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Information Based Trading
Models Developed to Capture the Probability of Information Based Trading

I. Introduction

Almost all of the observers of financial markets consider trade for informational reasons as a key motive for trade. This is known as information-based trade. It is unlikely that all trade is drive by pure risk-sharing motivations, which is the only alternative to information-based trading under standard assumptions. In particular, one would need only to speculate that risk sharing needs evolve rapidly to account for the large high-frequency fluctuations observed in trading volumes; and market participants agree to devote substantial resources to acquire information. Because of this theory, many models have been developed to capture the probability of information based trading.
David Easley, Nicholas M. Kiefer and Maureen O'Hara published a paper in July of 1996 detailing the process they used to develop and to test their hypothesis concerning agreements......

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Approximate Word Count: 3771
Approximate Pages: 16 (250 words per double-spaced page)

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