The IPO market appears to be improving this year, although factors still exist that will keep it from growing too rapidly. Company managers and owners must be ready to give up some control to shareholders when going public. This can deter some companies from transitioning to a publicly traded company until they require the capital for growth.
For that choose to prolong the jump to an IPO, private equity markets and venture capital have matured to fill the gap. Companies choosing to stay private longer can finance debt with relatively low interest rates providing an attractive option for growth. The private equity business sector also received additional boosts with the Reg A and crowdfunding rules that went into effect over the past couple years, which made it easier to raise capital without taking the step of a public IPO. The regulations of the Sarbanes-Oxley Act of 2002 is another factor that makes staying private even more attractive as public companies must invest time and accounting expertise to comply. Opportunities Exist with Special Purpose Acquisition Company (SPAC) Another opportunity exists for experienced traders willing to do research, which is a Special Purpose Acquisition Company, (SPAC). This is an interesting hybrid of public and private funding that is growing in the markets today. An SPAC IPO is essentially a blank check for the managers to go out and acquire private companies. An SPAC is usually formed by people with in-depth knowledge typically in a specific industry, who are confident that they can identify profitable acquisition opportunities. 100% of the money raised through the IPO is deposited into a trust account to fund the SPAC, giving reassurances to investors. Great Point Capital offers professional services for active including Proprietary Trading, Index Options and Quantitative Trading services. Our team has experience trading in stocks, futures, IPOs and SPAC’s. We are one of the few firms with the ability to offer access to Takion trading software, enhancing your trading performance. Great Point Capital has been serving the trading community since 2001, with 100+ prop traders actively trading the firm’s capital. Our mission is to lead the equity day trading community and give traders the support and tools necessary to make the most of their trading careers. Contact us today in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results
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IPOs have been slowly increasing since the lowest number in 2008 of only 35 newly introduced company stock during the Great Recession. 2014 saw the largest capital raised with 291 completed IPOs raising a record 96 billion, but only 112 in 2016 with just $21b raised. Although the IPO market has been slow the last couple of years, the first half of 2017 is seeing a slight increase with 91 completed deals. The upswing in 2017 of the number of IPOs creates opportunities for traders, although it can still be tricky to earn decent returns in the current environment. IPOs can be risky business for an individual investor as it can be difficult to predict how new stock will perform when introduced and trading begins. Most IPOs are experiencing a transition period which makes their future value a bit uncertain and there is no historical data to compare to.
Even though the number has been increasing, the return are not necessarily following suit. 2017 has seen returns on IPOs averaging only 10.6%, which is the 2nd worst performance for a 6-month period since 1995. To explain this decrease in performance we must evaluate the change in the structure of today’s typical IPO, which has had a profound effect on returns. Today’s IPO is Larger and More Stable The profile of today’s IPOs has changed dramatically in the last few years, as companies wait until they are much larger to go public than they would have in the past. The median deal size has increased from $82 million in Q1 2016 to $190 million in Q2 2017. IPOs are raising more money than they ever have in the past, and are more stable when deciding to go public. When these companies choose to go public they are stable with defined revenue streams and completely functioning management teams. The stability of the IPOs today allows them to command a higher market cap than companies without that proven track record. There is less volatility and less chance for bigger returns for traders with more visibility on valuation. It takes traders with experience and willingness to do the research to earn the returns on IPOs that we saw in the past. Great Point Capital is a team of experienced traders with in-depth knowledge of all market opportunities. Great Point Capital is a member of FINRA, serving the trading community since 2001. Our mission is to be the leader in the equity day trading community by giving the best traders the tools and support to make the most of their trading careers. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. The volatility of the stock market directly impacts stock returns and overall performance. History shows us that when the market experiences positive performance, volatility will decrease. Conversely, with an increase in volatility, the market sees a decrease in returns and investors experience increased risk. With the current state of low volatility, we have to wonder how long the market will remain calm, and when we should be concerned.
The VIX is the ticker symbol on the Chicago Board Options Exchange (CBOE) that is used to measure the level of volatility in the market. The VIX is supposed to represent the expectations for the next thirty days, and is commonly referred to as the “fear gauge”. The VIX uses volatility of various S&P 500 index options, which is derived from the capitalization of 500 of the largest companies listed on the Nasdaq and New York Stock Exchange (NYSE). The VIX is one of the most followed equity indices, and is thought to be an indicator of the US economy. VIX Hits Record Lows in 23 Years On December 22, 1993, the VIX hit record lows when it reached 9.48. The historical average of the VIX is typically close to 20, although it has recently been averaging under 10, and on May 9, 2017, the VIX closed at 9.77, the lowest in over 23 years. We typically see the market perform well during low volatile times, and that is surely the current situation, although we might wonder if the fear index is truly in line with investor confidence? The political turmoil we see regularly these days usually brings about uncertainty, although it appears Investors are not yet concerned or waning in confidence. What Contributes to the Volatility of the Stock Market? . News of mergers and acquisitions usually cause market activity, although nothing has been big enough to wake the current sleepy market. One factor may be that there are simply less players in the market than ever before. Less Market Participants The merger and acquisition business has been booming in spite of Antitrust laws that are designed to prevent monopolies that would hinder competition. This increase in M&A has contributed to fewer market participants than just a decade ago. As stated in a July 2015 article from CNN Money, the number of US stocks publicly listed hit a peak record of 7,562 in 1998. According to the Wilshire 5000 Total Market Index from 2015, there were only 3,812 publicly listed US stocks. Whether volatility is high or low, you can trade with confidence with an experienced team like Great Point Capital. Great Point Capital has been serving the trading community since 2001. Our 100+ prop traders actively trade the firm’s capital, specializing in equities and equity options. We are one of the very few firms able to offer access to Takion Software Platform, enhancing your trading performance. To earn to your maximum potential in times of low or high volatility, contact us today to speak with one of our knowledgeable staff. RegATS, RegNMS and the effect on Markets
RegATS was established in 1999, and actually increased the popularity of ATS (Alternative Trading Systems), as they then became allowed to register as a broker dealer, rather than as an exchange that must adhere to more stringent rules. This caused the volume traded on ATS systems to increase, having the opposite effect on the markets as they quickly lost liquidity. The SEC responded in 2005 with RegNMS, which was aimed to unify and streamline the ATS market share by requiring that all orders coming from an ATS be routed through a national market system, creating one combined network. RegNMS also required that all exchanges route all orders, regardless of where they originated, to the trading venue with the best displayed price, which did not necessarily have to be on an exchange. These regulations dramatically decreased the strong position that exchanges had on the market, as they lost even more liquidity. Prior to RegNMS, for example, the NYSE traded approximately 85% of total market share, while after RegNMS that volume dropped to about 30%, and went as low as 20% in 2014. Trading in ATS venues and Dark Pools was even more attractive with these regulations, along with a loophole in RegATS which allows trading with hidden prices as long as the total volume of those trades is less than 5% of the volume trading of the stock nationally. Investors were allowed to go into dark pools and trade anonymously to avoid alerting the HFT firms of what their intentions were. As more and more investors went to dark pools, exchanges again lost market share. SEC Begins a Tick Size Pilot Program to address Trade-At Rule Various proposals have been addressed to the SEC as options to implement a Trade-at Rule to address the liquidity of the markets and off exchange trading. One proposal referred to as a Tick Size Pilot Program is in process currently and will evaluate the effect of widening the tick size. Under this pilot program, the tick size will be increased from one cent ($.01) to five cents ($.05), only on certain piloted securities. Three groups and one controlled group were put into place, each with separate rules to trade by. One of the groups is actually using a trade-at rule, while another is required to quote in increments of $.05, and yet another must quote and trade in $.05 increments. This Tick Size Pilot Program just started last year in October of 2016, and is schedule to run for two years For more information on this pilot program, and to receive email updates of the program, visit FINRA.org. Other systems proposed include the “Grand Bargain” which was suggested by the Intercontinental Exchange, ICE, which suggests a trade at rule combined with reduced access fees Another proposed plan by Nasdaq suggests merely a decrease in fees with no trade-at rule at all. Our View on Trade-At Currently the trader's public quote acts as a reference price for POF firms and dark pools to trade in front of him. If a trader decides to display a quote in the public markets, that trader should get executions when orders come in at or through his displayed price. The trader only gets executed once POF firms do not feel there is an advantage any longer at that price. This means that the trader that risks the most in displaying a bid or offer is the last to be filled at that price. That is not a fair system, and de minimis price improvements should not be used to justify the practice. Most traders competing with this pricing model agree – a Trade-At Rule is necessary. Headquartered in Chicago, Great Point Capital, LLC, is a member of FINRA and has been serving the trading community since 2001. Our mission is to be the leader in the equity day trading community by giving the best traders the tools and support to make the most of their trading careers. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. Impact Technology has on the Market
The liquidity of US Stock Markets have been greatly impacted by the rapid advancement of smart computer algorithms working in conjunction with ECNs (Electronics Communication Networks), ATSs (Alternative Trading systems) and Dark Pools. The automation of smart computers along with liquidity in off exchange venues has contributed to a dramatic increase in trading on these alternative venues and have caused quite a dramatic decrease in volume traded on registered exchanges. It is this high speed coupled with the choice of using an ATS for fast execution and low cost that was a catalyst to what we now refer to as High Frequency Trading (HFT). HFT firms incorporate the speed from smart computer algorithms which gives them the ability to see orders in process, and buy them up for themselves. Since they can see all pending orders, they know if they’ll be able to turn around and sell at a slightly higher price, even in the sub-penny price range. On high-volume orders, fractions of a penny add up to millions of dollars. Sub-Pennying This combination of speed from computers and liquidity in ATSs, added to the decimalization of the markets in 2001 has spurred another predatory practice referred to sub-pennying, which goes right along with HFT, and occurs regularly today. Sub-pennying occurs when a broker gets in front of a displayed order by 1/100th of a penny, or .0001. This is all done inconspicuously with a computer algorithm program that allows them to see an order is pending, so they’ll buy up shares within a sub penny difference. Sub-Penny trades occur because POF firms have to validate taking the trade for themselves, so they improve the price by .0001. The market is showing $10.00 x $10.01, so when an order comes to the POF firm to sell at $10.00, they fill it themselves at $10.0001, letting them claim they improved the price for the customer. The truth is that there is probably a bid in a dark pool at $10.005, that the POF firm will then sell, immediately making themselves .0049/share in the process. Even if there isn't anything in the middle that they can immediately get out of the trade, they are far from the bid, which is what all bidders in the market at $10.00 wish they could be. All other bidders never get the chance, however, as the POF firm steps in front of them without ever having to risk putting a bid into the open market. This leaves traders experiencing whiplash in a scenario of “here one minute (second in this scenario) and gone the next” when attempting to execute their orders. Most traders that we talk to agree – a Trade-At Rule is necessary. Headquartered in Chicago, Great Point Capital, LLC, is a member of FINRA and has been serving the trading community since 2001. Our mission is to be the leader in the equity day trading community by giving the best traders the tools and support to make the most of their trading careers. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. Payment for Order Flow (POF) is a common practice that has been occurring in the United States markets for a long time now. This practice, in fact, was happening in the 1980’s with master crafters Bernie Madoff taking the front lead. The arrangement of POF occurs when a third-party firm pays a broker to send orders including a large amount of retail orders to their firm instead of to the open market.
When the POF firm gets their orders, they can either pass it on to the market to be filled against existing quotes, or they can execute it themselves which is more probable. If the buying firm sees an order for $10.10 for example, they can sell the stock to the customer themselves for $10.0999, giving the appearance of giving a price improvement. Now they’re just inside the bid and they can take advantage of midpoint pricing in dark pools and can possibly buy it back for $10.095. Direct high speed data cables connected directly to exchanges allow their computer algorithms to pick up on the National Best Bid and Offer (NBB) fractions of a second before it’s widely represented, allowing them to see a move to possibly $10.08 x $10.09. If the NBBO hasn’t changed yet and is still showing an offer of $10.10, they’ll give the execution at $10.10 adhering to the best official offer price, and turn around and buy immediately the $10.09 offer they know is coming. The implications to the average day trader are that they are the last to have their orders executed because once the POF firms process their orders including all retail customer trades, traders are left searching for what’s still available. All too often, when day traders try to sell stock at $10.10 referring to the example above, they act as nothing more than providing a reference price for the firms that get to see the orders first. Typically, the only way that the daytrader gets to see at the $10.10 price is if the POF firms decide not to sell it themselves, which means in most cases that it’s no longer a good trade. This is quite a disadvantage. After talking with several experienced daytraders, the consensus is in, and most daytraders agree that a Limit on Payment for Order Flow would be on the top of their wish list. Headquartered in Chicago, Great Point Capital, LLC, is a member of FINRA and has been serving the trading community since 2001. Our mission is to be the leader in the equity day trading community by giving the best traders the tools and support to make the most of their trading careers. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. US Market History
Many events have occurred in modern history that have created what many feel is a need for a Trade-At Rule. Common practices such as Payment for Order Flow (POF) are causing Exchanges, Regulators and Traders to analyze the current structure of the market and to consider implementing a Trade-At Rule. Payment for Order Flow is the agreement that exists when a third-party pays a broker to send their orders to them, rather than to the open market. This is a cunning strategy we are all well aware of, but yet there seems to be quiet acceptance. This type of payment incentive developed over time with the introduction of Alternative Trading Systems (ATS) and rapid improvements in computerized algorithmic trading. This type of payment structure leaves traders fighting for market share. Change in Markets due to Advancements in Technology The combination of ATSs and other off exchange venues along with computerized algorithmic software have had a huge impact on US Markets and how securities are traded today. Daytraders today dream of a level playing field and efficiency in the market. The Stock Exchange of today is not occupied by clamorous traders shouting on the floor while waving papers in the air. This market today is an age of computer algorithms scanning all available exchanges to buy and sell desired shares in fractions of a second. Many of the trades occurring are on an off-exchange venue such as an ATS, an ECN (Electronic Communication Network), or a Dark Pool, where they can act like an exchange but adhere to their own rule set. These off-exchange venues often offer price improvement, fast execution, and decreased trading costs for investors, making them a desirable way to go. This is where a conflict of interest could develops to the firms processing these orders. Brokers can either route their orders to an off-exchange venue offering the best price with the least costs, or they can send their orders to the venue that pays them the best rebates. The introduction of various ECN’s, ATS and Dark Pools has contributed to the development of a fragmented market that now consists of thirteen US Stock Exchanges, over forty dark pools and several ECN’s to choose from. With so many choices, it is no wonder that people are talking about liquidity, paying for it, and wondering how to keep it flowing within regulations, and in an ethical manner. While traders are fighting for market share, and wondering where to find liquidity in the market, most traders are also wondering if it’s time for new regulations, or are they long overdue? Headquartered in Chicago, Great Point Capital, LLC, is a member of FINRA and has been serving the trading community since 2001. Our mission is to be the leader in the equity day trading community by giving the best traders the tools and support to make the most of their trading careers. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. While the pros of trading from home are obvious, flexibility to be available for a variety of personal reasons, there are many benefits to working from the office of an experienced trading firm. One of the biggest benefits of working with your firm’s office would be the outstanding IT support that comes with it. Every trader must have reliable high speed internet, which is pretty easy to come by these days even in remote locations. If there happens to be a residential outage, however, you are at the mercy of your local provider. When trading from the professional environment of your firm, you will enjoy reliable backup systems, and alternative computers available if you have a hardware malfunction. A smooth-running machine with a reliable battery backup is imperative to complete your trades on time. In addition to top-notch IT equipment and support, one of the best advantages of working in-house with your fellow traders is being surrounded by experienced traders. Each seasoned trader has developed their own systems for observing and getting a feel for the market, which is hands on learning you cannot acquire from a screen. This mentoring is valuable especially to a new trader. You learn to develop your own strategies and feel for the market when your experienced colleagues and mentors are within the same office. Unless you need the flexibility of trading from home, we feel there are no cons to working from the firm’s office. Of course, if that flexibility is a matter of necessity or you are experienced enough to have your own proven strategies to trade from home, Great Point Capital is here to assist you. We employ several traders in-house at our two national locations, and we also employ several seasoned traders working remotely from their home location. With Offices in Chicago, IL and Austin, TX, Great Point Capital is poised to assist you and your market strategies, from any location. We offer the Takion Software Platform, utilizing algorithmic smart order routing, advanced code and connection to exchanges, and all major dark pools. In addition to access to Takion, we provide our own proprietary Instant Messaging (IM) Software, giving you the ability to collaborate with the experienced members in your firm. This gives our remote traders valuable insight from other experienced traders that you would not otherwise have. Great Point Capital, LLC, offers all of the same benefits to our remotely located traders as we do for those working in-house. You’ll be trading with bigger buying power, enjoying aggressive payout structures, and join a team of best traders in the business. With our two national locations, we are positioned to trade with you on site from either one of our modern offices or remotely from any location. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. If you are an experienced trader deciding to tackle the market from a home office, there are many technical considerations to successfully trade from home. While the basic required setup is simple; a reliable internet connection, a computer, and the software platform of your choice. If you decide to work from home, the investment into your IT Equipment will be your responsibility, although when trading with a reputable trading firm you will likely have access to their algorithmic software. Your computer purchase must be kept separate from personal use, do not allow family members or children to use for entertainment purposes. A computer that is used often for streaming or downloading music can get bogged down with malware and pop-ups. This could pose a huge risk for any client’s sensitive data, or you could risk missing an important trade if your computer slows you down. Hardware Requirements Most new laptops today come with a multi-core 64-bit processor, but you had better check the specifications to be sure. A 64-bit processor is faster and more efficient than a 32-bit processor, but just as important – a 64-bit computer can run software that is made for either 32 or 64 bit, but a 32-bit processor can only run 32-bit software. This is an important distinction when evaluating your computer specifications. Many of the algorithmic trading software platforms now utilize the 64-bit technology, so be sure to check your software manufacturer’s requirements in hardware. Adequate RAM is a necessity, as this Random Access Memory allows your computer to work more efficiently, thus quicker. RAM is not costly to purchase, therefore upgrading to either 8GB or 16GB is not too expensive. With the more powerful software programs out there today, you’ll need adequate RAM to keep up. Once you obtain the hardware you need, do not forget about a proper backup system. Online backup storage is available in several forms, usually from your antivirus software provider. Having an antivirus program is a given! It almost goes without saying, but of course anti-virus and malware protection is of the utmost importance! You’ll want a secure internet connection as well, with a password protected modem. Obviously reliable high-speed internet is mandatory, and is much more readily available in most areas than even a few years ago. Even with a reliable connection, however, you could risk an outage in any residential area. This is where the backup of a trader’s office could come in handy. Having multiple monitors would be a personal preference, many day traders to have more than one screen. The advantage of multiple screens is the ability to view real time monitoring of several markets at once. A good video graphics card is necessary to maintain multiple monitors, and even for good visuals on a single monitor. Once you have your home office setup with the proper equipment, it’s time to get busy, stay focused, and stay connected! Don’t let the distractions of a home office get in your way. Great Point Capital Has Much to Offer to the Experienced Home Day Trader Great Point Capital, LLC, with offices in both Chicago, IL and Austin, TX, provides benefits to both the in house office trader, and the experienced home day trader. You’ll have access to our Takion Software Platform, and connection to our own proprietary Instant Messaging software, where you can collaborate with some of the most experienced traders in the industry. Great Point Capital, LLC, offers all of the same benefits to our remotely located traders as we do for those working in-house. You’ll be trading with bigger buying power, enjoying aggressive payout structures, and join a team of the best traders in the business. With our two national locations, we are positioned to trade with you on site from either one of our modern offices or remotely from any location. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. Many Day Traders choose to work from their own home, rather than in the office of a trading firm, after reviewing the pros and cons. This may be possible once a trader has had enough experience, with a positive proven track record. Some family circumstances might be dictating the choice, but whatever the reason, there are advantages and benefits to both arrangements. If you know what they are up front, you can prepare and set yourself up for success. The greatest advantage of working from home is flexibility. Flexibility to be available to care for family, sick loved ones, or maybe you are pursuing your own dreams in between some down time. Just recognize flexibility for what it is, the availability to be there for family when you need to, but it is also an opportunity to slip into comfortable habits that could cause you to miss out on important market activity. Flexibility must be managed so that distractions do not cut into your working time. Working from home requires discipline, and especially in the field of Day Trading. Home traders must be paying attention and ready to go when the market gets into the swing of first morning trades. The market moves pretty fast, some days more than others, and you are likely to miss something important if you walk away at an inopportune time. This is where being surrounded by colleagues watching the market with you is beneficial. When in the office and surrounded by experienced traders, you get multiple views of the market which allows you to share opinions with other traders, collaborate and gain confidence in your trades. What all of this boils down to is that the home Day Trader must possess certain personal characteristics of a strong work ethic and self-motivation in order to trade from home with high performance results. Focus on your task at hand is imperative for successful trading, multi-tasking personal tasks while trading is not recommended. For the experienced Day Trader, working from home is achievable when self-motivation and discipline are applied to a focused, proven strategy. Success is much more achievable with the backing of a reputable trading firm, such as Great Point Capital. Great Point Capital, LLC, offers all of the same benefits to our remotely located traders as we do for those working in-house. You’ll be trading with bigger buying power, enjoying aggressive payout structures, and join a team of the best traders in the business. With our two national locations, we are positioned to trade with you on site from either one of our modern offices or remotely from any location. Contact Great Point Capital, LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results. |
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