Trade Paper, Trader, Trader's
Market, Trading Account Securities and Trading Market
or trade acceptances given rather than money in exchange for merchandise;
person who engages in speculation, buying and selling securities or commodities
for price appreciation; a person who executes orders of others on the
floor of an exchange or who, among dealers in unlisted securities, maintains
a position or inventory in assigned stocks and engages in buying and selling
operations in such stock.
unlisted securities trading, the inside market, or that market with the
closest spreads between bid and asked prices, maintained for trading between
firms and not for the public. Traders'
markets are published daily in the National Quotation Bureau's sheets
(see NATIONAL QUOTATION BUREAU).
Quotations released through regional offices of the NATIONAL ASSOCIATION
OF SECURITIES DEALERS, INC. to the press reflect approximate quotations
for the public. Necessarily,
spreads in quotations for the public must allow for the expense of maintaining
facilities for the public. Traders'
markets may be likened to wholesale prices, while public quotations are
acquired with the intention of selling them within a short period of time,
as opposed to investment account securities.
The Glass-Steagall Act restricts banks' securities trading but
does not prohibit trading Banks can underwrite debt obligations of the
narrow, dull, inactive market in which prices cover the same ground over
and over; a market in which public participation is negligible, transactions
being largely confined to those of professional traders, and therefore
sometimes called a professional market.
A trading market is a preparatory, hesitating condition preceding
an impending movement upward or downward.
In a trading market the range of stocks is kept within a few points,
and the trading area is a small range between the limits of which the
movement of prices is confined.
trading market is a period of vacillation occurring at the conclusion
of a decisive upward or downward swing.
Preparatory to the next swing, prices vibrate within a narrow range,
the amplitude of fluctuations demarking the limits of the trading area.
It is a time of suspended judgment - a speculative question mark
- and may be conceived of as a prolongation of a pause to permit digestion
of the preceding move, while speculators wait for additional facts to
provide an impetus for a fresh start in one direction or the other.
solely to the movements of the averages, a trading area on a high plateau
in a bull market almost invariably is an interlude in what later proves
to be a resumption of the rise, or else the energy required to hold prices
within the area would not have been expended.
The technical rule is that the line of least resistance is motion,
and stocks having risen to a temporary apex would be more apt to round
off and with little hesitation start downward.
Similarly, a trading area at the bottom of a sharp decline is a
breathing space to take account of fundamentals
If the decline has gone too far, recovery, if there is to be one,
will lose no time in asserting itself.
Consequently, a trading area following a declining movement is
usually the precursor of a resumption of the fall.
Technically, then, a trading area is a compromise, since the rule
of motion is violated.
applies to the averages in regard to trading areas is not applicable to
individual stocks. Frequently,
what appears to be a trading area at the bottom of a decline in an individual
stock is a zone of accumulation,
with the next important movement upward.
Similarly, the semblance of a trading area in an individual stock
on a high plateau frequently turns out to be a level of distribution,
with the next move downward.
trading area offers one type of market situation in which the trader may
have his decision made for him with a minimum of risk.
Since a trading area is an interruption of the trend, the market
will show, by its own action, what the direction will be when the trading
market has terminated. Just
as soon as the averages break out of their trading range in one direction
or the other, the action can be followed almost blindly.
Almost invariably, it is a signal for a continuation of that directional