Successful Trader's Cheat Sheet
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When it comes to research, Fidelity is in a league of its own. The intellectually curious can dive into research from more than 20 providers, including Recognia, Ned Davis, and McLean Capital Management. Fidelity’s Learning Center featured videos are organized by topic, but they don’t stop after explaining the concept; they also cover how to apply principles to your own Fidelity investments.
Diversification is considered to be the only free lunch in investing. (If you are new to this concept, check out Introduction To Diversification, The Importance Of Diversification and A Guide To Portfolio Construction.) In a nutshell, by investing in a range of assets, you reduce the risk of one investment's performance severely hurting the return of your overall investment. You could think of it as financial jargon for "don't put all of your eggs in one basket".
Financial innovation has brought many new financial instruments whose pay-offs or values depend on the prices of stocks. Some examples are exchange-traded funds (ETFs), stock index and stock options, equity swaps, single-stock futures, and stock index futures. These last two may be traded on futures exchanges (which are distinct from stock exchanges—their history traces back to commodity futures exchanges), or traded over-the-counter. As all of these products are only derived from stocks, they are sometimes considered to be traded in a (hypothetical) derivatives market, rather than the (hypothetical) stock market.
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