Scalping is a very-short term trading strategy in which traders predict price movements using technical analysis rather than examining the underlying value of the stocks. The goal is to make small profits on a high number of quick trades using the underlying philosophy that short movements are easier to profit from than long-term ones.
Scalpers can make hundreds of trades a day and often work with timeframes measured in minutes. They frequently use leverage (borrowing money from broker to multiply gains), which makes scalping very risky because leverage also magnifies any losses that occur.
A share certificate is a physical, legal document issued by a company to a buyer of shares to prove their ownership of those shares. It often evidences other rights as well, such as entitlement to dividends and the ability to vote in corporate decisions.
Other names for this document are “stock certificate” or “certificate of stock”. Today’s electronic trading methods have made paper share certificates virtually obsolete.
Share trading, which is referred to as stock trading in the US, is the activity of buying and selling units of ownership of a company with the aim of making a profit. The term also extends to trade in share-based derivatives, like options, forwards, and swaps.
Many draw a distinction between share investors, who aim to hold a share over time and see it appreciate in value, and share traders, who profit from shorter term price movements. Share trading can be carried out by individuals (retailers) or professionals on behalf of an institutions. Also, some share trading is done on margin, where the broker lends the trader money to amplify their gains.
A shareholder, or stockholder, is a person or entity that owns a portion (expressed as shares of stock) of a company. Shareholders benefit from strong company performance because it increases share prices or dividends, but they also suffer losses if the business performs poorly.
If a party owns more than 50% of a company’s shares, they are called a majority shareholder. Since shareholding is associated with voting rights within a company, a majority shareholder generally controls the company’s direction. Minority shareholders are those that own less than 50% of a company.
Spread trading is profiting from divergences in the price of two related securities, called legs, by simultaneously buying one and selling the other. Since the prices of related securities tend to move in the same direction, spread trading is less volatile than trading just one of the individual legs, where the trader is exposed to the full volatility of the underlying asset or the security itself. This type of trading is usually done using derivatives, like options or futures.
Types of spread trading include intra-commodity (where the two legs are contracts for the same commodity but on different dates), inter-commodity (where the legs are two related commodities, like oil and gasoline, or soybeans and soy oil), or inter-exchange (the same asset traded on two different exchanges).
A stakeholder is a party who has an interest in the outcome of a decision or in the success of an endeavour. In a corporate context, stakeholders are a broad category of individuals and entities including shareholders, employees, members of the business’ supply chain, customers, bondholders, and even the general public (in the case of environmental impacts, for example). They can be classified as primary stakeholders, which engage in economic transactions with the business, or secondary stakeholders, which may affect or be affected by a business but are not directly exchanging value with it.
Statistics is the study and practice of gathering and analysing data to extract conclusions and present them in mathematical form. The discipline can be applied to wide variety of fields, including social sciences, physical sciences, business, and finance. Key statistical concepts in the world of investing and finance are mean, median, and mode; standard deviation and variance; and skew and kurtosis. Many of these key concepts were pioneered by Carl Friedrich Gauss, a German mathematician who lived in the 1800s.
A stock, also known as a share, is a unit of ownership of a company. It is a security that can be bought and sold, often on an exchange. Companies issue stock as a way of financing their activities.
Stocks can be categorised as either common or preferred. Common stocks are the most ubiquitous variety, and carry voting rights, while preferred stocks are rarer and do not generally grant voting rights to the holder. Owners of preferred stocks get paid dividends first and have a priority claim to company assets in bankruptcy proceedings.
Stock analysis means analysing data related to equities in order to predict the future movements of a market, market sector, or specific stock and make the appropriate trading decisions.
Stock analysis can be fundamental or technical. Fundamental stock analysis focuses on the health and profitability of the company based on in-depth information like the company’s financial statements. Technical stock analysis looks at the history of a stock’s performance on the market to predict future behaviour, focusing on price movements and volume rather than the soundness of the company itself.
A stock broker is an intermediary who buys or sells stocks for another person or entity. They usually charge a fee or commission for each transaction. They provide an important service by matching buyers to sellers, and they can find clients low prices and advise them on the timing or order of trades. Stockbrokers now play a smaller role in the market than they historically had due to the rise of automated online brokers that provide a wide range of institutions and individuals easy access to stock exchanges.
The stock market is the collection of buyers and seller of stocks, also known as shares, which are units of ownership in a company. This activity can take place through a formal exchange, in which case the stocks are listed, or through private, over-the-counter transactions. Stock market transactions are often facilitated by brokers, though electronic platforms that bypass human brokers are increasingly common.
Swing trading involves profiting from price fluctuations by buying and selling securities within a time period that is generally longer than a day but less than a couple of months. This timeframe makes it different from scalping or day trading, which are shorter strategies, or from buy-and-hold investing, which has a much longer time window. Most swing traders make their decisions based on technical analysis, which means they analyse past price behaviour to predict future movements, but they may also draw on fundamental analysis.