Behavioural finance is the study of the influence of psychology on the behaviour of financial practitioners and the subsequent effect on markets.Behavioral finance argues that some financial phenomena can plausibly be understood using models in which some agents are not fully rational. It is a a field of finance that proposes psychology-based theories to explain stock market … [Read more...]
Multi Legged Option Trading Strategy Explained
A type of order that allows an option trader to simultaneously buy or sell a number of different options that traditionally could only be achieved by placing separate orders. An option is a contract that gives the owner the right to buy or sell a security at a specific price within a specific time limit. The owner of an option contract is not obligated to exercise the option … [Read more...]
Active Management Strategy
Active management (also called active investing) refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming an investment benchmark index. Investors or mutual funds that do not aspire to create a return in excess of a benchmark index will often invest in an index fund that replicates as closely as possible the … [Read more...]
Passive Managememt Strategy
Passive management (also called passive investing) is a financial strategy in which a fund manager makes as few portfolio decisions as possible, in order to minimize transaction costs, including the incidence of capital gains tax. One popular method is to mimic the performance of an externally specified index—called 'index funds'. The ethos of an index fund is aptly summed up … [Read more...]
Know Your Hedge-Like Mutual Funds
A hedge fund is an investment fund open to a limited range of investors that undertakes a wider range of investment and trading activities than long-only investment funds, and that, in general, pays a performance fee to its investment manager. A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options … [Read more...]