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TRADE
Balance of trade
Basket trades
Blended trade
Block trade
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• A trade so large that the normal auction market cannot absorb it in a reasonable
time at a reasonable price. In general, 10,000 shares of stock or $200,000 worth of
bonds would be considered a block trade.
• A large trading order, defined on the New York Stock Exchange as an order that
consists of 10,000 shares of a given stock or a total market value of $200,000 or
more.
• Refers to several illegal activities. Most common is the holding of customer orders
Butterfly trade
• Is the sale of two units of a futures contract and the purchase of two units of a
futures contract. Here, the contracts are positioned across three different delivery
months. One pattern would be buy 1 March, Sell 2 April, and Buy 1 May. This
strategy is also used in the credit markets.
Counter trade
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• The exchange of goods for other goods rather than for cash; barter.
Cross trade
Day trader
Flat trades
• (1) A bond in default trades flat; that is, the price quoted covers both principal and
unpaid, accrued interest. (2) Any security that trades without accrued interest or at a
price that includes accrued interest is said to trade flat.
• (1) A bond in default trades flat; that is, the price quoted covers both principal and
unpaid, accrued interest. (2) Any security that trades without accrued interest or at a
price that includes accrued interest is said to trade flat.
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Floor trader
• An exchange member who executes transactions from the floor of the exchange
only for his own account.
• A member who generally trades only for his own account, for an account controlled
by him or who has such a trade made for him. Also referred to as a local .
• Is a member of an exchange who trades for his or her own personal account. This
compares to a Floor Broker.
• A transaction in which the settlement will occur on a specified date in the future at a
price agreed upon the trade date.
Free trade
• A trading bloc that would extend the NAFTA and the Mercosur Group to create a
free trade zone from the Arctic to Cape Horn.
Gap trade
• A market is said to gap trade when prices in it move discontinuously from range to
range in response to announcements of economic numbers.
• A treaty that has governed world trade throughout most of the postwar era; it
extends free trading rules to broad areas of economic activity and is policed by the
World Trade Organization (WTO).
Good trader
• A Treasury coupon issue that can readily be bought and sold in size. If a trader can
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short $10 or $20 million of an issue and sleep at night, that issue is said to be a good
trader.
• The treaty establishing free trade and open markets between Canada, Mexico, and
the United States.
Posttrade benchmarks
Program trades
• Also called basket trades, orders requiring the execution of trades in a large
number of different stocks at as near the same time as possible. Related: block
trade
Publicly traded
• Companies whose common shares are listed and trade on a stock exchange.
• Assets that can be traded in a public market, such as the stock market.
Registered trader
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• A member of the exchange who executes frequent trades for his or her own
account.
Reversing trade
• Entering the opposite side of a currently held futures position to close out the
position.
• The expectation that for accepting greater risk, investors must be compensated
• The balance an investor must decide on between the desire for low risk and high
returns; low levels of uncertainty (low risk) are associated with low potential returns,
and high levels of uncertainty (high risk) are associated with high potential returns.
Rogue trader
• Is a person who operates outside the limits of his authority. There may or may not
be criminal intent. Often these rogues try to hide losses but in the process incur even
greater ones. Often these traders take on larger positions which are not authorized
in order to recoup open losses.
Spot trade
• The purchase and sale of a foreign currency, commodity, or other item for
immediate delivery.
Terms of trade
• The weighted average of a nation's export prices relative to its import prices.
Thinly traded
• Infrequently traded.
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To trade numbers
Trade
• A verbal (or electronic) transaction involving one party buying a security from
Trade acceptance
• Written demand that has been accepted by an industrial company to pay a given
sum at a future date. Related: banker's acceptance.
Trade credit
• Credit granted by a firm to another firm for the purchase of goods or services.
Trade date
• The date on which a transaction is initiated. The settlement date (the day cash and
the asset officially changes ownership) may be the trade date or a later date.
• In an interest rate swap, the date that the counterparties commit to the swap. Also,
the date on which a trade occurs. Trades generally settle (are paid for) 1-5 business
days after a trade date. With stocks, settlement is generally 3 business days after
the trade.
Trade debt
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• Accounts payable.
Trade draft
Trade house
• Is a company which deals in the actual or physical commodities. These firms may
also do an important amount of futures or options related business.
• Trade at a narrow or no spread in basis points relative to some other bond yield,
usually Treasury bonds.
Trade restrictions
• Are taxes, tariffs, capital constraints, multiple currency rates dependent on type of
transaction, quotas, and other impediments or requirements to execute an exchange
of goods, services or financial transactions.
Traders
• Persons who take positions in securities and their derivatives with the objective of
making profits. Traders can make markets by trading the flow. When they do that,
their objective is to earn the bid/ask spread. Traders can also be of the sort who
takes proprietary positions whereby they seek to profit from the directional
movement of prices or spread positions.
Upstairs trader
Uptick trade
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Volatility trades
• Typically there is a lag between the time a new bond is announced and sold and
• Abbreviated WTO. International body that polices world trading practices and
mediates disputes between member countries.
X or cross trade