http://www.insuranceadvisory.org Thu, 08 Dec 2011 11:47:27 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 http://www.insuranceadvisory.org/reasons-for-trading/ http://www.insuranceadvisory.org/reasons-for-trading/#comments Sat, 17 Oct 2009 11:21:10 +0000 admin http://www.insuranceadvisory.org/?p=40 The fundamental driver of trading is that one party has goods or services that they wish to sell and that another party wishes to buy. A trade can be made if they are brought together and can agree a price for the transaction. Markets have developed to facilitate this process. This is as true for financial products as it is for any other. The real drivers of the volume of trading in financial instruments are, however, fear and greed. Fear drives individuals, companies and financial institutions to take action to reduce or hedge risk. Greed drives the same parties to look for ways to profit from the trading activity itself.
We will start by looking at how spot markets operate and why hedging needs naturally result in the development of forward or future markets. Our main focus in this series of posts will be on the nature of arbitrage transactions and their importance in influencing financial instrument prices, and how financial institutions seek to profit from trading activities. We will look at the methods used to manage the risks taken in such activities in the future.

]]> http://www.insuranceadvisory.org/reasons-for-trading/feed/ 0