Trading News

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 […]

Different traders have different ways of determining a currency’s fair value price. Clearly, different expectations and different motivations are what make a market. While many traders have their own decision rules and proprietary systems, there are currency valuation models and ways of looking at the currency markets that are the most common.   Key Takeaways […]

Capital structure arbitrage (CSA) is a financial strategy used by hedge funds and proprietary trading desks. This strategy involves taking advantage of pricing discrepancies in a company’s capital structure. A company’s capital structure is comprised of its mix of debt, equity, and other securities. These pricing discrepancies can occur due to a number of reasons, […]

Tulip Mania, one of the earliest recorded financial bubbles in history, provides a fascinating case study for modern traders and investors. The rapid rise and fall of tulip bulb prices in the 17th-century Dutch Republic serves as a reminder of the potential consequences of irrational exuberance in financial markets. By examining the historical context, key […]

Interest rates can be unpredictable, yet they’re a big driver of asset prices, making it difficult to know what to do with your investments for tactical traders. Interest rate immunization is a strategy that can help you protect your investments from interest rate risk. In this article, we’ll take a closer look at interest rate […]

The potential you can make from day trading varies widely among individuals, largely due to differences in capital, strategy, discipline, risk management, and markets traded. We’ll look at the question across a variety of different variables.   Key Takeaways – How Much Can You Make Day Trading? Capital Starting capital significantly impacts potential earnings, with […]

Modern finance and trading is seeing many ongoing shifts. For example, we increasingly see a shift away from pure equity and credit strategies toward more balanced strategies – i.e., balancing risk across asset classes to enhance portfolio stability.  These methods address the limitations of traditional approaches that often concentrate risk in equities.  We’ll explore this […]

Leveraged ETFs target daily returns to maintain a consistent leverage factor, such as 2x or 3x, of the underlying index’s performance. This daily reset ensures predictable amplification of returns for short-term traders. But it can lead to significant deviations from expected performance over longer periods due to compounding effects.   Key Takeaways – Why Leveraged […]