What are Trade Orders? Trade orders refer to the different types of orders that can be placed on trading exchanges for financial assets, such as stocks or futures contracts. The order-driven style of trading mechanisms matches buyers and sellers who have matching order criteria. In other words, a buyer with a buy price matching the…
What are Triangle Patterns? Triangle patterns are a commonly used technical analysis tool. It is important for every trader to recognize patterns as they form in the market. Patterns are vital in a trader’s quest to spot trends and predict future outcomes so that they can trade more successfully and profitably. Triangle patterns are important…
What is the Aroon Indicator? The Aroon indicator, developed by Tushar Chande in 1995, actually consists of two indicators that together are designed to: Identify trend changes or the beginning of a trend Identify the existence of a trending or ranging market Spot corrective retracements or consolidation periods Gauge the strength of a trend The…
What is the Alternative Investment Market (AIM)? The Alternative Investment Market (AIM) was launched on June 19, 1995 as a sub-exchange market of the London Stock Exchange (LSE). The market was designed to help small, high-growth companies that are keen on raising capital for expansion. It has less onerous regulatory requirements, such as no set…
What is the Random Walk Theory? The Random Walk Theory, or the Random Walk Hypothesis, is a mathematical model of the stock market. Proponents of the theory believe that the prices of securities in the stock market evolve according to a random walk. A “random walk” is a statistical phenomenon where a variable follows no…
What are Fixed Income Securities? Fixed income securities are a broad class of very liquid and highly traded debt instruments, the most common of which is a bond. They generally provides returns in the form of regular interest payments and repayments of the principal when the security reaches maturity. They are different from equities, or…
What is a Blue Chip? A blue chip is a stock of a well-established corporation with a reputation for reliability, quality, and financial stability. Blue chip stocks are usually the market leaders in their sectors and have a market capitalization running into billions of dollars. They are the most popular stocks to buy, due to…
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…
