Please explain "arbitrage."?
960549
The other posters gave very technical definitions, which are true, but can be confusing if you aren't familiar with the term.\n\nLet's say you're looking at IBM stock.  Now, IBM stock trades on more than just the NYSE (there is the AMEX, and the regional exchanges like the Pacific Stock Exchange, Boston Stock Exch, etc.).  So, let's say you're looking at IBM and you notice that IBM is trading at $50.00 on the NYSE, but it's trading at $50.25 on the AMEX.  In arbitrage, you buy IBM stock on the NYSE at $50 and simultaneously sell in ton the AMEX for $50.25, thus locking in a guaranteed $0.25 profit per share.  This is very basic.  You can have situation like in the currency markets where the exchange rates between the US Dollar, Pound and Yen are such that you exchange dollars for pounds, then pounds for yen and then yen back to dollars to take advantage of exchange rate disparities and lock in a profit.\n\nIn the simplest terms, it's buying a security at one place and simultaneously selling it at another place where the price is higher.\n\nIn other words, imagine buying an item on Yahoo auctions for $5.00 and then selling it on eBay for $10.00 (where the going price on Yahoo is $5.00 and the going price on eBay is $10.00).\n\nHope this helps.
468147
You used the example of Microsoft, which is a very actively traded stock with huge volume. \n\nWhat you are suggesting is either arbitrage, or stock manipulation; probably the latter. Surely you aren't mad at Microsoft?\n\nFor the size of this company and number of outstanding shares, it would take hundreds of millions of dollars to move the price of the stock significantly. You would never move it to $1, because everyone knows the stock is worth more than that, and that the company is not going out of business. You could sell a billion dollars of that stock and not cut it in half.\n\nIf you're near a brokerage office, stop by and look at a quote machine and observe the active bids for Microsoft -- there are millions of shares bid at every price level close to the current price. Those are the people that you will have to take out before you move the stock price significantly. \n\nThe floor traders and dealer/brokers and specialists do not literally "set" the stock price; supply and demand does that, and you better believe there's going to be a huge demand for Microsoft at $15 or $20, after you sold your billion dollars of stock, and after you get through the millions of shares quoted at bid. The net effect will be that you lose at least 10% and probably 20% on your foolish endeavor to try and manipulate the price against market forces, when demand comes surging in and drives the price back up.\n\nThat's a cool $200 million loss to you.
114894
The answer is exchange traded funds. Click the first link below to see these funds.\n\nFor trading strategies using various types of funds, click the second link.
73185
The source is an excellent intro to financial terms, especially the "dictionary" which covers acronyms and phrases.\n\nOff the top of my head:\n\n1. Time value recognizes that value changes with time.  A stock option (to buy or sell stock at a fixed price) is a wasting asset that may be worth less and less as the option date approaches and worth nothing if not exercised.  A contract to erect a building three years from now must recognize that the cost of materials and labor may change by then.\n\n2.  In financial, "discount" can mean that something has been taken into consideration.  The price of a stock today discounted the fact that earnings are expected to double by next year.\n\n3.  As a mortgage is paid off monthly at a fixed amount per month, the debt remaining is less with each payment reducing the interest (but not the interest rate) and more and more of the payments will go to reducing debt as the mortgage is amortized, reduced to zero over time.\n\n4.  Compounding means that if you receive interest on a bank savings account, you also receive interest on any previous interest received and kept in the account.  Compounding may be calculated daily on the account balance (interest posted) or perhaps semi-annually or annually depending on your agreement with the bank.  By extension, If the value of stocks in your IRA increase 10% per year, the value of the investment compounds (Take say $10,000 and multiply it by 0.10 for each year up to your retirement (and it continues to compound as you take out money during retirement).  This is the hidden value in SS personal savings accounts.\n\n5.  Net Present Value relates future value with the present value.  If you invest in IT (information technology) today, what will its future value be to your company, etc.?
137423
Its about trading in foreign exchange. Read about it on Oanda.com\nYou can also set up a demo account to try your hand at it on that site - its under oanda fx game.
643788
Whatever it says it means! (LOL) Read the axes of the graph. It could be price against time, maybe?
19084
It's a comodity that's traded on a comodities market. Supply and demand determine the price each month which is why it goes up and down.
819277
It means Or Best Offer. Basically they will take less than the asking price and be willing to negotiate price.
365553
You can read the answer at InvestorWords.com\n\nHere is the link for "shelf offering":\n\nhttp://www.investorwords.com/4538/shelf_offering.html
1134715
Valuation of financial derivatives (options, futures, forwards, etc)\nReal hard math, but real good money.
840409
HI !\nYour problem is called spread. Spread is the difference between bid and ask price. Spread price depends on a brokerage company.\nIf you wan to learn more you may want to check out some course so you wont loose more money. \nI suggest forexonlinecourse.com. And help with your trading check out forexonlinesignals.com.
300695
So i guess you know what forex trading is.\n\nFutures and options and forwrds, the easiest, are a kind of derivatives. Derivatives are a financial instrument whose value derives form the value of other, more basic underlying assets.\n\nNow, forwards are contracts in which the price of a commodity or currency is set for the future. It has to do with expectations of the market, and how the market thinks, based on information today, the price of those commodities or currencies will be in a certain date.\nLets say the exchange rate of mexican pesos for us dollars today is $11.09. That´s the spot exchange rate. Now, lets say you and i agree that in june 2006, im your gonna sell me american dollars at an exchange rate of $11.1828. If my expectation is the peso will be higher, im gonna make a deal with you. So, the future of the pedo, for june 2006 will be $11.1828. Imagine our deal, but not made between us, but between thousands of dealers, in the Chicago MArket.\nCompanies use futures a lot as a way to protect themselves. I believe in english its called hedging. If an american firm sells water tanks to a firm in France, but the payment isnt due untill 45 days later, both companies would like to agree to make the exchange of euros for us dollars at a future exchange rate. That way they now exactly how much they owe or get. The same with commodity prices. A future of the price of oil is nothing more than a contract agreeing on the future price of the transaction. Funny thing is, you and i can agree on an oils future contract, where im selling and your buying, but the barrel of oil is never transacted. What we do is, lets say the future price of oil for august is $73 usd. im selling, you are buying, and we agree on that price. Come august 31st, the real price of oil is $78 usd. since you are buying, you win $5 bucks per barrel right? And i lose % per barrel... so instead of giving you a barrel of oil you cannot even store, i just give you $5 per barrel. _If the real price had been $65, i would have won $8 per barrel, and you lose $8 per barrel.\n\nThe same with futures. MAjor difference with forwards is that an exchange of assets is required. Contracts are pretty much standarized. The delivery, kind and quality of product, etc is all defined. Largest exchanges are made in the Chicago Board Trade. Futures include a los of prodcts... live cattle, sugar, coffee, gold, cooper, aluminium, etc.\n\nOptions are a little bit harder. There are 2 basic type of options: call options, giving the holder the right, option, to buy an asset at a certain date at a certain price. Put options, giving the holder the right, option, to sell an asset at a certain date at a certain price. For example, lets say i buy a call option to buy in 3 months stock of yahoo. The actual price is, just an example, $10 bucks, and my call option gives me the option to buy at $12. The price to buy that option for 1 share of yahoo is worth $1. If 3 months pass, and the price of the stock is $11, i certainly wont take my option to buy the stock and lose $1, the initial investment on the option. But if the real price is $15, im going to take my option, buy the stock at $12 and sell it at $15, earning $2. \nJust be careful cause there are american options and european options... european options can only be excersied at the end of the contract, ehile american options can be excercised whenever in the life of the option.
510550
When trading in in futures, an option is a contract which gives its holder the right to buy or sell an asset at some predetermined price within a specific period. \n\nif you have 100 shares of compnay XYZ, and u sell someone the right to buy ur shares at a certain price within 3 months, that person has the right to 'CALL' your shares at the price. these are called call options. I hope it makes sence.
330380
this means you will make money off whatever you are selling to another. You will "profit" or gain something.
713228
It's a transaction where the delivery of whatever commodity you are trading will be in the future, but at a price determined today. It is often used to hedge against the risk of negative currency fluctuations by companies doing business in foreign countries.\n\nFor example, if the yen to dollar exchange rate is 100 yen for 1 dollar (hypothetically), and the exchange rate switches to 80 yen for 1 dollar, a Japanese company who sold a 20,000 car in the US would only get 1,600,000 yen for the car, versus what it would have received originally (2,000,000 yen). Companies can not keep changing prices, and they can not ask for more money once a sale is complete. Thus, the forward contract would insure that the Japanese company received at least a certain amount, say 1,800,000 yen (whatever the forward contract is for). Of course, if the rate becomes 120 yen to 1 dollar, the Japanese company would choose not to exercise the forward contract. \n\nForward contracts normally cost quite a bit, otherwise the companies offering them would not make any money. In essence, they are acting like insurance companies: you will not always need them, but you still have to pay the premiums if you want them just in case.
976490
I think you're asking something different than what's been addressed so far...\n\n1.  An investor (could be an invdividual like you or me, could be a professional investor such as a hedge fund) first gets a quotation for the stock.  Nowadays this is done via the Internet (you and me) or over a dedicated electronic system with a terminal in the fund's office (hedge fund guy.)\n\n2.  Next step is to decide what kind of order to place.  There are two basic types: 'market orders' are orders to buy the shares at the best available price at the moment the order reaches the trading destination (more on that in a sec) and 'limit' orders specify a maximum price you are willing to pay; if the prevailing price when the order reaches the trading destination is above that your order won't be filled.\n\n3. The 'trading destinations' take several possible forms.  Exchanges are generally physical places with folks running around, waving arms, pointing and scribbling while they fill orders that have come from the folks described above.  But there are also electronic trading destinations such as Nasdaq and 'ECNs' like INET, Brut, Archipelago and others in which orders are simple entered into an electronic 'order book' and whenever a buyer's price and a seller's price match, a trade is made.\n\n4.  When you, or I, or the hedge fund guy want to trade we have to give our order to a brokerage firm and they will represent our order in one of the venues described above.  They try to match our order with someone else willing to sell the stock to us (in my example we're using a buy order, so a seller is on the other side of the trade.)\n\n5. The brokerage firm will also handle whats called the 'settlement' of the trade.  The back office of our broker will take care of paying the seller's brokerage firm for the stock, and will get the shares from the seller's brokerage firm for deposit in our account.  This happens on the so-called 'settlement date', which is generally three business days after the trade date. \n\nWe now own the stock.\n\nVoila.\n\nGood luck.
1142863
Okay, I don't know what all that was about...\nIf you mean buying shares of stocks, then you should open a "brokerage" account with someone like ScotTrade.\nEach share is a small piece of a company and the price is given in USD ($).\nYou buy pieces of the company and hope that the price will rise.  After some time, you can sell it into your account and keep the profit!  It is fun, too.