Close A Position

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.

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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%.

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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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