Where can I find a definition of psychological barriers with respect to marketable securities?
GuruFocus has an excellent summary of psychological barriers in the markets:  http://www.gurufocus.com/news.php?id=88451 I will teach you to be rich blog is all about psychological barriers and behavioural change. "I think ""Psychological Pricing"" is a similar phenomenon to what you are looking for.  This is where retailers use certain numbers in prices because those prices are more appealing to consumers.  Since stocks - and in your case bitcoin - have prices, they too will be more or less appealing at different prices based on psychology alone."
"Extrinsic value is not a factor with respect to gold.  Intrinsic value by definition is the natural value of a commodity set by the market -- extrinsic value is externally set. The ""extrinsic"" value of gold in the United States is $50/oz. If the market value of gold fell below $50/oz, a US American Eagle coin would be worth $50 in the US. If you take away the attributes that make a commodity valuable, the value drops. Substitutes of equal or better quality for most industrial or other uses of gold exist, so if if the popularity of gold declines, or if the hoarders of gold have to liquidate, it's value will diminish. I have no idea what that value would be, but it would set by the market demand for gold jewelry and other valuable industrial uses." "The answer, like many answers, is ""it depends"". Specifically, it depends on the broker, and the type of account you have with the broker. Most brokers will charge you once per transaction, so a commission on the buy, and a commission (and SEC fee in the US) on the sale. However, if you place a Good-til-Canceled (GTC) order, and it's partially filled one day, then partially filled another day, you'll be charged two commissions. There are other brokers (FolioFN comes to mind) that either have trading ""windows"", where you can make any number of trades within that window, or that have a fixed monthly fee, giving you any (probably with some upper limit) number of trades per month. There are other brokers (Interactive Brokers for example), that charge you the standard commission on buy and another commission and fee on sell, but can refund you some of that commission for making a market in the security, and pay you to borrow the securities. So the usual answer is ""two commissions"", but that's not universal. However, while commissions are important, with discount brokers, you'll find the percent you're paying for commissions is minimal, which losses due to slippage and poor execution can swamp." "Should I invest the money I don't need immediately and only withdraw it next year when I need it for living expenses or should I simply leave it in my current account? This might come as a bit of a surprise, but your money is already invested. We talk of investment vehicles. An investment vehicle is basically a place where you can put money and have it either earn a return, or be able to get it back later, or both. (The neither case is generally called ""spending"".) There are also investment classes which are things like cash, stocks, bonds, precious metals, etc.: different things that you can buy within an investment vehicle. You currently have the money in a bank account. Bank accounts currently earn very low interest rates, but they are also very liquid and very secure (in the sense of being certain that you will get the principal back). Now, when you talk about ""investing the money"", you are probably thinking of moving it from where it is currently sitting earning next to no return, to somewhere it can earn a somewhat higher return. And that's fine, but you should keep in mind that you aren't really investing it in that case, only moving it. The key to deciding about an asset allocation (how much of your money to put into what investment classes) is your investment horizon. The investment horizon is simply for how long you plan on letting the money remain where you put it. For money that you do not expect to touch for more than five years, common advice is to put it in the stock market. This is simply because in the long term, historically, the stock market has outperformed most other investment classes when looking at return versus risk (volatility). However, money that you expect to need sooner than that is often recommended against putting it in the stock market. The reason for this is that the stock market is volatile -- the value of your investment can fluctuate, and there's always the risk that it will be down when you need the money. If you don't need the money within several years, you can ride that out; but if you need the money within the next year, you might not have time to ride out the dip in the stock market! So, for money that you are going to need soon, you should be looking for less volatile investment classes. Bonds are generally less volatile than stocks, with government bonds generally being less volatile than corporate bonds. Bank accounts are even less volatile, coming in at practically zero volatility, but also have much lower expected rates of return. For the money that you need within a year, I would recommend against any volatile investment class. In other words, you might take whichever part you don't need within a year and put in bonds (except for what you don't foresee needing within the next half decade or more, which you can put in stocks), then put the remainder in a simple high-yield deposit-insured savings account. It won't earn much, but you will be basically guaranteed that the money will still be there when you want it in a year. For the money you put into bonds and stocks, find low-cost index mutual funds or exchange-traded funds to do so. You cannot predict the future rate of return of any investment, but you can predict the cost of the investment with a high degree of accuracy. Hence, for any given investment class, strive to minimize cost, as doing so is likely to lead to better return on investment over time. It's extremely rare to find higher-cost alternatives that are actually worth it in the long term." The idea is great but US securities laws impose a huge burden on these businesses.  Specifically [Rule 502(c)](http://taft.law.uc.edu/CCL/33ActRls/rule502.html) of Reg D prohibits 'general solicitation and advertising' - such as using the internet.  There is currently pending legislation to amend the [US Securities act of 1933 sec. 4(2)](http://taft.law.uc.edu/CCL/33Act/sec4.html) regarding public offerings to help reduce such barriers, but as it stands there are significant barriers to entry in the market.  SEC filing and reporting requirements, especially after Dodd-Frank, are onerous to say the least, and running direct lending services are at the moment largely cost prohibitive due to these requirements. Using inside sensitive information about corporate and using the same to deal in securities, before the exchanges are made aware of the information. Its mostly used in derivatives to get maximum returns on investmens, but Its illegal in all the exchanges "You're mostly correct, although I think you're missing something essential about no-arbitrage versus an arbitrage argument.  Black-Scholes makes an arbitrage argument, which is that the value of an option should be the same as any portfolio that has identical cash flows, and this is generally a sound argument.  Notice, however, that BS is ultimately an equilibrium model: it tells you the ""correct"" price of an option if the assumptions of BS hold, and doesn't necessarily match observed market prices.  A no-arbitrage condition or model deliberately incorporates observed prices (or yields, or whatever) into the model, so that there cannot be an arbitrage opportunity implied by the model.  This comes up a lot in term structure of interest rate problems, where equilibrium models like Vasicek or Cox-Ingersoll-Ross won't perfectly reproduce the current, observed term structure, and so imply an arbitrage opportunity.  No-arbitrage models like Hull-White specifically match the model's term structure to observed yields/prices, so that there is no arbitrage opportunity between the observed term structure and your model of it.  It's important to note that this will still allow for arbitrage involving bonds that are *not* part of the observed term structure.  As for equivalent martingale measures, you might think about it more generally.  The process involves changing the probability distribution from the actual (which is hard to use for pricing) to a different one that's easier to use but will result in the same prices; this is nearly always a risk-neutral probability.  You can think of equivalent martingale  pricing as asking, ""how would this security behave, and be priced, in a world that is completely risk neutral"", and then making an argument that the prices are in fact equivalent.  EDIT: grammar" It's a good answer. I was alluding to cryptocurrency such as bitcoin which was a pretty genius invention (blockchain and mining) to solve the honesty problem (counterparty risk) you outlined when there's no trusted middleman to help keep people honest. Sounds like a dodgy cat though! I think that some asset classes should be better protected from arbitrage.  Its not possible to prevent either greed or information asymmetry so high market volatility will continue to get worse.  However, secondary transactions directly or indirectly involving assets of a protected class:  * Food - agriculture futures, farm land mortgages, seed licenses, etc...  * Housing - Resales, mortgages, any mortgage derivatives  * Medicine - Insurance policies, drug licenses, medical debt  * Education - Debt and derivatives  Should be heavily taxes to discourage destructive arbitrage.  This will not hurt investment (in the capitalist sense) because such transactions are purely speculative.