Trading Strategies

Maneuvering the
Indian securities market with certainty

Asymmetric Trading Strategies

An asymmetric trade or asymmetric payoff is when the outcome of a trade has more profit than loss or risk taken to achieve the profit. Or, the upside potential is greater than the downside loss. It is an asymmetric risk/reward profile–one that is imbalanced or skewed toward the upside than the downside.

Asymmetric trading has implications for both stock returns and real investment. In terms of stock returns, the market maker is rational and takes the most recent trading strategies into account when devising pricing function.