Take a look at our list of the financial terms associated with trading and the markets. From beginners starting their trading journey to experts with decades of experience, all traders need to clearly understand a huge number of terms.
In trading, resistance level is a price point at which the price of a security or financial instrument tends to encounter selling pressure, making it difficult for the price to rise above that level. The resistance level is seen as a ceiling, as the price has a hard time going above it. Traders use resistance levels to identify areas where they expect the price to stall or reverse direction. This can be determined by observing the historical price movement of a security or financial instrument, looking for areas where the price has consistently failed to break above. Resistance levels are also used in combination with support levels to identify potential price ranges and trade entry or exit points.
What happens when a stock hits resistance?
If a stock hits a resistance level it can cause the stock to stall, move sideways, or even reverse direction. At resistance level traders that have taken a long position might decide to take profits, while traders that have not yet taken a position might decide to wait for a break above the resistance before buying.
When a stock hits resistance, traders will typically observe the stock's behavior at that level to determine if the resistance level is likely to hold or if the stock is likely to break through it. If the stock breaks through resistance, it can be considered a bullish sign, indicating that the stock is likely to continue to rise. On the other hand, if the stock fails to break through resistance, it can be considered a bearish sign, indicating that the stock is likely to stall or reverse direction.
What are Support Levels?
Support levels refer to the levels at which the price of an asset tends to stop falling and stabilize. These levels are determined by analyzing past price movements and identifying a floor at which buying pressure is strong enough to prevent the price from falling further. Traders and investors use support levels as a guide for placing buy orders, and as a signal for potential buying opportunities.
What does support level mean in Crypto?
Support levels mean the same thing regardless of the asset class in question.
What is the best indicator for support and resistance?
There are several indicators that can be used to identify support and resistance levels in a market. Some commonly used indicators include moving averages, Fibonacci retracements, and pivot points. However, no single indicator is considered to be the "best" as different indicators may work better in different market conditions and for different traders. Ultimately, the best indicator is the one that works best for you and fits your individual trading style and strategy.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
The ARK Space Exploration & Innovation ETF's (ARKX) investment objective is long-term growth of capital. ARKX is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation. The Adviser defines “Space Exploration” as leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
Financial Select Sector SPDR Fund (XLF) tracks US financial companies within the S&P 500. This asset uses the Financial Select Sector Index as its tracking benchmark. The ETF offers concentrated exposure large-cap US financial companies.
Just a few holdings make up a big part of the portfolio, and there are only 68 holdings in total. Top holdings for the benchmark index include Berkshire Hathaway Inc, JPMorgan Chase & Co and Bank of America.
RSI stands for Relative Strength Index and is a technical analysis indicator that measures the strength of a security's price action, by comparing the magnitude of recent gains to recent losses. The RSI ranges from 0 to 100, with values above 70 indicating overbought conditions and values below 30 indicating oversold conditions. Traders often use the RSI as a buy or sell signal, depending on whether the RSI is above or below a certain level.
Is a higher RSI value better?
A higher RSI value generally indicates that a security is overbought, which means that it is trading at a relatively high price compared to its recent price history. Traders may interpret this as a signal to sell, or to be cautious about buying. Traditionally, an RSI value of 70 or above is considered to be overbought, and a value of 30 or below is considered to be oversold.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
Currency futures are legally binding agreements that are traded on exchanges, where traders can buy or sell a specific currency at a fixed exchange rate on a future date. These contracts allow traders to hedge against foreign exchange risks by fixing the price at which a currency can be obtained (exchanged). On the expiration date of the contract, the "counterparties" to the agreement must deliver the specified currency amount at the agreed-upon price.
What is the benefit of buying a currency futures contract?
The main benefit of buying a currency futures contract is that it allows traders to fix the price of a currency and thus hedge against foreign exchange risks.
What is a futures contract in simple terms?
A futures contract is a legally binding agreement to buy or sell a specific asset at a fixed price on a future date.
What happens when currency futures expire?
At expiration, the counterparties to the contract must deliver the specified currency amount at the agreed-upon price. Traders are responsible for having enough capital in their account to cover margins and losses which result after taking the position. If they wish to exit their obligation prior to the contract's delivery date, they need to close out their positions.
The ARK Space Exploration & Innovation ETF's (ARKX) investment objective is long-term growth of capital. ARKX is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation. The Adviser defines “Space Exploration” as leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth.
Currency futures are legally binding agreements that are traded on exchanges, where traders can buy or sell a specific currency at a fixed exchange rate on a future date. These contracts allow traders to hedge against foreign exchange risks by fixing the price at which a currency can be obtained (exchanged). On the expiration date of the contract, the "counterparties" to the agreement must deliver the specified currency amount at the agreed-upon price.
What is the benefit of buying a currency futures contract?
The main benefit of buying a currency futures contract is that it allows traders to fix the price of a currency and thus hedge against foreign exchange risks.
What is a futures contract in simple terms?
A futures contract is a legally binding agreement to buy or sell a specific asset at a fixed price on a future date.
What happens when currency futures expire?
At expiration, the counterparties to the contract must deliver the specified currency amount at the agreed-upon price. Traders are responsible for having enough capital in their account to cover margins and losses which result after taking the position. If they wish to exit their obligation prior to the contract's delivery date, they need to close out their positions.
Financial Select Sector SPDR Fund (XLF) tracks US financial companies within the S&P 500. This asset uses the Financial Select Sector Index as its tracking benchmark. The ETF offers concentrated exposure large-cap US financial companies.
Just a few holdings make up a big part of the portfolio, and there are only 68 holdings in total. Top holdings for the benchmark index include Berkshire Hathaway Inc, JPMorgan Chase & Co and Bank of America.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
In trading, resistance level is a price point at which the price of a security or financial instrument tends to encounter selling pressure, making it difficult for the price to rise above that level. The resistance level is seen as a ceiling, as the price has a hard time going above it. Traders use resistance levels to identify areas where they expect the price to stall or reverse direction. This can be determined by observing the historical price movement of a security or financial instrument, looking for areas where the price has consistently failed to break above. Resistance levels are also used in combination with support levels to identify potential price ranges and trade entry or exit points.
What happens when a stock hits resistance?
If a stock hits a resistance level it can cause the stock to stall, move sideways, or even reverse direction. At resistance level traders that have taken a long position might decide to take profits, while traders that have not yet taken a position might decide to wait for a break above the resistance before buying.
When a stock hits resistance, traders will typically observe the stock's behavior at that level to determine if the resistance level is likely to hold or if the stock is likely to break through it. If the stock breaks through resistance, it can be considered a bullish sign, indicating that the stock is likely to continue to rise. On the other hand, if the stock fails to break through resistance, it can be considered a bearish sign, indicating that the stock is likely to stall or reverse direction.
What are Support Levels?
Support levels refer to the levels at which the price of an asset tends to stop falling and stabilize. These levels are determined by analyzing past price movements and identifying a floor at which buying pressure is strong enough to prevent the price from falling further. Traders and investors use support levels as a guide for placing buy orders, and as a signal for potential buying opportunities.
What does support level mean in Crypto?
Support levels mean the same thing regardless of the asset class in question.
What is the best indicator for support and resistance?
There are several indicators that can be used to identify support and resistance levels in a market. Some commonly used indicators include moving averages, Fibonacci retracements, and pivot points. However, no single indicator is considered to be the "best" as different indicators may work better in different market conditions and for different traders. Ultimately, the best indicator is the one that works best for you and fits your individual trading style and strategy.
RSI stands for Relative Strength Index and is a technical analysis indicator that measures the strength of a security's price action, by comparing the magnitude of recent gains to recent losses. The RSI ranges from 0 to 100, with values above 70 indicating overbought conditions and values below 30 indicating oversold conditions. Traders often use the RSI as a buy or sell signal, depending on whether the RSI is above or below a certain level.
Is a higher RSI value better?
A higher RSI value generally indicates that a security is overbought, which means that it is trading at a relatively high price compared to its recent price history. Traders may interpret this as a signal to sell, or to be cautious about buying. Traditionally, an RSI value of 70 or above is considered to be overbought, and a value of 30 or below is considered to be oversold.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
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