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Glossary
Appreciation
Definition
An increase in the value of an instrument.
What is appreciation?
Appreciation refers to an increase in the value of an asset over time. It can apply to various types of assets, including real estate, stocks, and currencies. Appreciation is influenced by factors like market demand, economic conditions, and inflation.
Why is appreciation important to consider when trading?
Appreciation is a critical concept for traders as it represents the potential for profit in an investment. Understanding the factors that can lead to appreciation helps traders make informed decisions about when to buy or sell assets. In stock trading, selecting assets with a high potential for appreciation can lead to significant capital gains. However, it also requires careful market analysis and risk management, as the value of assets can fluctuate based on external factors.