1. Markets from zero

Markets from zero

Stocks, funds, quotes, orders, risk and who moves prices.

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  • 4 sections
  • 13 lessons
  • 1 h 21 min
About this chapter

This chapter builds the words every other chapter uses: stocks and funds, quotes, orders, returns and risk, the players, and one page each on derivatives, bonds and the macro.

What you will be able to do

  • Explain what a stock, a fund, an ETF and an index are, and why an index is a ruler, not a thing you own.
  • Read a quote: last price, bid, ask, spread, volume, and know how fresh the number on your screen is.
  • Describe the main order types and what "long", "short", "margin" and "leverage" mean, with the traps.
  • Turn prices into returns, and returns into risk: volatility, drawdown, correlation, beta.
  • Name the players on Wall Street (buy side, sell side, market makers, prime brokers, clearing, regulators) and the desks inside a bank.
  • Say in one breath what a derivative, a bond and "the macro" are.
  • Use the 100-word cheat sheet before a meeting.

The map

  1. Stocks, funds and quotes
  2. Trading, returns and risk
  3. Who moves prices
  4. Derivatives and bonds
  5. Cheat sheet

Five words to know before starting

price
What the last buyer and seller agreed on. Just a number from a trade.
market
Any place where buyers and sellers meet. Today it is mostly computers matching orders.
broker
The company that sends your orders to the market for you.
asset
Anything you own because you expect it to be worth something: a share, a bond, a coin, a house.
percent (%)
"Per hundred". 10% of 200 is 20. A change from 100 to 110 is +10%.
  1. Section 14 lessons · 24 minStocks, funds and quotesWhat you own, where it trades, and how to read a quote.
    1. 1.1What a stock is6 min
    2. 1.2Funds, ETFs and indices6 min
    3. 1.3Exchanges, hours and tickers6 min
    4. 1.4Reading a quote5 min
  2. Section 23 lessons · 19 minTrading, returns and riskOrders, long and short, gains measured right, and risk in numbers.
    1. 2.1Orders, long, short and margin6 min
    2. 2.2Returns and percentages5 min
    3. 2.3Understanding risk7 min
  3. Section 33 lessons · 19 minWho moves pricesThe players, how news becomes a price, and the macro machine.
    1. 3.1Who is who on Wall Street6 min
    2. 3.2How information reaches prices6 min
    3. 3.3The macro machine6 min
  4. Section 42 lessons · 13 minDerivatives and bondsContracts built on other things, and loans you can trade.
    1. 4.1Derivatives in one page6 min
    2. 4.2Bonds in one page6 min
    1. 5The cheat sheet4 min

Educational material about reading market data, not investment advice.