Investment Dictionary
Here we go with a feb basic terms which will help you navigate through the aparently complicated world of investment opportunities:
A
Asset
In common terms any object, intangible or tangible, that is of value to the owner. In most cases an asset is cash or can be turned into cash; exceptions are prepayments, which are payments made in advance and which represent a receivable right for the posessor. Most accounting bodies throughout the workd now define an asset as “a source of economic benefits obtained or controlled as a consequence of past economic events.”
I
Investment (definition)
In finance, the purchase of an asset (in most cases a financial product) in order to produce for the owner future revenues in excess of the cost of that asset. An investment can take many forms, such as productive assets, financial products (bonds, shares, derivatives, etc). Any investment involves a certain degree of risk, since it can also generate losses (more costs than the revenues it generates).
Accounting definition of investments:
Properties hold by a company with the purpose of generating future revenues, as defined by the local accounting standards (GAAP - generally accepted accounting principles). For example, the UK standard (Statement od Standard Accounting Practice 19 defines investment as an asset:
- in respect to which construction work and development has been completed, and
- that is held for an investment potential, any rental income or revenue being negotiated at an arm’s length.
Intangible (asset)
An asset or an object without any physical form.
Mini Trading Dictionary - Some Useful Definitions
Buy stop order = a pending (waiting) order to buy a security or an investment vehicle which is triggered at a quotation above the current trading price level. In other words, the trader expects the instrument price to exceed a certain (higher) level before it will grow further. This is often associated with the traded instrument breaking a so-called resistance level, which once broken will be exceeded easily.
Buy limit order = also a pending order, to buy a security, but at a price below the current level. This type of order is more intuitive – you wait for the price to decrease to a certain level, after which you consider that it will grow back and make some profits from reversing the trend.
Sell stop order = a pending (on hold) order to sell a security which is triggered when the price decreases down to a certain level, below the current price. The thinking behind this is that the security will break the so-called support level, after which it will continue to decrease further.
Sell limit order = a pending (on hold) order to sell a security which is triggered when the price increases up to a certain level, above the current price. The thinking behind this is that the security price will reach a so called resistance level, after which it will stop growing and resume decreasing its price.
Technical analysis = a field of the financial analysis which attempts to predict the future movements of a financial instrument based purely on the past history of that instrument and on running different types of (mostly mathematical methods) on it.
Metatrader (MT) = one of the most popular trading platforms in the world, provided as a stand alone software by most brokers. It allows the trader to access a flux of data as provided by the broker, analyze it and place orders of sell and buy on that platform.
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