The online trading glossary: The terms to know and to deepen in order to become familiar with the field of trading at the operational level

Disclaimer

This book does not in any way constitute advice or a solicitation for public savings. Operating on the stock market is a risky undertaking. What is presented in this manual is the result of years of study and operation, so there is no guarantee that such results will be achieved. The results obtained by the author in the past are no guarantee of future earnings.

The reader is fully aware of and responsible for his economic and financial decisions, i.e. he is aware of the risks associated with any type of transaction.

The case studies and examples contained in the text are the result of facts and opinions that are subject to change at any time without notice and do not constitute a solicitation for the purchase or sale of securities and public savings.

The reason for presenting these cases is to provide elements of market research, so that they cannot be considered as definitive forecasts and do not protect against the risk inherent in stock market investment activities.

With the presence of this disclaimer, the author disclaims any liability for possible inaccuracies in the reported data, damages, economic losses, direct or indirect damages resulting from the use or disclosure of the information contained in this book.

How this book works

This glossary has been created to provide simple, practical and effective answers to key questions about trade and its operational implications.

The objective: to enable the reader to understand the subject, using a text that is sufficiently exhaustive to understand each element presented without unnecessary delay.

It is intended for anyone who needs to acquire information on business practices quickly, while it can be used as a summary text by powerful users, i.e. those who have already gone into the subject in depth in the past or who have extensive direct experience. The more experienced readers will be able to remember the main theoretical points about their operations.

In order to promote understanding and learning of the topics covered, each voice can be read independently of the others. This way, you can search for what is most useful, or acquire information by moving from one side of the book to the other.

Instead, those who read it from the outset will get a general overview of the main notions to know about the field of finance and its operational possibilities.

Each answer is organized in such a way that it can be read and memorized in a few minutes, while providing the necessary information to continue a thorough examination, which, in order not to distort the nature of this book, will have to be done independently by the user. At the end of the reading, you will still have all the information necessary to understand the subject.

The text is designed to transfer information gradually, so it is advisable to keep an open mind and use the various points not as exhaustive summaries, but rather as starting points for further study and research .

Cyclical analysis

Cyclical analysis is the branch of technical analysis that deals with the identification of upward and downward trends in cycles that follow one another at specific time intervals. The theoretical hypothesis underlying this discipline is that the economy develops and changes at rates similar to those of the seasons.

These rhythms are generally classified into four categories:

- expansion, characterized by increased productivity, higher prices and lower interest rates;

- boom, the final phase of market expansion. It is characterized by an overproduction and overbought of the main financial instruments;

- recession, indicating a first state of crisis; it is characterized by a drop in purchasing demand, production and a simultaneous increase in interest rates;

- depression, indicating a state of maximum deterioration in economic performance. At this stage, the market expels companies that are no longer competitive and creates the conditions for economic recovery.

The four steps are represented in the charts of financial instrument prices because they are a faithful reproduction of economic trends.

The economic analysis therefore seeks to identify the market's turning points by studying four parameters:

- prices of financial assets;

- volumes, i.e. the number of contracts negotiated;

- volatility, i.e. the speed at which trade takes place;

- time.

By interpolating these elements, it is possible to estimate the amplitude of stock market cycles, represented by a set of graphical patterns that are repeated at regular intervals over time. They are therefore recognizable, observable periodic functions that can be used to anticipate the performance of financial markets.

A widely used model in this field is the system of cyclical analysis produced by James Hurst, the American engineer who, at the turn of the 70s and 80s of the last century, attempted to identify and sketch out a series of principles recurrent in stock market cycles (including, for example, communality, nominability and proportionality).

His work is well exposed in the book The profit magic of Stock transaction Timing, a manual in English which remains the reference text for traders who wish to deepen the study of cyclical analysis.

Fundamental analysis

Fundamental analysis is one of the main tools for studying and understanding markets. The subject bases its forecasting capabilities on the collection of data and financial information on the companies, firms and organizations it researches.

The objective of a fundamental analyst's work is to determine the fair market price of the asset under review. Once the fundamental (or intrinsic) value has been determined, it will be possible