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Is anyone here an institutional trader?

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 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.
thanks for answering my questions
Quoting rdsl
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...
I think Skenobi mentioned the part about having to trade everyday. I know for myself I did not whether I was ahead of budget or not, but that was just me. I do agree the Boss will come around and ask what positions you have on. If the market is quiet then the boss wouldn't expect you to have anything on BUT if the market is volatile and trending and you are not involve and others around you are making money and you have your proverbial thumb up your ars then you're in trouble.

Banks only care about their traders making budget. Its no excuse to say "the order flow wasn't as much as last year and therefore I couldn't generate any pnl". That's why I (all of us) put on discretionary positions.

No offense, but banks won't hire someone from the who just prop trades, especially after all the scrutiny post 2008. You have to run a trading book to facilitate customer business which is a completely different skill set. Banks to hire based on education primarily if you have no experience and then you learn as you go.

Your last point is somewhat valid, budgets go up no matter what. The degree to which they do depends on a lot of things. For example, I traded China, Taiwan, Philippines, Singapore, Thailand, Mexico (forwards and NDF's). I had a bigger budget than say the spot Eur dealer because my currencies had bigger spreads more volatility and I had more currencies. The Bank therefore expects me to make more because I should have more potential to make money. And yes, if the customer flow isn't there to make that budget I have to compensate by trading bigger size and look for opportunities elsewhere.
Quoting skenobi
{quote} 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.
Hmmm...what is your guidelines?
Thanks skenobi & Jacob for the sharing your knowledge!

A couple of questions for the two of you:

1) Do you believe getting flow information (who's been buying/selling what and the order levels) is overrated?
2) I've seen reports written by the bank dealers in which they describe what happened, bit of flow info, key intraday levels etc. They also mention some of their own trades and what they are looking to buy/sell. Is that real or are they just putting out some ideas to get the clients to trade?
3) Why can't an important client not just call a dealer directly, but needs to get the order through a salesperson? Isn't that slowing the process?
4) Is it true that the central banks do much more speculation in the FX market than most people believe? What about the real money funds?

Thanks very much
Quoting CaymanTrader
Thanks skenobi & Jacob for the sharing your knowledge! A couple of questions for the two of you: 1) Do you believe getting flow information (who's been buying/selling what and the order levels) is overrated? 2) I've seen reports written by the bank dealers in which they describe what happened, bit of flow info, key intraday levels etc. They also mention some of their own trades and what they are looking to buy/sell. Is that real or are they just putting out some ideas to get the clients to trade? 3) Why can't an important client not just call a...
I'll be happy to give you my thoughts

1) I traded NDF's not the majors so my perspective may be a bit different. Order flow is good from that standpoint we dealers would share amongst ourselves where we had orders to buy and sell in our currencies. For example a colleague may want to sell USD Philippine but I may have bids lined up, I would tell that dealer they would have to get through some big bids before it cracks and he should wait until the orders get cleared out. It also gives us some protection and opportunity BUT there wouldn't be any way for you (or anyone outside my bank to know that at least without getting into serious trouble but people talk). BUT ultimately if an order can move the market its a good order if the market doesn't move than its really pointless. I will say if a particular Hedge Fund that I respected came in with an order I would take notice and share that info.
Again, the retail trader would never get this information (nor should any other institution but my own).

So maybe you or someone here can tell me what you mean by order flow from your perspective? I'm curious how you get your information or how you interpret order flow. From my standpoint unless you run a trading book or a friend of yours does there shouldn't been any possible way to know the flow.

2) those reports are real, we do that, like you said, to try and generate customer business usually from the Fund side (corporate don't trade they just hedge). Whether you have a position in it is probably not a requirement. We just need to tell a good story which economist and strategists are very good at.

3) Dealers don't talk to the customers directly because the salespeople are paranoid and do not want to get left out of the loop. Them being the intermediary is how they got paid, they will protect that relationship like a cornered animal. But don't get me started on sales people I'm trying to keep my blood pressure down

4) I couldn't answer the last question regarding central banks, they didn't deal with our bank as far as leaving orders or trading with us. Except the HKMA (Hong Kong CB) I would talk to them when ever the spot got close to their floor at which point they would be in there for yards and yards and yards of dollars, no one succeeded in breaking that floor.
Quoting JacobFordFX
{quote} I'll be happy to give you my thoughts 1) I traded NDF's not the majors so my perspective may be a bit different. Order flow is good from that standpoint we dealers would share amongst ourselves where we had orders to buy and sell in our currencies. For example a colleague may want to sell USD Philippine but I may have bids lined up, I would tell that dealer they would have to get through some big bids before it cracks and he should wait until the orders get cleared out. It also gives us some protection and opportunity BUT there wouldn't...
Thanks very much Jacob.

Well there are bits of info here and there that are even accessible to retail traders. There are people who share the info they get from the "insiders" or from the dealers/salesperson reports that make the rounds. A few of them are on Twitter. Also, some of the newswires like IFR and MNI are reporting on flows and orders, though I cannot tell how reliable they are. When I read IFR, it looks to me like they are guessing most of the times, based on basic support/resistance levels.

The tough part is to filter the information...some information can be valuable, like "Buba buying EURGBP on month-end demand" or big orders on the e-platforms, which sometimes hold very well, especially in the current low-volatility environment.
Quoting CaymanTrader
{quote} Thanks very much Jacob. Well there are bits of info here and there that are even accessible to retail traders. There are people who share the info they get from the "insiders" or from the dealers/salesperson reports that make the rounds. A few of them are on Twitter. Also, some of the newswires like IFR and MNI are reporting on flows and orders, though I cannot tell how reliable they are. When I read IFR, it looks to me like they are guessing most of the times, based on basic support/resistance levels. The tough part is to filter the information...some...
I would be surprised if a dealer from a bank would share there order flow with anyone outside of their institution, that's a breach of the code of conduct at my bank. I agree with you, the so called flows and orders look like technical levels, which I'm sure will have orders there but unless its the net position of all institutions trading FX its like you said "bits of info here and there". I not saying they are lying I just don't believe a bank like Goldman or JPMorgan would tell the general population where they have buy and sell orders and the amounts, for two reasons. One, I believe it to be a breach of their code of conduct and two, maybe more importantly they would lose their "edge" if they told people what their order books looked liked and you could be dam sure the customers who's orders they are would not at all be happy.

I can see maybe retail platforms divulging that information but that would piss me off to know my interest is being shown as a marketing tool for some eFx platform. Would anyone on this sight really want their provider to include your order buy eurusd at say 1.3600 on some report. If I see something like that then you know what I do, I put an order to buy at 1.3601. So whatever edge you had by placing your order there has just vanished because maybe you broker just sold your order to a Flash Firm (high Frequency trading firm) so those guys can front run you.

I know the institutions that deal in big size, that can be different for different depending on the ccy pair, would never put orders on platforms, especially not stops, they would want a dealer working that stop loss so they have the benefit of discretion.
Quoting JacobFordFX
{quote} I would be surprised if a dealer from a bank would share there order flow with anyone outside of their institution, that's a breach of the code of conduct at my bank. I agree with you, the so called flows and orders look like technical levels, which I'm sure will have orders there but unless its the net position of all institutions trading FX its like you said "bits of info here and there". I not saying they are lying I just don't believe a bank like Goldman or JPMorgan would tell the general population where they have buy and sell orders...
What about the reports they put out for their clients? The one's from the dealers and the one's from the salespersons. They don't mention anything very specific, but I've read things like "We sold good amount for macro fund", "We have offers from RM name at level x", "CTA stops below level x" and so on.

And what is your experience with the newswires? Do the institutional traders pay any attention to them when it comes to such information?
Quoting CaymanTrader
{quote} What about the reports they put out for their clients? The one's from the dealers and the one's from the salespersons. They don't mention anything very specific, but I've read things like "We sold good amount for macro fund", "We have offers from RM name at level x", "CTA stops below level x" and so on. And what is your experience with the newswires? Do the institutional traders pay any attention to them when it comes to such information?
Those reports have some value to clients. I can see reporting that a Macro Fund sold or bought in size AFTER the fact. The bank looks good for providing that information and it's good marketing material to show other potential clients "We are the bank that the big funds trust with their orders" and for the fund its great because they are already in their position, quietly I may add, and now the bank is advertising the fact and they will get people to follow the trade thus helping their position out.

I have never seen anything on paper that divulged a customers name or interest at a "specific level". I've seen and did myself make general statements about potential support and resistance BUT never specifics. Again, the customer trust you to be discrete with any and all orders if they find out they you have breached tat trust you are f**ked.

Newswires are good if they are timely. Trade the News is what we used because they reported numbers news etc as it happened, but also we are seating there at our desk (as you all are as well) watching the action and if its market moving news we prepare to make prices to clients. I'll read a lot before and after certain key events but during I watch the price action and doing price discovery.
This is an example of the kind of information I get now. This is from a friend from Reuters who puts these "flow" reports out. I can see where it can be useful but when I was dealing I never looked at it. I did give this person general info from time to time because he was friend and he had many in the market that with help him put this kind of thing together.


BUZZ-USD/CAD- Order boards tighten up

May 29 9:38am By

  1. Light Corp bids 1.0850, better size 1.0835/25/00; Stops below
  2. Model sell stops sub 1.0770, RM buyers/ hedgers 1.0750 & 20
  3. Spec offers 1.0875/80, Corps1.0895, 1.0915; Models 1.0940
  4. Buy stops 1.0900, 30 & 40; Closest opt exp 1.0875 Options Calendar 1
  5. S/T momentum models are short, pivots: 1.0867 & 1.0876
  6. System SARs buy Cl < 1.0890, 95, 1.0940, 90, 1.1010 & 15

Quoting JacobFordFX
This is an example of the kind of information I get now. This is from a friend from Reuters who puts these "flow" reports out. I can see where it can be useful but when I was dealing I never looked at it. I did give this person general info from time to time because he was friend and he had many in the market that with help him put this kind of thing together. BUZZ-USD/CAD- Order boards tighten up May 29 9:38am By Light Corp bids 1.0850, better size 1.0835/25/00; Stops below Model sell stops sub 1.0770, RM buyers/ hedgers 1.0750 & 20 Spec offers...
Looks just like what one using IFR would get. To my knowledge, MNI does the same thing but I never used them. You can also get reported order flow information from sites like ForexLive or Darkstar's orderflowtrading.

One thing we retailers should note is that these are "reported" flows. They aren't cold hard fact, so you can't just rely on them. Price action definitely helps in confirming them and allows you to "read" the past order flow and get a story of what is going on. The reason they tend to cluster around S/R is because so many participants rely on S/R. This causes S/R to have orders around that level and is where liquidity can be found. That's why the big moves will happen between the S/R levels. Well that's to my knowledge, but what I do know I'm not an institutional.
hi guys, firstly this thread has been a great fun reading - getting insights into how a true professional trader would look at things. Thanks for your time Jacob,Skenobi, Magix !

For retail traders, we see so much emphasis on the Central Banks announcements that do happen quite frequently across different currencies. Implies retails do run into pockets of high vol no matter how much they would want to avoid. Now, do you guys do pay attention to ALL the announcements happening ? or given that you have well informed Analysts giving solid ( inhouse ) reports the positions you take DO NOT need a day2day followup of news.
And by news, i specifically point to the Announcement, since Economic data expectations could be priced in through due analysis but Rate Expectations etc, is the question.
Quoting phani_genin
hi guys, firstly this thread has been a great fun reading - getting insights into how a true professional trader would look at things. Thanks for your time Jacob,Skenobi, Magix ! For retail traders, we see so much emphasis on the Central Banks announcements that do happen quite frequently across different currencies. Implies retails do run into pockets of high vol no matter how much they would want to avoid. Now, do you guys do pay attention to ALL the announcements happening ? or given that you have well informed Analysts giving solid ( inhouse...
Here is my best guess to get you thinking:

Traders working at the institutional level are probably constantly staying informed as any news that may affect order flow can impact their trading and market making decisions. Taking trades from analysis done in the morning when an announcement may shift general sentiment would be foolish. They would most likely want to go with the informed flow, not against it. Granted, market makers do have to take bad positions, but those usually get offloaded by "hot potato trading". Market sentiment can quickly change as new market drivers get factored in and trading at that level you should always try to find out as best as you can what is driving your market. We as retailers too should get the whole picture of what is going on, and not just rely on basic signals and patterns generated by charts. Those types of traders are what the predatory stop loss hunters eat up.

I hope our institutional traders can shed more light.
Quoting Mingary
{quote} 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.
I sold my hedge fund more than 8 years ago so am posting now as a private trader even if i still do money management for third parties.

#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.#

Uncorrect i was a member since 2006

​As an institutional i was first trading only very volatile Nasdaq shares ( i still remember Google IPO ) . On shares market supports/resistances work better than on forex where support /resistance points are wider , we used to talk about support/resistance zone more than round prices.

Then i was trading futures but from a model we started to built 10 years before .

On forex it is a little bit different as players are different .

I am gonna reveal a #secret# here a kinda holy grail you will thank me later

Trade a larger time frame like 4 hours and take the opposite direction of what you see on the first page of ff at the bottom #position/ live account#

For exemple today and since eur/usd started to go down the position shown is long so go short .
this # indicator# was short from 1,3 till 1,4 .

It is a contrarian indicator as it represents retail position and for a reason i will explain later if i find somespare time; private parties in their infiny majority like to play against the market .

It is that simple .period
Quoting spieler
{quote} I sold my hedge fund more than 8 years ago so am posting now as a private trader even if i still do money management for third parties. #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.# Uncorrect i was a member since 2006 ​As an institutional i was first trading only very volatile Nasdaq shares ( i still remember Google IPO ) . On shares market supports/resistances work better than on forex where support...
ok. then I must be one of those "private parties" I can never be too contrary.
well i was myself very contrarian when playing the market on a short time frame and it paid huge rewards .
Being contrarian is an art difficult to master.

Here i am talking of a different kind of thing.

First i am talking large time frame and you can only be contrarian on those time frame if you are looking for 10/20 pips and try to catch small inflexion points on the market against the trend . I dont think it worth the energy spent in the long term.

And i am contrarian as i am taking the opposite position of the retailers my goal is to catch hundreds of pips on one trade not 10 .
More rewarding and i get out the stress from the equation and i needed that after years of grinding pennies
Quoting spieler
{quote}#secret# here a kinda holy grail you will thank me later Trade a larger time frame like 4 hours and take the opposite direction of what you see on the first page of ff at the bottom #position/ live account# For exemple today and since eur/usd started to go down the position shown is long so go short . this # indicator# was short from 1,3 till 1,4 . It is a contrarian indicator as it represents retail position and for a reason i will explain later if i find somespare time; private parties in their infiny majority like to play against the...

Good Advice man, actually it's great advice, using retail sentiment against the big holders. It's always nice to hear guys from the inside confirm something that a lowly retail guy like myself use sometimes. Keep them coming.
Being a trader is lonely, but being a great trader is lonelier still
Quoting rdsl
So if it is better to trade from "outside" , then why don't those firms "hire" outsider traders to trade for them?
To be frank, I would not hire someone simply on the basis of their MT4 trading records (for instance). The theory is if a potential rookie is too lazy to get a college degree, he'll probably be too lazy to learn risk management. And my team's collective performance is too precious for me to risk on such a hire. The theory could be faulty due to the fact that the college degree is largely USELESS when it comes to trading, but it's the only entry-level benchmark I trust.

Quoting rdsl
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?)
"Prop" trading means "proprietary" trading... which is any kind of trading (except market making) that's supposed to make money. Prop traders are interbank traders, not "outsiders".

Your other concerns have been excellently covered by Jacob, methinks.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting EinsWaltz
{quote} Hmmm...what is your guidelines?
Hmm.. Now that I think about it, I've never put it down in black and white. Maybe one day I will, but doubtful.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting CaymanTrader
Thanks skenobi & Jacob for the sharing your knowledge! A couple of questions for the two of you: 1) Do you believe getting flow information (who's been buying/selling what and the order levels) is overrated? 2) I've seen reports written by the bank dealers in which they describe what happened, bit of flow info, key intraday levels etc. They also mention some of their own trades and what they are looking to buy/sell. Is that real or are they just putting out some ideas to get the clients to trade? 3) Why can't an important client not just call a...
Jacob's covered a lot of ground so I will merely make the following points, numbered accordingly:

1. Jacob's opinions on this notwithstanding, I think GETTING flow info is over-rated. KNOWING WHO'S buying and selling is not half as important as knowing what to do with that info. And at my stage of trader development, I can already guess where the flow is and will be, using my own S/R drawing guidelines with a pretty small margin for error.

4. I've worked for three "Agent" Banks (i.e. big Banks that the central bank has designated as their "agents" in market interventions) and I have served on the Agent desk of one of them. When this particular central bank "speculated" a lot, it was a little before my time so I only know from hearing the war stories of my seniors. Outside of speculation, when they "intervene", they can come in quite heavy. But usually it's enough that they call some interdealer brokers "to check prices" and then let that info spook the market.
I'm not trying to convince anyone. I'm not in the "convincing" business.
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