What is Basket trading?

basket trading strategyBasket trading is buying or selling a group of securities at the same time. Basket trading is important for institutional investors and investment funds who are willing to hold a large number of securities in certain proportions. So, when cash is moving in and out of the fund, it is necessary to buy or sell large baskets of securities simultaneously, so that price movements for each security don’t change  the portfolio allocation ( “basket trade” must involve the sale or purchase of 15 or more securities).

Basket trading strategy is popular among program traders, also hedge funds and large institutional investors that have large amounts of money to invest...

Introduction to Carry Trade

carry trade strategy Carry trade is a trading strategy which involves borrowing a currency that has a low interest rate and investing in an asset that provides a higher interest rate. Traders’ main goal is not just earning the interest rate differential between the two currencies, but they also look for the purchased currency in order to appreciate. This trading strategy is popular among traders who are not afraid to take a risk, but if the financial environment changes all of a sudden and speculators have to unwind their carry trades, it may have a negative impact on the global economy...

What is Hedging Strategy?

forex hedging strategy

Traders of the financial markets are looking for ways to limit the risk and increase their profits. Hedging is one of the best trading strategies to achieve this goal. Hedging refers to the process of buying one asset and selling another, hoping that the losses on one trade will be compensated by the gains made on another trade, for instance in order to hedge, traders can choose two pairs that are positively correlated, for instance AUD/USD and NZD/USD and take opposite directions on both.

Forex hedging

Forex hedging can help both traders, who buy a foreign currency pair and expect the asset to rise in value, by protecting them from downside risk, and traders, who buy a foreign currency pair with the expectation that the asset will fall in value, by protecting them against upside risk...

Advantages of Trend Trading Strategy

trend trading strategy Trend trading is a trading strategy, which aims to capture gains by analyzing an asset’s momentum in a particular direction. Trend traders take a long position when a stock is in an uptrend and a short position is taken when the stock is in a downtrend. A trend can also be applied to interest rates, equities and any other market that can be characterized by a long-term movement in price or volume. Human element plays a central role in trend trading, as traders need to be disciplined and have emotional control in order to stick with trend trading through market ups and downs. A trend trader’s main goal is capturing the majority of a market trend (up or down) to make a profit. Trend trading strategy offers traders various benefits, here are a few of them:

Making profits in up and down mark...

Key Events of the Financial World

The infographic created by IFC Markets shows the development of financial markets: from the emergence of the first stock exchanges 600 years ago to the opportunity of creating own trading instruments.

History of the Financial World
Infographic by IFC Markets

Are You Ready for Swing Trading?

swing trading strategiesSwing trading is one of the most popular ways of trading financial markets. Swing trading refers to taking positions that usually last from a few days to a couple of weeks. In reality, swing trading is in the middle of day trading and trend trading. Day traders usually hold a stock from a few seconds to a few hours, but they don’t keep it more than a day, whereas trend traders spend much time for research to invest into long-term fundamental trends of a stock or index, and can hold the stock for a few weeks or months. Swing traders hold a particular stock generally from a few days to a couple of weeks, which is between those extremes, and they trade during the natural “swings” in the market.

The advantages of swing trading

  • Since financial markets usually don’t go in one direction fo...

Momentum Trading Techniques

momentum tradingMomentum trading is a trading strategy, which focuses on stocks or other trading instruments that show a strong move in a particular direction usually on high volume. Momentum traders can hold their positions for a few minutes, a couple of hours, as well as for the entire length of the trading day (it depends on how quickly the stock moves and when it changes direction). Momentum traders are mainly concerned with stocks in the news. These stocks are usually the high percentage and volume movers of the day. In this article you can explore a number of momentum trading techniques.

Technical indicators

Momentum trading is seeking out technical indicators of a resistance break. There are many stock trading software programs that show these trend lines automatically...

5 Most Common Day Trading Strategies that Work

day trading strategiesIt is crucial for day traders to be better aware of day trading strategies to achieve the success they desire. All day traders have at least a few favourite strategies that they fall back on again and again. The strategies that work for some people may not work for others, so you need to explore different day trading strategies to find the one that suits you best.  Here is a brief overview of a few common day trading strategies.

News trading

Major news events affect the stock market greatly, so a savvy day trader should spring into action. In fact, using this strategy is very simple, just keep up to date with current news stories and move quickly to buy or sell as needed.

Range trading

Range trading is a strategy, which involves identifying stocks that are trading in a range, then trader...