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What Is the Endowment Effect? The Endowment Effect is a behavioral finance bias where people place a higher value on something simply because they own it. In plain English: Ownership makes us emotionally attached, and that attachment inflates value in our minds. Once something becomes “mine,” logic quietly leaves the room and emotion takes the driver’s seat.

Definition of Herding Herding is when investors blindly follow what everyone else is doing instead of making decisions based on actual research, fundamentals, or strategy. It’s jumping into the market simply because “everybody’s buying” or dumping your investments just because “everyone is selling.”

Definition of Behavioral Finance Behavioral finance is the study of how our emotions, habits, and quirks influence our financial decisions. In a perfect world, people would invest, save, and spend based on facts and logic. But we don’t—we’re human. We tend to follow the crowd, panic when markets dip, overspend when we’re stressed, and cling to bad investments because we “feel” they’ll bounce back.

Definition of Random Walk Theory Random Walk Theory says that stock prices move in random, unpredictable ways because all available information is already baked into the price. In other words, the market doesn’t care about your predictions, your gut feelings, or your uncle Joe’s “can’t-miss stock tips.” Prices just… wander.

Definition of Dollar Cost Averaging Dollar Cost Averaging (DCA) is an investing strategy where you invest a fixed amount of money at regular intervals—say, every week or every month—regardless of whether the market is up or down. Over time, this approach smooths out your purchase price and reduces the risk of buying everything at the market’s peak.

Definition of Growth Investing Growth investing is a strategy focused on buying shares of companies that are expected to grow faster than the overall market. These companies typically reinvest their profits back into expansion—through new products, technology, or market share—rather than paying dividends to shareholders. The goal? Long-term capital appreciation.

Definition of Value Investing Value investing is a long-term investment strategy focused on buying stocks (or other assets) that appear to be undervalued by the market. In plain English, it means finding strong companies selling for less than they’re truly worth—and holding them until their true value is recognized.

Definition of Contrarian Investing Contrarian Investing is a strategy where investors go against the prevailing market trends—buying when others are selling and selling when others are buying. The idea is simple but gutsy: when the crowd runs in one direction, look carefully at the opportunities they’re leaving behind. Contrarians believe markets often overreact to news, creating mispriced assets that can offer outsized returns once emotions settle.

Definition of Trend Trading Trend trading is an investing strategy that aims to profit by identifying and following the direction of a market trend — whether that trend is moving up or down. The basic idea: the market tends to move in trends, not random zigzags. Traders use price charts and technical indicators to figure out which direction the trend is heading and then ride that momentum until the trend starts to lose steam.

Definition of Swing Trading Swing trading is a short- to medium-term trading strategy that aims to capture “swings” in a stock, ETF, or crypto asset’s price over a few days to several weeks. Unlike day traders who enter and exit within a single day, swing traders hold positions longer to ride momentum—buying when prices are poised to rise and selling when the trend starts to slow or reverse. The goal is simple: capitalize on market waves without being glued to a screen all

Definition of Day Trading Day trading is the practice of buying and selling financial instruments—like stocks, options, or currencies—within the same trading day. The goal is to profit from small price movements rather than long-term appreciation. By the end of the trading day, all positions are typically closed, meaning no holdings are carried overnight.

Definition of Scalping In trading, scalping is a short-term strategy where a trader aims to make many small profits by quickly buying and selling an asset — sometimes holding it for just seconds or minutes. The goal is to “scalp” tiny price movements, stacking up small wins that, over time, can add up to meaningful gains.

Definition of a Tick Chart A tick chart is a type of financial chart that plots price movement based on a specific number of transactions — or “ticks” — rather than time. Unlike traditional charts that show how a stock or asset performs over minutes, hours, or days, a tick chart updates only when a set number of trades have occurred.

Definition of Order Book An Order Book is a real-time, continuously updated list of buy and sell orders for a particular financial asset—like a stock, cryptocurrency, or commodity—organized by price level. It shows how much demand and supply exist at each price point and helps traders see market activity as it unfolds.

Definition of Volume Profile Volume Profile is a trading tool that shows how much trading activity (volume) occurred at specific price levels over a given period of time. Instead of focusing on when trades happened (like a traditional volume chart does), it focuses on where they happened — revealing price zones where the most buying and selling took place. Think of it as an X-ray of the market. It tells you where traders cared most, not just when they were active.

Definition of a Point and Figure Chart A Point and Figure Chart is a type of financial chart used in technical analysis to track price movements without considering time. Unlike traditional line or candlestick charts that plot prices over specific dates, Point and Figure (P&F) charts focus purely on price changes and trends.

Definition of a Renko Chart A Renko Chart is a type of financial chart developed by the Japanese that focuses exclusively on price movement, not time or volume. Unlike traditional charts that plot data based on set intervals (like daily or hourly), Renko charts use “bricks” to represent a fixed amount of price movement—say $1, $5, or $10 per brick. A new brick is added only when the price moves enough to meet that threshold, effectively filtering out small, insignificant flu

Definition of Heikin-Ashi The term Heikin-Ashi (pronounced “hey-kin ah-shee”) is Japanese for “average bar.” It’s a type of candlestick chart used by traders to smooth out price data and make it easier to spot trends. While a standard candlestick chart shows every little price jump and drop, the Heikin-Ashi method averages out the movement — helping you see the forest instead of getting lost in the trees.

Definition of an OHLC Chart An OHLC chart (which stands for Open, High, Low, Close) is a type of financial chart used to show how the price of an asset—such as a stock, cryptocurrency, or commodity—moved during a specific period of time. Each vertical bar represents one unit of time (like a day), showing four key data points:

Definition of Line Chart A line chart is a type of graph that uses lines to show how a value changes over time. Each point on the chart represents a specific data value—such as a stock price, an index level, or a company’s revenue—plotted along a time axis. When the points are connected, the line shows the trend, making it easy to visualize increases, decreases, or stability in performance.