Glossary — L

Learning the Lingo: Let us explore investment terms beginning with `L'! LOSS A loss is incurred when a capital asset, such as a short-term investment or real estate, decreases in value. Loss in the stock market happens when: 1. You buy a stock at a higher price 2. The stock's price falls 3. You sell the stock at the lower price 4. As a result: You lose money. For example:

• Buy a stock for $100
• Stock price falls to $80
• Sell the stock for $80
• Loss: $20 (the difference between the buy and sell prices)

Remember, the stock market can be unpredictable, and prices can fluctuate. It is essential to be aware of the risks and make informed decisions when investing! Capital Loss Definition and Reporting Requirements

Leverage

Let us picture that you are using a crowbar to move a heavy rock! You know, one of those long metal bars that helps you lift and move heavy things? When you use a crowbar, you are using leverage to make it easier to move the rock. You are not lifting the whole rock by yourself, but using the crowbar to help you lift it with less effort! Leverage is like using a crowbar:

• It is like using a crowbar to lift a heavy rock - you are not using all your own strength (money), but using someone else's strength (money from a bank or friend) to help you lift it (achieve your goals) with less effort!

Just like how you need to be careful not to slip and hurt yourself when using a crowbar, you need to be careful when using leverage with money so you do not get into financial trouble! What Is Financial Leverage, and Why Is It Important?

Liquidity

Liquidity is like a vending machine. Imagine you put your money in a vending machine and select your favorite snack. If the machine is working properly, you get your snack quickly and easily! Liquidity in investments is like a vending machine for your money:

• When you invest in something liquid, like a stock or bond, it is like putting your money in a vending machine.
• If you need your money back quickly, you can "select" to sell your investment and get your cash out easily and fast, just like getting your snack from the vending machine!
• But, if you invest in something illiquid, like a piece of art or a house, it is like putting your money in a safe. It might take a while to get your money out, and you might need to wait for someone to buy your art or house.

So, liquidity is like having a vending machine for your money - it makes it easy to get your cash when you need it! Understanding Liquidity and How to Measure It LONG-TERM INVESTMENT A long-term investment is when you put your money into an investment for an extended period of time, usually several years or even decades. Examples of long-term investments:

• Stocks
• Real estate
• Retirement accounts

You do not plan to withdraw your money or sell your investment quickly, but rather wait years to experience the potential and see how far it can go. It is like planting a tree:

• You plant a seed (invest) and let it grow over time.
• You don't dig it up (withdraw) after a few months
• You let it grow strong and tall (compound) over many years

Long-term investments often have time to ride out market ups and downs, and can potentially earn more returns over time. Long Term: Definition in Investing for Companies and Individuals LIQUIDITY VOID A liquidity void is an impulsive move away from a level that creates 1-3 big bodied candlesticks in a larger time frame whose bodies have not yet been filled in by other candles. This is considered inefficient price action, price should fill in these bodies before resuming in the direction of the big bodied candles. Liquidity Gap: Meaning, Examples, and

Faq

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