Stocks
Technical Analysis
The building blocks of investing. Understand what you're buying before you buy it.
Read price charts like a pro. Candlesticks, moving averages, RSI, and support/resistance levels.
What is a stock?
A stock (or share) is a tiny piece of ownership in a company. When you buy one share of Apple, you literally own a fraction of everything Apple has — its cash, buildings, patents, and future profits.
What is a stock market?
A stock market is a marketplace where buyers and sellers trade shares. The NASDAQ, the New York Stock Exchange (NYSE), and Euronext are examples. Think of it like an auction house that runs every weekday.
How are prices set?
Prices move with supply and demand. If more people want to buy a stock than sell it, the price rises. If more want to sell, it drops. Company earnings, news, and market sentiment all influence demand.
Key terms
- Ticker — the short code for a stock (e.g. AAPL for Apple).
- Market cap — total value of all shares (price × number of shares).
- Volume — how many shares are traded in a day.
- Adj Close — closing price adjusted for splits and dividends, essential for long-term comparison.
Candlestick Charts
Each candle shows four prices for one time period: Open (where it started), Close (where it ended), High (the peak), and Low (the bottom). A green candle means the price closed higher than it opened; red means it closed lower.
Moving Averages (SMA / EMA)
A stock's daily price is noisy — it jumps up and down every day. A moving average smooths it out so you can see the real trend underneath.
- SMA (Simple Moving Average) — just the average closing price over the last N days. Every day counts equally.
- EMA (Exponential Moving Average) — same idea as SMA, but recent prices count more than older ones. Reacts faster to new information.
When price crosses above a moving average, it's often a bullish signal. When it crosses below, bearish. Toggle the indicators below:
RSI (Relative Strength Index)
RSI is a number between 0 and 100 that answers one question: "Is this stock being bought too aggressively or sold too aggressively right now?"
It measures the speed and size of recent price movements. Not where the price is, but how fast it's been moving up or down.
- Above 70 = Overbought — the stock may have risen too fast. A pullback could be coming.
- Below 30 = Oversold — the stock may have dropped too aggressively. A bounce could be coming.
Support & Resistance
Support — a price floor: a level where the stock keeps stopping its fall and bouncing back up. When a stock drops to $150 and bounces 3 times, traders remember. Next time it approaches $150, they think "this is a good buying opportunity," so they buy — pushing the price back up. It becomes a self-fulfilling prophecy.
Resistance — a price ceiling: a level where the stock keeps stopping its rise and falling back down. Traders who bought at $200 and watched it fall are waiting to "get out even." When price approaches $200 again, they all sell — supply overwhelms demand — price falls again.
ETFs
Portfolio Construction
Diversification in a single trade. The easiest way to start investing.
Don't just pick one stock — build a combination of assets that reduces risk without sacrificing return.
What is an ETF?
An Exchange-Traded Fund bundles many stocks into one tradable product. Instead of buying 100 companies individually, you buy one ETF that holds all of them. It trades on the stock market just like a regular share.
Why do beginners love ETFs?
Instant diversification. If one company in the bundle crashes, the others cushion the blow. The QQQ ETF, for example, tracks the 100 largest NASDAQ companies — so you get Apple, Microsoft, NVIDIA, and 97 others in a single purchase.
ETFs vs. individual stocks
ETFs
- Lower risk (diversified)
- Smoother returns
- Less research needed
- Lower potential upside
Stocks
- Higher risk (concentrated)
- More volatile
- Requires research
- Higher potential upside
Popular NASDAQ ETFs
- QQQ — tracks the NASDAQ-100 (top 100 non-financial companies).
- VGT — Vanguard Information Technology ETF.
- ARKK — ARK Innovation, focused on disruptive tech.
Diversification
Holding multiple uncorrelated assets reduces risk. When one stock drops, others may hold steady or rise. The math is powerful: a portfolio of 5 uncorrelated assets can have the same expected return as a single stock with significantly less volatility.
Portfolio A: 100% Tesla (volatile)
Portfolio B: 5 Stocks (smoother)
Correlation
Correlation ranges from -1 (perfect inverse) to +1 (move in lockstep). For diversification, you want assets with low or negative correlation. Two stocks that always rise and fall together give you no diversification benefit.
Sector Allocation
Spreading across different sectors matters because industries are affected by different economic forces. A tech crash won't necessarily hurt energy or healthcare stocks. A balanced NASDAQ portfolio allocates across sectors:
Efficient Frontier
For every level of risk, there's a maximum possible return. The efficient frontier is the curve connecting the best portfolios — you can't do better without taking more risk. Portfolios below the frontier are suboptimal.
Risks
Risk Metrics Deep
Every return comes with a price. Learn to measure and manage risk.
Measure and quantify risk precisely. Volatility, Sharpe ratios, drawdowns, and strategy comparison.
Why do prices go down?
Markets react to uncertainty. Bad earnings, interest rate hikes, geopolitical crises, or simple panic can trigger sell-offs. In March 2020, the NASDAQ dropped 30% in three weeks due to COVID-19 fears — then recovered within five months.
Volatility
Volatility measures how much a price swings up and down. NVIDIA moved ±5% in a single day dozens of times in 2023. A savings account has near-zero volatility. Higher volatility = higher potential reward, but also higher potential loss.
Key risk metrics
- Max drawdown — the worst peak-to-trough drop. Tesla lost 73% from Nov 2021 to Jan 2023.
- Sharpe ratio — return per unit of risk. Higher is better. Above 1.0 is considered good.
- VIX — the "fear index." When VIX spikes, markets are panicking.
The golden rule
"Never invest money you can't afford to lose." Diversification, long time horizons, and emotional discipline are your best defenses. Historically, the NASDAQ has returned ~10% annually over 20+ year periods — but short-term swings can be brutal.
Volatility (Annualized)
Volatility is the standard deviation of daily returns, scaled to a year (252 trading days). A stock with 40% annualized volatility can swing ±40% in a typical year. The chart below shows price on top with 30-day rolling volatility underneath — notice how volatility spikes during crises.
Sharpe Ratio
The Sharpe ratio measures return per unit of risk. A Sharpe of 1.0 means you earn 1% of excess return for every 1% of volatility. Higher is better.
Max Drawdown
Max drawdown is the worst peak-to-trough drop over a period. It shows how much money you would have lost at the worst possible entry point. The red shaded area below marks the largest drawdown period.
Strategies Comparison
- Value — buy stocks trading below their true worth. Patient, contrarian. Example: Intel (INTC).
- Growth — buy companies growing revenue fast, even if expensive. Example: Amazon (AMZN).
- Momentum — buy stocks that have been rising recently, betting the trend continues. Example: NVIDIA (NVDA).
Our Simulation
Market History & Psychology
Travel back in time and see what your money could have done.
Markets are driven by humans, and we are irrational. Understanding past crises and cognitive biases separates emotional investors from disciplined ones.
What if you had invested?
Our simulator lets you travel back in time. Pick a company, choose a date, enter an amount, and watch how your investment would have grown (or shrunk) using real historical data.
- Compare stocks vs. ETFs side-by-side.
- See how strategies like Dollar-Cost Averaging perform against lump-sum investing.
- Explore the impact of major events: the 2008 crash, COVID, the AI boom.
The Annotated NASDAQ Timeline
An interactive timeline of the NASDAQ-100 (QQQ) from its inception to today. Click on events or use the buttons below to zoom into key crisis periods.
Cognitive Biases
Understanding these psychological traps can save you from costly mistakes:
FOMO (Fear Of Missing Out)
Buying at the top because everyone else is. "NVIDIA is up 200% this year, I need to get in now!" You buy at the peak and watch it drop 30% the next month.
Anchoring
Fixating on the price you paid instead of current value. "I bought Tesla at $400, I can't sell at $200." The price you paid is irrelevant — only the future matters.
Confirmation Bias
Only reading news that confirms your existing position. You own AMZN, so you only read bullish articles and ignore warnings. You miss the red flags.
Loss Aversion
Feeling losses twice as strongly as equivalent gains. Losing $100 hurts more than gaining $100 feels good. This leads to holding losers too long and selling winners too early.
Volatility Clustering
Big swings tend to follow big swings. After a large move (up or down), the next few days are more likely to also have large moves. This is volatility clustering — visible in the daily returns chart below as "bursts" of activity.
Simulation Lab
Put your knowledge to the test. The expert simulation lab includes a Strategy Backtester, Portfolio Builder, and Crisis Stress Test.
Launch Simulation Lab →