Traders Activating the Stock Markets

Abstract

Many of the financial experts interviewed for this study have brought up the complex personality needed to be a successful trader. In the literature, traders have been compared to test pilots in the US Air Force, which implies that both categories either ‘have it’ or not; that they need to be made out of ‘the right stuff’ (Bruegger, 1999). For traders, the central abilities seem to be to comprehend the rapid shifts occurring in the various markets with which they engage and to have the nerves to function under pressure. Due to their close and frequent involvement in transactions on specific financial markets, traders are seen as operating at the centre of the market mechanism (Abolafia, 1996). Their role has been further accentuated by the rapid growth in both the number of financial transactions executed and the value of the securities transacted. Even though there is a wide range of securities on sale in contemporary financial markets, the stock markets remain central to the financial industry. Figure 3.1 illustrates the value of shares traded annually on the global stock markets since 1995. The periods of rapid growth leading up to the dot-com crash in 2000 and to the global financial crises in 2008 can be clearly seen.