Rio Trade

AAA

DEFINITION of 'Rio Trade '

In the securities market, a transaction made in a desperate attempt to recover previous losses. Rio trade was coined with the idea that if a trader fails in his or her attempt to recover previous losses, he or she would have to hop on a plane to Rio De Janeiro, Brazil, in order to escape from creditors. Since it is executed under dire circumstances, a Rio trade might be a higher-risk trade than an investor would normally consider.

INVESTOPEDIA EXPLAINS 'Rio Trade '

The level of risk associated with many investments and trading strategies depends on the expertise of the person making the investment decision. Speculators take high risks intentionally in the hope of achieving high returns. Their trades don't always pan out the way they hope, but they understand the potential ramifications of their decisions in advance. A new investor who uses lots of leverage in placing a forex trade, on the other hand, may get burned without even understanding where they went wrong.

RELATED TERMS
  1. Overleveraged

    Occurs when a business is carrying too much debt, and is unable ...
  2. Punter

    1. A trader who hopes to make quick profits. Basically, another ...
  3. Risk

    The chance that an investment's actual return will be different ...
  4. Speculator

    A person who trades derivatives, commodities, bonds, equities ...
  5. Rio Hedge

    When a trader who is facing financial or legal troubles hedges ...
  6. Creditor

    An entity (person or institution) that extends credit by giving ...
Related Articles
  1. To Sell Or Not To Sell
    Retirement

    To Sell Or Not To Sell

  2. 5 Things To Know About Asset Allocation
    Investing Basics

    5 Things To Know About Asset Allocation

  3. A Look At Exit Strategies
    Active Trading Fundamentals

    A Look At Exit Strategies

  4. The Art Of Selling A Losing Position
    Investing

    The Art Of Selling A Losing Position

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center