How does the Core Equity model calculate the capital available for subsequent trades? Option: It adds the profits from previous trades to the initial capital, It deducts the capital allocated to a trade from the existing capital, reducing the available capital for future trades, It factors in the overall market performance to adjust the available capital, It considers the total account balance, including unrealized profits and losses

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How does the Core Equity model calculate the capital available for subsequent trades?

It adds the profits from previous trades to the initial capital

It deducts the capital allocated to a trade from the existing capital, reducing the available capital for future trades

It factors in the overall market performance to adjust the available capital

It considers the total account balance, including unrealized profits and losses

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Why is estimating equity capital considered a complex task in trading?

Determining the initial investment amount requires extensive market research

The dynamic nature of open positions and their fluctuating P&L makes it challenging

Market volatility makes it difficult to predict future capital levels

Calculating brokerage fees and taxes can be complicated

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What role does the Level 3 market window play in position sizing?

It suggests the ideal holding period for a stock

It recommends the best time of day to enter a trade

It determines the exact number of shares to trade based on capital availability

It helps estimate the number of shares to trade considering the stock's liquidity

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What is the primary reason for charging margins in trading?

To cover administrative costs of trading

To generate revenue for brokerage firms

To discourage excessive trading activity

To manage and mitigate potential risks

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What is the primary focus of pair trading?

"Capitalizing on price differences between related securities"

"Minimizing investment risk"

"Maximizing short-term profits"

"Diversifying investment portfolios"

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What is the primary function of position sizing in trading?

Determining the optimal time to enter a trade

Calculating the amount of capital to allocate to a specific trade

Predicting future market movements

Selecting the best stocks for investment