An economic indicator that changes after the economy has already begun a trend or pattern.
Examples: Unemployment rate, corporate earnings.
Term used to describe companies with a market capitalization value of more than $10 billion.
Last In First Out (LIFO) is a tax-lot matching method. Under LIFO, each sale is paired with the most recent possible purchase. LIFO assumes that an entity sells, uses or disposes of its newest inventory first.
The time delay between placing a trade and its execution.
High-frequency traders (HFTs) aim to minimize latency to gain edge.
A type of spoofing, where multiple fake orders are placed to manipulate price direction. After the desired move occurs, the real trade is executed and fake orders are withdrawn.
Illegal market manipulation.
Using borrowed funds to increase potential returns (and risk) on investment. Expressed as a ratio.
Example: 5:1 leverage means controlling $5,000 worth of assets with $1,000.
An order to buy or sell at a specific price or better.
Buy Limit: Executes at or below the specified price.
Sell Limit: Executes at or above the price.
Benefit: Greater control; Risk: May not execute.
A measure of how quickly and easily an asset can be bought or sold without significantly affecting its price.
High liquidity: Narrow bid-ask spread, high volume (e.g. Apple stock).
Low liquidity: Wide spread, few buyers/sellers (e.g. small-cap penny stock).
A market where all buy and sell orders are publicly visible in the order book before execution.
Example: NYSE, NASDAQ.
An order visible to the market. Opposite of a dark order, which is hidden until executed.
When a trader or investor owns a security with the expectation that its price will rise.
Example: Buying 100 shares of Tesla = Long Tesla.
A profit from selling a security held for more than one year. Typically taxed at a lower rate than short-term gains.