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Anyone here profitable? Show your Live Earnings here 3 replies

Brokers and Banks as an Institutional Trader 4 replies

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Is anyone here an institutional trader?

Quoting rdsl
{quote} 1. Making a lot of money. (Earning a lot of money as a trader for a hedge fund) 2. Becoming a millionaire. (i think an amount of 50 mill would do it for me personally) 3. Making a lot of money. 4. Living a financially free life. 5. Making a lot of money. 6. Not having to worry about money. 7. Making a lot of money. 8. Retiring young (and rich). 9. Making a lot of money. I think you get the idea Thanks !
Base salary for most traders is not that high, so you're relying on being very good and getting a massive bonus. Prop trading has declined significantly in recent times and even execution trading is being pushed to algos more and more. It's not a career to go into, because there are decreasing opportunities. In terms of financial freedom and so on, well as you earn more you spend more, but you'll still have financial worries and if you did actually find a prop role you'd have worries about that account, so money worries will persist. It's hard work getting in that early and trading all day, I wouldn't call it free.
Quoting traider
{quote} So generally, has the exposure to flows as you experienced them whilst working, helped you in any way? I would have thought so if you are still at the coal face of service provider.
Flow (or orders) coupled with an uninformed customer is what banks (not just mine but ALL banks) rely on. I was a dealer in FX Forwards and NDF's in emerging Asian currencies so it was easier to take advantage of the customers ignorance. This was a much more difficult task my for my friends who quoted Spot FX, everyone knew where the spot markets were at all times. If a customer is not familiar with the market and the way it trades due primarily to lack of transparency then you try to make as much as you can off that particular deal. That's why most losses that you read about in the papers are primarily in the Derivatives space (no one knows how to mark to market those deals hence easier to deceive.) That was earlier in my career when customers didn't have access to the information I had and by information I mean where the prices are actually trading in the market and what the liquidity situation was, etc. As time went by, customers became smarter and demanded better (fairer pricing) and then flow started to become an albatross around the dealers neck, especially when it came to quoting the Hedge Funds ( god I hated those FKs!!!).

But I think you meant Spot FX flows, at least in my bank dealers were not allowed to front run the customers orders, except the dealer working that order. I'll give you an example, a very good friend of mine ran the Spot GbP/Usd book. He was given an order to sell 2 yards (billion) of gbp/usd at best and the entire desk and bank for that matter knew it but none of us could trade ahead of that or during the time he work the order nor could we trade any GBPxxx's. All we could do is watch him drive gbp/usd lower by 250 pips in the matter of an hour or so. It was great fun to watch but we couldn't capitalize on it. That's the kind of trade, if you knew when it was coming could make you entire year.

That was my experience, I'm sure other dealers have different experiences and I have heard some great stories but it didn't happen as much as I would have thought. But then again that's not real trading that's good market making and execution.
Quoting JacobFordFX
{quote} Flow (or orders) coupled with an uninformed customer is what banks (not just mine but ALL banks) rely on. I was a dealer in FX Forwards and NDF's in emerging Asian currencies so it was easier to take advantage of the customers ignorance. This was a much more difficult task my for my friends who quoted Spot FX, everyone knew where the spot markets were at all times. If a customer is not familiar with the market and the way it trades due primarily to lack of transparency then you try to make as much as you can off that particular deal. That's...
250 pips on only 2 yards? Was it a very thin day?
Quoting SupraSense
{quote} 250 pips on only 2 yards? Was it a very thin day?
If I remember correctly it was a NY Friday afternoon, which greatly helped the decline It's nice to have that kind of customer that just needs to get it done regardless of price.

It reminds when I first started out and my boss telling me how the bank got customer orders over the telex machine to buy and sell various currency pairs. They would wait until the end of the day and fill the Buy orders near the day's high and the sell orders at the day's low. How could you not make money in that environment!!!!!

Crazy right, I started way too late. But like I said in my last post that's not trading that's stealing. I have more respect for the retail trader who trade their own capital than some of the so called professional dealers I worked with who couldn't trade their way out of a paper bag and couldn't make a penny if it wasn't for having great flow and dumb customers.
Quoting JacobFordFX
{quote} If I remember correctly it was a NY Friday afternoon, which greatly helped the decline It's nice to have that kind of customer that just needs to get it done regardless of price. It reminds when I first started out and my boss telling me how the bank got customer orders over the telex machine to buy and sell various currency pairs. They would wait until the end of the day and fill the Buy orders near the day's high and the sell orders at the day's low. How could you not make money in that environment!!!!! Crazy right, I started way too...
Yep. I think those dumb customers need to take a fair amount of the blame too though. I mean no trader here would just log on and click buy without at least seeing a bid/ask
Thanks for sharing your experiences! It's always interesting to know how is it like trading for institutions.

Regarding an increasing target every year, the target is set by % of return or actual $?

if its %, is it possible to keep increasing? Usually the bigger the fund size, your possible return% should be lesser? What is the target return% normally given?
  • Post #27
  • Quote
  • Edited 4:14am May 25, 2014 3:27am | Edited 4:14am
Quoting JacobFordFX
{quote} All we could do is watch him drive gbp/usd lower by 250 pips in the matter of an hour or so.
So he didn't care about any 'technical' aspect (pivots, Fibonacci levels, SMA) or any fundamental outlook, did he? Does price action offer any clue when this kind of action takes place (candlesticks or bars bodies, retracements, velocity, tick volume etc.)?
Quoting Pollux
{quote} So he didn't care about any 'technical' aspect (pivots, Fibonacci levels, SMA) or any fundamental outlook, did he? Does price action offer any clue when this kind of action takes place (candlesticks or bars bodies, retracements, velocity, tick volume etc.)?
Clues abound and it pays to do your homework. These clues will most certainly not be given away. Good luck and prepare yourself for lots of hard graft.
The road to pipland is arduous and fraught with challenge.
Quoting SupraSense
{quote} 250 pips on only 2 yards? Was it a very thin day?
I trade 15 min spot and daily sentiment and generally expect, at best, 180 on a good day (usually with the europeans and kiwi). Do you regularly get better than that and which pairs? Ta
The road to pipland is arduous and fraught with challenge.
Quoting traider
{quote} Clues abound and it pays to do your homework. These clues will most certainly not be given away. Good luck and prepare yourself for lots of hard graft.
that is easy. even birds know that. this guy will start selling when you are buying.

how else could it be ?!?
Quoting skenobi
{quote} I can approach that question from a few different angles. To save time, give me your own points why you want to become one, and I will shoot down each point one by one.
I want to jump in on this one...

  1. Access to expert knowledge from the experienced guys, I'm assuming you would get extensive training and a mentor.
  2. The knowledge comes from those who know what they're talking about or they would have been fired by now, as opposed to lots of keyboard warriors.
  3. In the midst of it all, that must be like the pit traders who had a feel for what was happening around them just by fellow traders.
  4. Access to cool stuff, terminals and the like.

That basically all boils down to a training phase, that's the enticement for me...


What I don't think I would like is:

  1. Dog eat dog world.
  2. Crazy targets.
  3. Long and stupid hours.
  4. Earning money for someone else.


So, what's your take on those skenobi?

Quoting Pollux
{quote} So he didn't care about any 'technical' aspect (pivots, Fibonacci levels, SMA) or any fundamental outlook, did he? Does price action offer any clue when this kind of action takes place (candlesticks or bars bodies, retracements, velocity, tick volume etc.)?
When you say he do you mean my friend or the customer? Actually the answer is the same, the customer just wanted to get it done. My friend didn't just sell blindly but he thinks someone on the sales desk try to kiss up to a hedge fund and May have tipped them off to what he was doing and sold along with my friend making the the move more exaggerated. Those are the kind of bars or candlesticks you see on charts that have no news behind it.
Quoting traider
{quote} I trade 15 min spot and daily sentiment and generally expect, at best, 180 on a good day (usually with the europeans and kiwi). Do you regularly get better than that and which pairs? Ta
If you're looking for bigger pip moves I like to trade UsdMxn, UsdZar, UsdPln, UsdHuf, but those pips are not worth as much as say EurGbp so you would need to trade a bigger position to get the same USD p/l (not all pips are create equal)
Quoting lithium1
Thanks for sharing your experiences! It's always interesting to know how is it like trading for institutions. Regarding an increasing target every year, the target is set by % of return or actual $? if its %, is it possible to keep increasing? Usually the bigger the fund size, your possible return% should be lesser? What is the target return% normally given?
I traded for a bank, our budgets were determined by the product you traded and the currency pairs within that product. But usually the board of directors determines a pct increase in share value and it gets distributed throughout all the banks profit centers which includes sales and trading. Usually in my experience that just increase it in increments of millions. When I started my budget was only 1 million USD by the end of my career they wanted me to make 25 million (outrageous!!!)
  • Post #35
  • Quote
  • Edited 9:59am May 25, 2014 8:45am | Edited 9:59am
Quoting JacobFordFX
{quote} When you say he do you mean my friend or the customer? Actually the answer is the same, the customer just wanted to get it done. My friend didn't just sell blindly but he thinks someone on the sales desk try to kiss up to a hedge fund and May have tipped them off to what he was doing and sold along with my friend making the the move more exaggerated. Those are the kind of bars or candlesticks you see on charts that have no news behind it.
I was talking about your colleague. I thought that if the client didn't care for a specific price, your mate just sent the order to the market irrespective of S&R or other technical considerations (others than time of high(er) liquidity).
Quoting JacobFordFX
{quote} I traded for a bank, our budgets were determined by the product you traded and the currency pairs within that product. But usually the board of directors determines a pct increase in share value and it gets distributed throughout all the banks profit centers which includes sales and trading. Usually in my experience that just increase it in increments of millions. When I started my budget was only 1 million USD by the end of my career they wanted me to make 25 million (outrageous!!!)
Im just a small retail trader. So there are a lot of things that I don't understand.

Do you mean you were given a fund of 1 million. And they want you to turn it to 25mil in a year? That's 2500%!!! Are you serious or I'm getting it wrong...
Quoting sandy-pip
Access to expert knowledge from the experienced guys, I'm assuming you would get extensive training and a mentor.
Dunno what kind of "extensive" training a First World investment bank might give a rookie trader. Where I come from, a rookie has to make the rounds on the floor to learn up the tedious flow of treasury business, especially the regulatory compliance parts of it (the department that runs the trading floor is called the treasury department. Different banks will glam up the name and call it "Global Markets Division" or some similar puffery).

The trading training is pretty basic shite that you can just as easily get from places like Babypips. Or they'll send you to some Bloomberg or Reuters charting course where the trainers will give the rundown on how to use their terminals.

The bank will give you a minimum of 2 monitors (1 PC, and one Reuters or Bloomberg terminal) and you're left pretty much on your own. If they can see you don't have any talent in trading, they'll just move you to the treasury sales desks. They don't assign you a mentor. A mentor will seek you out if he sees fit to take you on. Don't expect to be trained from scratch if you don't already have talent built-in.

Read "Liar's Poker". The trading floor environment described in the book is annoyingly similar.

Quoting sandy-pip
The knowledge comes from those who know what they're talking about or they would have been fired by now, as opposed to lots of keyboard warriors.
Only if you have a mentor who likes you in spite of you.

Quoting sandy-pip
In the midst of it all, that must be like the pit traders who had a feel for what was happening around them just by fellow traders.
Erm.. pit traders are like soooooo 6 decades ago, mate. But I know what you mean. You think you'd like the "feel" of "knowing" stuff by being around fellow traders. You'll get over it pretty quickly, though.

Quoting sandy-pip
Access to cool stuff, terminals and the like. That basically all boils down to a training phase, that's the enticement for me...
Access to "cool stuff"? Seriously? As I implied before, Banks are not in business to give rookies "access". They're in business to make money. I understood that point a month into the job and was prepared to give up whatever spare waking moment I had to The Life. If you're not prepared to pay whatever price to lead the life you wanted to live, then definitely institutional trading is not for you.

So get used to the "dog eat dog", the "crazy targets", the "long stupid hours", and (especially) the pointless "enhancing of shareholder value".

Quoting JacobFordFX
But like I said in my last post that's not trading that's stealing. I have more respect for the retail trader who trade their own capital than some of the so called professional dealers I worked with who couldn't trade their way out of a paper bag and couldn't make a penny if it wasn't for having great flow and dumb customers.

Even with 15 years of experience trading for Banks, this ol' dog can still learn new insights from retail traders with skin in the game. Bank prop traders who couldn't wean themselves off of customer flow business could never survive trading on their own. These guys are not real traders. They're bullsh!t artists.

Quoting lithium1
Im just a small retail trader. So there are a lot of things that I don't understand. Do you mean you were given a fund of 1 million. And they want you to turn it to 25mil in a year? That's 2500%!!! Are you serious or I'm getting it wrong...
What he meant was: When he was rookie trader just starting out, his profit target was USD 1 million. By the end of his institutional career (he mentioned he's been doin' it for like 12 years), his target had already ballooned to 25 million.
I'm not trying to convince anyone. I'm not in the "convincing" business.
This is a great thread. Could some of the institutional traders here answer this question.

Does the retail trader have ANY usable visibility to the trade volumes that are occurring in the Spot FX market?

I get the feeling that even during "seemingly" low volume sideways movements the actual volumes might sometimes be huge,

and if known could it be a clue to future movement of price. I guess this could be back to this idea of order flow that has already been mentioned.

I guess that I am looking for confirmation that for the retail trader, Price is the ONLY indicator we have.

Thanks Guys
Thanks for all the fish
Quoting skenobi
{quote} Dunno what kind of "extensive" training a First World investment bank might give a rookie trader. Where I come from, a rookie has to make the rounds on the floor to learn up the tedious flow of treasury business, especially the regulatory compliance parts of it (the department that runs the trading floor is called the treasury department. Different banks will glam up the name and call it "Global Markets Division" or some similar puffery). The trading training is pretty basic shite that you can just as easily get from places like Babypips....
Good post. I think retail traders seem to think that most bank traders are making directional bets and prop trading. But it simply isn't true. There are lots of traders doing hedging jobs, execution, and a heck of a lot are just basically a sophisticated broker. It's wrong to think that these types have any great knowledge or understanding of how to trade directionally. Besides, I'd argue the majority of the best prop traders tend to move out of banks anyway and set up or join hedge funds. Yet somehow people think they will get super secrets about prop trading from working in a bank. Let me tell you prop trading is dying in banks. Partly due to regulations, but it's not only that. Traders jobs are being sourced to algos where possible and as a career it is dying. There are still some real traders about, but very few.
Quoting lithium1
{quote} Im just a small retail trader. So there are a lot of things that I don't understand. Do you mean you were given a fund of 1 million. And they want you to turn it to 25mil in a year? That's 2500%!!! Are you serious or I'm getting it wrong...
Skenobi answered the question perfectly. Thx

As far as training, Skenobi described the trading floor perfectly. I received no training whatsoever, I was told to take over certain FX Forward Currency pairs that didn't make any money and was told to try and turn them around. I had to figure it out myself, when you start to make money then and only then will you get some "guidance" but by that time I didn't really need them anyway.

Retail traders, don't sell yourself short. What we looked at as far as technical, charts, fundamentals, etc is pretty much the same thing that you look at as well. The Spot guys would always talk about highs and lows and support and resistance. Some would use that to "run stops" (meaning getting the price to trade that level to uncover s/l loss orders in order to make a few pips. So be careful where you put your stops, the bank traders will gun for them if they can!!!! Also, there was never any Hedge Fund's that did anything you and I wouldn't do, if eur was selling off because of Draghi's comments they sold like the rest of us only in size. Don't be impressed with Hedge Funds at least when it comes to the spot market. They don't know anymore or are anymore sophisticated that you are, its just a matter of degree. I give you another example, the biggest FX fund (or at least most well know) out there when I was in the business was FX Concepts. They gave back their customers money a year or two ago because they couldn't make money trading FX.

Give yourself some credit guys, if your making money be proud of yourself's....if not then you have to keep at it if you truly love it.

As far as volume, I never new what the total volumes were. All you went by was how much you traded and what information I could glean from the brokers. Not sure about the spot guys they used EBS and Reuters dealing machines, perhaps they showed total volume.
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