Needing more money to expand they then turn to venture capitalists who will buy new shares in the business, in return for which the latter own a portion of the company and sit on its board. This initial injection of outside money is a first stage investment. If the company is one of the minority to survive it will then get further slugs of venture capital funds, and if it evolves further will probably move on to an IPO, moving in to the publicly traded arena. The IPO will typically be partly a primary offering of new shares to raise money for the company, and partly a secondary one, with the founders and venture capitalists selling some of their existing shares to lock in welcome profits. Stock market volatility all but choked off the flow of IPOs in 2009 as firms proved unwilling to risk getting a bad price for their shares or no price at all.

I just got news one of my trading friends (he has no name here) has crashed and burned. He appears to have lost the lot. I knew something was wrong but didn’t suspect that. He’s someone I like enormously but from whom I have never taken any ideas because I could never quite work out what it was he did. He also seemed to be making too much money. I don’t know what happened but I suspect he just got it wrong too many times…let’s face it, good money management will keep you in the game for longer but it can’t keep you in the game forever. I also suspect he didn’t have the flexibility to adapt to the change in the market. He started at a time the market was falling….and then found it difficult to make money when the market turned for the better. Anyway, a sad day.

Quantitative Easing = Printing more money = falling £v$ = higher commodity prices = inflation = erosion of savings = less consumer spending = lower GDP. The cycle used to be broken by higher wages with the inflation bit. That used to to inflate our debt away as wages went up. The problem now is that we have to hold down public sector wages and the private sector is now competitively linked to to unemployment and global labour rates. Expect higher fuel prices and imported foods. On the plus side the lower £ is good for exporters such as service sector and manufacturing, so they should be able to employ more which should add to GDP. So, bad for retailers but good for financial services and manufacturers.

Moodys downgrade our banks. Moody’s have effectively stuffed the UK. Disgraceful. Government pumps in £75bn, Moody downgrades banks by 3 notches…..money goes up in puff of smoke. Sometimes I feel ratings agencies should be closed down, not least because of their role in causing this crisis in the first place. The timing of their pronouncements is extremely suspect. While we are at it, can we add the BBC to that least of “come the revolution”? Yes it’s grim out there but people are intent on pushing agendas.

The downgrades were as follows:

• Lloyds TSB and Santander UK were downgraded one notch from an Aa3 ratings to an A1
• Royal Bank of Scotland and Nationwide were downgraded two notches from Aa3 to A2
• Co-Operative bank was downgraded from A2 to A3.
• Newcastle building society, Norwich and Peterborough building society, Nottingham building society, Principality building society, Skipton building society, West Brom building society and Yorkshire building society were all downgraded between 1 and 5 notches each.
• Barclays Bank PLC was not downgraded but left at Aa3

Why were the Credit Ratings Cut?*

The ratings were cut because Moody’s now considers these banks to be at a higher risk of defaulting than they were before. However, Moody’s were quick to point out that the downgrade did not “reflect a deterioration in the financial strength of the banking system,” and went on to say that ‘The downgrades have been caused by Moody’s reassessment of the support environment in the UK which has resulted in the removal of systemic support for seven smaller institutions and the reduction of systemic support… for five larger, more systemically important financial institutions.’

In short, Moody’s is of the opinion that the British government has removed some support to the banking sector making a default slightly more likely if things go wrong. Elisabeth Rudman, senior vice president at Moody’s said after the downgrade: “Compared to their European peers the UK banks are well positioned from a capital perspective. But the environment they are operating in is still very tough and there’s an awful lot of uncertainty out there in the euro zone.” Banks and building societies involved in the downgrade were quick to emphasise this point. A spokesperson from the Building Society Association commented: “It does not represent any change in financial strength and it is business as usual across the sector”. The Chancellor of the Exchequer George Osborne, in an interview with BBC Radio 4’s Today programme said that he was ‘confident that British banks are well capitalised, they are liquid, they are not experiencing the kinds of problems that
some of the banks in the eurozone are experiencing at the moment.’

Impacts of the Downgrade*

In truth the immediate impact shouldn’t be too extensive. The most recent round of quantitative easing announced by the Bank of England should inject enough cash into the banks to counteract the rising cost of the banks borrowing money thanks to their new lower credit ratings. Any effects are likely to be seen in a drying up in credit for smaller businesses. There have been calls from the Lib Dems to nationalise RBS completely so that they can sidestep this problem by forcing the bank to lend to smaller businesses and encourage economic growth. This however is unlikely.

The greatest and most immediate affect the downgrade will have is summed up by Jason Riddle, founder of campaign group save our savers: “The downgrade of 12 banks and building societies will further undermine savers’ faith in the banking system.” With the memory of 2008 still fresh in everyone’s memory and dissatisfaction with banker’s wages and bonuses; people are beginning to lose patience with the problematic banks.

* with some excerpts from SVS CFD Securities report

Having said that I think Moody’s have a point to downgrade UK banks. The Bank of England is giving the banks monopoly money to pump into the economy and strengthen their balance sheets. The government are deliberately devaluing the £ to make our exports more competitive and our imports more expensive. They are trying to inflate our way out of debt. You can’t expect to devalue your currency without devaluing your assets – in this case banks. I believe it was Harold Wilson who devalued the £ and said ‘This won’t effect the £ in your pocket’ – except when you go to the supermarket or pay your fuel bills hmm

And its not just the United Kingdom…In the USA we have an Armageddon looming and the debt bomb keeps ticking…

In 2009 US debt was $12 trillion, it has grown 23% to $14.8 trillion in just 2 years. If it grows at the same rate it will hit $18.2 trillion in 2 years, (almost double the 2008 level) their new debt ceiling is set at $16.4 trillion and maybe hit in just 12 months if my calculator is right? If they are spending $1.3 trillion more than they are earning how can they reduce debt? Tick tock!

Already, the U.S. unemployment rate has climbed above 9 percent. In the United Kingdom., jobless claims have climbed to the highest level this decade while Japan has seen the jobless rate climb back above 4 percent — an unsettling trend in a country where 5 percent unemployment is considered to be crisis-like conditions. In fact only Europe and the commodity block economies of Australia, Canada and New Zealand have been able to maintain job growth in this challenging environment.

The size and scale of job losses in 2011/2012 may tell us much about future direction of the G10 currencies because the extent of the unemployment problem will likely determine everything from final GDP demand to monetary and fiscal policy of each individual nation and monetary union. Presently, the currency market is anticipating a very severe contraction in the Euro Zone, as many market players presume that the credit crunch that has created such disarray in the European financial sector will result in very challenging economic conditions for Euro Zone businesses and, ultimately, a substantial decline in demand.

However, the latest data does not support such a dire view. Germany, the region’s most important economy, continues to generate jobs, even in these trying conditions. If the German labor demand remains relatively healthy, the ECB, which is tasked primarily with maintaining price stability, may not ease monetary policy nearly as much as most markets players believe. Furthermore, with EUR/USD having declined nearly 20 percent off its peak, the region’s exporters – its biggest driver of economic growth — should stand to benefit from the more benign exchange rate environment, further mitigating the recessionary scenario. In short, with the EUR/USD priced for drastic slowdown in the region, the unit may see a bounce in 2009 if Euro Zone labor conditions deteriorate materially.

If G10 economies can avoid massive unemployment, markets across all asset classes are likely to stabilise and the relentless risk aversion flows that have characterised currency trading over the past several months are likely to moderate.

Each trade I take my strategy within that trade is very much biased towards how much I have gone into on the trade, so a trade at say £10pp is going to be treated very differently to one at £300pp. I always try to get myself into a free trade as soon as possible, it’s actually a lot easier trading with larger sums than smaller amounts, say at £300pp it goes 10pts in my favour I will have £2k off that leaves me with £100pp to play with and a 20pt leeway before I’m out of pocket, this leaves me with plenty of options on how I want to play the trade out going forward.

If my trades are taken off of larger timeframes and news is backing my direction i will more than likely look to pyramid, so no trade I enter has a hard and fast rule, but i’ll be thinking along the lines of how much risk I’m taking into the trade getting it risk free asap and if possible running a slice of it to maximise profits, you know a lot of people set up each trade with risk parameters and i’m not against that it’s just not how I trade.

Some lovely trades lately ,last 45mins on the Dow Jones can quite often give a nice move, I went long DAX at 5204 and 14 traded it right back to its pivot at 5311,with a few add on’s at 55 and 67 along the way, also bought gold at 1603 (still in that trade) and about 20 minutes before market closing I took a small long on Apple stock (AAPL). So fingers crossed come 14.30pm although the hourly candle is one hell of a bullish engulfer, yesterday was pretty much the perfect conditions for day trading, a lot of people get caught out because today they will think ahh we have this trading game nailed now, and will give it all back the next day, I know I’ve been there, now i approach each day on its merits.

So let’s have a look at a stock and the reason I took the trade, AAPL was delivering news but not the news we expected i.e. the new iphone5, so the stock takes a battering along with the market, the news is an iphone 4s basically quicker processor and better camera and this icloud thing to keep a pace with the samsung, Is this bad news or more clever AAPL marketing. My thinking is that they have another product to market for xmas and you can bet your bottom $ an iphone5 will be just around the corner, they have more cash than you can shake a stick at, so knowing I won’t get an entry on the hourly which is how i prefer to play AAPL, I drop down to the 5,and the following chart shows when I entered!

My technical anlaysis is far from textbook stuff, but it is stuff that gets used in the trenches day in day out, so it’s been tested proved and improved over time and no doubt I will go on improving things as new things come to light, a lot of people have technical analysis websites, write books etc and don’t even trade, I wouldn’t give them the time of day, battle hardened veterans is the way to go, hmmm been up since 4.30am quite often I struggle to sleep after a real full on trading day can’t seem to stop buzzing this is what caused me problems trading accounts full time, I now pick and choose when I do this…

The consideration of a financial transactions tax on bond, shares and derivatives contracts in Europe continues to be the subject of intense debate.  With the persistent financial crisis hitting the news, there has been frequent reference on the introduction of a financial transactions tax. This tax, commonly referred to as ‘Tobin tax’ after its original supporter, James Tobin, in the 1970s, would mean that individual transactions undertaken by a financial institution would be hit by a levy fee.

Of course when the president for the European Commission, José Manuel Barroso came up with a proposed tax on financial transactions in Europe (Tobin tax), he clearly had the banks and financial sector in mind. The tax, if it were to be adopted, would impact financial transactions between financial institutions from 2014, charging 0.1% (10 basis points) against the exchange of stocks and bonds and 0.01% (1 basis point) across derivative contracts.  The tax is intended to apply to financial transactions where at least one of the parties to an applicable transaction is resident within the 27 member state European Union.  In fact the tax is broad in the sense that it catches a broad range of financial instruments, such as those negotiable on the capital markets, money-market instruments (except instruments of payment), units or stocks in collective investment undertakings, derivative transactions and the purchase and sale of structured products (including securitisations, warrants and certificates). It would also cover transactions that take place outside an organised market, such as Over the Counter trading in derivatives. The Commission believes that such a tax would contribute up to 57 billion euros per year, which would help ‘ensure that the financial sector makes a fair contribution at a time of financial consolidation’ taking into consideration, amongst other things, the heavy government bailouts to support the financial sector during the crisis.

But most industry commentators agree that a Tobin tax is likely to hit pension funds and other investment schemes and middle-sizes enterprises which utilise derivatives to hedge against price fluctuations in currency and commodity prices because it would be hard for them to go round it. In such a scenario banks are likely to pass the costs of such a tax to their end clients while shifting their hedging outside of the European sphere while multi-nationals are also likely to use subsidiaries to avoid the Tobin tax. Meanwhile day traders are more likely than not to move offshore and shift more of their transactions from stocks and bonds (which would be taxed at 0.1% with the Tobin tax) to CFDs and other derivatives (taxed at 0.01%).

There is continuing opposition to a financial transaction tax, in both the continent of Europe and in the USA. In particular, critics fear that the tax could lead to a decline in economic activity and, thereby, a decline in overall taxable revenues. In the USA, proposals for a financial transaction tax  keep getting pushed behind due to opposition by main governmental authorities.

The tax may be controversial but pro-Tobin backers argue that such a tax would help harmonise and establish minimum standards for similar taxation provisions that have already been enacted by a number of European Member States. In the United Kingdom for instance, they have already imposed a tax on UK banks in the aftermath of the financial crisis, responding to popular demand and criticism brought about due to the huge bailouts that some UK banks recevied. In particular, in January 2011, the UK introduced a bank levy which is essentially based on the balance sheet positions of each financial institution at the end of the year, as opposed to a tax on every transaction that the institution engages in. The UK also imposes a 0.5% stamp duty levy on all transactions involving UK securities, which is in fact similar to the Commission’s proposed structure but covering a narrower range of transactions.

In any case I still have to question how and on what basis long term investors will benefit from a Tobin tax.. Such a tax would only serve to reduce market efficiency and increase costs which is unlikely to translate into benefits. The UK’s Government Office for Science conducted a review on High Frequency Trading where it emerged that much of the qualities which make up High Frequency Trading are good: transactions costs have been brought down and market efficiency has been improved so caution must be taken to avoid curtailing the many advantages that the high frequency markets have brought.

High Frequency Trading cannot be blamed for the May 2010 flash crash. In actual fact, the Securities and Exchange Commission/Commodity Futures Trading Commission investigation noted that the one-day stock markets crash was due to a long-term participant’s inflexible execution of a huge trade. High Frequency Trading temporarily removed liquidity in response to this, but other market maker participants did so as well. All participants follow the same exchange rules and will widen prices to adjust trading volumes if they are faced with abnormal market conditions in an effort to mitigate risk. On a number of key markets (NYSE Liffe, for instance) no party is obliged to respond to easy and every quote request, as for both conventional market makers and High Frequency Trading firms controlling their stock market trading is an important component of prudent risk management in an imperfect world. It is also worth mentioning that there has been many liquidity crisis in the past that haven’t involved High Frequency Trading as happened in 1987 and 1962.

London has thrived the financial sector despite stamp duty as the growth has been in foreign exchange, credit, debt, structured finance and other industry areas that do not by themselves attract stamp duty. Even in the case of UK securities, the stamp duty is not paid by most institutional investors as they make use of CFDs (contract for differences) which aren’t subject to the tax. It would be a great blow to the United Kingdom if it were to lose its financial sector as a consequence of imposing a Tobin tax as the past has shown that the industry has paid about a quarter of corporate taxes received, with its workforce paying 15% of income taxes received.

Financial institutions have to-date been able to trade efficiently with each others which has greatly contributed towards facilitating the low cost of lending to business entities and households over the last years. This is in effect a social utility. I can’t see any evidence that High Frequency Trading as an industry seeks to manipulate the market it serves. Manipulation of the stock markets is in effect illegal in many jurisdictions so is punishable by law. A financial transaction tax like the Tobin tax which is being proposed would cost the United Kingdom in terms of tax revenue and jobs while damaging private and institutional investors by raising costs, only to ultimately raise a lot less monies than expected. (and that would be given to the European Union) while volumes would collapse coupled with liquidity and market stability. Some analysts predict that such a tax could potentially reduce trading volumes in Europe by up to 30% although the tax is unlikely to take effect until 2014. According to the World Federation of Exchanges, last year, more than $10,000bn in securities trading switched hands on European markets. In any case although volumes are likely to go down and spreads increase, a financial transaction tax is unlikely to make high frequency trading disappear, far from it…

Germany and France in particular have continued to press the adoption of a European financial transaction tax.   But of course although proposal has much support within the European Commission  and political support it would need unanimous approval from the 27 Member States in order to pass into law and this is unlikely at present since the UK and Sweden are likely to veto such a proposal unless it is adopted on a global basis. A global agreement by the G20 also seems unlikely with the USA presently resisting such a transaction tax so chances are that even if such a tax was agreed it would not be brought into effect across all European Union countries. In such a case of partial adoption where the UK used its veto to block the tax, the Tobin tax would still impact UK institutions entering into transactions with counterparties located elsewhere in the UK without the United Kingdom getting any share of revenues. But of course such a step would also boost business to UK exchanges. A general adoption of the tax, even in a reduced geographical sphere, might provide sufficient upport for the tax and persuasion for global implementation at future meetings of the G20.

A friend of mine was taking the Stanzione trades and he had a run of 9 losing trades in a row you know what happened the next one which he didn’t take was a nice winner, but I’m like Gordon Gekko. I hate losing trades – it ruins my day so that approach would not be right for me. I have no contact now with traders I knew back then but I presume they are still trading. Again I try to keep contact with other traders to a minimum because the talks you have plant that seed that can come back to haunt you.

A lot has been made of screen watching, trying to catch every trade, I really don’t approach day trading like that. If you are daytrading you can’t expect to be catching 60 70 80 pt moves off of the smaller timeframes, lock in trail and maybe a thing to do for newcomers is have an achievable target and once hit get out of there, if you keep coming back into the market i.e. overtrading you will get caught.

Well its been interesting on here with some undoubted skill on show but I`m sticking with my daytrading as it has served me well over the years. A profit every year. I obviously don`t have the right mentality/knowledge for stock trading. “If it ain`t broken…” etc. I have managed to more than triple my day trading account this year so far.

I think both time, natural skill and conviction are needed to be successful in that way.

I wondered how you set yourself up emotionally/psychologically during times like yesterdays wild swings on Wall Street? As a long term investor one can monitor macro economic stats…etc to gauge a view on the market in the medium term and ignore ‘noise’ but intraday on volatility like we have seen it can be very frustrating if you do try and pick a direction, do you literally play what is in front of you and try and ignore your opinion? I have found that when I let opinion take over a trade it’s often wrong were if I’d played what the chart was telling me it would have been a good trade!

I’m not quite sure how to answer obviously as a day trader we need to be focused very much on what the charts are telling us. Because the markets quite often take a while to react to news and then usually they don’t react how we expect, so psychologically I like to think of day traders as special forces you are in a hostile environment on your own and your senses need to be switched on at all times, I listen to snippets of news just to see what’s going on as soon as I’m in a trade I pretty much turn all news off as I find it can affect my decision making.

I start each day with a clean slate knowing the market can go in any direction and try to be prepared for whatever that is coming by keep a check on the major markets. I like to trade at the longer timeframes just to see what the general trends are if markets are ranging etc and then ready for the battle to commence, I’m not sure this answers your question? But that’s how I look at the market! Although really, why not take a bit off and try and run the rest?

Hi, I’m quite new here – not a day trader even though I seem to watch the screen constantly. I’m quite young (24 tomorrow!) and I’m looking to invest for the long term (5+ years). Just trying to judge a good entry point.

My plan was to drip feed all the way down into solid FTSE100/FTSE250 stocks – I have a shortlist of shares I’m watching. Buying on fear is a good plan, but trying to figure out when fear is at its maximum is difficult – like trying to judge the bottom of a market. And then psychologically – pressing the buy button when everything is plummeting is also quite difficult.

Don’t buy all the way down, wait for market to turn and then buy…

2011 has been a difficult year – untradeable to a certain extent – it may be better to wait for a clear upturn in the market, you might miss a smidge of the early bit of cream, but people have been trying to catch an upturn in this market for months and I guess most have got a bloody nose from trying to do so. The fact is it’s very difficult to sit on the sidelines but that has definitely been the thing to do since early summer, well unless you had a shorting strategy, it’s been said on here a 1000times before but patience, discipline and a simple plan that you can adhere to is the way to go!

I dunno why we ever lend to the Greeks…according to one article I read they have spent 50 of the last 200 years not repaying their debt. A poor credit risk if ever there was one.

It is like giving the local gambler, £100 whenever he asks, they have a history of poor money management, people retiring at 53 on 95% of their salary, billionaires paying less tax than a cleaner, strikes me the reason they are moaning is not that they are facing austerity measures more a reality check !

I suppose what Greek people have to accept are the effects of default and exit – lower wages cuts in this and that – but remaining in euro with support of big countries. but they are still going to be expected to pay back money, which they simply haven’t got, and will not have. So yo no comprendo…

The problem is that the Euro countries are simply throwing good money after bad imo, you keep bailing banks countries out,it will come to a point, where nobody will be able to pay anybody back and we will see a crash that will make 08 look like a blip,this is pencilled in to happen in 2013, can’t remember where I read the 2013 quote now but i suppose it is possible…

Having said that it was only 13 years ago that Russia defaulted and went bust. Look where they are now. Same for Argentina and Iceland. Countries soon recover. The issue for us is what happens to the debt and what effect it has such as bank bail outs. In other words the debt gets passed to tax payers in other countries and bank shareholders.

The consequences inside those three countries shortly after default was food shortages, very high unemployment, high inflation and very reduced social benefits. Beware companies that trade inside Greece such as GBO?

What would have happened if the UK banks (RBS, Northern Rock,etc), hadn’t been given any bailout?

Thousands of businesses would have gone bust, it would have infected other banks causing thousands more businesses to go bust. There would have been an inability of some remaining businesses to pay wages to staff or to pay their suppliers causing food shortages in shops & fuel shortages – in general a deep depression or worse.

Is Italy the next Greece?

Last week over lunch a friend who is an analyst for temporary staff consultants said that the trends in Italy indicate that the industrial and commercial economy has been growing by 7% year-on-year for at least 5 years. This is a marker for growth. It may be that other older industries are slipping and shedding staff. The optimism is that there is some growth in Italy that is absorbing some unemployment. His conclusion FWIW is that Italy is not the problem country. If he is right, then IMHO Italy will benefit from losing Berlusconi and if it can collect taxes, get tougher with public sector and the corruption in the south etc they can fix it.

Traders with these handsets can usually download a mobile platform through the phone itself, typically by accessing some kind of ‘app’ centre, which is essentially a hub for a diverse range of software applications specially designed for that device. It may also be possible to download the platform online and then install it on to the phone. Apple’s ‘App Store’, for example, is easily accessible either directly through the iPhone, or online via iTunes, while BlackBerry users can delve into RIM’s ‘App World’.

Depending on your strategy, the ability to move quickly could be the difference between realising a profit or a loss. With markets becoming increasingly volatile, it is important traders maintain access to price fluctuations and can get in and out of positions as the touch of a button, wherever they are. Mobile trading gives them the ability to do this

Rival, IG Index also witnessed a spike in account opening during the month and noted that clients had placed more bets than ever before. As a consequence of the market volatility and economic turmoil the number of deals placed by clients jumped through the roof, with the PureDeal trading platform executing almost 900,000 on Auguest 9 alone. Typically IG’s trading platform executes about 6 million transactions, which implies that daily volumes were up some 230% at the height of the trading periods. Curiously at the height of the volatility and volumes in August 4, the LIFFE exchange system went down under the pressure – not so for IG Index. Industry observers noted how smaller spread betting providers reacted by manually readjusting spreads to 1pt but IG used its automated system that increased spreads by 600% to 6pts during the downtime.

Most spread traders were trying to capitalise on short-term movements Angus of Capital Spreads noted that at times of extreme volatility they tend to see trade numbers increasing dramatically with clients trading non-stop in an attempt to capitalise on the wild movements so they can make money fast.

The majority of traders either see themselves as short-term or long-term traders. Either way the market turbulence forces both types of traders to take action and longer term traders might end up exiting from spread trades prematurely. The very violent nature of the market swings can trigger stops and close traders out of their trades only to see the market swing back in their favour, implying that some traders get the direction right but get caught out by the market swings.