Downside

AAA

DEFINITION of 'Downside'

The negative movement in the price of a security, sector or market. Downside can also refer to economic conditions and it describes periods when an economy has either stopped growing or is shrinking. Movement to the downside is often expressed in terms of risk, as in there is a downside risk in a particular country's economy; or, stock ABC has downside risk because of changing consumer trends. Downside risk can be evaluated by fundamental and technical factors.

INVESTOPEDIA EXPLAINS 'Downside'

Downside risk is sometimes expressed in terms of an estimation of a security or economy's potential to experience negative movement. A stock analyst, for example, might guess how big a price drop he or she expects stock ABC will endure because of certain events. Economists can estimate the downside risk a country's economy is likely to suffer due to current conditions, such as unemployment and GDP growth.

RELATED TERMS
  1. Bear

    An investor who believes that a particular security or market ...
  2. Upside

    The potential dollar or percentage amount by which the market ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
  5. Upside/Downside Ratio

    A technical indicator that shows the relationship between the ...
  6. Risk

    The chance that an investment's actual return will be different ...
RELATED FAQS
  1. How does leverage affect pip value?

    A standard forex account has specific lots and pip units. A lot is the minimum quantity of a security that may be traded, ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Beta: Know The Risk

    Beta says something about price risk, but how much does it say about fundamental risk factors? Find out here.
  2. Options & Futures

    Cut Down Option Risk With Covered Calls

    A good place to start with options is writing these contracts against shares you already own.
  3. Options & Futures

    A Beginner's Guide To Hedging

    Learn how investors use strategies to reduce the impact of negative events on investments.
  4. Active Trading Fundamentals

    Limiting Losses

    It is impossible to avoid them completely, but there is a systematic method you can use to control them.
  5. Options & Futures

    Prices Plunging? Buy A Put!

    You can make money on a falling stock. Find out how going long on a put can lead to profits.
  6. Investing

    Wizards Of Odd: A Trip To Tech Land

    I spent a couple of days in Silicon Valley, and here are some key lessons I learned after meeting with a number of tech CEOs and venture capitalist.
  7. Investing Basics

    Explaining Market Value of Equity

    Market value of equity is the total value of all the outstanding stock as measured in the stock market at a particular time.
  8. Investing Basics

    What is Spread?

    Spread has several slightly different meanings depending on the context. Generally, spread refers to the difference between two comparable measures.
  9. Economics

    What is the Breakeven Point?

    In general, when gains or revenue earned equals the money spent to earn the gains or revenue, you’ve hit the breakeven point.
  10. Stock Analysis

    What is the Price-to-Sales Ratio?

    The price-to-sales ratio is an indicator of the value placed on each dollar of a company’s sales or revenues.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center