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. Downtick

    A transaction on an exchange that occurs at a price below the ...
  3. Dow Theory

    A theory which says the market is in an upward trend if one of ...
  4. Tide

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

    A pattern of behavior marked by noticeable increases and decreases. ...
  6. Premium to Surplus Ratio

    Net premiums written divided by policyholders’ surplus. The premium ...
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. Options & Futures

    I have a short period of time (1 year or less) during which I will have money to invest. What are my ...

    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 options you should consider outside of the typical checking and savings ...
  8. The correlation coefficient is a measure of how closely two variables move.
    Active Trading

    What's the Correlation Coefficient?

    The correlation coefficient is a measure of how closely two variables move in relation to one another. If one variable goes up by a certain amount, the correlation coefficient indicates which ...
  9. Trading Strategies

    What are the best technical indicators to complement the Parabolic Indicator?

    Learn about two of the best technical indicators recommended for traders to use to refine a trading strategy based on the parabolic SAR indicator.
  10. Technical Indicators

    What is the Double Exponential Moving Average (DEMA) formula and how is it calculated?

    Discover the equation for double exponential moving average, or DEMA, and learn how it is calculated for a better understanding of how it works.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center