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 Buy and Hold Buy and Hold is a long-term investment strategy where an investor purchases assets—typically stocks, ETFs, or index funds—and holds them for an extended period, regardless of market fluctuations. The idea is simple: time in the market beats timing the market. Instead of jumping in and out based on daily trends or short-term news, the buy-and-hold investor focuses on the long-term growth of their investments.

Definition of Momentum Investing Momentum investing is an investment strategy where investors buy assets that have shown strong recent performance and sell those that have shown weak performance. It’s based on the idea that rising stocks often keep rising for a time, and falling stocks often keep falling, because of market psychology and herd behavior.

Definition of Income Investing Income investing is a strategy focused on generating steady, reliable income from your investments—usually through dividends, interest, or rental income. Instead of betting on stock prices shooting up over time, income investors look for assets that pay them regularly. The goal? To build a portfolio that produces consistent cash flow without needing to sell assets to make money.

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 Position Trading Position trading is a long-term investing strategy where traders hold assets—like stocks, ETFs, or commodities—for weeks, months, or even years. Instead of reacting to daily price swings, position traders focus on the big picture—economic trends, market cycles, and company fundamentals. They’re not trying to “time” the market day by day—they’re aiming to catch major price movements over time.

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.

Definition of Bar Chart A bar chart is a type of graph that uses rectangular bars to represent data. The length or height of each bar corresponds to the value it represents — longer bars mean higher numbers, shorter bars mean lower numbers. In finance, bar charts are commonly used to show things like stock prices, company earnings, revenue growth, or expense comparisons over time.

Definition of a Candlestick Chart A Candlestick Chart is a type of financial chart that shows how an asset’s price moves over a specific time period—whether that’s one minute, one day, or one month. Each “candlestick” represents four key data points...

Definition of Bollinger Bands In simple terms, Bollinger Bands show when a price may be overbought (too high) or oversold (too low) based on how far it moves from its average. In Plain English:Think of Bollinger Bands as a “mood ring” for market prices. When the bands expand outward, the market’s emotions are running hot—there’s higher volatility and larger price swings. When the bands tighten, the market’s taking a breather—lower volatility and smaller price moves.

Definition of RSI (Relative Strength Index) RSI is a momentum indicator used in technical analysis that measures the speed and change of price movements. It ranges from 0 to 100 and helps investors identify whether an asset—like a stock, ETF, or cryptocurrency—is potentially overbought or oversold.

Definition of MACD MACD (pronounced “mack-dee”) stands for Moving Average Convergence Divergence. It’s a popular technical indicator used by traders to analyze stock price trends and momentum. In simple terms, it shows the relationship between two moving averages of a stock’s price — usually the 12-day and 26-day exponential moving averages (EMAs).

Definition of Moving Average A moving average (MA) is a calculation that helps smooth out price data by creating a constantly updated average price over a specific time period. Investors and traders use moving averages to identify trends and potential buy or sell signals by filtering out short-term price noise.

Definition of Fibonacci Retracement A Fibonacci Retracement is a technical analysis tool that helps traders identify potential levels where a stock (or any financial asset) might reverse or “bounce back” after a price move.It’s based on the famous Fibonacci sequence — 0, 1, 1, 2, 3, 5, 8, 13, etc. — where each number is the sum of the two before it.

Definition of a Flag Pattern A Flag Pattern is a chart pattern in technical analysis that signals a short pause in a strong trend — like a pit stop before the market continues racing in the same direction. It looks just like it sounds: a small rectangular “flag” that forms after a sharp “flagpole” move up or down.

Definition of Cup and Handle A Cup and Handle is a chart pattern that signals a potential continuation of an uptrend after a brief period of consolidation. Imagine the price forms a “U” shape — that’s the cup. Then it drifts slightly downward or sideways — that’s the handle. When the handle finishes forming, the price often breaks out above the resistance line, signaling that buyers are back in control. It’s like the market taking a sip of coffee before charging full steam

Definition of Head and Shoulders A Head and Shoulders is a classic chart pattern used in technical analysis to predict a potential reversal in the price of a stock, commodity, or index. The pattern looks—quite literally—like a head with two shoulders...

Definition A Double Bottom is a chart pattern in technical analysis that signals a potential reversal in a downward trend. Picture the letter “W.” The price of a stock (or index, or crypto) falls, bounces up a bit, falls again to roughly the same low point, and then rises once more.

Definition of Double Top A Double Top is a chart pattern in technical analysis that signals a possible trend reversal. Imagine a stock price climbing, hitting a peak, pulling back a little, then climbing again—only to hit about the same peak a second time. After failing to break through that “ceiling” twice, the price often turns downward.

Definition of Dead Cat Bounce A dead cat bounce is a temporary recovery in the price of a declining stock or market before it continues to fall further. It looks like a rebound, but it’s short-lived. The name comes from the grim idea that “even a dead cat will bounce if it falls from a great height.” In other words: don’t mistake a quick uptick for a full recovery.

Definition of Bull Trap A Bull Trap happens when investors are tricked into thinking a falling market has turned around and started to rise, but the rally is only temporary. After pulling in optimistic buyers, the market quickly reverses downward again—“trapping” those who bought in too early. Think of it like stepping onto what looks like solid ground, only to discover it’s quicksand.

Definition of Bear Trap A bear trap is a false technical signal that tricks traders into thinking a market or stock is heading downward (bearish), only for it to quickly reverse upward (bullish). It often happens when prices break below a support level, making it look like a downtrend is starting, but then the market rebounds—“trapping” those who sold short or exited too early. In simple terms: a bear trap is when the market fakes you out on the downside.

Definition of Market Correction A market correction is when a stock market index (like the S&P 500 or Dow Jones) drops by 10% or more from its recent high but less than 20%. If the decline goes beyond 20%, that’s considered a bear market. Corrections are a normal part of the market cycle and usually don’t last very long—historically, they often resolve in a few months.

Definition of Volatility Index (VIX) The VIX is calculated by the Chicago Board Options Exchange (CBOE). It’s derived from the prices of S&P 500 index options. Higher option prices often mean investors are bracing for bigger swings in the market, which pushes the VIX higher.

Definition of MSCI MSCI stands for Morgan Stanley Capital International, a company that provides some of the most widely used investment indexes and analytics in the world. Think of MSCI as the “scorekeeper” for global stock markets. When you hear about funds that track the MSCI World Index or the MSCI Emerging Markets Index, what they’re really doing is following the performance of groups of stocks MSCI has bundled together.

Definition of Shanghai Composite Index The Shanghai Composite Index (often called the Shanghai Composite) is the main stock market index that tracks all the stocks listed on the Shanghai Stock Exchange (SSE) in China. Think of it as China’s version of the S&P 500 or Dow Jones in the U.S.—a barometer for how Chinese companies are doing and how investors feel about the Chinese economy.

Definition of the Hang Seng Index The Hang Seng Index (HSI) is the main stock market index for Hong Kong. Think of it as Hong Kong’s version of the Dow Jones or S&P 500. It tracks the performance of the largest and most influential companies listed on the Hong Kong Stock Exchange, including banks, real estate developers, and tech giants.

Definition of Nikkei 225 The Nikkei 225 is a price-weighted stock market index made up of 225 blue-chip companies across multiple industries in Japan. “Price-weighted” means companies with higher stock prices carry more influence on the index, regardless of their total market size. It’s published by the Nihon Keizai Shimbun (that’s where “Nikkei” comes from—Japan’s leading financial newspaper). First introduced in 1950, it’s considered the leading indicator of Japan’s overa

Definition of DAX The DAX, short for Deutscher Aktienindex (German Stock Index), is Germany’s version of the S&P 500 or Dow Jones. It tracks the 40 largest and most liquid companies listed on the Frankfurt Stock Exchange. Think of it as a snapshot of Germany’s corporate heavy-hitters—big names like Siemens, Adidas, BMW, Volkswagen, and Deutsche Bank often appear in this list.

Definition of FTSE 100 When you hear people in the financial world talk about “the FTSE,” they’re usually referring to the FTSE 100 Index(pronounced “Footsie 100”). It’s the stock market index of the 100 largest companies listed on the London Stock Exchange (LSE) by market capitalization.

Definition of Russell 2000 Index The Russell 2000 is a stock market index that tracks the performance of about 2,000 smaller publicly traded companies in the U.S. It’s considered the best measure of how small-cap stocks (companies with relatively small market values) are doing. While the S&P 500 gets all the headlines for tracking America’s biggest corporations, the Russell 2000 gives you a peek into the health of the smaller players that make up the backbone of the U.S. eco

Definition of Nasdaq The Nasdaq (short for the National Association of Securities Dealers Automated Quotations) is both a stock exchange and a stock market index. It’s known for being the world’s first electronic exchange, launched in 1971, and is home to many of the largest technology and growth companies, including Apple, Microsoft, Amazon, and Tesla.

Definition of S&P 500 The S&P 500 (short for Standard & Poor’s 500) is one of the most well-known stock market indexes in the world. It tracks the performance of 500 of the largest publicly traded companies in the United States, covering industries like technology, healthcare, finance, energy, and consumer goods.

Definition of Dow Jones The Dow Jones Industrial Average (DJIA)—often just called “the Dow”—is one of the most widely recognized stock market indexes in the world. It tracks the performance of 30 large, publicly owned companies based in the United States. These companies span multiple industries, making the Dow a quick snapshot of how the stock market—and in many ways, the economy itself—is doing.

Definition of an Index An Index is a measurement tool that tracks the performance of a group of assets—usually stocks or bonds—so investors can see how a particular market or segment of the market is doing. Think of it as a financial scoreboard. The most famous indexes include the S&P 500, which follows 500 of the largest U.S. companies, and the Dow Jones Industrial Average, which tracks 30 major corporations.

Definition of Market Sentiment Market sentiment is the overall mood of investors about the market (or a specific stock, sector, or asset). Are people feeling optimistic (bullish), pessimistic (bearish), or just…meh (neutral)? That collective mood often shows up in prices, trading volume, and volatility.

Definition of Market Depth Market depth shows how much real buying and selling interest exists at different prices for a stock, ETF, or crypto. It’s the stack of limit orders waiting in line—how many shares are bid below the current price and how many are offered above it. Deeper markets = more shares at many price levels = easier to trade without moving the price.