Trading Academy - Episode 4: Stocks and Shares

In the 4th week the contestants start trading individual stocks; focusing on the pairs trading technique (i.e. long one stock, short another - thereby holding a beta neutral position which gains or loses depending on the stock specific factors). For some the task of picking individual stocks becomes a bit much - with the universe of possible stocks in the thousands; whereas previously they had only a handful of instruments to trade. This episode probably mostly helps on teaching the value of focus; it's also important for emphasising the importance of developing a trading style and a trading plan. Trading strategies need to be adaptable, they need to be profitable of course, but they also need to be sustainable in that they suit the philosophy and beliefs of the trader. Watch and learn! See also: Episode 1 (meet the candidates), Episode 2 (FTSE Fundamentals), Episode 3 (Global Indices) and Million Dollar Traders (a similar apprentice-style trading competition where the aim is to train a successful hedge fund manager). Be sure to add your comments below.

.Trade currencies, commodities, and stocks at eToro
Finance Documentaries: http://www.financedocumentaries.com/2013/04/trading-academy-episode-4-stocks-and.html

The City Uncovered - When Markets Go Mad

This BBC documentary takes you through the so-called "madness of markets". It begins by looking at just what is a market, what role does a market and its participants serve in the economy. Essentially markets exist as a mechanism for price discovery as demand meets supply. As the prices vary, economic agents vary their behaviour and the "invisible hand" adjusts the supply-demand balance. The presenter, Evan Davis, has some interesting interviews with a range of people to get their perspectives; professors, traders, fund managers, mortgage lenders, borrowers, and investment bankers. This documentary offers a fascinating look at the role of humans (and thus the role of psychology) in markets. At the end of the day, markets are made by people, and the behaviour of prices depends as much on the behaviour of people as it does on the economic fundamentals.

.Trade currencies, commodities, and stocks at eToro
Finance Documentaries: http://www.financedocumentaries.com/2013/04/the-city-uncovered-when-markets-go-mad.html

Trading Academy - Episode 3: Global Indices

In the third episode the competition is becoming stronger as the weaker traders get sent home. This week the traders focus on trading global indexes and use the 'spread betting' technique whereby you go long one related instrument e.g. one stock, and short another instrument e.g. another stock - in that example you remove market risk and retain stock specific risk. This series is an excellent way of getting up to speed with the basics of trading and also becoming aware of the pitfalls and risks as well as the challenges of mastering not only your trading system and trading style, but mastering your own trader psychology. The contestants show the learning in action, as well as getting vital tips and hints from the experts. Watch and learn! See also: Episode 1 (meet the candidates), Episode 2 (FTSE Fundamentals) and Million Dollar Traders (a similar apprentice-style trading competition where the aim is to train a successful hedge fund manager). Be sure to add your comments below.

.Trade currencies, commodities, and stocks at eToro
Finance Documentaries: http://www.financedocumentaries.com/2013/04/trading-academy-episode-3-global-indices.html

Bulls & Bears - SFE

This is a promo for the documentary "Bulls & Bears" - a documentary about futures traders on the old Sydney Futures Exchange (SFE - now part of the ASX, and now digitally traded following the closure of the open outcry trading pits). The documentary follows the plight of a group of local traders around the time of the Asian financial crisis; seeing what works and what doesn't in the high stakes world of futures trading. Much of the trading was interest rate futures e.g. bets on rates going up or down, or changes in the shape and structure of the yield curve. This type of trading requires large amounts of capital and can see rapid gains or losses based on global macro events, changes in sentiment, and central bank policy announcements, among other things. Note, I will try to track down the full documentary - please comment it below if you have it.

.Trade currencies, commodities, and stocks at eToro
Finance Documentaries: http://www.financedocumentaries.com/2013/04/bulls-bears-sfe.html

Trading Academy - Episode 1: Meet the Candidates

Trading Academy is a new series from City Index that puts 8 candidates against each other and against the market in a bid to become a successful trader and take the $100,000 prize. In this first episode we meet the traders and get a briefing on the competition. Market analysts, Ashraf Laidi (Chief Global Strategist) and James Chen (Chief Technical Strategist) are on hand to teach the traders tips on how to read the market, how to execute trades, offer tips on trading psychology, and of course grill the losing traders on why they should stay in the competition. This is a very interesting series and offers entertainment value as well as some insights on how to succeed at trading in the markets. Highly recommended viewing. See also: Million Dollar Traders (a similar apprentice-style trading competition where the aim is to train a successful hedge fund manager). Be sure to add your comments below.

.Trade currencies, commodities, and stocks at eToro  
Finance Documentaries: http://www.financedocumentaries.com/2013/03/trading-academy-episode-1-meet.html

The LME - Europe's Last Open Outcry Trading Floor

This short documentary from the Wall Street Journal adds to a handful of videos on Finance Documentaries which look at the old way of trading - people interacting with people; as opposed to computers talking to computers. "In the first of a new series of training videos, Dow Jones Newswires' Andrea Hotter takes a look at the last bastion of open outcry trading in Europe and one of the few remaining in the world, the London Metal Exchange. Tracing its history from inception to current day, she examines the various ways to trade metals." The London Metals Exchange (LME) is one of the last modern exchanges that uses the old open outcry method of trading. The LME was sold to Hong Kong Exchanges and Clearing Ltd in 2012. See also: Anatomy of a Trade - The NYBOT and LIFFE Documentary and especially see Floored - which details the life of a trader in the pit, and the transition to computer trading.

.Trade currencies, commodities, and stocks at eToro
Finance Documentaries: http://www.financedocumentaries.com/2013/02/the-lme-europes-last-open-outcry.html

The Food Speculator

This documentary from VPRO Tegenlicht examines the global commodities futures markets and aims to understand the role of speculation on food prices. The presenter raises a small pool of capital to trade agricultural commodities so he can gain a first hand understanding of the role of the speculator. He travels to Tunisia - a country where rising grain prices saw bread become unaffordable; which ultimately lead to an uprising and regime change, i.e. "the Arab spring". He also attends some futures trading industry symposiums to speak to the industry participants and travels to Chicago - home of the CBOT to find out what "good speculators" and "bad speculators" are. When you think about the key function of commodity futures markets, the main purpose is to help producers and buyers of commodities to manage price risk i.e. hedging. Speculators play a vital role of providing liquidity - in other words in order to conduct a futures trade to hedge crop output you need an active market that provides price discovery and low cost and timely trade execution. Interesting viewing, also note parts of the documentary are in Dutch with English subtitles. See also: Anatomy of a Trade - The NYBOT

 Trade currencies, commodities, and stocks at eToro  
Finance Documentaries: http://www.financedocumentaries.com/2012/12/the-food-speculator.html

Anatomy of a Trade - The NYBOT

This short documentary provides a good educational on how trading used to work at the NYBOT (New York Board of Trade), a commodities futures exchange that was taken over and rebranded by ICE aka IntercontinentalExchange. Essentially the NYBOT used to, and still does in its new form, provide: 1. Price Discovery; 2.Price Risk Transfer; and 3.Price Dissemination. The main two instruments traded are futures and options on futures; typically these instruments are used by participants primarily for risk management or hedging, but other participants accept risk i.e. speculators, and others still engage in arbitrage transactions. The documentary provides an anatomy of a trade by a corporate that is trying to hedge price risk and follows the transaction through from idea formation to order to execution and adjustment. Very interesting and educational documentary. See also: LIFFE Documentary and Floored

 Trade currencies, commodities, and stocks at eToro
Finance Documentaries: http://www.financedocumentaries.com/2012/11/anatomy-of-trade-nybot.html

LIFFE Open Outcry Trading in the 1980's

This short documentary explains what the old LIFFE (London International Financial Futures Exchange - now a part of NYSE Euronext) was and how it worked. The LIFFE was established in 1982 at the Royal Exchange in The City of London in order to facilitate trading of currency futures and other financial derivative contracts; later expanding into a broader range of commodity futures. This documentary outlines the key players in the market, how the market operates, and why people use it e.g. for hedging or managing financial risk exposures. The documentary also provides a look back at the old mode of trading called 'open outcry' - where trading was all done by humans; whereas nowadays most stocks and futures exchanges are electronic: for more on the modernisation of financial exchanges see Floored

 Trade currencies, commodities, and stocks at eToro  
Finance Documentaries: http://www.financedocumentaries.com/2012/11/liffe-open-outcry-trading-in-1980s.html

The Flash Crash

The "flash crash" was an intriguing event that occurred on May 6 2010, where the Dow Jones Industrial Average plunged about 1000 points or approximately 9%, only to recover in minutes. Some companies dropped from a price of about $60 to like 1 cent - for no fundamental reason. The only answer was that a machine or a computer was the source of the trading, but questions remain - what went wrong? was it a rogue algorithm? was it intentional? but aside from those questions some market participants began to question the very integrity of markets now that computer and algorithmic and automatic trading has become such an endemic part of the market structure.

Among the theories to explain the flash crash are: "fat-finger" or human error, the impact of high frequency traders, large directional bets, changes in market structure, and technical glitches. While the event itself is very interesting, it is equally interesting to look at how the market is evolving, and the growing prevalence and influence of algorithmic/high frequency/quantitative/automated computer driven trading. This Dutch documentary (it is in Dutch, but the majority of speaking is in English) by Tegenlicht provides an excellent and in-depth look at the flash crash.  See also: Quants - The Alchemists Of Wall Street

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Finance Documentaries: http://www.financedocumentaries.com/2012/09/the-flash-crash.html

Alexander Elder - Trading for a Living

Alexander Elder has made a name for himself as one of the most widely recognised educators of traders. He authored the books "Trading for a Living", "Come Into My Trading Room", and "Entries & Exits". In this lecture he explains some of the key insights and lessons from his book "Trading for a Living". Alexander Elder explains the importance of the 3 Ms i.e. Mind, Method, and Money. Which basically put means you need to master yourself first i.e. have discipline, avoid making the natural/common psychological mistakes that most people are wired to make. Only then should you focus on putting together a winning method which suits your style and circumstances and of course makes money. Finally the point of money is about having adequate risk management policies and procedures so that you don't blowout as a result of one or two mistakes. Well worth a watch for those considering or already trading for a living.

..Trade currencies, commodities, and stocks at eToro  
Finance Documentaries: http://www.financedocumentaries.com/2012/09/alexander-elder-trading-for-living.html

Close Up: Foreign Exchange Dealers

This New Zealand documentary on foreign exchange dealers features New Zealand's current prime minister, John Key, early in his successful career in foreign exchange trading. The 1980's fashion and manner is humorous but the job of foreign exchange dealing is much the same today as it was then, albeit the technology, volumes, and players have changed. The documentary provides an interesting insight into the job of foreign exchange dealing and the kinds of people that the work attracts and who succeeds at it. It also provides an interesting look back in time at the finance industry, and at John Key. See also: Billion Dollar Day

..Trade currencies, commodities, and stocks at eToro  
Finance Documentaries: http://www.financedocumentaries.com/2012/09/close-up-foreign-exchange-dealers.html

What separates the best forex traders?

Mind Over Money

Economics and finance have become topics dominated by maths and theory, with a key theory of economics being 'rational expectations' with theories predicated on rational operators. But the problem with this is it misses the point that people are emotional, and people are the ones who determine how the economy operates and how prices behave in financial markets. Indeed the emerging field of behavioral finance is honing in on this very point and attracting increasing attention. If any example illustrated the folly of human behavior in financial and economic systems, it was the global financial crisis. Simply put, in order to really understand economics and finance you must understand the impact of human psychology, emotions, and behaviour.

NOVA presents "Mind Over Money"—an entertaining and penetrating exploration of why mainstream economists failed to predict the crash of 2008 and why we so often make irrational financial decisions. The program reveals how our emotions interfere with our decision-making and explores controversial new arguments about the world of finance. In the face of the recent crash, can a new science that aims to incorporate human psychology into finance—behavioral economics—help us make better financial decisions? 


Buy the DVD on Amazon 
Finance Documentaries: http://www.financedocumentaries.com/2012/04/mind-over-money.html

Black Monday - Nightly Business Report Oct.19, 1987

While this isn't a documentary it is quite an interesting watch. Indeed, some may call this an entertaining, strangely humorous clip. Basically this is coverage of the 1987 stock market crash by the Nightly Business Report. For those who weren't around then it gives a surreal insight into what people were thinking and feeling during the crash, and it rings similar tones to the crashes since then e.g. the Asian crisis, the dot com bubble, and the enormous volatility seen during the global financial crisis and just recently through the sovereign debt crisis.

First 10 minutes of the Nightly Business Report episode from Black Monday, October 19, 1987. The Dow Jones Average dropped by more than 22% that day to close at 1,738 with volume double the previous record (set the preceding Friday). Just two months earlier the average had peaked at 2,722, a level it would not see again for two years and would revisit for the final time in early 1991.



Finance Documentaries: http://www.financedocumentaries.com/2011/11/black-monday-nightly-business-report.html

Tulipmania

Tulipmania chronicles one of the first major market manias. Since the tulip bulb trading bubble in the 17th century there have been numerous market bubbles, and it is a product of human nature. One of the most memorable recent examples is the internet stock bubble of the late 1990's, which saw the Nasdaq run up to giddy heights before crashing back down to reality. The recent US housing bubble is also called to mind, likewise the astronomical Chinese stock market bubble in 2007. So given the recurrence and poignancy of market bubbles and crowd psychology it pays to look back in time to one of the first major market bubbles to both marvel and learn. This is a great markets/economic history documentary.

Imagine a craze as potent as the wildest stock market boom, a commodity as precious as gold. This was Tulipmania which gripped 17th century Amsterdam. The tulip appeared in Europe in the mid-16th century, and imported luxury from turkey – a delicately formed and vividly coloured flower that was viewed as exotic and alluring. ‘Tulip Mania’ was a rapid rise in the price of tulip bulbs notably between 1634 and 1637. The frantic trading of the tulip bulb was triggered when a market in tulip futures was opened to speculate on bulbs not yet reared. This was initially restricted to professional growers and experts but slowly engulfed ordinary middle class and poorer families. Everyone wanted a part of the excitement and eventually Tulipmania turned the entire economy of a rich and prosperous nation upside down. Men murdered for them and the Amsterdam stock exchange began dealing in tulips instead of stock and shares. In 1637 when doubts arose whether prices could possibly continue to climb, the market collapsed, sweeping away fortunes. The tulip rush was over and never again has anything so frenzied and potent been witnessed. As quickly as it arrived, Tulipmania disappeared – almost overnight.

Watch Tulipmania at Babelgum

 Buy the DVD on Amazon 
Finance Documentaries: http://www.financedocumentaries.com/2011/11/tulipmania.html