• Resource Guide

This page was created with two purposes in mind: 1) to provide some easy definitions of commonly used terms; and 2) to provide a list of resources used to collect information related to specific stocks and financial markets in general. I will update this page periodically. If you have any suggestions of terms or sources to add, please let me know -- nothing is ever finished when it comes to learning about financial markets!



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(Terms are in alphabetical order)

(q/q) -  Quarter-Over-Quarter: meaning the change from the past quarter to the present quarter, usually expressed as a percentage.

(m/m) - Month-Over-Month: meaning the change from the past month to the present month, usually expressed as a percentage.

(y/y) - Year-Over-Year: meaning the change from the past year to the present year, usually expressed as a percentage.

(LTM) - Last Twelve Months: "A period of time commonly used to evaluate financial results such as a company's performance or investment returns. Twelve months is a relatively short time frame, but it is a period long enough to generate a meaningful set of data. Also called trailing twelve months (TTM)" (Investopedia).

(OTC) - Over-The-Counter: "A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange" (Investopedia).

(TTM) - Trailing Twelve Months: "The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation of its financial performance for a 12-month period, but typically not at its fiscal year end. Since quarterly reports rarely report how the company has done in the past 12 months, TTM tends to be calculated manually or found on various websites" (Investopedia). Trailing Twelve Months (TTM) and Last Twelve Months (LTM) mean the same thing.

Algorithmic Trading ("Algos") - "A trading system that utilizes very advanced mathematical models for making transaction decisions in the financial markets. The strict rules built into the model attempt to determine the optimal time for an order to be placed..." (Investopedia). Investment banks and investment management firms will often use trading algorithms to help them buy (or sell) large quantities of shares with the smallest impact on the stock price that they can possibly achieve. Individuals will also create trading algorithms that automatically execute trades when a prearranged set of criteria is met by a specific stock.

Ask - "This is the lowest price an owner is willing to accept for an asset" (Investorjunkie.com).

Asset - "Something that has the potential to earn money for you. It is something you own that can reasonably be expected to produce something for you. Assets include stocks, bonds, commodities, real estate, and other investments" (Investorjunkie.com).

Asset allocation - "One of the ways to divide up the holdings in your portfolio is to do so by asset class. The idea is that different assets perform opposite to each other, and you can limit some of your risk by allocating your portfolio according to the type of asset you have" (Investorjunkie.com).

Balance sheet - "A statement showing what a company owns, as well as the liabilities the company has, and stating the outstanding shareholder equity" (Investorjunkie.com).

Bear market - "This is a market that is falling. A bear market has a downward trend, and someone who believes the market is headed for a drop is often referred to as a 'bear'" (Investorjunkie.com).

Bid - "This is the highest price a buyer is willing to pay when buying an investment. Today, electronic trading makes it possible for ask and bid to be matched up automatically and almost instantly" (Investorjunkie.com). Despite that fact, some traders (or trading systems) still take advantage of the "bid-ask spread" on different stocks.

Blue chip - "You might hear reporters and others refer to'blue chip stocks.' Blue chips are companies that have a long history of good earnings, good balance sheets, and even regularly increasing dividends. These are solid companies that may not be exciting, but they are likely to provide reasonable returns over time" (Investorjunkie.com).

Bond - "A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents" (Investopedia).

Book value - "If you take all the liabilities a company has, and subtract them from the assets and common stock equity of the company, what you would have left over is the book value. Most of the time, the book value is used as part of an evaluative measure, rather than being truly related to a company’s market value" (Investorjunkie.com).

Broker - "This is the entity that buys and sells investments on your behalf. Usually, you pay a fee for this service. In the case of an online discount broker, you often pay a flat commission per trade. Other brokers, especially if they also manage your assets as a whole, just charge a percentage of your assets each year" (Investorjunkie.com).

Bull market - "This is a market that is trending higher, likely to gain. If you think that the market is going to go up, you are considered a 'bull.' Additionally, the term, like bear, can be applied to how you feel about an individual investment. If you are 'bullish' on a specific company, it means you think the stock price will rise" (Investorjunkie.com).

Capital gain (or loss) - "This is the difference between what you bought an investment for and what you sell if for. If you buy 100 shares of a stock at $10 a share (spending $1,000) and sell your shares later for $25 a share ($2,500), you have a capital gain of $1,500. A loss occurs when you sell for less than you paid. So, if you sell this stock for $5 instead ($500), you have a capital loss of $500)" (Investorjunkie.com).

Diversity - "A portfolio characteristic that ensures you have more than one type of asset. It also means choosing to buy investments in different sectors, industries, or geographic locations" (Investorjunkie.com).

Dividend - "In some cases, a company will offer to divide up some of its income among shareholders. Dividends can be paid once, as a special use of them, or they can be paid more regularly, such as monthly, quarterly, semi-annually, or annually" (Investorjunkie.com).

Dow Jones Industrial Average (DJIA) - "This average includes a price-weighted list of 30 blue chip stocks" (Investorjunkie.com).

Exchange - "This is a place where investments, including stocks, bonds, commodities, and other assets are bought and sold. It’s a place where brokers (buyers and sellers) and others can connect" (Investorjunkie.com).

Forex (FX) - "The market in which currencies are traded. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world... The forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney" (Investopedia). Currencies are traded in pairs. For example, the EUR/USD (Euro/US Dollar) is a very popular currency pair.

High Frequency Trading (HFT) - "A program trading platform that uses powerful computers to transact a large number of orders at very fast speeds. High-frequency trading uses complex algorithms to analyze multiple markets and execute orders based on market conditions. Typically, the traders with the fastest execution speeds will be more profitable than traders with slower execution speeds. As of 2009, it is estimated more than 50% of exchange volume comes from high-frequency trading orders" (Investopedia).

Index - "A tool used to statistically measure the progress of a group of stocks that share characteristics. This can include a group of stocks, a group of bonds, or a group of other assets" (Investorjunkie.com).

Junk Bond - A high-yield or non-investment grade bond. "Junk bonds are fixed-income instruments that carry a rating of 'BB' or lower by Standard & Poor's, or 'Ba' or below by Moody's. Junk bonds are so called because of their higher default risk in relation to investment-grade bonds" (Investopedia). Junk bonds are riskier than U.S. Treasury Bonds, but they also have a higher yield to compensate investors for taking on the additional risk.

Margin ("trading on margin") -  "This is essentially borrowed money used to make an investment... The hope is that you will make enough money that you will be able to repay the borrowed amount from your earnings" (Investorjunkie.com).

Market capitalization - "The market cap of a company is figured by multiplying its current share price by the number of shares outstanding" (Investorjunkie.com).

NASDAQ - A stock exchange that is well-known for having many technology and biotechnology stocks listed on it. The number of stocks listed on the NASDAQ is far larger than the number of stocks listed on other well-known stock exchanges, namely the S&P 500 and the Dow Jones Industrial Average (DJIA).

New York Stock Exchange - "One of the most famous stock exchanges is the NYSE, which trades stocks in companies all over the United States, and even includes stocks of some international companies" (Investorjunkie.com).

Option Contract(s) - "A contract that allows the holder to buy or sell an underlying security at a given price, known as the strike price. The two most common types of options contracts are put and call options, which give the holder-buyer the right to sell or buy respectively, the underlying [security] at the strike if the price of the underlying crosses the strike [price]. Typically each options contract is written on 100 shares of the underlying" (Investopedia). Traders need to pay a slight premium for every option contract that they purchase, and they receive the premium from option contract they sell. The premiums paid are decided upon before the option contracts are either bought or sold.

  • Example: "A trader believes that the price of a stock will rise from its current price of $40 to a level nearing $100. Rather than purchasing the stock itself, [the trader] can purchase a call option for a fraction of the price at a strike anywhere between $40 and $100. If the stock does indeed rise to $100, and assuming the call option was bought at a strike of $75, the holder stands to gain $25 per share on the contract, minus any premiums paid for the option itself" (Investopedia).

Order Duration (basic) - There are three basic order durations that can be applied to normal limit and stop orders, and there are three additional order durations that can be applied to limit orders that are for more than 100 shares. The three basic order durations that can be applied to normal limit and stop orders are: Day, GTC ("Good-'Til-Cancelled"), and GTD ("Good-'Til-Date/Time"). The three additional order durations that can be applied to limit orders for more than 100 shares are: AON ("All or None"),  IOC ("Immediate or Cancel"), and FOK ("Fill or Kill"). There are other order durations, but those are the six main ones. Market orders must have "Day" as their duration. Each of the order durations is described, in greater detail, below:

  • Day: The order must be filled during the trading day (i.e. between 9:30 AM and 4:00 PM).
  • GTC: An order with this type of duration is placed "...for a period that ends when it is executed or when [the investor cancels it]" (Fidelity). Some brokerages have set rules about how long these orders can actually remain open for, so it is important to check those rules. For example, Fidelity says that "all open GTC orders will expire 180 calendar days after they are placed. If the 180th day falls on a weekend or holiday, those orders will expire on the first business day following the expiration day" (Fidelity).
  • GTD: Not every brokerage offers this type of order duration. "The GTD (Good-til-Date/Time) time in force lets you select an expiration date and time up until which an order will continue to work. Setting this attribute requires both a time in force selection of GTD, a date entry in the Expiration Date field, and a time entry in the Expiration Time field if that level of detail is required. Note that if you only enter a good-till date, the unfilled order will cancel at the close of the market on the specified day" (Interactive Brokers).
  • AON: "When you place an all-or-none designation on your order, it is considered restricted. The stock can trade at or below your price on a buy, or at or above on a sell, without the right to execution, unless the entire amount of your order is executable" (Fidelity).
  • IOC: "Fill the whole order or any part immediately, and cancel any unfilled balance" (Fidelity).
  • FOK: This type of order duration is used in many famous investing movies. This type of order duration requires a brokerage to "fill the entire order immediately or cancel it" (Fidelity).

Order Types (basic) - There are three basic order types: Limit, Market, and Stop. Each of the three order types has different variations that can be chosen by the person making the trade. Additionally, the three order types can have different "duration" (as described above). Basic definitions for all the different order types, and realistic hypothetical examples of each (using GTC order duration), are found below:

  • Limit: "An order placed with a brokerage to buy or sell a set number of shares at a specified price or better" (Investopedia). If you place a "Limit" buy order for a stock it will be purchased at or below your limit price, but never above it. If you place a "Limit" sell order for a stock it will be sold at or above your limit price, but never below it. Limit orders can be assigned any time duration, and all "Limit" buy orders must be entered for a price that is below the current market price while all "Limit" sell orders must be entered for a price that is above the current market price.  Realistic Hypothetical ExampleApple (AAPL) is trading at $106.15/share and I want to buy 10 shares of Apple, but I don't want to pay $106.15/share. Instead of just buying the 10 shares outright using a "Market" order, I decide to set a "Limit" buy order for AAPL at $100.25 with a GTC duration. In this circumstance, I will not buy any shares of Apple until it has moved down to $100.25/share, or lower. After AAPL drops to $100.25 (or below) and my limit order was "triggered" (meaning I successfully bought 10 shares of Apple for $110.25 or below),  I  decide that I want to sell them when Apple reaches $110.50/share and I set a "Limit" sell order for APPL at $110.50 with a GTC duration. When Apple reaches $110.50/share (or above) my limit order is triggered and I successfully sell my 10 shares of Apple for $110.50/share (or potentially slightly above that).
  • Market: "A market order instructs [a brokerage] to buy or sell securities for your account at the next available price. It remains in effect only for the day, and usually results in the prompt purchase or sale of all the shares of stock, options contracts, or bonds in question, as long as the security is actively traded and market conditions permit" (Fidelity). Market orders cannot be assigned a duration such as GTC, because they must take place as soon as possible. Realistic Hypothetical ExampleApple (AAPL) is trading at $106.15/share and I want to buy 10 shares of Apple, so I set a market order for 10 shares of Apple and buy them immediately, or as soon as the brokerage handling my trades can fill the order, for $106.15/share (assuming no order "slippage"). 
  • Stop: "Stop orders are generally used to protect a profit or to prevent further loss if the price of a security moves against you. They can also be used to establish a position in a security if it reaches a certain price threshold or to close a short position. The specialists on the various exchanges and market makers have the right to refuse stop orders under certain market conditions. Not all securities or trading sessions (pre- and post-market) are eligible for stop orders" (Fidelity). There are two types of stop orders: stop loss and stop limit. A stop loss order "...automatically becomes a market order when the stop price is reached. Therefore, there is no guarantee that [the] order will be executed at the stop price. It is important for investors to understand that company news or market conditions can have a significant impact on the price of a security. This could result in a stop loss order being executed at a price that is dramatically different than what your stop loss price indicates" (Fidelity). A stop limit order "...automatically becomes a limit order when the stop price is reached. Like any limit order, a stop limit order may be filled in whole, in part, or not at all, depending on the number of shares available for sale or purchase at the time." (Fidelity). Furthermore, "Buy stop loss and buy stop limit orders must be entered at a price which is above the current market price. Sell stop loss and sell stop limit orders must be entered at a price which is below the current market price" (Fidelity). Realistic Hypothetical ExampleI bought 10 shares of Apple for $106.15/share and I want to limit my downside risks, so I decide to set a sell stop loss order, with a GTC duration, for $101/share. If Apple drops down to $101/share (or below) my order will be triggered and I will automatically sell my 10 shares on the open market with a market order, but if Apple does not drop down to $101/share (or below) I will continue to own the 10 shares. If Apple happens to report some bad news during a period of time in which the market is not officially open (so not between 9:30 AM and 4:00 PM) and drops to $98/share in pre-market trading and opens at $98/share, my stop loss order will be triggered and will automatically become a market order that sells my 10 shares for around $98/share (depending on AAPL's price when my order is filled). Therefore, even though my stop loss order was set for $101/share, I will have sold my 10 shares of AAPL for around $98/share.
  • Other details about how different orders are executed can be found HERE.

P/E ratio - "This measure reflects how much you pay for each dollar that company earns. A company often reports profits on a per-share basis. So a company might say that it has earned $5 per share. If that same stock is selling for $75 a share on the market, you divide $75 by $5 to come up with a P/E ratio of 15" (Investorjunkie.com).

Penny Stocks - The basic definition of a penny stock is: "a stock that trades at a relatively low price and market capitalization, usually outside of the major market exchanges. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure. They will often trade over the counter through the OTCBB and pink sheets" (Investopedia). The specific qualities of a penny stock (i.e. "cut off price level and market cap") are not always agreed upon, and some people believe that a penny stock is one that trades for under $5 while others believe that penny stocks need to be worth under $1. Regardless of the stock's share price, investors will generally agree that a penny stock is one that trades Over-The-Counter (OTC), or on a "pink sheet," and has a market cap that is below $300 million.

Pink Sheets - "A daily publication compiled by the National Quotation Bureau with bid and ask prices of over-the-counter (OTC) stocks...Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC. Pink sheets also refers to OTC trading" (Investopedia). It is important to know that not all stocks that trade on pink sheets (OTC) are necessarily dangerous to invest in. Well-known companies, like BMW, that are traded on foreign stock exchanges are also traded on pink sheets in the U.S.

Registered Investment Advisor (RIA) - "A financial investment advisor that has been through certain training, and that agrees to abide by certain rules, including ensuring that recommendations, and trades made on your behalf are in your best interest" (Investorjunkie.com).

Security - "A financial instrument that represents: an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option. A security is a fungible, negotiable financial instrument that represents some type of financial value. The company or entity that issues the security is known as the issuer" (Investopedia).


Sharpe Ratio - "A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns... The Sharpe ratio tells us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. Although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a risk-less asset would perform better than the security being analyzed" (Investopedia). A picture of the Sharpe Ratio's formula is shown below:

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Stock -  "Buying a stock" involves the purchase of one or more "shares" of a company. A "share" is simply a very small piece of a company. "A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings." There main types of stock: common stock and preferred stock.

  • Common Stock: "A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debtholders have been paid in full" (Investopedia).
  • Preferred Stock: "A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights. The precise details as to the structure of preferred stock is specific to each corporation. However, the best way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation). Also known as 'preferred shares'" (Investopedia).

Yield - "This is associated with dividend investing. Your yield represents the ratio between the stock price paid and the dividend paid. A stock trading at $100 per share, with a dividend that amounts to $5 per year, you divide the $5 by $100 and turn it into a percentage. In this case, the yield would be 5%" (Investorjunkie.com).


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(Terms are in alphabetical order)

ADP Non-Farm Employment Change - “Estimated change in the number of employed people during the previous month, excluding the farming industry and government” (Forexfactory.com).

Asset Purchase Facility - Measures the “total value of money the BOE will create and use to purchase assets in the open market” (Forexfactory.com).

Cash Rate - The “interest rate for overnight money market deposits” (Forexfactory.com).

CPI -  Consumer Price Index: Measures the “change in the price of goods and services purchased by consumers” (Forexfactory.com). This reading is very important because “consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate” (Forexfactory.com). This reading is released monthly and is often interpreted as the annualized present level of inflation, but only if it says (y/y) after it. If it says (m/m) then it is interpreted as the present level of inflation for the month.

Flash Estimate CPI - The source that provides the data (the “Eurostat” for the Eurozone, etc.) “bases this estimate on energy prices and 13 euro area member states that report early CPI data. While the report is narrow and void of line items, it’s extremely early and tends to have a significant impact” (Forexfactory.com). The second report (the one that comes after the Flash Estimate) is called the Final.

Gross Domestic Product (GDP) - "The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory" (Investopedia.com).

Gross Domestic Product Per Capita (Per Capita GDP) - "A measure of the total output of a country that takes the gross domestic product (GDP) and divides it by the number of people in the country. The per capita GDP is especially useful when comparing one country to another because it shows the relative performance of the countries. A rise in per capita GDP signals growth in the economy and tends to translate as an increase in productivity" (Investopedia.com).

HSBC - The Hongkong and Shanghai Banking Corporation: The HSBC Manufacturing PMI report is an alternative report to the one released by the China Federation of Logistics and Purchasing (CFLP), which is the source of the normal Manufacturing PMI report.

Minimum Bid Rate -  The “interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system” (Forexfactory.com).

Official Bank Rate -  The “Interest rate at which banks lend balances held at the BOE to other banks” (Forexfactory.com).

Overnight Rate -  The “interest rate at which major financial institutions borrow and lend overnight funds between themselves” (Forexfactory.com).

PMI - Purchasing Managers’ Index: Released monthly. It is derived from surveying a large number of “purchasing managers” (basically an employee or owner of a company who is responsible for buying goods or services). A reading above 50.0 indicates industry expansion and a reading below 50.0 indicates industry contraction.

Prelim CPI - Preliminary reading of CPI.

Real Gross Domestic Product (Real GDP) - "An inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices" (Investopedia.com).

Trade Balance -  Also known as the “Balance Of Trade” (BOT). Released monthly. It is the “difference in value between imported and exported goods during the previous month” (Forexfactory.com), which means that it is calculated by taking the value of a country’s imports and subtracting it from the value of a country’s exports. If the result is negative the country has a “Trade Deficit,” and if it is positive the country has a “Trade Surplus.”


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What are some good online resources to use to keep up with the stock market?

What are some good websites for creating stock watch lists?

What are some good resources to use for coming up with investment ideas?  

What are some good resources to use for performing due diligence and researching investment ideas?

(***Please note that one should ALWAYS perform due diligence after reading an equity research article or hearing about an investment idea online***)

  • Well-known Websites With FREE Financial Data & Analysis: MorningstarGuruFocus, and Quandl (limited number of free previews)
  • Well-known Websites With FOR-PAY Financial Data & Analysis: Thomson Reuters, S&P Capital IQ, FACTSET (they have free & for-pay content), and many others!

What are some really good resources for "visual learners" to use?

Not so excited about the prospect of sifting through financial statements and reading research reports? Well, if that's the case, these three websites are definitely for you: Bloomberg Industry Leaderboard, FinViz, and Trefis.

What are some platforms that allow someone to create a "simulated" stock portfolio?

What are some other useful resources for investors to use?


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What is the basic difference between "fundamental analysis" and "technical analysis"? What are the benefits/weaknesses of both? - Common definitions for both terms, and the benefits and weaknesses of both types of analysis, are found below:

Fundamental Analysis: "A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors... Although most analysts use fundamental analysis to value stocks, this method of valuation can be used for just about any type of security" (Investopedia).

  • Names of famous investors who employ(ed) fundamental analysis: Warren Buffet and Benjamin Graham
  • Benefits and weaknesses of this strategy: The primary benefit of fundamental analysis is that an investor can use it to calculate the "intrinsic value" of a stock, and then decided whether the stock is "undervalued" or "overpriced" by comparing the stock's current share price its calculated intrinsic value. Calculating the intrinsic value of a stock allows an investor to gauge the stock's potential return and, as a result, the investor is able to more effectively manage a position's risk/return profile. The main weakness of fundamental analysis is that it is not timing specific. When an investor using fundamental analysis finds a company that is deemed to be undervalued, the investor could buy shares of the company only to see those shares continue to depreciate in value. In short, companies can always become more "undervalued" or "overpriced," and fundamental analysis cannot always tell an investor when it is a good time to buy or sell a specific security.

Technical Analysis: "A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity" (Investopedia).

  • Names of famous traders who employ(ed) technical analysis: Richard Donchian and Ed Seykota
  • Benefits and weaknesses of this strategy: The primary benefit of technical analysis is that it deals strictly with price, which is always the final determinant in every situation involving evaluating a stock. In essence, "price never lies." Computer programmers are able to use their skills to take technical indicators and incorporate them into an automated trading strategy, which can be very effective and profitable if done well. Many companies have recently taken this a step farther by using automated trading systems in "high frequency trading," which has received a lot of press recently. Other benefits of technical analysis include; managing risk through setting "limit" and "stop" (stop limit or stop market) orders; timing "entries" into new positions; and mathematic models to predict a security's price target. In terms of weaknesses, technical analysis can be considered subjective and it only takes into account factors like price and volume, while not paying any attention to the fundamentals of the security that is being analyzed. Technical analysts will sometimes encounter difficulty when they are trading a stock using solely technical analysis and a major news story comes out about a stock during a time when the stock market is not open. In this circumstance, the stock could move significantly in pre-market trading, which is a time period when technical analysis (for the most part) does not work. Given this significant risk, many traders who solely use technical analysis to make trades will often only trade in "futures" (see definition of "Futures Contract") markets or foreign exchange markets, because those markets are open 24 hours a day.

Is it possible to combine technical analysis and fundamental analysis? Yes it is. Many investors today (myself included) will use fundamental analysis to find a stock that they want to invest in, and then use technical analysis to time their "entry."

"Investing" vs. "Trading", what is the difference? – As typically understood, investments are not expected to be short-lived, while trades are usually extremely short-lived. Simply put, one invests in a company for the "long haul," while one trades a stock with the intention of selling it within a relatively short period of time.


If there are any terms or sources that you would like to see added to this guide please fill out the form below. Likewise, if you have any questions about anything that is written in this Resource Guide, feel free to fill out the form below: 

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