Glossary
Terms, defined plainly
- DiversificationRisk
- Spreading capital across holdings with different drivers to reduce company-specific risk.
- Lesson: Diversification and the risk you cannot remove
- LiquidityMarkets
- How much you can trade without moving the price. Deep books and tight spreads mean high liquidity.
- Lesson: Exchanges, brokers, and the order book
- SpreadMarkets
- The gap between bid and ask; the immediate cost of entering and exiting a position.
- Lesson: Exchanges, brokers, and the order book