A basket refers to a grouping of various securities, such as stocks or currencies, that are selected
based on a common theme or specific criteria. An example would be a sector exchange-traded fund
(ETF), which typically comprises a collection of stocks all belonging to the same industry.
Basket orders involve executing multiple trades in various securities simultaneously, often utilizing a
program that executes all the trades at once. Due to this programmatic aspect, baskets are
commonly integrated into program trading strategies.
Institutional traders, hedge funds, mutual funds, and exchange-traded funds (ETFs) utilize baskets to
efficiently adjust their portfolio allocations quickly. Many retail brokers also offer individuals the
capability to create and execute basket orders.
In economics, a basket of goods denotes a predetermined selection of consumer products and
services whose prices are regularly assessed, typically on a monthly or annual basis, to monitor
inflation trends.