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A Day in the Life of a Trader: Randy Frederick

Discover how Schwab’s VP of Trading and Derivatives goes about a typical trading day.

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Lou Mercer: Yeah, Randy, just under 30 years in the industry. How do you approach your typical trading day?

Randy Frederick: Well, one of the first things I look at is what Lee was talking about, which is I look at the futures markets, because we want to know what's going on around the world. We live in an internet age. Most of you know this. Information travels around the world in less than a second. What's going on in Asia? What's going on in Europe? When we come in in the morning, Europe's trading day is halfway done. Asia's trading is pretty much over.

But the other thing that I think is really important is to take a look at the economic calendar. We have economic reports that come out almost every single day.

And many of these come out at either 7:00 eastern time or at 8:30 eastern time, both of which is a long time before the market opens, 2.5 hours to an hour before market open. They can have a complete reversing effect. So maybe the futures markets are expecting a down day, and we get a really strong labor department report or something. All of a sudden, everything flips over.

So you have to be ready for what's going to happen at the open. And again, that's a relatively short term thing. It may dictate the entire trading day. It may only dictate the first 15 or 20 minutes, possibly. But to me, that's something that I always look at very first.

And then recently, I've been paying a lot of attention to the dollar, as we've talked about the dollar like crazy lately, because the dollar has been - the dollar was in an uptrend for a long time, which was hurting oil prices. It's in a downtrend here in the last eight weeks or so, which has been helping commodities and oil prices, and oil prices and equities are moving together.

Lou Mercer: And Randy, one of your specialties is volatility. If a trader at home wants to write down and take a note one thing that can help them be more successful in the future, what is it around volatility that they should be looking for? Is there a lesson that can be learned from something that you've seen in your experience with volatility?

Randy Frederick: So volatility, as we've talked about so many times, has a tendency to spike very quickly at any point in time, and it could spike because of an economic report, or it could very well spike because of a - you know, a - who knows, a terrorist attack somewhere in the world, a plane crash, whatever that might be.

So you don't really know until just recently what was going on with volatility prior to the market open. But it tends to open pretty much where it opened - where it closed the previous day, unless the futures markets are expecting a big down.

And it tends to be, like anything else, a little over-reactive. So if we get a little bit of a down open, the volatility will spike up, and then it'll slowly moderate back towards its mean. And the same thing if the market's open really high. Volatility will drop way off at the open. And then it will come up a little bit.

So it's not real easily a tradeable thing, but it is out there, and it's something to keep an eye on. 

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