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Brokers and Banks as an Institutional Trader 4 replies

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Is anyone here an institutional trader?

Quoting jmn5611
What I think the trader has to let go is the concept of certainty in a world of uncertainty.
.... and the notion that his pathetic stop is the only trade order in the universe. LOL
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting skenobi
{quote} .... and the notion that his pathetic stop is the only trade order in the universe. LOL
I think it is a flaw in big picture thinking. Would a trader tell his opponent in a sporting match or chess game that "if you do that, then I will do this"? That is just silly. Or course the MM will take the price down to where the trader will give up. It's easy money. I would do the same thing. There are some trader coaches who say that if you don't place a hard stop in the market then the trader will wind up taking a big loss due to a lack of discipline. If a trader lacks the fundamental discipline to trim his portfolio when risk gets too great, then she needs to find another profession. It is that simple to my simple mind. Markets oscillate much more than they trend, seems obvious, but nearly every one is out there looking for a trend. That is a low probability event and is a waste of time.

Rant over. Thanks skenobi for educating people. Patience is a character virtue that I lack when it comes to people.
If you are good at something, never do it for free--Joker
I was hoping I could ask a question about equities - so based on what you guys are saying, price is perceived and everything else is pretty much irrelevant. So if price is hitting resistance at a particular level, even if a company's earnings is amazing, it could still reverse the trend and bounce right off of the resistance level?
Quoting oopsies
I was hoping I could ask a question about equities - so based on what you guys are saying, price is perceived and everything else is pretty much irrelevant. So if price is hitting resistance at a particular level, even if a company's earnings is amazing, it could still reverse the trend and bounce right off of the resistance level?
I'm going to answer your question first before I continue: Yes, it could, but in equities, not likely.

Maybe someone else can comment further on equities, but I'm gonna go ahead and just make the following biased observations:

1. The number of shares in a particular stock are finite. In FX, the commodity (whether it's the real deal or CFDs) can be created out of thin air, it's all just numbers in a computer.
2. Because of the above conditions, FX is relatively more "liquid" (in a manner of speaking).
3. Also, while FX markets can be subject to insider moves, in equities it's even worse because of the finite number of shares being traded.
4. A better alternative to equities would be to trade the indices.

The above is just my own biased opinion (which means, nothing some naysayers here will say to me can change my mind about it).

YMMV.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting skenobi
{quote} I'm going to answer your question first before I continue: Yes, it could, but in equities, not likely. Maybe someone else can comment further on equities, but I'm gonna go ahead and just make the following biased observations: 1. The number of shares in a particular stock are finite. In FX, the commodity (whether it's the real deal or CFDs) can be created out of thin air, it's all just numbers in a computer. 2. Because of the above conditions, FX is relatively more "liquid" (in a manner of speaking). 3. Also, while FX markets can be subject...
That's an interesting take - you're basically saying that equities prices are more easily (likely) to be manipulated by institutional trading because of limited shares trade-able. If that's the case, I suppose one could also suggest the argument that tape reading in equities is more accurate because the price action is an indication of what the "insiders" are doing at certain levels.

BTW, thanks for the video interview with David Paul. I started watching some of the other videos with him in it and I'm mulling over something he said about entries and exits. He said that for entries, he tends to place his orders at areas where stop losses are likely to exist in great numbers near key levels. And for exits, he said to close into strength using Fib extensions. What are your thoughts on his comments? Is this something you do as well?
Awesome post, just came across with it.

Thank to the institutional trades in this thread for sharing and answering all our retail trader questions.
Quoting oopsies
BTW, thanks for the video interview with David Paul. I started watching some of the other videos with him in it and I'm mulling over something he said about entries and exits. He said that for entries, he tends to place his orders at areas where stop losses are likely to exist in great numbers near key levels. And for exits, he said to close into strength using Fib extensions. What are your thoughts on his comments? Is this something you do as well?
I go to where price has "memory", which is all I'd rather say on the subject.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting skenobi
{quote} I go to where price has "memory", which is all I'd rather say on the subject.
That is very cryptic and revealing all at the same time lol
hi all,
im new to this platform and am here because a friend of mine is looking at starting fx trading and had been reading this forum. So here i am.. Why did i join and why am i commenting?. I just couldn't help myself after reading a lot of the posts.

i Wont go into what i do etc but please trust that i am well credentialed to comment.

Firstly, congratulations to skenobi as you really are doing a terrific job at explaining the workings and realities of fx. Im not sure that i agree with all of it, but that is normal.

There is one big elephant in the room that no one seems to recognize. Well, there are a lot of elephants in the room but one big one.

For those describing themselves as ' just starting out' , 'retail traders'. 'part time traders'. ' just trying to supplement my income' etc etc.

Please understand the following: (and some of you who might read this probably wont like it)

You simply do not have the luxury of trading only against like minded traders. Every time you trade you are trading against the whole market.
You are trading against full time professional traders. These guys work 12 hours plus a day. They are heavily resourced and informed. The whole structure of their businesses is designed around giving themselves the best possible chance to generate returns for their investors.

Trading in smaller amounts or shorter time frames does not change this dynamic. A very high level of commitment is a prerequisite to being profitable . This commitment does not guarantee profitability but not having it does all but guarantee that you will not be profitable.

This does not mean that these guys are smarter, or a better level of human being, but that they are simply overwhelmingly better placed to profit.

The percentage of profitable days to loss days for a competent trader is somewhere around 50 %.In fact most are somewhere around the mid/low 50s. ( the profile of an option based strategy will look different. Much more like an annuity type portfolio).

The guys at the very top of our tree are actually well below 50% as they trade in such size that they pay big bid/offer spreads to enter/exit the market.

There is a saying. Anyone who has a win rate of 65+% is in jail ,or about to go.

So. Im certainly not here to try and tell any of you how to suck eggs. But please ask yourselves 'are you in a position to compete with the above described'. i would humbly suggest that it is highly unlikely.

There are way way too many posts saying that trading is easy, that trading can be done part time, that you can do it with a laptop while watching tv. Does it really make sense that money is that easy to make? Of course not.

If you decide that above is nonsense and you will roll the dice anyway, then fair enough and good luck.
Well, here is one of the 'Institutionals' who has been into this for well over a decade. Maybe a lunch time tour of our inner workings will help
Quoting skenobi
{quote} I go to where price has "memory", which is all I'd rather say on the subject.
It's almost philosophical. What would you remember if you were price?
"The fun is in the hunt. Not the kill."
Quoting Redeflect
{quote} It's almost philosophical. What would you remember if you were price?
The last time I bounced repeatedly at the same wall of orders.
I'm not trying to convince anyone. I'm not in the "convincing" business.
firstly i read the entire thread amazing and great... thanks

I have a question for people who have traded at institutions...whats the biggest trade that you have placed or seen it placed...does it get executed without slippage?what is the liquidity available on average at any given time at spot price?
example 1 billion buy eurusd etc.

whats the average volume institutional traders trade on daily basis?

do institution traders look at price levels or candlesticks?

and how does algo's trade at institutions?

and being institutional trader do you see order flow where at what price level lot of volume is available?and moves taken by other institutions and banks?

please people who traded for institution reply
thanks
Quoting skenobi
{quote} The last time I bounced repeatedly at the same wall of orders.

Or the opposite.
"The fun is in the hunt. Not the kill."
Quoting traderforlyf
firstly i read the entire thread amazing and great... thanks I have a question for people who have traded at institutions...whats the biggest trade that you have placed or seen it placed...does it get executed without slippage?what is the liquidity available on average at any given time at spot price? example 1 billion buy eurusd etc. whats the average volume institutional traders trade on daily basis? do institution traders look at price levels or candlesticks? and how does algo's trade at institutions? and being institutional trader do you see...

ok. lets see if i can answer this without being confusing..
I can only speak to hedge fund execution, not the other type of institutions that might execute foreign exchange.

firstly, position size in total is unlikely to be the same as order size. Generally people build their positions incrementally.

so to use the eurusd as a typical currency pair. And assuming 'normal' market conditions
and everyone executes a little differently

So order size:.. that will be directly related to the amount of capital that a portfolio manager is managing. The very top end of the trading market will rarely have positions that exceed 5b.

order size: quite common to place orders of 200-300 m. above that then they are usually kept pretty close and released to the mkt slowly. less common to see orders of 500+ released at one time but it does happen. Again everyone does it differently.

The average volume traded will vary a lot. It will be a function of Capital size and trading style. A longer term trader will have less turnover than a shorter term trader. It might be worth noting here that people dont really think in terms of how many dollars, but in risk levels. For example one might want to put on 30 bps of risk and that will equal a certain dollar amount calculated using historical volatility. Many have dedicated execution desks to execute the order.

As to liquidity. Bit of moving feast that.

10m eurusd ... no impact
50m eurusd..... no impact.
100m eurusd .. the mkt wil vibrate for 10-20 seconds but typically settle at the same price.
Above 100m it will start to get tricky.

Liquidity in 1b+.. terrible.

Dis-economies of scale kick in quite quickly in fx as the cost of entry/exit become quite a drain on win rates. No one likes managing too much capital.

As to algos:.. they have become the preferred mode of execution. So using the algo in a banks portal might look something like this.. order to buy 400m eurusd over 4 hours with a limit price. The platforms are much more efficient than humans.

Or do you mean the high frequency trading algos?.

Very few portfolio managers use candlesticks or charts as their starting point for a trade.

Flow and order book information used to be common place but these days you got to jail for passing that information..


ok. how did i go?.. make it clearer of less so?
Quoting mollyellie
hi all, im new to this platform and am here because a friend of mine is looking at starting fx trading and had been reading this forum. So here i am.. Why did i join and why am i commenting?. I just couldn't help myself after reading a lot of the posts. i Wont go into what i do etc but please trust that i am well credentialed to comment. Firstly, congratulations to skenobi as you really are doing a terrific job at explaining the workings and realities of fx. Im not sure that i agree with all of it, but that is normal. There is one big elephant in...
Hi, thankyou for your wake-up slap It is true that Forex seems to be the only profession where the beginner can start after reading a 'how to trade' book and open an account on the very same day. Then they get to trade versus the seasoned professionals. But I do not think it is that bad, as everyone starts as beginners sometime. You could limit your risk in learning the profession by only using money you can afford to lose and go in with a plan, solid mentality and knowledge of risk and money management. It does not have to be a roll of the dice, and why can't the beginner learn to trade on the side of the professionals
"Only you can Make the Future you will be proud to be a part of..." -Me
yes, sure..
my post wasnt intended to be 'a wake up slap'... simply a reality check.

And yes everyone is a beginner at some stage..And far as markets are concerned we all beginners all the time.
My musings were cautionary and can easily be read as something more arrogant.

If anyone wants to give it go, then of course, and i hope it works out
Quoting traderforlyf
firstly i read the entire thread amazing and great... thanks I have a question for people who have traded at institutions...whats the biggest trade that you have placed or seen it placed...does it get executed without slippage?what is the liquidity available on average at any given time at spot price? example 1 billion buy eurusd etc. whats the average volume institutional traders trade on daily basis? do institution traders look at price levels or candlesticks? and how does algo's trade at institutions? and being institutional trader do you see...
If you had really read this entire thread, all of your current questions would've been answered satisfactorily.

You have another weekend coming up. Maybe you can spend that time re-reading this thread in depth... although I don't really see how any of the information in this thread actually makes anyone any money.
I'm not trying to convince anyone. I'm not in the "convincing" business.
Quoting skenobi
{quote} If you had really read this entire thread, all of your current questions would've been answered satisfactorily. You have another weekend coming up. Maybe you can spend that time re-reading this thread in depth... although I don't really see how any of the information in this thread actually makes anyone any money.
sknobi, this thread is quite informational, and I find it a gem; eventhough like you said it does not offer concrete trading strategies.

it gave the retail trader an inside look on the insto world.
Quoting skenobi
{quote} I go to where price has "memory", which is all I'd rather say on the subject.

You were keystrokes away from disclosing your edge.

My guess is a future's data proxy used in a long-term composite volume profile.
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