Glossary Archives - HowTheMarketWorks

Robinhood Free Stock: Up to $1,700 in Free Shares

Levi Rasmussen — Fri, 19 Apr 2024 19:56:20 +0000

Is it worthwhile to use Robinhood for your stock and crypto investments instead of one of the many other investing apps out there? Given that Robinhood has over 23,000,000 users, it must be doing something right. At HowTheMarketWorks, we provide our members with unbiased reviews of investing apps and tools. We do that by using Read More...

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Kevin Smith — Thu, 09 Mar 2023 19:38:43 +0000

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Best Crypto Demo Accounts

Levi Rasmussen — Mon, 09 May 2022 23:21:54 +0000

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 Market Works, we focus on giving high school students the tools and resources to start investing in the stock market. But where Read More...

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Finviz Review: The Pros & Cons to Using This Stock Screener

Robert Gelber — Tue, 17 Oct 2017 19:31:49 +0000

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 P/E ratios or 12-month trailing EPS (earnings per share), and allow you to identify potential winners. But since there are so many of them Read More...

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The Nuts and Bolts of How Hedge Funds Work

Robert Gelber — Tue, 17 Oct 2017 19:08:50 +0000

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 since the launch of the very first ever fund in 1949 by A.W Jones & Co. Since then, their popularity Read More...

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What Is a Short Stock

Bavan Arumugam — Thu, 31 Aug 2017 15:00:28 +0000

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 where you borrow shares from another party (usually a broker) and sell it on the market. Borrowing from a Read More...

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What Is A Long Stock?

Bavan Arumugam — Thu, 31 Aug 2017 14:49:17 +0000

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 increase your holdings of a stock, your ownership stake in the company increases. Words such as “shares”, “equity” and “stock” all Read More...

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Price Controls

Kevin Smith — Wed, 19 Apr 2017 18:53:02 +0000

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 to prevent the price from getting too low, they are called “Floors”. Price Ceilings Price Ceilings are controls put in place Read More...

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The Business Cycle

Kevin Smith — Wed, 19 Apr 2017 18:45:48 +0000

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, industrial expansion, inflation rates, but the most important indicator is GDP (Gross Domestic Product) growth. Below you can see a graph of the GDP growth Read More...

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Credit Cards

Kevin Smith — Wed, 19 Apr 2017 18:37:25 +0000

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 – you borrow money from your credit card issuer, and later pay it back with interest. Credit Cards Vs Debit Cards Read More...

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Credit – Using Borrowed Money

Kevin Smith — Tue, 04 Oct 2016 16:02:58 +0000

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, which means that it is often a challenge for beginners to learn all the different ins and outs of Read More...

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Credit Reports

Kevin Smith — Tue, 04 Oct 2016 16:01:16 +0000

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 reports, so you might know that these are important. Most people, however, don’t know just how big a role a credit report can Read More...

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What is Economics?

Kevin Smith — Tue, 07 Jun 2016 17:30:11 +0000

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 choices facing people, businesses, schools, and governments, and see if there is any way to improve outcomes. This is done by looking at how supply and Read More...

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Contract

Kevin Smith — Fri, 27 May 2016 18:50:35 +0000

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 them in court to either force them to fulfill their side of the agreement, or pay back compensation. What Makes A Contract Binding? Read More...

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Banks, Credit Unions, and Savings & Loan Institutions

Kevin Smith — Sat, 16 Apr 2016 17:16:29 +0000

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 that might make them a better or worse fit for your financial needs. What They Have In Common All three of these institutions can do Read More...

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Wealth

Kevin Smith — Sun, 10 Apr 2016 10:27:50 +0000

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 have a monetary value does not mean it is worthless. Having strong connections with friends and family is often considered a major component of wealth – since Read More...

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Money – Types of Stored Value

Kevin Smith — Tue, 05 Apr 2016 14:50:33 +0000

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 used to transport some dollar amount which we can later exchange for goods and services. Each of these forms of stored value have their Read More...

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Spending Plan

Kevin Smith — Mon, 04 Apr 2016 22:22:45 +0000

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 fixed part is usually the same every month, with things like rent/mortgage payments, grocery bills, insurance, and car payments. The variable part Read More...

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JamesAquino’s Trading Strategy

Kevin Smith — Thu, 28 Jan 2016 14:39:14 +0000

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 it is easy to manage and chose which stock to buy wisely. (BUY WHAT YOU KNOW) that’s pretty much it 🙂 Final Read More...

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Demand

Kevin Smith — Fri, 15 Jan 2016 21:50:06 +0000

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 that people are willing to pay generally goes down. This is because each person puts some value on the good – Read More...

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Supply

Kevin Smith — Fri, 15 Jan 2016 18:44:10 +0000

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 sell of it. Details As the market price for a good goes up, companies want to sell more of it to try to make greater profits. Read More...

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Stock Market Crash of 1929

Kevin Smith — Thu, 14 Jan 2016 23:21:30 +0000

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 crash came in multiple parts – the initial crash on October 28 (a 12.87% drop) continued into October 29 (a 11.73% drop), Read More...

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What is the Federal Reserve?

Kevin Smith — Thu, 14 Jan 2016 13:56:57 +0000

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 resort” for other banks. Regulating Currency The Federal Reserve works to maintain the interest rates that banks use to lend money to Read More...

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Reserve Requirement

Kevin Smith — Thu, 14 Jan 2016 13:38:29 +0000

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 States). Details The “Reserve Requirement” is about 10% of all money that has been deposited at a bank. Because of how Read More...

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Money Creation

Kevin Smith — Wed, 13 Jan 2016 21:45:01 +0000

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 is created principally by standards set by the federal reserve / central bank. The central bank will determine the amount loaned to it’s commercial Read More...

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How Is Money Created?

Kevin Smith — Wed, 13 Jan 2016 21:39:46 +0000

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 be zero! In the US, money is created as a form of debt. Banks create loans for people and businesses, which in Read More...

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Cottage Industry

Kevin Smith — Wed, 13 Jan 2016 18:10:43 +0000

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, instead of large factories. History “Cottage Industry” describes the methodology that was used to produce most goods throughout human history, up until the end Read More...

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OHLC – Bar Chart

Kevin Smith — Tue, 15 Dec 2015 17:00:52 +0000

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) OHLC are very useful for provide quick visual details, especially for technical analysis. Details on OHLC Charts OHLC charts are also known as Read More...

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Branflakes’s November Investing Contest Strategy

Kevin Smith — Mon, 30 Nov 2015 16:28:46 +0000

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 on for a couple minutes or over night, then I sold them, sometimes shorting stocks that are too hyped up Performance Over The Total Contest Click Read More...

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Why is it called Wall Street?

Kevin Smith — Mon, 09 Nov 2015 12:03:34 +0000

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 Read More...

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What is the New York Stock Exchange?

Kevin Smith — Tue, 03 Nov 2015 16:29:20 +0000

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. Read More...

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ksmith’s October Day Trading Strategy

Kevin Smith — Thu, 15 Oct 2015 14:19:53 +0000

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-leveraged ETFs (Click Here for a list of leveraged ETFs!) [hq]DWTI[/hq] and [hq]JDST[/hq]. [hq]DWTI[/hq] is a triple-leveraged Bear Oil ETF, so when oil goes down by 1%, Read More...

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hoabidebay’s First October Week Contest Trading Strategy

Kevin Smith — Wed, 14 Oct 2015 22:08:46 +0000

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, paying attention to how they behave (gap up/down) the 1st 15 min of the opening session. Final Open Positions and Portfolio Allocation Performance Over The Total Read More...

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BranFlakes1212’s October Day Trading Strategy

Kevin Smith — Wed, 14 Oct 2015 21:51:06 +0000

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 more volatile. Tuesday however didn’t have very many stocks doing what I prefer to trade, so I pretty much picked one of the top Read More...

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Phil Simard’s Blue Chip Investment Strategy

Phil Simard — Fri, 25 Sep 2015 00:17:42 +0000

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 Challenge. I just tried to get as much profit as possible by trading SPXU and other triple leveraged ETF’s and trying to time the market. Read More...

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Ross Lo Giudice’s Blue Chip Challenge Investment Strategy

Rosario Lo Giudice — Fri, 25 Sep 2015 00:11:26 +0000

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 that were familiar and then I closed my eyes and crossed my fingers. The end result was losses across the board that ranged Read More...

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Kevin Smith’s Blue Chip Challenge Investment Strategy

Kevin Smith — Wed, 16 Sep 2015 10:44:59 +0000

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 contest was dominated by the crash in oil prices, so I figured that there would probably be a rebound coming soon. Read More...

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Forex

HTMW Team — Tue, 01 Sep 2015 21:43:36 +0000

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.

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Stop and Limit Orders

Phil Simard — Tue, 01 Sep 2015 20:44:54 +0000

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 Read More...

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Trailing Orders

Phil Simard — Tue, 25 Aug 2015 18:54:06 +0000

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 Read More...

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Bond

Phil Simard — Mon, 24 Aug 2015 08:08:12 +0000

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 the corporation. The value of Bonds traded are greater than the value of stocks traded.

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Risk Level

Phil Simard — Fri, 21 Aug 2015 13:45:43 +0000

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 Read More...

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Stock

Kevin Smith — Fri, 21 Aug 2015 12:46:13 +0000

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Asset

Phil Simard — Tue, 18 Aug 2015 15:43:31 +0000

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 Read More...

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Open Interest

Phil Simard — Tue, 04 Aug 2015 21:33:09 +0000

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 Read More...

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Pullback

Phil Simard — Tue, 04 Aug 2015 18:40:31 +0000

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 Read More...

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Variance

Kevin Smith — Fri, 31 Jul 2015 20:41:40 +0000

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 Read More...

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Leveraged ETFs

Kevin Smith — Mon, 27 Jul 2015 16:05:39 +0000

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”, Read More...

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S&P 500

HTMW Team — Sun, 26 Jul 2015 13:29:18 +0000

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.

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GTD Good Till Day Orders

Kevin Smith — Mon, 20 Jul 2015 10:21:18 +0000

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 simply one that will cancel at the end of the trading day if it does not fill. So, for example, if Read More...

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How do I diversify a portfolio?

Kevin Smith — Mon, 20 Jul 2015 10:15:00 +0000

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 Read More...

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Sharpe Ratio (Beginner)

Kevin Smith — Thu, 16 Jul 2015 12:05:23 +0000

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 Read More...

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What is the Dow Jones Industrial Average

HTMW Team — Fri, 26 Jun 2015 13:36:26 +0000

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 in the United States have traded during a standard trading session in the stock market.

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OTC (Over The Counter) Stocks

Kevin Smith — Fri, 15 May 2015 22:40:33 +0000

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 Read More...

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Technical Analysis Software

HTMW Team — Sun, 02 Nov 2014 08:58:39 +0000

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).

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Investing in Chile

HTMW Team — Thu, 30 Oct 2014 20:09:10 +0000

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 dominant and major exporter of copper. Chile’s Main Industries Chile is economically known for its strength in: Mining and Minerals Sector Copper Lithium Read More...

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Investing in Serbia

HTMW Team — Thu, 30 Oct 2014 20:02:42 +0000

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 attracted solid foreign direct investment. This article explores Serbia's economic strengths along with the stock market, largest banks and ways one can invest in the country.

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Investing in Latvia

HTMW Team — Fri, 22 Aug 2014 15:47:45 +0000

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 investment inflows. Its economy was ranked first among developing countries until 2008.

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Investing in Belgium

HTMW Team — Sat, 02 Nov 2013 14:10:27 +0000

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 destination for foreign capital.

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Investing in Italy

HTMW Team — Sat, 02 Nov 2013 13:58:25 +0000

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 economic role.

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Investing in Ireland

HTMW Team — Sat, 02 Nov 2013 13:42:11 +0000

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 multinational corporations.

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Investing in Hungary

HTMW Team — Wed, 23 Oct 2013 18:03:05 +0000

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, chemicals, textiles, and agricultural products. Hungary’s Main Industries Hungary is economically known for its strength in: Agriculture Sector Wheat Corn Sunflower Potato Sugar Read More...

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Investing in Peru

HTMW Team — Wed, 23 Oct 2013 17:20:38 +0000

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, copper, zinc, and fish.

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Investing in Portugal

HTMW Team — Wed, 23 Oct 2013 17:09:35 +0000

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.

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Investing in Romania

HTMW Team — Wed, 23 Oct 2013 16:48:08 +0000

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 economy strong in its industrial and agricultural sectors.

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Investing in Austria

HTMW Team — Tue, 15 Oct 2013 20:24:12 +0000

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 reputable law firms and banks, and has a vibrant tourism sector.

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Investing in Argentina

HTMW Team — Tue, 15 Oct 2013 20:09:14 +0000

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 natural resources, a strong agricultural sector, and a well-educated population.

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Investing in Other Countries

HTMW Team — Tue, 15 Oct 2013 15:11:53 +0000

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. Other countries to enter the top 25 include: Romania, Saudi Arabia, Chile, and Egypt.

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Gross National Product

HTMW Team — Wed, 09 Oct 2013 16:35:03 +0000

Gross National Product is the value of all goods and services produced by a country’s residents.

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Free Cash Flow

HTMW Team — Wed, 09 Oct 2013 16:24:08 +0000

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 Flow to Equity (FCFE).

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Form-8K

HTMW Team — Wed, 09 Oct 2013 01:49:03 +0000

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.

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Fixed Income Analysis

HTMW Team — Tue, 08 Oct 2013 14:46:59 +0000

Fixed income analysis is the process of evaluating and analyzing fixed income securities for investment purposes.

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Financial Modeling

HTMW Team — Tue, 08 Oct 2013 14:37:58 +0000

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 current value can be viewed as being derived from its future cash flow streams. An investor deciding whether to purchase or sell a stock, therefore, will be interested in estimating such value.

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Earnings Report

HTMW Team — Thu, 03 Oct 2013 13:45:17 +0000

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 company’s: financial condition, strategic plans, industry and competitive position, Key performance drivers and risk factors and Future performance.

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Discounted Cash Flow

HTMW Team — Thu, 03 Oct 2013 13:37:30 +0000

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 decision-making entails discovering the fair value of investments.

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Debt Snowball Method

HTMW Team — Thu, 03 Oct 2013 13:30:06 +0000

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 debt balance, followed by larger ones until all obligations are paid off.

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Covariance Analysis

HTMW Team — Tue, 24 Sep 2013 16:46:29 +0000

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 measure how different financial variables interact together.

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Correlation Analysis

HTMW Team — Tue, 24 Sep 2013 16:37:39 +0000

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 rates and stock returns, money supply and inflation, stock and bond returns, and exchange rates.

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Comprehensive Insurance

HTMW Team — Tue, 24 Sep 2013 16:22:24 +0000

Comprehensive insurance to a form of insurance policy which includes a broad range of coverage or protection.

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Collar Option Strategy

HTMW Team — Tue, 24 Sep 2013 16:14:54 +0000

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 Put and shorting a Call.

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Chicago Mercantile Exchange (CME Group)

HTMW Team — Thu, 19 Sep 2013 01:05:27 +0000

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, equities, interest rates, and exchange rates.

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Chicago Board of Trade (CBOT)

HTMW Team — Thu, 19 Sep 2013 00:59:03 +0000

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 agriculture, energy, metals, equities, bonds, and exchange rates. The majority of its trades are conducted electronically.

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Cash Conversion Cycle

HTMW Team — Thu, 19 Sep 2013 00:51:27 +0000

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, allowing it to effectively make sound investing and financing decision. Managing the CCC entails efficient inventory, receivables, and payables functions, and should be part of a company’s overall operational strategy.

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Capital Funding

HTMW Team — Wed, 18 Sep 2013 15:56:14 +0000

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, organizations, and individuals in order to fund their functions and operations. In most cases, capital provided is compensated by some form of return to the provider. Two important types of capital are equity and debt. Equity capital represents an ownership stake, while debt capital is a form of lending.

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Account Receivables Management

HTMW Team — Tue, 10 Sep 2013 16:21:24 +0000

Account Receivables Management refers to the set of policies, procedures, and practices employed by a company with respect to managing sales offered on credit.

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Account Payables Management

HTMW Team — Tue, 10 Sep 2013 15:31:44 +0000

Account Payables Management refers to the set of policies, procedures, and practices employed by a company with respect to managing its trade credit purchases.

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Insurance

HTMW Team — Thu, 05 Sep 2013 19:07:11 +0000

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 insurance will cover the cost of having it fixed or replaced.

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Commercial Bank

HTMW Team — Thu, 05 Sep 2013 18:59:35 +0000

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 kind of bank that individuals go to for their everyday financial needs.

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Price Ceilings

HTMW Team — Thu, 13 Jun 2013 13:36:50 +0000

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 consumers from conditions that would make a vital product from being financially unattainable for consumers.

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Poison Pill

HTMW Team — Thu, 13 Jun 2013 13:25:33 +0000

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 actions of corporate raiders. The “Poison Pill” is also useful in slowing down the speed of potential raids.

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Straddles

HTMW Team — Tue, 11 Jun 2013 16:02:18 +0000

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 stock.

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Oligopoly

HTMW Team — Tue, 11 Jun 2013 15:52:29 +0000

An oligopoly is characterized by a small number of sellers who dominate an entire market.

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Monopoly

HTMW Team — Mon, 27 May 2013 13:53:10 +0000

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 certain characteristics.

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Monopolistic Competition

HTMW Team — Mon, 27 May 2013 13:50:02 +0000

Monopolistic Competition is characterized as a form of imperfect competition.

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Money Supply

HTMW Team — Mon, 27 May 2013 13:47:02 +0000

Money supply is the total amount of money available in an economy at any particular point in time.

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Monetary Policy

Kevin Smith — Mon, 27 May 2013 13:42:06 +0000

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.

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Modern Portfolio Theory (MPT)

HTMW Team — Mon, 27 May 2013 13:31:17 +0000

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.

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Gross Domestic Product

HTMW Team — Fri, 17 May 2013 13:29:16 +0000

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.

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Fiscal policy

HTMW Team — Fri, 17 May 2013 13:13:59 +0000

Fiscal policy is the use of government spending to influence the economy.

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Expected Return

HTMW Team — Mon, 13 May 2013 12:27:38 +0000

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.

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Elasticity

HTMW Team — Mon, 13 May 2013 12:08:26 +0000

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 another valuable.

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Duration

HTMW Team — Tue, 07 May 2013 23:27:51 +0000

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 how do you measure the bond’s price sensitivity to such rate fluctuations? The answer is duration.

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Dupont Analysis

HTMW Team — Tue, 07 May 2013 21:19:57 +0000

Dupont Analysis breaks the Return on Equity into several different components in order to analyze where the returns are coming from.

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Direxion Small Cap Bear 3X – Triple-Leveraged ETF (TZA)

HTMW Team — Tue, 07 May 2013 21:16:24 +0000

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 Cap Index.

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Straight Line Depreciation

HTMW Team — Fri, 03 May 2013 15:52:54 +0000

Straight line depreciation is the most commonly used and simplest form of depreciation.

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Depreciation

HTMW Team — Thu, 02 May 2013 21:58:06 +0000

Depreciation refers to the gradual and permanent decrease in value of the assets of a firm, nation or individual over its lifetime.

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Consumer price index

HTMW Team — Wed, 24 Apr 2013 06:54:17 +0000

A consumer price index (CPI) is the relative measure of a market basket of consumer goods and services purchased by households.

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Small cap stock

HTMW Team — Tue, 23 Apr 2013 23:51:20 +0000

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.

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Commodity

HTMW Team — Tue, 23 Apr 2013 23:28:21 +0000

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, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade. Typical types of commodities are corn, gold, silver, steel, etc.

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Body of a candlestick

HTMW Team — Mon, 22 Apr 2013 20:59:26 +0000

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, hour, day, week or other). They are the most basic building block for candlestick charts.

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Candlesticks

HTMW Team — Mon, 22 Apr 2013 20:36:10 +0000

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 wicks - one on each end. For a white (could also be green) candlestick, the bottom of the body represents the opening price and the top of the body represents the closing price. For red candlesticks, it is just the other way around. The top and bottom tips of each wick are the day's highest and lowest price respectively.

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Shadows

HTMW Team — Mon, 22 Apr 2013 20:26:18 +0000

A small line (like a candle wick) found at the top or bottom of an individual candle in a candlestick chart.

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Fundamentals

HTMW Team — Sat, 13 Apr 2013 19:10:14 +0000

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 these fundamentals to develop an estimate as to whether the underlying asset is considered a worthwhile investment. For businesses, information such as revenue, earnings, assets, liabilities and growth are considered some of the fundamentals.

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Momentum Investors

HTMW Team — Sat, 13 Apr 2013 19:01:59 +0000

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 by additional gains and vice versa for declining values.

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Resistance Line

HTMW Team — Sat, 13 Apr 2013 18:52:44 +0000

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 index is finding it difficult to break through it, and may head lower shortly. The more times that the stock or index tries unsuccessfully to break through the resistance line, the stronger that area of price resistance becomes.

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Price to Sales (P/S Ratio)

HTMW Team — Sun, 07 Apr 2013 07:24:00 +0000

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 company's total sales over the past 12 months. The lower the ratio, the more attractive the investment.

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Stagflation

HTMW Team — Fri, 05 Apr 2013 20:29:21 +0000

High inflation and high unemployment occurring simultaneously.

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Inflation-Indexed Securities

HTMW Team — Wed, 03 Apr 2013 01:40:40 +0000

A security with a guarantee of a return rate that is higher than the rate of inflation if it is held to maturity

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Commission

HTMW Team — Fri, 29 Mar 2013 18:13:51 +0000

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.

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Brokerage Account

HTMW Team — Fri, 29 Mar 2013 17:58:26 +0000

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 types of brokerage accounts. Full-service brokers provide investment advice and charges high fees for their services. Most online brokers provide less services at a far Read More...

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Fibonacci Ratios

HTMW Team — Fri, 29 Mar 2013 00:23:01 +0000

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 infamous "Golden Ratio" which is .618.

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Earnings Report

HTMW Team — Thu, 28 Mar 2013 23:55:07 +0000

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.

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Earning Estimates

HTMW Team — Thu, 28 Mar 2013 23:50:40 +0000

Earnings estimates provide one strong measure of potential future performance and are a mainstay of stock investing research.

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Return on Equity

HTMW Team — Thu, 28 Mar 2013 23:34:17 +0000

Return on Equity (ROE) is used to measure how much profit a company is able to generate from the money invested by shareholders.

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Price to Earnings Growth (PEG)

HTMW Team — Thu, 28 Mar 2013 23:28:43 +0000

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 Share (EPS).

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When to Sell Stocks

HTMW Team — Thu, 28 Mar 2013 22:53:53 +0000

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 stand by and watch others reap in huge profits have felt the pain of premature sales.

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Stock Volatility

HTMW Team — Thu, 28 Mar 2013 22:49:28 +0000

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.

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Stock Exit Strategies

HTMW Team — Thu, 28 Mar 2013 22:45:52 +0000

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.

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Cutting Your Losses

HTMW Team — Thu, 28 Mar 2013 22:33:10 +0000

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 if it's time to hold or fold.

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Hedge Fund

HTMW Team — Thu, 28 Mar 2013 22:15:39 +0000

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 on a portfolio.

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Cramer Bounce

HTMW Team — Thu, 28 Mar 2013 22:08:10 +0000

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.

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Hyperinflation

HTMW Team — Mon, 25 Mar 2013 22:13:55 +0000

Hyperinflation refers to out of control or extremely rapid inflation, where prices increase so quickly that the concept of real inflation becomes meaningless.

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Inflation

Kevin Smith — Mon, 25 Mar 2013 21:58:21 +0000

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.

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Certificates of Deposit (CDs)

HTMW Team — Mon, 25 Mar 2013 21:45:34 +0000

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 deposit account.

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Market Capitalization

HTMW Team — Mon, 25 Mar 2013 21:34:50 +0000

In a cap-weighted index, large price moves in the largest components (companies) can have a dramatic effect on the value of the index.

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Systemic Risk / Market Risk

HTMW Team — Mon, 25 Mar 2013 21:06:21 +0000

Market risk is a measure of how much of a loss an investor is facing while trading.

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Various Risks of Investing

HTMW Team — Mon, 25 Mar 2013 20:46:07 +0000

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 look for the opportunity.

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Diversify to Reduce Risk

HTMW Team — Mon, 25 Mar 2013 19:46:05 +0000

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.

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Buy and Hold Strategy

HTMW Team — Sat, 23 Mar 2013 21:31:17 +0000

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 that stocks tend to go up in price over extended periods of time.

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Timing System

HTMW Team — Sat, 23 Mar 2013 20:04:59 +0000

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.

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Offer Price

HTMW Team — Sat, 23 Mar 2013 19:56:56 +0000

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.

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Spread

HTMW Team — Sat, 23 Mar 2013 19:52:15 +0000

The difference between the ask price and the sell price is called the “spread” and it is kept by the broker.

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Stock Symbols

HTMW Team — Sat, 23 Mar 2013 18:37:01 +0000

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.

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Risk Management

HTMW Team — Sat, 23 Mar 2013 18:07:05 +0000

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 trading.

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REITs

HTMW Team — Sat, 23 Mar 2013 17:39:05 +0000

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.

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Currency ETFs

HTMW Team — Sat, 23 Mar 2013 17:32:08 +0000

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.

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Stock Index

HTMW Team — Sat, 23 Mar 2013 16:01:55 +0000

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.

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Institutional Investor

HTMW Team — Sun, 17 Mar 2013 03:11:35 +0000

A non-bank organization that regularly trades large blocks of stocks.

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Horizontal Analysis

HTMW Team — Wed, 13 Mar 2013 19:00:15 +0000

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 could project 7% profit increase for the next quarter.

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Market Indicators (list of Market Indicators)

HTMW Team — Tue, 12 Mar 2013 21:26:47 +0000

A series of technical indicators used by traders to predict the direction of the major financial indexes.

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Debtor Nation

HTMW Team — Tue, 12 Mar 2013 21:19:41 +0000

A national government that owes money to international financial institutions such as the World Bank, foreign governments, or to foreign lenders.

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Seasonal Indicators

HTMW Team — Tue, 12 Mar 2013 20:32:06 +0000

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.

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Arms Index

HTMW Team — Fri, 08 Mar 2013 07:25:28 +0000

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 as a predictor of future price movements in the market primarily on an intraday basis.

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Absolute Breadth Index

HTMW Team — Fri, 08 Mar 2013 07:23:25 +0000

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 advancing issues and the number of declining issues. Typically, large numbers suggest volatility is increasing, which is likely to cause significant changes in stock prices in the coming weeks.

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Advance/Decline Index (AD Line)

HTMW Team — Fri, 08 Mar 2013 07:12:50 +0000

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 movements as a whole. Stock indexes such as the Dow Jones Industrial Average only tell us the strength of 30 stocks, whereas the advance/decline index can provide much more insight into the movements of the market.

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Market Index

HTMW Team — Fri, 08 Mar 2013 01:54:48 +0000

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 represent an entire stock market and thus give investors a way to monitor the market's changes over time.

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Sole Proprietorship

HTMW Team — Thu, 07 Mar 2013 22:41:05 +0000

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 distinction between the assets and liabilities of a business and those of its owner. It is by far the most popular business structure for startups because of its ease of formation, least record keeping, minimal regulatory controls, and avoidance of double taxation.

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Maintenance Margin

HTMW Team — Thu, 28 Feb 2013 23:18:40 +0000

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 minimum for all margin accounts and many brokerages have higher maintenance margin requirements of 30-40%. Maintenance Margin example If you Read More...

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Initial Margin

HTMW Team — Thu, 28 Feb 2013 23:12:01 +0000

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.

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Margin Call

HTMW Team — Thu, 28 Feb 2013 23:11:15 +0000

Margin calls happen when your account value drops to a value below that allowed by a broker.

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Corporation

HTMW Team — Sat, 23 Feb 2013 20:58:56 +0000

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).

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Incubator

HTMW Team — Sat, 23 Feb 2013 19:17:13 +0000

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.

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Retained Earnings

HTMW Team — Thu, 21 Feb 2013 16:22:35 +0000

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

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Dividend Reinvestment Plan

HTMW Team — Thu, 21 Feb 2013 15:40:44 +0000

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.

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Chart Analysis

HTMW Team — Wed, 13 Feb 2013 20:21:15 +0000

Chart analysis is the same as Technical Analysis. It is mostly concerned with price and volume.

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The Fed / The Federal Reserve System

HTMW Team — Wed, 13 Feb 2013 19:33:14 +0000

The Fed is the US central-banking system which is made up of 12 regional central banks

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Blue Sky Laws

HTMW Team — Wed, 13 Feb 2013 18:10:09 +0000

State regulations governing the sale of securities and mutual funds

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Direct stock purchase plans

HTMW Team — Wed, 13 Feb 2013 02:12:02 +0000

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 restrictions on when an individual can purchase shares. Example: The greatest benefit of using direct stock purchase plans for investors is the ability to avoid commissions by not Read More...

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Falling Knife

HTMW Team — Sat, 09 Feb 2013 01:46:03 +0000

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 worthless.

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S Corporation

HTMW Team — Thu, 07 Feb 2013 19:55:38 +0000

One of the ways to define a corporation. S Corporations are allowed by the IRS for most companies with less than 75 shareholders.

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National Debt

HTMW Team — Wed, 06 Feb 2013 19:05:15 +0000

The total amount that the federal government has borrowed including internal debt (borrowed from national creditors) and external debt (borrowed from foreign creditors).

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Stop Limit

HTMW Team — Wed, 06 Feb 2013 01:27:27 +0000

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 reached. After the stop price is reached, the stop limit order becomes a limit order to buy (or sell) at the limit price or better.

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GDP (Gross Domestic Product)

HTMW Team — Sat, 02 Feb 2013 20:25:23 +0000

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 value of imports.

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Horizontal Integration

HTMW Team — Sat, 02 Feb 2013 20:21:49 +0000

The merger of companies at the same stage of production in the same or different industries.

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Sherman Antitrust Act

HTMW Team — Fri, 25 Jan 2013 22:50:31 +0000

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 distribution of goods. Amended by the Clayton Act of 1914. Also called Sherman Act.

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GTC Order (Good Til Cancel)

HTMW Team — Thu, 24 Jan 2013 18:18:30 +0000

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.

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Economies of Scale

Phil Simard — Tue, 22 Jan 2013 20:25:33 +0000

Decreasing the long-run average and marginal costs that come from an increase in the size of a factory or plant.

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Uncovered Call

HTMW Team — Thu, 17 Jan 2013 18:19:57 +0000

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.

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Junk Bonds

HTMW Team — Thu, 17 Jan 2013 17:19:19 +0000

A high-risk bond with a low credit rating. Junk Bonds usually have a much higher yield than investment-grade bonds.

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403(b)

HTMW Team — Thu, 17 Jan 2013 17:07:07 +0000

An alternative retirement plan to a 401(k) plan offered by non-profit organizations such as universities and charitable organizations, rather than corporations.

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Exchange Offer

HTMW Team — Thu, 17 Jan 2013 16:43:08 +0000

When a company offers to trade one security in return for another security.

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Support and Resistance

HTMW Team — Wed, 09 Jan 2013 22:32:06 +0000

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 close the position rather than take the risk of a significant decline if the stock uptrend reverses.

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Average Directional Index (ADX)

HTMW Team — Sat, 05 Jan 2013 21:07:44 +0000

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.

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Day Trading Rules

Phil Simard — Fri, 21 Dec 2012 17:15:09 +0000

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 cash to have $25,000 or more in your account. Many beginning traders have been bitten by this rule!

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Press Releases

Greg Brown — Fri, 21 Dec 2012 15:03:40 +0000

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 stations, television stations, or television networks.

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Bad Earnings Surprise

HTMW Team — Wed, 19 Dec 2012 09:50:22 +0000

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 have upward breakouts.

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Dead Cat Bounce

HTMW Team — Tue, 18 Dec 2012 22:30:32 +0000

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 supply and demand has become unbalanced, any type of bear market rally will create a massive short covering which will lead to a swift price move up. This bounce will be short lived and followed up by heavy selling which will break the prior price low.

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QuantShare

HTMW Team — Mon, 10 Dec 2012 23:19:08 +0000

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 watchlists, create trading strategies, backtest these strategies, create portfolios based on these strategies… QuantShare is suitable for all levels of traders and it works with U.S. and Read More...

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Stock Picking Software

HTMW Team — Fri, 02 Nov 2012 08:27:35 +0000

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-programmed by the manufacturer to identify the right buying opportunities and the right timing.

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Charting Software

HTMW Team — Wed, 31 Oct 2012 15:41:26 +0000

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 indicators. Equity charting software packages are used by many traders to determine the direction on any given stock price.

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Investment Software

HTMW Team — Wed, 31 Oct 2012 15:26:52 +0000

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 software and many more.

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Compound Interest

Phil Simard — Mon, 15 Oct 2012 19:02:57 +0000

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 money to buy back all of Manhattan, they would still have several hundred million dollars left over. That is the power of compound interest over time.

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Expiration Types

HTMW Team — Mon, 15 Oct 2012 13:49:47 +0000

Expirations determine when your order gets placed on the market.

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Order Types

HTMW Team — Sun, 14 Oct 2012 21:05:33 +0000

Order Types offered in our Stock Market Game: Market Orders, Limit Orders, Stop Market Orders, Stop Limit Orders and Trailing Stop Orders

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Order

Phil Simard — Sun, 14 Oct 2012 17:10:59 +0000

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 allow investors to place restrictions on their orders affecting the price and time at which the order can be executed.

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Penny Stocks

HTMW Team — Sun, 14 Oct 2012 01:33:19 +0000

Penny stocks are stocks with a share price of $5 or less.

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Asset Turnover Ratio

HTMW Team — Thu, 11 Oct 2012 15:28:36 +0000

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 Turnover Ratio. More Detail: Asset turnover measures a firm’s efficiency at using its assets in generating sales or revenue – the higher the number Read More...

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AMAX

HTMW Team — Thu, 11 Oct 2012 15:20:04 +0000

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 stocks, ETF's and Derivatives.

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Day Trading

Phil Simard — Tue, 09 Oct 2012 20:25:11 +0000

Day traders buy and sell the same stock (or other investment type) within a single trading day.

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Mutual Fund Screener

HTMW Team — Mon, 08 Oct 2012 22:03:48 +0000

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.

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ETF Trading Strategies

HTMW Team — Sun, 07 Oct 2012 16:13:47 +0000

The following strategies are used to trade ETFs.

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Closed-End Mutual Fund

HTMW Team — Sat, 06 Oct 2012 21:19:06 +0000

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 stock on a stock exchange.

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Open End Mutual Funds

HTMW Team — Sat, 06 Oct 2012 18:13:33 +0000

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 investors.

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Loaded Mutual Fund

HTMW Team — Sat, 06 Oct 2012 21:05:02 +0000

A load mutual fund comes with a sales charge or commission.

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No-Load Mutual Fund

HTMW Team — Sat, 06 Oct 2012 20:51:51 +0000

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 through a alternate party.

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Mutual Funds

HTMW Team — Sat, 06 Oct 2012 17:35:24 +0000

A mutual fund is a form of professionally executed investment tool that merges money from numerous investors to buy securities.

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Leveraged ETFs

HTMW Team — Sat, 06 Oct 2012 20:16:50 +0000

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 Dow Jones Industrial Average.

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Indexed ETFs

HTMW Team — Fri, 05 Oct 2012 15:46:17 +0000

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 broad market exposure, low operating expenses and low portfolio turnover.

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Exchange Traded Fund (ETF)

HTMW Team — Fri, 05 Oct 2012 12:44:46 +0000

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 stock, as they are bought and sold.

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Covered Calls

HTMW Team — Thu, 04 Oct 2012 19:40:46 +0000

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.

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Cash Flow Statement

HTMW Team — Wed, 03 Oct 2012 21:54:47 +0000

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 occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This holds true for both business and personal finance.

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Dollar Cost Averaging

HTMW Team — Thu, 04 Oct 2012 00:46:41 +0000

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.

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Fundamental Analysis

HTMW Team — Wed, 03 Oct 2012 21:21:54 +0000

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 competition.

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Dogs of Dow Strategy

HTMW Team — Wed, 03 Oct 2012 21:02:32 +0000

A stock investing tactic where you purchase the ten DJIA stocks with the highest dividend yield at the start of each year.

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Stock Charts

HTMW Team — Wed, 03 Oct 2012 22:24:31 +0000

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 indicators. More Detail: Many web sites that offer stock charts offer advanced features. Some of these features offer the Read More...

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Getting and Understanding Stock Quotes

HTMW Team — Wed, 03 Oct 2012 21:50:24 +0000

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 decimals.

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IPO

HTMW Team — Wed, 03 Oct 2012 21:34:24 +0000

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 companies looking to become publicly traded.

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Trading Halts

HTMW Team — Fri, 28 Sep 2012 21:01:03 +0000

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.

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Time Decay

HTMW Team — Fri, 28 Sep 2012 20:50:10 +0000

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.

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Sharpe Ratio (Advanced)

HTMW Team — Fri, 28 Sep 2012 15:29:07 +0000

A Sharpe Ratio calculates the extra return you make compared to the extra risk you take on.

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How To Select Your Trading Strategy

HTMW Team — Fri, 28 Sep 2012 14:21:30 +0000

Factors that contribute to selecting your trading strategy include: personality, goals, amount of investment capital and comfort zone.

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Capital Asset Pricing Model : CAPM

HTMW Team — Fri, 28 Sep 2012 12:59:59 +0000

Capital Asset Pricing Model (CAPM) is a method used by investors to prioritize what stocks to invest in, given their limited cash.

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Naked Short Selling

HTMW Team — Thu, 27 Sep 2012 23:07:23 +0000

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 own and are not borrowing from someone. Here you owe the shorted shares to the buyer but "fail to deliver."

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Short Proceeds

HTMW Team — Wed, 26 Sep 2012 16:09:34 +0000

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,” and the securities lender.

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Stock Order Term

HTMW Team — Wed, 26 Sep 2012 14:55:14 +0000

Video explaining the time period over which an order that you are placing is valid.

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Selling Short

Phil Simard — Wed, 26 Sep 2012 01:46:50 +0000

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 ("covering") at a lower price. In the event of an interim price decline, the short seller will profit, since the cost of repurchase will be less than the proceeds received upon the initial (short) sale. Conversely, the short seller will incur a loss in the event that the price of a shorted instrument should rise prior to repurchase.

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Buy on Margin

HTMW Team — Tue, 25 Sep 2012 22:42:40 +0000

Buying on margin is borrowing money from a broker to purchase stock.

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Diversification

HTMW Team — Tue, 25 Sep 2012 10:53:25 +0000

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 than the weighted average risk of its constituent assets, and often less risk than the least risky of its constituents.

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Cash Flow Per Share

HTMW Team — Tue, 25 Sep 2012 10:49:23 +0000

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 values.

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Form 10-Q

HTMW Team — Tue, 25 Sep 2012 10:42:04 +0000

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.

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Form 10-K

HTMW Team — Tue, 25 Sep 2012 05:35:31 +0000

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 securities are publicly or privately traded. Up until March 16, 2009, smaller companies could use Form 10-KSB. If a shareholder requests a company’s Form 10-K, the company must provide a copy. In addition, most large companies must disclose on Form 10-K whether the company makes its periodic and current reports available, free of charge, on its website. Form 10-K, as well as other SEC filings may be searched at the EDGAR database on the SEC's website.

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What is a Balance Sheet?

HTMW Team — Tue, 25 Sep 2012 02:33:38 +0000

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 equity are listed as of a specific date, such as the end of its financial year.

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What is an Income Statement?

Mark Brookshire — Tue, 25 Sep 2012 05:31:49 +0000

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 company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line").

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Stop Loss Order

HTMW Team — Tue, 25 Sep 2012 02:23:28 +0000

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 appeared first on HowTheMarketWorks.

Limit Order

HTMW Team — Tue, 25 Sep 2012 02:17:16 +0000

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 the limit price or higher. A limit order is not guaranteed to execute. A limit order can only be filled if the stock’s market price reaches the limit price. While limit orders do not guarantee execution, they help ensure that an investor does not pay more than a pre-determined price for a stock.

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Market Order

HTMW Team — Tue, 25 Sep 2012 02:16:16 +0000

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 executed is not guaranteed. It is important for investors to remember that the last-traded price is not necessarily the price at which a market order will be executed. In fast-moving markets, the price at which a market order will execute often deviates from the last-traded price or “real time” quote.

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Ask Price

HTMW Team — Mon, 24 Sep 2012 23:14:09 +0000

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 sold at that price.

Sometimes called "the ask."

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Bid Price

HTMW Team — Mon, 24 Sep 2012 23:12:02 +0000

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 for.

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P/E Ratios

HTMW Team — Mon, 24 Sep 2012 21:43:23 +0000

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.

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Dividend Yield

HTMW Team — Tue, 25 Sep 2012 00:40:36 +0000

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 for a stock. The formula is Annual Dividends Per Share divided by Price Per Share.

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Dividend

HTMW Team — Tue, 25 Sep 2012 00:37:06 +0000

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 can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be distributed to shareholders. There are two ways to distribute cash to shareholders: share repurchases or dividends. Many corporations retain a portion of their earnings and pay the remainder as a dividend.

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Preferred Stock

HTMW Team — Tue, 25 Sep 2012 00:32:55 +0000

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 stocks are limited in the total profit they can earn.

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Common Stock

HTMW Team — Tue, 25 Sep 2012 00:29:59 +0000

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 in the United States. It is called "common" to distinguish it from preferred stock.

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Ticker Symbol

HTMW Team — Tue, 25 Sep 2012 00:24:45 +0000

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 selects an available ticker symbol for its securities which investors use to place trade orders. Every listed security has a unique ticker symbol, facilitating the vast array of trade orders that flow through the financial markets every day.

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Capital Stock

HTMW Team — Mon, 24 Sep 2012 13:08:24 +0000

All shares representing ownership of a company, including preferred and common shares.

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Capital Gains Distribution

HTMW Team — Mon, 24 Sep 2012 08:13:59 +0000

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 securities sales) to its shareholders. These distributions are taxable income reported to the IRS on Form 1099. Investors must report the income on their tax returns. This poses a problem for some mutual fund investors who make initial purchases of mutual funds near the end of a calendar year. Because they receive a capital gains distribution, they immediately receive taxable income and face a mutual fund NAV that is reduced from the distribution.

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Capital Gain or Loss

Mark Brookshire — Mon, 24 Sep 2012 11:10:16 +0000

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 property.

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Call Option

HTMW Team — Mon, 24 Sep 2012 08:09:18 +0000

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 who anticipate a price increase.

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Blue Chip Stocks

HTMW Team — Mon, 24 Sep 2012 08:06:12 +0000

Stocks of leading and nationally known companies that offer a record of continuous dividend payments and other strong investment qualities.

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Block Trades

HTMW Team — Mon, 24 Sep 2012 08:05:23 +0000

Trades greater than or equal to 10,000 shares in size and greater than or equal to $100,000 in value.

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Stock Beta

HTMW Team — Mon, 24 Sep 2012 08:04:24 +0000

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 beta means that the asset generally follows the benchmark, in the sense that the asset tends to move up when the benchmark moves up, and the asset tends to move down when the benchmark moves down. A negative beta means that the asset typically moves in the opposite direction as the benchmark: the asset tends to move up when the benchmark moves down, and the asset tends to move down when the benchmark moves up.

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Bull Market

HTMW Team — Mon, 24 Sep 2012 07:56:19 +0000

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 Market when the market is moving lower over time.

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Bear Market

HTMW Team — Mon, 24 Sep 2012 07:48:07 +0000

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.

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at-the-money

HTMW Team — Mon, 24 Sep 2012 07:43:27 +0000

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 ABC 75 call option is at the money and so is the ABC 75 put option. An at-the-money option has no intrinsic value, but may have time value (value if the stock goes up during the period of the option). Options trading activity tends to be most active when options are at the money.

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Arbitrage

HTMW Team — Mon, 24 Sep 2012 07:38:21 +0000

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.

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All-or-None Order

HTMW Team — Mon, 24 Sep 2012 07:35:07 +0000

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.

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Technical Analysis

HTMW Team — Mon, 24 Sep 2012 03:06:05 +0000

Technical Analysis is the use of technical indicators comprising of statistics using past market information to predict which direction the security price will move.

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Trailing Stop

HTMW Team — Mon, 24 Sep 2012 05:53:59 +0000

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 percentage. The trailing stop adjusts automatically as the price of the security rises and bases itself on the new appreciated value. This type of order allows profits to be made while cutting losses simultaneously.

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Margin

HTMW Team — Mon, 24 Sep 2012 00:08:09 +0000

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, dealer, or other lender.

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EPS

HTMW Team — Sun, 23 Sep 2012 23:43:14 +0000

Earnings Per Share (EPS) is Total net profits divided by the number of outstanding common shares in the market.

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Current Ratio

HTMW Team — Sun, 23 Sep 2012 23:37:16 +0000

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 "liquidity ratio", "cash asset ratio" and "cash ratio".

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Buy Side Firms

HTMW Team — Sun, 23 Sep 2012 19:30:41 +0000

Buy-side Firms are institutions that provide advice on buying securities and assets within their own organizations.

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Black-Scholes

HTMW Team — Sun, 23 Sep 2012 19:13:05 +0000

The Black-Scholes model is one of the most widely used ways to approximate the true price of a option.

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Total Asset/Equity Ratio

HTMW Team — Sun, 23 Sep 2012 18:56:24 +0000

Asset/Equity Ratio is the ratio of total assets divided by stockholders' equity.

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Short Selling your Investment Portfolio and Taking a Position

HTMW Team — Mon, 10 Sep 2012 21:38:35 +0000

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 HowTheMarketWorks.

Moving Average Convergence Divergence (MACD)

HTMW Team — Sun, 09 Sep 2012 21:30:39 +0000

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.

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