March 31, 2009
This type of credit exists when one firm provides goods or services to a customer with an agreement to bill them later, or receive a shipment or service from a supplier under an agreement to pay them later. It can be viewed as an essential element of capitalization in an operating business because it can reduce the required capital investment to operate the business if it is managed properly. Trade credit is the largest use of capital for a majority of business to business (B2B) sellers in the United States and is a critical source of capital for a majority of all businesses.
There are many forms of trade credit in common use. Various industries use various specialized forms. They all have, in common, the collaboration of businesses to make efficient use of capital to accomplish various business objectives.
For many borrowers in the developing world, trade credit serves as a valuable source of alternative data for personal and small business loans. For example, Wal-Mart, the largest retailer in the world, has used trade credit as a larger source of capital than bank borrowings; trade credit for Wal-Mart is 8 times the amount of capital invested by shareholders.
March 19, 2009
Short Term Trading
Short-term trading refers to the trading of stocks and other securities over brief periods of time, such as a few weeks or months. Short-term trading should not be confused with day trading, where stocks are bought and sold within the span of one trading day. In general, those who practice short-term trading rely heavily on technical analysis and tools such as charts and graphs in order to make decisions about how and when to place a trade. This differs from a strategy of fundamental analysis, where an investor will research a company’s earnings, history, management, balance sheet, labor relations and other “fundamental” factors before purchasing or selling the company’s stock.
An investor who uses short-term trading has little practical use for fundamental analysis because of the time and effort involved in it. A short-term trader is much more concerned with where the price of a stock is at the moment, and where it is going in the near future. It is often easier for a trading novice to become familiarized with technical tools such as charts and algorithms than it is to learn what makes a company strong and therefore a good long-term investment. Because of this, short-term trading is very popular, especially in times when stock markets have a general upward trend.
One very common type of short-term trading is swing trading. This consists of buying a stock with the hope of taking a profit within a few days or weeks. The ideal environment for swing trading is when the market is not exhibiting any particular trend, but will go up for a few days and down for a few days, alternately. A swing trader aims to take advantage of these fluctuations, with no regard for the fundamentals of the underlying company, since these don’t normally change over a period of days.
Position trading involves holding a stock for a few months, or perhaps as much as a year. A position trader, as opposed to a swing trader, has a somewhat long-term outlook. In this case, fundamentals can be important to consider, especially if they indicate the potential for a rise in price which may not fully play out for months. While still considered a type of short-term trading, it is not usually subject to the level of risk associated with day trading or swing trading.
March 2, 2009
It is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP).
The International trading economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, corporations, outsourcing globalization and multinational are all having a major impact on the international trade system.
International trade is a major source of economic revenue for any nation that is considered a world power. Without international trade, nations would be limited to the goods and services produced within their own borders.
The principle of International trade is not different from domestic trade as the motivation and the behavior of parties involved in a trade does not change fundamentally depending on whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or a different culture.