Definition
A workable indication is a financial term used in securities trading. It is an approximate estimate or an indication given by a market maker about where a certain security is likely to be bought or sold. The indication helps traders in making decisions but is not a firm commitment to trade at those prices.
Phonetic
The phonetics for ‘Workable Indication’ is: Workable: /ˈwɜːrkəbəl/Indication: /ˌɪndɪˈkeɪʃn/
Key Takeaways
I’m sorry, but I can’t provide specific information about “Workable Indication” as it’s not a well-known concept or topic. Perhaps there was a confusion in your request. Could you provide more details or context? I’d be more than happy to assist you with clarified information.
Importance
A workable indication is significant in business/finance as it represents a temporary price at which a security or a commodity could likely be traded. This term is often used in the over the counter market and it is essential as it gives participants an idea of the prevailing market conditions for a particular commodity or security. Moreover, workable indications can provide initial guidance on a potential transaction’s pricing which is valuable, especially in illiquid markets where there may be minimal trading activity or price transparency. It aids financial professionals in decision-making processes, influencing if, when, and how they will carry out a transaction.
Explanation
Workable Indication is a key financial term, frequently used in the scope of trading and investment. The purpose of a workable indication is to provide an initial estimate or a likely range in which a security can be bought or sold. It’s essentially a preliminary quote given by a dealer to a trader, indicating the rate or price they can operate in the securities market. This workable indication represents the dealer’s assessment of where the security could be traded, and it guides the trader to understand the likely price range and make investment decisions accordingly.This is usually not an offer to transact, but a dealer’s informed prediction about the possible trading price. The function it serves in the business and finance world is pivotal. Dealers and brokers use workable indications as a tool for facilitating transactions and enabling a smoother negotiation process. For traders, these indications can act as a preliminary guide to determine whether or not they want to proceed with a trade, based on their own financial strategy and market insights.
Examples
“Workable indication” is a term used in finance to refer to the feasibility or likelihood that a trade or investment opportunity could be executed at the indicated price. It provides preliminary evidence to determine if the trade or investment could happen. 1. Stock Trading: Let’s say a stockbroker receives an indication from a client who is interested in buying shares in a specific company at $50. The broker uses this “workable indication” to scan the market and see if it’s possible to fulfill the order at the desired price taking into account the current market price and liquidity of the shares.2. Foreign Exchange Trading: A trader might get a “workable indication” about exchanging Euro to US dollars at a specific rate. The trader would then use this information to see if there are sufficient forex resources available and if the prevailing market conditions would allow for the trade to take place at the client’s desired rate.3. Commodity Trading: A commodities trader receives a “workable indication” from a client who wishes to buy a large quantity of crude oil at a certain price. The trader would evaluate the current market prices, the availability of the oil, and the logistics of the delivery to determine if the trade is feasible.
Frequently Asked Questions(FAQ)
What is a Workable Indication?
A workable indication is a soft quote provided by a market maker. It represents a price range in the stock market where a security can be bought or sold rather than an exact price. This is usually given in complex or less liquid markets.
How is a Workable Indication used in financial markets?
Market makers typically use a workable indication to provide clients with a general idea of where a security could be traded. It assists financial market participants by offering a preliminary estimate on the price range of a potential transaction.
Is a Workable Indication binding?
No, a workable indication is not a legally binding quote; it’s purely informational and used as a guideline to provide a rough estimate regarding the pricing of a particular security.
Why is a Workable Indication important in finance?
They serve as useful tools in markets where clear pricing isn’t always available. This system provides guidance for investors or traders on the buy-sell range for a security, allowing them to take informed decisions.
Where is a Workable Indication commonly used?
Workable indications are commonly used in bond markets, illiquid or exotic derivatives, and other over-the-counter (OTC) markets where assets are less frequently traded and hence, price transparency is less prevalent.
When should I ask for a Workable Indication?
You should consider asking for a workable indication when dealing with more complex or illiquid securities where real-time, exact pricing information may not be readily available.
How reliable is a Workable Indication?
Though not legally binding, workable indications are generally reliable as they are provided by professional market makers who have expert knowledge and experience in their respective markets. However, actual transaction prices may vary depending on market conditions.
Related Finance Terms
- Market Order: A type of financial order where a security is bought or sold at the best available price in the current market.
- Bid-Ask Spread: The difference between the highest price a buyer is willing to pay for an asset and the lowest price a seller is willing to accept.
- Over-the-Counter (OTC): A decentralized market where securities are traded directly between two parties, without a broker’s supervision.
- Price Discovery: The process through which the price of an asset is determined on an exchange or in a market based on supply and demand factors.
- Liquidity: The degree to which a financial instrument can be quickly bought or sold in the market without affecting the asset’s price.
Sources for More Information
I’m sorry for any confusion, but “Workable Indication” isn’t a recognized term in the business or finance sectors. Maybe you’re referring to another term or concept? I’ll be glad to assist you with that.
