What are Baby Bonds? As the name suggests, baby bonds are fixed-income securities with the size characteristics of babies in the sense that their par values are small. Baby bonds have a par value of less than $1,000 but typically range in values between $25 and $500. A sample baby bond from New Mountain Finance…
What is Trading Psychology? Trading psychology refers to the mental state and emotions of a trader that determines the success or failure of a trade. It represents the aspects of a trader’s behavior and characteristics that influence the actions they take when trading securities. While other aspects – such as experience and trading knowledge –…
What is a Trading Session? A trading session refers to the active trading hours of an asset or a given locale. Usually, different markets follow different trading hours, and a single trading day of a market is the trading session referenced by investors in a particular market. The different characteristics of the markets for stocks,…
What is a Trading Strategy? A trading strategy is a fixed plan for buying and selling securities designed to generate a profitable return on the investments. It should be objective, consistent, quantifiable, and verifiable. The strategy is founded on fundamental analysis or technical analysis so that the inevitable systemic risks cannot lead to catastrophic effects…
What is Trading Software? Trading software are computer programs that traders use to trade and analyze financial products such as currencies, stocks, bonds, and derivatives over a network with a financial intermediary, which can be a broker, market maker, or stock exchange. Investors can use trading software to place trades from any location. Trading software…
What is a Trading Range? A trading range is the vertical price movements between a resistant ceiling and a support floor for a period of time. Trading range often occurs in all financial markets in which the price resistance is provided by the top of a security’s trading range, while the price support is offered…
What is a Trading Partner Agreement? A trading partner agreement is a contract that binds two parties to engage in a commercial transaction. It stipulates terms of trade, including how partners will interact, fees or duties, and the general terms and conditions. Trading partner agreements are common in healthcare and credit reporting firms. Understanding Trading…
What is a Trading Plan? A trading plan refers to a systematic approach used to identify and trade securities based on several variables, such as investment objectives, risks, and time. A trading plan lays out procedures and conditions under which to search for asset classes and execute trades. The underlying elements of a trading plan…
What is a Trading House? A trading house is a business that facilitates trade between two countries – i.e., a foreign country and a home country. It provides a service that eliminates trading barriers to enter into foreign markets, especially for small companies with limited resources or import or export capability. Trading houses promote both…
What is a Trading Desk? A trading desk is a department within a company or investment bank where securities are sold and purchased to provide market liquidity. Some of the securities traded on trading desks include stocks, bonds, commodities, and currencies. Firms with trading desks can add value to their portfolio by supplying expertise in…
