Mechanical Investing Buying and selling stocks according to a screen based on predetermined criteria, usually with the help of technical indicators such as relative strength or momentum. This method allows traders to enter transactions without emotion and backtest their strategies by using historical data from any time period. For example, one of the most common … [Read more...]
Archives for April 2010
High-Frequency Trading – HFT Explained
A program trading platform that uses powerful computers to transact a large number of orders at very fast speeds. High-frequency trading uses complex algorithms to analyze multiple markets and execute orders based on market conditions. Typically, the traders with the fastest execution speeds will be more profitable than traders with slower execution speeds. As of 2009, it is … [Read more...]
What Does Stock Screener Mean?
A tool investors can use to filter stocks given certain criteria of their choice. By using a stock screening tool an investor is able to follow a strict set of criteria that he or she requires prior to investing in a company. For example, an investor could screen stocks by entering the following criteria: "listed on the NYSE", "in the telecommunications industry", "has a P/E … [Read more...]
What does Dogs Of The Dow mean ?
An investing strategy that consists of buying the 10 DJIA stocks with the highest dividend yield at the beginning of the year. The strategy was formulated in 1972 and has proven to be successful. In fact, as Dog of the Dow investors readjust their portfolios each year, it places pressure on the stocks involved. The Dogs of the Dow is an investment strategy popularized by … [Read more...]
What is Backtesting?
Backtesting The process of testing a trading strategy on prior time periods. Backtesting (or back-testing) is the process of evaluating a strategy, theory, or model by applying it to historical data. It can be used in situations like studying how a trading method would have performed in past stock markets, or how a model of climate and weather patterns would have matched … [Read more...]