........................SPREAD BETTING......................FOREX......................CFDs....................FUTURES.............................

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th

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It’s a numbers gameturnIng sport Into profIt on the spread bettIng markets

Trading sTraTegies To combaT cenTral bank inTervenTion

analysis: Using cUrrency pairs To measUre risk aversion

celebriTy Trader: Jason leonardThe imporTance of keeping

yoUr image on Trend

B e t W e e n t h e t r a D I n G f L o o r a n D t h e f I n a L s c o r e . . .

www.theexchangemagazine.com

issue 12OCT 2011

£3.95

EDITOR AlEx HAmmOnD

WRITERs & COnTRIBUTORsDEClAn FAllOnKEn FIsHERRICHARD PERRYmARK sOUTHERnAnDREI TRATsEUsKIPETER WEBBGREG mICHAlOWsKIATIF lATIFVICTORIA POWERAlAsTAIR mCCAIGCOlIn CIEszYnsKI

DIGITAl COnTEnT & mARKETInGAnDREW CAPEl

PUBlIC RElATIOnsmARK sOUTHERnPOlYGOn PR

sOCIAl mEDIA mAnAGERsImOn WIlTsHIRE

sUBsCRIPTIOnssubscription@theexchangemagazine.com

PUBlIsHED BYTHE ExCHAnGEadmin@theexchangemagazine.com

Issn: 20472625

© 2011. The Magazine is published by The Exchange.All rights reserved. The publishers declare that anypublication of any advertisement does not carry theirendorsement or sponsorship of the advertiser or theirproducts or services unless so indicated. Contributionsare invited and, whether or not accepted, submissionswill be returned only if accompanied by a stampedaddressed envelope. No responsibility can be takenfor drawings, photographs or literary contributionsduring transmission or while in the Managing Editor’shands. Proof of receipt is no guarantee of appearance.In the absence of an agreement, the copyright of allcontributions, literary, photographic or artistic belongsto the The Exchange. This publication (or any partthereof) may not be reproduced, transmitted or storedin print or electronic format (including, but not limitedto, any online service, database or part of the internet),or in any other format in any media whatsoever,without the prior written permission of The Exchange.The Exchange accept no liability for the accuracy ofthe contents or any other opinions expressed herein.

Its offIcIal the advent calendars are in Tescos (other ridiculously premature superstores are available), I’ve spotted my first Christmas lights and x Factor is back on the telly, which means the country is already counting down to the end of the year.

not here at The Exchange though, because October’s issue is packed once again with all the latest from the markets and the world of trading. Greek debt and the demise of the Eurozone once again take, centre stage, but as Ken Fisher so astutely points out, things are looking brighter in the Us than the media would have you believe.

This month’s issue takes sports spread betting back to basics, and so a “practice what you preach” move my big news this month is thatI’ve also opened a new sports spread betting account and will be blogging regularly on my results. I’m not entirely sure whether this honesty box policy is the best idea to be truthful, after all you very rarely hear about traders who are keen to publish how much money they’ve lost, but hopefully it will at least force me to consider trades more thoroughly. Any ill thought-out punts should be ridiculed as such. I look forward to hearing from you.

With sports taking centre stage for the first time in The Exchange it would be remise not to at least mention the rugby. We’re half way through the World Cup, which means we’re on the cusp of seeing some meaningful games. Ok, I know I’m still being flippant about the group stages of the tournament lacking a depth of quality, and we have seen one or two (or one) decent games, but now is where the real competition begins.

With England, France, Wales and Ireland all finding themselves in the same half of the draw we’ll have at one northern hemisphere team in

Anyone feeling festive yet?

EDITOR’S LETTER

the final, and judging from the way les Blues have turned out in new zealand to date it’s more than likely to be a home nations team. And that’s definitely a reason to be glued to your TV on a saturday morning.

The loss of Dan Carter from proceedings is huge, not just for new zealand, but for the tournament as a whole. You have to feel sorry for the All Blacks no.10, he’ll be 33 by the time the next World Cup comes around and when all’s said and done might be the best player of all time to have never played in a World Cup final.

What Carter’s absence does do though is spice up a World Cup that was fast becoming a nz walkover. Colin slade, Carter’s deputy, has been woeful by All Black standards in his World Cup appearances to date. Throw in the weight of expectation and a tricky semi-final against either Australia or south Africa and that “Kiwis are unbeatable” mantra is starting to show some cracks. Don’t get me wrong, new zealand are still the tournament favourites, but for the gambler the best value can be found with south Africa.

Anyway that’s enough from me again, be sure to follow me on Twitter at @ExchangeEditor and at my blog page at www.theexchangemagazine.com.

I hope you enjoy the issue.

4 | THE EXCHANGE | October 2011

THE EXCHANGE | WELCOME

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the open12 Ups & Downs14 Book Club18 Celebrity Trader: Jason Leonard 24 Interview: Michael Stumm

FeAtUReD26 Sports Spread betting

the long34 A Greek Tragedy36 Currency pairs to measure risk aversin40 Making sense of forex trading42 Trading & Central Banks44 Gold46 Chart Wonk48 Ken Fisher50 Avoiding mistakes trading CFDs52 Laying the field

contents

18

26

3460

the spReAD58 Restaurants60 Weekends62 Cuisine64 Sweet Suite66 Travel

the close72 Cosmetics76 Who’s Who80 Glossary82 Killa Villa

Your rightful placeBecoming a Club Wembley member will give you guaranteed access to world-class events* until 2018, in the finest seats within Wembley Stadium. You can also experience the exclusivity of the Club Wembley concourse with a variety of restaurants and bars for you and your guests.

To guarantee you’re here to enjoy our next big event call Harry Tyndall on 020 8795 9781 or email harry.tyndall@wembleystadium.com

*Subject to licence agreement. Concerts are options events. Matches that form part of a tournament where The FA are not the owner such as the Olympics Games, the Rugby World Cup or The UEFA Champions League Final are not included.

The greatest views from the greatest stadium

Club Wembley is the finest way to enjoy all the action at one of the world’s greatest stadiums. Choose the right seat for your business needs from commanding corner views to fantastic half-way line seats or even the exclusivity of your own Corporate Box.

A Club Wembley seat licence is the only way to guarantee access to the best events until 2018* including:

• All England Senior home games• The Football League Cup Final• The FA Cup Final• Both FA Cup Semi-Finals• The FA Community Shield• The Rugby League Challenge Cup Final

In addition, members have first option to purchase tickets or hospitality packages for other world class sporting events and concerts*. This year’s events calendar sees the return of the 5th NFL International Series^ game at Wembley Stadium in October, with the Tampa Bay Buccaneers hosting the Chicago Bears, and the UEFA Champions League Final* is set to return in 2013.

Working hard for your business

As competition to maintain professional partnerships and win new business continues to grow, the need to establish lasting relationships with clients becomes increasingly important. Corporate hospitality has long been seen as an ideal opportunity to nurture these relationships.

Club Wembley is a powerful and rewarding way to entertain guests. It builds loyalty with existing clients and makes potential clients feel valued as well as making staff and colleagues feel rewarded.

Members have access to the exclusive Club Wembley concourse which offers a kilometre of restaurants and bars. Choose from the formality of The Venue and Arc Restaurants which offer traditional cuisine to The Venue and Arc Brasseries which offer a more informal atmosphere with a contemporary hot and cold buffet. For a light snack, the Champagne and Seafood bars offer a more relaxed environment. To make the journey to the Stadium easier, all Club Wembley members have use of the complimentary train service which brings passengers into Wembley Stadium station. Tickets are available for London Marylebone, Beaconsfield, Bicester North, Warwick Parkway and Birmingham Moor Street.

Of course, it doesn’t have to be all work and no play. Club Wembley is also an ideal setting for spending valuable time with friends and family. Whoever you decide to bring with you to Club Wembley will always remember their experience at this exciting venue.

The ultimate stadium. The ultimate club.

Club Wembley offers more than just the best seats in the house for the greatest events, there a number of additional benefits available to members.

• Club Wembley Connections gives members access to a range of exclusive offers and discounts with top name brands plus access to a whole host of tickets and hospitality outside of Wembley Stadium including the Barclays ATP World Tour Finals, London Bierfest, Wimbledon and so much more...

• Exclusive opportunities to attend a variety of exclusive Member Events including golf days, networking events and and post-match conferences**.

Interested? Find out more...

Contact Harry Tyndall on 020 8795 9781 or harry.tyndall@wembleystadium.com for more information about Club Wembley or to arrange a meeting.

^Subject to availability

*Excluding the FIFA World Cup Finals tournament; the UEFA European Championship Finals tournament; the Olympic Games; any association football match staged at the Stadium where The FA or the Football League is not the owner. We will however try to secure tickets for these excluded bid events where possible.

** Member events are subject to availability and may change year on year. Places will be limited to each event. Details of these events will be communicated to Club Wembley members with prior notice. Club Wembley reserves the right to change or withdraw member events at anytime.

Your rightful placeBecoming a Club Wembley member will give you guaranteed access to world-class events* until 2018, in the finest seats within Wembley Stadium. You can also experience the exclusivity of the Club Wembley concourse with a variety of restaurants and bars for you and your guests.

To guarantee you’re here to enjoy our next big event call Harry Tyndall on 020 8795 9781 or email harry.tyndall@wembleystadium.com

*Subject to licence agreement. Concerts are options events. Matches that form part of a tournament where The FA are not the owner such as the Olympics Games, the Rugby World Cup or The UEFA Champions League Final are not included.

The greatest views from the greatest stadium

Club Wembley is the finest way to enjoy all the action at one of the world’s greatest stadiums. Choose the right seat for your business needs from commanding corner views to fantastic half-way line seats or even the exclusivity of your own Corporate Box.

A Club Wembley seat licence is the only way to guarantee access to the best events until 2018* including:

• All England Senior home games• The Football League Cup Final• The FA Cup Final• Both FA Cup Semi-Finals• The FA Community Shield• The Rugby League Challenge Cup Final

In addition, members have first option to purchase tickets or hospitality packages for other world class sporting events and concerts*. This year’s events calendar sees the return of the 5th NFL International Series^ game at Wembley Stadium in October, with the Tampa Bay Buccaneers hosting the Chicago Bears, and the UEFA Champions League Final* is set to return in 2013.

Working hard for your business

As competition to maintain professional partnerships and win new business continues to grow, the need to establish lasting relationships with clients becomes increasingly important. Corporate hospitality has long been seen as an ideal opportunity to nurture these relationships.

Club Wembley is a powerful and rewarding way to entertain guests. It builds loyalty with existing clients and makes potential clients feel valued as well as making staff and colleagues feel rewarded.

Members have access to the exclusive Club Wembley concourse which offers a kilometre of restaurants and bars. Choose from the formality of The Venue and Arc Restaurants which offer traditional cuisine to The Venue and Arc Brasseries which offer a more informal atmosphere with a contemporary hot and cold buffet. For a light snack, the Champagne and Seafood bars offer a more relaxed environment. To make the journey to the Stadium easier, all Club Wembley members have use of the complimentary train service which brings passengers into Wembley Stadium station. Tickets are available for London Marylebone, Beaconsfield, Bicester North, Warwick Parkway and Birmingham Moor Street.

Of course, it doesn’t have to be all work and no play. Club Wembley is also an ideal setting for spending valuable time with friends and family. Whoever you decide to bring with you to Club Wembley will always remember their experience at this exciting venue.

The ultimate stadium. The ultimate club.

Club Wembley offers more than just the best seats in the house for the greatest events, there a number of additional benefits available to members.

• Club Wembley Connections gives members access to a range of exclusive offers and discounts with top name brands plus access to a whole host of tickets and hospitality outside of Wembley Stadium including the Barclays ATP World Tour Finals, London Bierfest, Wimbledon and so much more...

• Exclusive opportunities to attend a variety of exclusive Member Events including golf days, networking events and and post-match conferences**.

Interested? Find out more...

Contact Harry Tyndall on 020 8795 9781 or harry.tyndall@wembleystadium.com for more information about Club Wembley or to arrange a meeting.

^Subject to availability

*Excluding the FIFA World Cup Finals tournament; the UEFA European Championship Finals tournament; the Olympic Games; any association football match staged at the Stadium where The FA or the Football League is not the owner. We will however try to secure tickets for these excluded bid events where possible.

** Member events are subject to availability and may change year on year. Places will be limited to each event. Details of these events will be communicated to Club Wembley members with prior notice. Club Wembley reserves the right to change or withdraw member events at anytime.

Jameseasy-forex Dealer

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October 2011 | THE EXCHANGE | 11

THE OPEN | WHERE DO YOU TRADE?

oPenTHE

IN THE OPENUPS & DOWNSBOOK CLUBCELEBRITY TRADERINTERVIEW

The markeTs might well be yo-yoing on a daily basis in conjunction with the Eurozone debt crisis, but undoubtedly the biggest news of the month was came from the offices at UBS.In a hark back to 1995 Kweku Adoboli, an ETF trader on the Swiss bank’s “Delta One” trading team, pulled off his best Nick Leeson impersonation by dropping a cool $2bn through unauthorised trades.Just how Adoboli managed to run up the biggest single trading losses in British history is yet to be fully disclosed, although it has been revealed that the inputting of false hedges, particularly against the Swiss Franc, and trading beyond his permitted financial limits were at least to blame for such a spectacular fall from grace.The news of wiping out of an entire quarter’s profit by one rogue employee has understandably not gone down well in the bank’s home county of Switzerland. Swiss taxpayers had to bail out the bank to the tune of $60bn after the financial crisis of 2008, so it comes as little

surprise that UBS CEO Oswald Grubel has been forced to pack his bags in wake of the scandal.Adoboli’s losses are substantially larger than Leeson, the rogue trader so famous they had to make a film about him, but are still overshadowed by Jérôme Kerviel, the most historically unsuccessful illicit dealer of all time, who managed to separate Societe Generale from €4.9bn in 2008 before he was finally nabbed.Adoboli will learn the full extent of his fate later this month, which will almost certainly include considerable jail time. So what’s the moral of the story? Investment banks need tighter regulation, perhaps? That you should pay slightly more attention to the helpful guy in the office offering to stay late and do extra data entry than you have been, almost certainly. Or maybe the lesson to be learned is just that if you are going to engage in a spot of off-piste dealing, make sure you get it right?It’s all a matter of perspective.

From trading etFs to trading cigarettes

UPS&DOWNSFrom news stories to trading issues, a round-up of the things that have caught our eye this month

IT can’T have escaped the attention of traders with their fingers on the social media pulse that Twitter is fast becoming one of the go-to tools for determining what’s going on in the markets.

Scores of index and currency-related tweets are hitting the information super-highway every day. And with traders making the markets, surely it makes sense to pay attention to the opinions of the trading masses.

And just to hammer the point home, even scientific research is now pointing to using Twitter as an effective trading tool. A recent study by Timm Sprenger, PhD student at the Technical University of Munich, analysed a sample of 250,000 tweets posted over a period of six months. His research identified a “striking

co-ordination” between the Twitter consensus about stocks and the external information from spread betting and financial trading analysts.

He also found that more valuable information tended to be retweeted, giving it the opportunity to connect with a larger audience.

Twitter may eventually provide a more specialised version of its Trending Topics feed. However, for traders who want to stay ahead now the best market analysts from the biggest spread betting and forex platforms are already providing up to the minute data and reaction straight to you PC now.

And to make matters even better, for The Exchange’s very own market commentary and opinion you can follow @theexchangemag and @ExchangeEditor today.

The Uk’s fasTesT growIng prIvaTe bookmaker, Star Sports, has expanded its activity into the financial betting space with the launching of Star Financials.

The spread betting website, which can be found at www.starfinancials.co.uk, has been launched in conjunction with WorldSpreads. Clients will be able to trade on over 4,000 markets including indices such as the UK 100, stocks, forex and a selection of commodities including gold and oil.

As a welcome to all new account holders Star Financials are promising to cover net losses in a client’s first eight weeks of trading up to £250, when they make an initial deposit of £500 and place a minimum of 10 trades.

Commenting on the launch, Managing Director of Star Sports Ben Keith said “This is an exciting new development for us all. We have every confidence that with our emphasis on exceptional service and WorldSpreads’ leading platform, Star Financials will be every bit as successful as Star Sports has grown to be in just two years.”

Conor Foley, CEO of WorldSpreads, is equally enthusiastic about the venture, saying “We are delighted to form a partnership with one of the country’s most ambitious bookmakers. Star Sports has become a major player on the UK bookmaking scene over the last few years with a strong emphasis on excellent customer service and creative marketing. We believe that our two brands will work well together and we are pleased to extend this opportunity to Star in their ultimate aim to become a one-stop shop for their customers.”

CAN TWITTER bE USED TO ANALySE THE FINANCIAL MARkETS?

STAR SpORTS kICkS OFF FINANCIAL SpREAD bETTINg SERvICE‘gentlemAn’s BookmAkeR’ enteRs AgReement with woRlDspReADs

12 | THE EXCHANGE | October 2011

THE OPEN | NEWS

Send us your news, views,and unprintable gossip at:editor@theexchangemagazine.com

October 2011 | THE EXCHANGE | 13

THE OPEN | NEWS

eToro, The world’s largesT InvesTmenT neTwork, has shown its innovative side once again by launching another new product, CopyMe™. Designed to incentivise traders to share their knowledge and theories, CopyMe™ is an individual and personalised virtual e-store allowing expert traders to generate a second line of income by showcasing their investment skills. CopyMe’s innovative concept and business model enables expert traders to easily create their own investment shop and start promoting their financial services to every potential investor in the world. In addition, “Guru-traders” will benefit from the integration of CopyMe with eToro’s OpenBook, which exposes their trading skills to eToro users. CopyMe provides investors with full transparency on each trader’s performance, risk appetite, trading history and portfolio breakdown and is integrated into eToro OpenBook, the largest social trading network, which enables eToro community

eToro pIONEERINg TRADER “INvESTMENT bUSINESS” WITH COpyME™

members to invest in their trading performance by automatically copying all their trades into their own eToro trading account. Apart from building their own investment business, Guru traders are compensated on the amount of unique copiers they have per month and can earn big pay-outs in monthly income from their trading expertise.To become an expert trader, applicants are selected based on their historical performance, trade strategy and risk behaviour. Experts are required to maintain a successful trading history with a minimum number of executed trades over a specified time period, or hold a professional money management certificate. In the coming months eToro will offer additional marketing services to experienced traders allowing them to keep in touch with their followers and copiers and to effectively promote their investment services.

FIRST MEXICAN CULINARy FESTIvALCOMES TO ONE&ONLy pALMILLAa-lIsT resorT One&Only Palmilla has announced that it will be hosting the first ever annual Mexican Culinary Festival next month.

The event, which runs from 2nd – 6th November, will feature celebrity Mexican

chefs Enrique Olvera from Pujol, Daniel Ovadía from Paxia and Edgar Nunez from Sud777, as well as boutique wines from the Guadalupe Valley. The four day feast includes daily cooking demonstrations hosted by the celebrity chefs and three individual dinners designed by each, as well as wine and tequila tastings.

One&Only Palmilla’s fantastic resort is the perfect backdrop for the festival, making the event the perfect getaway for sunseekers in search of culinary bliss and idyllic relaxation.

A NEW CHApTER OF THE HORIzON FOR kENSINgTON pLACEresTaUranT groUp d&d london have announced that Kensington Place, Notting Hill’s iconic restaurant, will re-launch later this month with a fresh new look.

Having opened in 1987, Kensington Place was the first modern British brasserie in London. The new look will involve interiors designed by Polly Dickens, a new menu containing not only classic brasserie dishes but also celebrating the best of British fish, and the kitchen will be led by head chef Dan Loftin, formerly at Almeida restaurant.

The interior will feature a custom made communal table and banquette seating which will give a more intimate feel to Kensington Place. Wine will also be a big part of the new Kensington Place with a list containing some excellent wines from France and the New World. An Enoround at the bar will give customers a choice of many fine wines by the glass to enjoy with light-bites and snacks. Kensington Place will close for refurbishment on 23rd September and reopen on 7th October.

We’ll see you there.www.kensingtonplace-restaurant.co.uk

14 | THE EXCHANGE | October 2011

THE OPEN | BOOK CLUB

The exchange Book cluBThe Thinking Trader’s answer To oprah

Each month the Exchange takes you through the trading literature you’ll need to amass the ultimate spread betting library. This month: Mark Ingebretsen’s The Guts and Glory of Trading, Stop Orders by Tony Loton and 7 Charting Tools for Spread Betting by Malcolm Pryor

the Guts and the Glory of day tradInG: TrUE STOrIES OF DAy TrADErS WHO

MADE (Or LOST) $1,000,000 by Mark Ingebretsen

As well Arabian revolutions and cats that look like Hitler, the internet has given birth to widespread day trading.

It’s come in two phases. Firstly, thanks to zippy 56k net connections,

traders in the ’90s and early 2000s were able for the first time to buy and sell shares as many times a day as they liked, using their own research, and all from the comfort of their own home.

The boom was phenomenal. Day trading was the trendy self-employed career of the day. Unfortunately, it also coincided with the tech bubble, and a lot of those internet-enabled traders ended up trading heavily in internet-based businesses.

so the bust, too, was phenomenal.since then, of course, there’s been economic

recovery and economic collapse again. But all the while, the tools available to traders have carried on improving, and now, in the second phase, an even better-equipped day trader has emerged.

They also need to be more savvy, and learn from the triumphs and failures of the past, which is where mark Ingebretsen’s fascinating book comes in.

Originally written in 2001, in it he interviews twelve real-life day traders and shares their stories: the strategies they use, the mistakes they’ve made, the triumphs they’ve earned.

It offers an up-close look at what it took to be successful the first time round; and how that will help anyone looking to be successful today.

A critical insight that emerges from the book is that, as the author says, “an average intelligent person can indeed succeed at trading”. By the end, you’ll be persuaded of this too – and much better armed to be one of them.

stop orders A PrACTICAL GUIDE TO USING STOP

OrDErS FOr TrADErS AND INVESTOrS by Tony Loton

All those who have even the most basic knowledge of trading and investing will know of the stop order tool. stop orders can be used with any tradable security or financial instrument – including equities, exchange traded funds, currencies,

commodities, options, contracts for difference and spread bets – to help manage losses and improve profitability. However, even though this is an essential – perhaps the most essential – tool available to traders and investors, it is often poorly understood and regularly misused.

Unfortunately many books on trading and investing only include a short section on the topic and gloss over the finer points somewhat. Tony loton’s stop Orders redresses this balance by dedicating a whole book to the subject.

In a lively and engaging style, loton runs through the different kinds of stop order available – including buy and sell orders, and trailing stops – and then moves on to how to apply stop orders effectively at entry and maintain them properly until exit, how to limit downside risk by combining stop orders with effective position sizing, and explains what you should do if the market gaps and you get stopped out. In a particularly valuable section, the book examines the practical applications of the various stop order tools and outlines some ways to use different stop order techniques when placing your trades.

Whether you are a trader, investor or spread bettor, you will find something of value here – this book will help everyone to see the importance of the stop order for containing losses, locking in profits and, as a result, being successful in the markets.

7 chartInG tools for spread BettInG A PrACTICAL GUIDE TO MAKING MONEy FrOM

SPrEAD BETTING WITH TECHNICAL ANALySIS

by Malcolm Pryor

spread betting lends itself especially well to charting tools, but getting properly acquainted with the ones that are going to be most helpful to your trading is rarely a simple process.

You can take your chances on the web, or pour

your money into the pockets of seminar organisers, and still be left without a really full and practical idea of a tool’s potential.

This is what makes malcolm Pryor’s 7 Charting Tools for spread Betting such a valuable book.

The author has also written the definitive guide to spread betting, and a number of strategy books/DVDs. Here he takes the same thoughtful and incisive approach to setting out a range of valuable charting tools – and demonstrating how they work through detailed and often compelling examples.

The tools in question are ATR, Directional movement, moving Averages, support and Resistance, Oscillators, Relative strength and momentum.

Each chapter takes the reader through a detailed look at how the tool in question is constructed, then at its strength and weaknesses. After this, the tool’s available settings and potential uses are laid out, followed by an in-depth worked example of it in action.

Pryor is a great writer of plain and logical prose, even when explaining some abstruse concepts, and these chapters are brilliant introductions or refreshers to potentially turgid topics.

With the advice steadfastly practical throughout, you’ll be itching to incorporate some of these gems into your own trading and reap the rewards. And thanks to this book, that’s no longer a difficulty.

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