Date Last Updated: June 27, 2019

Tag: investing

  • Investing

    Swaps

    “Contracts for Difference” are popularly known as “swaps”, with the most common types being Equity Swaps and Interest Rate Swaps. All contracts for difference have as their basis an exchange between two parties that allows each party to realize a benefit, not necessarily a profit, from the exchange. It may be that one party seeks to reduce their level of risk engendered by their ownership of ...

  • Swaps

    Option

    Option swaps are more commonly known by the acronym “swaption”. The concept is relatively simple, in that by participating in a swaption, a trader has acquired the option to enter an interest rate swap. They key factor is that the trader is not obligated to enter into the swap, but he does have the right to do so should he so desire.

  • Swaps

    Total Return

    Total Return Swaps are contracts between two parties in which a reference asset or group of assets is used to provide one party with regular interest payments, plus any capital gains (or losses) over the term of the contract. The other party benefits by receiving a set or variable rate of cash flow from the first party. Thus, a Total Return Swap enables one party to receive financial ...

  • Swaps

    Interest Rate

    Interest rate swaps are a type of Derivative transaction in which two participating parties swap, or exchange, positions in interest-bearing financial instruments for mutual advantage. The reasons for doing so are typically that one trader is seeking to reduce their exposure to interest rate fluctuations on the equity they currently own, assuming that equity (a bond or other interest-bearing ...

  • Currencies

    Forex

    “FOREX” is an acronym for Foreign Exchange Trading; the practice of buying and selling foreign currency on the world’s many foreign exchange markets. Many people will be surprised to know that the FOREX market is by far the largest financial trading market in the world. Based on the total cash value of all trades, over $1.9 trillion is traded every day on global FOREX markets.

  • Investing

    Options

    There are two kinds of objectives in paying premiums for the flexibility to buy or to sell assets at fixed prices on pre-determined dates: one is to hedge on the average cost of a material used in a business over which a user company has no direct control, and the second is simply to gamble. Neither of these objectives is relevant for the average individual investor at the retail level in a ...

  • Options

    Strategies

    Once an investor decides to enter the options trading scene, they will need to exploit the various types of options trades to engender highest possible profits with the least downside risk. There are four kinds of options trades: Long Call, Long Put, Short Call and Short Put. By bringing the two standard stock trading strategies (Long and Short) into the mix, a number of options strategies ...

  • Investing

    Bear Markets

    A Bear Market is one in which share prices are falling. It may refer to the market as a whole, or only to a specified sector. For example, a bear market in gold lasted from January 1980 and did not end until June 1999, during which time the price of the precious metal fell from around $850 per ounce all the way down to $253 per ounce. Another instance of a sector bear market was that caused ...

  • Investing

    Bull Markets

    A Bull Market is a medium to long term stock market trend characterized by rising share prices. Its counterpart is a Bear Market. While it is usually possible to know the market is in bull mode in real time, often it takes hindsight from the perspective of a market correction or crash to know that a bull market had occurred. For example, in the 1920s market prognosticators were quoted as ...

  • Investing

    Equity Swaps

    An equity swap is conducted by two parties with the intent usually being to save costs on a transaction. These costs may be in the form of basic taxes, or other costs associated with the transaction such as locally based dividend taxes. Another reason for companies, specifically those in the US, to engage in equity swaps is to increase the amount of market leverage a trader can exert, which ...

  • Glossary

    R

    Retirement – Retirement refers to the point in a person’s life at which they stop working and, hopefully, begin to live off of their savings and investments. Retirement should be foremost in the minds of any new investors, no matter how young they may be. This is because the archetypical retirement savings strategy consists of […]

  • Futures

    Trading

    You probably know someone who trades in stocks. They may be a day-trader, a long term investor, or someone who just dips their toe into the market from time to time. Perhaps this describes you! When it comes to trading Futures, however, you may draw a blank unless your career involves you in banking and investing.