The Secrets of Professional Traders and Investors

The author draws on his investment banking experience to highlight some of the advantage the professionals have over private individual traders.
Many investors tend to feel at some point that the large institutional investors that you read about getting multi million dollar bonuses must somehow have some advantages over the private investor. Having been both a private investor as well as working in a large investment banks I can testify that to some extent they do.

In this article I want to demonstrate that times are changing and many of the advantages the professionals hold are being eroded away as the techniques and tools they use are now becoming available, and more importantly affordable to the private individual investor.

Having been both a private individual investor as well as working in one of the worlds largest Investment Banks I have seen both sides of the proverbial fence and have first hand experience of how both types of investor operate and react to different markets and opportunities.

Historically the big advantages the professionals have had is the experience gained from spending several years operating in and even helping to form some of the different markets around the world. A big barrier to entry for individuals is knowledge. It can be a daunting task to pick one stock to invest your hard earned cash in out of literally thousands. On the flip side a trader in an investment bank is not playing with his own money. By definition they are incentivized to take more risks as their big bonuses are based on the profit their trading brings in for the banks.

Even as traders retire, leave or get fired they always leave behind a fountain of market knowledge and industry contacts that can be used by the firm’s next trader. Over time this knowledge accumulates to offer them an advantage over both their competitors and individuals. As an individual investor you can sometimes feel that you are so inexperienced in a particular investment type that it is too risky to invest. This effect can be described as a barrier to entry. Individual investors need a certain amount of knowledge of a market to be able to enter and trade.

The author is currently giving away a FREE information pack explaining in more detail the
Investment Secrets of Professional Investors & Banks and how individuals can use them. Just follow this link to get hold of your free copy.

By James McKerr
Published: 7/25/2008
 
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