7-01 How to Read Stock Charts This chapter will expose you to the most common charts available. Their names and meanings are important to your continuing education and the number of tools you carry in your toolbox in order to evaluate stocks. Understand that it will take some time before you are comfortable reading and interpreting many of these charts. Don’t become discouraged, as many … Continue reading 7-01 How to Read Stock Charts
6-10 Competition In the last chapter, we talked about the importance of diversification. A key to that lesson is that you should strive to have stocks across multiple industries, but also try to have more than one stock in any single industry. When you make your investments, keep in mind that companies in the same industry are competitors – the actions of one company will … Continue reading 6-10 Competition
6-09 New and Improved Products In a capitalist economy, innovation is necessary to survive. A company cannot survive by offering the same products produced the same way forever because some other company will find a way to make a better product, produce it cheaper, or both. This means that for a company to be profitable in the long-run, “New and Improved” products are key. Two … Continue reading 6-09 New and Improved Products
6-08 Management A company can have the best product on the market, tons of cash in the bank, and a huge well of talented staff, and all the customer loyalty in the world – but that can all disappear in a flash with poor management at the top of the company. Likewise, a company with an energetic, public-facing CEO can attract much more attention to … Continue reading 6-08 Management
6-07 Balance Sheet We mentioned earlier in this chapter that a stock’s value is based on two things: The future earnings of the company The current value of the company So far on this chapter, we have exclusively discussed the future earnings of the company. Future earnings is generally what dictates if a stock’s price rises or falls. This requires the most attention day-to-day for … Continue reading 6-07 Balance Sheet
6-06 Revenue and Earnings Estimates When you’re considering buying or selling a stock, it is just as important to look at future expectations as historical performance. We can read all of the 10-Ks and 10-Qs we want; we can study the Income Statements, Cash Flow Statements, and Balance Sheets until we have them all memorized; but that is only half of the battle. A company’s … Continue reading 6-06 Revenue and Earnings Estimates
6-05 EPS, PE Ratios, Cash Flow per Share and ROE OK, so we have discussed sales, operating income, Earnings before interest, taxes, depreciation, and amortization. EBITDA , and net income. Which is the best measure of a company? The answer, unfortunately, is NONE OF THE ABOVE! If Stock A and Stock B are in the exact same industry, have the exact same revenues, costs, EBITDA … Continue reading 6-05 EPS, PE Ratios, Cash Flow per Share and ROE
6-04 Understanding Cash Flow Statements Once you have understood a company’s profitability, take a look at the Statement of Cash Flows because this is the second most important element of Fundamental Analysis, and it frequently needs more than a casual examination. Many experts strongly contend that good cash flow is more important than earnings to ensure company viability for the long-term. Surprised? Don’t be. Before … Continue reading 6-04 Understanding Cash Flow Statements
6-03 Operating Income, EBITDA and Net Income A company’s net income is one of the most critical pieces of data you can pull out of the financial statements because it is this profit that generates cash and cash drives value. A company can produce the most innovative products, be in an industry with minimal competition, and have superior management, but the company may still not … Continue reading 6-03 Operating Income, EBITDA and Net Income
6-02 The Income Statement-An Introduction The income statement primarily focuses on the company’s revenue and expenses (what they’ve earned and what they’ve paid for) during a particular period of time. The bottom line shows a net profit or a net loss depending on the company’s performance during that time period. Companies may complete an income statement whenever they want, but typically they are completed quarterly (every three … Continue reading 6-02 The Income Statement-An Introduction
6-01 Information: 10-Ks, 10-Qs, and 8-Ks The first place to start analyzing a company is to go straight to the source and review the financial information that the company is publishing about itself. In previous chapters we talked about IPOs and what it takes to be a public company in the U.S. To remain a public company in good standing with the Securities and Exchange … Continue reading 6-01 Information: 10-Ks, 10-Qs, and 8-Ks
5-07 Keep to Your Exit Strategies Rule #7 – Have an Exit Plan and Target for Every Stock Exit Strategies are designed to protect your value! Few experienced traders ever invest in any stock without having an exit strategy. In its simplest form, an exit strategy is a plan to get you out of something you’re in. In the investment universe, it means you should … Continue reading 5-07 Keep to Your Exit Strategies
5-08 Resources You’ve made your first purchases and now you have some idea what to do with them. While you’re not yet an expert, you should now have enough information to create a basic holding strategy and an exit plan. You understand that you should ride your winners and dump your losers. Having a sensible exit strategy helps you maximize your profits and minimize your … Continue reading 5-08 Resources
5-06 Watch the Volume! Volume is a key indicator of a stock, second only to the bid/ask prices. We briefly mentioned volume before, but as a refresher, this is the total number of trades that have been made on this stock in the last trading day. Watching the volume of your stock can be pretty boring, and with most stocks volume stays pretty close the … Continue reading 5-06 Watch the Volume!
5-05 Know When to Hold’em, Know When to Fold’em So far, we have talked about riding your winners and ruthlessly selling off your losers. Now we need to think about those pesky in-betweeners; the stocks that are not really losing your money but have not been performing very well either. Keep To Your Objectives Protecting against losing 10% was easy with stop orders, but we … Continue reading 5-05 Know When to Hold’em, Know When to Fold’em
5-04 Diversify, Diversify and Diversify Rule #4 – Diversify, diversify, and diversify To “diversify” means to pick a variety of stocks in different industries. History shows that at different points in time different parts of the market outperform the others. At times the technology stocks perform well, sometimes it’s the banking stocks, sometimes it’s international stocks, sometimes it’s defense, sometimes it’s medical, etc. Since it … Continue reading 5-04 Diversify, Diversify and Diversify
5-03 Never lose more than 10% Rule #3 – Never, ever, ever lose more than 10% on any single trade. We have talked about both stop and limit orders last chapter and using both to build your returns. But as an investor, always remember your #1 goal is capital preservation. Capital preservation is the concept that you do not want to lose the money you … Continue reading 5-03 Never lose more than 10%
5-02 Don’t Fall in Love With Your Stocks Rule #2 – Don’t fall in love with your stock purchases – winners OR losers (particularly losers). This is often the biggest pitfall to new investors – holding on a stock for too long because you “like it”. You can think of this rule as kind of the opposite of the “Buy what you Know” strategy for … Continue reading 5-02 Don’t Fall in Love With Your Stocks
5-01 Ride Your Winners Selling a stock is just as important of an investment decision as buying and you must have a strategy to maximize your profits and minimize your losses. Developing a trading strategy is important to your future investing activities. Even a flawed strategy is better than having no strategy. And trust me, your strategy will always be evolving as you learn from … Continue reading 5-01 Ride Your Winners
4-07 Resources It’s time to decide on how you’d like to construct your portfolio. Whether you decide to invest virtual money or real funds, you should now have a basis to create your own thoughtful plan and strategy. Using your virtual portfolio and trading ability, you can test your strategy and “tweak” it, if necessary, to achieve profitable results in both the virtual and real world. … Continue reading 4-07 Resources
There is an astounding volume of information available from a myriad of “experts” and a plethora of websites. Most are useful to people, but you’ll decide which sources are most useful to YOU. Here is some information on a few popular sources. MSN Money: Offering you stock quotes, financial news, rumors, strategies, and blogs, MSN Money can serve as a supermarket of investing data for … Continue reading 4-07 Popular Analysts and Websites
4-06 Stock Screeners Now we have covered some of the concepts that fit into planning your portfolio, heard from some of the experts, and covered how to Buy What You Know. Now we need to focus on polishing off your first portfolio. After you’ve made your plan and got your eye on a few stocks, you will still probably have some gaps that need to … Continue reading 4-06 Stock Screeners
4-05 Meet Peter Lynch Past portfolio manager of Fidelity Magellan, which became the largest mutual fund in the 1990s. Peter Lynch, another globally respected investment genius, also embodies a solid – not exotic – investing strategy. After graduating from Boston College (1965), Lynch was hired as an intern at the company that came to be forever linked with his name, Fidelity Investments. This was mostly … Continue reading 4-05 Meet Peter Lynch
4-04 Meet Warren Buffet Investing in “what” you know based on “how much” you know can provide an excellent return and a higher level of comfort. As an example, the legendary investor Chairman and CEO of Berkshire Hathaway, and generally regarded as the greatest buy and hold investor of the last 40 years. Warren Buffet has amassed his fortune without using a wide variety of … Continue reading 4-04 Meet Warren Buffet
4-03 Buying Stocks that you Know There are tens of thousands of stocks out there in the world. If you have plenty of time on your hands, you could spend all day, every day reading dozens of news sites, checking out all the latest discussion boards, watching all the investing news shows, listening to podcasts, and starting your day with 20 newsletters in your inbox. … Continue reading 4-03 Buying Stocks that you Know
4-02 Measuring Risk: The Sharpe Ratio The Sharpe Ratio, named after Nobel laureate William F. Sharpe, measures the rate of return in association with the level of risk used to obtain that rate. It’s a particularly useful tool for novice investors to use as a method tracking “luck” versus “smarts.” An Example of the Sharpe Ratio Look at the performance of these two stocks: On … Continue reading 4-02 Measuring Risk: The Sharpe Ratio
4-01 Risk, Reward, and Diversification Risk, reward, and A way of reducing the risk and variances in your portfolio returns by buying a variety of stocks across different industries, market caps, etc. diversification are the most important concepts to understand before you start your portfolio. They are factors in all investment decisions. You must learn more than the textbook definitions of these factors–you need to … Continue reading 4-01 Risk, Reward, and Diversification
3-09 Resources Ok new investor, you should be ready to begin. You can now leave the bleachers, put on a uniform, cross the white lines, and play. Stay focused, positive, and realistic. You might not make the Majors right away, but you can enter the investment world armed with solid knowledge, upon which you can expand by practice and repetition at a virtual trading simulation. … Continue reading 3-09 Resources
3-08 Set Goals and Targets You should have a “game plan” for your investing life. Just as you plan your workday, vacation, college financing, golf matches, and other areas of your personal and professional life, you need a plan, objective, and goal for your investment activities. Spend some quality time with yourself, thinking about what you really want to accomplish. Stating that you simply want … Continue reading 3-08 Set Goals and Targets
3-07 How to Record Gains and Losses Unfortunately, when it comes time to file your tax return, the IRS wants to know how much money you made or lost in your brokerage account. Your brokerage firm will even report to the IRS your total proceeds from all of your sales of stocks, but they don’t report your gains and losses. The reason they don’t report … Continue reading 3-07 How to Record Gains and Losses
3-06 Short Selling So far, we’ve talked about how to make your first trades – buying a stock you think will get more valuable. But what about if you are SURE a stock is about to tank? Wouldn’t it be great if you could make profit in both directions? With short selling, you can! What Is Short Selling? “Selling Short” is a way for an … Continue reading 3-06 Short Selling
3-05 Buying on Margin When you are opening a real brokerage, you will be asked if you want to open a Margin Account. Buying on margin means that you purchase securities using some of your own cash and you take a loan from your broker to complete the purchase. The collateral for the loan is the stocks or cash you already own. The difference between … Continue reading 3-05 Buying on Margin
3-04 Order Terms Now that you know some of the basic order terms, you can use Limit, Stop, and Trailing Stop orders to start building your portfolio, keeping an eye out for good deals and protecting yourself against loss. But when you go to actually place your order, there is one more option that pops up – “Duration”. “Duration” is also called the “Order Term” … Continue reading 3-04 Order Terms
3-03 Types of Orders-Market, Limit, Stop Once you have the ticker symbol for the company you wish to trade, you are ready to place your first order. Go to your virtual trading account and you’ll see several options for order type—market, limit, stop, and trailing stop. You have already found the symbol to trade “LUV” and you can enter any quantity of shares to buy. … Continue reading 3-03 Types of Orders-Market, Limit, Stop
3-02 Understanding Stock Quotes A stock quote gives essential information about a particular stock at a point in time. The quote normally includes information such as the name of the company, the ticker symbol, the price, the day’s high and low prices, and the trading volume. Details Usually when you get a stock quote, you see lots of other information about that company and that … Continue reading 3-02 Understanding Stock Quotes
3-01 How to Look Up a “Ticker Symbol” The first thing you must understand about trading stocks is that the exchanges have assigned each stock a unique “ticker symbol” for identification purposes. When researching stocks, getting quotes, and placing trades, you usually have to know the ticker symbol. Stock ticker symbols are usually 1 to 5 letters long. (Occasionally they contain a “.” or a … Continue reading 3-01 How to Look Up a “Ticker Symbol”
2-11 Resources Now you should be a bit more familiar with how the stock market works, what drives prices, and general trends to look out for. The next chapter is all about choosing your first stock and making your first trade! Glossary Supply – The total quantity of a good, service, or security available for purchase at a given price. Demand – The total quantity … Continue reading 2-11 Resources
2-10 Buying Individual Stocks Versus Investing in Mutual Funds As a newer investor, you should also be aware that you can save some research time by investing in mutual funds instead of individual stocks. Mutual funds contain a mix and diversity of stocks in which you will spread out one investment into many small blocks of shares. Mutual funds and ETFs (exchange traded funds) have … Continue reading 2-10 Buying Individual Stocks Versus Investing in Mutual Funds
2-09 Why Stocks Are a Good Choice For Investing In this course, we generally advocate that stock market investing is an excellent choice to receive consistently high Return on Investment (ROI). This does not mean we think everyone should be “stock picking” – but that stocks, mutual funds, and ETFs generally provide the best return in the long run. Earlier in Chapter 1, we showed … Continue reading 2-09 Why Stocks Are a Good Choice For Investing
2-08 What is a Brokerage? When you are ready to start buying your own stock, you won’t withdraw some cash from the ATM, head to New York, and look for someone with paper shares to sell. Instead, you would open an account with a stock brokerage, where you will make your trades. What is a Brokerage? Brokerages exist to allow individuals to make investments into … Continue reading 2-08 Brokers and How to Choose the Right Ones
2-07 The Danger of Trying to Time the Market The mere perception that a market is becoming Bearish is not a predictor of disaster. Fortunes have been made in A prolonged period of pessimism and falling stock prices that seems to feed on itself and generates even more pessimism and even lower stock prices. Bear Markets. The trick is to know when one is coming … Continue reading 2-07 The Danger of Trying to Time the Market
2-06 Bull vs. Bear Markets Business and economic popular news will often refer to “Bull” or “Bear” markets. You probably already have some idea what this means – “Bull” markets tend to be going up, while “Bear” markets tend to be going down. What is a Bull Market? A “Bull Market” means that investors are optimistic that stock prices are generally increasing, and that the … Continue reading 2-06 Bull vs. Bear Markets
2-05 Market Timing and Moving Now that you know what the stock market is and what role the Stock exchanges are simply organizations that allow people the ability to buy and sell stocks. Stock Exchange plays, let’s take a step back and look at how stock prices and the economy move. As you might expect, timing is extremely important in investing because you must learn … Continue reading 2-05 Market Timing and Moving
2-04 Public versus Private Companies & IPOs versus Secondary Market Securities Now that you know what an exchange is, it’s necessary to make a very important distinction between what shares trade on exchanges and what shares don’t. Most companies are private companies and don’t trade on exchanges. The barber shop and the florist on the corner, the guy that cuts your grass, and the plumber … Continue reading 2-04 Public versus Private Companies & IPOs versus Secondary Market Securities
2-03 Other Stock Exchanges In addition to the New York Stock Exchange, there is also the American Stock Exchange (AMEX) and NASDAQ. In the past, the NASDAQ was for smaller companies that were just getting started, and it was prestigious for them to move up to the NYSE or AMEX. These smaller companies included a few you might have heard of, like Apple Computer (AAPL),Intel … Continue reading 2-03 Other Stock Exchanges
2-02 A History Lesson – Wall Street 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 finance in the world. History The first European colony in what we now know as New York was actually dutch – the city’s original … Continue reading 2-02 A History Lesson – Wall Street
2-01 What Are Stock Exchanges? In the last lesson, we used a simple example of 10 buyers and 10 sellers who got together in the same room to make trades of one company’s stock. In the real world, there are hundreds of millions of people and companies trading trillions of shares of millions of company’s stocks – getting everyone in the same room would be … Continue reading 2-01 What Are Stock Exchanges?
1-13 Resources Congratulations, you are through the first chapter! This is a glossary review and some extra resources for more information before we continue on to the chapter exam. Glossary Bank accounts – a depository account at a bank that acts as a secure way to store your money and withdraw it later. Checking Accounts – a type of bank account you would use for … Continue reading 1-13 Resources
1-12 Recent Performance of Investments Now that we have looked at several different types of investments, we can compare how they have performed over time. In this case, we will pretend we invested $10,000 in Stocks, Gold, Commercial Real Estate, Residential Real Estate, and a Savings Account in January of 2010, and pulled our money out at the end of May, 2021. This is how … Continue reading 1-12 Recent Performance of Investments
1-11 Real Estate If you are a homeowner, your home is probably where you keep most of your wealth. Everyone hopes to be able to sell their home for more than they paid for it – which means that every homeowner is a real estate investor! “Real Estate Investing” means making money based on buildings or properties. There are four main ways to be a … Continue reading 1-11 Real Estate
1-10 Foreign Currency and Foreign Stocks You just got some insider information – Nintendo is about to announce a new Zelda game, coming out on their new console. Gamers are getting pumped up, this is a sure-fire hit. As a savvy investor, you think now might be a good time to invest in Nintendo! But wait, Nintendo is not listed on major US exchanges – … Continue reading 1-10 Foreign Currency and Foreign Stocks
1-09 Gold and Other Precious Metals When we covered commodities, we mentioned iron and copper, but not Gold and Silver. That is because Precious Metals operate by different rules than other commodities – and are very different to investors. This is because unlike iron or copper, which is just used as inputs for other industry powering the economy, Gold, Silver, Platinum and other precious metals … Continue reading 1-09 Gold and Other Precious Metals
1-07 Bonds Unlike Stocks are “equity investments” which means that individuals that own stock shares of a company actually own part of that company. stocks, which are equity instruments, A debt obligation of a company, the U.S. Treasury Department, or a city where the borrower receives funds (usually in increments of $1,000), makes semi-annual interest payments based on the coupon rate, and eventually repays the … Continue reading 1-07 Bonds
1-06 ETFs (Exchange-Traded Funds) ETFs are a cross between mutual funds and stocks. ETFs are simply a portfolio of stocks or A debt obligation of a company, the U.S. Treasury Department, or a city where the borrower receives funds (usually in increments of $1,000), makes semi-annual interest payments based on the coupon rate, and eventually repays the borrowed amount ($1,000) to the lender at the … Continue reading 1-06 ETFs (Exchange-Traded Funds)
1-05 Mutual Funds A mutual fund is a type of investment where a money manager takes your cash and invests it as he sees fit, usually following some rough guidelines. For example, the Fidelity Group has a fund that specializes in finding high dividend paying Stocks are “equity investments”, which means that individuals that own stock shares of a company actually own part of that … Continue reading 1-05 Mutual Funds
1-04 Stocks Stocks are “equity investments” which means that when you own shares of a company you own part of that company. For example, if you own 1,000 shares of Apple Computer stock and Apple has 1,000,000 shares that are “issued and outstanding,” then you own 0.1% of the company. If Apple were then to be sold to another company for $50,000,000, then each share … Continue reading 1-04 Stocks
1-03 Certificates of Deposit (CDs) With a An investment choice at most banks where you agree to deposit a specific amount of money for a fixed period of time (this is called the maturity). By agreeing to keep your money at the bank for a certain length of time, the bank usually pays you an interest rate higher than savings and Money Market accounts. CD, … Continue reading 1-03 Certificates of Deposit (CDs)
1-02 Basic Bank Accounts Bank accounts are issued by banks, credit unions, and savings & loan institutions as a secure way to store your money and make it easily accessible later (without carrying around all your cash everywhere you go). If you are sitting with your first $500, you usually have two options for accounts: a Savings Account, or a Checking Account. Before we get … Continue reading 1-02 Bank and Credit Union Products
1-01 Understanding Investment Choices The first time Tiger Woods grabbed a golf club he couldn’t hit the ball perfectly straight 300 yards and the first time Michael Jordan touched a basketball he couldn’t dunk it, so don’t think that you will be able to earn a 100% return in the first year. Before Tiger could hit a golf ball 300 yards, he had to learn … Continue reading 1-01 Understanding Investment Choices
Want to find a new way to use the platform in your classes? This is a collection of projects utilizing Stock-Trak submitted from professors around the world. Find great project ideas for a variety of classes, from portfolio management and investments to agribusiness.
If you’ve started buying a few stocks, you will probably be interested in diversifying your portfolio between various sectors. This sounds easy, but it can be very challenging finding stocks from a wide range of sources that fit what you’re looking for. Thankfully, our [link name=”quote” dest=”/quotes”]Quotes Tool[/link] has all the information you need to get started. First, head to the Quotes page and click … Continue reading Finding Stocks In Specific Sectors
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 minute) Details OHLC charts are also known as “Bar Charts” because they display the information as a series of line segments instead of as a continuous line. Bar charts are very useful to see … Continue reading OHLC (Bar) Chart
Your [link name=”trans” dest=”/account/transactionhistory” ]transaction history page[/link] will show you all the orders you’ve placed that have gone through. Features Everything on this page is used to help you see your previous transactions. Action Button This will take you back to the trading page, set to repeat this action. This button will not fully pre-populate an Options order (particularly expired options), or Future Options. Symbol … Continue reading Transaction History
Your [link name=”closed” dest=”/portfolio/closepositions”]closed positions page[/link] will show an estimated profit and loss from all positions you’ve “Closed” (bought then later sold, or shorted and later covered). Disclaimer The most important note about your Closed Positions is that it is only an estimate, and nothing on this page is used to calculate your portfolio value. Inaccuracies are usually caused by buying and selling the same … Continue reading Closed Positions
You can find your Open Positions page in two places: your [link name=”dash” dest=”/account/dashboard”]Dashboard[/link], or your [link name=”open” dest=”/portfolio/openpositions”]Open Positions[/link] page. The only difference between the two pages is that the “Dashboard” version will have all the security types as tabs you can switch between, while the “Open Positions” page will show each type separately. All prices on the Open Positions page are delayed by … Continue reading Open Positions
This user guide is intended for professors and site administrators as a primer on managing your classes and contests. Recorded Webinar This webinar is designed to get new professors introduced to the site and all of its components. It is just under 15 minutes long, and covers all of the aspects of creating your class, viewing reports, and managing assignments. For the full non-administrator user … Continue reading Administrator User Guide
Welcome to the Virtual-Stock-Exchange! This guide will show you everything you need to know for getting started, registering your class, setting up assignments, and monitoring your students’ progress, all in less than 10 minutes! Registration Step one is getting signed up for your free account. Just fill out the quick Registration Form, and you’ll be all set! Important Questions Take note of the following registration … Continue reading Virtual-Stock-Exchange Teacher’s Guide
Welcome to our investment simulator. This will be an overview on the different pages, navigation, and what features are available to all users. Video Tutorials If you prefer to watch short video tutorials on different parts of the site and trading, you’re in luck! [link name=”navvid” dest=”/content/navigationvideo”]Click Here For Tutorials Covering The Different Pages Of The Site![/link] [link name=”tradingvid” dest=”/content/tradingvideo”]Click Here For Trading Tutorials![/link] … Continue reading Complete User Guide
We have a huge amount of research tools available on our [link name=”quote” dest=”/quotes”]Quotes Page[/link]. On this page, you’ll find a second level of navigation to move between different research tools right at the top. Basic Quotes And Beginner’s Research If you’re just getting started, most of the information you’ll need will be in the main “detailed quotes” page. Detailed Quotes At the top you … Continue reading Using The Quotes Tool For Research
Calculating your buying power can be tricky, and it gets trickier with more complex contest rules. This will be a quick primer on how to see exactly how your buying power is calculated, what affects it, and how to recover it when you want to make more purchases. What is Buying Power? Your buying power is the money you have available to use to purchase … Continue reading How Is My Buying Power Calculated?
This resource will help teachers new to our stock game get familiarized with the registration process, student interactions, teacher reports, and how to use the game as part of their classes. Registration Registration is simple! If you are using the simulation for the first time, go to the registration link provided by your challenge administrator. This will prompt you to fill out some information about … Continue reading Teacher’s Guide
How Do I Build a Diversified Portfolio? 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’t “put all of your eggs in one basket.” What Does It Mean To Diversify? Simply put, to “diversify” means to make sure pick a variety of … Continue reading Portfolio Diversification
Why Invest in Stocks? Once you have built your budget and built up your emergency fund, you will start to build up extra savings that go towards your future – and that future should include investing. Simply put, when you have money to invest for an extended period of time (like 20 years or more), the stock market historically has provided the greatest return. When … Continue reading Why Invest In Stocks
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 finance in the world. History Before New York was New York, it was a Dutch colony called New Amsterdam, which only took up a small area in the south of … Continue reading Wall Street
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 come to trade U.S. stocks (and now some foreign shares as well). It is where over 2,800 of the biggest U.S. companies have their shares listed. On average, over 1 billion … Continue reading What is the New York Stock Exchange?
ETFs have been one of the most popular investment vehicles in the world over the last decade or so, with investors of all types attracted to the low fees, but diverse holdings, falling somewhere between mutual funds and stocks in terms of how easy they are to manage in a portfolio. However, one of the ETF’s biggest strong points, that you can trade it throughout … Continue reading ETFs showing signs of stress with high trading!
Fibonacci Arc is a technical analysis indicator and is utilized to give hidden support and resistance levels for security. It is built by drawing a trend line between two swing points on a chart.
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 as the global market that does business in money trading.
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 of each other; they have the same mechanics, but have opposite triggers. When creating a limit or stop order, you will select a ticker symbol and quantity, just like a market order, … Continue reading Stop and Limit Orders
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 cents terms. When in dollar terms it will activate when the price has moved by the target you have set relative to the day’s high. Example Let’s say we … Continue reading Trailing Orders
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. Risk Understanding the level of risk you need and want is a very important part of selecting a good strategy. For nearly any strategy, whether it is picking … Continue reading Risk Level
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 can also be intangible assets such as the value of a brand name or logo. Details: Assets generally refer to either something that you intend to sell later for … Continue reading Asset
Definition “Asset Allocation” is how you have divided up your investments across different assets. You can have all your assets in one place, or you can use diversification to spread them around to reduce risk. Details Whenever you pick stocks, open a bank account, get paid, buy something, or do anything with any resources, you are doing some form of “Asset Allocation”. Early on, the … Continue reading Asset Allocation
An investment strategy is the set of rules and behaviors that you can adopt to reach your financial and investing goals. Choosing an investing strategy can be a daunting task when you are starting to learn about investments and finance. Here we will look at the larger overall strategies rather than very specific strategies. Given that this is such a broad term there can be … Continue reading Investment Strategy
In finance, Volume-Weighted Average Price (VWAP) is a ratio of the profit traded to complete volume traded over a distinct time horizon – normally one day. It’s a portion of the average price a stock traded at over the trading horizon.
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 options contracts: by owning an option, it signifies that there is interest in actually trading that stock, although at a different price. Since this represents your “interest” in owning it, the “open interest” is … Continue reading Open Interest
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 downtrend and can pull back upwards or downwards. In the example below we can see a pullback as it retraces back to the original trend. Pullbacks frequently become a new support or … Continue reading Pullback
Double Bottoms are reversal patterns and often seem to be one of the most common (together with double top patterns) patterns for currency trading. Double Bottoms patterns are identified by two consecutive low prices of the same depth with a moderate pull back up in between (neckline peak).
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 get out of a box of a particular cereal), the “variance” is how far away the numbers get from the average. The higher the variance, the farther away most numbers … Continue reading Variance
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 diverse portfolio without holding dozens of individual positions. However, using financial derivatives and debt, there are also “Leveraged ETFs”, which amplify the risks, and returns, of whichever index … Continue reading Leveraged ETF List
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 stock market indices like the Dow Jones Industrial Average and the Nasdaq Composite because it tracks a different number of stocks and weights the stocks differently. It is one of the most commonly followed indices and many consider it the best representation of the market and a bellwether for the U.S. economy.
Good Till Date Order Terms If you have ever placed a limit or stop order, you have see the “Good Till Day” order term on the trading menu: A “Good-Till-Day” order is simply one that will cancel at the end of the trading day if it does not fill. So, for example, if you have Apple stock, and today you know they are releasing an … Continue reading GTD Good Till Day Orders
How Do I Build a Diversified Portfolio? 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’t “put all of your eggs in one basket.” What Does It Mean To Diversify? Simply put, to “diversify” means to make sure pick a variety of … Continue reading How do I diversify a portfolio?
Sharpe Ratio for Beginners 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 consistent the returns of a stock or portfolio are, so you can determine if the returns are stemming more from wise investing, or “getting lucky”. Example … Continue reading Sharpe Ratio (Beginner)
The head-and-shoulders pattern is one of the most popular chart patterns in technical analysis. The pattern looks like a head (the middle peak) with two shoulders (two equal heiight peaks).
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 MACD moves two trend following indicators and moving averages into a momentum oscillator by subtracting the longer moving average from the shorter moving average. The result is that the MACD gives the best of both … Continue reading MACD
Fixed income analysis is the process of evaluating and analyzing fixed income securities for investment purposes. Fixed Income represents a distinct asset class. Investors and analysts perform fixed-income analysis to Evaluate the risk characteristics underlying debt securities and to assess the capacity of the borrowing entity to meet its financial obligations (credit analysis) Identify which debt securities represent attractive investment opportunities Determine the appropriate valuation … Continue reading Fixed Income
Introduction The Black-Scholes formula is the most popular ways to calculate the true price of an option. It is easy to calculate the intrinsic value, but the extrinsic value can be very tricky to calculate. Black Scholes is used for calculating two types of options. Options on stocks Stock Options. Fisher Black, Robert Merton and Myron Scholes originally created the Black Sholes formula in 1973. … Continue reading Black-Scholes
Definition: 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. In Depth Description: In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being … Continue reading Arbitrage
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, there are also thousands of companies that want to sell shares to the general public, but are not able to sell on these exchanges. Stock traded on these “Over The Counter” exchanges are known as OTC stocks. Why … Continue reading OTC (Over The Counter) Stocks