Securities Trader Sara Goldstein on Developing Expertise
Securities Trader Sara Goldstein on Developing Expertise
Sara Goldstein clearly remembers the cold day of January 2015 when the Swiss National Bank suddenly lowered its ceiling on the franc, sending the safe haven currency soaring against the euro. In a few minutes, the Swiss franc rose by almost 30% against the euro. The move has bankrupted some stock traders caught on the wrong side of the trade. âThere are different types of volatile days. There are those you can expect, such as a Fed rate decision, and the ones you can’t. The decision of the Swiss franc caught a lot of people off guard, âshe observes.
Goldstein, based in London, Head of Premium Clients – Trading at IG, says days with unexpected volatility are among his favorites. “It’s very intense. You need to be alert and on your game to be ready for whatever throws at you. It’s a bit like work, âobserves the stock market operator.
Goldstein broke into finance almost nine years ago when a college friend in the industry told him about the high-energy world of commerce. Today, she manages a portfolio of over 100 high net worth clients, who trade often and everything from currencies to cryptos, commodities and small cap stocks.
Intensity reigns over Goldstein’s days. Even before the London Stock Exchange opened, Goldstein wrote and distributed a morning recap to clients summarizing overnight movements in Asia and the United States, chatted with analysts, and often took a few client calls. âIt’s about being as prepared as possible. Knowing which clients are going to call, which ones are going to negotiate and what bad news could put clients’ accounts in trouble, âshe says.
Most of Goldstein’s clients focus on European small-cap equity trading and she has developed expertise in the field and a flair for growth opportunities.
We spoke to Goldstein about how she developed her trading expertise.
How Did an Economics Degree Prepare You for Stock Trading?
Not much at all. Adam Smith’s division of labor theory from 100 years ago doesn’t help you digest Lloyd’s banking results. I liked the economy a lot, but I wasn’t sure what I wanted to do. A friend who worked in the industry told me what she was doing and I thought, why not give it a try?
Talk about your first experiences as a trader
When I joined IG as part of the graduate rotation program, I was one of the only women on the trading floor. It will sound funny, but if you went to the bathroom there was never a line because there was no one there. At the same time, if you needed a hairbrush, you were in trouble because there was no one to ask! This has changed over the past eight years. I have seen a lot more women entering the industry. IG’s philosophy is to empower people to access financial freedom and women are a part of it.
Do you see any differences in the way men and women trade?
This is something that people have tried to analyze for years. Is it a question of education? Does it come down to what girls study versus boys? Is it a question of risk? In terms of the differences, I don’t have enough clients to answer the question. But there is definitely a difference in the number of women trading compared to men, and it would be nice to see more of them join the market.
Which markets are you most interested in?
I prefer shares. I like to look at a company, see what it does and assess its value: what P / E ratio it is trading on; how much money and debt they carry and so on. I am not a technical trader. I don’t know how you can predict what the cable price is (the term forex to denote an exchange between the British pound and the US dollar) going to be in the next 30 seconds. Stocks are something I grew up in, starting with reading articles on individual stocks. At the same time, I was trained in economics, so I look at the larger markets.
Are there any key distinctions between trading stocks and commodities, for example?
From a trading and execution perspective, we have so much liquidity at IG that many of our products (indices, currencies, commodities) can be traded online. There is no need to call an execution broker like me, unless you are dealing with a large size. And this is where it gets interesting. Someone gives you a big order and wants to buy a huge volume in an illiquid stock, you have to find that volume and know how to trade it without changing the price.
Many of my clients trade very small cap stocks, guided by market makers, those who provide liquidity and set prices. You can’t just place your order on an exchange like you would stock Apple or a FTSE 100 Stock. It’s a bit like a game of poker. Market makers control the price; you want to know what bitrate and volume they have. They want to know what you are holding and where you are sitting, so it becomes a game of trying to get customers a good price and a good fill.
I find it very exciting and I do it daily. You will see two prices on the screen; an offer and an offer price. You will see different market makers on offer. But you don’t always know that they are actually the best deal. Maybe the market maker is just trying to get an order to show us our hand. It’s a strange and quite fun market.
How do you keep tabs on dozens of dynamic small cap stocks?
You can’t stare at your screen all day looking at 40, 50 markets for price movements. I set price and news alerts, which will tell me when something is going on. For example, if a stock moves more than 5 or 10 percent, it will ping me and I can step in to investigate the move. Why did this happen? Is it rational or logical? Should I call my clients about this? Should I exchange it? I’m pretty hot on news and price alerts
Some people may feel stressed about hearing unexpected pings all day long. How do you deal with your emotions?
People in the office know me as fiery. I have a little tongue and sometimes I can be heard screaming on the ground. I think controlling your emotions comes down to being organized. You get angry, panic, and act irrational when you are unprepared. Yes you make sure you know what you are doing and then in these times of heightened emotion when the market is incredibly volatile, that confidence will allow you to stay calm, stay focused, trade and get the job done. In saying that, the swear word helps.
Using stops and limits won’t take the emotion out of the way you trade, but it will definitely help you control and manage your risk. I think losing control of your risk is the source of a lot of emotions. Losing control is when you panic and make mistakes. If you are in control of your risk management, you are less likely to act recklessly or impulsively, which is probably one of the worst things you can do when the market starts to get volatile.
Who are you looking for inspiration from?
It’s controversial, but I don’t like to follow other traders. I think there are some people you can look up to but if you place a trade because someone else said they placed a trade you will never be successful. You have to make your own decisions. You never know why or when someone made a transaction (and more importantly at what cost!). A good example is Gamestop and the frenzy around Wall Street betting. While a lot of people made a lot of money, there were also those who joined the late train and suffered huge losses. Blindly following someone is a pretty lazy way to trade and will always end in tears.
Learn more about the other female traders at DailyFX Women in finance content center.