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Contra Trading


A trading method whereby traders take advantage of the delay in settlement– i.e., the period of three days (known as the contra period) after the trade is executed (T+3). A trader would buy and resell shares within the same settlement period to avoid making any payment (cash upfront). Contra-trading is typically commonplace in day trading, where a speculator buys shares during the day and resells them before the close of trading; both transactions settle on the same day (e.g., T + 3) with the speculator having no gross cash outflow (capital outlay). With contra trading, speculators can make a profit without having to fork out capital.



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This section covers a wide-ranging array of terms and concepts, among others, in the area of exchanges and financial marekts at large ...
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