How to make money on Pokemon if you are a trader?
The summer of 2016 was remembered by many as a Pokemon fever. With the release of the mobile game Pokemon Go, people catch Pokemon everywhere, some even managed to take a trip around the world to collect all the animals. This game has forced millions of people around the world to raise their lazy loin parts, this is its main plus.
And where there is popularity, there is money. Even despite the decline in public interest, the game continues to bring its creators several million dollars in profit per day. How to make money on this trader? The answer is simple - trading in Nintendo shares. Today we’ll talk about how to do this.
Starting a business with the sale of playing cards, initially the company's products were focused solely on squandering dividends of capitalists. But, as it later turned out, playing cards are used not only by visitors to the casino, but also people of a lower rank, for example, children and housekeepers. Founded in 1889, Nintendo was able to survive the change of several generations until it was in the hands of the youngest leader in the history of the company, the 21st Hiroshi Yamauchi. Thus, in the middle of the last century, Nintendo opened a new niche for itself - the market for children's toys. Surely, Nintendo has a long and very exciting history, but, nevertheless, the company acquired its present reputation as a manufacturer of video games.
We all played at one time in NES (Nintendo entertainment system), known in our country as Dendy. Next came the console, which in Russia was not very popular, but in other countries they were sold in millions of copies. These are Snes, N64, Gamecube, DS, 3DS, Wii, Wii U and, expected next year, Nintendo NX.
Nintendo has always firmly occupied its not the largest, but significant part of the video game industry. Those who are not interested in games didn’t hear much about them until there was an explosion - the release of a mobile game Pokemon go.
Fever and its decline
What are the concepts of the market? In fact, the crowd effect is still difficult to predict, and from the outside everything seems like chaotic insanity. Even with such a powerful tool as the Internet, insiders still have the most important information.
At the same time, what happened can be described in terms of the spread of the virus. If in the last century the concept of viral marketing did not exist, then the concept of viral infections was practiced everywhere. For example, with the naked eye you can see the relationship of the most destructive events of the early 20th and 21st centuries.
The sudden success after the release of the first mobile hit drove Nintendo shares to soar. The excitement provoked a general fever, and the lack of information did not allow to stop in time. In one week, stock growth added 10 billion to the market value of the company. This greatly heated the shares of the gaming giant, which in the end led to a 20% drawdown. Analysts and traders are still arguing about how fair the current value of the company is and how much this success is due to the release of the game about Pokemon.
The less traders understand the principle of industry functioning, the larger the bubble is inflated by each new technology company. The launch of the new game had a very positive effect on investors, and as it turned out later, even too positive.
Actually, the stock has never been very popular on the American stock exchange, and the main decisions are made during eastern trading. Such a sudden rally can still be explained by a lack of liquidity and a temporary loss of investor interest. A sharp jump in interest caused a chain reaction, and the market caught the wave, not having time to fully assess the potential that arose.
For example, it is not completely clear what is the reason for the July 11 gap. During one trading session on the Tokyo Stock Exchange, stocks have traveled a record distance over the past ten years without obvious reasons.
In general terms, in just one week, the company's shares rose by more than 50%. This jump was even greater than when Nintendo announced their entry into the mobile app market last year. Actually, in terms of the growth rate of capitalization, they greatly outstripped all closest competitors, in the person of Electronic Arts, Activision and others. In two weeks, growth was 100%. After the publication of information that Nintendo, in fact, is not a developer of Pokemon Go, almost 20% correction followed.
Today, Nintendo is one of the largest game corporations, with annual revenues of more than $ 5 billion. Most of the profits come from the United States, followed by Japan. At the same time, only a third of earnings comes from the sale of software. But, unlike Microsoft and Sony, Nintendo is able to develop games entirely on its own, without relying on the help of third parties, as well as being a console manufacturer.
The company's main iron product is the Wii U and Nintendo 3DS game consoles.
The current generation of consoles has not gained the same popularity as before, and staff reductions, roughly speaking, returned the company 4 years ago.
Now we are witnessing a period of prolonged stagnation. Over the past five years, the company's net profit fell more than 3 times. 2017 promises to grow, but expectations look too high and, most likely, revolution is not worth waiting for next year. The main economic prospects are focused on the release of the new console and the mobile application market.
Given the magnitude of the discussion in the media, ordinary people might think that at least a significant part of the proceeds from the game goes into Nintendo’s pocket. In fact, things are a bit more complicated, as Pokemon Go was developed by Niantic and the Pokemon Company. According to a rough estimate, Nintendo owns only 10% of the revenue from a mobile game, and the rest is evenly divided between Apple, Niantic and Pokemon. In addition, Nintendo owns a third of Pokemon, which increases the total share of the company to about 20%, which is a significant, but not decisive share.
The real developer of Pokemon Go is Niantic. Adaptation to the popular franchise is based on their previous game, Ingress, widely known in narrow circles, also based on geolocation.
In any case, the reaction is premature, since Pokemon Go is not the very game that will change the market. By next year, Nintendo is preparing to release 5 of its own games on mobile platforms, on the success of which it will be possible to play. In terms of price-earnings ratio, Nintendo is already far ahead of its industry peers (with the exception of Zynga). As of July 14, the value of the shares was 96 times higher than the profit, which is several times higher than the performance of the closest competitors.
- Position Sizing
The size of the standard lot for CFD instruments is 100 shares. Let's say the cost of one Nintendo stock is $ 30. In this case, the purchase of 100 shares on the exchange will cost 30 * 100 = $ 3000. When trading with forex brokers (see below), you do not need to pay the full price of the transaction, just use leverage. With a leverage of 1:20, the entire amount of the deposit will be 3000/20 = $ 150.
You can get the full specification for the contract by right-clicking on it from MT4's “Market Watch” and selecting “Specification”. For Nintendo stocks traded on the NASDAQ, the minimum price change (one tick) is one cent. This means that if the shares rise in price by $ 1, from one standard lot you will receive $ 100 of profit (two-thirds of the pledge).
- Technical and fundamental analysis
Technical analysis is a universal tool for determining patterns in any market. That is, only the presence of a quote stream is important, everything else does not matter.
Most stocks on the stock market are not traded around the clock, and trading volumes are an order of magnitude less than forex. In this regard, gaps and gaps are quite common on the stock exchange. It is much more difficult to analyze such a chart than the usual EURUSD.
Support / resistance levels, candlestick patterns work well. It is better not to launch standard technical indicators within the day, most likely, they will show incorrect values. Anyway, the main trend is determined by certain fundamental events. The fair value of shares is formed on the basis of the current situation and forecasts for the future in relation to a particular company: assets are growing - it's time to invest. In general, all Wall Street traders are confident that the foundation ultimately always outweighs any short-term trends.
Fundamental factors include the planned release of the new NX console in the spring of 2017. Along with this, the company is preparing several new games for well-known franchises. In fact, the market can even move a simple tweet. The official Pokemon Go twitter constantly publishes application update logs, information about bugs and launches in new markets (like the recent launch in South America).
So, having decided on economic prospects and noting the main trend, you will need to find the most suitable place to enter the position. Here the analysis of the price chart will help just to determine the levels of support / resistance and reversal figures. It is also not necessary to delay the entry too much; in the stock market, volatility can grow very quickly, and at this time it is better not to trade.
In addition to earnings from the growth in the value of shares, shareholders also have the opportunity to receive additional income in the form of dividends. Roughly speaking, part of the company's profits can be distributed among shareholders. Everyone receives a payment proportional to the size of the position.
Typically, companies pay dividends when there are available or idle funds. Fast-growing companies tend to reinvest profits for business growth. Slowly growing companies, such as General Electric, are able to provide shareholders with dividends on an ongoing basis.
In the case of trading CFDs, the so-called dividend adjustment is used. In the case of a long position, the amount of the amendment is credited to the account; in the case of a short general position, it is withdrawn from the account. This is what Nintendo’s dividend payment schedule looks like in the historical perspective. The last payment was made on July 15th.
- Trading time
Two trading sessions are in the morning and evening. Trading on the Tokyo stock exchange begins at 3:00 and ends at 9:00 (Moscow time). The New York Stock Exchange opens at 16:30 and closes at 23:00.
- What strategies to apply
In the case of Nintendo stocks, it will be effective to use the foundation (primarily news) + candle patterns (get from Steve Neeson’s shelf) + support / resistance levels.
You can forget about trendy indicators.
Where to trade Nintendo shares?
To be trendy, many forex-oriented companies are launching Nintendo stock trading. At the moment this is:
When trading directly, follow the fundamental news (the media love the topic of Pokemon), video game market news, candle patterns, including those that are not used on Forex, and of course, do not forget about the risks.