individual traders vs professional traders

Hi guys,

I actually had a question about the average individual trader like us vs working traders who trade for firms from your average prop trading company to Goldman sach. I am not taking about money vise comparison. I am concerned about information wise comparison. Do proffessonal working traders at your average firm or at a great firm like Goldman sach have any information/news/teaching method advantage over us?

thanks

Million Dollar trading computer systems is one of the advantages they have.

Some people have a fantasy of dating a famous model. Mine is to spend 30 minutes in one of these rooms and watch how these guys operate.

yeh, they have millions of dollars of draw down capability. There are plenty of rogue traders that have buried companines.

Currency trading is a tough job and even professionals have their difficulties.
Here an article and performances for the 2nd quarter 2008:

http://www.thestreet.com/story/10426...st-dollar.html

They are all currency exchange-traded funds (ETFs) or ETN's and so publicly traded. Their results are quite disillusioning.
From 0,92 % for ELEMENTS Linked to the Euro/U.S. Dollar Exchange Rate ETN
up to
6,71 % for CurrencyShares Australian Dollar Trust (FXA) A+ which is ok.
Better not to talk about the others.

That's the reality!

Well they have quite a few advantages. One that was mentioned is their computer systems. Combined with their scale, they can profit from minute arbitrage opportunities before an individual could even read the 3 quotes in question. They have flow of funds information that can be very significant in less liquid markets. They have access to a lot of professional proprietary research at no cost, huge capital cushions, the best execution, the best margin availability and rates, back office support, etc. They have the resources to fly around the world to the countries they trade and speak to central bank and government officials and bankers. And God knows what kind of leverage Goldman has with governments around the world.

From a few of the prop traders that I have spoken to, I would sooner say that their biggest advantage is education. When starting at a prop firm, you often have the option of taking one of their education classes (usually for a fee). That, combined with the fact that you are in the company of other successful traders, can give a base knowledge that not many home-based traders can acheive. It seems their trading is not overly complicated using edges that only they have access to, but instead they have just had formal education regarding system analysis and implimentation.

I do not have prop trading experience, but it seems that proper education can be a huge difference in the approach a professional takes versust he average hobby trader at home.

one of the biggest differences people dont get about professional traders is that they arent traders. they are essentially dealers. they do not trade like you and i do. they can name their own prices for a trade, and negotiate a deal. they are working with actual lots of money, not online contracts.

most of the terms we use to describe trading do not apply to what they do. for example, if they are in a deal (not a trade) for a few minutes and a few pips, they arent scalping. they just made a small deal. thats it.

this is why you cant compare the two. it like trying to compare a marine to a cop. while they are both in the business of protecting people (forex), one of them deals with enforcing the law while the other deals with defeating an enemy. they both use similar tools, and sometimes similar tactics, but their jobs are entirely different.