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Brokers and Banks as an Institutional Trader 4 replies

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Is anyone here an institutional trader?

Quoting skenobi
{quote} This is what I do when I see other people's stops: I run them. When I run stops, I don't use stops on those runs, because my targets are usually less than say 20 pips for a short term kill. Some guys go for more, I guess I'm not that greedy. I do use mental stops however in case my runs go sour. That takes discipline which the Banks pay me big bucks for. When I run stops, trend direction is always at the back of my mind, but not a factor because, as I've implied, my targets are very short term. I don't use technical tools other than my...

can you explain to me what you mean when you tell you run stops. I didn't undestand that.
Quoting 21vs7
{quote} True, otherwizze there is deeper sized market there...you can liquidate 50 with ease on majors even EURPLN 50 eur is nathing I hitted 70 Mil EURJPY with no problem one ticket spread 17 pippers interbankmarket
Conversely I've been partial filled on 5 minilot limit order on USDJPY during the NY session outside of news before.
The more money i made as a hedge fund manager was related to the management fees more than the performance fees
The main problem you fce is to keep your customers; even if the return is good they are very greedy and can jump easily from your fund to an other one so the energy spent to keep your customers is phenomenal and you are not trading during that time ( of course it was not a billion dollar hedge fund with huge back office team)

And even with a long and excellent track record it is not that easy to attract customers.
I remember a conversation with a family office partner ( former senior vice president from JP Morgan) managing hundreds of millions who told me : # we cannot invest in your hedge fund because my team , even if the due diligence shows that your system is very profitable, don't understand how come you are profitable using this system!!
It was a a system a little bit complicated on futures, hedging european markets against american market so involving parity exposures.

For the info I set up 3 hedge funds, 1 in luxembourg and 2 in BVI
Quoting xoxo12
{quote} can you explain to me what you mean when you tell you run stops. I didn't undestand that.
(There are a few variations. This is one.)

When I see somebody else's buy stop (for instance), I (usually in confederation with other like-minded counterparties) will pay up "in size" until the stops are filled, and then close off our longs just as quickly.

Note that in all cases, retail trader stops are not even glints in our collective eyes i.e. we only trade with institutionals and OUR market prices are transmitted to the retail world. If retail trader stops get killed as a result of what we did, it's just collateral damage.
I'm not trying to convince anyone. I'm not in the "convincing" business.
It's really great to learn how institutional traders trade!

Can you tell me what timeframe you use to trade?
I think you can trade any timeframe whenever you see opportunity, right?

I currently use tick chart to track and follow your movements .
I use tick of EUR/X and USD/X to trade EUR/USD.
Is it the right way?

Thank you and Have a nice day!
When you lose, I'm the loudest who laugh at your face )
Quoting Zelo
It's really great to learn how institutional traders trade! Can you tell me what timeframe you use to trade? I think you can trade any timeframe whenever you see opportunity, right?
Yes. Except for M1, weekly and monthly. And tick charts, coz I don't know what the heck a tick chart is. And I don't know anybody who trades them. Sounds like a nutty way to trade, but what the heck do I know..

Quoting Zelo
I currently use tick chart to track and follow your movements . I use tick of EUR/X and USD/X to trade EUR/USD. Is it the right way?
The right way is whatever makes you money, mate.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting skenobi
{quote} It's a process, not a skill. A market maker makes markets to "discover" the current price. And it doesn't take great skill to make markets. You just show your bid/ask quote and wait for someone to hit or take you. The skill comes in not losing money while doin' it.
Thanks for that heads up.
The road to pipland is arduous and fraught with challenge.
Quoting skenobi
{quote} Yes. Except for M1, weekly and monthly. And tick charts, coz I don't know what the heck a tick chart is. And I don't know anybody who trades them. Sounds like a nutty way to trade, but what the heck do I know.. {quote} The right way is whatever makes you money, mate.
Hi S,
Can I ask - do you still work for an institution - Hedge fund bank?
Quoting skenobi
{quote} (There are a few variations. This is one.) When I see somebody else's buy stop (for instance), I (usually in confederation with other like-minded counter-parties) will pay up "in size" until the stops are filled, and then close off our longs just as quickly. Note that in all cases, retail trader stops are not even glints in our collective eyes i.e. we only trade with institutional and OUR market prices are transmitted to the retail world. If retail trader stops get killed as a result of what we did, it's just collateral damage.

I can appreciate 'collateral damage'.....Good information for new traders or those seeking out knowledge.....
Gregory D. Alexandr
  • Post #130
  • Quote
  • Edited at 3:35am May 29, 2014 2:56am | Edited at 3:35am
Quoting spieler
The more money i made as a hedge fund manager was related to the management fees more than the performance fees The main problem you fce is to keep your customers; even if the return is good they are very greedy and can jump easily from your fund to an other one so the energy spent to keep your customers is phenomenal and you are not trading during that time ( of course it was not a billion dollar hedge fund with huge back office team) And even with a long and excellent track record it is not that easy to attract customers. I remember a conversation...
Not wanting to state that it a bit odd to have Institutional traders posting on FF ..
But anyway, yes Indeed. Once you set up shop you need to be a good at sales to get that OPM. You do need to show some positive return, but there is a lot more money to be made from management fees than from trading.
Quoting skenobi
{quote} retail trader stops are not even glints in our collective eyes i.e. we only trade with institutionals and OUR market prices are transmitted to the retail world.
thanks for your comments, skenobi. I wanted to ask you about barrier options and other exotic options in institutional fx trading. One hears about those being very large sometimes. Do all institutional traders know where they may be & their size on any given day? and is the presence of those something that traders are mindful of...?
"If The Fool persists in his Folly he will become wise." - William Blake
Quoting skenobi
{quote} I don't use technical tools other than my own eyes and price action on the screen.

Awesome insights Obie One, thank you
like totally failure brah
Quoting goldenmember
{quote} Conversely I've been partial filled on 5 minilot limit order on USDJPY during the NY session outside of news before.
Im talking about interbank market
Quoting skenobi
{quote} Sounds like you don't even have a plan for what you want in 10 years. As for not having entrepreneurial qualities, it's something that can be developed and learnt. Don't wait till it's too late though. Good luck!

Hi...Mr. Skenobi...can u explain your trading strategy and technique?

Thx
Quoting stewrigh
{quote} Hi S, Can I ask - do you still work for an institution - Hedge fund bank?
Semi-retired in 2011 after 16 years. Now trading on my own.

Quoting Mingary
{quote} Not wanting to state that it a bit odd to have Institutional traders posting on FF
Well when I became a FF member in '07, I was the only institutional I know on FF. I don't know of any other current institutional trader posting here, but am presently retired.

Quoting The Fool
I wanted to ask you about barrier options and other exotic options in institutional fx trading. One hears about those being very large sometimes.
I've written about this in other threads. To repeat: barrier options (or any derivative instrument for that matter) on their own DO NOT AFFECT spot fx prices, however "large" the face amount of the option trade. What DOES potentially affect spot prices are the delta hedging activities related to the option trade and any spot activity (which need not be even the same large size as the barrier) designed to trigger the knock-out or knock-in features of a barrier.

IT DOES NOT MATTER if the particular orders being attacked are delta-hedge-related or barrier-related or not. If you really think about it, who the hell cares? WHAT DOES MATTER is that there are orders being tested and what are you (as a trader) going to do about it.

Quoting The Fool
Do all institutional traders know where they may be & their size on any given day? and is the presence of those something that traders are mindful of...?
OTC (over the counter) options trades are traded by 2 counterparties. When Bank A transacts with Bank B, it's pretty obvious the spot traders in both Banks A and B will know the trade details from their respective options trader colleagues. I'll leave it to your imagination as to how the details could leak out....

To re-iterate: knowing barrier option level attacks or defences does not confer the retail trader any visible advantage. All the retail trader needs to know is that a particular support/resistance zone (what barrier attacks/defence is really all about) is seeing some considerable activity.

Being able to explain away this or that activity as option-related may make a retail trader seem smart. But that's all that it does.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting EinsWaltz
{quote} Hi...Mr. Skenobi...can u explain your trading strategy and technique? Thx
Since becoming a civilian, I trade mostly break-outs and fake-outs, sprinkled with some educated guesses as to where the order clusters are for target-settings.

I can't really go into it too much. I don't really have much of a technique, just guidelines.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting skenobi
All the retail trader needs to know is that a particular support/resistance zone (what barrier attacks/defence is really all about) is seeing some considerable activity.
I'll second that, indeed this is what I do; works for me.
lol.. civilian

Quoting skenobi
{quote}I don't really have much of a technique, just guidelines.
Is there an EA for this?
like totally failure brah
Quoting simonb
Is there an EA for this?
"Always be yourself " Batman
You guys mentioned that we , retail traders , have a certain advantage vs the institutional traders because we don't always have to trade. We CAN just wait... On the other hand you also said, that the boss in an institutional firm or bank really don't give an F about "how" you make your money as long as you make it, right? So if it is better to trade from "outside" , then why don't those firms "hire" outsider traders to trade for them?Why it is that prop trading is declining? (I'm not sure what prop trading really is but i'm guessing that it is giving an "external" person some of the firm's money to trade it, but that person is not a bank/hedge fund/ institutional firm employee... am I right?)

ALSO :

When the target goes up from 1 million to 25 million , and if you work for a bank that basicly has no limit of money amount that can be used by its traders. then why not just take the same kind of positions and make them 25 times bigger? I'm sure it is a stupid question but I don't have the exact answer and I really am curious ...
"Always be yourself " Batman
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