A stock trader or equity trader or a stock trader is a person or company involved in equity trading. Stock traders can be agents, hedger, arbitrageur, speculators, stockbrokers. Like equity trading in large publicly traded companies can go through one of the major stock exchanges, such as the New York Stock Exchange or the London Stock Exchange, which serves as a managed auction for stock trading. Stocks in smaller public companies are bought and sold on over-the-counter (OTC) markets.
Stock trading may be done by shareholders, or by an authorized agent to buy and sell on behalf of the shareholder. Exclusive trading is buying and selling for trader's own profit or loss. In this case, the principal is the owner of the stock. Agent trade is the purchase and sale by an agent, usually a stockbroker, on behalf of the client. Agents are paid commissions to trade.
Major stock markets have market makers that help to limit price variations (volatility) by buying and selling shares of certain companies on their own behalf and also on behalf of other clients.
Video Stock trader
Stock trading as a profession/career
Stockbrokers advise shareholders and help manage portfolios. Merchants engage in the buying and selling of bonds, stocks, futures and shares in hedge funds. A stockbroker also conducts extensive research and observations on how financial markets perform. This is achieved through economic and microeconomic studies; consequently, more advanced stock traders will investigate macroeconomics and industry-specific technical analysis to track assets or company performance. Other tasks of a stock trader include a comparison of financial analysis with the current rules and the future of his work.
Professional stock traders working for financial companies are required to complete internships for up to four months before becoming established in their career field. In the United States, for example, internships are followed up by taking and authorizing Series 63 or 65 exams set by the Financial Industry Authority. Passing stock traders demonstrate familiarity with US Commission and Exchange (SEC) compliance and compliance practices and compliance. Stock traders with experience usually earn a four-year degree in finance, accounting or economics after the license. Oversight positions as merchants typically require an MBA for advanced stock market analysis.
The US Bureau of Labor Statistics (BLS) reported that growth for stock and commodity traders is expected to be greater than 21% between 2006 and 2016. In that period, stock traders will benefit from a trend driven by baby boomer retirement and their declining dependence. on Social Security. US Government bonds will also be traded more volatile. The stock trader who just entered the field suffered because of only a few entry-level positions. While entering into this highly competitive career field, increased equity and mutual fund holdings spurred a huge career growth from traders. The bank also offers more opportunities for the average person to invest and speculate in stocks. BLS reports that stock traders have an average annual income of $ 68,500. Experienced traders from stocks and mutual funds have the potential to generate over $ 145,600 per year.
Risks and other costs
Contrary to a stockbroker, a professional who arranges transactions between buyers and sellers, and secures a guaranteed commission for each deal, a professional trader may have a steep learning curve and his ultra-competitive performance-based career may be trimmed. , especially during the fall of the stock market in general. Stock market trading operations have extremely high levels of risk, uncertainty, and complexity, especially for unwise and inexperienced share traders/investors who are looking for easy ways to make money quickly. In addition, trading activity is not free. Speculators/stock investors face some fees such as commissions, taxes and fees to be paid to brokers and other services, such as the purchase/sale of orders placed on the stock exchange. Depending on the nature of any national or state law involved, large amounts of fiscal obligations must be respected, and taxes are charged by jurisdiction over transactions, dividends and capital gains included in their scope. However, these fiscal liabilities will vary from jurisdiction to jurisdiction. Among other reasons, there may be instances where taxation has been incorporated into share prices through different laws that companies must adhere to in their respective jurisdictions; or tax-free stock market operations that are useful for boosting economic growth. Beyond this cost is the opportunity cost of money and time, currency risk, financial risk, and Internet services, data and news agencies and the cost of electricity consumption - all of which must be accounted for.
Important case
Jerome Kerviel (Socià © Å © tale) and Kweku Adoboli (UBS), two mischievous merchants, work in the same type of position, the Delta One table - the table on which the derivatives are traded, and not a single stock or bond. These types of operations are relatively simple and often reserved for novice traders who also specialize in exchange-traded funds (ETF), financial products that mimic the performance of the index (ie either upward or downward). Because of their ease of use, they facilitate portfolio diversification through acquisition of contracts supported by stock indices or industries (eg commodities). Both traders are very familiar to control the procedure. They work in the back office, the bank's administrative body that controls the regularity of operations, before moving on to trade. According to the report of Inspector General Societe Generale, in 2005 and 2006 Kerviel "lead" by taking a position of 100 to 150 million euros in Solarworld AG's registered stock in Germany. In addition, the "illegal trade" of Kweku Adoboli, similar to Kerviel, did not exist long ago. Adoboli has been in operation since October 2008 - its failure and subsequent arrests took place in 2011.
Maps Stock trader
Methodology
Speculators and stock investors usually require stock brokers like banks or brokerage firms to access the stock market. Since the advent of Internet banking, Internet connections are usually used to manage positions. Using the Internet, specialized software, and personal computers, stock speculators/investors utilize technical and fundamental analysis to help them make decisions. They can use several sources of information, some of which are very technical. Using the pivot point calculated from the previous day's trading, they try to predict buying and selling points from today's trading session. These points signal to speculators, about where the price will go to that day, encourage every speculator where to enter the trade, and where to get out. An additional tool for stock picker is the use of "stock screen". The stock screen allows the user to enter certain parameters, based on technical and/or fundamental conditions, which he deems desirable. The main benefit associated with the stock display is its ability to return a small set of shares for further analysis, among tens of thousands, in accordance with the requirements requested. There is criticism about the validity of using these technical indicators in analysis, and many professional stock speculators do not use them. Many stockbrokers and full-time stock investors, as well as most others in finance, have traditionally had formal education and training in areas such as economics, finance, math and computer science, which may be highly relevant to this work - because the stock of trade is not for sure science, stock prices generally have random or chaotic behavior and there is no proven technique to trade stocks profitably, the level of knowledge in that field is ultimately negligible.
Stock picking
Efficient market hypothesis
Although many companies offer courses in stock-taking, and many experts report success through technical analysis and fundamental analysis, many economists and academics claim that because of the efficient market hypothesis (EMH) it is unlikely that some analysis can help investors make any profit over the stock market itself. In the distribution of investors, many academics believe that the richest are only those who are outside in such a distribution (ie in a coincidence game, they have turned their heads twenty times in a row). When money is put into the stock market, it is done with the aim of generating a return on invested capital. Many investors try not only to generate profitable profits, but also to outperform, or beat, the market. However, market efficiency - championed in the EMH formulated by Eugene Fama in 1970, shows that at any given time, prices fully reflect all the information available on a particular stock and/or market.
Thus, according to EMH, no investor has an advantage in predicting earnings over share prices because no one has access to information that is not yet available to others. In an efficient market, prices become unpredictable but random, so there is no distinguishable investment pattern. Therefore, the planned approach to investment can not succeed. This "random walk" of price, which is commonly discussed in EMH schools of thought, results in the failure of any investment strategy that aims to beat the market consistently. In fact, EMH suggests that by providing transaction costs involved in portfolio management, it would be more profitable for investors to put their money into index funds.
Mandelbrot fractal theory
In 1963, Benoit Mandelbrot analyzed cotton price variations in a series of times beginning in 1900. There are two important findings. First, price movements have little to do with the normal distribution where most observations lie close to the average (68% of data are within a standard deviation). In contrast, the data show extremely high frequency of extreme variations. Secondly, price variations follow indifferent patterns to scale: the curves depicted by price changes for one day are similar to the lunar curve. Surprisingly, these patterns of self-similarity were present throughout the entire period 1900-1960, a cruel period that has witnessed the Great Depression and two world wars. Mandelbrot used his fraction theory to explain the presence of extreme events on Wall Street. In 2004 he published his book on "bad behavior" of financial markets - The (Mis) Market behavior: A Fractal View of Risk, Ruin, and Reward. The basic idea that links fractals to financial markets is the probability of experiencing extreme fluctuations (as triggered by group behavior) greater than what conventional policy wants us to believe. This of course provides a more accurate vision of risk in the financial world. The main objective in financial markets is to maximize revenue for a given level of risk. The standard model for this is based on the premise that the possibility of extreme variations in asset prices is very low.
These models depend on the assumption that asset price fluctuations are the result of a well-behaved random or stochastic process. This is why mainstream models (such as the famous Black-Scholes model) use normal probabilistic distributions to illustrate price movements. For all practical purposes, extreme variations can be ignored. Mandelbrot thinks this is a bad way to look at financial markets. For him, the distribution of price movements is not normal and has a property of kurtosis, where fat tails are abundant. This is a more loyal representation of the financial markets: the Dow index movement over the past hundred years shows alarming frequency of violent movements. However, the conventional model used in the 2008 financial crisis ruled out these extreme variations and thought it could only happen every 10,000 years. A clear conclusion from Mandelbrot's work is that greater regulation on financial markets is needed. Another contribution of his work to the study of stock market behavior is the creation of new approaches to evaluating risk and avoiding unexpected financial collapse.
Beat the market, fraud, and fraud
Outside the academic world, the controversy surrounding market timing was primarily focused on daily trading by individual investors and mutual fund trading scandals by institutional investors in 2003. Media coverage of these issues has been so prevalent that many investors now ignore time market as a credible investment strategy. Insider trading is not exposed, accounting fraud, embezzlement and pumping and disposal strategies are factors that hinder efficient, rational, fair and transparent investments, as they can create fictitious financial statements and financial data, leading to a stock price that inconsistent.
Throughout the history of the stock market, there have been dozens of scandals involving listed companies, stock investment methods and brokers. The classic case associated with insider trading of listed companies involves Raj Rajaratnam and the hedge fund management company, Galleon Group. On Friday, October 16, 2009, he was arrested by the FBI and accused of conspiring with others in insider trading in several public companies. US lawyer Preet Bharara put the total gain in a scheme above $ 60 million, said at a press conference it was the largest insider trading hedge fund case in US history. The widely publicized accounting fraud of listed companies involves Satyam. On January 7, 2009, Chairman Raju resigned after publicly announcing his involvement in massive accounting fraud. Ramalinga Raju was sent to the Hyderabad jail along with his brother and former board member Rama Raju, and former CFO Vadlamani Srinivas. In Italy, Calisto Tanzi, Parmalat, was accused of financial fraud and money laundering in 2008. The Italians were surprised that such a vast and established empire could be destroyed so quickly. When the scandal was discovered, Parmalat's stock price on the Milan Stock Exchange fell. Parmalat has sold itself a related credit note, which essentially places bets on its own creditworthiness to conjure assets from thin air. After his arrest, Tanzi reportedly confessed during his interrogation at Milan's San Vittore prison, that he diverted funds from Parmalat to Parmatour and elsewhere. Family football and tourism companies are a financial disaster; as well as Tanzi's efforts to rival Berlusconi by buying Odeon TV, only to sell it at a loss of around EUR45 million. Tanzi was sentenced to 10 years in prison for fraud related to the collapse of the milk group. Seven other defendants, including executives and bankers, were acquitted. Eight other defendants dropped out of court in September 2008.
Day trading sits at the extreme end of the investment spectrum from conventional buying and conventional wisdom. This is the final market-timing strategy. Although all the attention drawn by the day's trade seems to suggest that his theory is good, critics argue that, if so, at least one notable financial manager will master the system and claim the title "Warren Buffett of day trading". The long list of successful investors who have become legends in their own time does not include one individual who builds his reputation with day trading.
Even Michael Steinhardt, who trades his wealth within a span of 30 minutes to 30 days, claims to take a long-term perspective on his investment decision. From an economic point of view, many professional money managers and financial advisors shy away from daily trading, arguing that the rewards do not justify the risk. Trying to generate profit is the reason investors invest, and buying low and selling high is the common goal of most investors (although short-selling and arbitrage take a different approach, the success or failure of this strategy still depends on the time).
The problem with mutual funds trading that wastes market time in a negative light occurs because the prospects written by mutual fund companies strictly prohibit short-term trading. Despite this ban, special clients are permitted to continue to do so. So, the problem is not with the trading strategy but with the implementation of unethical and unfair strategies that allow some investors to engage in it while excluding others. All the biggest investors in the world rely on, to some extent, at a time of market for their success. Whether they base their buying and selling decisions on fundamental analysis of the market, the technical analysis of each company, personal intuition, or all of the above, the main reason for their success involves making the right trade at the right time. In many cases, the decision involves a long period of time and is based on buying and holding investment strategies. Value investments are a clear example, since a strategy is based on buying a stock that trades for less than its intrinsic value and sells it when its value is recognized in the market. Most value investors are known for their patience, as undervalued stocks often remain undervalued over a significant period of time.
Some investors choose a mix of technical, fundamental and environmental factors to influence where and when they invest. These strategists rejected the 'opportunity' theory of investing, and attributed their higher rates of return to both insight and discipline.
Financially failed and unsuccessful stories related to stock trading abound. Every year, much money is wasted in publications and non-peer-reviewed (and largely unregulated) courses and courses attended by confident people who are persuaded and accepted bills, hoping to become rich by trading in the market. This allows for the promotion of inaccurate and unproven trading methods for stocks, bonds, commodities, or Forex, while generating substantial revenue for authors, advisors, and unscrupulous independent salespeople. Most active money managers generate worse returns than indexes, like S & amp; P 500.
Stock speculation is a risky and complicated business because the market direction is considered unpredictable and less transparent, as well as the financial regulator sometimes can not adequately detect, prevent and remediate irregularities committed by registered companies or other financial market actors. In addition, financial markets are subject to speculation. This does not nullify the true and well-documented true and genuine story of the great success and consistent profitability of many individual stock investors and stock investment organizations in history.
See also
References
Source of the article : Wikipedia
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