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a Prof. Thomas Lee
THE RISKS AND RECOMMENDATIONS OF THE FINANCIAL MARKET :
The sucess Model
ABSTRACT
The topic concerns the risks and recommendations of the financial market. Thomas Lee, currently in Beijing but living in Australia, has gained a wealth of experience in the financial market, dealing with foreign exchange, derivatives, capital markets and prime broking for over 30 years. He moved to Australia in 2002, worked in CFD trading and also for a numerous international banks and financial services companies as a senior manager. He is currently Joint CEO of Multibank Australia Pty Ltd. The paper the success depends on 3 key factors. The first one is the personal character, the second one is how much you know about the market and, the third one is risk management. For example the personal character depends on whether you are a flexible person or not. In the financial market, different from the stock market where there are more long term investments, people don't hold on the investments for a long time, and this is the reason why people have to be flexible. If you stay on your investment for a long time, it means that if you are wrong, you lose your money faster and quicker than in the stock market. In the FX, the currency market, with 10 thousand dollars you can buy one million investments, so your risk is expended by the leverage a hundred times. If the market moves 1%, you are losing 100%. Easily in the FX market if move 1% a day, you lose all your money. That's why to trade in this financial market, which we call leverage market, you need to be flexible and you have to exercise in the risk management. What about risk management, the third factor of success that the article mentioned? So the best way to control this risk is to put a stop loss on all your investment. A lot of the investors, especially the Chinese ones, didn't stop their loss, this is why they lost a lot of money. You have to make sure that whatever you do, your profit is always higher than your loss. If you lose 100 dollars, your target is to make 200 dollars every time you do the trade. Unfortunately, and I know the market because I have been in this market for a long time, things go in another way. When they make 50 dollars they happily take the profits, but when they start losing 10, 50, 100 dollars they prefer waiting a little bit more, but why? I think that this is a factor that comes from experience.
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Keywords: Risk, risk management, capital market, CFD trading, inflation policy, financial market
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