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
Investing 101

What is Swing Trading

Swing trading is an investment technique where the asset is held for anywhere between a day to a few weeks with the idea of making profit from fluctuating prices or 'swings'. Investors are not interested in intrinsic value of the stock but rather focus on price momentum. The stock hold time usually lies between the two extreme ends - day trading, where asset is held for a day and trend
Investing 101

A Primer on New York Stock Exchange (NYSE)

New York Stock Exchange or NYSE is the oldest US Stock exchange and worlds’ largest stock exchange by total market capitalization of the listed securities. It is a marketplace for nearly 8,000 corporate stocks and securities. Unlike the Nasdaq, it is an auction market where buyers and sellers enter in to competitive bids and offers. On the NYSE, the traffic controller to facilitate market and its working is called as
Investing 101

What is Hedge Trading

Hedging is actually an insurance for trader’s profit/losses against adverse market conditions. Technically, hedge trading can be defined as a process to eliminate the risk of erratic price fluctuations in the market. Various hedging techniques can protect your stock against various types of risks. It protects your capital against fluctuation in prices due to change in demand and availability of various basic commodities such as metal, agricultural commodities, etc. It
Investing 101

What are Binary Options

Binary options simply provides only two possibilities of payoffs to the investor – Yes or No. On the maturity date, if the asset is trading above a price designated at the time of contract agreement, the payoff is made to the trader else nothing at all. This simplicity makes them one of the most popular and lucrative options for new as well as existing traders. Binary options are also commonly