Cost of Capital Definition: Day Trading Terminology Cost of capital is a benchmark rate of return that any project must meet or exceed to justify the internal investment in a company. The exact make-up of the cost of capital measure will vary from company to company, but is usually generated as a weighted average cost […]
Central Bank Definition: Day Trading Terminology A central bank is a modern national institution that oversees some combination of currency management, monetary policy and banking regulation. The exact role and structure of a central bank varies from country to country, but the general purpose of economic and financial management and oversight is the defining characteristic. […]
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 […]
Warrant Definition: Day Trading Terminology A warrant is an equity derivative that shares many of the same characteristics with options, but with a few key differences. Just as in the case of a standard equity option, a warrant provides the holder with the right, but not the obligation, to buy a stock at a specified […]
A margin call occurs when the broker of a margin account demands additional money or securities be added to an account to bring the amount of equity in the account up to its designated maintenance margin. If the account holder fails to add enough cash or securities to the account to bring it up to […]
Mutual Fund Definition: Day Trading Terminology A mutual fund an investment vehicle whereby funds are pooled together with the goal of investing into securities like stocks and bonds among others. A mutual fund is overseen by money managers or fund managers working for a money/asset management company. Money managers invest the funds with the goal […]
What is a Channel pattern? It is described as a price movement which utilizes support and resistance to validate what will happen in the future. As a form of trading, it capitalizes on the market tendencies to trend. This is one of the most powerful trading tools that combines different technical analysis indicators finally […]
The open interest for an option is the total number of outstanding or open, not delivered or closed, options or futures contracts that are in effect on any given day, to be delivered at a particular date. It is most often associated with the options and futures markets, where the existing number of contracts will change […]
When it comes to profiting from stock movement, there are different strategies which can be used thanks to their ability in combining buy and sell call and put options. This can happen at different strike prices and expiration dates. One common strategy is known as a butterfly spread. In day trading, a call refers […]
