Is it worthwhile to use Robinhood for your investments instead of one of the many other investing apps out there? At HowTheMarketWorks, we provide our members with unbiased reviews of investing a...
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In an ever-changing world of for sale financial courses and gurus, it has become increasingly difficult for student investors to find and utilize the best free tools on the market. At How the M...
https://www.howthemarketworks.com/best-crypto-demo-accounts/
When looking for investment ideas and tips, stock screeners are a really great idea. The best screeners available provide a large array of different information based on unique criteria, such as ...
https://www.howthemarketworks.com/finviz-review-pros-cons-using-stock-screener/
You may have heard a lot about hedge funds on television and perhaps, in newspapers. What exactly is a hedge fund, and what do they do? Hedge funds have been in existence for several decades sinc...
https://www.howthemarketworks.com/nuts-bolts-hedge-funds-work/
A short stock is an expression used when you sold shares of a company that you did not own beforehand. Let’s say you expect a stock’s price to drop. Shorting a stock would involve a strategy ...
Long Stock What is a long stock? A long stock is an expression used when you own shares of a company. It represents a claim on the company’s assets and earnings. As you i...
Definition “Price Controls” are artificial limits that are put on prices. If the limit is put in place to prevent prices from getting too high, they are called Ceilings. If they are in place ...
What Is The Business Cycle? The Business Cycle is the broad, over-stretching cycle of expansion and recession in an economy. The Business Cycle is concerned with many things – unemployment, ind...
What are Credit Cards? Credit cards is a form of unsecured credit (meaning a loan without collateral) that you can use to make everyday purchases. All credit card purchases are made using a loan ...
What Is Credit? “Credit” is when you have the ability to use borrowed money. This can come in many different forms, from credit cards to mortgages. There is a wide range of ways to use credit...
https://www.howthemarketworks.com/credit-using-borrowed-money/
Credit Reports are basically a report that contains your credit history – both the good and bad. If you watch late-night TV, you have probably seen a few commercials offering free credit report...
Definition “Economics” is often called the Dismal Science – it studies the trade-offs between making choices. The purpose of economics is to look at the different incentives, assets, and ch...
Definition A “Contract” is a legally binding agreement between two parties (people, companies, or both). Having a contract means that if one party does not keep their word, the other can sue ...
When talking about Banking, people generally group Banks, Credit Unions, and Savings & Loan companies all in one group. They do provide similar services, but they each have specific differences t...
https://www.howthemarketworks.com/banks-credit-unions-and-savings-loan-institutions/
Definition of Wealth “Wealth” means having an abundance of something desirable. This can be tangible, like money and property, or intangible. Intangible Wealth Just because something does not...
Definition When we think of money, stored value means anything that isn’t cash, but you can still use to transfer value – checks, debit cards, gift cards, and forms like that. These are use...
https://www.howthemarketworks.com/money-types-of-stored-value/
A “Spending Plan” is exactly as it says – a plan of what you will be spending each month. There are usually two parts – your “fixed” spending and your “variable” spending. The fix...
Contest: December Trading Contest Final Portfolio Value: $117,803.89 (+17.80%) Trading Strategy For This Contest I’ll be general with my strategy so what I have done is I kept a max 5 stocks so...
https://www.howthemarketworks.com/jamesaquinos-trading-strategy/
Definition In Economics, “Demand” is the relationship between prices and how much people want to buy a good or service. Details As the market price of a good goes up, the amount of that good...
Definition In Economics, “Supply” means the relationship between prices and production. In general, the higher the market price of a good or service is, the more producers are willing to sel...
Definition The stock market crash of 1929 was a massive crash in stock prices on the New York Stock Exchange, and marks the largest financial crash in the United States. Details The stock market ...
https://www.howthemarketworks.com/stock-market-crash-of-1929/
Definition The Federal Reserve Bank, or the “Fed”, is the central banking system of the United States. It serves as the primary regulator of the US dollar, as well as the “lender of last r...
https://www.howthemarketworks.com/what-is-the-federal-reserve/
Definition The Reserve Requirement is how much of all deposits that a bank is required to keep “on hand”, meaning in its vaults, or on deposit at the Federal Reserve Bank (in the United State...
Definition: Money creation is accomplished through a system of borrowing and lending. Until the 1970’s, it was based on the total reserves of gold and silver. Details on Money Creation: Money i...
In the United States (and many other countries), the question “How is money created?” comes up a lot. The treasury isn’t just printing cash all day, if they were the government debt would b...
Definition Cottage Industry, or the “Putting Out System” is a production system of producing goods that relies on producing goods, or parts of goods, by craftsmen at home, or small workshops,...
Definition: “OHLC” stands for “Open, High, Low, Close”, and this is a chart designed to help illustrate the movement of a stock’s price over time (typically a trading day, hour, or minu...
Contest: Second November Investing Contest Final Rank: 5 Final Portfolio Value: $112,017.03 (+12.01%) Trading Strategy For This Contest I looked for low prices stocks breaking new highs and held ...
https://www.howthemarketworks.com/branflakess-november-investing-contest-strategy/
Definition “Wall Street” is a street in New York City, near the southern end of Manhattan Island. It is the home of the New York Stock Exchange, and the biggest center of stock trading and fi...
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Definition The New York Stock Exchange (or NYSE) is the largest stock exchange in the world. Think of it as an organized, fast-paced flea market where buyers and sellers from all over the world c...
https://www.howthemarketworks.com/what-is-the-new-york-stock-exchange/
Contest: October First Daily Challenge Final Rank: 3 Final Portfolio Value: $102,112.25 (+2.11%) Day Trading Strategy For This Contest For this day-trading contest, my big winners were the triple...
https://www.howthemarketworks.com/ksmiths-october-day-trading-strategy/
Contest: October First Weekly Challenge Final Rank: 1 Final Portfolio Value: $116,943.82 (+16.94%) Trading Strategy For This Contest I select highly volatile and liquid stocks / ETFs to trade, pa...
https://www.howthemarketworks.com/hoabidebays-first-october-week-contest-trading-strategy/
Contest: October First Daily Contest Final Rank: 6 Final Portfolio Value: $101,341.05 (+1.34%) Day Trading Strategy For This Contest I usually focus on Lower priced stocks because they tend to be...
https://www.howthemarketworks.com/branflakes1212s-october-day-trading-strategy/
Final Rank: 318 / 518 Final Portfolio Value: $992,114,784.48 (-0.79%) Investment Strategy For The Blue Chip Investment Contest Since time was very limited for me in the Blue Chip Investment Chall...
https://www.howthemarketworks.com/phil-simards-blue-chip-investment-strategy/
Final Rank: 338 / 518 Final Portfolio Value: $979,922,717.88 (-2.01%) Investment Strategy For This Contest I don’t know if what I did even qualifies as strategy. I purchased about 20 or stocks ...
https://www.howthemarketworks.com/ross-logiudices-blue-chip-challenge-investment-strategy/
Final Rank: 331 / 518 Final Portfolio Value: $985,785,982.85 (-1.42%) Investment Strategy For This Contest This was a contest where I wanted to go big or crash hard. The news leading up to the co...
https://www.howthemarketworks.com/ksmith-blue-chip-challenge-investment-strategy/
Live Forex trading includes negotiating of national bills which is performed on a live basis at 24 hour, around-the-clock period. Forex is derived from the words Foreign Exchange which is known a...
Definition A Stop (or stop loss) order and limit order are orders that try to execute (meaning become a market order) when a certain price threshold is reached. Limit and stop orders are mirrors...
Definition An order type that allows to set a moving stop or limit target price. The target price moves based on the daily high. Trailing stops can be set either in percentage or in dollars and c...
Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time. This is seen as a loan from the bond holder to t...
Definition Your “Risk Level” is how much risk you are willing to accept to get a certain level of reward; riskier stocks are both the ones that can lose the most or gain the most over time. R...
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Definition: An asset is anything that has monetary value and can be sold. Assets can be anything from a pencil (though it is not worth much) to a skyscraper to things like Stocks and ETFs. There ...
Definition Open Interest is the total number of options or futures contracts that are “open”, meaning currently owned by an investor and not yet expired. Details Think first in terms of optio...
A pullback is a technical analysis term used frequently when a stock “pulls” back to a resistance and/or support line, usually after a breakout has occurred. Pullbacks can be in an uptrend or...
Definition When you are looking at a sequence of related numbers (for example, the price of a single stock over time, the height of all students in a classroom, or how many breakfasts you will ge...
ETFs are collections of assets into bundles you can invest in all at once, the most popular ones follow indecies (such as SPY following the S&P 500), which is one way for an investor to build a ...
The S&P 500, or the Standard & Poor's 500, is a stock market index based on the common stock prices of 500 top publicly traded American companies, as determined by S&P. It differs from other stoc...
Good Till Date Order Terms If you have ever placed a limit or stop order on HowTheMarketWorks, you have see the “Good Till Day” order term on the trading menu: A “Good-Till-Day” order is ...
Understanding what it means to build a diversified portfolio is one of the first concepts a new investor needs to understand. When talking about stocks, diversification means to make sure you don...
https://www.howthemarketworks.com/how-do-i-diversify-a-portfolio/
Introduction The Sharpe Ratio is an important tool for evaluating a stock, or a portfolio, based on how risky it is to get a higher return. You can use the Sharpe Ratio to determine how consisten...
The Dow Jones Industrial Average, also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index that shows how 30 large publicly-owned companies based ...
https://www.howthemarketworks.com/what-is-the-dow-jones-industrial-average/
Over-The-Counter (OTC) Stocks Most investors are familiar with NASDAQ, the NYSE (New York Stock Exchange), TSX (Toronto Stock Exchange), and most other large national stock exchanges. However, th...
https://www.howthemarketworks.com/oct-over-the-counter-stocks/
Technical analysis software automates the charting, analysis and reporting functions that support technical analysts in their review and prediction of financial markets (e.g. the stock market). ...
Introduction Chile is one of Latin American countries that have a vibrant market-oriented economy and an OECD member. It depends heavily on foreign trade due to its natural resources, and is a do...
Serbia is a European country with an upper-middle income economy. It had one of the fastest growing economies of its region, in terms of GDP growth rates prior to the global recession, and attrac...
Latvia is an EU member country that experienced superior GDP growth rates prior to the financial crisis in 2008. It underwent significant privatization, which resulted in large foreign direct inv...
Belgium is an EU member located in Western Europe. It has a strong industrialized economy, well-developed transportation infrastructure, and a highly productive work-force making it an attractive...
Italy is an EU member country and one of G-8 leading industrialized economies, having the seventh largest economy in the world. Its thriving small and medium enterprises play an important economi...
Ireland is an EU member country with a knowledge-based economy and strong industries in services and technology. With attractive corporate tax rates, Ireland has been ideal destination for multin...
Hungary is an EU member country with a medium-sized, liberal economy that is rapidly developing. It has the 5th largest economy in Central and Eastern Europe, with major exports in machinery, che...
Peru is a Latin American country with an emerging, market-oriented economy that has been among the top performers in South America. Rich in natural resources, it is a major exporter of gold, copp...
Portugal is an EU member country with a high-income and service-based economy. It enjoys vast forests, has a strong industrial base, and is an important agricultural exporter. The post Investin...
Romania is an EU member country, which has experienced positive foreign direct investment and GDP growth following privatisation initiatives over the last decade. It has an upper-middle income ec...
Austria is an EU member and currently the 12th richest country in the world. It has experienced sustained economic growth and attracts many foreign investors. Austria is home to internationally r...
Argentina is a South American country that is one of the G-20 economies. It is the third largest economy in Latin America and has the highest GDP per capita in its region. It possesses plenty of ...
Recently there has been a rise of emerging markets. As you would expect, the top countries for investment include China, India, and Brazil. Poland has moved up 16 rungs to weigh in at No. 6. Othe...
https://www.howthemarketworks.com/investing-in-other-countries/
Gross National Product is the value of all goods and services produced by a country’s residents. The post Gross National Product appeared first on HowTheMarketWorks .
Free Cash flow is the cash available to all the capital providers of a company. There are two types of free cash flows: 1) Cash flow available to pay out to all capital providers and 2) Free Cash...
The Form-8K is a SEC-mandated report filed by public companies to report unexpected events or transactions that are material in nature, and thus have an impact on the share prices of the company....
Fixed income analysis is the process of evaluating and analyzing fixed income securities for investment purposes. The post Fixed Income Analysis appeared first on HowTheMarketWorks .
In investment valuation, financial modeling refers to the procedure and methodology performed to determine the value of an asset or financial security. Fundamentally, a business or company’s cu...
The earnings reports released by companies can be invaluable in providing such information. Released by public companies on a quarterly and annual basis, they can be used to assess and gauge a co...
Discounted Cash Flow is a valuation technique or model that discounts the future cash flows of a business, entity, or asset for the purposes of determining its value. One aspect of investment dec...
The Debt-Snowball Method is a debt-management strategy aimed at reducing a borrower’s obligations. Borrowers can use this method to slowly eliminate their debt by focusing on their smallest deb...
Covariance is a statistical measure of the extent that 2 variables move in tandem relative to their respective mean (or average) values. In the investment world, it is important to be able to mea...
The use of correlation analysis extends to numerous important fields. For example, in finance, correlation analysis can be used to measure the degree of linear relationships between interest rate...
Comprehensive insurance to a form of insurance policy which includes a broad range of coverage or protection. The post Comprehensive Insurance appeared first on HowTheMarketWorks .
The options collar strategy is designed to limit the downside risk of a held underlying security. It can be performed by holding a long position in a security, while simultaneously going long a P...
The CME Group is an order-driven exchange that facilitates the trading of forward, futures, and options contracts on numerous products within key asset classes such as agriculture, energy, metals...
https://www.howthemarketworks.com/chicago-mercantile-exchange-cme-group/
The CBOT is an exchange providing trading in derivatives contracts and clearinghouse functions. It allows traders to buy and sell contracts on several products in asset classes such as agricultur...
https://www.howthemarketworks.com/chicago-board-of-trade-cbot/
Measuring the cash conversion cycle is important to liquidity, working capital, and the operating cycle of a company. Good management of the CCC can also enhance a company’s cash flows, allowin...
Capital funding is the provision of monetary resources or capital for productive uses. Capital provided by investors or other parties is used by various entities such as governments, companies, o...
Account Receivables Management refers to the set of policies, procedures, and practices employed by a company with respect to managing sales offered on credit. The post Account Receivables Mana...
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Account Payables Management refers to the set of policies, procedures, and practices employed by a company with respect to managing its trade credit purchases. The post Account Payables Managem...
https://www.howthemarketworks.com/account-payables-management/
Insurance is protection from losing or damaging something. It is defined as the transfer of loss risk in exchange for payment. Basically, if we damage or lose something that was insured, the insu...
A Commercial Bank is a type of financial institution that is responsible for catering to everyday banking needs. Commercial Banking is also sometimes referred to as Retail Banking. This is the ki...
Price ceiling is a government-mandated limit on the price that can be charged for a given product, such as a utility or electricity. The intended purpose of a price ceiling is to protect the cons...
A “Poison Pill” creates a strong defense mechanism for a “targeted takeover company” allowing the company to properly identify legitimate and beneficial acquisitions and weed out the acti...
A straddle is an investment strategy that involves the purchase or sale of an option allowing the investor to profit regardless of the direction of movement of the underlying asset, usually a sto...
An oligopoly is characterized by a small number of sellers who dominate an entire market. The post Oligopoly appeared first on HowTheMarketWorks .
Monopoly, in economic terms, is used to refer to a specific company or individual has a large enough control of a particular product or service that allows them to influence it’s price or certa...
Monopolistic Competition is characterized as a form of imperfect competition. The post Monopolistic Competition appeared first on HowTheMarketWorks .
Money supply is the total amount of money available in an economy at any particular point in time. The post Money Supply appeared first on HowTheMarketWorks .
Monetary Policy refers to the process by which the Monetary Authority of a given country implements a variety of measures to control the supply of money. The post Monetary Policy appeared firs...
Modern Portfolio Theory (MPT) is an investment theory whose purpose is to maximize a portfolio’s expected return by altering and selecting the proportions of the various assets in the portfolio...
https://www.howthemarketworks.com/modern-portfolio-theory-mpt/
Gross Domestic Product, or as it is most often simply referred to as ‘GDP’ is the combined value of ALL goods and services produced within a given country in a given time period. The post G...
Fiscal policy is the use of government spending to influence the economy. The post Fiscal policy appeared first on HowTheMarketWorks .
The Expected Return is a weighted-average outcome used by portfolio managers and investors to calculate the value of an individual stock, or an entire stock portfolio. The post Expected Return ...
Elasticity is one of the most important terms in economics, and has a plethora of uses. Economists define elasticity as the ratio of the percent change in one variable to the percent change in an...
If you own a bond or manage a bond portfolio, chances are that will you be following daily interest rates. You know that bond prices increase when rates rise, and decrease when rates fall. But ho...
Dupont Analysis breaks the Return on Equity into several different components in order to analyze where the returns are coming from. The post Dupont Analysis appeared first on HowTheMarketWork...
Direxion Small Cap Bear3X - Triple-Leveraged ETF is an index fund ETF (Exchange Traded Fund) designed to seek a daily result of 300% of the INVERSE of the performance of the Russell 2000 Small Ca...
https://www.howthemarketworks.com/direxion-small-cap-bear-3x-triple-leveraged-etf-tza/
Straight line depreciation is the most commonly used and simplest form of depreciation. The post Straight Line Depreciation appeared first on HowTheMarketWorks .
https://www.howthemarketworks.com/straight-line-depreciation/
Depreciation refers to the gradual and permanent decrease in value of the assets of a firm, nation or individual over its lifetime. The post Depreciation appeared first on HowTheMarketWorks .
A consumer price index (CPI) is the relative measure of a market basket of consumer goods and services purchased by households. The post Consumer price index appeared first on HowTheMarketWork...
Stocks with a very small market capitalization. Small caps definition varies but generally it is a company with a market capitalization between $300 million and $2 billion. The post Small cap s...
A basic material used in manufacturing or commerce that is interchangeable with other the same commodities coming from a different source. The quality of a specific commodity may differ slightly,...
For a candlestick chart, the body or real body is the wide or colored part of a candle that represents the range between the opening and the closing prices over a specific time period (minute, ho...
A point on a candle stick chart representing a specific time period (a day, an hour, a minute, etc) in which the underlying stock price has moved. Candlesticks will have a body and usually two wi...
A small line (like a candle wick) found at the top or bottom of an individual candle in a candlestick chart. The post Shadows appeared first on HowTheMarketWorks .
The qualitative and quantitative information that contributes to the economic well-being and the subsequent financial valuation of a company, security or currency. Analysts and investors analyze ...
An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed...
A point or range in a chart that caps an increase in the price of a stock or index over a period of time. An area of resistance, resistance line or resistance level indicates that the stock or in...
The price-to-sales ratio (Price/Sales or P/S) provides a simple approach: take the company's market capitalization (the number of shares multiplied by the share price) and divide it by the compan...
High inflation and high unemployment occurring simultaneously. The post Stagflation appeared first on HowTheMarketWorks .
A security with a guarantee of a return rate that is higher than the rate of inflation if it is held to maturity The post Inflation-Indexed Securities appeared first on HowTheMarketWorks .
https://www.howthemarketworks.com/inflation-indexed-securities/
The fee charged by a broker or investment advisor in exchange for investment advice and/or handling the purchase or sale of a security. Commissions vary from brokerage to brokerage. The post Co...
When an investor takes an account with a licensed brokerage firm that allows the investor to deposit money and place investment orders through the brokerage firm. There are several different type...
Fibonacci numbers are a sequence of numbers where each is the sum of the two preceding numbers (1,1,2,3,5,8,13,21,34 and so forth). This sequence of numbers forms various ratios including the inf...
https://www.howthemarketworks.com/fibonacci-ratios-in-finance/
Earnings report stock trends, profit and more but making sense of an earnings report can seem daunting especially in light of the catastrophic endings of Lehman Brothers, Enron and Worldcom. Th...
Earnings estimates provide one strong measure of potential future performance and are a mainstay of stock investing research. The post Earning Estimates appeared first on HowTheMarketWorks .
Return on Equity (ROE) is used to measure how much profit a company is able to generate from the money invested by shareholders. The post Return on Equity appeared first on HowTheMarketWorks .
Price to Earnings is the most usual way to compare the relative value of stocks based on earnings since you calculate it by taking the current price of the stock and divide it by the Earnings Per...
https://www.howthemarketworks.com/price-to-earnings-growth-peg/
The question of when to sell stocks is not easily answered. On the one hand, you know a correction is coming but the question of "when" isn't so clear. Anyone who has ever sold early only to stan...
Stock volatility information can be used in many different ways but here is a quick and easy bit of stock volatility information that you can begin using today. The post Stock Volatility appea...
https://www.howthemarketworks.com/stock-volatility-information/
It is impossible to predict what the market will do today, tomorrow or next year, but there is one thing that is definite: markets go up, they go down, and they stay the same. The post Stock Ex...
The golden rule of stock investing dictates cutting your losses when they fall 10 percent from the price paid, but common wisdom just might be wrong. Instead, use some common sense to determine i...
A hedge fund is one of the investment tools you will aspire toward as a serious investor. The first hedge fund came out in 1949 as a strategy to neutralize the effect of overall market movements ...
The Cramer bounce is a theory that the stocks that Jim Cramer recommends on his TV show will almost always increase the day after the show airs. The post Cramer Bounce appeared first on HowThe...
Hyperinflation refers to out of control or extremely rapid inflation, where prices increase so quickly that the concept of real inflation becomes meaningless. The post Hyperinflation appeared ...
Inflation refers to the general rising of prices for goods and services in the economy, due to an increase in the amount of money and/or credit available. The post Inflation appeared first on ...
A CD or Certificate of Deposit is one of the safest and liquid forms of investment available. Insured by the FDIC (Federal Deposit Insurance Corporation), CDs are a type of interest earning depos...
https://www.howthemarketworks.com/cd-basics-certificates-of-deposit/
In a cap-weighted index, large price moves in the largest components (companies) can have a dramatic effect on the value of the index. The post Market Capitalization appeared first on HowTheMa...
Market risk is a measure of how much of a loss an investor is facing while trading. The post Systemic Risk / Market Risk appeared first on HowTheMarketWorks .
https://www.howthemarketworks.com/market-risk-or-systemic-risk/
Your ideal investment or investment portfolio gives you the most opportunity for the risk you can bear. In this sense, it is important to understand the risk inherent in an investment before you ...
https://www.howthemarketworks.com/various-risks-of-investing/
Diversification to reduce risk should seem obvious to most investors but a surprising number of people follow their instinct rather than intellect when it comes to investing. The post Diversify...
The buy and hold strategy is essentially just what it sounds like: Purchase stocks and then hold them for an extended period of time. The underlying assumption for the buy and hold strategy is th...
Everywhere you turn there is another proprietary stock market timing system being sold. Let's take a few minutes to review these claims against common sense. The post Timing System appeared fi...
It is only an offer and will not be accepted if the seller is not willing to let go at the offer price. This offer price pertains to all traded investments. The post Offer Price appeared first...
The difference between the ask price and the sell price is called the “spread” and it is kept by the broker. The post Spread appeared first on HowTheMarketWorks .
https://www.howthemarketworks.com/understanding-bid-and-ask-price/
If you are brand new to investing then take time to understand what you are reading when viewing a Stock Exchange Symbol and learn Stock Market Investing Basics. The post Stock Symbols appeare...
Many people start trading stocks and never learn about stock trading risk management. The one's that do learn, usually learn after they have been trading for a while, not before they start tradin...
https://www.howthemarketworks.com/introduction-to-stock-trading-risk-management/
A REIT or Real Estate Investment Trust may be the perfect investment vehicle. REITs own, and often operate, real estate but are publicly traded like stock. The post REITs appeared first on How...
https://www.howthemarketworks.com/investing-in-real-estate-through-reits/
The U.S. Dollar has lost more than 30 percent of its value relative to other world currencies. Shorting the U.S. dollar and buying other world currencies is one way to make money from this trend....
By measuring the compilation of similar stocks instead of just one or two stocks, a stock index provides information about that particular market or segment. The post Stock Index appeared firs...
A non-bank organization that regularly trades large blocks of stocks. The post Institutional Investor appeared first on HowTheMarketWorks .
A way to evaluate potential profit on an investment by making a projection of growth over several years. For example, if a company makes a 7% profit increase in the prior quarter, an accountant c...
A series of technical indicators used by traders to predict the direction of the major financial indexes. The post Market Indicators (list of Market Indicators) appeared first on HowTheMarketW...
A national government that owes money to international financial institutions such as the World Bank, foreign governments, or to foreign lenders. The post Debtor Nation appeared first on HowTh...
Many stock analysts have identified market trends related to specific times of the year. The success ratios of these trends are often far stronger than most other indicators. The post Seasonal ...
A technical analysis indicator that compares advancing and declining stock issues and trading volume as an indicator of overall market sentiment. The Arms Index, or TRIN (Traders Index), is used ...
A market indicator used to determine volatility levels in the market without factoring in price direction. It is calculated by taking the absolute value of the difference between the number of ad...
A technical analysis tool that represents the total difference between the number of advancing and declining security prices. This index is considered one of the best indicators of market movemen...
By aggregating the value of a related group of stocks or other investment vehicles together and expressing their total values against a base value from a specific date. Market indexes help to rep...
Simplest, oldest, and most common form of business ownership in which only one individual acquires all the benefits and risks of running an enterprise. In a sole-proprietorship there is no legal ...
Definition: The minimum amount of equity that must be maintained in a margin account. NYSE and FINRA a 25% margin of the total market value of the securities in the margin account. This is a mini...
The percentage of the purchase price of stocks (that are purchased on margin) that an investor must pay for with his own cash or marginable securities. The post Initial Margin appeared first o...
Margin calls happen when your account value drops to a value below that allowed by a broker. The post Margin Call appeared first on HowTheMarketWorks .
An entity that abides by specific legal requirements that sets it apart as having a legal existence, as an entity separate and distinct from its stockholders (owners). The post Corporation app...
A company that provides ideas to support growth and organization as well as introductions for new entrepreneurs to help their startup companies. These startups are usually technology-related. T...
Retained earnings is calculated by adding net income to (or subtracting any net losses from) the beginning retained earnings and then subtracting the dividends that were paid to shareholders Th...
A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date. The post Dividend Reinv...
https://www.howthemarketworks.com/dividend-reinvestment-plan-drip/
Chart analysis is the same as Technical Analysis. It is mostly concerned with price and volume. The post Chart Analysis appeared first on HowTheMarketWorks .
The Fed is the US central-banking system which is made up of 12 regional central banks The post The Fed / The Federal Reserve System appeared first on HowTheMarketWorks .
https://www.howthemarketworks.com/the-fed-the-federal-reserve-system/
State regulations governing the sale of securities and mutual funds The post Blue Sky Laws appeared first on HowTheMarketWorks .
Definition: An investment service that allows individuals to purchase a stock directly from a company or through a transfer agent. Not all companies offer DSPPs and the plans often have restri...
https://www.howthemarketworks.com/direct-stock-purchase-plans/
A phrase used for a stock where the price has dropped significantly in a short period of time. A falling knife security can rebound, or it can lose all of its value where the shares become worthl...
One of the ways to define a corporation. S Corporations are allowed by the IRS for most companies with less than 75 shareholders. The post S Corporation appeared first on HowTheMarketWorks .
The total amount that the federal government has borrowed including internal debt (borrowed from national creditors) and external debt (borrowed from foreign creditors). The post National Debt ...
A Stop Limit is an order that combines the features of stop order with the features of a limit order. A stop limit order executes at a specified price (or better) after a specified stop price is ...
The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the val...
https://www.howthemarketworks.com/gdp-gross-domestic-product/
The merger of companies at the same stage of production in the same or different industries. The post Horizontal Integration appeared first on HowTheMarketWorks .
US federal legislation of 1890 that prohibited the creation of monopolies by outlawing direct or indirect attempts to interfere with the free and competitive nature of the production and distribu...
An order to buy or sell a stock at a fixed price. This order is active until 1) the trade is executed, 2) the investor decides to cancel it or 3) a specified time period elapses. The post GTC O...
https://www.howthemarketworks.com/gtc-order-good-til-cancel/
Decreasing the long-run average and marginal costs that come from an increase in the size of a factory or plant. The post Economies of Scale appeared first on HowTheMarketWorks .
A short call option position where the writer does not own the specified number of shares specified by the option nor has deposited cash equal to the exercise value of the call. The post Uncove...
A high-risk bond with a low credit rating. Junk Bonds usually have a much higher yield than investment-grade bonds. The post Junk Bonds appeared first on HowTheMarketWorks .
An alternative retirement plan to a 401(k) plan offered by non-profit organizations such as universities and charitable organizations, rather than corporations. The post 403(b) appeared first ...
When a company offers to trade one security in return for another security. The post Exchange Offer appeared first on HowTheMarketWorks .
Resistance and support levels are widely used by experienced traders to formulate trading strategies. For example, if a stock is approaching a very strong resistance level, a trader may prefer to...
Analysis of ADX is a method of evaluating trend and can help traders to choose the strongest trends and also how to let profits run when the trend is strong. The post Average Directional Index ...
https://www.howthemarketworks.com/average-directional-index-adx/
If you perform four or more day trades in a 5 day period you may get flagged by the SEC as a "Pattern Day Trader." This can cause you to lose your margin account status until you deposit enough c...
All HowTheMarketWorks.com written communication with the news media for the purpose of announcing something ostensibly newsworthy. They were sent to editors at newspapers, magazines, radio statio...
An event pattern called a bad earnings surprise is where a company distributes an earnings announcement then the market defines it as worse than expected. Even in a bear market about 61% will hav...
A trading term called a dead cat bounce is used to when a stock is in a severe decline and has a sharp bounce off the lows. It occurs due to the huge amount of short interest in the market. Once ...
The Most Powerful and Complete Trading Software Quantshare is a desktop application that allows trader to monitor and analyze the market. You can display charts, add indicators, create watchlis...
Stock Picking Software automates the task of identifying the best stocks and the best time to buy those stocks. This software can sometimes be programed by the user and sometimes comes pre-progra...
Charting Software is an analytical, computer-based tool used to help equity (stock) traders with trading analysis by charting the price stock price for various time periods along with various ind...
Learn about all the most popular Investing Software available. Our directory includes charting software, trading software from all the major brokerage houses, chart pattern identification softwar...
Had the American Indians sold their beads and trinkets they received from selling Manhattan Island, invested their $16 and received 8% compounded annual interest, not only would they have enough ...
Expirations determine when your order gets placed on the market. The post Expiration Types appeared first on HowTheMarketWorks .
Order Types offered in our Stock Market Game: Market Orders, Limit Orders, Stop Market Orders, Stop Limit Orders and Trailing Stop Orders The post Order Types appeared first on HowTheMarketWor...
An investor's instructions to a broker or brokerage firm to purchase or sell a security. Orders are typically placed over the phone or online. Orders fall into different available types which all...
Penny stocks are stocks with a share price of $5 or less. The post Penny Stocks appeared first on HowTheMarketWorks .
Definition: The amount of sales generated for every dollar’s worth of assets. It is calculated by dividing sales in dollars by assets in dollars. Formula: Also known as the Asset to Turno...
The American Stock Exchange (AMEX) is the third largest Stock Exchange in the US by trading volume. It overlooks the trading of approximately 10% of all US traded securities including small-cap s...
Day traders buy and sell the same stock (or other investment type) within a single trading day. The post Day Trading appeared first on HowTheMarketWorks .
Mutual Fund screeners are available on countless websites and trading platforms. They allow users to choose trading instruments that are suitable for certain criteria profile. The post Mutual F...
The following strategies are used to trade ETFs. The post ETF Trading Strategies appeared first on HowTheMarketWorks .
A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a sto...
A load mutual fund comes with a sales charge or commission. The post Loaded Mutual Fund appeared first on HowTheMarketWorks .
A no-load mutual fund in which shares are sold without a commission or sales fee. The notion for this is that the shares are allocated directly by the investment company, rather than going throug...
An exchange-traded fund (ETF) that uses financial derivatives and debt to amplify the returns of an underlying index. Leveraged ETFs are available for most indexes, such as the Nasdaq-100 and the...
An open end mutual fund don't have limits on the quantity of shares the fund will issue. Provided that demand is requested often, the fund will continue to issue shares no matter the number of in...
A mutual fund is a form of professionally executed investment tool that merges money from numerous investors to buy securities. The post Mutual Funds appeared first on HowTheMarketWorks .
A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide b...
A stock like security that follows an index, a commodity or a basket of assets like an indexed mutual fund. Securities like ETFs trades like a stock. ETFs prices change throughout the day, like a...
An options strategy by which an investor retains a long position in an asset and writes or sells a call options on an identical in an effort to produce an increased income from the asset. The p...
Dollar Cost Averaging is the method of purchasing a fixed dollar amount of one particular investment at regular period of times, regardless of the share price. The post Dollar Cost Averaging a...
Definition: With stock charts, you can view as much as 20 years of data or as little as a few minutes with a variety of line styles, color pallets and comparison features such as technical indica...
A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing - although this also occu...
A stock quote is a list of prices (generally bid, ask and last) for a stock at a particular point during the trading day. Stocks used to be quoted in fractions, but now most exchanges use decimal...
The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned compan...
Fundamental analysis is the process of looking at the basic or fundamental financial level of a business, especially sales, earnings, growth potential, assets, debt, management, products, and com...
A stock investing tactic where you purchase the ten DJIA stocks with the highest dividend yield at the start of each year. The post Dogs of Dow Strategy appeared first on HowTheMarketWorks .
A Trading Halt is the temporary suspension of trading of a security for a specific period of time. Trading Halts typically last for an hour, but can extend into days. The post Trading Halts ap...
Time Decay is the inclination for options to decrease in worth as the expiration date draws near. The extent of the time decay is inversely connected to the changeability of that option. The po...
A Sharpe Ratio calculates the extra return you make compared to the extra risk you take on. The post Sharpe Ratio (Advanced) appeared first on HowTheMarketWorks .
Factors that contribute to selecting your trading strategy include: personality, goals, amount of investment capital and comfort zone. The post How To Select Your Trading Strategy appeared fir...
https://www.howthemarketworks.com/how-to-select-your-trading-strategy/
Capital Asset Pricing Model (CAPM) is a method used by investors to prioritize what stocks to invest in, given their limited cash. The post Capital Asset Pricing Model : CAPM appeared first o...
https://www.howthemarketworks.com/capm-capital-asset-pricing-model/
The basic form of short selling is selling stock that you borrow from an owner and do not own yourself. In essence, you deliver the borrowed shares. Another form is to sell stock that you do not ...
The cash received from the short sale of a security. The interest return from investment of the short proceeds is usually divided between the short seller, who gets partial “use of proceeds,”...
Video explaining the time period over which an order that you are placing is valid. The post Stock Order Term appeared first on HowTheMarketWorks .
In finance, short selling (also known as shorting or going short) is the practice of selling securities or other financial instruments, with the intention of subsequently repurchasing them ("cove...
Buying on margin is borrowing money from a broker to purchase stock. The post Buy on Margin appeared first on HowTheMarketWorks .
In finance, diversification means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk ...
Cash flow per share shows the after-tax earnings plus depreciation, on a per share basis. Many financial analysts place more emphasis on the cash flow per share value than on earnings per share v...
Form 10-Q, is also known as a 10-Q or 10Q, is a quarterly report mandated by the United States federal Securities and Exchange Commission, to be filed by publicly traded corporations. The post ...
Companies with more than $10 million in assets and a class of equity securities that is held by more than 500 owners must file annual and other periodic reports, regardless of whether the securit...
Income statement (also referred to as profit and loss statement (P&L), revenue statement, statement of financial performance, earnings statement, operating statement or statement of operations is...
A summary of the financial balances of a sole proprietorship, a business partnership, a corporation or other business organization, such as an LLC or an LLP. Assets, liabilities and ownership equ...
An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor's loss on a security position. The post Stop Loss Order app...
A limit order is an order to buy or sell a stock at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at ...
A market order is an order to buy or sell a stock at the best available price. Generally, this type of order will be executed immediately. However, the price at which a market order will be execu...
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment fo...
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money ...
Preferred stock is a special class of stock issued by a company that pays dividends. Preferred stock is more like a bond than true stock because the main appeal is dividend income. Most preferred...
Common stock is a form of corporate equity ownership, a type of security. The terms "voting share" or "ordinary share" are also used in other parts of the world; common stock being primarily used...
Three or four characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it se...
The price a seller is willing to accept for a security, also known as the offer price. Along with the price, the ask quote will generally also stipulate the amount of the security willing to be s...
When you are selling your shares of a security, the bid price is what the buyer is willing to pay for your shares. This Bid Price offers you an exact price of how much you can sell your shares fo...
The price to earnings ratio is a useful tool but certainly not the holy grail of investing as it is sometimes made out to be. The post P/E Ratios appeared first on HowTheMarketWorks .
All shares representing ownership of a company, including preferred and common shares. The post Capital Stock appeared first on HowTheMarketWorks .
Profit or loss resulting from the sale of certain assets classified under the federal income tax legislation as capital assets. This includes stocks and other investments such as investment prope...
By law, every year, mutual funds must distribute that year's net investment income (the total of dividends and interest received, less fund expenses) and net realized gain (gains less losses on s...
https://www.howthemarketworks.com/capital-gains-distribution/
A Call Option gives the holder the right, but not the need to purchase a fixed quantity of a particular stock at a specific price inside a particular time. Call Options are bought by investors wh...
Stocks of leading and nationally known companies that offer a record of continuous dividend payments and other strong investment qualities. The post Blue Chip Stocks appeared first on HowTheMa...
Trades greater than or equal to 10,000 shares in size and greater than or equal to $100,000 in value. The post Block Trades appeared first on HowTheMarketWorks .
A measurement of the relationship between the price of a stock and the movement of the whole market. An asset has a beta of zero if it moves are not related to the benchmark's moves. A positive b...
The tendency of the stock market to trend higher over time. It can be used to describe either the market as a whole or specific sectors and securities. The opposite of a Bull Market is a Bear Mar...
The tendency of the stock market to trend lower over time. It can be used to describe either the market as a whole or specific sectors and securities. The post Bear Market appeared first on Ho...
When an option's strike price is identical to the price of the security. Both call and put options will be simultaneously "at the money." For example, if the ABC stock is trading at 75, then the ...
The simultaneous purchase of a security on one stock market and the sale of the same security on another stock market at prices which yield a profit. The post Arbitrage appeared first on HowTh...
When you place an order to buy stocks that must be filled completely, with the total quantity requested, or the trade should not execute at all. The post All-or-None Order appeared first on Ho...
Trailing Stop is a Stop Loss order which is placed as a percentage value as opposed to an absolute dollar value. The order will only execute if the price of the security falls by a certain percen...
Technical Analysis is the use of technical indicators comprising of statistics using past market information to predict which direction the security price will move. The post Technical Analysis...
Margin is the amount of money supplied by an investor as a portion of the total funds needed to buy or sell a security, with the balance of required funds loaned to the investor by a broker, deal...
Earnings Per Share (EPS) is Total net profits divided by the number of outstanding common shares in the market. The post EPS appeared first on HowTheMarketWorks .
Current Ratio is the ratio of current assets divided by current liabilities. It provides A liquidity ratio that measures a company's ability to pay short-term obligations. Also known as "liquidit...
Buy-side Firms are institutions that provide advice on buying securities and assets within their own organizations. The post Buy Side Firms appeared first on HowTheMarketWorks .
The Black-Scholes model is one of the most widely used ways to approximate the true price of a option. The post Black-Scholes appeared first on HowTheMarketWorks .
Asset/Equity Ratio is the ratio of total assets divided by stockholders' equity. The post Total Asset/Equity Ratio appeared first on HowTheMarketWorks .
In shorting you sell the stocks and then buy them back when the price falls, earning you a profit. The post Short Selling your Investment Portfolio and Taking a Position appeared first on HowT...
The Moving Average Convergence-Divergence (MACD) indicator is one of the easiest and most efficient momentum indicators you can get. It was developed by Gerald Appel in the late seventies. The ...