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Wedge

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 26 Apr 2023

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Wedge

A wedge is a type of financial instrument that is used to increase the leverage of a position. It is a strategy that involves taking two positions in the same security, one long and one short, with the same expiration date. The goal of the wedge is to increase the potential return on the position by taking advantage of the difference in the price of the two positions. The wedge can be used in a variety of markets, including stocks, options, futures, and currencies.

History of the Wedge

The wedge strategy has been used for centuries by traders and investors. It was first used in the stock market in the late 1800s, when traders would buy and sell the same stock at different prices. This allowed them to take advantage of the difference in the price of the stock and increase their potential return. The wedge strategy has since been used in a variety of markets, including options, futures, and currencies.

Comparison Table

Strategy Leverage Risk
Long Position Low Low
Short Position High High
Wedge High High

Summary

The wedge is a financial instrument that is used to increase the leverage of a position. It involves taking two positions in the same security, one long and one short, with the same expiration date. The goal of the wedge is to increase the potential return on the position by taking advantage of the difference in the price of the two positions. For more information about the wedge, you can visit websites such as Investopedia, The Balance, and Investing.com.

See Also

  • Long Position
  • Short Position
  • Leverage
  • Options
  • Futures
  • Currencies
  • Margin
  • Arbitrage
  • Hedging
  • Speculation

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