Trading Basics
Close A Position
When a trader places a trade to reduce their position to zero.
They are closing their position.
Other Trading Basics
Backwardation
Backwardation occurs when a bid price exceeds the ask price.
This usually occurs when stock is suspended or under a share repurchase scheme.
It can also mean that a futures contract will trade at a higher price when it is coming close to expiring.
The opposite of backwardation is known as contango.
Alpha
This is a measure of price performance vs a benchmark.
If a trader makes 10% per annum and the index makes 7% the trader has an alpha of 3%.
Cost of Carry
The cost to a trader of maintaining a position. This might be in form of overnight financing on simple CFD trades but can also include the costs to insure, transport or finance on more complex trades.
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