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. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  3. Upside

    The potential dollar or percentage amount by which the market ...
  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 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. Forex

    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, while a pip is the smallest amount by which a currency quote can change. ...
  6. 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.
  7. Forex Education

    What's the difference between bid-ask spread and bid-ask bounce?

    Understand the difference between the bid-ask spread that determines the buy or sell price for a stock and a bid-ask bounce, a situational price volatility.
  8. Options & Futures

    How do you trade put options on E*TRADE?

    Learn all about put option trading at E*TRADE. Explore margin accounts and become familiar with the different types of option writing.
  9. Options & Futures

    Do you have to be an expert investor to trade put options?

    Learn about investing in put options and the associated risks. Explore how options can provide risk, which is precisely defined to predetermined limits.
  10. Options & Futures

    Are put options more difficult to trade than call options?

    Learn about the difficulty of trading both call and put options. Explore how put options earn profits with underlying assets fall in value.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center