Category: Stock Research
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What is On-balance volume? How to use On-balance volume
On-balance volume (OBV) is a technical analysis indicator intended to relate price and volume in the stock market. OBV is based on a cumulative total volume. Volume on an up day (close higher than previous close) is added and volume on a down day is subtracted. The technique was investigated in the 1940s by Woods…
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Put options
Put options give the buyer the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares. If you choose to buy or go long a put…
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Call Options
Call options are agreements that give an investor the right, but not the obligation, to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period. The agreed upon price of the exchange is called the strike price. The date on which the agreement expires is the expiry date…
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Asset Allocation with ETFs
Investors should spend most of their time on overall asset selection and ignore individual stocks for the most part. according to research, about 95% of money managers’ performance can be explained by their selection of asset classes, not by their selection of individual stocks. Asset allocation is not necessarily easy, but it is less detailed…
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ETF – Exchange Traded Fund
An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as…
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The primary types of financial options
The primary types of financial options are: Exchange traded options (also called “listed options”) are a class of exchange traded derivatives. Exchange traded options have standardized contracts, and are settled through a clearing house with fulfillment guaranteed by the credit of the exchange. Since the contracts are standardized, accurate pricing models are often available. Exchange…
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Parabolic SAR (SAR – stop and reverse)
Parabolic SAR (SAR – stop and reverse) is a method devised by J. Welles Wilder, Jr, to find trends in market prices or securities. It may be used as a trailing stop loss based on prices tending to stay within a parabolic curve during a strong trend. The concept draws on the idea that time…
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The Elliott wave principle
The Elliott wave principle The Elliott wave principle is a form of technical analysis that attempts to forecast trends in the financial markets and other collective activities. It is named after Ralph Nelson Elliott (1871–1948), an accountant who developed the concept in the 1930s: he proposed that market prices unfold in specific patterns, which practitioners…
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What is Commodity Channel Index (CCI)?
The Commodity Channel Index (CCI) is an oscillator originally introduced by Donald Lambert in an article published in the October 1980 issue of Commodities magazine (now known as Futures magazine). Since its introduction, the indicator has grown in popularity and is now a very common tool for traders in identifying cyclical trends not only in…
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Stock Chart: Double Tops and Bottoms
A much more common reversal pattern is the double top or bottom. Next to the head and shoulders, it is the most frequently seen and the most easily recognized. Example of a bouble top. This pattern has two peaks (A and C) at about the same level. The pattern is complete when the middle…