Trading Strategies
How does the Sharpe ratio help in evaluating an investment strategy?
The Sharpe ratio helps investors measure the risk-adjusted return of an investment. It tells you how much excess return (return above the risk-free rate) you’re earning for each unit of risk taken. Formula: Why is it useful? A higher Sharpe ratio ...
What are high-frequency trading (HFT) strategies?
High-Frequency Trading (HFT) strategies use powerful computers and algorithms to execute trades within microseconds. These strategies capitalize on small price movements and high trading volumes, making profits from rapid transactions rather than ...
What is a covered call strategy in stock trading?
A covered call is an options trading strategy where you sell a call option on a stock that you already own. It’s used to earn extra income from the stock while keeping the shares, especially when you think the stock price will stay flat or rise only ...
What is positional trading?
Positional trading is a type of trading where you buy and hold stocks (or any financial asset) for a longer period of time—usually weeks, months, or even years—with the aim of making a profit from big price movements. Unlike intraday trading, where ...
What is arbitrage trading?
Arbitrage trading is the practice of profiting from price differences in different markets with minimal risk. It involves buying and selling the same asset simultaneously in separate markets to capitalize on price variations. The core idea behind ...
What is swing trading?
Swing trading is a short- to medium-term stock investment strategy that involves buying and selling financial assets, such as stocks, commodities, or currencies, over a period ranging from a few days to several weeks. The primary objective is to ...
What is intraday trading?
Intraday trading, also known as day trading, refers to the practice of buying and selling stocks within the same trading day, meaning that all positions are squared off before the market closes. The primary objective of intraday trading is to ...
Popular Articles
What is an online trading platform?
An online trading platform is a software application that allows investors and traders to buy and sell financial instruments such as stocks, bonds, commodities, currencies, derivatives (like Futures and Options), and other assets through the ...
What is a stockbroker, and why do I need one?
A stockbroker is a SEBI-registered individual or company that acts as a middleman between you and the stock market. In India, you can’t directly buy or sell shares on the stock exchanges like NSE (National Stock Exchange) or BSE (Bombay Stock ...
What is a speculative stock?
A speculative stock is a high-risk stock that offers the potential for high returns. Speculative stocks are often associated with companies that are new, have uncertain prospects, or are undergoing major changes. Speculative stocks appeal to ...
What is technical analysis in stock trading?
Technical Analysis is a method used by traders and investors to evaluate financial instruments like stocks, commodities, and currencies by analyzing historical market data—primarily price and volume. Unlike fundamental analysis, which examines a ...
What are the different types of mutual funds?
The Securities and Exchange Board of India (SEBI) has classified mutual funds into five main categories based on their investment instruments: Equity Schemes: These funds primarily invest in equity and equity-related instruments. SEBI has defined ...