Blog Posts

Geopolitical events can create significant volatility in financial markets, which can impact asset prices, currency values, and overall trading returns.  To protect against these risks, traders use various hedging strategies.  This article takes a look at how these hedging strategies can reduce geopolitical risks.   Key Takeaways – Geopolitical Risk Hedging Strategies Diversify Portfolios Spread […]

Credit spread arbitrage is a trading strategy used in the fixed-income and derivatives markets, where a trader look to profit from the difference (spread) between two credit instruments. The strategy involves simultaneously buying and selling related securities to exploit price inefficiencies and differences in credit spreads. True credit spread arbitrage is trading price discrepancies between […]

Volatility arbitrage is a trading strategy that tries to profit from the difference between the forecasted or implied volatility of an asset and its actual future volatility.    Key Takeaways – Volatility Arbitrage Market Neutral Strategy Volatility arbitrage tries to profit from the difference between expected and actual volatility. Options are typically used to create […]

Portfolio tilt involves adjusting the asset allocation within a portfolio to reflect the trader’s expectations about future market conditions. This shift, often toward specific asset classes or sectors, allows the trader to position their portfolio to potentially benefit from anticipated market trends. Portfolio tilt is commonly done in the context of “base” portfolio that’s well-structured […]

The Series 7 license, administered by FINRA, qualifies individuals to sell a wide range of securities including stocks, bonds, options, and mutual funds. It requires an exam on various financial topics.  The Series 63 license focuses on state securities laws and is necessary for representatives who sell securities within specific states. This ensures they understand their […]

The Chartered Financial Analyst (CFA) program is a globally recognized professional designation offered by the CFA Institute. The program covers a broad range of topics including: Ethical and professional standards Quantitative methods Economics Financial reporting and analysis Corporate finance Equity investments Fixed income Derivatives Alternative investments Portfolio management and wealth planning Key Takeaways – CFA […]

The Chartered Market Technician (CMT) designation is a professional credential awarded to individuals who have demonstrated proficiency in technical analysis and trading techniques. The CMT program is structured to provide a strong understanding of market behavior and technical trading strategies.   Key Takeaways – Chartered Market Technician (CMT) Enhanced Technical Analysis – Master trend analysis, […]

The importance of controlling volatility in trading lies in the effect of volatility on compounded returns. Holding return constant, higher volatility reduces the geometric mean more than lower volatility, which means that trades or investments with lower volatility tend to grow more effectively over time. This is because the compounding process penalizes high variability, leading […]

The Global Exchange Rate Assessment Framework (GERAF) is a currency valuation model developed by the US Department of the Treasury to evaluate currency valuations.  It looks at external imbalances and exchange rate misalignments by considering a wide set of economic indicators, structural factors, cyclical factors, and policy variables.  GERAF gives a multilaterally consistent analysis, which […]

Welcome to a comprehensive guide on currency trading and macroeconomic relationships. Currencies are a macro asset class. In a previous article, we looked at currency valuation models. In this article, we’ll delve more specifically into dozens of concepts that are critical to understanding how macroeconomic factors affect currency values and how to use this knowledge […]