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Tchu

Questions Concerning Risk Taking and Speculative Trading for a Bsc Dissertation

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Dear Banker and traders,

 

I am a third-year Management student in Royal Holloway, University of London. I am currently writing a dissertation as a part of my BSc degree. The topic is on risk taking and speculative trading.

 

I am writing to you to ask you whether it would be possible to discuss some aspects of your wide experience in this area. It would be extremely beneficial to the progress of my research if we could discuss some aspects of your experience in this area in this post. You do not to answer all of the questions and I am very grateful for every response.

 

Questions:

1. Do you act sometime on instinct when making a deal or do you strictly follow the regulation?

2. Please give a small example If you acted on your instinct before, when and why it occurs.

3. In your opinion, can banker/traders become successful by only following the regulations? (Please give a reason why you think this way)

4. It is common sense that traders/bankers are under a lot of pressure and have to deal with stressful situations. How do you deal with it?

5. Do stressful situations and pressure increase your performance?

6. What is your opinion on the security regulations within your financial institution? (Are they more of a interference or help for surveillance for you)

7. Have you ever breached a security regulation? If yes, why?

 

Thank you very much

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Tchu - when you talk about regulations v instinct are you sure thats what you wish to know about.....

Plus I dont know of many people even on an anonymous website (not everything is always anonymous) who would admit to breaking regulations.....unless they are an idiot.

Are you sure regulations are the right word???

Plus if it is, most people are not regulated.

 

as an example......

1. Do you act sometime on instinct when making a deal or do you strictly follow the regulation?

 

yes - I rarely pay any heed to regulations when making a trade decision unless I have inside knowledge, but I do when executing.

 

2. Please give a small example If you acted on your instinct before, when and why it occurs.

 

This morning - I shorted the EURUSD 1.31171 and instinct told me to buy it back at 1.3112, I should not have. It occurs as I was not focused - in this case and was leaving to go to lunch and just could not be bothered.

 

3. In your opinion, can banker/traders become successful by only following the regulations? (Please give a reason why you think this way)

 

Clearly MFGlobal shows that this is not the case :)

Regulations have nothing to do with success. :2c:

 

4. It is common sense that traders/bankers are under a lot of pressure and have to deal with stressful situations. How do you deal with it?

 

alcohol (when younger, but that was also as I enjoyed getting drunk with friends - now I rarely drink) and success is the best stress reliever - now days I just wish I had kids so I could beat them at the end of a bad day. .....and I thought train drivers and dentists had the most stressful jobs

In other words......I dont think I can really answer this question as trading is not what gives me stress.

 

5. Do stressful situations and pressure increase your performance?

 

sometimes, but generally not in trading. Pressure causes other problems that might be tranlated into the trading arena.

 

6. What is your opinion on the security regulations within your financial institution? (Are they more of a interference or help for surveillance for you)

 

IMHO compliance was designed for two reasons - to protect firms from breaking regulations, and to ensure clients have some level of protection. They were designed to ensure processes were followed to minimise risks

In reality IMO, compliance is now an empire unto itself and while providing a lot of wasted time and extra costs have not minimised risks or reduced bad behaviour - no in my terms its a general failure. However that is not to say you dont need something and as corporate culture starts at the top of the firms then this is where the problems lie.

In my experience (when working at firms) regulations and compliance are clearly a hinderance as I have always acted in the clients best interests, for those that dont they are a hinderance, Its basically only a help for those who are amoral and need a set of rules to follow if they cant distinguish between right and wrong.

Ultimately regulations and compliance fail as they are just another process that either bogs businesses down or they dont understand the business. They should be part of the culture. There is a difference.

I have been regulated at a large firm in both Australia and the UK, and I am currently regulated - I have also seen how poor regulations are when they are deliberately ignored. (too many stories, even the fiction writers would not believe them)

 

7. Have you ever breached a security regulation? If yes, why?

 

No - if I had would I admit it. ;)

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Thanks you for helping me to write a better dissertation. It is a sensible topic and I could have choosen an easier one, but I would rather write about something harder which I am interested in than to gain a better mark by writing some easy.

The objective of my dissertation is to try to find a pattern and link between "rogue traders", emotions and regulations. I am really interested in why traders go rogue and break regulations. It is because of greed, chance of success or is it the system itself who pushes them to the edge. I hoped to find some common pattern from traders and bankers how they deal with their emotions and regulation with my questions in hope that it could be linked to why traders go rogue.

 

Thanks again for taking your time to answer the questions. :)

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first look at this....

Departing Goldman banker slams 'rip-off' culture

 

Notice how the mention of culture is key.

 

What you asked v what you are trying to get at...."It is because of greed, chance of success or is it the system itself who pushes them to the edge. I hoped to find some common pattern from traders and bankers how they deal with their emotions and regulation with my questions in hope that it could be linked to why traders go rogue." can be a multi varied thing.

 

I view the world this way.....put 1000 people in a room, give them a set of rules, there will always be someone who works out how to break these rules and yet remain on the right side of the law......change the rules, the same people will still do the same thing.

ie; it is nt the system - its the people, the culture of greed that is taught and encouraged.....just like racism, nationalism and other such ism's - they are taught, encouraged and allowed to happen...... and yet I will also always defend the right to free speech......its a double edged sword.

 

As for why traders as individuals go rouge ---- a different (but related) story if you are talking about people like Nick Leeson, the Japanese copper man and the recent french and UBS guys....

check out this A Rogue Trader Is Still A Rogue Whether He Makes Money Or Not

 

emotions, regulations and rouge traders will go hand in hand.....effective regulations will do nothing - --- this needs to be a firm internal process, and regulations while they purport to only allow people who are off good name, character and standing to operate can never enforce it......bring back the partnerships --- allow personal looses for the heads of some of these firms and then you might see a change. :)

What you read and what actually goes on can often not be made up by the fiction writers.

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Questions:

1. Do you act sometime on instinct when making a deal or do you strictly follow the regulation?

 

What do you mean by regulation? Small retail traders just open an account and trade. What kind of regulations could they be breaking?

 

Unless a person's trading is fully automated, or extremely well defined, I'm sure that purely random trading happens a lot.

 

2. Please give a small example If you acted on your instinct before, when and why it occurs.

 

Entering a trade for any other reason than a well defined rule that is followed with discipline could be for a lot of reasons.

 

Emotions. Fear, greed.

Lack of focus, impatience.

 

 

3. In your opinion, can banker/traders become successful by only following the regulations? (Please give a reason why you think this way)

 

Yes, but the vast majority of people can not trade profitably. Of the people who can't trade profitably, some of them will try to find unethical or illegal ways to make money.

 

4. It is common sense that traders/bankers are under a lot of pressure and have to deal with stressful situations. How do you deal with it?

 

Pressure to do the wrong thing is not unique to traders or bankers. A person needs some kind of moral standard and motivation to adhere to that standard. For example, I want to be able to give a good answer to God for my actions. Or a strong desire to do what is write because of a hatred for evil. Or to gain or maintain standing with someone important to you. For example, not wanting to let your mother down who you love. What would she think if she found out.

 

Laws and regulations are not a motivation for people to adhere to them. The threat of punishment is only a deterrent to people who would probably do the right thing anyway. The real issue is what society, parents and schools promote and teach about the motivation to do good and not evil.

 

Self-respect is a big factor. Even if a person gets away with murder, how will they feel about themselves? Some people promote an attitude that they are proud to be stupid. Ultimately we have to live with ourselves.

 

5. Do stressful situations and pressure increase your performance?

 

It can go either way. It depends on how much pressure there is and how well prepared I am to deal with it.

 

6. What is your opinion on the security regulations within your financial institution? (Are they more of a interference or help for surveillance for you)

 

I'm not sure how many members of this group are institutional traders. A lot are probably just trading on their own.

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...Questions:

1. Do you act sometime on instinct when making a deal or do you strictly follow the regulation?

2. Please give a small example If you acted on your instinct before, when and why it occurs.

3. In your opinion, can banker/traders become successful by only following the regulations? (Please give a reason why you think this way)

4. It is common sense that traders/bankers are under a lot of pressure and have to deal with stressful situations. How do you deal with it?

5. Do stressful situations and pressure increase your performance?

6. What is your opinion on the security regulations within your financial institution? (Are they more of a interference or help for surveillance for you)

7. Have you ever breached a security regulation? If yes, why?

Thank you very much

 

1-6-7: I am just a retail trader ;)

2: there are times you get the feeling what the market will do next since the price patterns&market behavior usually repeats...

4: trade small, trade safe

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