Trading Basics

Bid

Traders can go short at the bid price.

The terminology is from the broker point of view, they are bidding to buy from you.

The interest payment on a bond.

Backwardation occurs when a bid price exceeds the ask price.

This usually occurs when stock is suspended or under a share repurchase scheme.

It can also mean that a futures contract will trade at a higher price when it is coming close to expiring.

The opposite of backwardation is known as contango.

A trade to close a position. Most trading requires the trader to place the opposite trade to that done when opening their position.

This will crystallise the profit or loss.

Learn the skills needed to trade the markets on our Trading for Beginners course.