In the stock market, an investor can trade a large number of stocks with just a single order entry, and this is often referred to as “basket trading”. This is particularly useful for large institutional investors who are always making trades in the market. They can thus put all of this large number of trades under one basket through a single order entry. For basket trading however, the trader or the investor must be trading in a minimum number of stocks. And not just trade, the basket allows the trader to track and manage the stocks better as well.

Basket trading is not for small retail investors – this is the foray of large institutional investors. For large institutional investors, basket trading is actually standard practice. Other than stocks, basket trading is also used in the futures and the currency market too.

Here Are Some Advantages Of Basket Trading

It gives the investor complete control: The investor will just need to add the stocks to the basket and then they can be traded anytime. The timing and the tax implications of the basket transactions can be controlled easily. The basket can be modified anytime needed too.

Personalised investment decisions: Specialised baskets based on sectors, market capitalization, investment goals and styles and live events can easily be created. Thus the investor is able to meet the investment needs.

Performance tracking: The basket trades can be tracked and monitored as a group and this allows the investor to invest in a large number of securities from any sector. When you are putting in a large amount of money, it is necessary for you to keep a close watch on the performance because otherwise, the investment may not yield the expected returns.

Making various trades at one time: All the investor needs to do is place one order and the necessary investment decisions can be implemented.

Time saving: Basket trading also allows the investor to save time.

Easy cancellation: Though it is a single order entry, but individual stock decisions can be cancelled easily as well by the investor if the person needs to do this for some reason. However it is necessary to make the cancellation before the order is executed.

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