Jun 3, 2019 02:28
4 yrs ago
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English term

Alpha

English Bus/Financial Economics FX markets
Methods Of Generating Alpha

There are a variety of ways to generate alpha in the FX markets. A top team of spot traders, a
group of economists or a fully trained neural net algorithm might all work well. But the method
which has leapt to the front of the pack is the so-called 'technical-type' back-tested models.
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Non-PRO (1): Charlesp

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active return

Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
It is usually referred to with mutual funds.
Example sentence:

The excess return of an investment relative to the active return of a benchmark index is the investment’s alpha.

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4 KudoZ points awarded for this answer. Comment: "Thank you very much :"
33 mins

excess returns

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1 day 8 hrs

measure of investment performance compared with a suitable market index

the important thing to note is that alpha investments give an excess on return AFTER fees so equals a real return

I think this explains it a bit better than investopoedia

https://en.wikipedia.org/wiki/Alpha_(finance)

"...In modern financial markets, where index funds are widely available for purchase, alpha is commonly used to judge the performance of mutual funds and similar investments. As these funds include various fees normally expressed in percent terms, the fund has to maintain an alpha greater than its fees in order to provide positive gains compared with an index fund. Historically, the vast majority of traditional funds have had negative alphas, which has led to a flight of capital to index funds and non-traditional hedge funds..."
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