Trading Strategies

Ladder Strategy

A strategy in which a bond portfolio is constructed that invests equal amounts of money in every maturity within a given range in order to offset interest rate risk.

Momentum Reversals in E-Mini Futures Contracts

By Toni Hansen ©2007, Reprinted with permission of The Trader’s Journal magazine (www.tradersjournal.com) For many traders, the decision to trade the E-Mini futures market is viewed as a highly lucrative decision. The tax benefits and the ability to trade with relatively small starting capital t

Arbitrage

Arbitrage describes the simultaneous purchase of a security in one market and the sale of it or a derivative product in another market to profit from price differentials between the two markets. Also see: Spread

Alligator Spread

Describes an options market spread, the commission for which is so large that the client is unlikely to make a profit even if the markets move in the client’s favor.

Calendar Spread

The Calendar Spread is a trading strategy that aims to profit from simultaneously taking a long and short position in the same futures or options contract with different delivery months. Also known as a horizontal spread.

Dollar Cost Averaging

Dollar cost averaging refers to the practice of purchasing securities at predetermined intervals and at set amounts, protecting the investor against dramatic movements in price.

Legendary trades

Ironically, many of the most spectacularly successful trades of all time were made of one of the so called ‘black’ days, where the market saw a huge decline. Black Monday refers to Monday, October 19 1987, when the Dow Jones Industrial Average (DJIA) fell 22.6

Directional Trading

Trading strategies designed to speculate on the direction of the underlying market, especially in contrast to volatility trading.

Diagonal Spread

A spread between two call options or two put options with different strike prices and different expiration dates. See also: Horizontal Spread, Vertical Spread

Interdelivery Spread

A spread in which the long and short legs are in two different but generally related commodity markets. Also called an intermarket spread. See also: Spread