A rising market can still be volatile
Two paths can both run $100.00 to $104.00, a 4.0 percent gain, while one drops 19.6 percent in a period and touches $88.00. The endpoint hides the path.
Market language · 8 guides
Market language.
Understand prices, benchmarks and the words used to describe a move. Start with a question and work through the explanation at your own pace.
An index is a measurement; an ETF is a product
An index is a calculation over a named basket. An ETF is a 1940 Act fund that prices a NAV every business day and trades at a premium or discount to it.
Bull and bear markets: read the move, question the story
Investor.gov puts a bull market at a 20 percent rise in a broad index over at least two months, and a bear market at a 20 percent fall.
Compare market moves on the same basis
One $100 purchase, a $110 sale and a $2 distribution is +10%, +12% or +9.90% depending on the basis. Label six fields before comparing two returns.
Short selling: the borrowed-share loop
FINRA Rule 4210(c) sets short maintenance at $5.00 a share or 30 percent of market value, whichever is greater, above $5. You owe shares, not dollars.
Trading and investing: how the tasks differ
Ten round trips and one can both produce $500 gross, netting $480 against $498 at $1 a transaction. FINRA Notice 26-10 drops the $25,000 day-trade test.
What a stock quote tells you—and leaves out
The SEC states the last-traded price is not necessarily your execution price. Bid, ask and size are the live numbers, and a large order fills at two.
Why a 20% loss needs a 25% recovery
A 20 percent loss needs a 25 percent gain to break even: $10,000 falls to $8,000, and $2,000 on an $8,000 base is 25 percent. G = L / (1 - L).