{"appState":{"pageLoadApiCallsStatus":true},"categoryState":{"relatedCategories":{"headers":{"timestamp":"2022-05-24T18:31:21+00:00"},"categoryId":34300,"data":{"title":"General (Investing)","slug":"general-investing","image":{"src":null,"width":0,"height":0},"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"parentCategory":{"categoryId":34288,"title":"Investing","slug":"investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"}},"childCategories":[],"description":"How much should you save for retirement? Which investment strategies are smartest in your 20s and 30s? What is an inverse ETF? How does fiat money work? We've got these answers and many, many more.","relatedArticles":{"self":"https://dummies-api.dummies.com/v2/articles?category=34300&offset=0&size=5"}},"_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"relatedCategoriesLoadedStatus":"success"},"listState":{"list":{"count":10,"total":285,"items":[{"headers":{"creationTime":"2016-03-27T16:47:15+00:00","modifiedTime":"2022-05-02T18:18:27+00:00","timestamp":"2022-05-03T00:01:09+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"Dark Pools and High Frequency Trading For Dummies Cheat Sheet","strippedTitle":"dark pools and high frequency trading for dummies cheat sheet","slug":"dark-pools-and-high-frequency-trading-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"This Cheat Sheet provides a quick overview of dark pools and high frequency trading, including choosing a good broker, and much more.","noIndex":0,"noFollow":0},"content":"Dark pools and high frequency trading (HFT) are contentious subjects in financial markets. Billions of dollars are traded through dark pools, and HFT algorithms with just small, incremental price differences make billions of dollars. And it all can happen in milliseconds. Most importantly, dark pools and HFT are part of the current market environment. Anyone who’s invested in the markets needs to know what they’re involved with and what they’re up against.","description":"Dark pools and high frequency trading (HFT) are contentious subjects in financial markets. Billions of dollars are traded through dark pools, and HFT algorithms with just small, incremental price differences make billions of dollars. And it all can happen in milliseconds. Most importantly, dark pools and HFT are part of the current market environment. Anyone who’s invested in the markets needs to know what they’re involved with and what they’re up against.","blurb":"","authors":[{"authorId":9235,"name":"Jay Vaananen","slug":"jay-vaananen","description":"Jay Vaananen is a senior private banker with many years of experience advising clients in their investments across all asset classes. He is also a popular university lecturer and regular commentator in all matters regarding banking, finance and investing.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/9235"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":144053,"title":"Realising the Importance of Speed in High Frequency Trading","slug":"realising-the-importance-of-speed-in-high-frequency-trading","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144053"}},{"articleId":144049,"title":"Choosing a Broker Who Understands and Helps You Navigate Dark Pools","slug":"choosing-a-broker-who-understands-and-helps-you-navigate-dark-pools","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144049"}},{"articleId":144050,"title":"Being Aware of the Risks of Dark Pools","slug":"being-aware-of-the-risks-of-dark-pools","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144050"}},{"articleId":144051,"title":"The Basics of Automated Trading","slug":"the-basics-of-automated-trading","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144051"}},{"articleId":144031,"title":"10 Things You Should Know about Dark Pools","slug":"10-things-you-need-to-know-about-dark-pools","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144031"}}],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281564,"slug":"dark-pools-and-high-frequency-trading-for-dummies","isbn":"9781118879191","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1118879198/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1118879198/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1118879198-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1118879198/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1118879198/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/dark-pools-and-high-frequency-trading-for-dummies-cover-9781118879191-203x255.jpg","width":203,"height":255},"title":"Dark Pools and High Frequency Trading For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"\n <p><b data-author-id=\"9235\">Jay Vaananen</b> is a senior private banker with many years of experience advising clients in their investments across all asset classes. He is also a popular university lecturer and regular commentator in all matters regarding banking, finance and investing.</p> ","authors":[{"authorId":9235,"name":"Jay Vaananen","slug":"jay-vaananen","description":"Jay Vaananen is a senior private banker with many years of experience advising clients in their investments across all asset classes. He is also a popular university lecturer and regular commentator in all matters regarding banking, finance and investing.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/9235"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781118879191&quot;]}]\" id=\"du-slot-627070c62701f\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781118879191&quot;]}]\" id=\"du-slot-627070c62828c\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":144049,"title":"Choosing a Broker Who Understands and Helps You Navigate Dark Pools","slug":"choosing-a-broker-who-understands-and-helps-you-navigate-dark-pools","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144049"}},{"articleId":144022,"title":"The Fundamentals of High Frequency Trading","slug":"the-fundamentals-of-high-frequency-trading","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144022"}},{"articleId":144053,"title":"Realising the Importance of Speed in High Frequency Trading","slug":"realising-the-importance-of-speed-in-high-frequency-trading","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/144053"}}],"content":[{"title":"Choosing a broker who understands dark pools","thumb":null,"image":null,"content":"<p>If you&#8217;re buying or selling shares then you&#8217;ll inevitably be routed through a dark pool at some point and your trades may well be executed there. Your broker&#8217;s expertise and the services that he provides are now one of the most important parts of your investment process.</p>\n<p class=\"Tip\">Figure out what you want to do with your investments and what type of relationship you need with a broker. Deciding on a broker depends on how hands-on you want to be and how much control you want to have over your orders. If you just want to push the button and execute your order then you need a broker you can trust.</p>\n<p>If, on the other hand, you prefer to do things yourself then you need a broker who offers you as much control and decision making as possible when it comes to the execution of your trade.</p>\n<p>When you talk with your broker, ask him these questions to ensure that he&#8217;s working for your best interests:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Do you know the different dark pools?</b> Your broker should know the main dark pools. This question will tell you whether your broker is up to speed on the current market and has an understanding of who the major operators are. Stock trades are regularly routed through dark pools; if a broker hasn&#8217;t got any idea about dark pools, it&#8217;s a sign of incompetence.</p>\n<p class=\"child-para Tip\">After asking your broker what he knows about the different dark pools, you can also do your own investigation. Know the biggest dark pools by name. Read recent news reports about them and find out how they execute their orders and who they allow to operate in their pools. Don&#8217;t just believe their web pages and marketing materials. There have been lawsuits accusing dark pools of misleading clients, so make sure that you know the good guys from the bad guys.</p>\n<p class=\"child-para Remember\">The good guys can become the bad guys overnight, so regularly follow any developments in the dark pool market via the media. If a dark pool operator is fined or is under investigation for offences that have negatively impacted its clients, you should discuss the matter with your broker and make sure that he doesn&#8217;t route your trades through that particular dark pool until the issue with the dark pool is resolved.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>What markets do you trade in? </b>Discuss with your broker what dark pools and what displayed markets he executes your trades on. Don&#8217;t be afraid to ask straight and difficult questions and see what your broker says. If he can&#8217;t give you clear answers then the broker serving you either doesn&#8217;t know his job well enough or is hiding something from you.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Does the dark pool operate a maker-taker fee?</b> A <i>maker-taker fee</i> is when some traders (often high frequency traders) are paid a fee to post orders on the book, which adds liquidity (maker fee), or to trade against existing orders in the book, which takes away liquidity (taker fee). If the dark pools your broker uses operate a maker-taker fee then high frequency traders are likely to be operating in that dark pool. Exchanges make money when trades are executed; that&#8217;s why sometimes they offer financial incentives to certain traders to either post orders or to execute against existing orders already in the order book.</p>\n<p class=\"child-para\">If you&#8217;re dealing in small share lots then it may be fine for you to use the standard at-market orders, because they&#8217;re unlikely to have an impact on the price. If you&#8217;re trading large sizes then you may be better off trading in another dark pool because the chances are high that a high-frequency-trading algorithm will discover your larger order and trade against it.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Do you offer direct market access?</b> <i>Direct market access</i> means the ability to enter your orders directly into a market venue without having to go through a broker or intermediary. If you want to operate your trades yourself, you need direct market access. This gives you a choice of how and where to route your orders.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>What special order types do you have access to?</b> If you manage your own orders then you&#8217;ll need to know all the different special order types available and know exactly how they work in the market. Don&#8217;t just take your broker&#8217;s word; make sure that you research the different types of special order types and cross-reference with what your broker tells you.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>What is your trading portal? </b>A <i>trading portal</i> is what you have in front of you on your computer screen to enter and follow your trades.<b> </b>Get to know the trading tools at your disposal and test to see how they work. Check to see whether the broker&#8217;s trading portal is intuitive and easy to use.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Will you answer my dark pool queries in writing?</b> Don&#8217;t be afraid to ask your broker for confirmation in writing on any issues you have with how he operates in dark pools and routes trades. Getting everything in writing is important because it gives you proof that you&#8217;ve discussed the matter of dark pools with your broker and made demands on the broker as to how he should act with your orders when dark pools are involved in one of your trades. If a situation arises in which a dark pool has acted unfairly to certain market participants (as has happened before) then you at least have the possibility of redress.</p>\n</li>\n</ul>\n"},{"title":"Fundamentals of high frequency trading","thumb":null,"image":null,"content":"<p>Having a grasp of the fundamental traits of a high frequency trade helps you spot where the high frequency traders are operating and what tactics they&#8217;re using.</p>\n<p>The more knowledge you have of the tactics and trading strategies used by high frequency traders, the better equipped you will be to avoid becoming their prey and receiving poor trade executions. Here are some suggestions:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>High frequency traders trade in small lots of 100 to 200 shares.</b> They try to find out big orders hidden in the markets by using small orders to test the market.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Watch for stock price slippage.</b> <i>Slippage</i><i> </i>is the difference between the price of a stock when you send an order into the market and the price your order actually gets executed at. Consistently seeing slippage in your trades is indicative of high frequency traders operating in that stock. Be careful: you don&#8217;t want to be fodder for high frequency traders.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Flash crashes can often be traced back to high frequency traders</b>. Flash crashes happen fast. At their longest, a flash crash may take minutes; more often they are just seconds or milliseconds in length. Because of the speed at which a flash crash happens, it often involves high frequency traders pulling their orders out of the market and/or placing a large amount of sell orders. If the stock has had flash crashes then the order book may be the realm of high frequency traders.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>High frequency traders operate in dark pools. </b>Be aware that high frequency traders have been allowed into some dark pools. The fact that there may be high frequency traders in a dark pool makes it impossible for you to spot whether you&#8217;re trading against them. In such a situation, you&#8217;re at risk of receiving an execution at an inferior price.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>High frequency traders use many different strategies.</b> High frequency traders employ traditional market-making and trading strategies; contrary to popular belief, not all high frequency trading is predatory.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>High frequency trading follows regulatory changes.</b> Laws and regulations are the foundation of how high frequency traders are able to ply their trade. Any changes in regulation will affect how the market works.</p>\n</li>\n</ul>\n"},{"title":"Realizing the importance of speed in HFT","thumb":null,"image":null,"content":"<p>High frequency trading requires speed quicker than the eye can see. With superior speeds, high frequency traders are able to react to news faster than market participants with inferior speed, because computer algorithms are able to analyse and produce trading instructions faster than a human can manually input an order. These are some of the ways they achieve these superfast speeds:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Co-location is at the heart of HFT speed.</b> <i>Co-location</i> basically means placing a high frequency trader&#8217;s computers as close as physically possible to the exchange&#8217;s trade-matching computers. Doing so reduces the time it takes for the HFT trader&#8217;s computers to receive important market information. By placing their computers as close as possible to an exchange&#8217;s matching engine, high frequency traders are able to have faster access to changes in price and the order book.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>News service providers get a look at important economic data prior to the official release.</b> They then place the news in servers close to the exchanges so that when the news is released, it&#8217;s available in different geographical locations at exactly the same time. High frequency traders with their computers located close to the news servers will be at an advantage because they can get the released news more quickly and then trade on the news faster than other market participants.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Routing via a dark pool exposes you to the possibility of being front run and of information leakage. </b>When an order is first routed through a dark pool or even several dark pools, it&#8217;s leaking information all the time. The type of order, the price information and the amount of stocks in the order are all valuable information to other traders. This information is being sent electronically and is therefore at risk of being picked up or even given to other market participants, which is why it&#8217;s called <i>information leakage.</i> Make sure that it&#8217;s a dark pool you&#8217;re happy to have your orders go through.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2022-05-02T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":207527},{"headers":{"creationTime":"2016-03-27T16:46:49+00:00","modifiedTime":"2022-04-06T18:32:13+00:00","timestamp":"2022-04-07T00:01:07+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"High-Level Investing For Dummies Cheat Sheet","strippedTitle":"high-level investing for dummies cheat sheet","slug":"high-level-investing-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Check out the following sites, tools, and pointers to stay informed about major markets and global issues that affect stocks.","noIndex":0,"noFollow":0},"content":"In high-level investing, investors and speculators track the major markets and critical global issues that affect stocks and other securities, both in the United States and other major markets. Check out the following sites, tools, and pointers to stay informed.","description":"In high-level investing, investors and speculators track the major markets and critical global issues that affect stocks and other securities, both in the United States and other major markets. Check out the following sites, tools, and pointers to stay informed.","blurb":"","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":"Paul Mladjenovic, CFP, is a certified financial planner practitioner, writer, and speaker. He has helped people with financial and business concerns since 1981. He is the author of Stock Investing For Dummies and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Learn more at ravingcapitalist.com.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":139949,"title":"10 Respected Authorities on Stocks and Related Investments","slug":"10-respected-authorities-on-stocks-and-related-investments","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139949"}},{"articleId":139944,"title":"Is the Market Overvalued? Using the Buffett Indicator","slug":"is-the-market-overvalued-using-the-buffett-indicator","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139944"}},{"articleId":139943,"title":"An Option Strategy for a Turbulent Market: The Zero-Cost Collar","slug":"an-option-strategy-for-a-turbulent-market-the-zero-cost-collar","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139943"}},{"articleId":139939,"title":"7 Practices of Successful Options Speculators","slug":"7-practices-of-successful-options-speculators","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139939"}},{"articleId":139940,"title":"4 Great Simulated Stock-Trading Sites for High-Level Investors","slug":"4-great-simulated-stock-trading-sites-for-high-level-investors","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139940"}}],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282274,"slug":"high-level-investing-for-dummies","isbn":"9781119140818","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119140811/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119140811/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119140811-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119140811/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119140811/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/high-level-investing-for-dummies-cover-9781119140818-203x255.jpg","width":203,"height":255},"title":"High Level Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"\n <p><b data-author-id=\"9001\">Paul Mladjenovic, CFP,</b> has written four editions of <i>Stock Investing For Dummies</i> and has taught would-be investors about stock investing since 1983. As a certified financial planner, he personally coaches his clients on stock investing strategies. </p>","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":"Paul Mladjenovic, CFP, is a certified financial planner practitioner, writer, and speaker. He has helped people with financial and business concerns since 1981. He is the author of Stock Investing For Dummies and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Learn more at ravingcapitalist.com.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119140818&quot;]}]\" id=\"du-slot-624e29c31c24e\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119140818&quot;]}]\" id=\"du-slot-624e29c31c79c\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":139936,"title":"Intermarket Sites That Are Useful for High-Level Investing","slug":"intermarket-sites-that-are-useful-for-high-level-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139936"}},{"articleId":139939,"title":"7 Practices of Successful Options Speculators","slug":"7-practices-of-successful-options-speculators","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139939"}},{"articleId":139940,"title":"4 Great Simulated Stock-Trading Sites for High-Level Investors","slug":"4-great-simulated-stock-trading-sites-for-high-level-investors","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139940"}},{"articleId":139932,"title":"Recommended Apps for High-Level Stock Investing","slug":"recommended-apps-for-high-level-stock-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139932"}}],"content":[{"title":"Intermarket sites that are useful for high-level investing","thumb":null,"image":null,"content":"<p>Stocks can go up or down based on major movements in related markets. These sites track other major markets that can (or will) have a major impact on today&#8217;s stock market (and possibly your high-level investing pursuits):</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><a href=\"http://www.pensiontsunami.com\" target=\"_blank\" rel=\"noopener\"><b>PensionTsunami</b></a><b>:</b> Pensions are massively underfunded across the corporate and government world; this site gives you all the news and analysis on this critical topic.</p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"../theeconomiccollapseblog.com\" target=\"_blank\" rel=\"noopener\"><b>Economic Collapse Blog</b></a><b>:</b> Michael Snyder&#8217;s site provides thorough research on major financial and economic issues that could be problematic for the U.S. economy.</p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.thebubblebubble.com\" target=\"_blank\" rel=\"noopener\"><b>The Bubble Bubble</b></a><b>:</b> This site follows all of the potential bubbles that could burst in the next few years.</p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.kereport.com\" target=\"_blank\" rel=\"noopener\"><b>The Korelin Economics Report</b></a><b>:</b> This site provides news, commentary, and interviews with analysts on precious metals, stocks, and related topics.</p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.dollarcollapse.com\" target=\"_blank\" rel=\"noopener\"><b>Dollar Collapse</b></a><b>:</b> John Rubino&#8217;s site tracks the U.S. dollar, currencies, and related markets.</p>\n</li>\n</ul>\n"},{"title":"7 practices of successful options speculators","thumb":null,"image":null,"content":"<p>Option strategies augment any high-level investor&#8217;s or speculator&#8217;s overall approach. If you do option strategies of any kind, the following practices will help you get ahead:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Discipline:</b> Successful options speculators make sure they aren&#8217;t susceptible to emotions such as fear or greed, and they try to avoid a bias.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Money allocation:</b> They speculate only with money allocated for options —and they don&#8217;t spend a penny more.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Patience for opportunities:</b> They don&#8217;t trade every day. They wait for the right trades.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Planning:</b> They have plans for entering and exiting a trade.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Ongoing education:</b> They don&#8217;t assume they&#8217;ve learned all they need to know about options and the underlying assets.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Hedging:</b> They aren&#8217;t totally directional. They know that the market can sometimes go against them.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Back testing:</b> They use data from past or historical trades to see how trades would have or could have resulted.</p>\n</li>\n</ul>\n"},{"title":"4 great simulated stock-trading sites for high-level investors","thumb":null,"image":null,"content":"<p>Before you bet real money, it&#8217;s often a good idea to test your trading, investing, or speculating approach. Here are five great (free!) sites to help high-level investors learn through simulated trading:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><a href=\"http://www.wallstreetsurvivor.com\" target=\"_blank\" rel=\"noopener\"><b>Wall Street Survivor</b></a><b>:</b> This site provides great courses on investing for beginners and experienced investors.</p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.stocktrak.com\" target=\"_blank\" rel=\"noopener\"><b>Stock-Trak</b></a><b>:</b> This is a very active site for simulated trading.</p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.investopedia.com/simulator/\" target=\"_blank\" rel=\"noopener\"><b>Investopedia Stock Simulator</b></a><b>:</b> This is a great simulated stock investing program from a premier financial education site.</p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.vse.marketwatch.com/www.marketwatch.com/game/\" target=\"_blank\" rel=\"noopener\"><b>Virtual Stock Exchange</b></a><b>:</b> This is a very active simulated trading site and discussion forum with the trader community.</p>\n</li>\n</ul>\n"},{"title":"Recommended apps for high-level stock investing","thumb":null,"image":null,"content":"<p>In the age of tablets and smartphones, you can stay on top of your high-level investing pursuits with popular and powerful apps to keep track of stocks, do research and analysis, follow financial news and views, and more. You can find these apps on Apple&#8217;s iTunes site or via your favorite search engine:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Forbes Intelligent Investing app:</b> Forbes is a financial site, and this app has many features and tools for electronic investing.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>The Wall Street Journal app:</b> This fully featured app for investors is from the premier financial publication.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Yahoo! Finance app:</b> Yahoo is one of the top go-to financial sites, and this app brings Yahoo&#8217;s news and data to your fingertips.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>StockTwits app:</b> This app has great features designed by one of the top stock investing forums online.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>The Bloomberg Business app:</b> Bloomberg gives you stock quotes and financial headlines with this handy app.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-04-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":207427},{"headers":{"creationTime":"2017-04-02T05:37:16+00:00","modifiedTime":"2022-03-17T18:27:30+00:00","timestamp":"2022-03-18T00:01:12+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"Investing All-in-One For Dummies Cheat Sheet","strippedTitle":"investing all-in-one for dummies cheat sheet","slug":"investing-one-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Use this Cheat Sheet as a guide to the various types of investments, including ownership and lending, and the importance of divisification.","noIndex":0,"noFollow":0},"content":"Money is the biggest component of the investing world, but time comes in a close second. When you combine the two, you have the potential to grow your money into a healthy nest egg. This Cheat Sheet offers some basic investing terminology and advice that will pay off with every dollar you invest.","description":"Money is the biggest component of the investing world, but time comes in a close second. When you combine the two, you have the potential to grow your money into a healthy nest egg. This Cheat Sheet offers some basic investing terminology and advice that will pay off with every dollar you invest.","blurb":"","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":"Eric Tyson, MBA, is a personal finance writer, lecturer, and former management consultant to Fortune 500 financial service firms. He is the author or coauthor of more than 20 Dummies books on personal finance.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":242621,"title":"How to Find Company Regulatory Filings on the Securities and Exchange Commission’s Website","slug":"find-company-regulatory-filings-securities-exchange-commissions-website","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242621"}},{"articleId":242617,"title":"How to Evaluate Neighborhoods when Investing in Real Estate","slug":"evaluate-neighborhoods-investing-real-estate","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242617"}},{"articleId":242614,"title":"How to Determine How Much You Should Save for Retirement","slug":"determine-much-save-retirement","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242614"}},{"articleId":242611,"title":"Mastering Seller’s and Buyer’s Markets to Invest in Real Estate","slug":"mastering-sellers-buyers-markets-invest-real-estate","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242611"}},{"articleId":242608,"title":"What You Should Know about the Government’s Effect on Real Estate When Investing","slug":"know-governments-effect-real-estate-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242608"}}],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282303,"slug":"investing-all-in-one-for-dummies","isbn":"9781119873037","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119873037-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/9781119873037-203x255.jpg","width":203,"height":255},"title":"Investing All-in-One For Dummies, 2nd Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"\n <p><b data-author-id=\"8975\">Eric Tyson</b>, MBA, is a personal finance writer, lecturer, and former management consultant to Fortune 500 financial service firms. He is the author or coauthor of more than 20 Dummies books on personal finance.</p>","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":"Eric Tyson, MBA, is a personal finance writer, lecturer, and former management consultant to Fortune 500 financial service firms. He is the author or coauthor of more than 20 Dummies books on personal finance.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119873037&quot;]}]\" id=\"du-slot-6233cbc886640\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119873037&quot;]}]\" id=\"du-slot-6233cbc886fb7\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":236934,"title":"Websites That Can Help You Boost Your Savings","slug":"websites-can-help-boost-savings","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/236934"}},{"articleId":236937,"title":"Start Now to Become a Successful Investor","slug":"start-now-become-successful-investor","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/236937"}},{"articleId":236940,"title":"10 Tips for Investing Success","slug":"10-tips-investing-success","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/236940"}}],"content":[{"title":"Building wealth with ownership investments","thumb":null,"image":null,"content":"<p>If you want your money to grow faster than the rate of inflation over the long term and you don’t mind a bit of a roller-coaster ride from time to time in your investments’ values, <em>ownership investments</em> are for you.</p>\n<p>With an ownership investment<em>,</em> you own an interest in some company or other asset that has the ability to generate revenue and profits. Stocks and real estate are examples of ownership investments:</p>\n<p><strong>The stock market:</strong> Stocks are shares of ownership in a company. If you want to share in the growth and profits of companies like Skechers (footwear), you can! You simply buy shares of their stock through a brokerage firm. However, even if Skechers makes money in the future, you can’t guarantee that the value of its stock will increase.</p>\n<p>Some companies today sell their stock directly to investors, allowing you to bypass brokers. You can also invest in stocks via a stock mutual fund (or an exchange-traded fund), where a fund manager decides which individual stocks to include in the fund.</p>\n<p><strong>Real estate:</strong> Owning and managing real estate is like running a small business. You need to satisfy customers (tenants), manage your costs, keep an eye on the competition, and so on. Some methods of real estate investing require more time than others, but many are proven ways to build wealth.</p>\n"},{"title":"Generating income from lending investments","thumb":null,"image":null,"content":"<p>Besides ownership investments, the other major types of investments include those in which you lend your money. Examples of lending investments include the following:</p>\n<ul>\n<li>Suppose that you keep some money in a bank, either locally or online — most likely in a checking account but perhaps also in a savings account or certificate of deposit (CD). No matter what type of bank account you place your money in, you’re lending your money to the bank.</li>\n<li>You can also invest your money in bonds, another type of lending investment. When you purchase a bond that’s been issued by the government or a company, you agree to lend your money for a predetermined period of time and receive a particular rate of interest. A bond may pay you 4 percent interest over the next ten years, for example.</li>\n</ul>\n<p>An investor’s return from lending investments is typically limited to the original investment plus interest payments. If you lend your money to a company through one of its bonds that matures in, say, ten years, and the company triples in size over the next decade, you won’t share in its growth.</p>\n<p>The company’s stockholders and employees reap the rewards of the company’s success, but as a bondholder, you don’t; you simply get interest and the face value of the bond back at maturity.</p>\n<p>Many people keep too much of their money in lending investments, thus allowing others to reap the rewards of economic growth. Although lending investments appear safer because you know in advance what return you’ll receive, they aren’t that safe.</p>\n<p>The long-term risk of these seemingly safe money investments is that your money will grow too slowly to enable you to accomplish your personal financial goals. In the worst cases, the company or other institution to which you’re lending money can go under and stiff you for your loan.</p>\n"},{"title":"Diversifying: A smart way to reduce investment risk","thumb":null,"image":null,"content":"<p><em>Diversification</em> is one of the most powerful investment concepts. It requires you to place your money in different investments with returns that aren’t completely correlated.</p>\n<p>Now for the plain-English translation: With your money in different places, when one of your investments is down in value, the odds are good that at least another is up.</p>\n<p>To decrease the odds that all your investments will get clobbered at the same time, put your money in different types or classes of investments. The different kinds of investments include money market funds, bonds, stocks, real estate, and precious metals. You can further diversify your investments by investing in international as well as domestic markets.</p>\n<p>You should also diversify within a given class of investments. For example, with stocks, diversify by investing in different types of stocks that perform well under various economic conditions. For this reason, mutual funds and exchange-traded funds, which are diversified portfolios of securities, are highly useful investment vehicles. You buy into funds, which in turn pools your money with that of many others to invest in a vast array of stocks or bonds.</p>\n<p>You can look at the benefits of diversification in two ways:</p>\n<ul>\n<li>Diversification reduces the volatility in the value of your whole portfolio. In other words, when you diversify, you can achieve the same rate of return that a single investment can provide but with reduced fluctuations in value.</li>\n<li>Diversification allows you to obtain a higher rate of return for a given level of risk.</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2022-02-25T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":236944},{"headers":{"creationTime":"2016-03-27T16:57:50+00:00","modifiedTime":"2022-03-01T15:48:32+00:00","timestamp":"2022-03-01T18:01:06+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"Investing in Shares For Dummies Cheat Sheet","strippedTitle":"investing in shares for dummies cheat sheet","slug":"investing-in-shares-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Learn some fundamental aspects you need to be aware of before getting started as a share investor in the UK.","noIndex":0,"noFollow":0},"content":"Considering share investing? There are some fundamental aspects you need to be aware of before jumping in as a share investor in the UK. Avoid potential catastrophes and make the right investment choices by thinking ahead – take a look at the following points and tips.","description":"Considering share investing? There are some fundamental aspects you need to be aware of before jumping in as a share investor in the UK. Avoid potential catastrophes and make the right investment choices by thinking ahead – take a look at the following points and tips.","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":289224,"slug":"investing-in-shares-for-dummies","isbn":"9781119832218","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119832217/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119832217/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119832217-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119832217/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119832217/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/1119832217-203x255.jpg","width":203,"height":255},"title":"Investing in Shares For Dummies, 3rd UK Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":null,"authors":[{"authorId":9593,"name":"David Stevenson","slug":"david-stevenson","description":"","_links":{"self":"https://dummies-api.dummies.com/v2/authors/9593"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119832218&quot;]}]\" id=\"du-slot-621e5f62ef3b6\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" 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Fundamentals","slug":"looking-at-four-important-parts-of-a-companys-fundamentals","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194734"}},{"articleId":194728,"title":"Knowing the Best Financial Measures before Investing","slug":"knowing-the-best-financial-measures-before-investing","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194728"}},{"articleId":194732,"title":"Nine Events That Could Spell Trouble for Your Share","slug":"nine-events-that-could-spell-trouble-for-your-share","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194732"}}],"content":[{"title":"The 10 most important points about share investing","thumb":null,"image":null,"content":"<p>When you decide to invest in shares, making the right decisions is crucial: The ten most important points you need to know about share investing are listed here:</p>\n<ol>\n<li class=\"first-para\">You’re not buying shares; you’re buying a company.</li>\n<li class=\"first-para\">The only reason you buy a share is because the company is making a profit (at some stage, in the case of many technology companies).</li>\n<li>A single share, or shares in general, should never be 100 percent of your assets.</li>\n<li>In some cases, such as a severe bear market, shares aren’t a good investment at all.</li>\n<li>A share’s price is dependent on the company, which in turn is dependent on its wider market environment, which includes its customer base, its industry, the general economy, and politics.</li>\n<li>Your common sense and logic can be just as important in choosing a good share as the advice of any investment expert.</li>\n<li>Always be self-critical. Mistakes are a useful learning exercise in investing. Just try not to make too many with too much money.</li>\n<li>If you have no idea about the prospects of a company, and sometimes even if you think you do, always use stop-loss orders.</li>\n<li>Don’t rush to take profits and be brutally self-disciplined in cutting your losses.</li>\n<li>If the idea of finding a short list of companies to put in a diversified portfolio fills you with terror, then invest instead in a fund such as an investment trust or exchange traded fund (ETF).</li>\n</ol>\n"},{"title":"Reading list for investors in the UK","thumb":null,"image":null,"content":"<p>Doing your research and knowing your subject before investing in shares is crucial. Here’s the literature that should be on your bedside table when investing in shares.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">The company’s annual report</p>\n</li>\n<li>\n<p class=\"first-para\"><i>Standard &amp; Poor’s Share Guide</i></p>\n</li>\n<li>\n<p class=\"first-para\">The <i>Financial Times</i></p>\n</li>\n</ul>\n"},{"title":"Looking at four important parts of a company’s fundamentals","thumb":null,"image":null,"content":"<p>Knowing what aspects of a company to look at is crucial before you invest in shares. Cut through the jargon – keep the following in mind when inspecting a company’s performance.</p>\n<ul>\n<li><strong>Earnings:</strong> This number should growing consistently year on year through the business cycle.</li>\n<li><strong>Sales:</strong> This number should be higher than the year before.</li>\n<li><strong>Debt: </strong>This number should be lower than or about the same as the year before, unless there’s a specific reason to load up on the debt (such as a takeover). It should also be lower than the company’s assets.</li>\n<li><strong>Equity:</strong> This number, otherwise known as the <em>book value</em> or <em>net asset value</em>, should be higher than the year before.</li>\n</ul>\n"},{"title":"Knowing the best financial measures before investing","thumb":null,"image":null,"content":"<p>When investing in shares, you need to know how a company is doing. Certain financial measures can help you more than others when analyzing a company’s performance. Here are five of the best:</p>\n<p><strong>Price-to-Earnings ratio (PE): </strong>For large-cap shares, the ratio should be under 40. For all shares – including growth, small cap, and speculative issues – it shouldn’t exceed 60, unless you think the future growth prospects in the medium term are amazing.</p>\n<ul>\n<li><strong>Dividends: </strong>If the business pays a dividend, it should ideally be growing year on year</li>\n<li><strong>Return on equity (ROE):</strong> This should be growing on a year-on-year basis.</li>\n<li><strong>Earnings growth:</strong> Earnings should be at least 10 percent higher than the year before. This rate should be maintained over several years.</li>\n<li><strong>Debt-to-asset ratio:</strong> There needs to be a very good reason why this ratio is above 100 per cent. If not, avoid the company.</li>\n</ul>\n"},{"title":"9 Events that could spell trouble for your share","thumb":null,"image":null,"content":"<p>Economic, fiscal and political changes can sometimes jeopardize your investment in shares. The following list of events should set alarm bells ringing, so stay alert and be attuned to</p>\n<ul>\n<li>A bear market</li>\n<li>Increasing interest rates, which can spell trouble for heavily indebted companies</li>\n<li>Heavy insider selling by directors</li>\n<li>Lots of external investors building up a heavy short position</li>\n<li>A big and growing pensions deficit for the business pension scheme</li>\n<li>Questions about the sustainability of the sector (say, oil and energy) long term because of climate change. Think through how technological disruption can destroy whole sectors long term, slowly but surely eliminating the customer base</li>\n<li>Pending government regulatory intervention that could reduce long-term profit margins</li>\n<li>National or international conflict, such as war or acts of terrorism</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2021-10-29T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":209331},{"headers":{"creationTime":"2016-03-27T16:54:00+00:00","modifiedTime":"2022-02-18T17:36:43+00:00","timestamp":"2022-02-24T17:07:34+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"Investing For Canadians For Dummies Cheat Sheet","strippedTitle":"investing for canadians for dummies cheat sheet","slug":"investing-for-canadians-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Want to buy a home or retire comfortably? Investing can help with that! Peruse these tips for Canadians building their portfolios.","noIndex":0,"noFollow":0},"content":"Smart investing can help Canadians accomplish important financial goals like buying a home or retiring comfortably. Whether you’re an investing novice or your portfolio already consists of stocks, bonds, mutual funds, or real estate, these tips for Canadian investors can help you make informed choices. Read on for advice and resources to help you maximize your investment options and avoid common missteps.","description":"Smart investing can help Canadians accomplish important financial goals like buying a home or retiring comfortably. Whether you’re an investing novice or your portfolio already consists of stocks, bonds, mutual funds, or real estate, these tips for Canadian investors can help you make informed choices. Read on for advice and resources to help you maximize your investment options and avoid common missteps.","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282305,"slug":"investing-for-canadians-for-dummies-4th-edition","isbn":"9781119522317","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119522315/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119522315/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119522315-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119522315/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119522315/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/investing-for-canadians-for-dummies-4th-edition-cover-9781119522317-203x255.jpg","width":203,"height":255},"title":"Investing For Canadians For Dummies, 4th Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"\n <p><b data-author-id=\"8975\">Eric Tyson</b>, MBA, is a personal finance writer, lecturer, and former management consultant to Fortune 500 financial service firms. He is the author or coauthor of more than 20 Dummies books on personal finance. <b data-author-id=\"34468\">Tony Martin</b> is a nationally recognized personal finance and business speaker and commentator, columnist, management trainer, and communications consultant. He's coauthored two books on personal finance.</p>","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":"Eric Tyson, MBA, is a personal finance writer, lecturer, and former management consultant to Fortune 500 financial service firms. He is the author or coauthor of more than 20 Dummies books on personal finance.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}},{"authorId":34468,"name":"Tony Martin","slug":"tony-martin","description":"Tony Martin is a nationally recognized personal finance and business speaker and commentator, columnist, management trainer, and communications consultant. He's coauthored two books on personal finance.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/34468"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119522317&quot;]}]\" id=\"du-slot-6217bb56abcdf\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119522317&quot;]}]\" id=\"du-slot-6217bb56ac669\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":187977,"title":"How Canadians Can Maximize Investment Options","slug":"maximize-your-investment-options","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/187977"}},{"articleId":257056,"title":"How Canadians Can Minimize Investing Mistakes","slug":"how-canadians-can-minimize-investing-mistakes","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/257056"}},{"articleId":257059,"title":"A Beginner’s Guide to Investing for Canadians","slug":"a-beginners-guide-to-investing-for-canadians","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/257059"}}],"content":[{"title":"How Canadians can maximize investment options","thumb":null,"image":null,"content":"<p>Diversifying your investments helps buffer your portfolio from being sunk by one or two poor performers. Though no hard-and-fast rules dictate how to allocate the percentage you’ve ear-marked for specific investments, like stocks and real estate, here are some general guidelines for Canadians to keep in mind:</p>\n<ul>\n<li><strong>Maximize contributions to</strong> <strong>retirement plans.</strong> Unless you need accessible money for shorter-term non-retirement goals, why pass up the free extra returns from the tax benefits of retirement plans?</li>\n<li><strong>Take advantage of a Tax-Free Savings Account</strong> (TFSA). The capital gains, dividends, and interest you earn on money inside these accounts are tax-free, as are any withdrawals. Put short-term money such as your emergency funds into a TFSA. Also consider sheltering savings in a TFSA if you’re already contributing the maximum to your RRSP.</li>\n<li><strong>Don’t pile into investments that gain lots of attention.</strong> Many investors make this mistake, especially those who lack a thought-out plan to buy stocks.</li>\n<li><strong>Have the courage to be a contrarian.</strong> No one wants to jump on board a sinking ship or support a losing cause. However, just like shopping for something at retail stores, the best time to buy something is when its price is reduced.</li>\n<li><strong>Diversify.</strong> The values of different investments don’t move in tandem. When you invest in growth investments, such as stocks or real estate, your portfolio’s value will have a smoother ride if you diversify properly.</li>\n<li><strong>Invest more in what you know.</strong> Over the years, we’ve met successful investors who have built substantial wealth without spending gobs of free time researching, selecting, and monitoring investments. Some investors concentrate more on real estate because that’s what they best understand and feel comfortable with. Others put more money in stocks for the same reason. No one-size-fits-all code exists for successful investors. Just be careful that you don’t put all your investing eggs in the same basket (for example, don’t load up on stocks in the same industry you believe you know a lot about).</li>\n<li><strong>Don’t invest in too many different things.</strong> Diversification is good to a point. If you purchase so many investments that you can’t perform a basic annual review of them (for example, reading the annual report from your mutual fund), you have too many investments.</li>\n<li><strong>Be more aggressive inside retirement plans.</strong> When you hit your retirement years, you’ll probably begin to live off your non-retirement plan investments first. Why? For the simple reason that allowing your retirement plans to continue growing will save you tax dollars. Therefore, you should be relatively less aggressive with investments outside of retirement plans because that money will be invested for a shorter time period.</li>\n</ul>\n"},{"title":"How Canadians can minimize investing mistakes","thumb":null,"image":null,"content":"<p>Making an eye-popping return on an investment is great. You add to your savings, feel better about your finances, and have something to boast about with your friends. But often, you can get a solid pay-off from simply avoiding common investing missteps:</p>\n<ul>\n<li><strong>Where possible, minimize fees.</strong> The more you pay in commissions and management fees on your investments, the greater the drag on your returns. Don’t fall prey to the thinking that “you get what you pay for.”</li>\n<li><strong>Don’t expect to beat the market. </strong>If you have the right skills and interest, your ability to do better than the investing averages is greater with real estate and small business than with stock market investing. The large number of full-time, experienced stock market professionals makes it next to impossible for you to choose individual stocks that will consistently beat a relevant market average over an extended time period.</li>\n<li><strong>Don’t bail when things look bleak.</strong> The hardest time, psychologically, to hold onto your investments is when they’re down. Even the best investments go through depressed periods, which is the worst possible time to sell. Don’t sell when there’s a sale going on; if anything, consider buying more.</li>\n<li><strong>Ignore soothsayers and prognosticators.</strong> Predicting the future is nearly impossible. Select and hold good investments for the long term. Don’t try to time when to be in or out of a particular investment.</li>\n<li><strong>Minimize your trading.</strong> The more you trade, the more likely you are to make mistakes. You also get hit with increased transaction costs and higher taxes (for non-retirement account investments).</li>\n<li><strong>Think long term.</strong> Because ownership investments are riskier (more volatile), you must keep a long-term perspective when investing in them. Don’t invest money in such investments unless you plan to hold them for a minimum of five years, and preferably a decade or longer.</li>\n<li><strong>Match the time frame to the investment.</strong> Selecting good investments for yourself involves matching the time frame you have to the riskiness of the investment. For example, for money you expect to use within the next years, focus on safe investments, such as money market funds. Invest your longer-term money mostly in wealth-building investments.</li>\n</ul>\n"},{"title":"A beginner's guide to investing for Canadians","thumb":null,"image":null,"content":"<p>No one is born a knowledgeable, savvy investor. Here are some basic guidelines to keep in mind as you start to learn more about investing and begin to make your money work for you:</p>\n<ul>\n<li><strong>Saving is a prerequisite to investing.</strong> Unless you have wealthy, benevolent relatives, living within your means and saving money are prerequisites to investing and building wealth.</li>\n<li><strong>Know the three best wealth-building investments.</strong> People of all economic means make their money grow in ownership assets — stocks, real estate, and small business — where you share in the success and profitability of the asset.</li>\n<li><strong>Be realistic about expected returns.</strong> Over the long term, 9 to 10 percent per year is about right for ownership investments (such as stocks and real estate). If you run a small business, you can earn higher returns and even become a multimillionaire, but years of hard work and insight are required.</li>\n<li><strong>Diversify.</strong> Diversification is a powerful investment concept that helps you to reduce the risk of holding more aggressive investments. Diversifying simply means that you should hold a variety of investments that don’t move in tandem in different market environments. For example, if you invest in stocks, invest worldwide, not just in the Canadian market. You can further diversify by investing in real estate.</li>\n<li><strong>Look at the big picture first.</strong> Understand your overall financial situation and how wise investments fit within it. Before you invest, examine your debt obligations, tax situation, ability to fund retirement accounts, and insurance coverage.</li>\n<li><strong>Hire advisors carefully.</strong> Before you hire investing help, first educate yourself so you can better evaluate the competence of those you may hire. Beware of conflicts of interest when you consider advisors to hire.</li>\n<li><strong>You are what you read and listen to.</strong> Don’t pollute your mind with bad investing strategies and philosophies. The quality of what you read and listen to is far more important than the quantity. Find out how to evaluate the quality of what you read and hear.</li>\n<li><strong>Keep things in perspective. </strong>Your personal life and health are the highest-return, lowest-risk investments. They’re far more important than the size of your financial portfolio.</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2021-08-31T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":208630},{"headers":{"creationTime":"2016-03-27T16:57:58+00:00","modifiedTime":"2022-02-16T22:17:26+00:00","timestamp":"2022-02-24T17:07:33+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"Fundamental Analysis For Dummies Cheat Sheet","strippedTitle":"fundamental analysis for dummies cheat sheet","slug":"fundamental-analysis-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Get familiar with financial statements, investment terms, and what to look for in annual reports to make the most of fundamental analysis.","noIndex":0,"noFollow":0},"content":"Make the most of fundamental analysis by getting familiar with financial statements and investment terms as well as knowing the best places to find fundamental data.","description":"Make the most of fundamental analysis by getting familiar with financial statements and investment terms as well as knowing the best places to find fundamental data.","blurb":"","authors":[{"authorId":8949,"name":"Matt Krantz","slug":"matt-krantz","description":"","_links":{"self":"https://dummies-api.dummies.com/v2/authors/8949"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":225491,"title":"Ways the Economy Can Alter Your Fundamental Analysis","slug":"ways-economy-can-alter-fundamental-analysis","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/225491"}},{"articleId":225487,"title":"How a Company's Industry Can Influence Its Value","slug":"companys-industry-can-influence-value","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/225487"}},{"articleId":225484,"title":"Applying Moving Averages to Fundamental Analysis","slug":"applying-moving-averages-fundamental-analysis","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/225484"}},{"articleId":225478,"title":"Fundamental Analysis and the Income Statement","slug":"fundamental-analysis-income-statement","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/225478"}},{"articleId":225475,"title":"The Dangers of Initial Public Offerings","slug":"dangers-initial-public-offerings","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/225475"}}],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282219,"slug":"fundamental-analysis-for-dummies-2nd-edition","isbn":"9781119263593","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/111926359X/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/111926359X/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/111926359X-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/111926359X/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/111926359X/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/fundamental-analysis-for-dummies-2nd-edition-cover-9781119263593-203x255.jpg","width":203,"height":255},"title":"Fundamental Analysis For Dummies, 2nd Edition","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"\n <p><b data-author-id=\"33279\">Matt Krantz,</b> a nationally known financial journalist, has been writing for <i>USA Today</i> since 1999. He covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Matt also writes a daily online investing column called \"Ask Matt,\" which appears every trading day at USATODAY.com. </p>","authors":[{"authorId":33279,"name":"Matthew Krantz","slug":"matthew-krantz","description":"Matt Krantz is a nationally known financial journalist who specializes in investing topics. He is personal finance and management editor at Investor's Business Daily. He's also worked in the financial industry and covered markets and investing for USA TODAY. His writing on financial topics has appeared in Money magazine, Kiplinger's, and Men's Health. Krantz is the author of Fundamental Analysis For Dummies and coauthor of Investment Banking For Dummies. ","_links":{"self":"https://dummies-api.dummies.com/v2/authors/33279"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119263593&quot;]}]\" id=\"du-slot-6217bb55b84f4\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119263593&quot;]}]\" id=\"du-slot-6217bb55b8e9a\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":194786,"title":"Gathering the Key Documents for Fundamental Analysis","slug":"gathering-the-key-documents-for-fundamental-analysis","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194786"}},{"articleId":194827,"title":"6 Things in an Annual Report Necessary for Fundamental Analysis","slug":"six-things-in-an-annual-report-necessary-for-fundamental-analysis","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194827"}},{"articleId":194785,"title":"Top Sources for Fundamental Analysis Data Online","slug":"top-sources-for-fundamental-analysis-data-online","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194785"}}],"content":[{"title":"Gathering the key documents for fundamental analysis","thumb":null,"image":null,"content":"<p>Companies create plenty of financial documents, so you need to know which ones are most important to fundamental analysis. The following list helps you determine which documents can help you the most with fundamental analysis:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Earnings press release:</b> Curious how a company’s just-completed quarter went? That’s exactly what a company must spell out in a press release it provides investors, called the earnings report. These reports are pored over by investors and the media, as they trickle out during earnings season. Key financial measures such as revenue, expenses, and profit are often first presented to investors in the earnings press release, making them a critical document for fundamental analysis.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Quarterly financial report (10-Q):</b> Weeks after the earnings press release is given to investors, companies provide an official version called the quarterly report or 10-Q. In these documents, companies spell out the finalized numbers for the quarter. The 10-Q contains much of the same information as in the earnings press release, but usually to a much greater level of detail. For instance, many companies leave a statement of cash flows out of their earnings press release, but must include it in their 10-Q.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Annual financial report (10-K):</b> The annual report, formally known as the 10-K, is the most important and complete document fundamental analysts receive. The 10-K spells out in detail all the relevant developments at the company and full-year financial statements. Some companies also produce a more colorful version called the annual report to shareholders.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Income statement:</b> Want to know how much a company is making? Then the income statement is for you. This document shows you how much business the company is bringing in, revenue, and how much it keeps in profit after paying all its costs.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Balance sheet:</b> The balance sheet is the corporate version of an individual’s net worth statement. It shows what the company owes and what it owns.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Statement of cash flows:</b> There’s nothing more valuable than cold hard cash in business. A company may report huge profits on its income statement, but it is the cash that’s coming in the doors that matters most to fundamental analysts. While many investors start their fundamental analysis with the income statement and balance sheet, the statement of cash flows is critical because it is subject to fewer distortions from accounting rules.</p>\n</li>\n</ul>\n"},{"title":"6 things in an annual report necessary for fundamental analysis","thumb":null,"image":null,"content":"<p>After a huge annual report arrives in the mail, you may not know where to begin. So here are six things you should always consider when you get an annual report to make sure you are picking up the key elements needed in fundamental analysis:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Compare this year’s annual report with last year’s annual report.</b> The best way to read this year’s annual report is side-by-side with last year’s. Make sure the company achieved the goals it set for itself. If the company missed its goals, that’s a good place to start using your fundamental analysis skills to figure out why management fell short and whether it’s a reason to be concerned about the company’s future.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>See how cash flow compares with net income.</b> Accounting rules give companies a fair amount of leeway in how they report profits. Cash, however, is cash, and this line item is particularly important in fundamental analysis to assess when making investing decisions. You want to make sure that the company is bringing in roughly the same amount of cash as it reports as profit.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Consider operating and gross margins.</b> Too many investors get overly consumed with a company’s bottom line. However, the amount of profit a company generates should be considered in comparison with its revenue. Operating and gross margins, two financial measures fundamental analysts pay close attention to, let you do this analysis.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Look for any deterioration.</b> If you’re investing in a company because you think it has great growth prospects, make sure it’s actually growing. A basic analysis of a company’s fundamentals, including revenue and earnings, will show you how to do this pretty quickly.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Take a look at the CEO’s paycheck.</b> Most annual reports come packaged with a so-called proxy statement. These statements typically tell you how much the top executives are paid. Sometimes this information is found in the annual report. You want to be mindful that excessive compensation could be a sign that top management is out for itself, not you. Paying attention to executive pay is a way to look beyond financial statements to perform a complete analysis of a company.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Sleuth for potential conflicts of interest.</b> The proxy statement also allows investors to vote on key matters. Don’t just rubber-stamp directors the company recommends for the board. Check the proxy to see if those people have any business dealings with the company. If so, you might withhold your vote for them. Voting for members of a company’s board of directors is a way to use fundamental analysis to safeguard your interest in the company.</p>\n</li>\n</ul>\n"},{"title":"Top sources for fundamental analysis data online","thumb":null,"image":null,"content":"<p>You don’t have to subscribe to costly online services to get the data you need for fundamental analysis. Much of the fundamental analysis data you need is available from high-quality sites including:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b><a href=\"http://www.sec.gov\" target=\"_blank\" rel=\"noopener\">SEC.gov</a>:</b> If there’s one site you, as a fundamental analyst, need to know about, it’s this one. SEC.gov is a massive repository of financial information provided by the regulator, the Securities and Exchange Commission. The top function you’ll want is the ability to download all companies’ financial statements.</p>\n</li>\n<li>\n<p class=\"first-para\"><b><a href=\"http://www.nasdaq.com\" target=\"_blank\" rel=\"noopener\">Nasdaq.com</a>:</b> Nasdaq is best known for being a leading stock market exchange, a forum where traders buy and sell shares of certain stocks. But Nasdaq has built out a respectable Web site, containing loads of information for fundamental analysts. You’ll find summaries of companies’ financial statements, trading information, and stock quotes.</p>\n</li>\n<li>\n<p class=\"first-para\"><b><a href=\"http://usatoday.com\" target=\"_blank\" rel=\"noopener\">USATODAY.com</a>:</b> If you’re looking for business news, money.usatoday.com contains everything from business trends to economic reports. The site also contains a historical stock price lookup feature that will tell you what a stock’s price was in the past. There’s also a Stock Meter, which tells you how conservative or aggressive a stock is. You’ll also find the column, Ask Matt, each weekday.</p>\n</li>\n<li>\n<p class=\"first-para\"><b><a href=\"http://moneycentral.msn.com\" target=\"_blank\" rel=\"noopener\">moneycentral.msn.com</a>:</b> If you’re trying to find stocks that meet certain fundamental criteria, moneycentral.msn.com has a powerful screening tool. You can tell the system what traits you’re looking for, and it returns a list of all the stocks and companies that meet your criteria.</p>\n</li>\n<li>\n<p class=\"first-para\"><b><a href=\"http://Morningstar.com\" target=\"_blank\" rel=\"noopener\">Morningstar.com</a>:</b> Morningstar is best known as being a research firm that tracks mutual funds. But Morningstar.com contains quite a bit of information on stocks, including fundamental data. It’s also interesting to look up mutual funds and see which stocks they own, especially if the funds have skilled fundamental analysts.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-02-16T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":209357},{"headers":{"creationTime":"2016-03-26T22:34:36+00:00","modifiedTime":"2021-12-22T14:33:47+00:00","timestamp":"2022-02-24T17:07:19+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"How are Hedge Funds Different from Other Investments?","strippedTitle":"how are hedge funds different from other investments?","slug":"what-are-characteristics-of-hedge-funds","canonicalUrl":"","seo":{"metaDescription":"","noIndex":0,"noFollow":0},"content":"A hedge fund differs from so-called “real money” — traditional investment accounts like mutual funds, pensions, and endowments — because it has more freedom to pursue different investment strategies.\r\n\r\nIn some cases, these unique strategies can lead to huge gains while the traditional market measures languish. The amount of potential return makes hedge funds more than worthwhile in the minds of many accredited and qualified investors.\r\n\r\nHere are some of the basic characteristics of hedge funds.\r\n<h2 id=\"tab1\" >Hedge funds are illiquid</h2>\r\nOne key characteristic of hedge funds is that they’re <i>illiquid</i><i>.</i> Most hedge fund managers limit how often investors can take their money out; a fund may lock in investors for two years or more. In other words, investing in a hedge fund is a long-term proposition because the money you invest may be locked up for years.\r\n<h2 id=\"tab2\" >Hedge funds have little to no regulatory oversight</h2>\r\nHedge funds don’t have to register with the U.S. Securities and Exchange Commission (SEC). Most funds and their managers also aren’t required to register with the Financial Industry Regulatory Authority or the Commodity Futures Trading Commission, the major self-regulatory bodies in the investment business.\r\n\r\nHowever, many funds register with these bodies anyway, choosing to give investors peace of mind and many protections otherwise not afforded to them (not including protection from losing money, of course). Whether registered or not, hedge funds can’t commit fraud, engage in insider trading, or otherwise violate the laws of the land.\r\n<h2 id=\"tab3\" >Hedges use aggressive investment strategies</h2>\r\nIn order to post a higher return for a given level of risk than otherwise expected, a hedge fund manager does things differently than a traditional money manager. This fact is where a hedge fund’s relative lack of regulatory oversight becomes important: A hedge fund manager has a broad array of investment techniques at his disposal that aren’t feasible for a tightly regulated investor, such as short selling and leveraging.\r\n<h2 id=\"tab4\" >Managers receive bonuses for fund performance</h2>\r\nAnother factor that distinguishes a hedge fund from a mutual fund, individual account, or other type of investment portfolio is the fund manager’s compensation in the form of a performance fee. (SEC regulations forbid mutual funds, for example, from charging performance fees.)\r\n\r\nMany hedge funds are structured under the so-called <i>2 and 20</i> arrangement, meaning that the fund manager receives an annual fee equal to 2 percent of the assets in the fund and an additional bonus equal to 20 percent of the year’s profits. You may find that the percentages differ from the 2 and 20 formula when you start investigating prospective funds, but the management fee plus bonus structure rarely changes.\r\n<h2 id=\"tab5\" >Hedge funds use biased performance data</h2>\r\nWhat gets investors excited about hedge funds is that the funds seem to have fabulous performances at every turn, no matter what the market does. But the great numbers you see in the papers can be misleading because hedge fund managers don’t have to report performance numbers to anyone other than their fund investors.\r\n\r\nThose that do report their numbers to different analytical, consulting, and index firms do so voluntarily, and they’re often the ones most likely to have good performance numbers to report. Add to that the fact that hedge fund managers can easily close shop when things aren’t going well; after it shuts down it doesn’t report its data anymore (if it ever did), and poorly performing funds are most likely to close. What all this means is that measures of hedge fund performance have a bias toward good numbers.\r\n<h2 id=\"tab6\" >Hedges are secretive about performance and strategies</h2>\r\nSome hedge funds are very secretive, and for good reason: If other players in the market know how a fund is making its money, they’ll try to use the same techniques, and the unique opportunity for the front-running hedge fund may disappear. Hedge funds aren’t required to report their performance, disclose their holdings, or take questions from shareholders.","description":"A hedge fund differs from so-called “real money” — traditional investment accounts like mutual funds, pensions, and endowments — because it has more freedom to pursue different investment strategies.\r\n\r\nIn some cases, these unique strategies can lead to huge gains while the traditional market measures languish. The amount of potential return makes hedge funds more than worthwhile in the minds of many accredited and qualified investors.\r\n\r\nHere are some of the basic characteristics of hedge funds.\r\n<h2 id=\"tab1\" >Hedge funds are illiquid</h2>\r\nOne key characteristic of hedge funds is that they’re <i>illiquid</i><i>.</i> Most hedge fund managers limit how often investors can take their money out; a fund may lock in investors for two years or more. In other words, investing in a hedge fund is a long-term proposition because the money you invest may be locked up for years.\r\n<h2 id=\"tab2\" >Hedge funds have little to no regulatory oversight</h2>\r\nHedge funds don’t have to register with the U.S. Securities and Exchange Commission (SEC). Most funds and their managers also aren’t required to register with the Financial Industry Regulatory Authority or the Commodity Futures Trading Commission, the major self-regulatory bodies in the investment business.\r\n\r\nHowever, many funds register with these bodies anyway, choosing to give investors peace of mind and many protections otherwise not afforded to them (not including protection from losing money, of course). Whether registered or not, hedge funds can’t commit fraud, engage in insider trading, or otherwise violate the laws of the land.\r\n<h2 id=\"tab3\" >Hedges use aggressive investment strategies</h2>\r\nIn order to post a higher return for a given level of risk than otherwise expected, a hedge fund manager does things differently than a traditional money manager. This fact is where a hedge fund’s relative lack of regulatory oversight becomes important: A hedge fund manager has a broad array of investment techniques at his disposal that aren’t feasible for a tightly regulated investor, such as short selling and leveraging.\r\n<h2 id=\"tab4\" >Managers receive bonuses for fund performance</h2>\r\nAnother factor that distinguishes a hedge fund from a mutual fund, individual account, or other type of investment portfolio is the fund manager’s compensation in the form of a performance fee. (SEC regulations forbid mutual funds, for example, from charging performance fees.)\r\n\r\nMany hedge funds are structured under the so-called <i>2 and 20</i> arrangement, meaning that the fund manager receives an annual fee equal to 2 percent of the assets in the fund and an additional bonus equal to 20 percent of the year’s profits. You may find that the percentages differ from the 2 and 20 formula when you start investigating prospective funds, but the management fee plus bonus structure rarely changes.\r\n<h2 id=\"tab5\" >Hedge funds use biased performance data</h2>\r\nWhat gets investors excited about hedge funds is that the funds seem to have fabulous performances at every turn, no matter what the market does. But the great numbers you see in the papers can be misleading because hedge fund managers don’t have to report performance numbers to anyone other than their fund investors.\r\n\r\nThose that do report their numbers to different analytical, consulting, and index firms do so voluntarily, and they’re often the ones most likely to have good performance numbers to report. Add to that the fact that hedge fund managers can easily close shop when things aren’t going well; after it shuts down it doesn’t report its data anymore (if it ever did), and poorly performing funds are most likely to close. What all this means is that measures of hedge fund performance have a bias toward good numbers.\r\n<h2 id=\"tab6\" >Hedges are secretive about performance and strategies</h2>\r\nSome hedge funds are very secretive, and for good reason: If other players in the market know how a fund is making its money, they’ll try to use the same techniques, and the unique opportunity for the front-running hedge fund may disappear. Hedge funds aren’t required to report their performance, disclose their holdings, or take questions from shareholders.","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Hedge funds are illiquid","target":"#tab1"},{"label":"Hedge funds have little to no regulatory oversight","target":"#tab2"},{"label":"Hedges use aggressive investment strategies","target":"#tab3"},{"label":"Managers receive bonuses for fund performance","target":"#tab4"},{"label":"Hedge funds use biased performance data","target":"#tab5"},{"label":"Hedges are secretive about performance and strategies","target":"#tab6"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-6217bb4781552\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-6217bb4781ecf\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Explore","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-07-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":198322},{"headers":{"creationTime":"2016-03-26T07:12:41+00:00","modifiedTime":"2021-12-22T14:20:59+00:00","timestamp":"2022-02-24T17:07:19+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"10 Ways to Minimize Losses in High-Level Investing","strippedTitle":"10 ways to minimize losses in high-level investing","slug":"10-ways-to-minimize-losses-in-high-level-investing","canonicalUrl":"","seo":{"metaDescription":"Learn from the best — here are ten valuable tips to help you minimuze losses in your high-level investing activity.","noIndex":0,"noFollow":0},"content":"Even the legendary investing and speculating pros have failures and losses. The key is that all these people learned from what they did and modified their approaches going forward. Here are ten aspects of losses, either helping you minimize them or suggesting what to do if you have them.\r\n<h2 id=\"tab1\" >Use stop-loss orders</h2>\r\n<i>\"</i><i>Have your profits run, but limit your losses.</i><i>\"</i> This age-old advice may be a cliché, but it's the quintessential grand strategy.\r\n\r\nIn today's marketplace, limiting your losses is easy to do thanks to technology. Considering how crazy and volatile the world is, the stop-loss order should be a ready weapon in your investing and speculating arsenal. The trick is knowing when to place a stop-loss order, how long it should be in effect, and how far to place the stop loss-order from the stock's (or exchange-traded fund's) market price.\r\n<p class=\"Remember\">You put a <i>stop-loss order</i> on a holding in your portfolio (such as a stock or ETF) to limit the downside risk of the holding without limiting the upside potential.</p>\r\n\r\n<h2 id=\"tab2\" >Employ trailing stops</h2>\r\nThe <i>trailing stop</i> is a stop-loss order that essentially trails the stock price like a giant tail as the stock price zigzags upward. The moment the stock reverses and falls, the trailing stop-loss order stays put at the most recent level it reached. When and if the stock does hit that stop-loss price level, the trailing stop turns into a market order and the stock will be sold. At that point, you've avoided further losses.\r\n<h2 id=\"tab3\" >Go against the grain</h2>\r\nWhen everybody and their uncle are ebullient about the stock market and the bulls-to-bears ratio is similar to the ratio of Red Sox fans to Yankees fans at Fenway Park, then it's time to be a contrarian — a cautious one.\r\n\r\nStarting to step away from a party that is overdue to end is a good way to avoid losses. Sure, you might miss a little more upside, but no one gets hurt taking a profit by selling or by using other loss-limiting strategies.\r\n<h2 id=\"tab4\" >Have a hedging strategy</h2>\r\nHaving a hedging strategy after the crash is like closing the barn door after the horses escaped. The best time to consider a hedging strategy is before a major market reversal. A hedging strategy is basically knowing (and doing) what is necessary to preserve gains or simply to limit the downside.\r\n\r\nA hedging strategy differs depending on the duration of the expected fall. For corrections, you consider hedging by buying put options, for example. For bear markets, you look to sell and be in cash.\r\n<h2 id=\"tab5\" >Hold cash reserves</h2>\r\nOpportunities happen constantly — risks show up to derail or delay the best plans — but the prepared investor always has cash on the sidelines. Some extra cash is like a secret weapon; it's also a saving grace when your positions are down, and you need money for some unforeseen expense.\r\n<h2 id=\"tab6\" >Sell and switch</h2>\r\nWhen your stock is down, can you do a fancy two-step that can save you on taxes and set you up for a profitable rebound? Keep track of your unrealized gains and losses and see whether there are opportunities for tax benefits, given what is happening in your portfolio. Maybe you have an opportunity to sell a losing position in your portfolio to book a capital loss. Realized capital losses are generally tax-deductible (check with your tax advisor to be sure).\r\n<p class=\"Remember\">You can play the rebound in a variety of ways, but make sure that the tax loss makes sense in your situation and that you did your due diligence regarding the potential rebound of the stock or the sector it's in. Discuss your personal tax situation with your tax advisor.</p>\r\n\r\n<h2 id=\"tab7\" >Diversify with alternatives</h2>\r\nKeep in mind that as an investor, even if you have limited capital, you live in a time where there are many strategies and investment alternatives. When you have a stock in mind that you'll be investing in, you should list or research the alternatives that could accompany or augment your investment choice and help you limit or even reverse a potential loss.\r\n\r\nUsing leveraged ETFs is a good example of this approach. A <i>leveraged ETF</i> is a speculative vehicle that seeks to emulate double or even triple the move of the underlying asset.\r\n<p class=\"Warning\">Leveraged ETFs are a form of speculating. They may magnify gains when you're right, but they can magnify losses if you're wrong.</p>\r\n\r\n<h2 id=\"tab8\" >Consider the zero-cost collar</h2>\r\nYou have a stock that has done well, but you're worried. The stock may have some upside, but the downside risk seems to be growing. You don't want to sell the stock because the gain is sizable (and taxable!), but the short term worries you. Can you protect your stock from a potential correction without needing to sell it?\r\n\r\nConsider doing the <i>zero-cost collar,</i> a combination of writing a covered call and buying a put on the same stock (or ETF).\r\n\r\nWhen you write a covered call, you receive income (from the premium you receive when you \"write\" or sell it); you can then use this income to buy the put. This combination is called a <i>collar</i> because it effectively boxes in, or collars, the stock price. Here's how events may play out:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\"><b>If the stock goes down:</b> The put that you bought comes into play. The put will increase in value the more the stock falls.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>If the stock goes up:</b> You make a small profit on the stock when it's sold at the strike price of the call option you wrote. But that's it, because the covered call limits your upside; you can't realize any gains above the strike price.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>If the stock moves in a flat or sideways manner:</b> Both the call you wrote and the put you bought would expire. No worries, though. Your stock is okay, and because both positions were acquired as a zero-cost collar, no harm is done when they expire. The collar didn't cost you, so there's no real loss.</p>\r\n</li>\r\n</ul>\r\n<h2 id=\"tab9\" >Try selling puts</h2>\r\nSay you have a stock with a loss. You review the wreckage and see that the stock price may be down (negative!), but everything else about the underlying stock and its company are positive.\r\n\r\nSuppose you have a stock that went from $50 per share and is wallowing in pain at, say, $25. Do you sell and take the loss, even though the company is really hunky-dory? Measure twice on this — is the stock price down only because investors left the sector entirely due to factors that are temporary and not fundamental to real value in the sector?\r\n\r\nSay that the company is fine but you could use the loss for tax purposes (capital losses in your portfolio are generally deductible). So consider selling the stock and then writing a put option on the same stock. Why? When you sell the losing stock, you pick up the loss on your taxes. Also, because the stock is down sharply, the puts on it are probably \"fat\" (meaning they picked up lots of value due to the stock's price drop).\r\n\r\nGiven that, write a put option on that stock; it will give you good income and you can lock in a good price because the put will require you to buy the stock at the lower price (the strike price in the put option). The bottom line is that you took a bad event (the stock's fall) and turned it into something more positive.\r\n<h2 id=\"tab10\" >Prepare your exit strategy</h2>\r\nStocks are meant to be a means to an end. You get stocks either for income or gains, maybe both. If you have a great stock and you've been getting great (and growing) dividends, year after year, then an exit strategy is either not a consideration or not a major concern. You develop an exit strategy for that type of holding in case you really need the money for a concern outside the realm of investing, such as funding college for your grandchild or buying that retirement home with all cash, no mortgage.\r\n<p class=\"Remember\">When will you exit your position with stock X? And why? What type of scenarios would make you sell that particular stock? Give exit strategy some thought before the need to sell materializes. Many investors think about an exit strategy even before they make the initial purchase.</p>","description":"Even the legendary investing and speculating pros have failures and losses. The key is that all these people learned from what they did and modified their approaches going forward. Here are ten aspects of losses, either helping you minimize them or suggesting what to do if you have them.\r\n<h2 id=\"tab1\" >Use stop-loss orders</h2>\r\n<i>\"</i><i>Have your profits run, but limit your losses.</i><i>\"</i> This age-old advice may be a cliché, but it's the quintessential grand strategy.\r\n\r\nIn today's marketplace, limiting your losses is easy to do thanks to technology. Considering how crazy and volatile the world is, the stop-loss order should be a ready weapon in your investing and speculating arsenal. The trick is knowing when to place a stop-loss order, how long it should be in effect, and how far to place the stop loss-order from the stock's (or exchange-traded fund's) market price.\r\n<p class=\"Remember\">You put a <i>stop-loss order</i> on a holding in your portfolio (such as a stock or ETF) to limit the downside risk of the holding without limiting the upside potential.</p>\r\n\r\n<h2 id=\"tab2\" >Employ trailing stops</h2>\r\nThe <i>trailing stop</i> is a stop-loss order that essentially trails the stock price like a giant tail as the stock price zigzags upward. The moment the stock reverses and falls, the trailing stop-loss order stays put at the most recent level it reached. When and if the stock does hit that stop-loss price level, the trailing stop turns into a market order and the stock will be sold. At that point, you've avoided further losses.\r\n<h2 id=\"tab3\" >Go against the grain</h2>\r\nWhen everybody and their uncle are ebullient about the stock market and the bulls-to-bears ratio is similar to the ratio of Red Sox fans to Yankees fans at Fenway Park, then it's time to be a contrarian — a cautious one.\r\n\r\nStarting to step away from a party that is overdue to end is a good way to avoid losses. Sure, you might miss a little more upside, but no one gets hurt taking a profit by selling or by using other loss-limiting strategies.\r\n<h2 id=\"tab4\" >Have a hedging strategy</h2>\r\nHaving a hedging strategy after the crash is like closing the barn door after the horses escaped. The best time to consider a hedging strategy is before a major market reversal. A hedging strategy is basically knowing (and doing) what is necessary to preserve gains or simply to limit the downside.\r\n\r\nA hedging strategy differs depending on the duration of the expected fall. For corrections, you consider hedging by buying put options, for example. For bear markets, you look to sell and be in cash.\r\n<h2 id=\"tab5\" >Hold cash reserves</h2>\r\nOpportunities happen constantly — risks show up to derail or delay the best plans — but the prepared investor always has cash on the sidelines. Some extra cash is like a secret weapon; it's also a saving grace when your positions are down, and you need money for some unforeseen expense.\r\n<h2 id=\"tab6\" >Sell and switch</h2>\r\nWhen your stock is down, can you do a fancy two-step that can save you on taxes and set you up for a profitable rebound? Keep track of your unrealized gains and losses and see whether there are opportunities for tax benefits, given what is happening in your portfolio. Maybe you have an opportunity to sell a losing position in your portfolio to book a capital loss. Realized capital losses are generally tax-deductible (check with your tax advisor to be sure).\r\n<p class=\"Remember\">You can play the rebound in a variety of ways, but make sure that the tax loss makes sense in your situation and that you did your due diligence regarding the potential rebound of the stock or the sector it's in. Discuss your personal tax situation with your tax advisor.</p>\r\n\r\n<h2 id=\"tab7\" >Diversify with alternatives</h2>\r\nKeep in mind that as an investor, even if you have limited capital, you live in a time where there are many strategies and investment alternatives. When you have a stock in mind that you'll be investing in, you should list or research the alternatives that could accompany or augment your investment choice and help you limit or even reverse a potential loss.\r\n\r\nUsing leveraged ETFs is a good example of this approach. A <i>leveraged ETF</i> is a speculative vehicle that seeks to emulate double or even triple the move of the underlying asset.\r\n<p class=\"Warning\">Leveraged ETFs are a form of speculating. They may magnify gains when you're right, but they can magnify losses if you're wrong.</p>\r\n\r\n<h2 id=\"tab8\" >Consider the zero-cost collar</h2>\r\nYou have a stock that has done well, but you're worried. The stock may have some upside, but the downside risk seems to be growing. You don't want to sell the stock because the gain is sizable (and taxable!), but the short term worries you. Can you protect your stock from a potential correction without needing to sell it?\r\n\r\nConsider doing the <i>zero-cost collar,</i> a combination of writing a covered call and buying a put on the same stock (or ETF).\r\n\r\nWhen you write a covered call, you receive income (from the premium you receive when you \"write\" or sell it); you can then use this income to buy the put. This combination is called a <i>collar</i> because it effectively boxes in, or collars, the stock price. Here's how events may play out:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\"><b>If the stock goes down:</b> The put that you bought comes into play. The put will increase in value the more the stock falls.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>If the stock goes up:</b> You make a small profit on the stock when it's sold at the strike price of the call option you wrote. But that's it, because the covered call limits your upside; you can't realize any gains above the strike price.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>If the stock moves in a flat or sideways manner:</b> Both the call you wrote and the put you bought would expire. No worries, though. Your stock is okay, and because both positions were acquired as a zero-cost collar, no harm is done when they expire. The collar didn't cost you, so there's no real loss.</p>\r\n</li>\r\n</ul>\r\n<h2 id=\"tab9\" >Try selling puts</h2>\r\nSay you have a stock with a loss. You review the wreckage and see that the stock price may be down (negative!), but everything else about the underlying stock and its company are positive.\r\n\r\nSuppose you have a stock that went from $50 per share and is wallowing in pain at, say, $25. Do you sell and take the loss, even though the company is really hunky-dory? Measure twice on this — is the stock price down only because investors left the sector entirely due to factors that are temporary and not fundamental to real value in the sector?\r\n\r\nSay that the company is fine but you could use the loss for tax purposes (capital losses in your portfolio are generally deductible). So consider selling the stock and then writing a put option on the same stock. Why? When you sell the losing stock, you pick up the loss on your taxes. Also, because the stock is down sharply, the puts on it are probably \"fat\" (meaning they picked up lots of value due to the stock's price drop).\r\n\r\nGiven that, write a put option on that stock; it will give you good income and you can lock in a good price because the put will require you to buy the stock at the lower price (the strike price in the put option). The bottom line is that you took a bad event (the stock's fall) and turned it into something more positive.\r\n<h2 id=\"tab10\" >Prepare your exit strategy</h2>\r\nStocks are meant to be a means to an end. You get stocks either for income or gains, maybe both. If you have a great stock and you've been getting great (and growing) dividends, year after year, then an exit strategy is either not a consideration or not a major concern. You develop an exit strategy for that type of holding in case you really need the money for a concern outside the realm of investing, such as funding college for your grandchild or buying that retirement home with all cash, no mortgage.\r\n<p class=\"Remember\">When will you exit your position with stock X? And why? What type of scenarios would make you sell that particular stock? Give exit strategy some thought before the need to sell materializes. Many investors think about an exit strategy even before they make the initial purchase.</p>","blurb":"","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":"Paul Mladjenovic, CFP, is a certified financial planner practitioner, writer, and speaker. He has helped people with financial and business concerns since 1981. He is the author of Stock Investing For Dummies and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Learn more at ravingcapitalist.com.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Use stop-loss orders","target":"#tab1"},{"label":"Employ trailing stops","target":"#tab2"},{"label":"Go against the grain","target":"#tab3"},{"label":"Have a hedging strategy","target":"#tab4"},{"label":"Hold cash reserves","target":"#tab5"},{"label":"Sell and switch","target":"#tab6"},{"label":"Diversify with alternatives","target":"#tab7"},{"label":"Consider the zero-cost collar","target":"#tab8"},{"label":"Try selling puts","target":"#tab9"},{"label":"Prepare your exit strategy","target":"#tab10"}],"relatedArticles":{"fromBook":[{"articleId":207427,"title":"High-Level Investing For Dummies Cheat Sheet","slug":"high-level-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207427"}},{"articleId":139949,"title":"10 Respected Authorities on Stocks and Related Investments","slug":"10-respected-authorities-on-stocks-and-related-investments","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139949"}},{"articleId":139943,"title":"An Option Strategy for a Turbulent Market: The Zero-Cost Collar","slug":"an-option-strategy-for-a-turbulent-market-the-zero-cost-collar","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139943"}},{"articleId":139944,"title":"Is the Market Overvalued? 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As a certified financial planner, he personally coaches his clients on stock investing strategies. </p>","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":"Paul Mladjenovic, CFP, is a certified financial planner practitioner, writer, and speaker. He has helped people with financial and business concerns since 1981. He is the author of Stock Investing For Dummies and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Learn more at ravingcapitalist.com.","_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119140818&quot;]}]\" id=\"du-slot-6217bb476363f\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119140818&quot;]}]\" id=\"du-slot-6217bb4764084\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-07-01T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":139032},{"headers":{"creationTime":"2016-03-27T16:46:45+00:00","modifiedTime":"2021-12-13T18:26:29+00:00","timestamp":"2022-02-24T17:07:16+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"Online Investing For Dummies Cheat Sheet","strippedTitle":"online investing for dummies cheat sheet","slug":"online-investing-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Learn basic online investing lingo and get some tips to make the most of your investments while protecting your money and identity.","noIndex":0,"noFollow":0},"content":"Whether you’re new at investing online or a grizzled veteran, you can always find better ways to make the internet work for you and your portfolio. You’ll want to make sure you know a few basics before you get started. And some tricks of the trade will literally help you to trade. Finally, you’ll want to know the terminology of investing online to make sure you are talking the talk.\r\n\r\n[caption id=\"attachment_263730\" align=\"alignnone\" width=\"535\"]<img class=\"size-full wp-image-263730\" src=\"https://www.dummies.com/wp-content/uploads/online-investing.jpg\" alt=\"online investor\" width=\"535\" height=\"333\" /> ©By SFIO CRACHO/Shutterstock.com[/caption]","description":"Whether you’re new at investing online or a grizzled veteran, you can always find better ways to make the internet work for you and your portfolio. You’ll want to make sure you know a few basics before you get started. And some tricks of the trade will literally help you to trade. Finally, you’ll want to know the terminology of investing online to make sure you are talking the talk.\r\n\r\n[caption id=\"attachment_263730\" align=\"alignnone\" width=\"535\"]<img class=\"size-full wp-image-263730\" src=\"https://www.dummies.com/wp-content/uploads/online-investing.jpg\" alt=\"online investor\" width=\"535\" height=\"333\" /> ©By SFIO CRACHO/Shutterstock.com[/caption]","blurb":"","authors":[{"authorId":8949,"name":"Matt Krantz","slug":"matt-krantz","description":"","_links":{"self":"https://dummies-api.dummies.com/v2/authors/8949"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}},{"articleId":265687,"title":"Online Brokerage Firms: Deep Discounters","slug":"online-brokerage-firms-deep-discounters","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265687"}},{"articleId":265681,"title":"How to Find the Best Online Investment Broker for You","slug":"how-to-find-the-best-online-investment-broker-for-you","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265681"}},{"articleId":191953,"title":"How Capital Gains Are Taxed","slug":"how-capital-gains-are-taxed-2","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/191953"}},{"articleId":191948,"title":"How to Trade in Stocks Online","slug":"how-to-trade-in-stocks-online-2","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/191948"}}],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281806,"slug":"online-investing-for-dummies-10th-edition","isbn":"9781119601487","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119601487-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/online-investing-for-dummies-10th-edition-cover-9781119601487-203x255.jpg","width":203,"height":255},"title":"Online Investing For Dummies, 10th Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"\n <p>Matt Krantz is a nationally known financial journalist who specializes in investing topics. He is personal finance and management editor at Investor's Business Daily. He's also worked in the financial industry and covered markets and investing for USA TODAY. His writing on financial topics has appeared in Money magazine, Kiplinger's, and Men's Health. Krantz is the author of Fundamental Analysis For Dummies and coauthor of Investment Banking For Dummies.</p>","authors":[{"authorId":33279,"name":"Matthew Krantz","slug":"matthew-krantz","description":"Matt Krantz is a nationally known financial journalist who specializes in investing topics. He is personal finance and management editor at Investor's Business Daily. He's also worked in the financial industry and covered markets and investing for USA TODAY. His writing on financial topics has appeared in Money magazine, Kiplinger's, and Men's Health. Krantz is the author of Fundamental Analysis For Dummies and coauthor of Investment Banking For Dummies. ","_links":{"self":"https://dummies-api.dummies.com/v2/authors/33279"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601487&quot;]}]\" id=\"du-slot-6217bb442a3b7\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601487&quot;]}]\" id=\"du-slot-6217bb442ad2a\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":139159,"title":"How to Get Started Investing Online","slug":"how-to-get-started-investing-online","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139159"}},{"articleId":139176,"title":"How to Protect Your Money and Identity Online","slug":"how-to-protect-your-money-and-identity-online","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139176"}},{"articleId":139183,"title":"3 Quick and Helpful Tips You May Not Know About Investing Online","slug":"3-quick-and-helpful-tips-you-may-not-know-about-investing-online","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139183"}},{"articleId":139173,"title":"An Online Investor's Glossary","slug":"an-online-investors-glossary","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/139173"}}],"content":[{"title":"How to get started investing online","thumb":null,"image":null,"content":"<p>Are you the impatient type? Do you just want to get started investing online right away? Here&#8217;s a quick step-by-step list to get you going:</p>\n<ol class=\"level-one\">\n<li>\n<p class=\"first-para\">Save your money.</p>\n<p class=\"child-para\">You don&#8217;t need much to get started investing, preferably $50 or more. Find an online broker with no minimum deposit.</p>\n</li>\n<li>\n<p class=\"first-para\">Learn the terms.</p>\n<p class=\"child-para\">Investing is full of jargon. You’ll need to know basic words just to get started. Get up to speed with websites such as <a href=\"https://www.investopedia.com/\" target=\"_blank\" rel=\"noopener\">Investopedia</a> and <a href=\"https://www.aaii.com/journal/article/investorwordscom\" target=\"_blank\" rel=\"noopener\">InvestorWords</a> (to make sure you have a good grasp of the language of online investing.</p>\n</li>\n<li>\n<p class=\"first-para\">Practice with fake money first.</p>\n<p class=\"child-para\">Before you start playing around with your real money, test your investment strategy with fake money first using Investopedia’s <a href=\"https://www.investopedia.com/simulator/\" target=\"_blank\" rel=\"noopener\">Stock Market Game</a> or Wall Street Survivor’s <a href=\"https://www.wallstreetsurvivor.com/\" target=\"_blank\" rel=\"noopener\">Stock Market Game</a>.</p>\n</li>\n<li>\n<p class=\"first-para\">Choose an online brokerage firm.</p>\n<p class=\"child-para\">Your online broker should be your wingman when investing online, so pick one you like and can trust. No one broker is best for all investors.</p>\n</li>\n<li>\n<p class=\"first-para\">Keep saving money.</p>\n<p class=\"child-para\">You&#8217;ll want to keep adding savings to your brokerage account so you can put more of your money to work.</p>\n</li>\n<li>\n<p class=\"first-para\">Study.</p>\n<p class=\"child-para\">The preceding steps will get you online and investing online. But there&#8217;s so much more to it if you want to be successful.</p>\n</li>\n</ol>\n"},{"title":"How to protect your money and identity online","thumb":null,"image":null,"content":"<p>When you’re buying and selling investments online, it pays to be extra careful to make sure your personal and financial information doesn’t get stolen by cyberthieves. At the very minimum you should protect yourself by</p>\n<ul>\n<li><strong>Locking down your computer. </strong></li>\n</ul>\n<p style=\"padding-left: 30px;\">You’ll want to make sure your computer is running antivirus software, which protects your files from malicious code, at the very least. Most modern operating systems — including Windows 10 — come with antivirus software installed. Make sure these security features are turned on.  Windows 10 also comes with a firewall that you should also make sure is activated. A firewall puts a fence around your computer, letting you control what data comes in and what goes out.</p>\n<ul>\n<li><strong>Be extra careful of wireless connections. </strong></li>\n</ul>\n<p style=\"padding-left: 30px;\">If you’re online using a public wireless internet connection, you need to be especially cautious.</p>\n<ul>\n<li><strong>Checking up on your brokerage. </strong></li>\n</ul>\n<p style=\"padding-left: 30px;\">Before you give money to anyone, be sure to run the broker or brokerage firm through the <a href=\"http://www.finra.org/\">Financial Industry Regulatory Authority’s</a> BrokerCheck. This simple search will only take a few moments and will tell you if the broker or brokerage firm is permitted to sell you securities.</p>\n<ul>\n<li><strong>Knowing what’s reasonable. </strong></li>\n</ul>\n<p style=\"padding-left: 30px;\">You should have a grasp of what kind of returns you can expect from investments. At the very least, know that U.S. stocks roughly generate 10 percent returns, a year, on average. Knowing what legitimate investments return will help you smell a scam a mile away. If someone promises “guaranteed” or “risk free” returns that exceed the return of stocks, or 10 percent, you know you’re most likely being lied to.</p>\n<ul>\n<li><strong>Getting familiar with regulators’ resources. </strong></li>\n</ul>\n<p style=\"padding-left: 30px;\">The <a href=\"https://www.sec.gov/\" target=\"_blank\" rel=\"noopener\">Securities and Exchange Commission</a> offers free and tremendously helpful tools and tips to investors. Taking the time to check out the site will make you a much more informed investor. The <a href=\"https://www.nasaa.org/\" target=\"_blank\" rel=\"noopener\">North American Securities Administrators Association</a> puts you in touch with your state regulator in two clicks. Just click the Contact Your Regulator option on the menu bar and then click your state in the list that appears.</p>\n"},{"title":"3 quick and helpful tips you may not know about investing online","thumb":null,"image":null,"content":"<p>Before you start investing online, take a look at the following three tips. These tips are short, but they might save you some time and trouble later on.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Quickest way to get stock information.</b></p>\n<p class=\"child-para\">If you’re in a hurry and want basic information about a stock, fast, hit the search engines. Enter a stock’s ticker symbol into the search field in all the popular search engines including Google and Bing. You’ll immediately get the basic information about the stock, including a chart of the stock price, price quote, and market value.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Don&#8217;t assume you have to pay commissions. </b></p>\n<p class=\"child-para\">Online commission are low — but you may not have to pay them. If you have an existing banking relationship with a large bank, such as Wells Fargo, you might qualify for free trades. Also, if you stick with certain exchange-traded funds, many brokers will give you free trades. And apps such as Robinhood offer free trades.</p>\n</li>\n<li><strong>Knowing how to invest online is important, even if you have a financial advisor.</strong></li>\n</ul>\n<p style=\"padding-left: 30px;\">There’s no question that you can save money if you manage your own portfolio online. Many advisors charge 1 percent of your portfolio annually to run your money, which can add up over time. That’s not to downplay the role of the advisor, though. Many advisors are skilled and may help you make financial decisions that more than make up for their fee. But even if you do hire an advisor, it’s important for you to understand how to invest online so you can understand the moves the advisor is making with your money.</p>\n"},{"title":"An online investor's glossary","thumb":null,"image":null,"content":"<p>When you first start investing online, you&#8217;re bound to run into some terms or concepts with which you&#8217;re unfamiliar. Don&#8217;t sweat it. Following are some key terms you should become familiar with before investing.</p>\n<p><strong>Active investor:</strong> An investor who tries to routinely beat the rest of Wall Street by a wide margin. Active investors have many different strategies, including trying to buy stocks when they think they’re cheap or stocks that have been rising rapidly in the recent past.</p>\n<p><strong>After-hours trading:</strong> Regular trading of stocks ends at 4 p.m. EST, but investors can continue to buy and sell stocks after that time.</p>\n<p><strong>Ask price:</strong> The lowest price a prospective seller is willing to accept for a share of stock.</p>\n<p><strong>Bid price:</strong> The price a prospective investor is willing to pay for a share of stock.</p>\n<p><strong>Bond:</strong> IOUs issued mainly by governments, agencies of governments, or companies to finance their operations or projects. Buyers of bonds are given a promise they’ll get their money back, plus interest, over a preset period of time. Bonds are often called <em>fixed-income investments</em> because interest payments are fixed.</p>\n<p><strong>Earnings season:</strong> The period of about three weeks following the end of a quarter when companies report their financial performance. Earnings reports contain information about a company’s profits and financial standing.</p>\n<p><strong>Fundamental analysis:</strong> A method of evaluating investments by studying a company’s earnings, growth rate, or other data related to the performance of the company’s operations.</p>\n<p><strong>Index:</strong> A basket of stocks or other investments selected to represent a certain market, style of investing, or market. The three most popular stock market indexes are the Dow Jones Industrial Average, Standard &amp; Poor’s 500, and NASDAQ composite.</p>\n<p><strong>IPO:</strong> Short for <em>initial public offering.</em> IPOs are shares of companies offered to public investors for the first time and are the way that a private company becomes a publicly traded one.</p>\n<p><strong>Online brokerage:</strong> An organization that works on your behalf to buy, sell, and hold your stocks and other investments and allow you to access your account online. Brokers, including online brokers, must be registered with the Securities and Exchange Commission.</p>\n<p><strong>Options:</strong> Financial tools that give their owners the right, but not the obligation, to buy or sell a stock or other investment by a certain date at a prearranged price. Options can be used to guard against large losses or by speculators to enhance returns.</p>\n<p><strong>Passive investor:</strong> An investor who generally believes it’s impossible for most people to consistently beat the stock market and therefore buys investments and hangs onto them. Many passive investors invest in broad and diversified index funds, which are highly tax-efficient and outperform many investors who try to beat the market with market timing and stock picking.</p>\n<p><strong>Phishing:</strong> A type of cybercrime where the bad guys tempt computer users to click on seemingly legitimate websites and enter personal information, which is then stolen and sold or used.</p>\n<p><strong>Prospectus:</strong> The in-depth document required to be filed with regulators by mutual funds, exchange-traded funds, and companies going public for the first time in an IPO.</p>\n<p><strong>Regulatory filings:</strong> Financial reports required by regulatory bodies, most typically the Securities and Exchange Commission, that give investors access to material information. Annual reports, quarterly reports, and proxy statements, often known by their technical names 10-K, 10-Q, and DEF 14, are available online and give investors information about a company.</p>\n<p><strong>Short seller:</strong> Investors who are betting that the value of an investment will fall. These investors borrow an investment, sell it immediately, and then buy it back later at a hopefully lower price in order to return it to the person they borrowed from.</p>\n<p><strong>Stock:</strong> A piece of ownership in a company that can be bought or sold to other investors. Stocks are sometimes referred to as <em>equities.</em></p>\n<p><strong>Technical analysis:</strong> A method of evaluating investments based on the movements of the stock price in the past. Technical analysts generally study stock charts and look for patterns they say can help predict future price movements.</p>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-08-10T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":207413},{"headers":{"creationTime":"2016-03-26T07:13:34+00:00","modifiedTime":"2021-11-08T19:54:01+00:00","timestamp":"2022-02-24T17:07:08+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General (Investing)","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"How to Sell Stock Short","strippedTitle":"how to sell stock short","slug":"how-to-sell-stock-short","canonicalUrl":"","seo":{"metaDescription":"Investors who sell stock short search for stocks they think will go down and find ways to cash in on the falling values.","noIndex":0,"noFollow":0},"content":"Ordinarily when you invest in stocks online, you hope to profit from a company's good times and rising profits<i>.</i> But there's a whole other class of investors, called <i>shorts, </i>who do just the opposite. They search the internet for news stories about diners getting food poisoning at a restaurant, for instance, and look for ways to cash in on the stock falling.\r\n\r\nTo sell a stock short, you follow four steps:\r\n<ol class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Borrow the stock you want to bet against.</p>\r\n<p class=\"child-para\">Contact your broker to find shares of the stock you think will go down and request to borrow the shares. The broker then locates another investor who owns the shares and borrows them with a promise to return the shares at a prearranged later date. You get the shares. Don't think you're getting to borrow the shares for nothing, though. You'll have to pay fees or interest to the broker for the privilege.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">You immediately sell the shares you have borrowed.</p>\r\n<p class=\"child-para\">You pocket the cash from the sale.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">You wait for the stock to fall and then buy the shares back at the new, lower price.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">You return the shares to the brokerage you borrowed them from and pocket the difference.</p>\r\n</li>\r\n</ol>\r\nHere's an example: Shares of ABC Company are trading for $40 a share, which you think is way too high. You contact your broker, who finds 100 shares from another investor and lets you borrow them. You sell the shares and pocket $4,000. Two weeks later, the company reports its CEO has been stealing money and the stock falls to $25 a share. You buy 100 shares of ABC Company for $2,500, give the shares back to the brokerage you borrowed them from, and pocket a $1,500 profit.\r\n\r\nWhen you short a stock, you need to be aware of some extra costs. Most brokerages, for instance, charge fees or interest to borrow the stock. Also, if the company pays a dividend between the time you borrowed the stock and when you returned it, you must pay the dividend out of your pocket. You're responsible for the dividend payment, even if you already sold the stock and didn't receive the dividend.","description":"Ordinarily when you invest in stocks online, you hope to profit from a company's good times and rising profits<i>.</i> But there's a whole other class of investors, called <i>shorts, </i>who do just the opposite. They search the internet for news stories about diners getting food poisoning at a restaurant, for instance, and look for ways to cash in on the stock falling.\r\n\r\nTo sell a stock short, you follow four steps:\r\n<ol class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Borrow the stock you want to bet against.</p>\r\n<p class=\"child-para\">Contact your broker to find shares of the stock you think will go down and request to borrow the shares. The broker then locates another investor who owns the shares and borrows them with a promise to return the shares at a prearranged later date. You get the shares. Don't think you're getting to borrow the shares for nothing, though. You'll have to pay fees or interest to the broker for the privilege.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">You immediately sell the shares you have borrowed.</p>\r\n<p class=\"child-para\">You pocket the cash from the sale.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">You wait for the stock to fall and then buy the shares back at the new, lower price.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">You return the shares to the brokerage you borrowed them from and pocket the difference.</p>\r\n</li>\r\n</ol>\r\nHere's an example: Shares of ABC Company are trading for $40 a share, which you think is way too high. You contact your broker, who finds 100 shares from another investor and lets you borrow them. You sell the shares and pocket $4,000. Two weeks later, the company reports its CEO has been stealing money and the stock falls to $25 a share. You buy 100 shares of ABC Company for $2,500, give the shares back to the brokerage you borrowed them from, and pocket a $1,500 profit.\r\n\r\nWhen you short a stock, you need to be aware of some extra costs. Most brokerages, for instance, charge fees or interest to borrow the stock. Also, if the company pays a dividend between the time you borrowed the stock and when you returned it, you must pay the dividend out of your pocket. You're responsible for the dividend payment, even if you already sold the stock and didn't receive the dividend.","blurb":"","authors":[{"authorId":8949,"name":"Matt Krantz","slug":"matt-krantz","description":"","_links":{"self":"https://dummies-api.dummies.com/v2/authors/8949"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General (Investing)","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}},{"articleId":265687,"title":"Online Brokerage Firms: Deep Discounters","slug":"online-brokerage-firms-deep-discounters","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265687"}},{"articleId":265681,"title":"How to Find the Best Online Investment Broker for You","slug":"how-to-find-the-best-online-investment-broker-for-you","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265681"}},{"articleId":207413,"title":"Online Investing For Dummies Cheat Sheet","slug":"online-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207413"}},{"articleId":191953,"title":"How Capital Gains Are Taxed","slug":"how-capital-gains-are-taxed-2","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/191953"}}],"fromCategory":[{"articleId":287556,"title":"Options Trading For Dummies Cheat Sheet","slug":"options-trading-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/287556"}},{"articleId":285735,"title":"What Is ESG Investing?","slug":"what-is-esg-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285735"}},{"articleId":285761,"title":"Just When You Thought It Was Safe: Coronawashing","slug":"just-when-you-thought-it-was-safe-coronawashing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/285761"}},{"articleId":273978,"title":"Investing For Canadians All-in-One For Dummies","slug":"investing-for-canadians-all-in-one-for-dummies","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/273978"}},{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281806,"slug":"online-investing-for-dummies-10th-edition","isbn":"9781119601487","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119601487-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/online-investing-for-dummies-10th-edition-cover-9781119601487-203x255.jpg","width":203,"height":255},"title":"Online Investing For Dummies, 10th Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"\n <p>Matt Krantz is a nationally known financial journalist who specializes in investing topics. He is personal finance and management editor at Investor's Business Daily. He's also worked in the financial industry and covered markets and investing for USA TODAY. His writing on financial topics has appeared in Money magazine, Kiplinger's, and Men's Health. Krantz is the author of Fundamental Analysis For Dummies and coauthor of Investment Banking For Dummies.</p>","authors":[{"authorId":33279,"name":"Matthew Krantz","slug":"matthew-krantz","description":"Matt Krantz is a nationally known financial journalist who specializes in investing topics. He is personal finance and management editor at Investor's Business Daily. He's also worked in the financial industry and covered markets and investing for USA TODAY. His writing on financial topics has appeared in Money magazine, Kiplinger's, and Men's Health. Krantz is the author of Fundamental Analysis For Dummies and coauthor of Investment Banking For Dummies. ","_links":{"self":"https://dummies-api.dummies.com/v2/authors/33279"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601487&quot;]}]\" id=\"du-slot-6217bb3c03383\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601487&quot;]}]\" id=\"du-slot-6217bb3c03da0\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-09-14T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":139175}],"_links":{"self":{"self":"https://dummies-api.dummies.com/v2/categories/34300/categoryArticles?sortField=time&sortOrder=1&size=10&offset=0"},"next":{"self":"https://dummies-api.dummies.com/v2/categories/34300/categoryArticles?sortField=time&sortOrder=1&size=10&offset=10"},"last":{"self":"https://dummies-api.dummies.com/v2/categories/34300/categoryArticles?sortField=time&sortOrder=1&size=10&offset=275"}}},"objectTitle":"","status":"success","pageType":"article-category","objectId":"34300","page":1,"sortField":"time","sortOrder":1,"categoriesIds":[],"articleTypes":[],"filterData":{"categoriesFilter":[{"itemId":0,"itemName":"All Categories","count":285}],"articleTypeFilter":[{"articleType":"All Types","count":285},{"articleType":"Articles","count":269},{"articleType":"Cheat Sheet","count":14},{"articleType":"Step by Step","count":2}]},"filterDataLoadedStatus":"success","pageSize":10},"adsState":{"pageScripts":{"headers":{"timestamp":"2022-05-24T18:59:04+00:00"},"adsId":0,"data":{"scripts":[{"pages":["all"],"location":"header","script":"<!--Optimizely Script-->\r\n<script src=\"https://cdn.optimizely.com/js/10563184655.js\"></script>","enabled":false},{"pages":["all"],"location":"header","script":"<!-- comScore Tag -->\r\n<script>var _comscore = _comscore || [];_comscore.push({ c1: \"2\", c2: \"15097263\" });(function() {var s = document.createElement(\"script\"), el = document.getElementsByTagName(\"script\")[0]; s.async = true;s.src = (document.location.protocol == \"https:\" ? 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How much should you save for retirement? Which investment strategies are smartest in your 20s and 30s? What is an inverse ETF? How does fiat money work? We've got these answers and many, many more.

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285 results
General (Investing) Dark Pools and High Frequency Trading For Dummies Cheat Sheet

Cheat Sheet / Updated 05-02-2022

Dark pools and high frequency trading (HFT) are contentious subjects in financial markets. Billions of dollars are traded through dark pools, and HFT algorithms with just small, incremental price differences make billions of dollars. And it all can happen in milliseconds. Most importantly, dark pools and HFT are part of the current market environment. Anyone who’s invested in the markets needs to know what they’re involved with and what they’re up against.

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General (Investing) High-Level Investing For Dummies Cheat Sheet

Cheat Sheet / Updated 04-06-2022

In high-level investing, investors and speculators track the major markets and critical global issues that affect stocks and other securities, both in the United States and other major markets. Check out the following sites, tools, and pointers to stay informed.

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General (Investing) Investing All-in-One For Dummies Cheat Sheet

Cheat Sheet / Updated 03-17-2022

Money is the biggest component of the investing world, but time comes in a close second. When you combine the two, you have the potential to grow your money into a healthy nest egg. This Cheat Sheet offers some basic investing terminology and advice that will pay off with every dollar you invest.

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General (Investing) Investing in Shares For Dummies Cheat Sheet

Cheat Sheet / Updated 03-01-2022

Considering share investing? There are some fundamental aspects you need to be aware of before jumping in as a share investor in the UK. Avoid potential catastrophes and make the right investment choices by thinking ahead – take a look at the following points and tips.

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General (Investing) Investing For Canadians For Dummies Cheat Sheet

Cheat Sheet / Updated 02-18-2022

Smart investing can help Canadians accomplish important financial goals like buying a home or retiring comfortably. Whether you’re an investing novice or your portfolio already consists of stocks, bonds, mutual funds, or real estate, these tips for Canadian investors can help you make informed choices. Read on for advice and resources to help you maximize your investment options and avoid common missteps.

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General (Investing) Fundamental Analysis For Dummies Cheat Sheet

Cheat Sheet / Updated 02-16-2022

Make the most of fundamental analysis by getting familiar with financial statements and investment terms as well as knowing the best places to find fundamental data.

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General (Investing) How are Hedge Funds Different from Other Investments?

Article / Updated 12-22-2021

A hedge fund differs from so-called “real money” — traditional investment accounts like mutual funds, pensions, and endowments — because it has more freedom to pursue different investment strategies. In some cases, these unique strategies can lead to huge gains while the traditional market measures languish. The amount of potential return makes hedge funds more than worthwhile in the minds of many accredited and qualified investors. Here are some of the basic characteristics of hedge funds. Hedge funds are illiquid One key characteristic of hedge funds is that they’re illiquid. Most hedge fund managers limit how often investors can take their money out; a fund may lock in investors for two years or more. In other words, investing in a hedge fund is a long-term proposition because the money you invest may be locked up for years. Hedge funds have little to no regulatory oversight Hedge funds don’t have to register with the U.S. Securities and Exchange Commission (SEC). Most funds and their managers also aren’t required to register with the Financial Industry Regulatory Authority or the Commodity Futures Trading Commission, the major self-regulatory bodies in the investment business. However, many funds register with these bodies anyway, choosing to give investors peace of mind and many protections otherwise not afforded to them (not including protection from losing money, of course). Whether registered or not, hedge funds can’t commit fraud, engage in insider trading, or otherwise violate the laws of the land. Hedges use aggressive investment strategies In order to post a higher return for a given level of risk than otherwise expected, a hedge fund manager does things differently than a traditional money manager. This fact is where a hedge fund’s relative lack of regulatory oversight becomes important: A hedge fund manager has a broad array of investment techniques at his disposal that aren’t feasible for a tightly regulated investor, such as short selling and leveraging. Managers receive bonuses for fund performance Another factor that distinguishes a hedge fund from a mutual fund, individual account, or other type of investment portfolio is the fund manager’s compensation in the form of a performance fee. (SEC regulations forbid mutual funds, for example, from charging performance fees.) Many hedge funds are structured under the so-called 2 and 20 arrangement, meaning that the fund manager receives an annual fee equal to 2 percent of the assets in the fund and an additional bonus equal to 20 percent of the year’s profits. You may find that the percentages differ from the 2 and 20 formula when you start investigating prospective funds, but the management fee plus bonus structure rarely changes. Hedge funds use biased performance data What gets investors excited about hedge funds is that the funds seem to have fabulous performances at every turn, no matter what the market does. But the great numbers you see in the papers can be misleading because hedge fund managers don’t have to report performance numbers to anyone other than their fund investors. Those that do report their numbers to different analytical, consulting, and index firms do so voluntarily, and they’re often the ones most likely to have good performance numbers to report. Add to that the fact that hedge fund managers can easily close shop when things aren’t going well; after it shuts down it doesn’t report its data anymore (if it ever did), and poorly performing funds are most likely to close. What all this means is that measures of hedge fund performance have a bias toward good numbers. Hedges are secretive about performance and strategies Some hedge funds are very secretive, and for good reason: If other players in the market know how a fund is making its money, they’ll try to use the same techniques, and the unique opportunity for the front-running hedge fund may disappear. Hedge funds aren’t required to report their performance, disclose their holdings, or take questions from shareholders.

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General (Investing) 10 Ways to Minimize Losses in High-Level Investing

Article / Updated 12-22-2021

Even the legendary investing and speculating pros have failures and losses. The key is that all these people learned from what they did and modified their approaches going forward. Here are ten aspects of losses, either helping you minimize them or suggesting what to do if you have them. Use stop-loss orders "Have your profits run, but limit your losses." This age-old advice may be a cliché, but it's the quintessential grand strategy. In today's marketplace, limiting your losses is easy to do thanks to technology. Considering how crazy and volatile the world is, the stop-loss order should be a ready weapon in your investing and speculating arsenal. The trick is knowing when to place a stop-loss order, how long it should be in effect, and how far to place the stop loss-order from the stock's (or exchange-traded fund's) market price. You put a stop-loss order on a holding in your portfolio (such as a stock or ETF) to limit the downside risk of the holding without limiting the upside potential. Employ trailing stops The trailing stop is a stop-loss order that essentially trails the stock price like a giant tail as the stock price zigzags upward. The moment the stock reverses and falls, the trailing stop-loss order stays put at the most recent level it reached. When and if the stock does hit that stop-loss price level, the trailing stop turns into a market order and the stock will be sold. At that point, you've avoided further losses. Go against the grain When everybody and their uncle are ebullient about the stock market and the bulls-to-bears ratio is similar to the ratio of Red Sox fans to Yankees fans at Fenway Park, then it's time to be a contrarian — a cautious one. Starting to step away from a party that is overdue to end is a good way to avoid losses. Sure, you might miss a little more upside, but no one gets hurt taking a profit by selling or by using other loss-limiting strategies. Have a hedging strategy Having a hedging strategy after the crash is like closing the barn door after the horses escaped. The best time to consider a hedging strategy is before a major market reversal. A hedging strategy is basically knowing (and doing) what is necessary to preserve gains or simply to limit the downside. A hedging strategy differs depending on the duration of the expected fall. For corrections, you consider hedging by buying put options, for example. For bear markets, you look to sell and be in cash. Hold cash reserves Opportunities happen constantly — risks show up to derail or delay the best plans — but the prepared investor always has cash on the sidelines. Some extra cash is like a secret weapon; it's also a saving grace when your positions are down, and you need money for some unforeseen expense. Sell and switch When your stock is down, can you do a fancy two-step that can save you on taxes and set you up for a profitable rebound? Keep track of your unrealized gains and losses and see whether there are opportunities for tax benefits, given what is happening in your portfolio. Maybe you have an opportunity to sell a losing position in your portfolio to book a capital loss. Realized capital losses are generally tax-deductible (check with your tax advisor to be sure). You can play the rebound in a variety of ways, but make sure that the tax loss makes sense in your situation and that you did your due diligence regarding the potential rebound of the stock or the sector it's in. Discuss your personal tax situation with your tax advisor. Diversify with alternatives Keep in mind that as an investor, even if you have limited capital, you live in a time where there are many strategies and investment alternatives. When you have a stock in mind that you'll be investing in, you should list or research the alternatives that could accompany or augment your investment choice and help you limit or even reverse a potential loss. Using leveraged ETFs is a good example of this approach. A leveraged ETF is a speculative vehicle that seeks to emulate double or even triple the move of the underlying asset. Leveraged ETFs are a form of speculating. They may magnify gains when you're right, but they can magnify losses if you're wrong. Consider the zero-cost collar You have a stock that has done well, but you're worried. The stock may have some upside, but the downside risk seems to be growing. You don't want to sell the stock because the gain is sizable (and taxable!), but the short term worries you. Can you protect your stock from a potential correction without needing to sell it? Consider doing the zero-cost collar, a combination of writing a covered call and buying a put on the same stock (or ETF). When you write a covered call, you receive income (from the premium you receive when you "write" or sell it); you can then use this income to buy the put. This combination is called a collar because it effectively boxes in, or collars, the stock price. Here's how events may play out: If the stock goes down: The put that you bought comes into play. The put will increase in value the more the stock falls. If the stock goes up: You make a small profit on the stock when it's sold at the strike price of the call option you wrote. But that's it, because the covered call limits your upside; you can't realize any gains above the strike price. If the stock moves in a flat or sideways manner: Both the call you wrote and the put you bought would expire. No worries, though. Your stock is okay, and because both positions were acquired as a zero-cost collar, no harm is done when they expire. The collar didn't cost you, so there's no real loss. Try selling puts Say you have a stock with a loss. You review the wreckage and see that the stock price may be down (negative!), but everything else about the underlying stock and its company are positive. Suppose you have a stock that went from $50 per share and is wallowing in pain at, say, $25. Do you sell and take the loss, even though the company is really hunky-dory? Measure twice on this — is the stock price down only because investors left the sector entirely due to factors that are temporary and not fundamental to real value in the sector? Say that the company is fine but you could use the loss for tax purposes (capital losses in your portfolio are generally deductible). So consider selling the stock and then writing a put option on the same stock. Why? When you sell the losing stock, you pick up the loss on your taxes. Also, because the stock is down sharply, the puts on it are probably "fat" (meaning they picked up lots of value due to the stock's price drop). Given that, write a put option on that stock; it will give you good income and you can lock in a good price because the put will require you to buy the stock at the lower price (the strike price in the put option). The bottom line is that you took a bad event (the stock's fall) and turned it into something more positive. Prepare your exit strategy Stocks are meant to be a means to an end. You get stocks either for income or gains, maybe both. If you have a great stock and you've been getting great (and growing) dividends, year after year, then an exit strategy is either not a consideration or not a major concern. You develop an exit strategy for that type of holding in case you really need the money for a concern outside the realm of investing, such as funding college for your grandchild or buying that retirement home with all cash, no mortgage. When will you exit your position with stock X? And why? What type of scenarios would make you sell that particular stock? Give exit strategy some thought before the need to sell materializes. Many investors think about an exit strategy even before they make the initial purchase.

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General (Investing) Online Investing For Dummies Cheat Sheet

Cheat Sheet / Updated 12-13-2021

Whether you’re new at investing online or a grizzled veteran, you can always find better ways to make the internet work for you and your portfolio. You’ll want to make sure you know a few basics before you get started. And some tricks of the trade will literally help you to trade. Finally, you’ll want to know the terminology of investing online to make sure you are talking the talk.

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General (Investing) How to Sell Stock Short

Article / Updated 11-08-2021

Ordinarily when you invest in stocks online, you hope to profit from a company's good times and rising profits. But there's a whole other class of investors, called shorts, who do just the opposite. They search the internet for news stories about diners getting food poisoning at a restaurant, for instance, and look for ways to cash in on the stock falling. To sell a stock short, you follow four steps: Borrow the stock you want to bet against. Contact your broker to find shares of the stock you think will go down and request to borrow the shares. The broker then locates another investor who owns the shares and borrows them with a promise to return the shares at a prearranged later date. You get the shares. Don't think you're getting to borrow the shares for nothing, though. You'll have to pay fees or interest to the broker for the privilege. You immediately sell the shares you have borrowed. You pocket the cash from the sale. You wait for the stock to fall and then buy the shares back at the new, lower price. You return the shares to the brokerage you borrowed them from and pocket the difference. Here's an example: Shares of ABC Company are trading for $40 a share, which you think is way too high. You contact your broker, who finds 100 shares from another investor and lets you borrow them. You sell the shares and pocket $4,000. Two weeks later, the company reports its CEO has been stealing money and the stock falls to $25 a share. You buy 100 shares of ABC Company for $2,500, give the shares back to the brokerage you borrowed them from, and pocket a $1,500 profit. When you short a stock, you need to be aware of some extra costs. Most brokerages, for instance, charge fees or interest to borrow the stock. Also, if the company pays a dividend between the time you borrowed the stock and when you returned it, you must pay the dividend out of your pocket. You're responsible for the dividend payment, even if you already sold the stock and didn't receive the dividend.

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