Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FINA 408 > Itech lecture 10 > Flashcards

Itech lecture 10 Flashcards

1
Q

Trading a security can be based off of 3 things, name them

A

1) performance
2) catching large trends
3) diversification

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are some costs associated with trading (TA)

A

-time consumption
-opportunity costs
-trading losses from learning curve
-setup costs
-commission
-slippage
-missing orders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

When you start trading, what kind of market should you go into

A

A “slower” market or lower risks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What sort of volume must be present to have high liquidity

A

heavy volume

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the 3 types of trading for different time horizons?

A

1) scalping
2) day trading
3) swing trading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is scalping?

A

Taking very small profits between bid-ask spreads and accumulating liquidity credits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does scalping need to have in order to be profitable?

A

Time, excellent order entry system and experience

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How quick is scalping

A

Very fast paced (minutes)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is day trading?

A

Starting the day with no positions and ending the day with no positions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How short is day trading?

A

Very short term, minute and hour bars are used

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is swing trading?

A

Catching small trends or counter trends over several days or weeks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How experience might an investor be in order to make swing trading profitable?

A

Less experience compared to day trading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the two approaches in to select investments?

A

Top down
Bottom up

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the sequence of events in a top down selection

A

market -> country -> industry -> security

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the sequence of events in a bottom up selection

A

Security -> industry -> country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does Canslim stock selection focus on?

A

Focuses on “leading” growth stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How are stocks ranked in CANSLIM

A

12 month relative price strength, with 3 month price strength weighted more heavily in percentiles from 0-99, 99 being the strongest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the stop loss in CANSLIM

A

7-8% strict stop loss rule

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

When do you hold the position in CANSLIM

A

Hold position if stock rises greater than 20% within 1-3 weeks

20
Q

What are the 3 patterns used in CANSLIM

A

1) cup and handle
2) Flat base
3) double bottom

21
Q

When is the best time to buy in CANSLIM

A

when breakout from a pattern with at least 50% increase in volume

22
Q

What does the C in CANSLIM represent + describe

A

Current Quarterly Earnings

+25 % or more in recent quarter
Look for stocks with string current results as well as string history of solid earnings growth

23
Q

What does the A in CANSLIM represent + describe

A

Annual earning
+25% for more for the past 3 years (year over year)

24
Q

What does the N in CANSLIM represent + describe

A

New product, Management, Highs
Biggest stock winners had new products, new management or new conditions in an industry that propelled the company to astounding height

25
Q

What does the S in CANSLIM represent + describe

A

Supply & demand
Strong demand for a limited supply of available shares will push a stock’s price up

26
Q

What does the L in CANSLIM represent + describe

A

Leaders: choosing to win
Steer clear of stocks that are laggards

27
Q

What does the I in CANSLIM represent + describe

A

Institutional sponsorships
Big institutional investors, managers of the company investing their ow money into stock of the company

28
Q

What does the M in CANSLIM represent + describe

A

Market direction
Don’t buy against the trend

29
Q

What are the retracement levels in Fibonnaci sequence

A

38.2%, 50%, 61.8%, 100%

30
Q

What do the retracement levels mean in Fibonnaci sequence

A

Spots where prices can find a resistance or support

31
Q

When can Fibonacci retracements be used? (3)

A

1) To place entry orders
2) determine stop-loss levels
3) set price targets

32
Q

In Eliott wave theory (EWT), how are stock prices governed

A

By irregular cycles founded upon the Fibonacci series (1-2-3-5-8-12-21…)

33
Q

In EWT how do impulse waves and corrective waves move

A

Impulsive waves move with the trend and corrective waves move against the trend

34
Q

Draw EWT in a bull market, identify the impulse, retracement and the corrective waves

A
35
Q

Draw EWT in a bear market, identify the impulse, retracement and the corrective waves

A
36
Q

In a bull market in EWT how many waves go up and how many waves go down

A

5 waves up, 3 waves down

37
Q

In a bear market in EWT how many waves go down and how many waves go up

A

5 waves down, 3 waves up

38
Q

In EWT, each larger wave is comprised of what?

A

Even smaller waves

39
Q

What are the 3 types of corrective waves?

A

1) zig zag
2) flats
3) triangles

40
Q

Draw a zig zag corrective wave

A
41
Q

Draw a flat corrective wave

A
42
Q

Draw a triangle corrective wave

A
43
Q

**What are the 3 rules of EWT that cannot be broken?

A

1) wave 2 must not break below wave 1 (original wave)
2) Wave 3 is never shorter than wave 1 and 5
3) Wave 4 cannot overlap the termination of wave 1

44
Q

What are some EWT guidelines (don’t always have to be followed)

A

-Alternation
-Equality
-Truncation

45
Q

What is alternation as EWT guidelines

A

Type of corrective wave in wave 2 and 4 alternate (a flat is followed by a zig-zag, or triangle)

46
Q

What is equality as EWT guidelines

A

Waves 1 and 5 are usually equal in length

47
Q

What is truncation as EWT guidelines

A

Occasionally the fifth wave fails to exceed the third wave and gets “truncated”

FINA 408 (15 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions