Basket Trade


What is a Basket Trade?

A basket trade is an order to buy 15 or more stocks at once.  Basket trades are initiated by large institutions or hedge funds with substantial amounts of money to invest.  Basket trades are not only an option for the banks, but it is also a good investment strategy for retail traders.  A small investor can benefit from a basket trade by diversifying the stocks in their portfolio to a number of sectors in order to minimize risk.  Traders can even invest in a number of indices, instead of individual stocks to better hedge themselves against market cycles.