Axe

What is an 'Axe'

An axe is the interest that a person or trader shows in buying or selling a financial security. There are many reasons why someone would have a particular interest in a security. If a trader holds a long position but has short-term concerns, that trader's "axe" toward short-term put options may be significant. Also used as a colloquial expression to indicate job cuts or layoffs.

BREAKING DOWN 'Axe'

The term "axe" may be derived from the phrase "axe to grind," which means to possess an ulterior motive or selfish aim. For example, consider a situation where trader A has a large position in a stock, and other market participants have no knowledge of this trader's position. If trader A shops around for quotes with the intention of unloading part, or all, of his or her long position, trader B, who makes a price quote to trader A, would be at a disadvantage if he or she is unaware that trader A has an axe with regard to this specific stock.

RELATED TERMS
  1. Derived Demand

    A term used in economic analysis that describes the demand placed ...
  2. Position Trader

    A type of stock trader who holds a position for the long term ...
  3. Trader

    An individual who engages in the transfer of financial assets ...
  4. Head Trader

    The manager of a trading business. He or she is responsible for ...
  5. Buy Weakness

    A proactive trading strategy in which a trader takes profits ...
  6. Swing Trading

    A style of trading that attempts to capture gains in a stock ...
Related Articles
  1. Investing

    People Are Watching Showtime's "Billions" Because They Feel Wall St Is Screwing Them

    TV dramas about Wall Street have historically tanked. That is, until Showtime's "Billions." A few financial crises can alter viewers' tastes. They now want to know how the sausage of their financial ...
  2. Professionals

    A Day In The Life Of A Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
  3. Forex Education

    What Type Of Forex Trader Are You?

    Timing may be the key to uncovering your true strength as a forex trader.
  4. Trading Strategies

    Are You a Trend Trader or a Swing Trader?

    Swing traders and trend traders execute market timing strategies that require different skill sets.
  5. Trading Strategies

    The 10 Worst Mistakes Beginner Traders Make

    Traders generally buy and sell securities more frequently and hold positions for much shorter periods than investors, which can result in costly mistakes.
  6. Trading Strategies

    How To Outperform The Market

    Active trading is an investing style that aims to beat the market. Find out how it works, and whether it will work for you.
  7. Forex Education

    Forex: Money Management Matters

    Currency trading offers far more flexibility than other markets, but long-term success requires discipline in money management.
  8. Options & Futures

    Conclusion

    Options afford day traders advantages that are not available from any other financial instrument.
  9. Forex Education

    How Much Trading Capital Do Forex Traders Need?

    Even a small pip profit can mean substantial percentage returns over time.
  10. Trading Strategies

    What is the Difference Between Institutional Traders and Retail Traders?

    The differences between retail and institutional traders lie in the size of the trade, level of sophistication, and the speed of transactions.
RELATED FAQS
  1. What are some ways to reduce downside risk when holding a long position?

    Learn about the various methods a trader can use to minimize risk of loss or protect a portion of profits in an existing ... Read Answer >>
  2. Is it better practice to use a stop order or a limit order?

    Discover whether it is considered best practice to use stop losses or limit orders. Both options have their advantages and ... Read Answer >>
  3. Is there a buy-and-hold strategy in forex, or is the only way to make money by trading?

    Typically there are different ways to trade in most markets. Traders have been classified into three groups, primarily based ... Read Answer >>
  4. How do traders use out-of-the-money options to hedge?

    Learn a couple of simple option trading strategies that traders can use to hedge an existing market position and protect ... Read Answer >>
  5. What is the difference between investing and trading?

    Investing and trading are two very different methods of attempting to profit in the financial markets. The goal of investing ... Read Answer >>
  6. What qualifies a person as a day trader?

    As of Sept 28, 2001, the NASD (now, FINRA) and NYSE amended their definitions of day traders. A new term that they use is ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center