A narrow focus and knowledge base would leave any trader highly exposed to losses.

Hence, to be a successful trader, you need to have a broad understanding of all markets and to be alert to developments in every other market and to quantify their impact on your own area of expertise.

We live in a truly global world where everything affects everything else, which was not always the case at the start of my trading career.

Let us consider some examples.

Whilst it remains true that US economic data and political developments continue to have the largest impact on all markets, what has changed is how movements in European markets now have a much more global impact.

For example, the EU sovereign crisis in 2010 to 2012.

In addition, traders need to be aware of cross market impacts.

For example, how would a poorly received US Treasury bond auction affect equity risk appetite? If a company defaults, is it idiosyncratic or systemic?