Category Archives: Financial Markets

Backtesting

For backtesting software, the historical data is usually in the form of daily opens, closes, highs and lows. That leaves a lot of data off the table. Two daily chart candles may look identical, opening at a low of 1 … Continue reading

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Flash Crash

On May 6, 2010, the Dow Jones Industrial Average plunged from 10,868.12 to an intraday low of 9,869.62. The intraday decline of 998.5 points, or 9.2%, was the largest intraday point drop in history. The index quickly recovered much of … Continue reading

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Euphemisms

Financial market news often describe investors as “bargain hunting” or “profit taking”, depending on the day’s trading direction. These are oversimplistic euphemisms that could mislead neophyte investors. People are not so lucky that the only trading activities that go on … Continue reading

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Anatomy of a Pump and Dump – www.hotstockmarket.com

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Dead Cat Bounce

A brief recovery in the price of a financial asset after experiencing a prolonged decline is sometimes called a “Dead Cat Bounce”. The idea behind the metaphor is that even a dead cat would bounce if it fell from a … Continue reading

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Market Bubbles

Market bubbles, sometimes called Manias, are characterized by price or investment inflation, followed by a panic-induced crash. The “boom” and “bust” phases of such are highlighted, and in fact made possible, by the natural human instincts of greed and fear. … Continue reading

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Paper Losses and Gains

Paper losses do not exist. Neither do paper gains. These concepts are mere figments of the human imagination. Humans, naturally, want to win and not to lose. This desire can be observed as the cognitive bias to be “conservative-with-profits-and-risky-with-losses”. The … Continue reading

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