TRADING SKILLS & ESSENTIALS

Fungibility Fungibility refers to the ability of an asset to be readily exchanged for another asset of similar type and quality within a market. In other words, fungibility describes the interchangeability of assets. Key Factors Affecting Fungibility: Market Depth: Assets with active and liquid markets are generally more fungible. Presence of Substitutable Assets: Assets that […]

Unwinding a Position Unwinding a position involves reversing the steps taken to acquire the position, typically in reverse order. It includes activities such as: 1. Selling or Repurposing Assets:– Sell any assets acquired in the position, such as securities, futures contracts, or options.- Repurpose assets into other investments or use them to generate income. 2. […]

A trading book refers to a document that provides information and guidance to traders, typically covering various aspects of the trading process. It can be structured in several ways, depending on the target audience and the style of teaching. Here are the key components of a trading book: 1. Introduction:– Overview of the book’s goals […]

A seller is a person or company who offers to sell a product or service to a customer. The seller is responsible for providing information about the product or service and for negotiating the price. Key tasks of a seller: Product knowledge: Having a deep understanding of the product or service they are selling, including […]

Definition: Slippage is a phenomenon in which a financial asset’s price moves in the opposite direction to the direction in which it is being traded. It occurs when there is a sudden shift in market sentiment, causing the asset’s price to deviate from its previous trend. Causes: High volatility: Assets with high volatility are more […]

Order-Driven Market An order-driven market is a type of market in which buyers and sellers initiate transactions by placing orders. Unlike a spot market, where prices are determined by the last traded price and quantity, in an order-driven market, prices are determined by the equilibrium of supply and demand. Key Features of Order-Driven Markets: 1. […]

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Analysis Paralysis Analysis paralysis is a psychological phenomenon in which an individual becomes so overwhelmed by the complexity of a decision-making process that they are unable to make any decisions at all. It is a common experience that can occur in many areas of life, including work, relationships, and personal decision-making. Causes: Fear of making […]

Audit Risk Audit risk is the risk that the auditor’s opinion may not be accurate, meaning that the auditor may not be able to express an opinion on the financial statements fairly and accurately. This risk is inherent in the audit process and is influenced by a number of factors, including the size and complexity […]

Capital Risk Capital risk is the risk associated with investing a company’s assets in long-term, high-risk projects that may not generate a return on investment (ROI). It is also known as systematic risk or undiversified risk. Causes of Capital Risk: High-risk projects: Investments in projects with a high probability of failure or low return on […]