Financial trading uses some phrases that are unique, including the terms that describe whether a trade was entered by buying or selling: Long When a day trader is in a long trade, they have entered a trade by buying a contract (or group of shares, or forex lot), and are hoping that the price will go up. Day traders will often use the terms buy and long interchangeably. … [Read more...]
What is Dash to Trash ?
Dash to Trash refers to a situation when the investors trading in the market flock to a class of securities or other assets, bidding up prices to beyond what can be justified by valuation or other fundamental measures. While it is known that the dash-to-trash effect can occur within any type of security, the phrase is typically used to describe the low-quality stocks and … [Read more...]
What is a Tech Bubble in Stock Market ?
Tech Bubble in Stock Market is a pronounced and unsustainable market rise attributed to increased speculation in technology stocks. It is highlighted by rapid share price growth and high valuations based on standard metrics like price/earnings ratio or price/sales. The technology stocks involved in a bubble may be confined to a particular industry (such as internet software … [Read more...]
Scalping Investment Strategy
Scalping, when used in reference to trading in securities, commodities and foreign exchange, may refer to (i) a fraudulent form of market manipulation or (ii) a legitimate method of arbitrage of small price gaps created by the bid-ask spread. Scalpers attempt to act like traditional market makers or specialists. To make the spread means to buy at the Bid price and sell … [Read more...]
Disadvantages of Owning Common Stock
The main disadvantage of common stock is that in case the company needs to be liquidated, they won't see a cent of their money after the bondholders, other debt holders, and preferred stock owners have received their part. This scenario shouldn't be dismissed by a responsible stock investor. After all, Enron and WorldCom plunged themselves, and thousands of Americans, into a … [Read more...]