Death Cross

A chart pattern indicating a major bearish shift.  A death cross occurs when a stock’s short-term moving average crosses below its long-term moving average.  The death cross is also considered a long-term indicator, as the most common moving averages used to...

Cup and Handle

A bullish trading signal where a security’s price chart shows an elongated “u” shape followed by a slight downward drift (forming a shape resembling a cup with a handle).  Generally, cups with a longer “u” bottom provide a stronger signal...

Compound Interest

The addition of interest to the principal sum of a loan or deposit.  Or, interest on your interest.  This interest calculated on the initial principal also includes all of the accumulated interest from previous periods.  Interest can be compounded on any schedule,...

“Falling Knives”

A shortened version of the colloquial term “don’t try to catch a falling knife.”  When it comes to trading, this term translates to “wait for the price to hit a bottom before buying it.”  There is no defined amount a stock must fall in...

Capital Gains Tax

A tax on the profit made from selling assets (eg stocks, real estate, or other investments).  The “capital gain” being taxed is the total price of the sale subtracted from the original cost of the asset.  When the assets themselves have been sold, the...