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Ex Insti Trader... AMA

Quoting alphaviech
{quote} 1) I never took pics on the trading floor as this is highly frowned upon and can get you in real trouble with your compliance department. 2) You mean largest order we had to work for a customer or largest clip size I traded at once or largest position I ran in my books? 3) You mean salary or how much our budget was that we were supposed to earn?

1)What is the largest clip size you have traded for a currency pair?
2) How much do you make YOURSELF per month/year? Best year/worst year?
  •  jmmn
  • | Joined Nov 2015 | Status: Learning while making money... | 526 Posts
Dear alphaviech, thanks for your thread. An enlightening and rewarding one for those who aim to learn.

Question: Considering that insti trades are usually long term and follow fundamentals, what makes sense, would it be ok for one of those trades to have a drawdown of a 2/3% and maintain the position (not letting any stop loss to close it)?

Thanks again.
Quoting foobar
Hi alpha, is there any advice you have for us to improve trading consistency? since you have the consolidated order book for a bank, you pretty much know the direction for each currency for the whole day unless there is some major market news coming up. Doesn't that give you a huge edge over people who do not know that.
again i donīt feel qualified to give general advice as everyone has his own style....

Regarding the order book - its not like you have hundreds of millions every view pips. Imagine it more like a tool like technical analysis. If you look at charts all you try to do is figure out where buyers are and where sellers are. And an orderbook can give you the same information. If you have clusters of decently sized orders at a certain level you can assume that there will be some resistance there. But at the same time you dont have a guarantee that your book is an accurate representation of the whole market. Its just an additional piece of info nothing more and nothing less.
Quoting alphaviech
{quote} again i donīt feel qualified to give general advice as everyone has his own style.... Regarding the order book - its not like you have hundreds of millions every view pips. Imagine it more like a tool like technical analysis. If you look at charts all you try to do is figure out where buyers are and where sellers are. And an orderbook can give you the same information. If you have clusters of decently sized orders at a certain level you can assume that there will be some resistance there. But at the same time you dont have a guarantee that...
Alphaviech,

What are some of the tools/processes that are readily available that Retailers are oblivious to that could enhance their trading success?

Thanks
Quoting jmmn
Dear alphaviech, thanks for your thread. An enlightening and rewarding one for those who aim to learn. Question: Considering that insti trades are usually long term and follow fundamentals, what makes sense, would it be ok for one of those trades to have a drawdown of a 2/3% and maintain the position (not letting any stop loss to close it)? Thanks again.
Is your question if 2-3 percent was acceptable for me when I traded for a bank or if I would let it run that far on my own account now?
Quoting hyuidnai
Do institutional traders use footprint charts ? Does the order book they use show pending orders 20~50 price levels above and below the current ask and bid price ?
I didnt even know what a footprint chart was before I googled it just now. But to be honest I dont see the value in that - FX doesnt have a centralized order book anyways & in system like EBS you never know if the amounts you see are real or if some algo is flashing.

Depends however you want to set it. But before news or any other risk event that is was to narrow. I normally checked whats within 1% of my pairs before important data came out.
Quoting aaven
{quote} Alphaviech, What are some of the tools/processes that are readily available that Retailers are oblivious to that could enhance their trading success? Thanks
Buying a few beers and not trading out of boredom if there is a market environment that doesnt present any chances...
Quoting CrocodileRex
{quote} 1)What is the largest clip size you have traded for a currency pair? 2) How much do you make YOURSELF per month/year? Best year/worst year?
If you have a relly big amount to do you dont just go out and hit the systems - there are execution algos that do that for you. They skew your prices within given parameters & hope to get hit on the systems.... if that doesnt happen within a certain time they then go out and hit the best prices they can find. But on aggregators that pool liquidity from a few systems you could for example trade eurusd in 100 mio with maybe 2 pips spread.

i wasnt allowed to trade private accounts while in banks..
and our P/L goal in the bank was 0
  •  jmmn
  • | Joined Nov 2015 | Status: Learning while making money... | 526 Posts
Quoting alphaviech
{quote} Is your question if 2-3 percent was acceptable for me when I traded for a bank or if I would let it run that far on my own account now?
Do you mind answering both?
Quoting jmmn
{quote} Do you mind answering both?
Bank: yes and no - its not like you look at things in term of drawdown. they just look at the bottom line (adjusted by your costs). But i had regularly some positions that were down a few % but they were never a large junk of my overall position limit. if i would yuse all my limit for a single position and that would be down a few percent that certainly would ring a few alarm bells.

Private: really depends on what your goals/financial situation look like. if the money in your trading account is all you have & you take your living expenses out of the profits then no way you should be extremely conservative & have to probably reduce positions when you plan to take long term views. If your goal is to try and build your account and busting it is no big deal then sure by all means go for it. Of course even then you shouldnt be fine with loosing 2-3% on every trade you take. But if you see a chance that you feel very confident about then why not go for an HR?
But again not possible to give a general answer its just too situation dependent.
But google Kelly Criterion. If you think you have a good estimate of what percentage of your trades is profitable then that can be a pretty good guide on how to size positions.
  •  jmmn
  • | Joined Nov 2015 | Status: Learning while making money... | 526 Posts
Quoting alphaviech
{quote} Bank: yes and no - its not like you look at things in term of drawdown. they just look at the bottom line (adjusted by your costs). But i had regularly some positions that were down a few % but they were never a large junk of my overall position limit. if i would yuse all my limit for a single position and that would be down a few percent that certainly would ring a few alarm bells. Private: really depends on what your goals/financial situation look like. if the money in your trading account is all you have & you take your living expenses...
Thank you very much, alphaviech!
I'd like to ask one more question. When deciding on trades, were they decided by some kind of supervisors, like they come out of the meeting room, go to their respective desks, and say to you like "okay, we're going to build an X lot position in Y, you guys take everything between 1.20 and 1.21, don't bid for it, just take it as it is offered, and let me now later how things stand or if something is not going well" ?

Or was it more like you have your account and you can trade whatever you want with the funds you have, and they only care about your PnL?


Also were you part of any kind of market manipulation something like I wrote as an example earlier?

Thanks for the answers
Price and volume reveals everything. The market moves on supply and demand.
Hello, I would love to ask about the notorious issue about fight between "evil" market makers and retail traders aka market manipulation to hunt stops, fake price movements etc..
From what I know, the guys who do market making really dont give a damn about some retail, because they are overhelmed with managing and hedging their Institutional flow. They also have just minimal directional positions as they try to immediately hedge flow they get. "Flow can kill you" right?
I donīt know if besides flow based desks, there are still some purely speculative desks as I thought regulation put an end to that and you can only hide speculative positions behind market making.
The players which really move the markets are hedge funds which trade throught banks, but not banks themselves, as the flow comes from those funds and banks are only hedging it on the market.
From your own experience are my thoughts right or am I wrong? Thank you very much.
Sacrifice is the price for glory
Quoting Fischerman
Hello, I would love to ask about the notorious issue about fight between "evil" market makers and retail traders aka market manipulation to hunt stops, fake price movements etc.. From what I know, the guys who do market making really dont give a damn about some retail, because they are overhelmed with managing and hedging their Institutional flow. They also have just minimal directional positions as they try to immediately hedge flow they get. "Flow can kill you" right? I donīt know if besides flow based desks, there are still some purely speculative...
There can be quite a big amount of flow through some of the bigger brokers but in the grand scheme of things I would agree its not enough to be significant in any way.
There are directional positions but yeah they are on flow desks as pure prop is not allowed anymore on most western jurisdictions. In emerging markets or options you naturally have positions all the time simply because you need to but no bank builds huge G10 positions anymore.
But with this "Flow can kill you" statement I don`t agree. Everywhere I have been we tended to warehouse the flow meaning you kept it for a relatively long time (minutes). Of course if tere was really big tickets or you got hit a few times on the same side you would instantly reduce the position. But generally speaking you keep the trades on your books for a bit and after a while you figure out which cpties you can make a few ticks out off and which ones you should try to get rid off immediately. There is a great deal of work done on trying to steer the flow though/keep the soft flow and price the toxic less aggressive. But this is getting harder since a lot of funds dont trade in their name but use prime brokerage so you have no idea who your counterparty is you just see for example Deutsche everytime.... And yes flow is generated by funds/corporates and you could argue by also by banks since they have to do constant hedging of their options portfolio (which is again filled by corporate/fund demand)
Quoting Darastonius
I'd like to ask one more question. When deciding on trades, were they decided by some kind of supervisors, like they come out of the meeting room, go to their respective desks, and say to you like "okay, we're going to build an X lot position in Y, you guys take everything between 1.20 and 1.21, don't bid for it, just take it as it is offered, and let me now later how things stand or if something is not going well" ? Or was it more like you have your account and you can trade whatever you want with the funds you have, and they only care about your...

Pls see the post above that should give you an idea of how we handled positions. But the decisions were discretionary its not like your boss constantly asks whats going on. Maybe if they see a big swing in your P/L they ask whats going on but thats it. Or if you have a big order in something thats not very liquid.

Well what do you define as market manipulation? If a central bank intervenes and asks you to buy USD vs XXX on their behalf? If you mean that then sure.
Or do you mean trading around the fixes?
Hi Alphaviech, nice to meet you here.

take this opportunity to ask you a few question....

1. as you said a lot of bb bank make profits from EM currencies, according bis data ndf/nds or other interest swap's volume are increasing recently compare with spot volume, and those forward contract always using usd as settlement currency, will these affect the usd with major spot rate especially on that day when fixing dates/far leg dates?

2. some bb bank as primary dealer for sovereign fund/bonds in banks prop positions, will they always open a neutral position at spot fx during central bank's press release?

3. since you able to access the central order book, does the round number theory really common apply in your industry?
Can you give a rough idea of what happens during a 1 way trade situation when a lot of big players are bearish USD bullish JPY like recently. Who is holding the other side of the trade as dumping of USD occurs? Do the banks hold it on their books or are there other big players who are willing to hold the other side of the trade.
From this thread I would conclude that experience is necessary for the success on this platform along with market knowledge. It is a tecnical business and you have to stay tuned for the opportunities in order to grab them at a right moment. What do you people think?
I have some questions: do institutional traders use limit orders or market orders/stop orders to initiate a position ? When do they use limit orders to initiate a position ? When do they use market/stop orders to initiate a position ?
Quoting hyuidnai
I have some questions: do institutional traders use limit orders or market orders/stop orders to initiate a position ? When do they use limit orders to initiate a position ? When do they use market/stop orders to initiate a position ?
My thought is they use algos at zones? Is this right?
these algos iceberg a position with yes limit orders but also in ways we have no idea or could understand. Hi tech/algo stuff from some of the greatest minds in the world. Thats ok. As retailers we need to see these zones and this activity then get a piece
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