Stock trading is not an easy task. That is why it offers the potential for great rewards. Many people get the impression from social media that it is easy to make a huge amount of money from stock trading. However, the reality is that stock trading can be quite difficult at times, and even the best traders can suffer substantial losses.

The stock market is always in a volatile state, and it can get affected by minor or major events. The COVID-19 pandemic collapsed in the stock market, and it is still recovering from the effects. But intelligent traders can make substantial profits from the recovering market using some key ideas. We will discuss six of those ideas that can be a part of your stock trading strategy.

Use Stock Trading Software

When it comes to stock trading, you shouldn't rely on predictions and forecasts. Wall Street professionals love to tell their customers that they can predict the future of stocks better. But the market situation of 2020 is one of the best examples of the futility of stock predictions.

Stock forecasts can be useful in preparing you for market volatility as long as you react on time. Whenever you see a downtrend emerging, it is best to move to the sidelines. But it is best if you rely on technical analysis software rather than a person trying to make a profit from it.

Stock trading software provides the necessary research and analysis of the stock market. That allows you to investigate the stocks that interest you. You can get information on the past performance of the company with accurate predictions of the future. The stock software also provides real-time updates on stocks and recommends the ones that are best for investment.

You will have access to indicators that study past patterns and provide accurate predictions and forecasts. Some of the best software offers advanced tools like charts and customised tax reports. They allow you to develop your stock trading strategy with risk management steps to avoid market crashes like the one in 2020.

When it comes to stock trading, you shouldn't rely on predictions and forecasts.

Keep Your Accounts Close to the Highs

You will have to double your efforts to make up for the losses incurred in 2020. Most people believe that long-term investments are the best way to compound your money. However, you can also compound your profits by keeping your accounts high and gaining continuous results.

Instead of holding onto a single stock and hoping to get rich from it, engage in aggressive trading. It will allow you to consider the best stock options and benefit from compounding your profits by keeping your accounts closer to the highs. 

Compounding profits in stocks can fail if you suffer huge losses, which applies to long-term and short-term trading. That is why you must protect your gains in 2021.

Profits Are Sporadic

The stock market always goes through ups and downs of various patterns. Therefore your style of trading should always be varied and focused on the bigger picture. In the post-COVID-19 market, you still have to follow the 80/20 rule. That means you will make substantial profits 20% of the time you spend on stock trading.

If you had an immediate success, you have to keep in mind that you might make little progress 80% of the time due to the shifts in the market. Bear in mind that you might not be able to predict the period of peak profit. So you have to be always ready to spring into action whenever the conditions are favourable and make maximum profit from it.

Use Charts

Some people think that they can rely on their ability to predict macroeconomic events. Such people have suffered huge losses during the COVID-19 market crash. Charts can provide you a framework for your stock trading in a million different ways.

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They are not a way to predict the future performance of the stock market. But charts are extremely helpful to manage and monitor your existing trades. They can also help you anticipate when to buy or to sell your stocks.

Develop Your Own Approach

The best approach for stock trading is subjective to every person. Some people are efficient at following trends and developing momentum, while others work best with the fundamentals.

Therefore, you should formulate your own approach in 2021, depending on your methodology to view the market and buy new stocks. The stock market is always evolving, which means you have to keep modifying your methods to protect your capital and future investments.

Consider Incremental Trading

Most people feel that stock trading is a process of buying a good stock and then hoping to make a profit from it. The style of trading without a strategy resulted in huge losses in the 2020 market crash. In the new year, you should consider trading incrementally by taking an initial position and watching the action.

If you were wrong about the stock or market shifts, you would be able to sell the stock with the least amount of losses. On the other hand, if the stock is doing well, you can become aggressive and build your trade.

Stock trading is difficult, and that is why it has the potential for huge profits. Therefore you must have the right strategies to maximize your earnings from your investments. We believe that the methods we discussed above will prove helpful for your stock trading strategy in 2021.

Many tools and apps have been designed to assist stock traders in day-to-day trading. These apps can help you analyse your potential stock investments while minimising the risks. A trader needs a good trading platform based on the market they prefer to trade in. But other than that, we believe that every trader needs these five apps to capitalise on opportunities with minimum risk. 

Portfolio Tracker Apps

A portfolio tracker is an essential part of preparing yourself for stock trading. It is especially useful for traders who hold a position overnight or invest money in long-term trades. You can use it to track a stock portfolio before and after you invest in it. A stock portfolio tracker can help you make smart investment decisions.

You can also use it to manage your budget and keep a record of all your investments. Sometimes traders tend to hold onto losing positions, hoping that they would be able to earn their money back.

A portfolio tracker will remind you to stay away from bad investments. You can also use it to identify the trades and investments that are right for you. These are some of the features that you must look for when choosing a stock portfolio tracker:

• Number of stocks tracked
• Integration for brokerage
• Stock analysis tools
• Integration of news feed

Stock Charts Apps

You might need a stock chart to plan your future trades. It will provide you a graphical representation of the stock data along with the price and volume. A simple stock chart will display the price data as a line graph, which will keep changing with time.

A trader needs a good trading platform based on the market they prefer to trade in.

Some stock charts also display candlestick charts as indicators for trading volumes. Many complex stock chart apps allow you to set any added indicators that you need to analyse your trading activity. There are many free stock chart apps available, but they come with certain limitations.

You can expect a 15-minute delay on the chart updates, which may not be apt for day trading. Some free charts also have limits on the volume reports and would only display limited information on exchanges. On the other hand, paid apps will provide real-time price and volume updates and several other charting options. 

Financial News Apps

With stock trading and investments, news updates and your reaction time can make a huge difference to your profits or losses. Therefore, you must have financial news apps on your smartphone. They give you access to actionable business information, financial news, and stock market data.

You can switch on notifications for breaking news alerts to take real-time action. Some apps also give you access to interactive charts, real-time stock quotes, and global business news.

Practice Trading Apps

Practice trading apps are investment simulators that help you prepare for stock trading without any risks before you invest in real trades. It gives you the experience of trading in the stock market so that you can get a hang of it. You will be able to invest virtual dollars in the trading simulator and see whether your choice of stock would have been profitable or not.

It allows you to test your stock analysis skills and come up with learning goals. You can also use practice trading to formulate multiple investment strategies for the future. It is a useful tool to learn the intricate working patterns of stock markets and practice the theories.

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Automated Trading Apps

Automated trading apps are the perfect solution for you if you want to take the psychological elements like emotions out of the trading. You can use these apps to set your parameters to choose potential stocks, allocate investments, and open or close positions. But using an automated trading app does not mean that there are no risks involved.

You would still have to set the initial guidelines along with the entry and exit positions. The app will use its algorithms to monitor the stock market according to the conditions you have set. There are many advantages and disadvantages of using automated trading apps, so consider them carefully before you choose to use one.

So which are the right apps that can give you an edge to earn maximum profits and minimize losses? It is probably one of the most debatable topics because every trader has their own choice of apps and tools. There is no doubt that certain apps are better than others, so read reviews and get referrals before you select the apps for your trading arsenal.

Most major stock markets were lifted on Thursday amid reports that President-elect Joe Biden will announce a $2 trillion COVID-19 stimulus programme later in the day.

European markets saw modest gains, with the FTSE 100 opening 0.1% higher in London and the DAX gaining 0.2% in Frankfurt. Paris’s CAC 40 remained flat. The effect on Asian markets was more pronounced as Japan’s Nikkei hit a three-decade peak and Hong Kong’s Hang Seng rose 0.95%.

The bond markets also saw movement. The yield on US Treasuries, the benchmark for global borrowing costs, also rose two basis points to 1.11% on the expectation that a $2 trillion aid package will raise US debt levels to new heights. Meanwhile, European yields were held in place due to widespread COVID-19 lockdowns and heightened expectations of further bond buying by the European Central Bank.

US futures were largely subdued, with the S&P and Dow Jones respectively gaining 0.2% and 0.3% while the Nasdaq slid 0.1% down.

President-elect Biden is expected to lay out stimulus plans today in Wilmington, Delaware. According to CNN, Biden’s advisors have told allies that the total package could come to around $2 trillion.

"Essentially, the markets have been in a holding pattern for the past three days as dealers have been waiting to hear from Mr Biden,” CMC Markets’ David Madden told Business Insider. "To an extent, a large amount of positive news has been factored into stocks and commodities."

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A Deutsche Bank analysts’ note spoke optimistically on the possibility of fresh stimulus checks sent to US citizens, noting that Biden has been a vocal proponent of $2,000 checks in the past. The bank also noted the possibility of “additional immediate economic relief for families and small businesses”.

Investors have remained largely unshaken by Wednesday’s historic House vote to impeach Donald Trump, making him the only US president to be impeached twice.

The value of the combined cryptocurrency market has passed $1 trillion as Bitcoin and other virtual token prices have seen widespread surges.

Bitcoin hit a new record high of $37,732 at around 5.40 AM GMT, only days after passing the $34,000 mark. The total value of the Bitcoin currently in circulation is close to $700 billion, making up the bulk of the crypto market cap.

Bitcoin’s rise has also lifted smaller cryptocurrencies including Ethereum, cardano and Ripple’s XRP.

Given its status as an alternative asset, crypto’s rise has been attributed in part to investors fleeing traditional markets in the wake of major events. The outbreak of the COVID-19 pandemic and resulting lockdown measures caused a sharp rise in investor enthusiasm which has continued to last through to 2021.

Bitcoin in particular has been sensitive to the political climate. Its latest price rally, which saw the currency’s value rise by 7% over the last 24 hours, came after Democratic candidates won crucial runoff elections in Georgia, giving the party control of the US Senate in addition to the House and, come 20 January, the presidency.

Overall, Bitcoin’s value has risen by 200% since the start of October. The currency has begun to move shift towards the mainstream payments landscape as PayPal moved to let its customers trade using Bitcoin on its platform.

Naeem Aslam, chief market analyst at Avatrade, said the 6 January chaos on Capitol Hill helped to shore up the price of Bitcoin, and said that the currency was “surely and clearly heading towards the next important price level, which is $40,000.”

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“A real bull rally has only begun,” he predicted.

European and US markets are bracing on Wednesday as several countries impose stricter lockdown measures to curtail a spike in COVID-19 cases and the first of two key Georgia Senate races is won by the Democratic Party.

London’s FTSE 100 gained 0.8% at the open, while France’s CAC 40 gained 0.7% and Germany’s DAX gained 0.4%.

Following a brief relaxation of COVID-19 restrictions during the holidays, the UK and European nations are beginning to impose tougher measures. A third nationwide lockdown has been declared in the UK, along with new economic stimulus for businesses in affected sectors, with France and Germany now in their second lockdowns as a highly infectious new strain of COVID-19 spreads internationally.

Markets are also focused on the outcome of the two runoff US Senate votes in Georgia, which will determine whether the Democratic or Republican parties gain a majority. A Democrat win would greatly empower the incoming Biden administration, affecting the reach of the new president’s policies during his first two years in office and impacting the size of the next COVID-19 stimulus bill.

US networks and the Associated Press have called the first of the Georgia races for Democratic candidate Raphael Warnock, likely unseating Republican Kelly Loeffler. Democratic challenger Jon Ossoff also holds a lead over Republican David Perdue with 98% of votes counted, according to the AP.

“Our US economists have indicated that a Democratic Senate would likely lead to another large fiscal stimulus package, possibly including some priorities of the new Administration such as infrastructure,” said Deutsche Bank analysts in a note. “They see that as a material upside to their GDP forecast, which they currently see rising 4.3% Q4/Q4 in 2021.”

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Nasdaq futures were down 1.7% on Wednesday morning, while the S&P fell 0.2% and the Dow Jones gained 0.4%.

David Smith, a cryptographer from the Smart Card Institute, offers Finance Monthly a beginner's guide to various financial markets and what a prospective investor can hope to get out of them.

Most people get intimidated by the idea of making an investment – mostly because they don’t understand the different types of financial markets and which one could be the best suited for them. Our article today sheds light on the different types of financial markets so that you can make better investments in the future.

1. Stocks

Most people are aware of stocks. They are probably the most popular and simple kind of investment that has been around for a really long time. Basically, when you invest in stocks you are buying a part of a share in a public trading company. Some of the biggest companies in the world today such as Microsoft, Apple, Samsung, all sell their shares. However, they sell only a small percentage in the stock market.

Once you buy the stock and the prices go up in the stock market then you can sell the share at a profit. The downside is obviously if the price goes down and you will go into a loss. If you wish to buy stocks then brokers are the right people to get in touch with as they will help you make an investment.

2. Bonds

Buying a bond means you are lending money to an enterprise that is either government-owned or is a business. Businesses issue corporate bonds whereas the government issues treasury bonds or municipal bonds. Once you have held the bond for a particular time period and it reaches maturity, you can acquire the bond with interest. Bonds are generally a low-risk investment and come with a lower return as compared to stocks.

Buying a bond means you are lending money to an enterprise that is either government-owned or is a business.

3. Foreign Exchange

This is a relatively simpler investment. Foreign exchange investors buy a currency that is expected to increase in value in the future and then they make a profit out of it. The profits all depend on the exchange rates at the time of selling.

4. Mutual Funds

Mutual funds refer to a pool of investors who are investing in several companies at the same time. These funds are either managed actively, in which the manager chooses the companies for the investors to put their money, or they can be passively managed, in which the fund tracks some stock market investment. There can be mutual funds which are a mixture of actively managed and passively managed funds.

5. Certificates of Deposit

One of the safest forms of investment is a certificate of deposit in which you give money to a bank for a certain time period and once the time period is over you can withdraw the money along with the interest which was pre-determined.

6. Physical Assets

Investing in physical assets means you are buying an asset that holds a market value and can be liquidated when you need the money. These assets can be precious metals, jewelry, property, etc. As in the case of most investments, investors who put their money here expect the prices to increase so that they can sell their property, jewelry, etc. at a higher price.

7. Cryptocurrencies

Cryptocurrencies can be thought of as digital currencies that have market value and are a great investment option. Bitcoin is one of the most famous cryptocurrencies that is now coupled with advanced smart card technology. However, cryptos can be an extremely risky form of investment as their value fluctuates tremendously.

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8. Retirement Plans

Most people are offered a retirement plan at either their workplace or some other means. Retirement plans are not exactly an investment category but they can be thought of as a means to make other investments as they give you countless advantages such as tax leverages.

9. Annuities

A lot of people use annuities coupled with their retirement plans to make investments. Once you purchase an annuity you come to terms with a contract with an insurance company that provides you with payments periodically. The payment duration and the amounts are both predetermined. Annuities are a low-risk investment but they are low-growth as well.

10. Options

Options can be thought of as a complex kind of stock. An option gives you the ability to either buy or sell a certain asset at a predetermined price at whatever given time. An option may decrease in value and might end up in a loss for the investor.

Conclusion

Overall, financial markets make it possible for companies to acquire capital due to their regulated and open system and enable businesses to balance risk with the help of foreign exchange, commodities and other derivates.

Elon Musk’s Tesla on Monday will become the most highly valued company ever admitted to the S&P 500, with a market cap that will account for over 1% of the entire index.

Its 21 December listing is predicted to trigger a rush of stock trading on Friday as index-trading funds acquire shares so their portfolios will correctly reflect the S&P 500. $80 billion of the company’s stock is expected to change hands by the end of Friday’s session.

In addition to acquiring Tesla shares, funds mapping onto the index will simultaneously be forced to sell shares in other S&P 500 constituents worth the same amount.

Actively managed funds that use the S&P 500 as a benchmark for their performance, many of which have thus far shied away from investing in Tesla for fear that it has become , will have to decide whether they will risk buying its stock.

Shares in Tesla have risen by almost 700% in the past year, ranking it as the sixth most valuable publicly listed US company with a stock market value of over $600 billion. Stocks hit all-time highs on Thursday at $655.90 per share.

Tesla’s unprecedented stock surge in 2020 has pushed founder and CEO Elon Musk’s total net worth to more than $150 billion, cementing him as the world’s second-richest person ahead of former Microsoft CEO Bill Gates. Despite its current market value, Tesla has only turned a profit for five consecutive quarters, and recently completed a $5 billion equity sale to capitalise on its explosive growth.

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A study by Invezz found that Tesla shares were the most popular stock to invest in for Europeans in 2020. The company was the most commonly searched-for stock in 26 of 31 European countries analysed.

Some of the investors who are earning billions from the stock market have suggested doubling your invested money every three years at a CAGR of 24%. Investing in stocks doesn't mean you can sit idle and earn higher returns. You can earn profit as well as lose it. But staying patient for the long run and diversifying your portfolio is a good option.

Speaking of diversifying, the RBI of India has permitted investors to invest an amount in US stocks. Most of the stocks are traded on an exchange such as NASDAQ. Some of the best NASDAQ stocks of the year include Workday WDAY, Nvidia NVDA, Zoom Video Communication ZM, Tesla shares, Jd.com JD, Marriott Int MAR, Apple AAPL, Expedia Group EXPE, and Ulta Beauty ULTA.

A stock market, also known as an equity market or share market, is an auction where several buyers and sellers join to carry out the purchase and selling of stocks. Purchasing a share of a company means you are given legal ownership for a part of the company.

Basic information on how the stock market works

• The purpose of investing in the stock market is to provide companies with capital to expand their business. In return for this, investors also get advantages. The investors get an opportunity to have a share of the profits earned by the companies.
• Stocks are not only traded on exchanges but also over the counter. Government agencies such as the Securities and Exchange Commission in the United States regulate the stock exchange, which is a marketplace for investors to buy and sell stocks. For the stocks being traded over the counter, they can be purchased or sold in the marketplace through either a dealer or a market maker.
• The most regular participants of the stock market are investment banks, stockbrokers, and investors.
• Stock market indices are designed to reflect the overall performance of the stock in the market. These performances decide the chances of making profit or loss from investments.
• Bull and bear markets - "Bull market" refers to the stock market when the prices of the stock are gradually rising. Most investors are tempted to invest in this type of market rather than short sellers of stocks. In the case of the bear market, the price of the stocks keeps declining. Through short-selling, investors have the chance to earn profit in bear markets.

Some of the investors who are earning billions from the stock market have suggested doubling your invested money every three years at a CAGR of 24%.

• Analysing the stock market - It is important to analyse the stock market by considering the price to earnings ratio, debt to equity ratio, return on equity ratio, and profit margin of the company you are about to invest in.
• Approaches to stock market investing - There are several methods for picking up a perfect stock to invest but the two basic approaches are value investing, or growth investing.

How can you become rich by investing in the stock market?

Here are some tips for you:

1. You must set your financial goals and decide your investment appetite based on your earnings and savings.
2. Make proper research about the company you are investing in. You can also keep track of the most listed companies so that investing becomes minimally risk-prone.
3. Stop regretting after you have already invested. You must keep in mind that investing at lower prices and selling the stocks at a higher price is almost impossible until you have inside information in the company. You have chances to make a profit as well as incur a loss.
4. If you want to earn more then always take liquid stocks as they provide chances to earn higher returns.
5. While investing in a stock market you must understand the market properly, stay patient for a longer period, and stay focused with your investment goals. Don't get affected by market fluctuations.
6. Make a monthly budget plan for investing in stocks. With a budget plan, you can cut off your extra expenses and increase your savings, which will help you to further increase the amount of investment.
7. Use index funds so that your portfolio gets the chance to broadly diversify. With a single stock, you cannot be rich, so start investing with a small amount in different funds of several companies.
8. Hold stocks for a long time. Buying and selling of stocks within a few months or a few years are not beneficial for investors, as they may not earn returns from the amount as expected.
9. Diversify your portfolio to reduce the number of risks and increase the return rate. Speaking of diversification, you can try investing in US stocks, as these are going to become more promising than ever before in the coming years. For example, the trading of Nvidia Corporation shares has increased by 26.57% in the current year. Investing in such shares is a smart choice. This will also add global diversification to your portfolio.

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1. Risk calculation is very important in an investment procedure. If you are not tolerant of risk then it is suggested that you don't invest in the stock market as these are highly risk-prone areas. Decision risk factors like market risk, business risk, inflation risk, regulatory risks etc, are all factors.
2. Don't borrow money from leveraged investors for investing in a stock. This will push you to the losing side right from the beginning, as in case of any market fluctuations you will have to bear huge pressure to pay back the borrowed amount of money and is, therefore, a risky practice.
3. Review your investment portfolio regularly.
4. Have proper knowledge of when you are going to invest more, when to sell the shares, or when to exit from the investment.
5. Don't make emotional decisions. Instead depend on facts, and data, to look into the company's performance, and how much the company is promising.
6. If you are a new investor then you must do a shadow or a diamond investment so that your knowledge is enhanced and you understand the market more accurately.
7. Beware of penny stocks. Don't invest in these stocks by seeing the minimum amount of investment as it may lead you to go bankrupt.

On a closing note

Investing in stocks means you want to increase your capital but there is nothing free in this world. Hence, to earn more you need to face the risk factors. Besides this, you need to have patience, skills, a focused mindset, clear financial goals, and a proper plan of investment. No one can say for certain that you will become rich by investing in the stock market but there are chances that your capital will keep growing if you are holding the stocks for a longer period.

In the present era, every person strives for economic sustainability. People struggle to make ends meet financially, as jobs are paying average wages and businesses are merely covering the running costs under this economy. At a time when there are not many profitable business opportunities, the trading of cryptocurrencies has emerged as a feasible mode of financial investment. Digital currencies have taken the economic world by a storm and it has completely altered the concept of traditional currency.

The global economy has seen major fluctuations over the course of the last two decades. The financial crisis of 2008 proved to be extremely hurtful to businesses, and it was an indication that the traditional concept of currency was unable to tackle modern complications. This is when cryptocurrencies, like Bitcoin, started to make their way into the mainstream financial world.

New investors and traders are now inclined towards digital currencies like Bitcoin. There is an increasing demand for Bitcoin in the digital market. The boom in the prices of bitcoin in 2017 came as a shock to the financial world, and many of Bitcoin’s early investors were able to gain thousands and millions of dollars in profit. Since then the business world has kept a keen eye on the performances of Bitcoin in the market.

The Reason Behind Bitcoin’s Success

The traditional banking system is deemed incompetent by the public, as the general perception is that it has too many complications and complexities. Plus, there is a governing body over these banks which keep a regulatory check on every transaction made from a single account. People have to go through a lengthy process even to open an account.

Bitcoin, on the other hand, is an independent entity, and it has provided an easier alternative mode of transaction for the public. Without any external controls, transactions through Bitcoin are more safe and secure. Furthermore,Bitcoin can be traded and mined from anywhere in the world, as it unites the digital world in one forum. However, banks usually do not allow international transactions, and if they do the cost is much higher. The global economic market sees bitcoin as a more feasible and profitable mode of transaction.

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Feasibility of Trading Bitcoin Through Mobile Applications

Bitcoin is used by millions of people all over the world, and this fact has forced major brands to recognize Bitcoin as an acceptable mode of transaction as well. However, there are still many complications to this new concept which are not simple to comprehend by the general public. This is why there are platforms that guide new traders and investors in the field.

These platforms provide demo accounts to provide practical experience to the traders, and even allow their accounts to function from a minimal investment. They have no extra charges, and they provide market analysis and predictions to the users, which later helps them in gaining trade profits.

These platforms have a high success ratio, and they use modern technologies like blockchain and artificial intelligence to make predictions. Accessibility and feasibility is another benefit of trading through these platforms, because they are easy to use and can be accessed at any time to trade bitcoin on your phone. They allow manual and automated training as per the convenience of the users and give traders a chance to make their own decisions.

With the growing influence of bitcoin and other cryptocurrencies, these platforms are expected to play a vital role in training and guiding new traders. Also, these platforms have a minimal risk of loss which encourages new investors in the industry.

European stocks and US futures made gains on Friday amid mounting hopes of a much-needed bipartisan US stimulus deal.

The FTSE 100 reached its highest level in nine months, gaining 0.7% on the opening bell on a tide of optimism generated by the initial rollout of a COVID-19 vaccine planned to begin next week. France’s CAC 40 and the Europe-wide Stoxx 600 index each rose by 0.2%, though Germany’s DAX shed 0.1%.

US futures saw their own gains, with Dow Jones, S&P 500 and Nasdaq futures rising by 0.2%, 0.3% and 0.4% respectively.

Analysts at Deutsche Bank noted that market optimism had been spurred by speculation that a bipartisan stimulus deal proposed by Democratic Party leadership could be agreed upon.

House speaker Nancy Pelosi and Senate minority leader Chuck Schumer said on Thursday that they “could come to an agreement” with Republican legislators on a $908 billion plan drawn up by a bipartisan group of senators. Democrats had pushed for a $2.4 trillion plan prior to the Senate adjourning ahead of the presidential election.

The rise in Nasdaq futures is especially notable, as the index closed at a record high on Thursday. The tech-heavy index was propelled higher by a 5% increase in Tesla shares after Goldman Sachs upgraded the automotive company’s stock to “buy” ahead of its addition to the S&P 500. The Dow Jones also saw a surge after Ryanair’s order of 75 additional 737 Max jets caused shares In Boeing to jump by over 7%.

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Late trading on Thursday also saw the S&P 500 retreat slightly from its all-time highs seen earlier in the week as it was reported that Pfizer faced supply chain obstacles in shipping its COVID-19 vaccine, causing its stock to tumble 1.7%.

During the Internet bubble around the turn of the century, not a day would go by that a future Fortune 500 wasn't hitting the stock market for the first time as part of an Initial Public Offering (IPO). For those unfamiliar, an IPO involves offering new stock shares in a private company on the open market to stock investors.

Why initiate the Initial Public Offering process? For one, the IPO process is a way for private companies to raise capital or reward initial investors. Generally, the stock’s initial price is determined by the potential demand for the stock and the amount of money the company wants to raise. Once the shares open up for sale on the open market, market forces take the stock in one direction or the other, usually upwards.

Besides boosting a company’s market value, going public can provide the liquidity that short-term investors require. Additionally, completing the IPO process can help a business owner improve their retention rate, as these company shares will enhance less-than-stellar benefit packages.

Due to the legalities involved with going public, the IPO process can be unnecessarily complicated. Fortunately, the private company in question can partner with legal professionals to help streamline the process.

Advantages of going public

Before initial investors willingly concede to giving up control of their company, they’ll have to understand the benefits they can derive from doing so.

The primary benefit of initiating an IPO has to do with the opportunity mentioned above to raise capital. With this extra capital, a company can fund research and development (R&D) projects, fund business acquisitions, expand company efforts, or reward initial investors.

After introducing the company to the marketplace, a company stands to benefit from the Initial Public Offering process. In most cases, undergoing the IPO process will swing open doors and allow the company to gain market share for its products or services.

Besides boosting a company’s market value, going public can provide the liquidity that short-term investors require.

Downsides of going public

Of course, there are some disadvantages a company must manoeuvre when going public.

Firstly, there’s a significant cost associated with undertaking the IPO process. These costs include accounting and legal services to prepare for the IPO proceedings and the marketing costs of raising public awareness and piquing community interest.

Secondly, the new company's reporting requirements rise significantly. Under the scrutiny of the Securities and Exchange Commission, the company has to provide quarterly and annual financial information as a form of transparency to the government and investors.

Finally, the IPO process wrestles some management control away from initial investors/owners as a Board of Directors takes over.

The roadmap for an IPO

As was stated above, the IPO process is very complicated. For an IPO to legally and successfully make it to the IPO closing, every "i" needs to be dotted, and every "t" needs to be crossed.

If you’re contemplating taking your company public, you could probably use a roadmap to get your company where it needs to go. To help in that regard, here are the most important steps you would need to follow.

Securing the services of an underwriter

An underwriter is an investment bank specialist assigned to lead the company through the IPO process from a financial perspective. These underwriters assume the responsibility of setting the initial price. Often, these IPO players participate by selling/marketing the stock and becoming actual investors.

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Setting the IPO guidelines and framework

Once the underwriter is in place, there are many legal documents and agreements that the designated parties must fill out and sign. This list of documents/agreements includes (but is not limited to):

• Underwriting Firm Commitment
• Engagement Letter and Letter of Intent
• Red Herring Document (about the company in question)
• Underwriting Agreement
• S-1 Registration Statement for SEC
• Prospectus (defines IPO)

Roadshow and price setting

This stage is when marketing personnel make presentations to top investors and brokers to drum up interest and determine potential demand. This information collected during these presentations forms the basis for setting the initial price of the offering.

The quiet period

After executing marketing-based efforts, there comes a 25 day "quiet period." During this time, underwriters are granted access to oversubscribed purchases of the stock. This window, dubbed the quiet period, is the timeframe where the "lock-up" period is set. The lock-up period, usually 90 to 180 days in length, is when insiders can’t dump their allotted shares on the market.

IPO closing

IPO closing is the day and time when the IPO goes to market, and stock transactions can begin. To reach this long-awaited day with ease, follow the steps outlined above.

Giles Coghlan, Chief Currency Analyst at HYCM, offers Finance Monthly his insight on the possible impact the Biden administration will have on the markets.

The 2020 US Presidential election has produced what now seems to be a clear result: Joe Biden will be the next President of the United States. Interestingly, during the same week as the election, Pfizer announced that their COVID-19 vaccine was 90% effective, precipitating a major market rally as a result. Any market shifts that came a result of Biden’s victory were amplified by the positive market response to this pharmaceutical development.

However, it’s still worth considering what a Biden presidency means for British and American investors. COVID-19 won’t occupy the entirety of the Biden administration’s tenure, and the huge policy divergence between Joe Biden and Donald Trump means that we’ll undoubtedly see the financial markets reacting differently in the years ahead.

So, with this in mind, there are certain aspects investors could consider following Biden’s election victory. Although it’s still too early to make any concrete forecasts, especially with control of the Senate hanging on Georgia’s run-off elections, there are still important observations that can be made.

Checks and balances

Although the upcoming Georgia run-off senate race is being hotly debated within the US media, the reality is that Republicans will almost certainly retain control of the senate throughout the Biden Presidency.

For investors, this may represent great news. Analysis of all Presidential scenarios since 1945 reveals that a Democrat president governing with a split congress generated, on average, the best average annual returns for the US stock market – nearly 14% in dollar terms - according to UK firm Quilter Cheviot.

The reasoning behind this comes down to constraining what the President can accomplish. A split congress, as Barack Obama discovered in his final two years in office, can mean that much of what a President attempts to deliver is quickly impeded by filibusters and congressional obfuscation. This is especially the case in the senate.

Although the upcoming Georgia run-off senate race is being hotly debated within the US media, the reality is that Republicans will almost certainly retain control of the senate throughout the Biden Presidency.

But what could a split Congress mean for Biden? Ultimately, it might constrain his ability to introduce larger economic support spending, health or tax reforms, and climate-related legislation. Stocks and assets that performed well during the last four years would, in this scenario, largely continue to perform well. However, if Biden manages to clinch control of the Senate, how would his ambitious plans impact the markets?

All about tax

Trump’s most impactful economic policy, by far, was the cutting of the US corporate tax rate from 35% to 21%. Investors, traders, and CEOs all benefited massively from this, which is part of the reason why the Dow Jones has been making steady gains during Trump’s presidency.

Biden’s tax plan, increasing the corporate tax rate to 28%, would be seen as a huge blow to many US businesses. Although still 7% shy of the tax rate in place before Trump took office, many of the companies listed on the benchmark S&P 500 index could see their margins shrink if such tax reform was implemented.

The biggest winners from the Trump Tax cut, including AT&T, Hilton Worldwide, General Motors and Walgreens Boots Alliance, would all be hit hard from this shift in tax policy. Whether Biden is successful in enacting his envisioned tax reform, however, is still yet to be decided.

Technology on the horizon

The performance of technology stocks this year has been keenly observed by investors and traders. We’ve seen Apple become America’s first $2 trillion-dollar company and the working-from-home revolution facilitate a surge in remote-working shares, including Slack, Zoom, and Amazon.

A tech sell-off has already begun in reaction to Pfizer’s aforementioned vaccine development, but would this accelerate upon Biden moving into the White House? Democrats like Elizabeth Warren have vowed to do everything in their power to break up Amazon, Google and Facebook via anti-trust regulations; a move that could see millions of dollars of value wiped in an instant for these companies.

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Depending on whether Biden shares the ambition of his Democrat colleagues in this regard could facilitate a huge shock for investors in US technology. Those who own stock in, for example, Facebook may have to decide between keeping their shares in the core Facebook product or, alternatively, Instagram if a break-up of the company goes ahead. Although action of this kind is definitely more likely to occur under a Biden presidency, we will have to wait and see whether this transpires.

Preparing for 2021

In general, then, investors should be closely following US political developments if they own shares in any American-based companies or major stock indices such as the S&P 500. If Joe Biden is successful in the Georgia senate run-off elections, then it’s possible that many of his more ambition plans may be attempted, leading to huge ramifications across numerous asset classes.

The immediate reaction would likely be a large initial surge in US stocks in anticipation of a larger US stimulus package.  Alternatively, a Democrat President and Republican Senate will likely facilitate much more political compromise in American politics, which itself guarantees a certain level of economic certainty that, subsequently, will allow financial markets to grow and grow.

So, in many ways, with the large amount of fiscal stimulus, QE, low Fed interest rates, and willingness for the US to take on debt, I believe the US stock market should ultimately benefit either way in the medium to longer term. We are in an age where fiscal conservatism is dying and that should boost US stocks over the next Presidential term.

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