Yes, a stock can lose all of its value. Companies that fall on difficult financial times can go bankrupt leaving the equity worthless. This can stem from a loss of customer demand, operating issues, mismanagement, or fraudulent activity. There are …
The risk-reward ratio measures the potential profit for every dollar risked. It is the ratio between the value at risk and the profit target. For example, if you buy a stock for 10 with a profit target of 12 and set a …
A stop-loss order protects profit or limits risk on an investor’s open position by exiting at a predetermined price. Placing an order to sell a long stock position if the price drops 5% below the purchase price is an example …
Getting into investing and trading can be exciting. It can be rewarding. And if you’re like me, it can be an obsession. But I’m the first to admit that the terminology can get very confusing when you’re starting. With that …
Stop orders typically do not execute during extended hours. The stop and trailing stop orders you place during extended hours usually queue for the market opening on the next trading day. Orders created during regular market sessions generally do not …
Sector momentum is a sector rotation strategy to boost performance by ranking sectors according to their momentum, buying top performers, and selling laggards. In this post, I describe sector momentum and why it works and backtest an algorithmic sector rotational …
Pandas was developed at hedge fund AQR by Wes McKinney to enable quick analysis of financial data. Pandas is an extension of NumPy that supports vectorized operations enabling fast manipulation of financial information. I’ll be using company data provided by an Intrinio developer …
We’re going to be populating our equity backtesting database with stock market data from Intrinio. Intrinio provides access to its data through both CSV bulk downloads and APIs. In this article, I’m going to cover importing the data using the Intrinio …
You can pay to get the S&P 500 historical constituents or use various free sources. Due to survivorship bias, getting an accurate list of the S&P500 components over time is critical when developing a trading strategy. Getting the S&P500 Historical …
The cost of capital is the weighted average of the cost of equity and the cost of debt. It’s the rate both equity and debt investors demand as a return or the hurdle rate if you’re on the other side of …
