
Would the stock market be more stable if trading were left to the professionals and day traders eliminated?
It seems to me, that since day traders ( people allowed to trade daily thru the net without professional counsel ) and trading were left to the professionals who actually understand and have been trained and educated in the market, that stocks throughout the world and America would be more stable.
eg: Hurricane Katrina: gas prices almost doubled in America. But America gets most of its oil and gas from Canada, South America, and the Middle East and we have reserves in Utah, Arizona, Pennsylvania, and Alaska. There was no reason other than greed and speculation for prices to increase.
First, gasoline prices rose during Katrina because the REFINERIES that made the oil into gas were damaged. Oil was still plentiful, but without refineries, gas was scarce. A very large percentage of the refineries in the US were in that area. And if you’re talking about natgas, you may have plenty of that throughout the world, but it’s very expensive to transport much beyond the region it’s produced in. Yea, we could get natgas from Canada, but getting it to the gulf region when the infrastructure isn’t in place is another matter.
Next, when you say day traders, you have to be more specific. When someone talks of day traders, they usually mean small traders trading out of their homes. The impact of these traders on the overall market amounts to a gnat bite on an elephant. High frequency traders (while they could be called day traders, that’s not properly defining their type of trading) DO have an effect on volatility. They can account for up to 75% of the volume trade on major exchanges in a day. So do hedge funds. And, as we’re learning over the last two weeks, it may be that the proliferation of ETF’s really exacerbate volatility.
But don’t think that if you eliminate the volatility you’ll eliminate the manipulation. It would be easier to manipulate a market when you reduce the liquidity that HFT provides.
Forex Training – Pin Bar Forex Trading Strategy
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