Ripple

AAA

DEFINITION of 'Ripple'

A term used by "The Dow Theory" author, Robert Rhea, to describe the day-to-day fluctuations in stock market price activity. Rhea wrote that three simultaneous movements of stock prices occur that can be compared to tides, waves and ripples. The Dow Theory, published in 1932, indicated that speculators attempt to ride the tides and the occasional big waves, and that only reckless investors would ever attempt to profit by the day-to-day price changes or ripples.

INVESTOPEDIA EXPLAINS 'Ripple'

Many of today's technical and fundamental analysts encourage investors to ignore market ripples -the small changes in daily price movement -and instead focus on the longer-term tides and waves. Active traders, and in particular day traders and scalpers, try to exploit these short-term ripples for profit, often opening and closing a position within a matter of hours, minutes or even seconds. Despite Rhea's belief that this type of investing was reckless, it has become an established type of market participation.

RELATED TERMS
  1. Uptick

    A transaction for a financial instrument that occurs at a higher ...
  2. Dow Theory

    A theory which says the market is in an upward trend if one of ...
  3. Wave

    A pattern of behavior marked by noticeable increases and decreases. ...
  4. Tide

    A metaphor for a long-term market trend. The tide would refer ...
  5. Downtick

    A transaction on an exchange that occurs at a price below the ...
  6. Discounted Future Earnings

    A method of valuation to estimate the value of a firm.
RELATED FAQS
  1. I have a short period of time (1 year or less) during which I will have money to ...

    If you only have a short period of time in which to invest your money (i.e. less than one year), there are several investment ... Read Full Answer >>
  2. How many components are listed on the Dow Jones Industrial Average?

    The Dow Jones Industrial Average, or DJIA, is a stock index comprised of 30 different companies traded on the Nasdaq and ... Read Full Answer >>
  3. How were the figures 80 and 20 arrived at in the 80-20 rule (Pareto Principle)?

    The 80-20 rule has its roots in early 20th century Italy. Economist Vilfredo Pareto – best known for the concepts of Pareto ... Read Full Answer >>
  4. How do I build a profitable strategy when spotting a Tweezer pattern?

    The key to building a profitable trade strategy based on a tweezer pattern is establishing sufficient confirmation of the ... Read Full Answer >>
  5. What is a geometric mean in statistics?

    In statistics there exists a wide variety of metrics such as median, standard deviation, arithmetic mean, power mean, geometric ... Read Full Answer >>
  6. What are some real-life examples of the economies of scope?

    Real-world examples of economies of scope can be seen in mergers and acquisitions (M&A), newly discovered uses of resource ... Read Full Answer >>
Related Articles
  1. Technical Indicators

    A Primer On The MACD

    Learn to trade in the direction of short-term momentum.
  2. Investing Basics

    Do Your Investments Have Short-Term Health?

    If a company is strong enough to survive tough times, it is more likely to provide long-term value.
  3. Active Trading Fundamentals

    Identifying Market Trends

    The success or failure of your long- and short-term investing depends on recognizing the direction of the market.
  4. Taxes

    Capital Gains Tax 101

    Find out how taxes are applied to your investment returns and how you can reduce your tax burden.
  5. Trading Strategies

    10 Tips For The Successful Long-Term Investor

    These guiding principles will help you avoid common folly during the decision-making process.
  6. Forex Education

    Mastering Short-Term Trading

    Making money in a pressure-cooker environment is all about minimizing risk on hot picks.
  7. Investing Basics

    What is a Financial Market?

    “Financial market” is a broad term used to describe any forum where buyers and sellers meet to trade assets.
  8. Economics

    Explaining the Value Chain

    A model of how businesses receive raw materials as input, add value to the raw materials, and sell finished products to customers.
  9. Fundamental Analysis

    Explaining Variance

    Variance is a measurement of the spread between numbers in a data set.
  10. Investing Basics

    Understanding Risk-Return Tradeoff

    The essence of risk-return tradeoff is embodied in the common phrase “no risk, no reward.”

You May Also Like

Hot Definitions
  1. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  2. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  3. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  4. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
  5. Subordinated Debt

    A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known ...
  6. International Financial Reporting Standards - IFRS

    A set of international accounting standards stating how particular types of transactions and other events should be reported ...
Trading Center