Options trading in financial crisis for a trader

Независимый рейтинг брокеров бинарных опционов за 2020 год:

Options trading in financial crisis for a trader

The Crisis Trader is world-renowned investment authority Graham Summers’ weekly options trading service.

The goal of this service is to use trade options on highly predictable market moves to lock in MAJOR gains FAST.

Does it work?

Since 2020, The Crisis Trader portfolio has NEARLY TRIPLED, producing a total return of 195%.

We’re not making this up. You can see the full returns based on a starting portfolio of $30,000 in the chart below:

Even more astonishing, Graham only charges $499 for a subscription to The Crisis Trader.

Yes, $499. for an options service that has produced average annual returns of 41% since inception.

Graham puts it this way:

Every Tuesday morning, Graham sends out an alert to subscribers outlining the most promising trade of the week, which option contract to buy, what price to pay, and how long he expects to hold the trade.

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When it comes time to sell, Graham ALSO sends out real-time
trade alerts so you can maximize your profits.

But that’s not all.

Every subscription to The Crisis Trader also comes with a copy of Graham’s bestselling book The Everything Bubble: The Endgame For Central Bank Policy.

. as well as FOUR investment reports distilling over a decade’s worth of Graham’s trading knowledge on how to successfully trade options with minimal risk.

So all told, for $499 you get:

Best of all, you can try out The Crisis Trader for
60 days with ZERO risk.

If for any reason during the first 60 days you find
The Crisis Trader is NOT for you, just send us an
email at:

And we will issue a FULL refund, no questions asked.

The trades published during that 60 days, and the copy of Graham’s book are yours to keep.

So. what are you waiting for?

To take out a 60-day trial of The Crisis Trader for just $499..

Disclaimer: The information contained on this email is for marketing purposes only. Nothing contained in this email is intended to be, nor shall it be construed as, investment advice by Phoenix Capital Research or any of its affiliates, nor is it to be relied upon in making any investment or other decision. Neither the information nor any opinion expressed on this email constitutes and offer to buy or sell any security or instrument or participate in any particular trading strategy. The information on the site is not a complete description of the securities, markets or developments discussed. Information and opinions regarding individual securities do not mean that a security is recommended or suitable for a particular investor. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment.

Opinions and estimates expressed on this site constitute Phoenix Capital Research’s judgment as of the date appearing on the opinion or estimate and are subject to change without notice. This information may not reflect events occurring after the date or time of publication. Phoenix Capital Research is not obligated to continue to offer information or opinions regarding any security, instrument or service.

Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this email.

Past performance is not necessarily a guide to future performance and is no guarantee of future results. Securities products are not FDIC insured, are not guaranteed by any bank and involve investment risk, including possible loss of entire value. Phoenix Capital Research, Phoenix Capital Management, Inc and Graham Summers shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided.

Phoenix Capital Research is not responsible for the content of other emails to which this one may be linked and reserves the right to remove such links.

Phoenix Capital Management, Inc and the Phoenix Capital Research Logo are registered trademarks of Phoenix Capital Research. Phoenix Capital Management, Inc — PO BOX 2912, Alexandria, VA 22301

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Trader

What is a Trader?

A trader is an individual who engages in the buying and selling of financial assets in any financial market, either for himself or on behalf of another person or institution. The main difference between a trader and an investor is the duration for which the person holds the asset. Investors tend to have a longer-term time horizon, while traders tend to hold assets for shorter periods of time to capitalize on short-term trends.

Key Takeaways

  • Traders are individuals who engage in the short-term buying and selling of an equity for themselves or an institution.
  • Among the drawbacks of trading are the capital gains taxes applicable to trades and the costs of paying multiple commission rates to brokers.

Understanding Traders

A trader can work for a financial institution, in which case he trades with the company’s money and credit, and is paid a combination of salary and bonus. Alternatively, a trader can work for himself, which means he is trading with his own money and credit but keeps all of the profit for himself.

Among the disadvantages of short-term trading are commission costs and paying away the bid/offer spread. Because traders frequently engage in short-term trading strategies to chase after profit, they can rack up large commission fees. However, an increasing number of highly competitive discount brokerages has made this cost less of an issue, while electronic trading platforms have tightened spreads in the foreign exchange market. There is also disadvantageous tax treatment of short-term capital gains in the United States.

Trader Operations: Institution vs. Own Account

Many large financial institutions have trading rooms where traders buy and sell a wide range of products on behalf of the company. Each trader is given a limit as to how large of a position he can take, the position’s maximum maturity and how much of a mark-to-market loss he can have before a position must be closed out. The company has the underlying risk and keeps most of the profit; the trader receives a salary and bonuses. Most people who trade on their own account work from home or in a small office, and utilize a discount broker and electronic trading platforms. Their limits are dependent on their own cash and credit, but they keep all profits.

Discount Brokers: An Important Resource for Traders

Discount brokerage firms charge significantly lower commissions per transaction but provide little or no financial advice. Individuals cannot trade directly on a stock or commodity exchange on their own account, so using a discount broker is a cost-effective way to gain access to the markets. Many discount brokers offer margin accounts, which allow traders to borrow money from the broker to buy stock. This increases the size of the positions they can take but also increases the potential loss.

Electronic Foreign Exchange Trading Platforms

Foreign exchange trading platforms match currency buyers and sellers in the spot, forward and options markets. They sharply increase the amount of price information available to individual traders, and thus narrow price spreads and reduce commissions.

Short-Term Capital Gains Tax

A disadvantage of short-term trading profits is that they are usually taxed at the trader’s ordinary income tax rate. Long-term capital gains are taxed at 20% but require the underlying instrument be held for a minimum of one year. Under current laws, there is no technical definition of traders for taxes.

While there is a Trader Tax Status (TTS), election for this status is based on presented facts and circumstances of an individual. Some of the facts that the IRS considers while evaluating traders tax status are holding period of securities, number of trades conducted, and frequency and dollar amount of trades.

There are workarounds for traders to reduce their tax liabilities from short term trades. For example, they can write off expenses utilized in their trading setup, much like a freelancer or small business owner. If they selected Section 475(f), traders can value their entire trades for a particular year and claim deductions for the losses they incurred.

Financial trader

If you have an analytical mind and the steely resolve to read financial markets and make confident decisions, you’ll excel as a trader

As a financial trader you’ll buy and sell shares, bonds and assets for investors, including individuals and banks. You’ll make prices and execute trades, seeking to maximise assets or minimise financial risk.

Types of financial trader

There are two types of trader:

  • Flow traders — buy and sell products on the financial markets for the bank’s clients. Products include securities and other assets such as futures, options and commodities.
  • Sales traders — take instructions directly from clients, placing orders and advising them on market developments and new financial ventures. They act as intermediaries between the client and the market maker.
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Traders may specialise in a particular product, such as shares, fixed-interest bonds or foreign exchange (FX) markets.

Before 2008, it was common for traders to use a bank’s money to bet against predicted movements in the market. Following the financial crisis, however, this type of proprietary trading has been banned or is in the process of being banned. Banks will have to ‘ring-fence’ high street banking businesses from the investment banking arms, in order to prevent another taxpayer bailout of the system. Banks have until 2020 to implement these changes.

Responsibilities

While there are many similarities in the work of flow and proprietary traders and those working in sales, their roles differ substantially. The main difference is risk — sales traders do not take risks, while flow traders take risks in seeking rewards.

Work activities of a flow trader typically include:

  • speaking with colleagues, making phone calls and making instant decisions
  • making prices in their relevant products
  • executing trades electronically or by phone
  • liaising with sales traders or clients on market movements
  • predicting how markets will move and buying and selling accordingly (especially derivatives traders, who try to predict the state of a market at a future date)
  • informing all relevant parties of the most relevant trades for the day
  • gathering information — critically about mispriced assets, detailed data analysis and valuation.

Traders in sales are more focused on the relationships with clients. They analyse and market new financial offers that they believe will be attractive to their clients.

The day-to-day activities of a sales trader may include:

  • gathering information and analysing the market
  • carrying out detailed data analysis and valuation
  • providing in-depth market reports
  • identifying issues affecting clients
  • developing client relationships and presenting ideas to clients
  • executing trades and securing deals with new clients
  • keeping market-making traders informed of relevant issues with their customers and products
  • obtaining market prices from market-making traders and executing the trade.

Salary

  • Typical starting salaries for trainee financial traders can range from around £26,000 to £32,000, plus commission.
  • The range of salaries for experienced traders is between £45,000 and £150,000+.
  • An associate trader with experience selling credits could earn around £140,000 in a top-tier bank, or £230,000 if working in more lucrative derivatives.

Very high earnings are possible, especially for proprietary traders who are often paid a bonus equivalent to a proportion of the profits made. However, EU regulations, which came into force in 2020, limit bonuses in banking to no more than 200% of salary.

Additional benefits, such as non-contributory pension schemes and mortgage subsidies, are common.

Income figures are intended as a guide only.

Working hours

Working hours are typically 7am to 6.30pm with experience, but may be considerably longer for newcomers. Foreign exchange (FX) is 6.30am to 5pm, while oil can be 8am to 6.30pm or 9.30am to 8pm.

Part-time work is not feasible, although job sharing is possible and career breaks are becoming more common.

What to expect

  • The work is office based and the vast majority of opportunities are in London.
  • Self-employment or freelance work is unusual without years of experience.
  • The work is demanding and trading can be hectic. Managing large amounts of other people’s money is not a career to be taken lightly.
  • Overseas travel is occasionally required and, depending on the client base, is likely at least once a month for traders in sales.

Qualifications

Although this area of work is open to all graduates, a degree in the following subjects may increase your chances:

  • accountancy
  • business
  • economics
  • finance
  • maths
  • politics
  • sciences.

Entry standards are high, usually requiring a minimum 2:1 degree, and the selection process is demanding. An assessment may include interviews and psychometric tests, sometimes all in one day.

Foreign language skills are an advantage as banks are expanding globally, not just in Europe but also in Asia and Latin America.

Entry without a degree or HND is difficult, although it may be possible to enter the industry in administrative roles, make contacts, and eventually move into trader positions.

Skills

You’ll need to have:

  • strong numeracy skills
  • excellent communication and interpersonal skills
  • teamworking ability
  • physical and mental stamina
  • independent thinking
  • an interest in finance and the financial markets
  • integrity
  • alertness and decisiveness under pressure
  • ability to accept responsibility.

Work experience

Pre-entry experience is not needed but vacation work, internships and placements will give you an advantage. For further information see individual company websites.

Major investment banks recruit graduate trainees and offer internships or work experience, with some offering insight days for first-year students. Closing dates are normally in late October and early November for opportunities starting in the following summer or autumn. Banks may start to fill positions once applications open, so you’re strongly advised to apply early.

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Employers

Most traders work in the City, which describes the UK financial services sector rather than a physical place.

The City is made up of a number of financial institutions involved in banking, asset management, insurance, and services to business.

Major institutions include:

There are also a number of market institutions, such as:

In addition to this, there are thousands of firms including insurance companies, investment houses and financial advisers.

The vast majority of traders are employed by investment banks. An investment bank is usually a financial house whose role is to finance the trading and commercial activities of others and themselves. The major investment banks have offices in financial centres throughout the world.

Investment banks have a high profile in the City and recruit significant numbers of graduates during peaks in the economic cycle. There is keen competition between investment banks and selection is equally rigorous.

Specialist investment management firms employ a small number of traders. Treasury departments of very large companies may employ a few traders, but this is less common.

Look for job vacancies at:

Most vacancies are filled via specialist recruitment agencies, by word of mouth and through speculative applications.

Networking and following up contacts can be useful in finding jobs. Check with your university careers service for a list of past students working in the industry who are happy to be contacted. Ask your family, friends and associates to see if anyone can put you in touch with someone working in the field.

Competition for entry is intense. Generally, vacancies are limited and entry standards are consistently high. Not all jobs may be advertised so it is advisable to write speculative applications, expressing your interest and your suitability should a post arise, and enclose an informative, targeted CV.

Persistence is essential. You must be able to promote yourself effectively and give evidence of the reasons you believe you will be successful in this career. Read the financial press, attend presentations and do thorough research about potential employers and the opportunities they offer.

Professional development

Training is provided on the job and is often organised on a rotational desk basis. This usually consists of shadowing a more senior trader to watch what is going on and to learn the trading language (how to phrase questions and trades).

This training is supplemented by lectures, seminars and conferences. If traders are specialising in a product for a specific country, language training is frequently provided.

Before traders conduct any business, they must qualify to be placed on the Stock Exchange’s list of people who are eligible to trade. You are required to become an approved person by the FCA.

Relevant FCA-approved qualifications for traders, e.g. the International Certificate in Wealth and Investment Management, which is assessed by a multiple-choice examination, is offered by the Chartered Institute for Securities & Investment (CISI). Traders often have to take the examinations relevant to other European exchanges. Those choosing to do further study often go on to the Chartered Financial Analyst (CFA) Institute to complete the CFA programme.

Most firms pay for examinations, but individuals are expected to contribute a lot of self-study time. Graduate trainees are expected to learn quickly from other traders when starting out and need to be prepared to take on some menial tasks, such as data analysis and administrative duties, to assist other traders.

Career prospects

Generally, new entrants are considered as trainees for the first two years. After this, it’s likely that you’ll move up to the next level, provided your performance is satisfactory.

Once operational, traders who have completed their certificate-level qualification from the CISI may take the CISI Diploma or, more often, the CFA programme.

Although different banks have different job titles, promotion is generally structured as follows:

  • graduate trainee
  • analyst or trader
  • associate
  • senior associate
  • vice president or executive director
  • managing director.

It’s normal for traders to reach associate level about two to three years after their graduation. After associate level, the numbers able to reach executive director level are significantly lower. If you’ve proved yourself after five years, it’s not unusual to be given responsibility for a small team, possibly two or three small teams, and then to head up a new desk trading a new product or in a new country.

Regular moves between banks are possible at all levels, although such moves are more common from associate level and above. As many trading banks are international, there are opportunities to work in other locations and countries.

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