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Explanation:
Predatory trading is a strategy where a trader anticipates that a stock’s value will either increase or decrease and places trades accordingly. This strategy aligns with the concept of a ‘positive feedback’ strategy, where a trader buys more of a stock as its price increases and sells it as its price decreases. Thomas Wong, being a positive feedback trader, would likely engage in predatory trading as it aligns with his strategy of capitalizing on price movements. Therefore, predatory trading is the most accurate reason for Wong's positive feedback trading strategy.
Choice A is incorrect. An urgent need for cash does not necessarily dictate a positive feedback trading strategy. This strategy involves buying securities when prices are rising and selling when they are falling, which may not be the best approach if immediate liquidity is required.
Q.3949 Thomas Wong, one of the traders in the security market, has been a positive feedback trader. In his interview with a business analyst, Wong stated the factors that cause him to be a positive trader. Which choice among the following accurately states the reason as to why Wong practices positive trading?
A
Urgent need for cash
B
Need for liquidity
C
Competition
D
Predatory trading
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