Trading News

Academic papers can be a great way to not only learn, but also derive trading ideas. For example, in this article, we’ll consider the following paper and how we can derive insights and trade ideas from what’s written: The Term Structure of Covered Interest Rate Parity Violations   Key Takeaways – How to Turn Academic […]

Market microstructure is a specialized area within finance that explains how assets are exchanged in markets. Market microstructure affects liquidity, transaction costs, and price discovery. It’s applicable to both real and financial assets, but the latter has seen more extensive research due to the readily available transaction data. The primary focus of market microstructure research […]

MBS are essentially bonds backed by pools of mortgages. When homeowners make their mortgage payments, those payments flow through to the MBS investors. This offers investors a way to participate in the real estate market without directly owning properties. For traders, they offer a different type of fixed-income product to trade.   Key Takeaways – […]

What separates professional traders from amateur traders? What do they know or what traits do they share? Let’s take a look. 1) Risk Management Professionals have a strong understanding of risk management principles and techniques, such as position sizing, cost-effective use of options, and portfolio diversification. They tend to think of having a certain structure […]

Time series forecasting models in trading are statistical techniques used to predict future values of financial assets based on historical data. These models try to identify patterns and trends in time series data to help traders to make informed decisions about entry and exit points, as well as risk management strategies. Accurate forecasting can provide […]

Fusion Markets has bolstered its platform offering, introducing TradingView, alongside MetaTrader 4, MetaTrader 5, and cTrader. Fusion Markets is the latest broker to integrate the increasingly popular charting platform, following FP Markets and ThinkMarkets earlier this year. Key Takeaways TradingView sports a slick design with 10+ million custom indicators and 8+ million custom scripts. It’s […]

Duration-neutral spread basis (DNSB) refers to a trading strategy or approach that tries to construct a portfolio or set of positions that are uncorrelated or neutral to the broader market movements, specifically to changes in interest rates or duration risk. The goal is to systematically eliminate or minimize exposure to the overall market risk while […]

Trading provides value to the financial system and economy in several key ways. Some who don’t understand or like finance, markets, or trading might claim it’s a “waste of time” or that other industries should be getting more of the talent that the financial industry gets. What exactly is the function and value of trading? […]

Convergence trading strategies try to profit from the temporary mispricing of two related financial instruments that have diverged from their long-term equilibrium relationship.  Traders establish positions that will ideally benefit when the identified mispricing corrects itself and the assets converge back toward their expected equilibrium.  A deep understanding of the cause-effect mechanics and drivers of […]

We look at the differences between cointegration and correlations and its application in trading. Imagine a trader observing two assets that seem to move in unison. Do these assets offer a solid basis for a trading strategy (e.g., eventual convergence if they run apart)? Noticing this movement alone isn’t sufficient. It’s important to determine whether […]