Trading, 0DT-SEL
Trading is the short-term buying and selling of stocks, commodities, options, cryptocurrencies, and other securities. Trading has different objectives and strategies than long-term investing. Traders use technical analysis, buy and sell on margin, and look to capture price inefficiencies.
Trading Encyclopedia Articles By Title
0DTE options trading: High risk or hype?
If youâre a regular follower of financial news, youâve probably seen media reports about a relatively new phenomenon......
4 ways to invest in cryptocurrency stocks
Are you curious about cryptocurrency investing, but donât want to own Bitcoin or any other token? What about investing......
AI trading agents are here. Should you let one trade for you?
By now, you probably know that artificial intelligence tools can help you analyze a chart, summarize an earnings......
AI, stock valuations, and investing in a bubble
Editorâs note: This article first appeared in Money Matters, a newsletter from Britannica Money, on September 30,......
Altcoins, coins, and tokens: Whatâs the difference?
If youâre new to cryptocurrency and find âcrypto-speakâ a bit dizzying, itâs probably because both the technology......
Asset tokenization: Turning real-world assets into digital tokens
Tokenization of real-world assets: Itâs quite a mouthful, but what does it mean? The short answer is that itâs......
Average true range (ATR): Using volatility for position sizing and risk control
Ask an experienced trader about their biggest challenge in achieving consistent profitability, and theyâll likely......
Avoiding emotional investing: Strategies for better decision-making
When we speak about financial markets, the language we use is largely based on numbers. For everything from market......
Basics of margin calls: An unpleasant flip side of using leverage
A margin call is the kind of call no investor or trader wants to get. When you invest or trade in a margin account,......
Beyond banks and brokers: All about decentralized finance (DeFi)
If you can imagine sending money, making a payment, or buying a financial asset without the assistance of a bank,......
Beyond the benchmarks: How the advance/decline line offers deeper insights
Imagine for a minute that every trading day in the stock market is an election that offers investors one of two......
Bitcoin and the environment: Weighing cryptoâs impact on ESG investing
Are you worried about climate change, but also have some crypto coins jingling in your digital wallet? Might seem......
Bollinger Bands: A powerful technical tool for traders
Bollinger Bands are a popular technical analysis tool used by stock market traders to assess price volatility and......
Brewing up volatility: Why and how triple witching days can shake up markets
Halloween comes just once a year, but Wall Street types donât mind a good scare more oftenâin the form of a financial......
Buyer beware: How to spot (and avoid) rug pulls and pump-and-dump schemes
If youâre an active investor who dabbles in penny stocks or cryptocurrencies, you may be aware of two similar types......
Calculating position size in trading: The key to risk management
Position sizing is a crucial, yet often overlooked, aspect of risk management that determines how much of a particular......
Candlestick patterns: Charting your trading strategy
Japanese candlestick patterns are a cornerstone of technical analysis that offers traders an intuitive way to interpret......
Central bank digital currencies: How they could change money
A central bank digital currency, or CBDC, is a government-issued form of money that lives entirely online. Itâs......
Centralized vs. decentralized crypto exchangesâwhich should you choose?
Are you buying, selling, or trading cryptocurrencies? Youâre probably using a cryptocurrency exchange to complete......
Commission-free stock trading: Is there a catch?
If you follow the market, you know that uptrends and downtrends come and go. But thereâs one trend thatâs been......
Commitments of Traders (COT) report: Tracking the big commodity players
Regulators, such as the U.S. Securities and Exchange Commission (SEC), and financial exchanges have taken multiple......
Common trading biases and how to overcome them
Have you ever found yourself meticulously preparing a trading strategy, only to second-guess your decisions when......
Condor and iron condor option strategies
Advanced options traders know that some strategies are designed for a directional view, meaning you think a stock......
Contango vs. backwardation: Whatâs the difference?
If youâre an investor whoâs new to the world of the futures markets, you might be confused by the so-called futures......
Covered call options: Targeting income from stocks you own (or setting an exit price)
When we think of stock investing, itâs usually the buy-and-hold varietyâpick a stock or exchange-traded fund (ETF),......
Crypto forks: What they are and how they work
If youâre a crypto enthusiast or investor, youâve probably seenâamong the many thousands of coins in digital circulationâsome......
Crypto use cases: 9 ways to use cryptocurrency to manage money
How many ways can you use cryptocurrency? There may be more options than you think. Digital currencies can be used......
Cryptocurrency ETFs: Crypto exposure, listed on traditional exchanges
Bitcoin exchange-traded funds (ETFs) set the crypto markets buzzing in early 2024, when the first batch of spot......
Cryptocurrency exchanges: Where to buy and sell Bitcoin and other digital assets
Wondering how to purchase or trade Bitcoin and other cryptocurrencies? Crypto exchanges are digital marketplaces......
Cryptocurrency futures: A new way to ride the crypto wave, with some old-school trading twists
Crypto traders might consider themselves light-years removed from their boisterous, brawling ancestors who bought......
Cryptocurrency regulation: U.S. laws and global developments
Cryptocurrency regulation is no longer a theoretical debateâitâs an evolving framework that is beginning to take......
Cryptocurrency scams: 8 crypto cons to avoid
If youâve heard about cryptocurrency, then youâve probably heard about crypto scams. Decentralized technologies......
Cryptocurrency wallets: The ultimate beginnerâs guide
Are you wondering about crypto wallets? Cryptocurrency wallets provide access to cryptocurrency and other digital......
Day trading, active trading, and investing: Whatâs the difference?
So youâre ready to jump into the financial markets. Maybe itâs your first 401(k) plan, or thereâs a company whose......
Decentralized autonomous organizations: DAOs as an alternative investment
If cryptocurrency stands on a horizon far off the traditional investment path, then investing in a virtual organization......
Different margin for different traders: Reg T, futures margin, and portfolio margin
Margin is used by different types of traders and investors in different ways. Trading on margin (aka trading with......
Digital tokens: 8 types of crypto coins
Utility tokens, stablecoins, meme coins, and non-fungible tokens (NFTs) are just some of the digital tokens in......
Directional risk in options: Understanding delta and gamma
If youâve ever traded option contracts, or held them in your portfolio, you know the first rule is managing uncertainty.......
Does market timing work? The risk of missing big rallies
Market timingâtrying to precisely predict and capture market tops and bottomsâis intriguing to many investors.......
Donât be the fool: How narratives drive boomsâand busts
Editorâs note: This article first appeared in Money Matters, a newsletter from Britannica Money, on April 1, 2026.......
Double top and double bottom patterns: Spotting trend exhaustion
When a stock thatâs trending higher or lower reaches the same price level twice and fails to break through, it......
Dow theory and the foundations of technical analysis
What do the Dow Jones Industrial Average, the Wall Street Journal, and technical analysis have in common? All three......
Ethereum gas fees: The cost of doing (crypto) business
If youâve ever paid a toll on a highway, then you already know something about Ethereum gas fees. Ethereum gas......
Fibonacci trading strategies: Analysis, techniques, and debates
What does an 11th-century Italian mathematician have to do with trading? Turns out, quite a lot. Born about 1170,......
Flag and pennant patterns: When a trend hits the pause button
Even when a stock, cryptocurrency, commodity, or other security is clearly trending in one direction, it may occasionally......
Following the money flow: How the global currency market works
Currency is a fairly easy concept to understand as long as we focus on a single one. For instance, in the United......
Funding rates in trading
As the saying goes, âTime is money.â In financial markets, that idea is applied quite literally. Whether youâre......
Futures contract specifications: Know the delivery terms before jumping in
Considering a play in the futures market? In futures contractsâas with any investmentâspecifics matter. In the......
Futures delivery basics: Cash vs. physical
The concept of delivery is fundamental to the origin story of the American futures market, going all the way back......
Golden cross and death cross: Identifying and confirming chart trends
Suppose you have a long or short position in a stock, exchange-traded fund (ETF), cryptocurrency, or futures contract,......
Head and shoulders pattern: Indicating a shift in market sentiment
Imagine having the ability to spot a long-term market reversal as itâs unfolding. This would give you plenty of......
Heikin-ashi candles: Making market trends easier to spot
Heikin-ashi, roughly meaning âaverage barâ in Japanese, represents a modified version of traditional candlestick......
How AI might fit into your stock trading strategy
Stock picking takes time, and even then, itâs hard to know if youâve made the right choices. Artificial intelligence......
How basis trading works (and why borrowing big makes it risky)
Basis trading is a common strategy used by professional investors to profit from the small price difference between......
How do crude oil prices affect gasoline prices?
When crude oil jumps, gasoline prices typically follow. After all, crude is gasolineâs main ingredient. And when......
How smart contracts work with blockchain: A step-by-step guide
You may have heard about smart contracts, but what are they, exactly, and how do they work? If youâre a crypto......
How to recover lost cryptocurrencyâand how to keep it safe
Cryptocurrency scams are constantly evolving and growing more sophisticated, but you can take preventive measures......
Ichimoku cloud: At-a-glance view of trend and momentum
Is it possible to view the marketâpast, present, and even its potential futureâat a glance, with trend, momentum,......
Intro to options: A different way to participate in the stock market
Pretty much everyone with investing experience knows how to buy shares of a stockâitâs one of the first things......
Investing in unknowns and donât want to become a âbag holder?â Avoid these 10 mistakes
Are you familiar with the greater fool theory? Itâs a money concept that describes choosing an investment not because......
Iron butterfly: Body and wings (or a straddle with endpoints)
When new options traders get their feet wet, learn the math behind the numbers, and go through a few (or more than......
Itâs all relative (value): The art and science of pairs trading
Imagine two businesses operating in the same market, running the same strategies, and offering similar products.......
Know your optionsâand the risk and reward for each strategy
Whether youâre looking to learn more about the fundamentals of derivatives trading or understand advanced options......
Line, bar, and candlestick charts: 3 types technical analysts use
Line, bar, and candlesticksâthese are the three most common technical analysis chart types. Think of them as vanilla,......
Margin account vs. cash account: What to know before you trade
In the dynamic world of finance, understanding the nuances between different types of investment accounts is important......
Mark-to-market, variation margin, and daily settlement in futures
Margin is one of the most importantâand yet often misunderstoodâconcepts in futures trading. In equities, margin......
Market order, limit order, or stop order: What are they and which should you use?
Investors can buy or sell stocks using a variety of different order types depending on their objectives. For example,......
Market sentiment: Measuring fear, greed, and investor mood
If the actions of investors drive the price of a security, what drives investors to take those actions? The decision......
Measuring options risk: Delta, gamma, theta, and vega (and rho)
When youâre first starting your options journey, youâre taught to look at the so-called risk profile at expiration.......
Meme coins: Investing in a joke, or is the joke on you?
Will 2024 be known throughout history as the year of the meme coin? As cryptocurrency investing entered a new bullish......
Meme stocks explained: Hype, volatility, and lots of risk
Youâve probably seen a meme or twoâthose bits of viral culture passed around online. But what happens when that......
Micro-cap and penny stocks: What you need to know before you invest
Does a stock with a low price automatically feel like a bargain? What about that small, publicly held company you......
My stock is drifting down. Should I buy the dip?
You may have heard the phrase âBuy the dip,â whether from market experts interviewed on a financial TV channel......
Navigating the markets with moving average convergence/divergence (MACD)
Letâs suppose youâre a trend-following stock trader. Your objective as a trend follower isnât to seek companies......
Navigating the pattern day trader rules
For more than two decades, active traders with margin accounts had to navigate pattern day trader (PDT) rules.......
Need a trading assistant? How about AI?
With every new type of technology comes both the promise and the reality. Artificial intelligence is no exception......
NFT use cases: 8 innovative ways to use non-fungible tokens
Have you ever thought about buying a non-fungible tokenâan NFT? If you arenât terribly interested in owning digital......
Odd-lot trading: Small trades, big market insights?
Big, stodgy Wall Street institutions and big round numbers are so passĂ©. Todayâs markets are increasingly populated......
On-balance volume: Joseph Granvilleâs pioneering indicator in technical analysis
On-balance volume (OBV) is a technical analysis indicator and a powerful tool that can help you recognize both......
Option butterfly spreads: Volatility, magnitude, and defined risk
Optionsâon a stock, index, commodity, or whatever youâre tradingâare a lot like chess. No matter how the market......
Option collar strategy: Can you get free price protection?
If youâre a dog lover, youâre familiar with the collar. Itâs that protective band you strap around Fido for ID......
Option specs: American vs. European exercise; physical vs. cash settlement
Before you trade a single option contractâeither as a buyer or sellerâthere are several key terms and specifications......
Option straddles: Volatility, magnitude, and time (not direction)
If youâre new to options trading, you probably think in terms of directionâbuying a call option because you think......
Option strangles and iron condors: Targeting movement but not direction
Traders who are starting out in options tend to focus on directional plays. For example, a beginner might buy a......
Option theta, vega, and implied volatility: Navigating uncertainty
In the options world, time + volatility = uncertainty. What does that mean? When an option expires (when thereâs......
Perpetual futures: A crypto-driven force reshaping global markets
The future no longer has a âsell-byâ date. Thatâs the idea behind perpetual futures, a fast-growing new type of......
Prediction markets: The intersection of forecasting and investing
Prediction markets exist at the intersection of crowd wisdom, financial innovation, and speculative trading. They......
Price floors and ceilings: Areas of support and resistance in the markets
Stocks, ETFs, commodities, and really all market prices fluctuate, whether theyâre on their way up or down. If......
Price gap analysis: What gapping stocks can tell traders
If youâve ever traveled by subway in London, Paris, or New York, youâve seen the phrase âMind the gap.â Itâs a......
Proof of work vs. proof of stake: Comparing two blockchain verification types
Perhaps youâre looking to invest in blockchain technology to broaden your portfolio diversification strategy. You......
Reading market signals: The role of volume and open interest
Traders like to âfollow the money,â and in the futures markets, two clues can help: trading volume and open interest.......
Ready to roll? Keeping an option strategy intact past expiration
If you have auto insurance or home insurance, you know those contracts typically expire every 12 months. Just before......
Regret minimization theory: Making peace with uncertainty
Regret minimization theory is a decision-making framework that helps traders and investors navigate choices when......
Retail forex trading: An introduction for active investors
If youâre looking to diversify your portfolio by trading international currencies, the retail foreign exchange......
Risk-on vs. risk-off: How market mood moves money
Financial markets donât just move on corporate earnings, economic reports, or interest rates. They also move on......
Sahm rule: A real-time recession indicator
When a recession appears on the horizon, youâas an investor, business owner, or policymakerâmight find yourself......
Sell in May and go away? Not so fast
Editorâs note: This article first appeared in Money Matters, a newsletter from Britannica Money, on May 3, 2026.......
Selling call and put options: A guide to the risks and rewards
When most people first learn about options, itâs in the context of buying call and put options to speculate on......
Selling cash-secured put options: Stock accumulation and targeted premium collection
If youâre familiar with option basics, you know that a put option contract gives the owner (i.e., the buyer) the......
Selling vertical put option spreads: Defined risk and reward with a bullish bias
If you have experience trading single option contracts, you may be ready to jump to the next level. Maybe you like......