THE
EXCHANGE
BETWEEN THE TRADING FLOOR AND THE FINAL SCORE...
FOCUS THE TRADING JOB MARKET
The Crusader Lex van Dam saDDLes BEGINNERS’ GUIDE TOname FX of up in the better traDing
LONDON 2.0 REDESIGNING THE WORLD’S
CELEBRITY TRADER WE’VE GOT THE X FACTOR SKI WEEKENDS FOR EVERYONE BINARY TRADING GETS CLEVER
FINANCIAL CENTRE, THE SKY’S THE LIMIT
10 PAGES OF
CHRISTMAS GIFT GENIUS
ISSUE 2 NOV 2010 £7
Private banking for all? ken fisher: U.s. resUlts dwarf eUro worries lMaX, saXo, fXPro new laUnches how to trade the bail-oUts best winter PUbs
issue 3 DeC/Jan 2011 £7
.........SPREAD BETTING...............FOREX...............SPORT BETTING...............CFDs..........
THE OPEN | WELCOME
EDITOR’S LETTER Enough action – time for some peace WELL, that was a big month. As Ireland
What you’re saying…
succumbed to the inevitable, as students protested – and professional rabble-rousers rioted – and as currency wars edged ever closer to actual combat, we’re also trying to close out the year and clear the decks for the Christmas break. When you consider the turmoil of the past 12 months, and perhaps even more importantly the next six, it’s quite amazing that financial assets have performed anything like as well as they have. When countries, even if they are economically peripheral, send out the SOS then it is a stark reminder of how many issues there are still to deal with in the global recovery. Perhaps, rather than talking about a recovery or the threat of a double-dip or whatever, we have to understand that massive shocks to the system, accompanied otherwise by quite calm conditions, are what we must expect for probably some time to come. As a trader or an active investor, this is something of an issue. We saunter along on our own financial paths, but with the knowledge that at any time there could be a land mine underfoot. Trying to trade the Ireland or Portugal stories is basically a trade on the euro. But forex is deep and dark water for most of us; which is precisely why we have been focusing a lot of editorial on FX in the last issue, and this one too. It’s the boom market – with depth and liquidity and trading access that eclipses all others. In the coming 12 months the one thing we can be certain of is uncertainty, and volatility is the lifeblood of FX trading. Around the Ireland story I made a few quid from directional bets on EURUSD, but I’m an old-fashioned boy and stuck to what I know – equities and energy. Or, I thought I knew – I could see nothing stopping WTI pushing through $90 and staying there. The first bit of this was right – the second wasn’t. A technical sell-off caught me long, and I had to go back to a central tenet of trading – try and think of everything. You may be either chart-watcher or a fundamental story-buyer, but you ignore the other side of the argument at your peril. I did. We at The Exchange wish you a happy Christmas, and a prosperous New Year.
This is the third issue of The Exchange and we’ve been listening to responses to the first two issues to see how we’re doing. The answer is, we’re happy to say, ‘pretty good’. We’ve heard requests for more active investment coverage, for more on gadgets, and for more on sport betting – so when we come back refreshed and ready for 2011 with the February issue, we’ll be making those improvements and also asking you all more formally what you think. Meanwhile, here’s some comments made about issues one and two:
4 | THE EXCHANGE | December 2010 - January 2011
“It looks like you’ve been doing this for a while, not that this is the launch issue – very well put together.” – Matthew Ridley, Bullbearings.co.uk “I read it cover to cover. And I don’t really read magazines.” – Miles Standish, CEO, Fisher Wealth Management. “Can I buy a back issue of the first copy? I lost mine and I thought the articles were brilliant. And is there a new issue for Christmas, because I’m looking forward to reading over the holiday?” – Saad, by e-mail “Loved the first couple of editions. A stylish magazine with a great variety of content from knowledgeable contributors. Overall The Exchange willdefinitely become a valued addition to my coffee table!” – Lisa Baum, Cantor Index “The Exchange is a refreshing addition to the usual financial magazines which this industry use for branding and client acquisition. Its lighter but greater breadth of topics makes the magazine more engaging, and this combined with an excellent editorial team ensures the readers are fully up to date with relevant issues across the financial world.” – Stuart Rice, marketing director, Saxo Bank
EDITOR MATT GUARENTE DEPUTY EDITOR FRED PALLEY ART DIRECTOR ALEJANDRO GUERRA-PALACIOS CONTRIBUTORS ROB GRIFFIN CLEM CHAMBERS ANDREW DELLA CASA MADS KOEFOEDS STEVE WARD DAVID BUIK DECLAN FALLON KEN FISHER JEFF MILLS GEOFF NORCOTT RESEARCHER GAIL HEPBURN PRODUCTION ISABEL FERRER SUBSCRIPTION@ THEEXCHANGEMAGAZINE.COM COMMERCIAL DIRECTOR NATALIE KENNEALLY PUBLISHING DIRECTOR ALEX SORO PRINTED BY PRINTERMAN PUBLISHED BY THE EXCHANGE 102-103 HARBOUR YARD CHELSEA HARBOUR LONDON SW10 0XD T: +44 (0) 20 7351 1818 F: +44 (0) 20 7352 7182 ADMIN@THEEXCHANGEMAGAZINE.COM © 2010. The Magazine is published by The Exchange. All rights reserved. The publishers declare that any publication of any advertisement does not carry their endorsement or sponsorship of the advertiser or their products or services unless so indicated. Contributions are invited and, whether or not accepted, submissions will be returned only if accompanied by a stamped addressed envelope. No responsibility can be taken for drawings, photographs or literary contributions during transmission or while in the Managing Editor’s hands. Proof of receipt is no guarantee of appearance. In the absence of an agreement, the copyright of all contributions, literary, photographic or artistic belongs to the The Exchange. This publication (or any part thereof) may not be reproduced, transmitted or stored in print or electronic format (including, but not limited to, any online service, database or part of the internet), or in any other format in any media whatsoever, without the prior written permission of The Exchange. The Exchange accept no liability for the accuracy of the contents or any other opinions expressed herein.
THE EXCHANGE | ISSUE 3
contents 39
THE OPEN 10 14 15 16
UPS & DOWNS TRADING PLACES FILM CORNER DAVID BUIK
FOCUS 18 24
PRIVATE BANKING ALAN MILLER
THE LONG
18
59
26 29 34 36 37 39 43
TRADING UP LEX VAN DAM STEVE WARD CHART WONK KEN FISHER TRADING CONTAGION 10 TRADING TIPS
THE SPREAD 47 SNOW TIME 48 PARIS GUIDE 52 WEEKENDER 54 TOP TABLETS 56 FESTIVE BOTTLES 58 BLUE CHIP FILES
54
48
THE CLOSE 59 BEST ADVICE EVER 60 GREAT TRADES 62 WHO’S WHO 66 GLOSSARY 68 GEOFF NORCUTT
December 2010 - January 2011 | THE EXCHANGE | 7
LET’S GET GOING
OPEN THE
IN THE OPEN UPS AND DOWNS TRADING PLACES FILM CORNER DAVID BUIK
Gardening leave Quirky new openings in the City don’t come along that often – how many times have you heard of a new place starting out, only to pop along and have the uncanny sense that you’ve already been? It’s unlikely to happen in The Folly. There’s a touch of the potting shed, a bit of the botanical, and a good dose of whimsy in this Gracechurch Street newbie which will never disappoint for things to discover. There is a plethora of discrete areas, from a little booth of your own to a private room or three to the chef’s table, plus a real potting shed area and even a little flower stall. The drinks menu might have to poring over the details before the
barman gets to pouring out your choice, but we were especially taken with the idea of hot toddies in retro thermal flasks. How about a cognac and calvados shaken with fresh, hot apple juice with a hint of liquorice bitters and mint? Yours for £6.95. It’s open from breakfast to midnight with a range of modern European food, where the focus is on well-sourced food whether it be from Borough Market’s deli kings Brindisa or Mayfair meat maestros Allen. We’ll be visiting in the New Year. www.thefollybar.co.uk
December 2010 - January 2011 | THE EXCHANGE | 9
THE OPEN | UPS AND DOWNS
UPS&DOWNS
From new operators to trading issues, a round-up of the things that have caught our eye this month
Send us your news, views, and unprintable gossip at: editor@theexchangemagazine.com
FxPrO getS Uk liceNce
SeriOUS iSSUe OF THE MONTH
FeDS gO FiShiN’ Are you sitting on any ‘material, non-public information’? If so, can we advise that you either promptly forget it, or let everyone else know too? The Federal Bureau of Investigation is ramping up its three-year insider trading investigation and, despite allegations of being on fishing trips to see if big specimens like Stevie Cohen’s SAC Advisors might be in the net, the next few weeks should see names being named and trades being shamed. SAC, along with others, has been swept up in the wake of what looks like a witch-hunt against John Kinnucan’s boutique (i.e., one-man-band) consultancy Broadband Research. The allegation is that the company (the Feds have named Broadband, rather than Kinnucan, in subpoenas to avoid him taking the Fifth Amendment, a reasonable assumption on their part as he refused to wear a wire-tap for them) introduced money managers to company insiders. The FSA and the SEC appear to be working in tandem to combat insider trading.
Good news for all those Aston Villa and Fulham fans itching to get going on the forex trading platform sponsoring their favourite teams – FxPro announced it is now regulated by the FSA in the UK and is open for business on its UK platform. “FxPro is delighted to announce the opening of our new UK subsidiary,” said George Xydas, FXPro’s director of international operations. “The UK is a key market for us and the granting of regulatory approval by the FSA is an indication of our commitment to making the account opening process for potential UK clients as smooth as possible and in line with UK industry standards.” The FxPro UK website can be accessed at www.fxpro.co.uk.
Ski Whiz? We were intrigued by the press release for the City Ski Championships, now a regular fixture in the capital’s sporting calendar, announcing a kind of handicapping system. Basically, the gist is that if you’re a crap skier, you can still enter, because there will be prizes at all levels. Apart from the obvious problem – that no serious City player will accurately assess their own ability if it means they might not win – we were also rather saddened to see that there is no category for Traders. Inter alia, there’s Insurance, Property, Stockbroking, and (usefully, we feel) Medical categories. There’s also Fund Management, where we presume 95% of entrants will come down below the average time but demand their prize nonetheless. See www.cityskichampionships.com for more info.
10 | THE EXCHANGE | December 2010 - January 2011
THE OPEN | UPS AND DOWNS
it’S yOU agaiNSt me, bUDDy LMAX launched just slightly too late for inclusion in our last issue, which was thoughtless of them, but welcome anyway. The CFD and FX trading platform is similar to 73.5% owner Betfair in that it’s not just the take-it-or-leave-it option offered by most brokers – you can see the order book for the other side of your trade and take your position accordingly. The system
matches orders and LMAX does not take any position on the trade – meaning it has no interest in whether you win or lose. Equally, as a client you can set your own order size and wait to see if it’s matched. There’s rolling spot FX as well as a range of CFDs that cover indices, bonds, interest rates and commodities with other asset classes to be added. Commission on
sterling CFDs are 25p per contract with a 50p minimum. The company promises no re-quotes on any market, and deep liquidity between participants. The trades are straightthrough processed, and Goldman Sachs, which owns a 12.5% slice, provides liquidity along with Optiver and JP Morgan. www.lmaxtrader.co.uk.
rObiN OSmOND, lmax ceO; PUttiNg traDerS iN the DriViNg Seat
FOllOW the leaDerS Add together social networks, 7,000 competing forex wonks and lazy home traders, and what do you get? Currensee Trade Leaders, it seems. The new idea harnesses the ideas and performance of the 12 best of a group of active forex traders and allows you, the punter (sorry, thoughtful strategic trader) the opportunity to follow those trades. Trade Leaders are ranked by a proprietary algorithm that combines performance, risk and experience into a single index. The Trade Leaders Investment Program is partnering with AvaFX to allow traders to follow, and even automatically execute, on those trades. “The Trade Leaders Investment Program is a win-win for both traders and investors,” said Dave Lemont, CEO of Currensee. “Trade Leaders have a way to create a business doing what they do best – trading – without having to worry about administration, paperwork and finding new clients. “For traders and investors of every kind, the Trade Leaders program offers the opportunity to invest in the foreign exchange market. The success of our investors is our top priority.” See www.currensee.com for sign-up.
December 2010 - January 2011 | THE EXCHANGE | 11
THE OPEN | UPS AND DOWNS
Saxo’s new equity platform It’s not very often a new investor tool comes along that changes the game, but in the middle of last month Saxo bank undertook a European roadshow demonstrating its new equities trading system – and it’s clearly a game changer. Saxo, which has been providing marketleading professional-quality trading facilities via its Saxo Trader and WebTrader platforms, has built an analysis, research and execution system similar to the market-leading professional screens used by banks and hedge funds the world over – and who pay upwards of $20,000 a year for the privilege. While Equity Trader Platform was announced in March this year, the bank’s November tie-up with Microsoft’s MSN Money portal means that it is available to a massive spread of self-directed investors. For those that trade more than 5 equities a month the news, research, and analysis on the system – called, snappily, MSN Trader – Powered by Saxo Bank – on 11,000 stocks, 7,000
12 | THE EXCHANGE | December 2010 - January 2011
The company has a reputation for excellent client education CFDs, 800 ETFs and 20 index CFDs is free. This represents a significant shift in the individual investor’s ability to properly analyse peer groups, hedge by sector, commodity, geography or currency, and filter financial instruments using a huge variety of variables. There are research tools like aggregated analyst opinions, forward-looking estimates for most securities using consensus forecasts, and in-depth news using market-specific news feeds to ensure accuracy and speed of delivery. Jeff Saul, Saxo bank’s global head of equities, said the platform offers a ‘one stop shop’ with
professional-level information management and direct market access trading that can be free, or delivered for a small fixed fee per month for less frequent traders. Another central and heavily resourced facet of the platform is the education tool. The company has a reputation for excellent client education and the MSN Trader has tutorials and guidance built in to all the modules to help the informed investor become more so. So far, sign-up has been good. “It’s been very busy, we are seeing good traffic and good numbers so we’re happy,” said Saul. He is at pains to point out that this is a platform for the active, self-directed investor and not the flipper. ‘The time span for holdings should be medium- to long-term, we are not really looking to attract traders and we are open that we want people to build portfolios on the system – that’s what it was built for, and that’s where its strengths are.’ www.saxobank.co.uk
THE OPEN | WHERE DO YOU TRADE?
Trading Places #3: Linley Strasbourg Desk Most trading rooms we’ve been in are pretty dull from an office furniture point of view. There’s a modular desking unit in front of you and an Aeron chair under you. On your desk is probably a Unicol type affair holding up a bank of screens. Luxury it ain’t. So if you’re trading for yourself, why not indulge in something a little more luxurious than a jumped-up trestle table? This Santos rosewood and American maple desk by David Linley is at once modern with a retro feel – decidedly Mad Men, in fact. The sleigh leg design gives it a real solidity while the underslung drawers are elegant and practical. It’s the kind of desk that gives you a bit of a credibility boost, even if you’re the only one who sees it day in, day out. To complete the look, we also love this 1950s style reproduction Bakelite phone from Pedlars. It might not have speed dial or handsfree, but some times we could all do with taking things a little more slowly.
Desk: £8,700, Linley Phone: £525, Pedlars
14 | THE EXCHANGE | December 2010 - January 2011
THE OPEN | FILM CORNER
This month, we’re roasting our nuts on an open fire and digging out a Disney classic with a cautionary tale for all traders out there
FILM CORNER
The Scene After a disastrous Christmas Eve outing, Scott and Charlie relax and read the classic The Night Before Christmas (including, pay attention, reference to a Rose Suchak ladder). They hear something on the roof and go outside to investigate, when a surprised Santa unbalances and falls from the roof.
The Film The Santa Clause (1994) was a $198m box office success in which Tim Allen plays Scott Carson, a grumpy divorced ad exec struggling to win the affections of his son (Charlie) who has been told by his mother and stepfather Santa does not exist. He does, of course – and Scott is this year’s new model.
Scott: All right, you should just stay still.
Charlie: You never do what I wanna do! Scott: Would you please be quiet for a minute
Perfect. Charlie: You got him! Scott: Charlie, stay where you are. Charlie,
would you listen to me? Stay up there! Charlie: It is Santa! You killed him. Scott: Did not. And he’s not Santa. Charlie: Well, he was. Scott: He’s got some l.D. on him, I bet. Fella, if you can hear me, I’m just lookin’ for your identification. Once I figure out who ya are, I’ll-- I’ll give you a lift back to the mall. (Reads card) “lf something should happen to me, put on my suit. The reindeer will know what to do.” Yeah, right. Whoa! Charlie: Dad! Scott: Hey. He disappeared. He’s naked somewhere. Charlie: You gonna put on the suit like the
card said? Are you? Scott: No. No. Charlie: Come on, Dad. I wanna go too. Scott: Stop it, Charlie. We’re not goin’ anywhere.
so I can figure this out? Reindeer up on the roof. Santa suit layin’ on the ground. Guy fell. Not my fault. Reindeer on the roof. That is hard to explain. Charlie: It’s the ladder. Scott: Where the hell’d this come from? Charlie: Look here, Dad. “The Rose Suchak Ladder Company.” Scott: Huh? Charlie: “Out by the roof there’s a Rose Suchak ladder...” Scott: Just like the poem. Charlie: Just like the poem? Moral of the story:
Before you enter a binding contract, understand the terms and obligations.
What would Gekko Do?
New Year resolutions
Astrid from W1 writes: Gordon, you never seemed to show much moral backbone in your career, but then you also displayed such conviction. Where do you stand on New Year resolutions? Gordon responds: Astrid the last person to suggest I
had no moral backbone ended up needing a new one. The day the Fed prints moral money is the day I will start papering the walls of a children’s orphanage with it. In big bills. I take it from your postcode and trim way with words you’re Pfaffikon refugee seeking out a quick buck in the soft belly of London quant trading. Good luck lady, they’ll fillet you with a blunt spoon and then ask you out for a martini. My New Year resolution? Make more money. Next! Tahir from Leeds writes: Mr Gekko, I’ve watched Wall Street a hundred times. I think about your trader Ollie quite a lot and I’d love
to replicate his style – knowing all the market participants and understanding where price weakness exists and how to exploit it. What would you give as advice for a young trader and if you had one piece of advice for 2011, what would it be? Gordon responds: Gee, sport, the last guy in the world you want to follow is Ollie, the man’s a maniac and he can trade in his sleep, but as a role model he makes Homer Simpson look like Mahatma Ghandi. He’s the sort of guy you wouldn’t want your sister out on a date with, because he’d trade her for a jelly donut. You want moral guidance, go
ask Astrid. What would I do in 2011? Avoid Portugal. Aside from cash flow that makes Seanie Fitzpatrick look liquid, it has the worst food in Europe. That includes Romania. And Poland. Nico from Monaco writes: Gordon, imagine you’ve got one trade left before you cash out for good. What would it be? Gordon responds: Well, sport, when you’ve thought of yours, call me, and I’ll be the other side of that trade. Ideas like this make my mouth water like a well-grilled pork chop. C-o-o-ome to Gekko!
December 2010 - January 2011 | THE EXCHANGE | 15