Dividend Reinvestment Plan (DRIP) Definition: Day Trading Terminology A dividend reinvestment plan, or DRIP, is a broad category of special arrangements for the reinvestment of equity dividends back into the issuing company. Most DRIPs are issued by the relevant company, and contain additional restrictions and benefits beyond owning regular shares. However, many brokers also offer […]
Hyperinflation Definition: Day Trading Terminology Hyperinflation is a loose term describing a sustained period of extremely rapid price inflation in one or more national currencies. It is the product of the mismanagement of a fiat currency and/or national finances that causes a widespread loss of faith in the national currency. The rapidly increasing prices then […]
A mortgage-backed security, or MBS, is any security whose underlying value is based on one or more property mortgage loans. The mortgage-backed security, almost always in the general structure of a bond, is a synthetic financial product that aims to to repackage real estate loans made by banks into something that can be traded more […]
A preferred stock is an ownership stake in a public company, which unlike common stock, has a higher claim on its earnings and assets. Stakeholders of preferred stock can, therefore, benefit by receiving high dividends during the good times when the corporation has made huge profits and decides to distribute the excesses to its shareholders. […]
Extrinsic value is a term from derivatives trading that measures the difference between the market price of an option and its intrinsic value. Because options are most often priced directly on mathematical models of the underlying stock’s current and historical price (the intrinsic value), the extrinsic value is a measure of the decay in value […]
Fiat currency is any government-backed legal tender that is not backed by a physical commodity. The term comes from the fact that the currency is given value based on the dictate, or ‘fiat’, of a government, and not based on some intrinsic value recognized by those who use it. Most national currencies are based on […]
Elliott Wave Theory is a technical analysis approach that is based on the belief in cycles in the mass psychology of investing. According to Elliott Wave Theory, financial markets follow a familiar pattern of successively smaller 5-3 waves, with the 5 on-trend waves being interspersed with 3 opposite-trend counter-waves. Within each wave of the larger […]
A commodity is a loose term that describes a set of primary goods with shared features. Commodities are usually natural products that are used as first-stage inputs into more complex manufactured goods. Commodities are generally seen as interchangeable within their sub-class and grade. For example, copper is one of the world’s most widely used commodities. […]
Forex is the abbreviation for foreign exchange, which is the informal market for currency trading. There are no centralized currency exchange markets, but rather a loose collection of primary and secondary currency dealers that trade in an over-the-counter (OTC) market according to both national rules and international standards and conventions. Anyone can trade in the […]
Revenue is the amount of money earned by a business from the sale of goods and services to individuals and other businesses. It is recorded in the income statement as sales. Revenue can also be earned through the use of capital or assets that are associated with the organization’s main operations before expenses and other […]
