Trading News

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 […]

A gamma squeeze is a sudden, sharp rise in a stock’s price, often triggered by a rush of options trading activity. It’s driven by the actions of market makers and their hedging activity in response to the activities of options traders.   Key Takeaways – Gamma Squeeze Leverage Driven Volatility A gamma squeeze occurs when […]

Synthetic ETFs are different from standard ETFs in that they don’t own the actual assets they track. Instead, they use derivatives like swaps to replicate the performance of a particular index, like the S&P 500. Think of them as a mirror reflecting the movements of an index, rather than a basket directly holding all its […]

In “The Alchemy of Finance” (1987), famed trader George Soros presented his theory of reflexivity. This theory challenges traditional market assumptions by asserting that market prices aren’t merely a reflection of underlying fundamentals, but are also influenced by the perceptions and biases of market participants themselves. We’ve discussed in other articles how markets don’t perform […]

Financial plumbing is essentially the behind-the-scenes infrastructure of finance. It’s the network of systems, institutions, and processes that make the flow of money possible. Without it, payments wouldn’t clear, trades and investments couldn’t be made, and markets wouldn’t function. Accordingly, it’s important for all traders to understand the basics of financial plumbing.   Key Takeaways […]

Synthetic assets are financial instruments that mimic the value of other assets without needing to own the underlying asset. They’re essentially derivatives, meaning their value is derived from something else – a commodity like gold, a stock, index, or other asset.   Key Takeaways – Synthetic Asset Creation Versatility in Exposure Synthetic assets provide exposure […]

The Efficient Market Hypothesis (EMH) is a cornerstone of modern finance, but it’s often misunderstood. It doesn’t claim that markets are perfect or always rational. Instead, it posits that market prices reflect all available information. This means stock prices aren’t predictable – they adjust instantly to new news or data. Each piece of information – […]

The Random Walk Hypothesis (RWH) says that asset prices change randomly. In other words, it posits that each new price is independent of the last. Think of it like flipping a coin: Even if you get heads 5 times in a row, the next flip is still a 50/50 chance. According to the RWH, the […]

A liquidity aggregator combs through multiple exchanges and trading platforms, searching for the best deals on your behalf. In markets, prices can vary across different venues. This is where a liquidity aggregator comes in. It not only helps you find the most favorable prices, but it also helps you execute your trades seamlessly. A liquidity […]

Crossing networks are alternative trading systems (ATS) that offer an alternative trading venue to traditional exchanges. They offer a platform where buyers and sellers can directly exchange assets, cutting out the middleman. The primary function of a crossing network is to match buy and sell orders without routing them through a public exchange. This means […]