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How to choose the right trading bonus for you

‘Hooray’! This is the word used to express traders’ joy when they find out that their favourite broker is offering a new bonus. 

 

A trading bonus is an opportunity for traders to receive extra funds to trade, and/or some other rewards too. 

 

As you may have already seen, there are several types of bonuses: deposit bonuses, no-deposit bonuses, welcome bonuses, and others with fancier and more imaginative names. 

Before you decide which bonus you’d like to claim, you’d better get an idea of how each one works and what you can achieve. 

 

Although there are various differences between trading bonuses and promotions, there is one common truth behind them: if you use them wisely and responsibly, they can benefit you. You should also bear in mind that there are specific requirements (minimum deposit, minimum trading volume etc.) that you might need to meet to get/use your bonus.

 

The advantage of bonuses, especially for new traders, is that even when your trading budget is minimal, you have the potential to receive some extra money to boost your trading activity. The same applies to experienced traders in that bonuses will give them the opportunity to trade larger amounts of capital.

Different traders, different needs, different types of bonuses

Let’s recap on the three main types of bonuses: 

 

Deposit bonus: You can claim this bonus either with your first deposit or with every deposit you make, depending on the offers. Deposit bonuses are beneficial for traders since once the bonus is unlocked, they can trade bigger sizes and more assets. In general, brokers offer 100% or less for deposit bonuses, but some (such as Eurotrader) might more-than-double your deposit

 

No-deposit bonus: The no-deposit bonus doesn’t require the trader to deposit any funds. As there is no risk of losing your own money, the worst-case scenario is losing your bonus. But the best case is that you can successfully trade your bonus and make profits out of it (though it’s worth noting that you usually have to trade a specified total volume before you can withdraw such profits). A no-deposit bonus is great if you want to try different trading strategies or even the broker of your choice and their trading conditions. 

 

Welcome bonus: Usually, the welcome bonus is what its name suggests: a complimentary welcome treat, like a fruit basket waiting for you at a Mediterranean coast hotel. This kind of bonus is usually transferred to the trader’s account following the registration and verification process. Sometimes you can get it automatically (like a no-deposit bonus), or you should first make a minimum first deposit (deposit bonus). The welcome bonus is usually a one-off, fixed sum equal for all new clients.

 

An important note is that you should always check the terms and conditions of each bonus to be sure that the one you chose is right for you, your trading experience level and your strategy.  

 

Speaking of bonuses, why not check out Eurotrader’s 111% deposit bonus? Just deposit between $50 to $20k to trade forex and metals, and we’ll match it by 111%. Promotion T&Cs apply.

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How does Black Friday affect stock markets?

Black Friday is hailed as the kickoff to the holiday shopping season, and it’s one of the busiest, if not manic, shopping days of the year.

 

But where does the term ‘Black Friday’ come from? Well, once upon a time, Black Friday used to refer to stock market crashes in the 1800s. Since then, and thanks to the madness around the day’s special deals, stocks (mainly retail and consumer) usually get a boost from the prominent retail event. 

 

The market movement around Black Friday is closely linked to a sharp rise in Black Friday retail sales. This is because consumers often follow up Thanksgiving by shopping for Black Friday sales. 

 

Therefore, this period is often seen as a consumer ‘sentiment indicator’. If retailers show strong numbers, investors might believe that this is the start of a robust shopping season. Therefore, they push stock prices up. 

 

Respectively, if retailers cannot satisfy consumers on Black Friday, investor confidence could plunge, possibly causing stock prices to drop.

 

As supply chain ‘disasters’ worsen, it’s expected to be a very strong holiday season. Some experts are even predicting a record-high shopping period. Thus, considering the limited availability, consumers will likely spend as much as they can now to get what they need before any rise in prices. 

 

Further shifts in the market may be seen due to the ‘holiday effect’, i.e., seasonal investor optimism.

How does Black Friday affect stock markets?

‘Happy Black Friday! May your lines be short and your tempers too :).’

The stock market sees movement around this time of year mainly due to the aforementioned holiday effect. Markets tend to see boosted trading volume and more significant returns the day before a holiday or long weekend.

 

Apart from the holiday spirit, which boosts investors’ optimism, there is another reason for the holiday effect. Investors get in their last trades before the stock market closes for the week. As a result, US stock markets are closed for half the day on Black Friday.

 

However, the Black Friday effects are usually short-lived. 

 

Investors sometimes turn to Black Friday sales numbers as an indication of a specific retailer’s health or even the overall state of the retail sector. 

 

However, there is no empirical data or scientific evidence to support this theory. Data hints that there is no connection between a stock’s Q4 performance and the company’s Black Friday sales.

 

So, the best practice is to consider a company’s overall health when deciding which stocks you will trade.

 

How about speculating on the future movements of retail stocks by trading them as CFDs before or after your Black Friday shopping? Check out our product page to find all our stocks, commodities, indices, cryptos and forex pairs!

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Elon Musk unmasks social media influence on markets once again

Elon Musk’s name caught the headlines during this past week for all the wrong reasons. 

 

The first time around, it was because of the news that astronauts on his SpaceX will have to wear nappies when returning to earth following toilet leakage issues. What a stroke of luck to have travelled to space, and everyone is asking you about diapers! 

 

Then, he asked in a Twitter poll whether he should sell 10% of his stake in Tesla [TSLA.O : NAS], to which 58% of the 3.5 million accounts that voted said he should. The eccentric billionaire has since sold about $5bn in shares amounting to roughly 3% of his Tesla holdings, just days after polling Twitter users. However, $1.1bn was already in train before the poll since last September. 

Documents showed that the sale of about a fifth of the shares was made based on a pre-arranged trading plan. 

 

Tesla is the world’s most valuable carmaker, with a stock market valuation of more than $1tn. The company’s shares fell by around 16% in the two days after the poll in a multi-day selloff that threatened the company’s position in the $1tn club. Tesla stock regained some ground of 4.3% on Wednesday.

 

While Tesla has lost close to $150bn in market value this week, retail investors have been net buyers of the stock.

 

Tesla is now up more than 51% in 2021, thanks largely to an October rally fuelled by an agreement with rental car company Hertz.

Elon Musk unmasks social media influence on markets once again

Social media & financial markets – A soulmate relationship

This is not the first time that Elon Musk has used social media in a way that looks like market manipulation. 

 

Elon Musk’s tweets moved markets twice this year. First, in January, Bitcoin’s value jumped more than 20% after he changed his personal Twitter bio to #bitcoin.

 

Also, in January, the Tesla and SpaceX CEO fueled the frenzied surge in GameStop shares when he tweeted “Gamestonk!!”. The made-up word is a combination of GameStop and “stonks,” a slang term for stocks.

 

Some investors are calling on regulators to get involved. In addition, a discussion has started on the legitimacy of the practice and if it is legal to enrich himself with one tweet.

 

It seems that financial markets have their own influencers, like the beauty and fashion industry. Likewise, social media influencers have encouraged retail investors to jump into meme stocks such as AMC and GameStop and specific cryptocurrencies, pushing prices beyond fundamental values.

 

The Federal Reserve reported the trading action of such stocks and decided that social media had driven risk appetites in equity markets.

 

Social media has forced the financial world to evolve as users realise that such platforms can affect market activity. On the one hand, information sharing and discussion may improve market efficiency and transparency. But, on the other hand, there is always the risk that malicious actors may manipulate markets and price formation through misinformation and disruption.

 

How about speculating on the future movements of meme stocks or cryptos by trading them as CFDs? Check out our product page to find all the mentioned companies and more!

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Chip stocks to watch amid a global shortage

It’s around this time of year that kids, nephews, nieces and grandchildren launch into exploratory talks of holiday gifts. Well, here’s a tip for you ahead of Christmas 2021: don’t mention anything about video game consoles, and if the kids do, you’d better divert to something even flashier to distract them. Why? Among hundreds of other products, the supply of gaming devices will be short since the manufacturers are out of chips.

 

The global semiconductor shortage began in 2018 as one of the knock-on effects of the US-China trade war, only to be exacerbated further by the rise of 5G and the need for infrastructure. The shortage was then escalated in 2020 due to the COVID-19 pandemic. With the demand continuing to outpace supply,  analysts now expect the shortage to last until 2023.

 

Over 100 industries are currently affected by the chip shortage, but four chip-heavy sectors were hit particularly hard: automotive, consumer electronics, appliances and LED lighting. As a result, many manufacturers have had to halt or cut back their production temporarily. 

 

The ‘chipageddon’ – as insiders call it – directly affects (lost) sales, (extended) waiting times for new purchases, (limited) supply and (higher) pricing.

Chip stocks to watch amid a global shortage - Eurotrader blog

In the midst of every crisis lies great opportunity

Heavily chip-reliant companies that can’t easily raise prices will be among the losers. The same goes for chipmakers who cannot invest in additional semiconductor equipment and struggle to meet demand.

 

But, are there any winners? A lot of chip stocks are performing well despite the shortage, mostly those outgrowing their competitors. Furthermore, chip-buying companies which can raise prices to compensate for lost sales may mitigate the effect. The biggest winners are likely to be the most commodity-like chipmakers and, obviously, the semiconductor equipment manufacturers. 

 

Nvidia Corp. (NVDA.O: NAS) is a leader in processors for personal computers, workstations and mobile electronic devices. Nvidia is outgrowing its peers, thanks in part to its data centre business. In 2021, Nvidia stock is on fire. By 2 November, the stock had returned 102% and jumped 23.4% in October. 

 

ASML Holding NV (ASML: AMS) is the world’s third-largest semiconductor equipment supplier. It’s also the only maker of extreme ultraviolet lithography technology used to print advanced chips. ASML stock trades at a lofty 45 times earnings. The chipmaker’s customers expand capacity to meet demand, a bullish near-term catalyst for ASML.

 

Advanced Micro Devices Inc (AMD.O: NAS) is a microprocessor and graphics semiconductor company. Its shares have been up more than 1,700% in the past five years. AMD will likely continue to gain share from its competitor Intel in the central processing unit data centre market and is overall a strong performer in the industry. On average, AMD’s stocks score higher than 51% of the stock market. 

 

You can always speculate on the future movements of the chip stocks by trading them as CFDs. Check out our product page to find all the mentioned companies and more!