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What is the Negative Volume Index?
The Negative Volume Index (NVI) is a technical indicator that tracks decreases in trade volume for an index or security, as well as price changes on those days. Paul Dysart developed the original version of this indicator for market indexes, and it garnered renewed attention when it was reworked in the 1970s via Norman Fosback in his book Stock Market Logic. The price changes in a security or the percentage change in an index are only added to or subtracted from the Negative Volume Index on days when the trading volume is lower than the day before. By watching market movement on days with lower trading volume, investors can identify where institutions and fund managers are moving their money. If trading volume is down and the market continues to do well, it means that there is a strong bullish primary trend, and that trading volume is not artificially pushing prices around. Continue reading...
What is the Positive Volume Index?
The Positive Volume Index (PVI) is a technical indicator that tracks increases in trade volume for an index or security, as well as the changes in price on those days. Paul Dysart developed the original version of this indicator for market indexes using advance-decline numbers instead of prices. The Positive Volume Index was then redesigned by Norman Fosback for individual securities – the version commonly used today. Continue reading...
What is Consensus?
Consensus in investing is a measure of how in line investor beliefs are with one another. It describes strong trends in both trading and investor sentiment, often manifesting as bullish or bearish outlooks on a security or market. Bullish or bearish outlooks can be misleading, however. Opinions are not facts, and the noise of opinions from news sources and pundits can make opinions seem more factual than they are. Many investors require time to develop and form opinions, or form opinions for the wrong reasons, and can succumb to a herd mentality Continue reading...
What Can a Blockchain Do?
Blockchain technology is already being used and developed for many important and impressive applications, and much more is yet to be discovered. Blockchains use distributed work to obtain consensus for changes to a distributed ledger. Because of their nature, blockchains are incredibly powerful tools that can be used in many realms and applications. They offer security in that they are almost unhackable; any attempted unauthorized changes to the system are immediately obvious to the entire system because it is built on agreement and consensus among its many nodes. Because this structure gives each addition to the ledger, and the record in the ledger, a high degree of integrity and security, future applications of blockchains are being researched in various fields around the world. Continue reading...
What is Ethereum?
Ethereum is an open-source, public, blockchain-based distributed computing platform. Ethereum provides a cryptocurrency known as ether. Ethereum is a decentralized platform that runs what are known as “smart contracts.” Smart contracts are applications that run on custom built blockchain, which functions on its own accord through rules programmed into the protocol, and which also makes decisions and keeps records based on consensus throughout a peer-to-peer network. A blockchain oversees its own activities without requiring any trust in a central authority or the other parties involved. Continue reading...
Who Created Ethereum?
Who would have thought that a 19-year-old from Toronto could write a whitepaper nearly as influential as Satoshi Nakamoto’s (Bitcoin founder)? A few years after Bitcoin’s launch, a young programmer and student of blockchain technology named Vitalik Buterin wrote a whitepaper imagining the Ethereum platform. While Bitcoin’s blockchain was primarily designed to handle transaction information, Ethereum is designed to offer a blockchain protocol for anything that can be programmed, which includes wh... Continue reading...
What is a Money Market?
Money markets are very short duration debt securities, essentially the equivalent of cash traded between banks and offered to investors at a very nominal interest rate. Money market securities are essentially IOUs issued by governments, financial institutions and large corporations, and they’re traded between each other in very high denominations. Retail investors can gain access to money markets via money market funds, which generally pay very low interest rates. Continue reading...
What is the difference between active and passive money management?
The debate on whether active or passive management is better for investors has polarized many advisors and theorists for years. There are two schools of thought when it comes to long-term investing. One basically states that you should determine a proper allocation of asset classes for yourself, buy index funds to reflect each particular asset class, and possibly rebalance the portfolio periodically. This basically means “set it and forget it,” and the investor must be willing to ignore fluctuations in the markets and maintain a faith in an Efficient Market. Continue reading...
What does out of the money (OTM) mean?
If an option on an underlying security does not have a strike price giving the option holder the ability to exercise the option for a profit (based on the current market price of the underlying security) that option is “Out of The Money.” An option is Out Of The Money (OTM) if it isn’t profitable for the option holder to exercise it. Options have a strike price that contractually defines the amount which will be paid for the underlying security if the option is exercised. Continue reading...
What is the XRP Escrow Lock-Up?
Ripple does not have a mining rewards system like Bitcoin for releasing new coins into the market, so they’ve enacted a plan to put 55 billion XRP into escrow accounts. Prior to 2017, Ripple did not offer any guarantees to coin-holders concerning the rate at which Ripple would release XRP coins into the wild, and this made investors nervous. At any moment, Ripple theoretically could have dumped the approximately 60 billion remaining XRP into the market and washed out any value that the investors... Continue reading...
Learn Options Trading
Options are contracts used by investors to take a speculative position – or a hedge – based on expected future price movements of the underlying securities. An option is a contract which can be exercised if the price of an underlying security moves favorably. An option will be written or sold short by one investor and bought by another. It will name the strike price at which the security can be bought or sold before the expiration of the contract. Continue reading...
Starting a Portfolio? Why ETFs Are a Smart Choice
Step into the future of investing where Exchange Traded Funds (ETFs) and Artificial Intelligence (AI) converge to redefine diversification and decision-making. Explore the vast universe of ETFs, offering a spectrum of investment opportunities from global markets to niche sectors. Continue reading...
What is a call time spread?
A time spread using call options is a strategy that buys and sells the same number of options with the same strike prices, but different expirations. Time spreads are sometimes called calendar spreads or horizontal spreads. They make money based on the time decay of the options being shorted. Two calls are used: one is shorted and one is purchased, and both have the same strike price and same underlying security. Continue reading...
What is a strangle?
A strangle is an options strategy which is profitable if the price of the underlying security swings either up or down because the investor has purchased a call and a put just out of the money on either side of the current price of the underlying. To execute a strangle an investor chooses an underlying security which he or she anticipates will experience some price volatility around a given expiration date for options, but is not sure which way it will go, so a call and a put are both purchased. Continue reading...
What kind of venture capital funds exist?
Different venture capital firms focus on different types of funding. Some are more attuned to late-stage funding for proven companies who still have not gone public, while others prefer to help startups with bright futures. There are large venture capital firms, which might invest in any start-up company, as long as they think that the company has potential. There are also more narrow VC firms specializing only in one or a small number of industries, such as clean energy, or semiconductors. Continue reading...
How Many Dollars do We Have in Circulation?
According to the Federal Reserve, there are over 1.7 trillion U.S. Dollars in circulation. This number has been drastically increasing throughout the last few years, mostly due to programs such as Quantitative Easing. As of 2016, QE programs have ended and the Fed's balance sheet is shrinking, but M2 money supply still remains at elevated levels. What is the Size of our National Debt? What is Currency in Circulation? Continue reading...
What is Accommodative Monetary Policy?
Accommodative monetary policy is when a central bank makes it easier for banks and consumers to borrow money by lowering the interbank exchange rate. A central bank, such as the Federal Reserve Bank in the United States, can influence the economy by loosening or tightening the money supply. Loosening the money supply is known as accommodative policy, because it give the businesses and individuals in the country access to a higher degree of liquidity. Continue reading...
What is currency in circulation?
Currency in circulation tends to be defined as the currency held by commercial banks, and currency with the public, without including long-term deposits or investments. As much as 2/3rd of Currency in Circulation is held outside of the borders of the US, and is estimated to be around $1.5 trillion as of 2016. Currency in Circulation is one part of what’s known as the money supply. Money supply is divided into four levels: M0, M1, M2, and M3. Some might define currency in circulation as the larger part of M0, which is the money base, constituted by the currency held in commercial banking institutions and excluding central bank reserves / Federal funds. This definition disregards the Currency with Public, which is included in other definitions and is part of M1. Continue reading...
What is Monetary Policy?
Monetary policy is the stance of the central bank at any given time regarding the tightening or loosening of rates, or the issuance of new currency denominations, that will affect the money supply in the country. Monetary policy is the prerogative of the central bank but may be influenced by congress as well as private banking institutions and the central banks of other countries. The goal of monetary policy is to keep the Federal Funds Rate or the LIBOR, or whatever it might be depending on the country, at just the right level to keep the economy going in the direction that will be most helpful. Continue reading...
What is an Interest Rate?
An interest rate is a simple financial principle that’s been around for centuries, whereby a borrower has to pay for money borrowed. The interest rate is agreed to between the lender and the borrower, and there may be provisions under which the rate could change over the course of a loan. In simple terms, an interest rate is the cost of money. Continue reading...