While professional traders/day traders are often criticised for creating short-term volatility in share prices, in reality, this is not the case. It is crucial that stock markets have a mix of short-term, medium-term and long-term investors to allow value to be unlocked. Consequently, the importance of day traders is something which observers often miss. So what exactly do they provide?
There is a general misconception that wealth management is the domain of the rich and famous. Considering that the average home in the UK is valued at circa £290,000, and the IHT threshold is £325,000, this puts it into perspective. Those who fail even to consider wealth management services may find themselves with a tax bill that could have been avoidable by planning. Consequently, it is important to consider the topic of wealth management as you get older.
It is fair to say that developments in trading platforms, leading to low latency execution, created the perfect scenario in which artificial intelligence is able to thrive. Trade execution times have dropped dramatically in recent years and while execution only traders have benefited, so have the artificial intelligence programs. What would happen if traders stop using artificial intelligence?
Whether looking at clearing services in isolation or as part of more comprehensive clearing and custody services, investors should be aware of their importance. Since stock markets were opened up to the broader public, traders, and long-term investors, many of us give little consideration to clearing and custody services. However, they are at the heart of any investment market!
Many will have heard of the CREST stock settlement system which is an acronym for Certificateless Registry for Electronic Share Transfer. While we often take this stock settlement/clearing service for granted, it has played an integral role in the settlement, clearing and custody of various stocks and investment instruments. Before we look at CREST Depository Interests, it is important to note that CREST is not a monetary clearing service, but one of the best-known stock settlement/clearing services.
Even before Liz Truss took on the role of PM of the UK, there was market volatility, concerns about the future and uncertainty. While it is fair to say that many of the issues faced by Liz Truss in her first few weeks in office were out of control, the current economic concerns would appear to be a direct result of her policies. Is this a dream scenario for short-term traders?
There are many practical factors to consider as an execution only trader, such as the timing of trade execution and access to low latency execution services. However, one factor rarely discussed in great detail is the exchange rate, particularly the sterling dollar rate for UK investors.
As an execution-only trader, taking no advice from third parties, it can be challenging to know how markets will react in a recession. For example, how long will the recession last? Will there be a rebound? Are there any particular sectors which could outperform on a relative basis?
In the investment world, you will often hear people talk about the importance of trust. The reality is that all investment markets are based on trust. We usually take issues such as trade execution and clearing services for granted, but these are the foundations of any investment. Akin to a jigsaw, there are numerous areas of an investment market to consider.
As an execution-only trader, volatility is one of the main elements to look out for. Of course, there also needs to be liquidity to ensure you can get in and out of stocks in decent size, but volatility is the key to trading. So, what would you guess if we were to ask you how volatile the FTSE 100 had been over the last decade?