Meaning if the stock was first bought at 10.00, then rises to 11 and you double your position, you will have a cost average of 10.50. Due to scaling in with equal sizes, the trader has a cost average of 5.75. This means they have a “long” position and expect the stock to go up. If you were previously holding 1000 shares at $1.00, you would only be holding 100 shares at $10 after the split. Some companies will perform a REVERSE stock split. This means if you held 1000 shares at $700, you now own 7000 at $100.
Post market definition
Working capitalAlso known as ‘net current assets’, working capital is the total of a firm’s current, or short term, balance sheet assets minus all current liabilities. WarrantsWarrants are a type of security issued by companies and traded in the market, much in the way that shares are. It represents the rate of return a company must make on the money it has invested to stop investors putting their money elsewhere.
Financial instrument definition
It is characterized by increasing asset prices, typically driven by strong economic fundamentals, increased corporate profits, and positive news or sentiment. However, if the price reverses, the trailing stop triggers a market order to sell or cover the position, helping traders protect gains or minimize losses. Momentum traders typically have shorter investment horizons and are less concerned with a company’s fundamental analysis.
Short Position
Traders often use range-bound strategies when prices move within a well-defined range. A government-imposed trade restriction that limits the quantity of a specific good or asset that can be imported or exported during a given period. A type of investment fund that relies on quantitative analysis, mathematical models, and algorithms to make trading decisions. Examples include certain cryptocurrencies and commodity-backed assets. A financial ratio measuring a company’s profitability, calculated as net income divided by revenue. These investments aim for long-term capital growth and operational improvements.
- Return on capital employed (ROCE)This key ratio measures the profitability of a firm taking account of the amount of money it deploys.
- A stock breaks above $100 resistance, reaches $102, but then falls back to $98 within hours.
- Exotic options are financial instruments that have more unique features than traditional vanilla options.
You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. 67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Bid-Ask Spread
A slowdown in the rate of inflation, where prices are still rising but at a slower pace. These instruments are often used for hedging risk, speculation, or leveraging investment positions. A high ratio may suggest increased financial risk, while a low ratio indicates more conservative financial management. A financial metric that compares a company’s total debt to its shareholder equity. This strategy requires discipline, risk management, and access to high-speed trading platforms. Day orders are commonly used by traders who want precise control over their trades and do not wish to leave orders active overnigh
A methodology analyzing the relationship between volume, price spread, and closing price to determine market direction and strength. A stock averaging 1 million shares daily suddenly trading 10 million shares shows a volume spike. A charting tool that shows trading activity at different price levels over a specified time period. The degree of variation in a security’s price over time, measuring how much and how quickly prices change. The monetary Trading Terminology worth of an asset or security, determined by market forces or fundamental analysis. A trading benchmark that calculates the average price of a security over a specific time period.
They’re traded electronically but transactions are less transparent than the major exchanges. A trader’s action to buy or sell a certain amount of stock. A moving average is an indicator that shows a stock’s average price per share during a specific period. A measure of how much a company’s outstanding shares are worth. It represents a lower price point for a stock or index.
- A type of price chart that displays the high, low, open, and closing prices of a security for a specific period.
- We don’t care what your motivation is to get training in the stock market.
- It shows how much investors are willing to pay per dollar of earnings and is widely used to assess value.
- A currency future is a contract that details the price at which a currency could be bought or sold, and sets a specific date for the exchange.
Enhance Your Investment Strategy
Tradable financial instruments, including stocks, bonds, derivatives, and ETFs. The SEC enforces laws to protect investors, maintain fair markets, and promote capital formation. A UK-based electronic trading system for small and mid-sized stocks. A trading strategy focused on making small profits from rapid, short-term price movements.
Portions of a single share of stock, allowing investors to buy a fraction of a high-priced share instead of a whole share. The Fed’s actions, including setting interest rates and quantitative easing, significantly influence global financial markets. The regulatory body responsible for overseeing financial markets and firms in the United Kingdom.
For example, if you think one currency will gain in value against another, you’ll buy one to sell it later at a higher price. Currency trading used to be complicated for individual investors until it made its way onto the internet. Market participants are institutions, financial product banks, commercial banks, and retail investors worldwide. Instead, they operate via connected trading terminals and computer networks. Currencies are traded worldwide, but most of the action happens in the major financial centers.
Earnings per Share (EPS)
The term is often used humorously, suggesting that even a “dead cat” will bounce if it falls from a great height, but it’s not a sign of true revival. This bounce can give the false impression that the asset is recovering, but it typically represents a brief pause before the decline continues. The purpose of a take-profit order is to lock in profits by ensuring that a winning trade is closed at a desired profit target. It is a pre-defined order placed with a broker that specifies a particular price level at which an open position should be automatically sold or closed.
OTC stands for over-the-counter, and refers to a trade that is not made on a formal exchange. Open positions can be either long or short – enabling you to profit from markets rising as well as falling. Non-current assets – see full definition
Trade
The total number of shares or contracts traded for a specific security during a given time period. A structured strategy that outlines a trader’s objectives, risk tolerance, entry and exit points, and money management rules. The physical space within an exchange where traders buy and sell securities. Tangible assets are often used as collateral in financial agreements. The risk of collapse of an entire financial system or market, often triggered by the failure of a single entity or a major economic event.
Cons of Day Trading:
For example, a call spread might involve buying a call option at one strike price and selling a call option at a higher strike price. However, it’s more complex and requires a deeper understanding of the market. Spread trading can be less volatile. The benefit is reduced risk since gains in one position can offset losses in another. Spread Trading involves buying and selling two or more options simultaneously. Your position might suffer significant losses if market conditions change unexpectedly.
It oversees currency stability and economic growth across member countries. Investors who purchase shares on or after the ex-dividend date will not receive the upcoming dividend payment. A higher EPS often suggests greater profitability and is a key measure used by investors to compare companies within the same industry. A smaller drawdown indicates lower risk, while larger drawdowns can signal higher risk or poor risk management. Diversification reduces the impact of poor performance from a single investment on the overall portfolio.
