EDU Articles
Popular articles
What is an Alternative Trading System (ATS)?
An ATS is a platform separate from an exchange where securities are traded. ATSs provide marketplaces for buyers and sellers to transact in securities, much like a stock exchange. However, they are not available to the entire investment public, and they do not necessarily provide public information on the best prices available to traders within their system. They also do not set rules governing the conduct of subscribers and they perform no self-regulation, while exchanges perform all of these functions. Continue reading...
What is a momentum trading system?
Momentum trading usually involves long positions in a security that has been experiencing an uptrend and has a high volume of trading, and dropping positions that have lost momentum. Several systems exist to help take the emotion out of trading and to stick to a theory with rules. Momentum trading is such a system, and it can be automated with help from algorithm. Some indicators that can be used are Rate of Change and Relative Strength Index. Some would identify high momentum as steady price increases bolstered by high trading volume. Continue reading...
How to use the average directional index in trading?
Trend traders can use the Average Directional Index (ADX) technical indicator to spot and confirm the strength of a trend in a security, then combine the ADX reading with other indicators to determine whether it makes sense to trade with the trend. Click here to view the current news with the use of other Technical Indicators Technical Indicators are charting tools that appear as lines on charts, or as other kinds of graphical information, and serve as guidelines for buying and selling opportunities. Traders use technical indicators like the ADX to make predictions about future prices. They verify how well a specific indicator works for a particular security, often by calculating the odds of success under similar market conditions to guide their actions. Continue reading...
How to use the Detrended Price Oscillator in trading
The Detrended Price Oscillator (DPO) is a relatively uncomplicated tool of analysis that can be used to simplify a chart and identify conditions ripe for buying or selling. It turns the moving average line of a price chart into a flat horizontal axis, with prices plotted according to their distance from the moving average. Moving averages are important components of many technical indicators. A simple moving average determines the average of a range of closing prices for a security or index for a specific period of time. An exponential moving average is a moving average that gives more weight to the most recent data. Simple moving averages are not weighted for time the way that exponential moving averages are, which has the effect of snapping the chart to the most current information, while simple moving averages have lag. Continue reading...
What is the Accounting Cycle?
The Accounting Cycle includes all of the documentation that is collected and all of the controls and systems in place to ensure accurate accounting. The Accounting Cycle begins with the point of sale, with documentation for the transaction (invoice or receipt) and the internal expenses and inventory. There are conventions, controls and systems in place to account for and control the flow of information in a company at each stage of the process to ensure that accounts are as accurate as possible. The Accounting Cycle may refer to the length of time between trial balances, such as monthly, quarterly, or annually. Continue reading...
What is an Electronic Communication Network (ECN)?
An ECN is an alternative platform to an index for making trades. An Electronic Communication Network is a type of alternative trading system that allows for trading listed stocks and other exchange-traded products. Trading on an ECN is typically limited to institutions and broker-dealers, and trades are facilitated when the price on a buy order intersects with a price on a sell order. ECN’s must register with the SEC, and you must be a subscriber to trade on one. Continue reading...
What are Fibonacci Extensions?
In Fibonacci line analysis, chartists attempt to predict how far a trend will go in a single direction, despite some minor pullbacks that do not break the overall, stronger trend (behavior known as retracements). Trends can be upward or downward and still experience this phenomenon. Fibonacci extensions are estimations of the next high after an initial push and retracement, using Fibonacci sequences as guidelines. Some investors believe that, like many naturally occurring systems in nature, mark... Continue reading...
What are Accounting Policies?
Accounting policies are the internal controls of a company which stipulate the methods by which the books will be kept. Accounting policies are the agreed-upon accounting methods, conventions, and practices of an accounting cycle. A business must establish guidelines and training to ensure that accounts are kept in ways that satisfy their needs for documentation, security, liquidity, management, and the observation of applicable laws. Continue reading...
What is IRS Publication 527, Residential Rental Property (Including Rental of Vacation Homes)?
IRS Link to Publication — Found Here Owning multiple properties and receiving rent or lease income from those which are not personally used is a common way to increase wealth. Some individuals also own a vacation home which they use some of the time and rent out the rest of the year. Both of these sources of income addressed in Publication 527. Publication 527 describes how to report income from residential property, as well as how to depreciate it, what forms are needed for different situations, and categorizes different types of arrangements where individuals might own or rent only part of a property or only for certain times of the year, as well as not-for-profit rental. Continue reading...
What is a currency certificate?
A currency certificate is also called a foreign exchange (Forex) certificate (FEC), and it validates that the bearer is entitled to a certain amount of foreign currency upon the redemption of the certificate, or that a certain amount of foreign currency was exchanged for it. This is not to be confused with a certificate of currency, which is proof that some types of insurance are currently in effect. Currency certificates have been historically used in countries with closed or controlled economies, such as the Soviet Union, Cuba, and China. Continue reading...
What is After-Hours Trading?
After-Hours Trading on the Nasdaq can take place after market close from 4-8pm EST or in the pre-market hours from 4-9:30am EST. Pre- and Post-market trading used to be reserved for large institutional investors or high net worth individuals, but is now made possible through the improvements to electronic trading networks and the demand from individuals trading from their computers at home. Interestingly, institutional investors can trade anonymously on the after-hours Nasdaq market, such that virtually no one knows what positions they take during that time. This is called trading in “dark pools of liquidity.” Traders on the after-hours Nasdaq cannot make certain kinds of trades or use certain instruments. Continue reading...
What is Systematic Risk?
Systematic risk is the broad risk of fluctuations and downturns in the market as a whole, which it is said cannot be eliminated through diversification. Systematic risk is also known as market risk, which is the exposure of all investors to the broad movements and downturns of the market as a whole. Theoretically it cannot be controlled for through simple diversification, since that would only bring a portfolio closer to the broad market performance, with a Beta closer to 1. Continue reading...
What are the basics of technical analysis?
What does it mean to technically analyze a stock or other security? Technical analysis involves identifying price ranges, trend momentum, and points of possible reversals via graphical representations of the math behind price movements, examining information to the second or third derivative, and using trial-and-error with formulas. Geometry, calculus, physics, and finance all play a part in this methodology. Continue reading...
What are Accounting Controls?
Internal control systems and procedures can ensure the accuracy and reliability of financial accounts at a business. Accounting controls are meant to ensure that the numbers being put onto the books are accurate. Internal controls are the practices that employees are trained to do, and may be audited on, which general involve some oversight or double-checking to filter out mistakes. This not only prevents mistakes, but also malfeasance, embezzlement and fraud. Accounting done wrong can result in criminal penalties, bankruptcy, and tax problems. Continue reading...
How is Ripple Different Than Bitcoin and Ethereum?
Ripple’s XRP has the third-largest market cap in the cryptocurrency world, but what gives it value? Ripple Lab’s intent was not to be a store of value or a currency, per se, like Bitcoin. Neither did it intend to be a platform for developers to explore the possibilities of blockchains, like Ethereum. Ripple was always focused on being a payment system, facilitating transfers between banks, currencies, and countries in a way that would not be possible without blockchains. Continue reading...
What is the Risk/Return Trade-Off
There are investments which have the potential for very high returns, but they will always be that much riskier than the lower-yielding alternatives, and this is part of the risk/return trade-off. The relationship between risk and return is a positive linear relationship in most theoretical depictions, and if an investor seeks greater returns, he or she will have to take on greater risk. This is called the risk/return trade-off. For more stability and less risk, an investor will have to sacrifice some potential returns. Continue reading...
What is a Foreign Portfolio Investment (FPI)?
When foreigners purchase shares of domestic companies that represent less than 10% of the voting shares in the companies, and the investments are not those of company expansion or market penetration, but rather to add diversification to the foreigners’ investment portfolios, it is known as Foreign Portfolio Investment (FPI). FPI is the passive investing that foreigners do in a domestic market. It is separate from investments that companies might make into joint ventures or purchase facilities or acquire controlling interest in a domestic company — all of those are active investing and are usually called Foreign Direct Investment (FDI). FPI can be done by individuals or institutional investors. Institutional investors might run a mutual fund or pension fund in another country. Continue reading...
What is the foreign credit insurance association?
The Foreign Credit Insurance Association protects American businesses from non-payment in international trade deals where goods were sold on credit. The Foreign Credit Insurance Association (FCIA) is a group of insurance companies which underwrite the foreign credit insurance sold by the Export-Import Bank of Washington DC. The Export – Import Bank, also known as the Ex/Im Bank, is an independent government entity that facilitates and encourages some international trade activity of American companies. Continue reading...
What is the scope of Interactive Brokers' recent expansion of after-hours trading options for U.S. stocks and ETFs?
Unlock New Trading Possibilities with Interactive Brokers' Expanded After-Hours Trading for U.S. Stocks and ETFs. Explore the significance of this move and how it enhances your trading experience in a dynamic financial landscape. Don't miss out on opportunities beyond regular trading hours. #AfterHoursTrading #InteractiveBrokers #Stocks #ETFs Continue reading...
What is a Bank Guarantee?
When a lending institution offers a Bank Guarantee, they are reducing the risk involved in a transaction by guaranteeing payment to the seller. Bank Guarantees often come into play with deals made internationally, where the participants in the deal prefer to have some assurances before they do business. The guarantee acts as insurance to protect the parties involved in transactions where they are not fully able to assess the strength and reliability of the other, such as when small companies bid for projects or when bids for a job come-in from around the world. Continue reading...