Understanding Margin in Trading: Key Insights for Investors
Intro
Margin trading is an engaging yet complex strategy that can shape the landscape for investors and traders in finance, particularly in the growing realm of cryptocurrencies. By allowing traders to borrow funds to increase their potential returns on investment, margin trading can both amplify gains and magnify losses. Understanding the intricacies of margin trading is essential for anyone looking to navigate this arena successfully.
In this article, we'll explore the inner workings of margin trading, dissect its benefits and risks, and present strategic tips to optimize your approach. This discussion includes an analysis of margin requirements, types of accounts, and how leverage operates in this financial domain. Whether youāre just beginning your trading journey or are an experienced player looking to enhance your toolkit, the insights provided here will serve as a compass through the often-stormy seas of cryptocurrency trading.
Current Trends in Cryptocurrency
Market Movements and Analysis
The dynamic nature of cryptocurrency markets has transformed the trading landscape. Market movements can be swifter than a hawk spotting its prey, influenced by various factors ranging from regulatory news to technological innovations. For instance, Bitcoin recently experienced a surge due to institutional interest and increased adoption from payment services. Such movements often lead traders to adjust their tactics and explore margin trading to capitalize on the volatility.
As prices fluctuate, traders need to stay informed about market analysis. Utilizing tools like technical indicators and fundamental analysis can offer insights into potential price movements. Following market trends on platforms such as Reddit or Twitter, where traders often share insights, can keep one ahead of the curve.
Emerging Cryptocurrencies and Technologies
The landscape of cryptocurrencies continues to evolve, introducing new players that often come with unique selling propositions. Coins like Ethereum and Solana are gaining traction not just for their transactional capabilities but also for their underlying technology, enabling smart contracts and decentralized applications.
Moreover, technologies such as decentralized finance (DeFi) and non-fungible tokens (NFTs) contribute to new investment opportunities. Exploring these emerging sectors may unveil potential markets for margin trading, although traders should tread cautiously to assess their viability and risks thoroughly before diving in.
Practical Guides and Tips
Trading Strategies for Beginners
Entering the realm of margin trading isn't a walk in the park; it requires a well-thought-out strategy. Here are some pointers for beginner traders:
- Start Small: Before swinging for the fences, consider starting with smaller positions to lessen risk and gain experience.
- Set Clear Limits: Establish stop-loss orders to protect your capital against significant downturns.
- Educate Yourself: Familiarize yourself with trading terminologies and strategies through platforms like Investopedia.
Securing Your Digital Assets
In the digital sphere, securing your assets becomes paramount amidst rising cyber threats. Implement these strategies to bolster your asset security:
- Utilize Hardware Wallets: For long-term storage, hardware wallets like Ledger or Trezor can offer substantial protection from hacks.
- Enable Two-Factor Authentication: Regularly apply two-factor authentication on exchanges to add an extra layer of security.
- Regularly Update Software: Keeping your trading software and wallets up to date helps to shield from vulnerabilities.
As the saying goes, "An ounce of prevention is worth a pound of cure." Taking proactive measures can save you headĀaches down the road.
In summary, understanding margin in trading requires careful consideration and continuous learning. Keeping abreast of current trends and employing sound strategies will not only mitigate risks but also position traders for potential successes in the financial market.
Prologue to Margin Trading
In todayās fast-paced financial landscape, margin trading stands as a crucial pillar, particularly for investors and traders keen on maximizing their potential returns. This section serves to illuminate the significance behind margin trading, laying the groundwork for further exploration throughout the article. The ability to trade on margin allows participants to leverage their capital effectively, which can amplify both potential gains and losses.
Margin trading doesn't merely represent an avenue for speculation. It embodies a complex interplay of risk and reward that demands a measured understanding. Many newcomers might shy away from this concept, fearing its intricacies, but gaining insight into its mechanics can unlock new trading potentials. Given the rising popularity of cryptocurrencies and fluctuating market conditions, knowing how to leverage margin may prove indispensable for adept traders.
Defining Margin in Trading
Here's where the rubber meets the road. Margin refers to the minimum amount of funds a trader must put up to open a position. It is not the full amount of the asset's price; rather, itās a fraction that allows traders to borrow additional funds, facilitating larger trades than their account balance would normally permit. For instance, if a trader wishes to purchase assets worth $10,000 but only has $1,000, the margin provides the necessary leverage to control that larger position.
Margin can come in various forms, such as initial margin and maintenance margin. The initial margin is the amount required to open a margin position, while maintenance margin refers to the minimum amount of equity a trader must maintain in their margin account to keep their positions open.
Thus, margin functions as both a tool for greater exposure to market movements and a critical component of risk management. Without understanding margin's definition and its operational mechanics, a trader could easily find themselves in hot water during volatile market conditions.
The Role of Margin in Financial Markets
Margin plays an instrumental role in the broader context of financial markets. It serves as a catalyst for liquidity, enabling traders to engage in transactions that would otherwise be out of reach. When used prudently, margin trading contributes significantly to market depth, allowing for quicker execution and tighter spreads.
- Amplification of Trading Activities: Margin encourages higher transaction volumes and can lead to price movements that may not occur in a non-margin environment. When many traders employ margin, it heightens market activity.
- Efficient Allocation of Capital: By utilizing margin, traders can allocate resources to multiple opportunities rather than tying down capital in individual trades.
- Risk of Increased Volatility: While margin facilitates increased activity, it also has the potential to intensify market swings. This can lead to more drastic price changes, especially in turbulent conditions.
In today's volatile markets, understanding margin isn't just beneficial; it's essential for survival. Traders must equip themselves with this knowledge to navigate the intricacies of their trading endeavors.
The dual nature of margin as a facilitator and a risk factor underscores its importance in financial markets. As we delve deeper into the specifics of margin and its ramifications in subsequent sections, keeping in mind its transformative role will shed light on best practices and managing potential pitfalls.
How Margin Works
Margin trading serves as a powerful tool in the arsenal of any trader or investor. Understanding how margin works becomes vital when engaging with various markets, particularly for those looking to amplify their investment potential. With margin, traders can open positions larger than their available capital, which can lead to increased profits. However, it also brings the risk of substantial losses if the market swings against them. Therefore, unraveling the mechanics of margin trading is not just beneficialāit is essential for effective strategizing.
Calculating Margin Requirements
When delving into margin trading, the first step involves calculating margin requirements. Margin is often expressed as a percentage of the total trade value. For instance, if an investor wishes to control a position worth $10,000 with a margin requirement of 10%, they would need to deposit $1,000 as margin in their brokerage account.
To get the grasp of this, letās consider a practical example. Say you decide to trade in stocks. If the margin requirement set by your brokerage is 25% for purchasing a stock priced at $40, you would need to deposit $10 for every share you want to buy. Thus, if you aim to purchase 100 shares, your total required margin would amount to $1,000. It's also important to note that margin requirements can vary based on the type of asset or the volatility associated with that particular market. Furthermore, the ratios used to calculate margins can change with market conditions and broker policies, making stayin in touch with your brokerage critical.
Types of Margin Accounts
Margin accounts come in various forms, each tailored to different trading needs and risk tolerances. Understanding these account types can significantly enhance your trading strategy. Hereās a breakdown:
Standard Margin Accounts
Standard margin accounts are the most common type. They allow investors to borrow funds from their brokerage to buy more securities than their cash balance permits. The key characteristic of a standard margin account is its flexibility in trading activities, along with the ability to leverage investments. This can be a beneficial choice for traders seeking to quickly capitalize on market opportunities without the need to wait until they accumulate enough capital.
However, it's crucial to realize that with this flexibility comes the responsibility of maintaining certain account balances and meeting margin calls if the market conditions turn sour. This type of account generally has higher interest rates on borrowed funds, which can be a disadvantage during prolonged holding periods. The advantage here is active market participation; if handled well, it can lead to substantial gains.
Cash Accounts
On the other hand, cash accounts require the investor to pay the full price of the securities at the time of purchase. This means you canāt borrow money to buy stocks, which is the defining aspect of cash accounts. This structure keeps the system straightforward and is often favored by more conservative investors who wish to minimize risk exposure.
The unique feature is that there are no margin calls or the risk of losing more than the initial investment. However, the downside lies in the limitations on buying power; if an investor wants to leverage opportunities quickly, this type lacks the flexibility that margin accounts provide. Therefore, while cash accounts are beneficial for cautious investors, they may be unsuitable for those looking to engage in aggressive trading.
Controlled Accounts
Finally, controlled accounts represent a more hands-off approach for investors, often used by firms or individuals who prefer to delegate trading decisions. The key here lies in its regulatory oversight, often ensuring risk is managed and limits set by institutional guidelines. This can be highly attractive for those without extensive trading experience, as it helps in managing risk through professional oversight.
However, controlled accounts may have added fees, which can eat into profits, and less involvement may lead to missed opportunities in spontaneous market movements. For those who appreciate a degree of leniency and expert management, controlled accounts can be an ideal choice, even if it slightly dampens the element of full control in trading decisions.
In summary, itās essential to evaluate personal trading styles and risk tolerance when choosing from these margin account types, as each bears distinct advantages and disadvantages.
Leverage in Margin Trading
Leverage is a pivotal aspect of margin trading, acting as a double-edged sword that can amplify both gains and risks. It allows traders to control larger positions than they could with just their own capital. In this article, we'll explore how leverage works, its ratios, and the implications it presents for traders.
Understanding Leverage Ratios
Leverage ratios indicate the degree to which a trader is exposed to risk relative to their investment. In simple terms, itās the amount of capital that a broker lends against a trader's deposited funds. For instance, if a broker offers a leverage ratio of 1:10, it means that for every dollar a trader puts in, they can control up to ten dollars in assets. This can greatly enhance potential returns. However, with this increased potential also comes higher risk.
Hereās how some commonly used leverage ratios stack up:
- 1:2 - Lower risk, more limited potential gains.
- 1:5 - Moderate risk and moderate returns.
- 1:10 - Higher risk with corresponding higher returns possible.
Traders should tread carefully; the opposite can occur where a small drop in asset price can incur losses that exceed their initial investment. Thus, understanding the leverage ratio becomes essential in crafting trading strategies.
Implications of Using Leverage
Using leverage can certainly sweeten the pot for traders looking to boost their potential gains, but it is crucial to acknowledge its implications. High leverage can distort the relationship between risk and reward, often leading to less experienced traders shooting from the hip without fully comprehending the stakes. Here are some key implications to consider:
- Margin Calls: When the value of a traderās account drops below a certain threshold, brokers require them to deposit more funds. This can happen suddenly and often unexpectedly.
- Market Volatility: In fast-moving markets, leveraged positions can turn sour quickly. A brief dip can liquidate accounts if the trader is not properly hedged.
- Psychological Pressure: The emotional toll of high-stakes trading can cloud judgment. Decisions may be made out of fear rather than strategy.
Utilizing leverage is akin to driving a sports car. It can be exhilarating and quick-moving, but one must be adept at handling the speed; otherwise, things can take a catastrophic turn.
In sum, while leverage can significantly enhance trading opportunities, it necessitates a careful, informed approach to manage the intrinsic risks. Engaging with leverage demands discipline, rigorous strategy, and constant oversight of market conditions to steer clear of potentially detrimental outcomes.
Risk Management in Margin Trading
Risk management serves as the backbone of successful margin trading; without it, one could easily find themselves in dire straits. Athletes have game plans, and traders need a game plan too. The financial market, particularly in the context of margin trading, is notorious for its unpredictability. As such, implementing strong risk management strategies can be the make-or-break factor that defines the outcome of trading endeavors.
Identifying Financial Risks
The first step in mitigating risk is recognizing where vulnerabilities lie. In margin trading, the potential for loss escalates due to the leverage involved. This means that while profits can be magnified, so can losses. Factors to be aware of include market volatility, economic news releases, and even political developments that might affect asset values.
- Market Volatility: A sudden swing in market prices can catch traders off guard, particularly if they are highly leveraged.
- Interest Rates: Changes in interest rates can influence the cost of maintaining a margin position, which can have significant implications for profitability.
- Leverage Risk: Using high leverage can amplify losses quickly, resulting in margin calls that demand immediate attention. This urgency can lead to poorly thought-out decisions.
By keeping these risks at the forefront, a trader can develop an awareness that allows for better decision-making, moving us toward focused risk mitigation strategies.
Strategies for Risk Mitigation
Engaging in margin trading without a safety net is like walking a tightrope without a harness. Establishing solid strategies is essential to navigate this risky terrain.
Setting Stop-Loss Orders
Stop-loss orders can be equated to a safety net for traders. Upon reaching a specified price level, these orders automatically sell an asset, thereby preventing the position from losing further value. This is particularly beneficial in volatile markets where prices can fluctuate drastically in a short timeframe.
- Key Characteristic: A stop-loss order is straightforward to implement and provides peace of mind to the trader.
- Unique Feature: Traders can set stop-loss orders based on their risk tolerance, which adds a personal touch to risk management.
However, while stop-loss orders offer a layer of protection, they aren't foolproof. In fast-moving markets, slippage can occur, where the sell order executes at a price worse than expected.
Diversification of Assets
Diversification is a prudent strategy for spreading risk. Holding multiple assets reduces the impact of poor performance from any single investment, as losses can be offset by gains elsewhere. In the context of margin trading, diversifying across different sectors, geographic regions, or asset classes helps in building a balanced portfolio.
- Key Characteristic: Diversity can mitigate specific risks associated with one market or asset class.
- Unique Feature: It provides opportunities for different reward risk ratios, allowing traders more flexibility in choosing where to allocate their funds.
The flip side is that diversification can sometimes dilute overall returns if not done thoughtfully. Balancing diverse investments requires keen attention and can often be challenging.
Regular Monitoring of Positions
Keeping a close eye on open positions ensures that traders can notice shifts in market sentiment and developments in real-time. Adequate monitoring allows for timely adjustments, whether that means adding to a winning position or cutting losses on a failing one.
- Key Characteristic: Regular monitoring helps in making data-driven decisions.
- Unique Feature: By constantly evaluating portfolio performance, traders can adapt their strategies as market conditions evolve.
Yet, this constant scrutiny can lead to analysis paralysis if not managed well, where traders might hesitate to make necessary decisions due to overthinking.
In summary, understanding and managing risks in margin trading enhance the likelihood of favorable outcomes and informs better trading practices. Relying on strategies like stop-loss orders, diversification, and ongoing monitoring can help traders wrestle down the potential pitfalls that margin trading presents.
Common Misconceptions About Margin Trading
Margin trading, while a powerful tool for traders, often carries an array of misunderstandings. The significance of addressing these misconceptions cannot be overstated, as they impact both novice and seasoned investors. Appreciating this topic not just offers clarity but also equips traders with the knowledge necessary to navigate margin trading's intricacies safely and effectively. Misconceptions may lead to poor investment decisions and, in the worst-case scenario, significant financial losses.
Margin Is Not Free Money
One of the most common fallacies about margin trading is the belief that it is akin to having access to free money. This notion stems from the allure of leveraging oneās capital, but it's an oversimplification that can bring about perilous outcomes. When traders borrow funds to trade, they do not receive gifts from their brokers; rather, they enter a financial agreement that comes with costs.
Margin trading allows investors to control larger positions without needing the equivalent cash on hand. For instance, if a broker offers a leverage ratio of 2:1, a trader with $1,000 could control up to $2,000 in assets. However, the upside of this potential for bigger gains also introduces the risk of heightened losses. If the market turns against the traderās position, the losses can exceed their initial investment quite swiftly. Thus, itās crucial for any trader to understand that borrowing on margin is fundamentally a loan, complete with interest and the responsibility of repayment.
Some key points to consider include:
- Interest Payments: When trading on margin, interest may accrue on the borrowed amount, diminishing profits over time.
- Collateral Risk: Securities purchased on margin serve as collateral for the loan, meaning if investments falter, brokers may liquidate positions to recover their funds.
- Emotional Decisions: The belief that margin equates to free money can lead to overtrading and emotional decision-making, clouding judgment.
Understanding Margin Calls
Margin calls represent another critical area where misconceptions can lead to severe consequences. A margin call occurs when the equity in a margin account falls below the required maintenance margin. Traders might mistakenly think that a margin call means they simply lose their ability to trade. In reality, it's a demand from the broker for additional funds or securities to bring the account back into compliance with the margin requirement.
Consider these important aspects:
- Triggering Factors: Market volatility can quickly trigger a margin call if the value of the securities held declines significantly. For instance, if a trader buys stocks on margin and the stocks decrease in value, the broker will require the trader to deposit more funds or sell some securities to restore the required level of equity in the account.
- Immediate Action Required: Failure to respond adequately to a margin call can lead to forced liquidation of positions. This is often done at unfavorable market prices, leading to even higher losses.
- Communication: Most brokers will notify clients as soon as possible when a margin call occurs, yet many traders may underestimate the urgency, thinking they have time to address the situation.
In summary, understanding the true nature of margin trading is critical. Thinking of margin as free money or neglecting the implications of margin calls can significantly impact your trading success.
Understanding these misconceptions forms an essential foundation for anyone entering the world of margin trading, enabling them to approach their investments with a clearer mindset and wiser strategies.
The Impact of Market Volatility on Margin Trading
Market volatility refers to the rate at which the price of an asset increases or decreases for a given set of returns. For investors and traders engaging in margin trading, understanding market volatility is crucial. When asset prices swing wildly, the stakes get higher. In margin trading, volatility can severely impact not just profit potential but also the risk of substantial losses. Therefore, exploring the relationship between market fluctuations and margin trading is invaluable for anyone serious about navigating this complex landscape.
Volatility and Margin Requirements
The connection between market volatility and margin requirements is a matter of crucial importance. In essence, margin requirements dictate how much capital one needs to maintain a trading position. As volatility increases, brokers often raise margin requirements. This is a protective measure against abrupt market moves that can lead to immediate lossesāif an asset price falls significantly, a trader may not have enough equity to cover their outstanding positions.
The adjustments in margin requirements during volatile periods means that traders must be diligent in monitoring their accounts. Investors should note that:
- Higher Margin Rates: When volatility spikes, brokers may demand higher margins. This translates to needing more capital to maintain existing positions. If you don't have it, you might face a forced liquidation of your assets.
- Dynamic Assessment: It's not just about one-time adjustments; these requirements can change frequently. Being aware of market sentiment and news can guide you on when to adjust your positions.
- Risk Amplification: While volatility can lead to greater profit opportunities, it also brings risk. The potential for margin calls means that traders must have adequate buffers to withstand fluctuations.
"Understanding how your broker adjusts margin requirements can be the difference between sailing smoothly and falling off a cliff during trading."
Responding to Market Changes
To effectively manage the impact of volatility on margin trading, traders must be agile and adept in their response strategies. Here are several approaches to consider:
- Staying Informed: Keep a pulse on market trends and economic indicators. This can help predict potential volatility spikes. Report sources like Investopedia or MarketWatch offer valuable insights.
- Utilizing Stop-Loss Orders: Setting stop-loss orders can automatically close your position at a predefined loss point. This can protect your capital if the market moves unfavorably.
- Holding Cash Reserves: Having liquid cash available provides the flexibility to meet margin requirements without needing to sell assets at a loss. This strategy can be an absolute lifesaver during turbulent times.
- Portfolio Diversification: By spreading investments across various assets, you can minimize the effects of volatility on your entire portfolio. Think of it as not putting all your eggs in one basket.
- Continuous Monitoring: In volatile markets, maintaining a watchful eye on your margins and current positions is essential. Discretionary action often yields better outcomes than waiting for the perfect moment.
By adopting these strategies, traders can better manage their exposure to market volatility while engaging in margin trading. This awareness empowers them to navigate turbulent waters more confidently.
Margin Trading Strategies for Success
Trading on margin opens up a realm of possibilities for traders looking to maximize their returns. However, itās equally important for these traders to understand that success doesnāt merely hinge on how much they leverage; itās also about how they apply strategic thinking to their trades. In this section, we will dive deep into two primary strategies: trend following and scalping, examining each method's nuances and considerations. By integrating these approaches into your trading routine, you not only enhance your chances for success but also lay down a foundation for disciplined and informed trading.
Trend Following Techniques
Trend following is a well-known strategy that focuses on the direction of market momentum, either upward or downward. The main idea is to enter trades that align with established market trends, effectively riding the wave until signs of a reversal appear. Here are a few critical components of trend following that investors need to keep in mind:
- Identifying Trends: Use tools such as moving averages or trend lines to determine market direction. A common practice is to look for upward trends characterized by higher highs and higher lows.
- Entry Points: Position your entries at the beginning of an identified trend or at pullbacks within the trend. This can often yield better risk-to-reward ratios.
- Utilization of Indicators: Incorporate indicators such as the Relative Strength Index (RSI) or MACD, which can signal overbought or oversold conditions, aiding timely entry points.
A major advantage of trend following is that it aligns with the natural momentum of the market. However, it also comes with the inherent risk of missing out if trends abruptly change. You must be prepared for adjustments and manage your stop-loss orders accordingly.
"Trend following is about keeping the momentum, but donāt ignore signs of trouble."
Scalping and Quick Trades
Scalping offers a different flavor to margin trading. This approach is all about making quick trades, capturing small price gaps within the market. Scalpers typically aim for maximum leverage on minor price changes throughout the trading day. Hereās what to consider:
- Speed and Timing: Scalping requires swift execution. Traders often rely on technical analysis and real-time data to secure quick profits from brief fluctuations in price.
- Frequent Transactions: Given its nature, scalping may require substantial transaction fees. Itās crucial to consider brokerage charges because too many trades can eat into profits.
- Focus on Liquidity: Scalpers thrive in highly liquid markets. Stocks or currencies that have high trading volumes are typically preferred, ensuring that orders can be filled rapidly and at desired prices.
With scalping, the notion is to minimize exposure to market risk while capturing small profits that can accumulate over time. While this strategy might seem less glamorous than holding trades for longer periods, it can be particularly beneficial when leveraged correctly.
For adept margin traders, incorporating trend following and scalping strategies can significantly bolster their toolkit. Each strategy requires a deep understanding of market dynamics and well-honed execution skills. Ultimately, itās not just about the leverage you apply, but how you manage that leverage in various trading scenarios.
Relevant Resources
- Learn more about margin trading basics on Wikipedia.
- Explore trading techniques and strategies at Investopedia.
- Join discussions on trading strategies in communities like Reddit.
Successful trading on margin requires a fine balance of strategies, with trend following and scalping being vital components of that balance. The emphasis should always be on informed decisions, patience, and embracing the learning curve inherent to trading.
End
As we wrap up our exploration of margin in trading, it's crucial to recognize the multifaceted role it plays in todayās financial landscape. This article has unpacked the mechanics of margin trading, showing how it allows traders to amplify their positions using borrowed funds, but it hasnāt shied away from the inherent risks involved. A key takeaway here is that understanding margin is not merely about knowing how much one can leverage, but also about grasping the potential consequences of this trading strategy.
In essence, margin trading can be a double-edged sword. The benefitsāsuch as increased buying power and the potential for higher returnsāare tempting. However, they come with challenges that can lead to significant losses just as quickly. For anyone venturing into the world of margin trading, a solid grasp of these nuanced dynamics is essential.
Here are some key elements we discussed:
- The Mechanic of Leverage: Understanding how leverage works can fundamentally change the way traders approach the markets.
- Risk Management Strategies: Utilizing tools like stop-loss orders helps in safeguarding against drastic market shifts.
- Volatility Considerations: Recognizing how market volatility affects margin requirements is necessary for maintaining a balanced trading strategy.
Navigating through the complex waters of margin trading requires not just knowledge but also a mindful approach. Those who align their trading goals with a sound understanding of marginās implications will find themselves better equipped to handle market uncertainties.
Recap of Key Points
- Understanding Margin: Margin is more than just a funding tool; it requires a nuanced understanding of both potential gains and risks.
- Leverage: Increased buying power can lead to greater profits, but it can just as easily lead to substantial losses.
- Risk Management: Practical strategies like setting stop-loss orders can help safeguard your investments.
- Market Volatility: Fluctuations in the market can impact margin requirements, necessitating a proactive trading strategy.
Future of Margin Trading
Looking ahead, the future of margin trading seems promising but uncertain. With the rise of fintech, tools that facilitate margin trading are becoming more accessible. This means that more individuals might delve into margin strategies, making it imperative that education persists alongside this growth. Some considerations for the future include:
- Technological Advancements: As platforms enhance their tools, new educational resources will need to emerge to keep pace with these changes.
- Regulatory Updates: Keeping an eye on evolving trading regulations will be key for all participants in the market.
- Market Conditions: How economic shifts influence margin trading will shape user strategies and risk management tactics.
"Margin trading holds potential, but it requires wisdom to wield it effectively."
For further insights, check out the following resources:
- Investopedia on Margin Trading
- Wikipedia on Margin in Finance
- Financial Industry Regulatory Authority
- U.S. Securities and Exchange Commission
Learning about margin trading isn't just a task; it's a journey that every investor, trader, or analyst must undertake.
