Trading costs

Similar financial terms

Trading Halt
The temporary suspension of trading in a quoted security, usually for 30 minutes, while material news from the issuer is being disseminated over the news wires. A trading halt gives all investors equal opportunity to evaluate news and make buy, sell, or hold decisions on that basis. A trading halt may also be imposed for purely regulatory reasons, either by the SEC, the FSA, any index or other regulatory body.

Daytrading
Refers to trading in securities were positions are opened and closed on the same day.

Trading range
The difference between the high and low prices traded during a period of time; with commodities, the high/low price limit established by the exchange for a specific commodity for any one day's trading.

Trading posts
The posts on the floor of a stock exchange where the specialists stand and securities are traded.

Trading paper
CDs purchased by accounts that are likely to resell them. The term is commonly used in the Euromarket.

Program trading
Trades based on signals from computer programs, usually entered directly from the trader's computer to the market's computer system and executed automatically.

Last trading day
The final day under an exchange's rules during which trading may take place in a particular futures or options contract. Contracts outstanding at the end of the last trading day must be settled by delivery of underlying physical commodities or financial instruments, or by agreement for monetary settlement depending upon futures contract specifications.

Insider Trading
Insider trading is the trading (buying or selling) of shares in a company by an insider - i.e. a senior manager, director, or person who owns more than 10% of the shares of a company. Insider trading is not illegal. But, if insiders trade on material privileged information - before it becomes known to the general public - that is a problem! This is perfectly legal except when trading takes place using privileged information which has not yet been released to the public. We often hear of insider ...

The Commodity Futures Trading Commission (CFTC)
The Commodity Futures Trading Commission is the federal agency created by Congress to regulate futures trading. The Commodity Exchange Act of 1974 became effective April 21, 1975. Previously, futures trading had been regulated by the Commodity Exchange Authority of the USDA.

Separate Trading of Registered Interest (STRIPS)
Separate Trading of Registered Interest and Principal Securities (STRIPS) are securities that have their periodic interest payments separated from the final maturity payment and the two cash flows are sold to different investors.

Fictitious Trading
Wash trading, bucketing, cross trading, or other schemes which give the appearance of trading. Actually, no bona fide, competitive trade has occurred.

Volatility Quote Trading
Refers to the quoting of bids and offers on option contracts in terms of their implied volatilities rather than as prices.

Ginzy Trading
A trade practice in which a floor broker, in executing an order -- particularly a large order -- will fill a portion of the order at one price and the remainder of the order at another price to avoid an exchange's rule against trading at fractional increments or "split ticks." In In re Murphy, [1984-86 Transfer Binder] Comm. Fut L. Rep. (CCH) at pp. 31,353-4 (Sept. 25, 1985), the Commission found that ginzy trading was a noncompetitive trading practice in violation of section 4c(a)(B) of the Com ...

Agency costs
The cost of resolving the agency problem. These might include stock options and bonus schemes to managers.

Transactions costs
The transactions costs are the expenses to the execution of a trade. It includes the commissions plus the difference between the price obtained and the midpoint of the bid-offer spread.

Storage costs
The cost of storing commodity.

Direct costs
Costs related directly to sales.

Sunk costs
Costs that have been incurred and cannot be reversed.

Search costs
Costs associated with locating a counterparty to a trade, including explicit costs (such as advertising) and implicit costs (such as the value of time).

Round-trip transactions costs
Costs of completing a transaction, including commissions, market impact costs, and taxes.

Opportunity costs
The difference in the performance of an actual investment and a desired investment adjusted for fixed costs and execution costs. The performance differential is a consequence of not being able to implement all desired trades. Most valuable alternative that is given up.

Market timing costs
Costs that arise from price movement of the stock during the time of the transaction which is attributed to other activity in the stock.

Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.

Carring costs
Costs that increase with increases in the level of investment in current assets.

Fixed costs
Production expenses that are independent of the level of output. Fixed costs could include debt repayments, security costs and marketing and administration costs.