When asked about my career, and my trading background, it is interesting how many people I speak to just assume that trading could only have been my role in the stock market game. They assume that as a trader that I have been buying and selling stocks of companies in New York.
Although I have studied financial markets and have traded the financial markets as a desk trader, trading predominantly forex and cash, this type of trading is not the type of trading that has consumed much of my career. I thoroughly enjoyed sitting behind the wall of computer screens, looking at the graphs with one telephone to my left ear and another to my right, trading the positions of my clients. I loved the excitement and rush of adrenaline in the moment and quickly having to move with the market in the instant of major movements and breaking news.
Trading though has been around long before the New York Stock Exchange or any other exchange came to being. Traders were the adventurous people that plotted the wide open world as we know it today as they explored opportunities to find new products and supplies for the native markets mainly in Europe. The trading of physical products or commodities is something that has been lost over the years as people become more and more absorbed by Wall Street.
There is a couple of important similarities between the trading undertaken on the financial markets and the trading done in the physical product or commodities business. One of the most important tools to a trader is information. As a forex trader, I was staying abreast of all the news that was coming out from government and company reports. We studied the data and positioned our clients to benefit from the data. Information is what drives the financial markets, but so does it drive the physical markets. The better positioned the client was based on the information, the less we had to scramble when the market was trying to play catch up.
Traders use the information to take stances and positions on where an industry will move towards. Looking for arbitrage opportunities to capitalize on. When I traded forex, based on the market and the information, I would assume a market price at which buying the foreign currency was a "fair trade". If I was able to buy beneath that price I was adding tremendous value to my customer, and I would certainly not allow them to pay above that price. In the same way when trading physical products and commodities, as a trader I need to understand the "fair price" by studying the markets, the role players and looking for opportunities that exist, even for a short period where there is less market liquidity or surplus.
I would negotiate greater profits by buying at lower pricing using various tools to achieve this, but being aware of the market conditions, I would not conclude transactions where I would lose my margins. Sometimes this would mean taking stock of products or commodities to keep my costs fixed and not have it rising against a lowering selling price.
Trading is an age old activity, but in order to be a successful trader, you need to study and understand your market inside out, with courage to follow through on your market conclusions.
Although I have studied financial markets and have traded the financial markets as a desk trader, trading predominantly forex and cash, this type of trading is not the type of trading that has consumed much of my career. I thoroughly enjoyed sitting behind the wall of computer screens, looking at the graphs with one telephone to my left ear and another to my right, trading the positions of my clients. I loved the excitement and rush of adrenaline in the moment and quickly having to move with the market in the instant of major movements and breaking news.
Trading though has been around long before the New York Stock Exchange or any other exchange came to being. Traders were the adventurous people that plotted the wide open world as we know it today as they explored opportunities to find new products and supplies for the native markets mainly in Europe. The trading of physical products or commodities is something that has been lost over the years as people become more and more absorbed by Wall Street.
All companies except those in the professional services and manufacturing sectors, really are traders, they buy and sell products and make a margin between the two price we call profit.
There is a couple of important similarities between the trading undertaken on the financial markets and the trading done in the physical product or commodities business. One of the most important tools to a trader is information. As a forex trader, I was staying abreast of all the news that was coming out from government and company reports. We studied the data and positioned our clients to benefit from the data. Information is what drives the financial markets, but so does it drive the physical markets. The better positioned the client was based on the information, the less we had to scramble when the market was trying to play catch up.
The difference between a trader and just a sales person is their deep knowledge of an industry, the expectations of their customers and suppliers, the market pricing and market willingness to pay the prices or margins asked of it.
Traders use the information to take stances and positions on where an industry will move towards. Looking for arbitrage opportunities to capitalize on. When I traded forex, based on the market and the information, I would assume a market price at which buying the foreign currency was a "fair trade". If I was able to buy beneath that price I was adding tremendous value to my customer, and I would certainly not allow them to pay above that price. In the same way when trading physical products and commodities, as a trader I need to understand the "fair price" by studying the markets, the role players and looking for opportunities that exist, even for a short period where there is less market liquidity or surplus.
I would negotiate greater profits by buying at lower pricing using various tools to achieve this, but being aware of the market conditions, I would not conclude transactions where I would lose my margins. Sometimes this would mean taking stock of products or commodities to keep my costs fixed and not have it rising against a lowering selling price.
Trading is an age old activity, but in order to be a successful trader, you need to study and understand your market inside out, with courage to follow through on your market conclusions.
