This is a very interesting post on a poker forum I visit. The thread is about how poker rooms are making poker... not poker. (taking away high-stakes, taking away big tables, taking away things that makes poker players play and turning their room into Bingo Night)
I've been trying to put this into a trader's perspective. If there are sharks and fish, who are they? First, I need to find out who the market participants are.
The market participants range from central banks, interbanks, companies, hedge funds, to retail.
A central bank manages a state's currency, interest rates, and money supply. Their actions are usually referred to as an "intervention".
Banks such as the Deutsche Bank, UBS, and Barclays provide services for corporate and institutional clients.
Companies hedge against potential rising cost.
Hedge funds speculate to profit, are considered institutional.
Retail includes the retail broker and retail trader.
All together, on average, they turn out about five trillion dollars in daily volume. (2011) Retail accounts for about 217 billion dollars. (2011) That's about 4% of daily volume. This includes the broker facilitating the trade for the retail trader. So, one could say that the retail trader volume is only 2%. People like to say that the "big boys" do things like stop hunts. Surely, they wouldn't be profiting by hunting the retail traders, would they? I don't think they would be able to. With this, it seems retail has it's own ecosystem. The retail trader is the most numerous amongst the participants, though are only alive because the retail broker allows them to live. This is like a jellyfish that grows algae in itself.
Interbanks provide the liquidity for hedge funds and companies. The funds are looking to profit, while the companies are looking to minimize their loss. A fund can easily be seen as a shark, but what about a company? Is it a whale or a fish? Is it something else? What about the interbanks?
The central banks work hand-in-hand with their governments. This brings the idea of economic warfare. To prevent Iran from getting nuclear capability, there has been numerous sanctions placed on the nation. It's currency has dropped 80%. If the enemy can't buy any guns or bullets, how can they fight?
I've used google, wiki, and this site for some sources. Though, I would like to know what others think. I am sure I am not completely correct in my information; if I am wrong, please, let me know.
QuoteDislikedIt's not a logic of revenues. It's now an issue of the eco-system itself.
How do you produce rake? Rake is created from deposits (yes it doesn't appear magically).
Who makes deposits in order to sustain enough liquidity of money to have a viable system? Fishes because they go broke and then deposit. Repeat and rince.
If you have a network that has a ratio regs/grinders > fishes, your model will collapse at one point. So you need enough fresh deposits every month in order to cover the amount of rake produced. Simple example on small sample:
Let's say your network has a total of 10 players with 5 grinders and 5 fishes. All have the same BR of 1k€ each.
Grinders never deposit again because they never go broke/get bonuses from VIP plan to at least breakeven and only the 5 fishes deposit 200€ per month. Total deposit per month: 200*5=1000€
Grinders rake each 200€ per month and fishes rake each 50€ per month. That's a monthly total rake of 1250€.
Knowing that you have 1250€ rake produced from money of players and 1000€ deposited each month it means that in the space of 40 months, there is 0€ money left on any account of the 10 players or simply Regs/grinders stop giving each other action or they reduce the volume played?
I'm not saying regs are better than fishes for the rooms but I'm saying that they have more interest in "protecting" their fishes with more bonuses or limit the stakes they can play (reason why highstakes are being removed on Party) so they don't lose their money too fast etc... Also that's why you don't see rooms offering high RB % or rake races anymore (way less than years ago). And also reason why they limit action regs/grinders can have (by limiting # tables etc...) so they don't eat too fast the liquidity of money of the network by either turning it into rake or profit because once it's profit, regs don't give it back to the network liquidity....
The market participants range from central banks, interbanks, companies, hedge funds, to retail.
A central bank manages a state's currency, interest rates, and money supply. Their actions are usually referred to as an "intervention".
Banks such as the Deutsche Bank, UBS, and Barclays provide services for corporate and institutional clients.
Companies hedge against potential rising cost.
Hedge funds speculate to profit, are considered institutional.
Retail includes the retail broker and retail trader.
All together, on average, they turn out about five trillion dollars in daily volume. (2011) Retail accounts for about 217 billion dollars. (2011) That's about 4% of daily volume. This includes the broker facilitating the trade for the retail trader. So, one could say that the retail trader volume is only 2%. People like to say that the "big boys" do things like stop hunts. Surely, they wouldn't be profiting by hunting the retail traders, would they? I don't think they would be able to. With this, it seems retail has it's own ecosystem. The retail trader is the most numerous amongst the participants, though are only alive because the retail broker allows them to live. This is like a jellyfish that grows algae in itself.
Interbanks provide the liquidity for hedge funds and companies. The funds are looking to profit, while the companies are looking to minimize their loss. A fund can easily be seen as a shark, but what about a company? Is it a whale or a fish? Is it something else? What about the interbanks?
The central banks work hand-in-hand with their governments. This brings the idea of economic warfare. To prevent Iran from getting nuclear capability, there has been numerous sanctions placed on the nation. It's currency has dropped 80%. If the enemy can't buy any guns or bullets, how can they fight?
I've used google, wiki, and this site for some sources. Though, I would like to know what others think. I am sure I am not completely correct in my information; if I am wrong, please, let me know.
Play the players, not the cards.