In our previous illustration we discussed risk management techniques, and a few more key terms that will help one develop risk management and trading strategies. I have always loved Japanese candlesticks. Which strategy does your favorite investor utilize?


Sector Diversification

  • Information Technology
  • Healthcare
  • Materials
  • Energy
  • Industrials
  • Financials


Bearish it is when an investor believes a security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

Bullish it is when a specific security or an industry will rise. An investors who takes a bull approach will purchase securities under the assumption that they can be sold later at a higher price.

Candlesticks  is a style of financial chart used to describe price movements of a security, derivative, or currency. Each “candlestick” typically shows one day; so for example a one month chart may show the 20 trading days as 20 “candlesticks”.

Pips The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point – for most pairs this is the equivalent of 1/100 of one percent, or one basis point.