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Retail Trade Gains vs Pros

  • #1
  • First Post: Jun 30, 2013 5:49am Jun 30, 2013 5:49am
I was speaking with my uncle recently as i was showing him an intraday trade where i made 2%... I explained it's quite normal for some successful retail traders to make that sort of profit daily. He couldn't understand how that is possible when his investors at a big bank struggle to make him anything at all. I had no idea how to answer him...

So how can a consistent person among us retail traders make a few percent each week, where big fancy investors always seem to lose?! How can i explain this? Had the same question from my mother as her investors are doing crap!

Thanks, Ben
  • #2
  • Jun 30, 2013 6:04am Jun 30, 2013 6:04am
Quoting benjam1n
I was speaking with my uncle recently as i was showing him an intraday trade where i made 2%... I explained it's quite normal for some successful retail traders to make that sort of profit daily. He couldn't understand how that is possible when his investors at a big bank struggle to make him anything at all. I had no idea how to answer him... So how can a consistent person among us retail traders make a few percent each week, where big fancy investors always seem to lose?! How can i explain this? Had the same question from my mother as her investors...
Donīt confuse fund managers with traders. Goldmanīs prop operation seems to do well:

Quote
Goldman Sachs Group Inc. (GS), the Wall Street bank that generated 57 percent of its first-quarter revenue from trading, had a loss from that business on one day in the period, down from 17 during the preceding three months.
The firm’s traders made more than $100 million on 24 of the 62 days in the quarter ended March 31, according to a quarterly regulatory filing today by the New York-based company. The quarter produced the fewest days of trading losses since the first quarter of 2011, the...

http://www.bloomberg.com/news/2012-0...n-quarter.html
  • #3
  • Jun 30, 2013 8:52am Jun 30, 2013 8:52am
Quoting benjam1n
I was speaking with my uncle recently as i was showing him an intraday trade where i made 2%... I explained it's quite normal for some successful retail traders to make that sort of profit daily. He couldn't understand how that is possible when his investors at a big bank struggle to make him anything at all. I had no idea how to answer him... So how can a consistent person among us retail traders make a few percent each week, where big fancy investors always seem to lose?! How can i explain this? Had the same question from my mother as her investors...
if u are thinking to take some investment from ur uncle by showing him how u made profit it will be a


BAD IDEA
been there done that, Good Bye
  • #4
  • Jun 30, 2013 8:53am Jun 30, 2013 8:53am
its significantly harder to make someone else 2% in a day than it is to make your own account 2% in a day


unless of course your investors hand you $250 and say go nuts with it. that's completely different because if you lose $250 its not a big deal...

if they give you $100,000 and you lose it all its a big deal...

but if they give you $250 and you build it to $100,000 and then you lose it all... it doesn't matter because the investor didn't have to work for that money. all that was lost was profit.



the reason big firms dont typically make large % gains is a) they are market makers and b) they are much more sensitive to risk exposure than a small retail trader

but you gotta realize a 30% gain for a $1 billion+ fund is pretty good if you consider how extremely little they risk per trade, and how much their positions can move the market.
Be hopeful in a winning position, and fearful in a losing position.
  • #5
  • Jun 30, 2013 8:55am Jun 30, 2013 8:55am
Quoting WhiteHorse
{quote} if u are thinking to take some investment from ur uncle by showing him how u made profit it will be a BAD IDEA
you sound like a losing trader to me
your signature kind of confirms that.

this business is 10% luck
70%.. what a joke.


the 10% luck comes from market liquidity itself... when liquidity is high luck is less of a factor, when it is low, it is more of a factor (unless you aren't using tight stop losses, then it is no factor)
Be hopeful in a winning position, and fearful in a losing position.
  • #6
  • Jun 30, 2013 9:01am Jun 30, 2013 9:01am
Quoting Rag2RichesFX
{quote} you sound like a losing trader to me your signature kind of confirms that. this business is 10% luck 70%.. what a joke. the 10% luck comes from market liquidity itself... when liquidity is high luck is less of a factor, when it is low, it is more of a factor (unless you aren't using tight stop losses, then it is no factor)
yes I am a losing trader, even after 7 years of trading I am just able to take 12 to 15k per month from my trading as profit, while I shud be able to pump quite more.

btw its always a bad idea to trade some body elses money, specially if he is close relative, because when u lose, u just dont lose money but also relations.
been there done that, Good Bye
  • #7
  • Last Post: Jun 30, 2013 9:14am Jun 30, 2013 9:14am
Quoting WhiteHorse
{quote} if u are thinking to take some investment from ur uncle by showing him how u made profit it will be a BAD IDEA
God no, that would be a bad idea indeed and i have no need to...

Thanks a lot Rags2Riches, your response really helped!
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