A trading and investment strategy based on indexes instead of market trends.
Passive management is a strategy for investors who prefer to depend on and imitate the trading decisions of an index instead of making decisions by observing market trends. This investment management approach is different from the traditional trader’s disposition towards investments since the latter consists of their active observation of the market and hastiness to take advantage of price gaps. In passive management, the trader leaves any hard thinking to the market itself and simply invests in the same direction as the index.
Passive management is different from active management in the sense that it requires lower operational fees. Moreover, because the trader is not jittery due to short-term price fluctuations, it is a good strategy for long-term trading.