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What Is A Safe Haven Asset? Safe haven assets are investments that investors turn to during times of market volatility and instability, i.e., to "weather the storm." These investments are perceived to be safe from losses during market turmoil or are negatively correlated to the market at large, meaning they may go up in price when the majority of other assets, mainly stocks, are losing value. Most Common Safe Haven…
What Is Short Covering? Short covering is the act of closing out a short position in a security. Investors who believe that a stock, bond or commodity is overvalued and is likely to decline in price can try to profit on that belief by selling short that particular asset. In a short sale, the investor borrows the security from their broker and immediately sells it. At some point the investor…
What Is Short Interest? Short interest is the number of shares of a stock that have been sold short by investors but have not yet been paid back. Investors who believe a stock is overpriced and headed for a fall can short a stock by borrowing shares from their broker and then selling them, the proceeds of which go into their account. At some point they have to buy the…
What Is A Short Squeeze? A short squeeze is what happens when many investors with a short position in the same security—meaning they are betting that the price will drop—are forced to cover their positions and buy the security back when the price rises unexpectedly. The resulting demand usually forces the price to rise even higher, exacerbating the situation and the potential losses for short sellers. Investors who believe a…
For a vast majority of the English-speaking world, the terms shares and stocks are used to describe a corporate equity offering. Each is commonly viewed as being synonymous with the other, referring to a portion of a company's pledged debt obligations. Despite the perceived similarities between shares and stocks, there are some key differences. Working definitions, usage and practical applications are three areas where the functionality of one term is…
Like commodity, income and pink sheet equity offerings, cyclical stocks are a very specific type of corporate listing. Featuring unique tendencies in price action, cyclical stocks are frequently targeted for active speculation as well as portfolio diversification. What Is A Cyclical Stock? A cyclical stock is an equity product that experiences pricing fluctuations in concert with the prevailing macro economic trends of the day. Accordingly, stock prices typically exhibit bullish…
What Is "Dogs Of The Dow"? The Dogs of the Dow is an investment strategy that involves buying the 10 stocks in the Dow Jones Industrial Average (DJIA) with the highest dividend ratios relative to their price. The term "dogs" derives from a similar strategy that calls for investing in the 10 worst performing stocks in the Dow from the previous year. Generally, though, the stocks in both lists are…
"FANG" is an acronym for four U.S. technology stocks—Facebook, Amazon, Netflix and Google—that have been among the best performers in the stock market since the bull market began in 2009. James Cramer, host of CNBC's Mad Money program and the founder of TheStreet.com, is credited with coining the term to describe these tech stocks in 2013. Amid challenging financial environments such as the COVID-19 pandemic, FANG stocks have proved to…
What Is Floating Stock? Floating stock represents a company's shares that are currently available for trading. Simply put, it is the number of shares that investors can trade in an open market. Investors can calculate floating stock (also known as share float) by taking shares outstanding and then subtracting both restricted shares and closely held shares. By determining a figure for floating shares, investors can establish how many shares are…
Fiat money has value because the government has declared that it does. This kind of money has no intrinsic value, but since a government supports it, fiat currency can be exchanged for goods and services. Let's now look at exactly what fiat money is, how it can be used, and its benefits and downfalls. Money Basics Money comes in many different forms. However, anything that is used as money needs…
Stocks come in two varieties. "Common stocks" are indeed the most common, hence the name. For most people, the words "stocks" and "common stocks" are nearly synonymous terms. However, there is another type of stock, known as "preferred." While both common and preferred offer ownership shares in a company, there are big differences between the two. In a nutshell, common stocks offer the greatest reward but at the greatest risk.…
When executing customers' trades, FXCM can be compensated in several ways, which include, but are not limited to: spreads, charging commissions at the open and close of a trade, and adding a mark-up to rollover, etc. Commission-based pricing is applicable to Active Trader account types.
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