Stock Market basics

What is Algorithmic Trading?

• Trading based on buying and selling physical goods
• Trading using mathematical models and automated execution
• Investing in stocks without using technology
• Manual trading based on gut feeling

Which of these is a common strategy used in algorithmic trading?

• Momentum trading
• Fundamental analysis
• Astrological predictions
• Guesswork

What is a 'tick' in the context of the stock market?

• A measure of time
• A measure of stock price movement
• A type of stock
• A trading strategy

What does 'backtesting' mean?

• Testing the physical back of a computer used for trading
• Guessing past stock prices
• Analyzing the performance of a strategy based on historical data
• Testing the speed of internet connection

Which order type can help limit a trader's loss on a position?

• Market order
• Stop-loss order
• Limit order
• Conditional order

What is 'high-frequency trading' (HFT)?

• Trading at high altitudes
• A type of algorithmic trading characterized by high speeds and high turnover rates
• Trading based on high volume of news articles
• Slow, methodical trading

Which financial instrument can be traded algorithmically?

• Stocks
• Options
• Futures
• All of the above

What does the term 'liquidity' refer to in the stock market?

• How easily a stock can be bought or sold in the market without affecting its price
• The water content in stock certificates
• The amount of liquid cash a company has
• The ability to convert stocks into bonds

What role does 'volatility' play in trading?

• Indicates the stability of the government
• Measures the price movement of a stock over time
• Shows how fast a stock can be bought
• None of the above

What is a 'trading algorithm'?

• A recipe for cooking
• A set of instructions for manual trading
• A computer program that executes trades based on predefined criteria
• A legal document outlining trading rules