Objective vs Subjective Trading
Objective vs Subjective Trading Objective vs subjective trading: Most traders follow either an essentially objective or subjective trading style. Objective traders follow a set of rules to guide their trading decisions. They prefer to have buy and sell decisions essentially pre-planned. In contrast, subjective traders disavow using a strict set of rules, adapt to changing...
FTSE Indices
What are FTSE Indices? FTSE indices refer to several major UK stock market indexes. Stock indexes provide market analysts and investors with a gauge for monitoring the overall equity market. Specifically, the FTSE (Financial Times Stock Exchange) indices represent stocks traded on the London Stock Exchange (LSE). They reflect the performance of UK stock shares...
Examples of ADR
What are ADRs? American Depository Receipts (ADRs) are stocks that are sold in the US market but represent ownership of the underlying shares in a foreign company. An ADR trades in US dollars and they allow investors to avoid the risk of transacting in a foreign currency. Before the introduction of American Depository Receipts, investors...
LIBOR: Why the Benchmark Interest Rate Was Phased Out
What Was LIBOR? LIBOR, or the London Interbank Offered Rate, was a benchmark interest rate that represented the average rate at which major global banks were willing to lend to each other on a short-term basis. It was calculated for five currencies (USD, GBP, EUR, JPY, CHF) and multiple borrowing periods, or “tenors,” ranging from...
Basis Risk
What is Basis Risk? Basis risk is defined as the inherent risk a trader takes when hedging a position by taking a contrary position in a derivative of the asset, such as a futures contract. Basis risk is accepted in an attempt to hedge away price risk. As an example, if the current spot price...
