Flat
Candlefocus EditorIn stocks, a trading flat is a market with not much opportunity for profits. There might be moments of activity, but no real significant trend. Traders might still manage to make small profits by trading individual stocks, as opposed to indices, rather than basing trades on overall market direction.
On the bond market, a trading flat merely refers to the presence of holders of debt securities (bonds) who are not liable to take profit of accrued interest payments. Basically, the buyers of these bonds are certain that they will eventually receive the repayment of the initial loan amount, without having to pay for the passing of time.
In the forex market, the flat book is a situation where a forex trader’s opposing positions cancel each other out, leading to a break even or zero-sum result. This occurs when the tradable commodities from two currency pairs that offset each other’s risk, leading to a situation where the trader has no trades.
Flat is a powerful concept that can assist traders in better understanding the markets and how to trade them. It reflects the broader market’s sentiment for particular security or instrument and can provide clues about whether or not a the market is suitable for investments.