DailyFX Analyst Daniela Sabin Hathorn: the Foundation of Markets
Daniela Sabin Hathorn grew up on Menorca, a small island off the coast of Spain where today friends and family often ask her for financial advice. They see the extraordinary moves of individual stocks and cryptocurrencies, they offer to give her money so she can quickly place trades to make them rich. “I feel like that's one of the misconceptions about trading. There’s so much news about retail trading mania and cryptocurrency mining, people just hear the success stories. They don’t hear about the risks involved.”
Sabin Hathorn is an event-driven trader, who typically works out of an office in London. She makes decisions on money and markets by analyzing fast-moving developments of banks, businesses, governments and other news makers.
The DailyFX analyst distinguished herself in trading services overseeing client business and income generation and sticks by certain rules: “Remember the basics, especially the first rule of trading: never invest more than what you are willing to lose.”
We talked with Sabin Hathorn about how to trade the news, key players that move markets, liquidity flows, trading hours and other topics of interest to new traders.
Pretend I’m a friend who asks about trading to get rich quick, what do you say?
I can't make you rich, but I wish I could.
Good reality check—what do you do to make money in markets?
Every day, the first thing I do is check Twitter accounts or market news—from Reuters, the IG platform-- to see what’s going on in the world; what happened in Asia overnight, and in the US during the previous 24 hours. I look at changes in markets that are interesting to me. I use the DailyFX economic calendar to see central bank meetings, and their data releases. To learn what other people are thinking about a market, I’m looking at IG Client Sentiment data. With that background, I strategize my day.
What markets interest you?
I primarily focus on the European session because I am based in Europe. Sometimes I trade the Asian or the American session as well. The Forex Market trades 24 hours a day, five days a week. The 24-hour market gives you flexibility, more asset options and products that are not limited to your time zone. If there's something going on in the evening, and I want to be able to trade it, there’s about 20 foreign markets I could use.
How did you learn the foundation of markets?
I'm not one of those people who wanted to trade when they were young and used my pocket money. I didn't really become interested until university when I studied finance. I did a couple of subjects on markets and pricing derivatives, and that's when I started to get into it.
How do you get into a trade?
I have to have an understanding of what's going to happen in the next few days that can impact market moves. Sometimes you don't know why a market moves, and that's how it is. But I always try to see the big picture. I study market related events, central bank moves that can impact an asset and then make a plan. It’s the same for coming out of a trade. Sometimes I get cold feet. The market goes against me and I feel like I need to rush out of it.
Speaking of cold feet, how to manage your emotions in a volatile market?
Leave your feelings at the door. When I’m in a trade seeing money move and losing money or making money, I sometimes want to act impulsively to change the situation. I have to be able to separate my feelings from what I’m doing. I'll have my stops and my limits and know that when I set the trade, and thinking clearly about it, I had confidence in the strategy because I had a risk management plan in place. That's the whole point of having a strategy.
What’s the importance of liquidity?
Liquidity is the extent to which an asset can be bought and sold quickly, and at stable prices. Basically, it is a measure of how many buyers and sellers exist, and whether transactions can easily occur. A market with low liquidity can be hard to navigate. There are certain meme stocks that don't usually have a big liquidity. And when many traders pile in to the stock, it makes for a very rapid price moves. Those fast price moves can be risky for anyone that's new to the market, I would say be very careful. Make sure you have a strategy in place.
What should new traders know about interest rates?
Central banks use interest rates to control inflation and spending. Changes in interest rates can seriously move markets so traders focus on them. Traders can also speculate on changes in the interest rate, via instruments like bonds or derivatives. Interest rate changes also tell you where is the economy is heading and what the central banks think about the economic direction. That's the key. Interest rates and their changes give you a lot of information about the market, and can in turn shape other events.
What are the key market participants you track?
Central banks, institutional investors, hedge funds -- all of these organizations that move a lot of capital in the economy are important. If a hedge fund suddenly buys or sells a lot of Bitcoin, for instance, I’m going to have a look at the move. Elon Musk, he's a big player in the cryptocurrency market. When he says anything about cryptocurrency, people rush to trade it, maybe not even knowing why. I think there's another big group that bears watching and that is retail investors.
Talk about women in trading who inspire you
I wouldn't say anyone inspired me to trade. But there are people who inspire me to learn about the economy and what influences markets. For me, it would be someone like Janet Yellen, who has had such a great career in finance.
Are there differences in how men and women trade?
It’s a very broad question. Trading is an individual thing. But if I did have to say, I would offer that maybe women are a bit more cautious in general. They might want to understand the market, learn about it before they actually trade. Whereas men in general might be a bit more reckless, which isn't a bad thing because sometimes that's what you need to get things done.
Trading has changed a lot in the last few years, but it's still an industry heavily dominated by men, both trading and finance in general. I think there are a lot of women trading, but they don't talk about it as much and I feel like they might be intimidated to talk about it. You trade from the comfort from your home nowadays. It's not like 40 years ago where you had to be going physically into an office. You can trade silently and no one has to know it.
What do you like about being a trader?
The main thing I like about being a trader is it gives me flexibility. You set your own goals, timelines, strategy. At the end of day, it's your plan, it's your investment. And you get to decide. You're not pressured into doing anything. You can use it as a way of living to sustain yourself, or you can do it as a hobby, as an extra thing on the side. I think that's what I love most about it.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.