This weeks market term is Alpha – Alpha is a measurement of risk that has a direct correlation between the return on a stock and the return on the market as a whole. Alpha takes the price risk of a stock and compares it to a benchmark index. The excess return of the stock as compared to the benchmark index is termed the Alpha. If stocks rise when the market as a whole is declining, then it is said that the stock has a “positive” alpha. If the stocks were declining as the market is rising, then the stock would have a “negative” alpha.

The goal at BetterTrades is to help students learn more about the stock market and then use that knowledge to make better trading decisions. One of the first steps toward becoming an educated trader is to get familiar with the terminology used in the stock market.  To help speed your progress, BetterTrades brings you stock and options terms that you need to learn. Knowledge is the first step toward making better trades.

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