High Frequency Trading and Traditional Trading - how are they different? High frequency trading is very different from traditional trading strategies. Of course, the principle is still the same, buy low and sell high, but the details are very different. Most investment strategies, especially those used by casual investors and beginners, focus on holding onto stocks for an extended period of time as they slowly appreciate in value. With high … [Read more...]
Have you ever heard of algorithmic trading? This technique is a popular and powerful trading strategy that many professional traders use to make trades. As you have probably guessed, algorithmic trading involves the use of algorithms, which are mathematical formulas, to make trades. By the way, traders sometimes referred to these formulas as algo trading. Trading algorithms Trading algorithms are formulas that are designed to provide key … [Read more...]
If you're an investor, you've almost certainly heard the term “futures” tossed around before. It's a common enough of a term that it should be familiar to just about every investor. However, that doesn't mean you know exactly what it means. That's why we're going to take a moment to fill you in on what futures contracts are. We'll also talk about how they relate to stock markets. The Futures Contract So what is a futures contract anyways? A … [Read more...]
Covered calls are a special type of options trading strategy in which a trader who has a long hold on a certain asset will also sell call options on the very same asset in an effort to increase the long term earnings of their investments. Confused? Don't sweat it, we are going to go over the details of this options trading strategy. This trading strategy is also sometimes referred to as “buy-write” because the trader will buy an asset but also … [Read more...]
Straddle vs strangle strategies are very important to understand. They are two of the best and most widely used options strategies. Both strategies focus on maximizing profits when stock prices move up or down. Both rely on buying equal numbers of call and put options with the same expiration date. Definition of Investment Terms We just threw out a lot of important terms. So before we go any further, let's take a moment to understand what … [Read more...]