Trading & Rebalancing for Investment Management strategy, solutions & risks

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TRADING AND REBALANCING FOR INVESTMENT
MANAGEMENT STRATEGY SOLUTIONS
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• Indeed, the financial value created by the
  trading, have made them MUST PICK choice in the
  stock market, but just like any other financial
  platform, they are also not free from risk,
  rather the primary risks associated with trading
  derivatives are market, counterparty, liquidity,
  and interconnection risks.

• Read on to know what potential strategies have to
  be considered while trading.

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Market Risk

• In the world of the stock market, market risk is
  nothing uncommon and is a very general term in
  any sort of investment.
• Every investment is based upon the decisions
  which take place on the basis of assumptions,
  technical analysis or other factors, which sum up
  to an expectation that how a certain investment
  would perform.
• However, to avoid the horror of risk, with the
  investment analysis, you can understand the
  possible chances for an investment that whether
  it would turn profitable or would bring more risk
  ratio.

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Counterparty Risk

• Counterparty risk is also called the counterparty
  credit risk, which generally arises, when one of
  either a buyer or a seller, involved in a
  derivatives trade, defaults on the contract.
• Indeed, the risk gets higher in OTC markets, as
  they are less regulated than trading exchanges.
• With the regular trading exchange, you can
  facilitate contract performance through margin
  deposits, which are further adjusted via the MTM
  process.
• The mark-to-market process lets the pricing
  derivatives to be accurately reflecting the
  current value.

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5
Liquidity Risk

• If an investor plans to close out a derivative
  trade much before the maturity, then Liquidity
  risk applies.
• In such situations, investor needs to analyze if
  it is at all possible to close out the trade or
  if existing bid- ask spreads are so large to
  represent a significant cost, in accordance with
  he/she must take the final call.

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6
Interconnection Risk

• This risk refers to the interconnections between
  various derivative instruments and dealers, which
  ultimately affect the investor particularly
  derivative trade. This risk is usually caused by
  the chain reaction however the main dealer
  causes the problem in the derivatives market.
• Thus investor needs to be fully updated and must
  reduce the causes which threaten the stability of
  financial markets.
• The strategies listed above, clears the air that
  it can be a tough market for amateurs, this it is
  advised that only traders with high experience in
  trading must go with the derivatives market.
• Indeed, the stock market investment can be a
  great help in this league, but the right
  experience and the experts advice is necessary
  to go along with it, and this can easily be
  achieved with the professionals from Investment
  Excel.
• This very platform is offering the stock market
  advices through the hands of experts who hold the
  15 years of extensive experience and share the
  tips and tricks to overcome the burden of naivety
  in the field.

45-25685705
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info_at_investmentexcel.com