Thursday, October 03, 2002

Stock Market # 3

Ok I think I have been rambling on some un-necessary things. So now I will get to what 'actually' happens inside the stock market. Or more like - the daily life of a stcok broker.

Stock brokers work on an average 6 hours a day but those hours are some of the most stressful. Its similar to a doctor performing a complicated surgery for six hours everyday and if the operation is not successful he will tend to lose a milion dollars. Can you imagine getting up every morning for that? So now you know why I sound like a geek sometimes (or is it most times?) when I visit your blogs and post my comments there ;-) I end up being a bigger geek because London and New York work for longer periods (upto 10hours a day).

So what does a broker do at 7 in the morning? He walks in with a really strong cup of coffee, switches on the multiple screens and the first thing he does is check e-mail (yes even brokers can't live without emails). After that he looks at the trading screens, which show the charts and numbers of various major stock exchanges around the world. The key ones that we keep a watch in London are the New York, Japan, Hong Kong, S'pore, and some other developing nations including India. Within minutes brokers have to analyse how the global market is moving and what the trends are. With one eye on the screens, the other eye is now focussed on the news clippings of all major business stories (which explains why they look cock-eyed). News obviously has impact on the share price and it is upto him to assess how much the share will move on that day because of that news. By the way - Indians are pretty relaxed. Our market opens at 9:30 and closes at 4 in the evening - with a chai break at 11. The only stock exchange in the world where there is such a break!

In most other places the actual hungama begins at around 8am when market opens. The traders will have to quickly buy/sell the stocks and minimise the losses / maximise the gains. Remember that there are literally thousands of people putting in the orders are at any given second and even the fastest of computers will take time. Value of each order runs intho thousands of dollars and sometimes into millions. Traders punch in their orders direct from their screens which has live connection to the stock exchange. The computer at stock exchange matches the buy orders with sell orders and crosses them out. So if X from London wants to buy at £20 and there is Y from Delhi willing to sell at £20, the computer will automatically match them and cross those orders off the order book. It doesn't care whether X likes Y or vice versa. Only prices that match will get crossed. The heaviest trading takes place in first two hours and the last two hours of the day. In between its usually small time investors (like you and me) who wake up late, have breakfast, read papers and then decide to do some trading.

By the way, Im NOT a broker. I'm an analyst who tells the brokers when to get into the market and when to get out. I will tell you what I do, tomorrow.


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