Research and Trade #1 Introduction

Basic Terminology Security Long Short Index Any asset that can be traded and holds value Long Buying, or holding, a security Short Selling a security (short selling is a bit more advanced) Index A set of securities representing a market UIT? ETF?

Basic Terminology Ask Bid Spread Volatility Average last take from a seller (what the buyer pays) Bid Average last take from a buyer (what the seller gets) Spread The difference between the ask and bid price Volatility The relative amount a security moves in a given period

Terms in Action

Important Terms Yield Margin/Leverage Short Selling Day Trading Income returned on an investment Margin/Leverage Borrowed money used for investing Short Selling Borrowing a security to sell Day Trading Buying and selling a security within a day. *Subject to PDT guidelines

Day Trading?

Types of Accounts

Brokerage Employee Retirement Cash Margin Derivatives IRA 401(k) Payments must be made before settlement Margin Borrowing money and securities are allowed Derivatives Can trade futures and options IRA Anyone can open, low contribution limit $5,500 (under age 50) $6,500 (age 50 or older) 401(k) Offered by employers, high contribution limit ($18,500) Double taxation occurs if over contribution limit (6%)

Other Types of Accounts Employer Retirement Sep IRA Contribution limit ($55,000 or 25% of income, whichever is lower) Solo 401(k) $55,000 contribution limit (under 50) $61,000 (over 50) Managed Managed by a certified financial professional Unmanaged Not

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