What Is a Trading Book? A trading book is the portfolio of financial instruments held by a brokerage or bank. Financial instruments in a trading book are purchased or sold for several reasons. For example, they might be bought or sold to facilitate trading actions for customers or to profit from trading spreads between the
What Is a Trading Channel? A trading channel is drawn using parallel trendlines to connect a security’s support and resistance levels within which it currently trades. A trading channel may also be known as a price channel. Key Takeaways A trading channel is drawn using parallel trendlines to connect a security’s support and resistance levels
What Is a Trading Halt? A trading halt is a temporary suspension of trading for a particular security or securities at one exchange or across numerous exchanges. Trading can be halted in anticipation of a news announcement, to correct an order imbalance, as a result of a technical glitch, due to regulatory concerns or because
What Is a Trading House? A trading house is a business that specializes in facilitating transactions between a home country and foreign countries. A trading house is an exporter, importer and also a trader that purchases and sells products for other businesses. Trading houses provide a service for businesses that want international trade experts to
What Is a Trading Plan? A trading plan is a systematic method for identifying and trading securities that takes into consideration a number of variables including time, risk and the investor’s objectives. A trading plan outlines how a trader will find and execute trades, including under what conditions they will buy and sell securities, how
What Is a Trading Platform? A trading platform is a software system used to trade securities. It allows investors to open, close, and manage market positions online through a financial intermediary, such as an online broker. Online trading platforms are frequently offered by brokers either for free or at a discount in exchange for maintaining a
What Is a Trading Strategy? A trading strategy is a systematic methodology used for buying and selling in the securities markets. A trading strategy is based on predefined rules and criteria used when making trading decisions. A trading strategy may be simple or complex, and involve considerations such as investment style (e.g., value vs. growth)
What Is the Traditional Theory of Capital Structure? The traditional theory of capital structure states that when the weighted average cost of capital (WACC) is minimized, and the market value of assets is maximized, an optimal structure of capital exists. This is achieved by utilizing a mix of both equity and debt capital. This point
What Is a Traditional IRA? A traditional individual retirement account (IRA) allows individuals to direct pre-tax income toward investments that can grow tax-deferred. The IRS assesses no capital gains or dividend income taxes until the beneficiary makes a withdrawal. Individual taxpayers can contribute 100% of any earned compensation up to a specified maximum dollar amount. Income thresholds may
What Is a Traditional Whole Life Policy? A traditional whole life policy is a type of life insurance contract that provides for insurance coverage of the contract holder for their entire life. Unlike term life insurance, which covers the contract holder until a specified age limit, a traditional whole life policy never runs out. Upon the
