Make Your Money Work For You by Anthea Gardner

Author:Anthea Gardner
Language: eng
Format: epub
ISBN: 9781868429714
Publisher: Jonathan Ball Publishers
Published: 2019-05-23T10:20:50+00:00

Big cats (traders)

I’ve worked with enough traders, or big cats, to know that some of them literally growl, hiss and roar. They very rarely purr. More than once, I have been on the receiving end of a roar when I unwittingly got between the predator and his prey. Big cats come in the form of panthers, tigers, leopards and even lions. They’re born hunters: stealthy, fast and with a laser focus when in search of their prey.

Traders stand in the pit or sit in front of their computers, day in, day out, looking at the numbers on multiple screens, mostly waiting to take advantage of mispricing and turn a quick profit. There is the executing trader, who acts on instruction from his clients – ‘Buy 1 000 Tesla shares at the average price of the day’. In this case, it is the trader’s job to understand how the Tesla shares trade, to watch the newswires for any headlines that may affect the share price and to deliver to his client the best price possible.

The proprietary trader trades for her ‘own book’. She buys and sells shares, holding them for days or weeks in order to maximise profit.

Electronic trading has exponentially increased the pace at which trades are processed. Imagine the pressure on the traders when price discovery happens faster than they can blink because of the combination of the nature of news and the rate of flow of information in the modern age, and the speed at which one can execute large trades. Remember I mentioned the National Stock Exchange of India, which claims to have ‘attained nirvana’ by processing trades at the speed of light? I know some mathematical geniuses and analysts who know companies inside out, but none of them can do calculations at the speed of light. The world does not stand still, and before we knew it we had electronic trading. Some may say this will eliminate the human trader, but there are benefits and nuances to having a human hand on the enter key. Artificial intelligence and computer programming have come a long way, but it is still very difficult to upload past experience and emotional quotient.

As a medium- or long-term investor, I believe we need to shut out the ‘noise’ of daily or even weekly share movements. Bearing this in mind also helps calm your nerves when you see the value of your portfolio moving down; the movement might be due to structural economic changes that last a couple of years, or it might just be short-term market ‘noise’.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.