What Does Trading Flat Mean?

10-K

What does dish mean?

Flat, in the securities market, is a price that is neither up nor down. According to the terminology of fixed income securities, a bond which is traded without accrued interest is said to be flat. In forex, flat refers to the condition of being neither long nor short in a particular currency, and is also called “square”.

Understanding flat stocks

When the stock market has changed little or not over a period of time, it is said to be a flat market. This does not mean that all securities listed on the market do not make any significant movement. Instead, the increasing price movement of certain stocks in the sector or industry can be offset by an equal downward movement in the prices of securities in other sectors. Investors and traders looking for profits in a stable market prefer to trade individual stocks with upward momentum rather than trading market indices.

Individual stocks can also be flat. For example, if a stock in the past month is trading around $ 30, it can be considered flat. Bombardier Inc. (TSX: BBD-B.TO) is considered flat stock as it has averaged about $ 3 in the past five years (2020 to 2020). Taking out covered calls is a good strategy for taking advantage of stocks that remain stable or drop slightly.

Understanding flat obligations

A bond is negotiated flat if the buyer of the bond is not responsible for the payment of interest accrued since the last payment (the accrued interest is generally part of the purchase price of the bond). Indeed, a flat bond is a bond that is traded without accrued interest. The price of a flat bond is called a flat price or a net price. As a general rule, fixed prices are quoted so as not to distort the daily increase in the dirty price (bond prices plus accrued interest) because the accrued interest does not modify the yield to maturity (YTM) of the obligation.

A bond is also traded flat if the interest payment on the bond is due but the issuer is in default. Bonds in default must be negotiated flat without calculating the accrued interest and with the delivery of coupons which have not been paid by the issuers. In addition, if an obligation is settled on the same date as the interest payment and, consequently, that no additional interest has accrued beyond the amount already paid, the connection is deemed to be negotiated flat.

Flat position in forex trading

Being flat is a position taken by a trader in forex trading when he / she is unsure of the direction of currency trading in the market. If you had no position on the US dollar or your long and short positions canceled out, you would be flat or have a flat pound. The flat position is considered a positive position since even if the trader makes no profit by staying away, he / she also does not make any losses.

A flat may also refer to a transaction in which the currency pair has not significantly increased or fallen and, therefore, no significant gain or loss is attributed to the forex trading position. Since a fixed price stays in the same range and hardly moves, a horizontal or lateral trend can negatively affect the trading position.

Leave a Comment

Your email address will not be published. Required fields are marked *