Friday 3 July 2009
Seven top traders talk on what they trade and why. Excerpt from 'Bullseye - Top Trader Thinking' with permissions from the authors and copyright holders.
INTERVIEW WITH THE PANEL .....
Sari: Bullseye discusses ‘types’ and ‘styles’ of trading/investing. Do you trade physicals or derivatives or both?
Larry W: I trade stock indices and bonds, some futures and invest in stocks.
Andrew L: Have traded both over many years.
Guy B: Derivatives only. Options and Warrants.
Catherine D: I invest in shares and trade CFD’s.
Andrew P: I principally trade equities.
Tom S: Both.
Darryl G: Primarily Physicals.
Sari: Do you have any preferred markets or instruments that you trade/invest in?
Larry W: For short term trading – the SP 500 and Bonds. For investing – the Darlings of the Dow.
Andrew L: Interest Rates
Guy B: Commodity Futures
Catherine D: Naturally CFD’s are my thing. After moving from futures to shares, CFD’s were the perfect middle ground – all the leverage of the futures market but the simplicity, choice and familiarity of the share market.
Andrew P: Australia, US and NZ markets
Tom S: Mainly equities (use margin lending) and CFDs - would like to tackle options on futures as I look at so many futures/commodities as the underlying drivers for the Oz equity markets – so may as well use the knowledge and trade the futures.
Daryl G: Ordinary stocks in Australia, Singapore and Malaysia. I also trade some derivatives when market conditions make this appropriate.
Your Preferred Markets and Products:
Sari: Briefly, why are the instruments you trade/invest in personally appealing/suited to you?
Larry W: They offer a very good risk reward basis.
Andrew L: My background in merchant banking and time spent on the floor trading was in those products.
Guy B: Commodity futures markets offer great volatility and diversity. On the volatility side, you need markets to move to make a dollar. Markets such as Silver or Crude Oil or Coffee have great trends that offer great profit opportunity. I prefer to trade these markets over shares for example. I enjoy applying both fundamental and technical analysis to commodity markets.
On the fundamental front, these are markets that can be affected by political factors or adverse weather conditions or inventory pileups. Watching these markets trade around these events can be quite interesting and exciting and of course offer great opportunity.
On the technical front, I feel many of the common methods of technical analysis are more applicable (or reliance) to commodity markets than individual shares.
Catherine D: Leverage is very appealing. When I buy physical shares it’s only the penny stocks because they have the potential to move multiples, while blue chips have a much more limited potential to move. When CFD’s came along it enabled to me trade rather than invest in share market movements and to trade the bigger stocks for smaller moves.
Andrew P: Just shares and options, but recently started trading CFD’s as well
Tom S: I have a number of interests and trading shares allows me to pursue these other interests – I am not a slave to the markets – they also fit with the various articles/columns I write.
Darryl G: Ordinary stocks are the market where a mixed crowd of people is most active. This creates crowd behaviour and hence trading opportunities. It also creates market inefficiency, and hence some types of trading opportunity. Ordinary stocks provide a wide range of different types of opportunity, and offer the advantage of price leverage.
This is where I started trading and my skills are particularly relevant to this market. My objectives are a return on capital and this is achieved in this market. I am not driven by greed, so I see no need to expand into different market segments with different risk profiles.
My trading methods are based on understanding crowd behaviour as reflected through chart and price activity. A crowd of professionals trading mathematically derived derivative markets behave in different ways. They literally arbitrage opportunity because the level of skill is so consistent. These groups can be just as crowd driven as those in the stock market, but the degree of opportunity is more limited so I prefer to trade elsewhere.
I just trade ordinary stocks from the long side. I don’t trade short. I don’t manage money, and I don’t trade on the margin. I look for a reasonable return on my capital and a lifestyle that allows me to do the other things that I like doing. This includes writing and speaking about trading and teaching others some of the skills required.
end.
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| 'Bullseye - Top Trader Thinking' |
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| Sari Mustonen-Kirk interviews seven traders on the Bullseye panel about the products they trade and why they fit with them. |
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