The yield curve is a line that plots yields (or interest rates) of bonds having equal credit quality but differing maturity dates. Bond maturities range from 3 months to 30 years. The benchmark yield curve monitored closely for all economies is the spread between the 10-year bond and the 2-year bond. The 10-year to 2-year…
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Day Trading Introduction Day trading opportunities depend on the market’s volatility. 80% of the time, stock markets have low volatility (less than 25%) making it unprofitable to day trade. However, 20% of the time, market volatility increases above 25% which makes day trading profitable. That is why, professional traders in hedge funds are 80% of…
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Active trading is the science of structuring a portfolio of investments to protect the capital of clients (investors) and generate steady returns in both rising and falling markets. Active trading mission The performance of an active trader’s strategy is measured by its Sharpe ratio which summarises in one number the trading return generated compared to…
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Trading volume is one of the most important technical analysis indicators. It must be examined in conjunction with a security’s price movements. High levels of trading volume indicate a significant price move. A consolidated breakout followed by high trading volume confirms the move. Trades with lower than average volume should be avoided. How to use…
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Professional Portfolio Management requires a systematic investment process to achieve the following targets: Protect capital by controlling the portfolio’s risk (hedged portfolio) Generate Consistent & Smooth compounded risk-adjusted returns irrespective of the general market trend There are different investment strategies to achieve this either systematic (using software mdoels) or discretionary. Irrespective of the investment strategy…
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The Equity Risk Premium (ERP) is a critical concept in finance and investment analysis. It represents the additional return or compensation that investors expect to receive for investing in equities (stocks) over and above the risk-free rate of return, typically associated with government bonds or other low-risk investments. Here’s a breakdown of the components involved:…
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