If you’re a day trader that doesn’t mind some risk, you may find yourself interested in penny stocks. These stocks have the potential for huge returns but they come with a lot of risks. One of the reasons why they are considered risky investments is because, in most cases, they are traded in over-the-counter (OTC) […]
Backtesting is testing trading strategies against historical data. It serves as a research tool for traders and analysts to stress test their current strategies, find new strategies, or find which factor contributes the most to a strategy’s success. Most backtesting is done with code, using libraries from languages like Python and R and hence, […]
Many traders check the daily gainers & losers list in their screener and find an overhyped penny stock that could be a favorable short-selling opportunity. But when they go to short the stock, their broker frustratingly stops them in their tracks, leaving the trader asking “why can’t I short some penny stocks?” The short […]
Penny stocks are where a lot of new traders start their career. Tempting day traders with the prospect of significant financial gains and a low cost of entry. Stories of stocks gaining of over 5,000% in just a short time add to their appeal, and advances in trading technologies make it easier than ever […]
The alternative uptick rule is an SEC rule that prevents short sellers from shorting on the bid after a stock is down 10% in a day. Once the restriction is in place, short sales cannot occur above the national best bid price for the stock. In other words, short sales must be executed on […]
On June 23, a new rule was published that could put an end to the short squeeze madness we’ve seen throughout 2021. The rule essentially allows the NSCC, which is one of the DTCC’s clearing firms, to check if a broker-dealer meets capital requirements more frequently. To understand why this rule change matters, and […]
Just like mid and large cap stocks, there is no limit to how high a penny stock can go. Many massive, well-established companies were once trading for less than $5 per share. Some of these companies include Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Ford (NYSE: F), General Motors (NYSE: GM) and Advanced Micro Devices […]
Outright speculation on future volatility is a pretty new phenomenon in financial markets. The mathematization of derivatives markets made traders realize that they’re primarily making bets on future volatility more so than price, which encouraged Wall Street to create more “pure play” products. The primary volatility products in US markets are VIX futures/options, and […]
Reddit did it again. You can’t be blamed for thinking that the short squeezes in January 2021 were a complete anomaly, not to be repeated. Market pundits have plenty of explanations for why, but it happened again. Last time, the main event was GameStop (GME), and this time it was (is?) AMC Entertainment (AMC). […]
Browse through any major finance website, and you will likely see a post about “cult stocks.” If you are new to stock trading, this might be very confusing. Are they talking about a company engaging in evil activities? Well, the reality is much simpler. The term cult stocks refers to stocks that enjoy a […]
