Trade ideas (or trading ideas, or "Electronic Alpha-Capture") are investment ideas, typically equity related, ("long" i.e. buy, or "short" i.e. sell) which are sent by institutional stockbrokers to their institutional clients (i.e. this is not a service provided to private clients); recipients of trade ideas are thus hedge funds, a bank’s proprietary trading desks, and money managers.
Trade ideas are sent to the client with a recommendation to buy or sell, an investment value (e.g. $2 million) and often a timeframe and an indication of level of conviction.
The most active consumers of Trade Ideas are funds using quantitative or systematic strategies.
They typically propose a trade in a specific stock and are developed by the individual idea author’s (e.g. a salesman) own knowledge of their client’s particular area of investment interest, and so will take into account: the client’s investment style, portfolio size and the sector and geographic focus.
Brokers only send trade ideas to their most valuable clients.