Traders, Brokers, And Money: The Past Is Your Present And Future
Source: Southern Methodist University
With Wall Street bonuses under the spotlight, new evidence on the performance of Wall Street traders offers more nuance. Trillions of dollars in stocks are traded month after month in financial markets. The author shows that if pension plans and mutual funds pay attention to the cost of implementing investment ideas, they can save significant amounts of money for fund investors. The choice of the trader - who one selects to execute the order - matters. The Author says, "Trader who are ranked high based on past executions perform well in the future. This is the classic evidence for trading skill. This is particularly true for brokers. So broker selection should be based on past broker performance."