TRADING SKILLS & ESSENTIALS

Optimization Definition Optimization is a process of finding the best possible solution to a problem, given a set of constraints and objectives. It involves finding the parameter values that maximize or minimize a function, subject to the constraints. Key Components:* Objective Function: The function to be maximized or minimized. * Constraints: Limitations or restrictions on […]

Liquidity Liquidity is a measure of a financial asset or security’s ability to be easily bought or sold in the market at a quoted price. It is a key concept in finance and investment, as it affects the overall value and stability of a market. Key Factors Affecting Liquidity: Market Depth: The volume and frequency […]

Currency Risk Currency risk is the risk that the value of a currency will fluctuate against other currencies, affecting the value of investments and financial transactions denominated in that currency. Causes of Currency Risk: Economic factors: Differences in economic growth, inflation, interest rates, and trade balances between countries can cause currency values to fluctuate. Political […]

Spot price refers to the price of a commodity or financial asset at a particular point in time, usually the current time. It is the price paid for an asset or commodity at the moment of purchase, without any delay. Key features of spot price: Current price: Spot price is the price for immediate delivery […]

Transaction Exposure Transaction exposure is the risk of foreign exchange (FX) loss arising from foreign currency transactions. It is the amount of foreign currency that is exposed to exchange rate fluctuations at the time of the transaction. Sources of Transaction Exposure: Foreign currency sales and purchases: Sales and purchases of foreign currencies expose companies to […]

Sure, here is the meaning of the word “pit”: pit – a deep natural depression in the ground, usually filled with water. Here are some examples of how the word “pit” can be used: The river flows into a pit at the end of the valley. The cave is hidden in a pit. The dentist’s […]

Maintenance Margin The maintenance margin is a required reserve for a bank calculated on the customer deposits and other borrowed funds. It is held in a separate account from the bank’s general funds and is used to cover potential losses on loans and other debts. Purpose: To ensure depositors’ funds are protected against losses. To […]

Risk Analysis Risk analysis is a systematic process of identifying, assessing, and mitigating potential risks. It involves understanding the likelihood and impact of various events or factors that could negatively impact an organization, system, or individual. Key Steps in Risk Analysis: 1. Identify Risks:– Brainstorm potential risks and threats.- Consider historical incidents, industry trends, and […]

Arbitrage is a strategy that involves buying and selling the same asset in different markets to take advantage of price discrepancies. It is a type of trading that involves exploiting temporary misalignments between prices in different markets, with the goal of generating profit. Types of Arbitrage: Cash arbitrage: Involves buying and selling the same asset […]

Sure, here is the meaning of the word “illiquid”: illiquid means not liquid, solid, or gel-like. In other words, it does not flow freely like liquid and instead has a solid or semi-solid texture.