The product is managed by ProShares and structured as an ETF rather than an ETN.

If you don’t know what a VIX curve is, I’ll explain.

A futures contract is an agreement to trade at a locked price on a specific date in the future.

For example, if I buy a July 20 VIX futures contract, I agree to settle the difference in cash by that date if I remain the contract owner on that date.

If I buy futures at $20, which is $18 at maturity, I have to give my counterparty, the seller of the trade, $2.

In the futures market, there are several different maturities.

If you are a farmer and want to hedge next season’s crop, it doesn’t make much sense to hedge it with next month’s futures contract. If you’re a short-term trader, hedging next year’s futures doesn’t make much sense. So there’s a lot of expiration dates.

The VIX futures curve is a price sequence of different futures contract maturities. Here’s an example from VIX Central:

How To Find Penny Stocks

Spark Global Limited reports:

If you’re going to take advantage of penny stocks’ extreme volatility, start by understanding what those stocks are and how to find them to trade.

In today’s penny Stock guide, we’ll discuss the risks of trading penny stocks, how to avoid scams associated with these stocks, and how to use filters to find penny stocks.

What does penny stock mean?
Penny shares are ordinary shares that trade for less than $5 on the US stock market and less than £1 on the UK stock market.

On the other hand, the SECURITIES and Exchange Commission (SEC) defines a penny stock as a stock that trades for less than $5 a share.

Penny stocks are generally associated with small, often new companies, many of which don’t have the kind of growth potential that most traders are looking for.

In most cases, penny stocks are listed on over-the-counter bulletin boards (OTCBB) or pink sheets.

However, the New York Stock Exchange (NYSE), NASDAQ and AMEX also hold a large number of listed stocks that trade below $5.

The risks of trading penny stocks
Penny stocks, like other securities, have both advantages and risks that you should consider.

Learning more about how they differ from other types of stocks and how they work can help you decide whether to include them in your portfolio.

Penny stocks are riskier than traditional stocks because they do not represent companies traded on formal exchanges such as Nasdaq or the New York Stock Exchange (NYSE).

First, they are less transparent because they are not subject to the same mandatory information-sharing obligations as public companies. Moreover, these stocks are less liquid than the more popular ones.

So it can be harder to get in and out of a deal at the price you want.

Finally, penny stocks are highly volatile by nature, which means prices can move sharply against your position.

How to find penny stocks
You might be wondering how traders find new trading opportunities when it comes to penny stocks, and how people decide which stocks to buy or sell.

Well, the answer to both questions is usually a stock picker.

A stock screener is a tool used by traders and technical analysts to identify stocks that meet certain criteria.

Filters can filter stocks by price, industry, average number of stocks traded in a given day, and so on.

Stock screeners are a vital tool for inexperienced traders, especially if you’re going to try day trading and aren’t sure which stocks to buy and sell.

Which penny stocks you trade can be influenced by a number of factors, including how much money you have, your day-trading strategy, and your level of experience.

Whether you want to find the best short-term stocks to day trade, or you prefer other types of stocks such as investing, position trading or volatility trading, your criteria for finding these stocks should be written down as part of your trading plan.

Here are some of the best ways to navigate these stocks using technical indicators:
Breaking news
News is one of the main drivers behind most stock trading on Wall Street. Whether markets react positively or negatively to breaking news creates predictable patterns and affects momentum.

Like other types of stocks, penny stocks tend to change in price in response to momentary shifts in influential breaking news, events and hype around the company.

Sometimes a company announces an amazing new product or releases strong financial results and the stock soars, while other times the CEO writes a terse tweet and the stock plummets.

For example, if a penny stock company reports favorable details about a new service or product launch, its stock price may rise.

So when trading these stocks, keep an eye out for any positive news and quarterly financial reports, as well as reports predicting increases in profits and the value of the shares.

High relative volume
Day traders are always on the lookout for volatile penny stocks.

One of the best ways for traders and chartists to find these stocks is to compare trading volumes at any one time to a baseline to check for unusual activity that might signal an opportunity.

Relative trading volume refers to the ratio of the current trading volume to the historical average trading volume.

For example, this ratio can be used to compare current trading activity around penny stock X to past trading activity around penny stock X, rather than unrelated stocks.

How to choose a day trading laptop

Spark Global Limited reports:

When you’re looking for a new day trading laptop, it’s important to be realistic about your budget and needs. If money is no object and you’re just looking for the best laptop, we have some tips for you.

Obviously, most of you are looking for a balance between cost and performance/functionality. With a limited budget, you have to narrow down the most important components you need and work your way back from there.

Laptops have different uses; Gaming laptops don’t take traders into account, just as chromebooks for students don’t take gamers into account.

Identify the component requirements for your trading laptop
A computer is a collection of different parts, each with a specific function.

Building a powerful computer means getting a powerful set of components, but when you have the budget, it makes sense to focus on the most important components for everyday needs before optimizing anything else.

The basic building blocks of a computer are:

 

CPU: central processing unit. This is the brain of your computer. It processes all the instructions you give it and produces an output. When you tell your computer to do something like “open Google Chrome,” the CPU performs the task.
GPU: graphics processing unit. Gpus are like cpus that perform graphics tasks, such as drawing 3D animations or rendering video games.
Hard drive: A hard drive is like a filing cabinet. It has a lot of information, but it’s slow to sort and find what you need.
RAM: Random access memory. RAM temporarily stores memory that a computer needs to access quickly. RAM is like taking information you often need to access from a hard drive and putting it on a desk where it can be accessed quickly. There is less space on the table, but the items on it can be found quickly. RAM is critical for running multiple processes at the same time, essentially giving your computer short-term memory.

Most trading software uses a lot of CPU and/or RAM, making expensive Gpus less important.

To determine whether your trading computer should be centered on CPU or RAM, simply open up all the trading software you use and start interacting with it. Also, use Windows Task Manager (or system monitor on a Linux computer) to see which resources are most stressed.

With some exceptions, most standard charting platforms are RAM intensive, which means you should focus on maximizing your laptop’s RAM rather than other components.

With a few exceptions, you can skip an aftermarket GPU for your trading laptop. And since laptops come preloaded by the manufacturer, it’s hard to replace the motherboard.

So, in essence, your search boils down to finding a laptop with enough CPU, enough RAM, and enough hard disk storage.

On most laptops, replacing a hard drive is easy and cheap, so this is one thing you can compromise and replace at a later date. However, don’t expect to replace the CPU. There are some technical details here, but assume that you are tied to the CPU that comes with your laptop.

RAM is also easy to replace, but your laptop needs to have slots to expand it, because RAM is like a stick that you can put in a computer slot, and a laptop motherboard usually has a limited RAM slot.