What Is a Call Option? ━━━━━━━━━━━━━ Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period. The stock, bond, or commodity is called the underlying asset. A call buyer profits when the underlying asset...
🔵 Hedging Investment banks and other institutions use call options as hedging instruments. Just like insurance, hedging with an option opposite your position helps to limit the amount of losses on the underlying instrument should an unforeseen event occur. Call options can be bought and used to hedge short stock portfolios, or sold to hedge against a pullback in...
Momentum trading is the practice of buying and selling assets according to the recent strength of price trends. It is based on the idea that if there is enough force behind a price move, it will continue to move in the same direction.
What Is Position Trading? ━━━━━━━━━━━━━ Position trading is a strategy where traders and investors aspire to capitalise on strong pricing trends through entering and remaining present in a market for an extensive term. A position trade is a commitment of both time and money, with the intention of realising a sizable gain from the sustained growth of an open...
How The Economy Affects The Stock Market ? There are many factors that affect how the stock market is doing, and whether it’s moving up or down: the political climate, social factors, interest rates, trends and shifts in what investors prefer. So how does the economy affect the stock market? If the general population feels as if the economy will soon be taking...
━━━━━━━━━━━━━ Let’s assume stock prices have been rising for several years. Investors realize that a correction will come and stock prices will tumble. What we don’t understand is what will trigger the selloff or exactly when it will occur. Therefore, some investors will sit on the sidelines holding cash, waiting for the opportune time to get in. Those who are...
Stock Valuation ━━━━━━━━━━━━━ The actual price of a stock is determined by market activity. When making the decision to buy or sell, the investor will often compare a stock’s actual price to its fair value. For example, if a stock is trading at $30 per share and its fair value is $35, it may be worth purchasing. Conversely, if it trades at $30 but its fair value...
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What Makes Stock Prices Go Up & Down? ━━━━━━━━━━━━━ There are many factors that determine whether stock prices rise or fall. These include the media, the opinions of well-known investors, natural disasters, political and social unrest, risk, supply and demand, and the lack of or abundance of suitable alternatives. The compilation of these factors, plus all...
What Is Equity ? ━━━━━━━━━━━━━ In stock market parlance, equity and stocks are often used interchangeably. Stocks and equity are same, as both represent the ownership in an entity (company) and are traded on the stock exchanges. Equity by definition means ownership of assets after the debt is paid off. Stock generally refers to traded equity. ━━━━━━━━━━━━━
What Is Stock Market ? ━━━━━━━━━━━━━ A stock market, equity market or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are...
📊 What Is Swing Trading? 📊 ━━━━━━━━━━━━━ Swing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities. These traders may utilize fundamental analysis in addition to...
📊 Day Trading Strategies 📊 ━━━━━━━━━━━━━ Day traders use numerous intraday strategies. These strategies include: 🛑 Scalping: This strategy attempts to make numerous small profits on small prices changes throughout the day. 🛑 Range trading: This strategy primarily uses support and resistance levels to determine buy and sell decisions. 🛑 News-based trading: This...
📊 What Is Day Trading ? 📊 ━━━━━━━━━━━━━ Day trading usually refers to the practice of purchasing and selling a security within a single trading day. While it can occur in any marketplace, it is most common in the foreign exchange (forex) and stock markets. Day traders are typically well-educated and well-funded. They use high amounts of leverage and short-term...
📊 Benefits of Short Term Investment 📊 ━━━━━━━━━━━━━ 🔴 Short-term investing offers flexibility to the investor as they do not need to wait for the security to mature in order to get cash. On the other hand, long-term investments can be liquidated by selling in the secondary market, but the investor earns lower profits. 🔴 Investors can make substantial profits in a...
📊 Benefits of Long Term Investment 📊 ━━━━━━━━━━━━━ Reduces Transaction Fees (Cost) Every time you invest, there is a transaction fee incurred. If you invest for a long-term and avoid repeated investments, you save multiple fees. Tax Benefits (Tax) Long-term investments are taxed at rates lower than your income tax bracket. Stability (⚖) Long-term investments...