What is an Underweight Recommendation? When a market analyst designates a stock or security as an underweight recommendation, he or she is stating their belief that the stock will likely underperform compared to some benchmark stock, security, or index. Therefore, investors should devote a smaller percentage of their investment portfolio to holdings in that stock….
What is Currency Risk? Currency risk, or exchange rate risk, refers to the exposure faced by investors or companies that operate across different countries, regarding unpredictable gains or losses due to changes in the value of one currency in relation to another. Formula To illustrate how the exchange rate can affect an investor operating in a…
What is the Money Market? The money market is an organized exchange market where participants can lend and borrow short-term, high-quality debt securities with average maturities of one year or less. It enables governments, banks, and other large institutions to sell short-term securities to fund their short-term cash flow needs. Money markets also allow individual…
What is the Mindset of a Trader? Being a trader is not just about formulating better strategies and performing more extensive analysis, but is also about developing a winning mindset. According to many studies of traders, what separates a winning trader from a losing one: It’s NOT that winning traders formulate better trading strategies It’s…
What is the Efficient Markets Hypothesis? The Efficient Markets Hypothesis (EMH) is an investment theory primarily derived from concepts attributed to Eugene Fama’s research as detailed in his 1970 book, “Efficient Capital Markets: A Review of Theory and Empirical Work.” Fama put forth the basic idea that it is virtually impossible to consistently “beat the…
What is Insider Trading? Insider trading refers to the practice of purchasing or selling a publicly-traded company’s securities while in possession of material information that is not yet public information. Material information refers to any and all information that may result in a substantial impact on the decision of an investor regarding whether to buy…
Stock Investing: A Guide to Value Investing Since the publication of “The Intelligent Investor” by Benjamin Graham, what is commonly known as “value investing” has become one of the most widely-respected and widely-followed methods of stock picking. Famed investor Warren Buffet, while actually employing a mix of growth investing and value investing principles, has publicly…
Stock Investing: A Guide to Growth Investing Investors can take advantage of new growth investing strategies in order to more precisely hone in on stocks or other investments offering above-average profit potential. When it comes to investing in the stock market, there are always a variety of approaches that can be taken. The goal, however, is…
What are Algorithms (Algos)? Algorithms (Algos) are a set of instructions that are introduced to carry out a specific task. Algorithms are introduced to automate trading to generate profits at a frequency impossible to a human trader. The process is referred to as algorithmic trading, and it sets rules based on pricing, quantity, timing, and…
Guide to Commodity Trading Secrets Successful commodity traders know the commodity trading secrets and distinguish between trading different types of financial markets. Trading commodities is different from trading stocks. It’s a different game, but a game worth learning for investors. Every investment instrument is unique in terms of how best to generate profits from trading it….
