Trading and investment are growing at a very fast rate. The market structure has changed fundamentally and business people have indicated presence of low frequency trading opportunities (O’Hara, 2014). The chances to purchase are not limited but buyers are few and this has tempted most investors to look for bigger gains. Consequently, there is a need for implementing smarter ideas inorder to survive in the market. In fact, by adopting business strategies that are appropriate for the better frequency in business world, investors can enjoy reasonable gains. Otherwise, most investments involve some degree of risks and as such, investors must be willing to risk. Therefore, to succeed the project investors must be in position to identify and control the risks associated with the investment.
Business people need appropriate tools of understanding the dynamics of the market structure. The conventional yearly consequences of expenses and the related costs are very essential in recognizing how expenditures in business tarnsactions matter as period horizons lengthen. This is because most traders view the consequences as modest irrespective of the fact that investment costs are known for damaging investors’ ways of life. Investments may be made indirectly via intermediaries like pension funds, brokers, insurance companies and banks. These institutions might pool money obtained from a huge number of clients into funds like unit trusts in order to undertake huge scale investments.
They entails diversification of specific assets with motive of avoiding unproductive and unnecessary risk but many businesses end up failing because of using wrong measurers (Bodie et al., 2014). For example, with the rising use of advanced technology, machines are now more capable of doing multiple the work that employees used to do. Of course, the argument on whether machines are more beneficial in investment than human labor need to be looked to be examined, but there is no doubt that machines bring several benefits. This is due to the fact that machines are more robust than human as they hardly suffer from fatique. As a result, machines can work consistently to produce high-valued product with little or no mistakes. For other employers, using machines may help them to make reasonable savings since machines do not ask for over-time, pension or even a salary. Consequently, employers can save money on staff welfare since the business may only require technicians to check whether machines are properly maintained (O’Hara, 2014).
Business risks are associated with income variance and factors like contribution margin ratio, financial laverage consequences and operation leverage results ought to be considered carefully. Various risk analysis techniques are often taught in business school in programmes such as Financial Engineering and Actuarial Science. However, some of the risk analysis methods can be self taught using tailored modules that ara available on the internet. These ratio shows the operator whether the incremental gain resulting from a particular transformation of sales has constructive or destructive effects, as most businesses use debt to fund their operations (Bodie et al., 2014). Indeed, managers should analyze business risks by simply studying variations in operating income and sales over a given period and investors can learn this by using better structured methods such as using statistics.
In conclusion, unless investors recognize the existence of a paradigm shift in the investment market, the adopted marketing strategies may not be effective.Therefore, portfolio traders and managers need to focus on the high frequency business globe by expanding beyond the ancient styles of trading.This might be achieved by embracing modern technology, which is more likely to reslt in improved performance and reliability. In addition, risk analysts , traders, and portfolio managers need to train in the latest risk analysis techniques, especially in the wake of an increasingly global economy. There is no doubt that more robust training in investment trading will result in better returns for all the stakeholders.
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Maureen O’Hara. (2014).High-Frequency Trading and Its Impact on Markets. Financial
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