Trading

Confirmation bias is a psychological bias that refers to the human tendency to favor information that confirms our existing beliefs and to disregard information that contradicts them. Explanation: Confirmation bias occurs when we selectively attend to information that confirms our existing beliefs and downplay information that contradicts them. Our brains are wired to seek out […]

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 […]