Investing 101

Bond Vs. Equity Returns

Bond and equity returns consist of capital gains and cash distributions. Bond returns consist mainly of periodic interest payments. Equity returns consist mainly of capital gains when you sell, although some companies pay cash dividends as well. The total return of your portfolio depends on your mix of stocks, bonds and other assets, as well as overall economic conditions. Bond Returns Bond returns depend on several factors, such as interest
Investing 101

What Are GDP, CPI and PPI & Why Do They Matter?

One of the things that can be daunting for those new to the investing and trading world is the plethora of acronyms and abbreviations that those with more experience throw around. They are often to do with analyzing an individual stock or its performance, but some refer to economic data that, taken together, help you to form an opinion on and, more importantly an outlook for, the broader economy. GDP,
Investing 101

What is CFD trading?

Contracts for Difference (CFD) give traders all the benefits of owning a particular stock, index, or commodity position – without having to physically own the underlying instrument itself. It’s a simple and inexpensive trading option, to trade the change in price of multiple commodity and equity markets, with leverage and immediate execution. A customer enters into a contract for a CFD at the quoted price and the difference between that
Investing 101

All you need to know about Hedge Funds

Hedge funds are alternative investment vehicles that explicitly pursue absolute returns on their underlying investments. The term "hedge fund" has come to incorporate any absolute return fund investing within the financial markets (stocks, bonds, commodities, currencies, derivatives, etc) and/or applying non-traditional portfolio management techniques including, but not restricted to, short selling, leveraging, arbitrage, swaps, etc. Initially devised in the US in 1949, hedge funds really took off in the late
Investing 101

What is Basis Trading

An arbitrage trading strategy that aims to profit from perceived mispricing of similar securities. Basis trading relates to a trading strategy in which a trader believes that two similar securities are mispriced relative to each other, and the trader will take opposing long and short positions in the two securities in order to profit from the convergence of their values. The strategy is known as basis trading, because it typically
Investing 101

What are Aggressive Growth Funds

A mutual fund which aims for the highest capital gains and is not risk-averse in its selection of investments. Aggressive growth funds are most suitable for investors willing to accept a high risk-return trade-off, since many of the companies which demonstrate high growth potential can also show a lot of share price volatility. Aggressive growth funds tend to have a very large positive correlation with the stock market, and so
Investing 101

Countertrend Trading

A type of swing-trading strategy that assumes a current trading trend will reverse and attempts to profit from that reversal. Countertrend trading is a medium-term strategy in which positions are held between several days and several weeks. Countertrend trading can be used as part of a diversification and risk-reduction strategy. To limit losses in the event that a trend does not reverse, traders should consider using strategies such as stops
Investing 101

Attribution Analysis

Attribution analysis is performance-evaluation tool used to analyze the ability of portfolio and fund managers. Attribution analysis uncovers the impact of the manager's investment decisions with regard to overall investment policy, asset allocation, security selection and activity. In this type of analysis, a fund or portfolio's returns are compared to a benchmark to determine whether a manager is skilled or just lucky. Fund and portfolio management costs money, so attribution
Investing 101

Commodity Selection Index – CSI

CSI is a technical momentum indicator that attempts to identify which commodities are the most suitable for short-term trading. The larger the CSI value, the stronger is the trend and volatility characteristics associated with the asset. This indicator should only be used by traders who can handle large amounts of volatility as it indicates strong trending, but reversals are always possible. Short-term traders know that the key to making money
Investing 101

What is Tender Period

Tender period refers to the time period before the expiry of futures contract. It generally has a time line of few days. Tender period gives members of the contract to make decisions till the time the contract expires. The parties of the contract have the liberty to change the terms of the contract during this period. Once the tender period is over, they have no other choice but to honour