Perfect Hedge
A Perfect Hedge refers to a series of positions taken by a trader in which to sum of the positions equate to a combined Beta of 0.0. A Perfect Hedge can also be achieved in a trader’s book by each directional trade (long or short) being offset by a corresponding and inversely correlated opposite directional trade. In this case each trade need not More...
Paper Trade
A Paper Trade refers to a method of practicing trading by using a brokerage firm’s demo account. Demo accounts or practice accounts are offered by trading brokerage firms with a balance of virtual money. The More...
Pairs Trade
A Pairs Trade refers to an equity trading strategy in which two stocks in the same sector are simultaneously bought and sold. The strategy is essentially an arbitrage strategy in which the trader or hedge fund goes More...
Options on Futures
Options on Futures are American Style options contracts that have their value based upon the value of an underlying Futures contract. Whereas an Equities Option gives the holder the right to buy or sell the underlying More...
Overnight Forex Position
An Overnight Forex Position is a Forex trading strategy in which the trader enters into one or more trades at the beginning of the trading day, holds the position overnight, and exits the position early the next More...
Over Hedged
The term Over Hedged refers to when a trader has several trading positions on his book that he has corresponding hedging trades. While a perfect hedge on a trade will theoretically reduce all risk, it will do so More...
Outright Option
An Outright Option is an options trading strategy in which the trader buys or sells options contracts that are unhedged. An options trader will buy or sell call or put options without the simultaneously placing More...
Out of the Money
The term Out of the Money refers to when an option’s strike price is either well above or well below the price of the underlying security that it is tied. The strike price or exercise price of an option is the More...
High-Frequency Trading (HFT)
The use of high speed, advanced technical systems and algorithms to trade financial securities automatically, on a rapid basis. HFT involves positions being held for very short time frames, often for just fractions More...
Nova/Ursa Ratio
The Nova/Ursa Ratio is a Technical Indicator that measures the sentiment of the market. While relatively unscientific in nature, it has been used by market technicians to measure the bullishness or bearishness of More...