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Some questions about large speculators

  • #1
  • First Post: Mar 30, 2013 5:27am Mar 30, 2013 5:27am
Title speaks for itself. This post contains some quotes from the other thread i found interesting.

Q1) What is their trading costs?

My guess is that they are operating in an enviroment with spreads similar to ones provided by good ECN broker, but with the difference that they don't have to pay extra commission.

Quoting jeuro
But in general, Hedge funds do not speculate in currencies
much.

If they do forex, is very little of their working capital.. or they use currencies only to hedge some of the other instrument they trade.
Q2) Why is that?

Quoting jeuro
Hedge Funds have traders like we are .
I guess each individual trader has their own opinion as we do.
Most, use naked charts.
Quoting MasterGamble
I know a guy at a mid sized hedge fund. They use technical analysis for entry, have people continually monitoring all fed announcements and meetings, and have fundamental analysts. The fundamental analysts and fed analysis is used for decision making. Technical analysis is used for positioning.

However... They are a bunch of idiots when it comes to trading... They barely outperform the S&P.
Quoting kuroro001
To answer your question, it depends on the hedge funds.
I've been working in one of them. Some guys were trading using EW analysis, while other were trend traders without any specific indicators.

You can find different kind of HF traders, from technical to fundamentals.
You will find chartists trading with EW, MACD, Ichimoku, or quants trading with algos, or fundie traders using macro news to take mid-long term positions.

The only purpose is to make money...isn't it, so who cares about "indies or not"
next quote sums it up very well.
Quoting jeuro
Hedge funds, are called like that because is a "Fund" (a lot capital put togeheter) and "hedge" because they hedge the crap of anything and everything..
Q3) But aren't there any large speculators who are likethis: lets trade only eur/usd; usd/jpy; eur/jpy and follow our system? How are they called?

Q4) Do banks also hire traders and if so then why.... or they also "hedging the crap of anything and everything"?
  • #2
  • Mar 30, 2013 7:12am Mar 30, 2013 7:12am
Quoting ARTjoMS
Title speaks for itself. This post contains some quotes from the other thread i found interesting.
Q1) What is their trading costs?
My guess is that they are operating in an enviroment with spreads similar to ones provided by good ECN broker, but with the difference that they don't have to pay extra commission.
Yes, ECN pricing is quite a good estimate. But also keep in mind that actually no one "pay" spreads.
If you want to buy you have to pay the ask price.. if you want to sell they offer you the bid price.
No one pay "extra" from that. The drop we see in our balance at the moment we buy a currency
it is not because we paid ... it is because they will not gives us the same amount for our purchase
in that specific second. The ECN has multiple ask and multiple bids and the best prices are the one
that always get hit first. In theory with a good connection to multiple liquidity providers anyone
could be always be buying at the same price that could be sold... making it like we call zero spread.

Quoting ARTjoMS
Q2) Why is that?
Mainly because they can not lay a handle on currencies. Any technical analysts is worthless without
knowing the "volume" being traded. So, as in the spot market the volume is unknown, they leave it alone
or do very little of it.
Quoting ARTjoMS
next quote sums it up very well.
3) But aren't there any large speculators who are likethis: lets trade only eur/usd; usd/jpy; eur/jpy and follow our system? How are they called?
I doubt they exist up to this moment. I mean large firms that have "forex only" specialists that have come up
with multiple currencies System/strategies. I doubt these firms hire with the sole purpose of coming out with forex only strategies. Any big hedge fund would like to have/know a good forex only strategy. But in reality there is no
good strategyst for forex. Only good traders. Our group has been working on it for long time and we have good stuff for reasonable good results, but how to keep it from being reverse engineered if presented to anyone??? That is a different history.

Quoting ARTjoMS
Q4) Do banks also hire traders and if so then why.... or they also "hedging the crap of anything and everything"?
Sure do, they hire good traders that speculate for them. But They assign a limited capital for their trading.
1M maybe to start and later more if they show to be good. If they are hired as currency traders they can not hedge
with other things as Banks usually do not have other instruments speculators.. Do not know if some of these traders use hedging muti-pairs strategies of some type. Most likely a few may exist.

J
  • #3
  • Mar 30, 2013 8:39am Mar 30, 2013 8:39am
Quoting jeuro
No one pay "extra" from that.
As extra I just meant commission per volume traded which is usulllay around 4-5 per 100 000 traded.

Quoting jeuro
Mainly because they can not lay a handle on currencies. Any technical analysts is worthless without
knowing the "volume" being traded. So, as in the spot market the volume is unknown, they leave it alone
or do very little of it.
Here i disagree that technical analysts is worthless w/o knowing volume.... that is like saying there is no profitable srategy/system that doesn't use volume. After all tick volume or volume traded in futures is usually a quite good estimation if one really needs it. Besides... as we all know, volume in fofrex ... is very big and my intuitive guess is that it doesn't change from day to day (and in the same hours of days) as much as it does in stocks.

Can't get enough edge? If that is so then that is a very good reason. My guess was that it had something to do with lack of leverage. After all 100 pip movement in eur/usd is less than 1%... maybe thay just think that without leverage they can earn by more trading something else.


Quoting jeuro
But in reality there is no good strategyst for forex. Only good traders. Our group has been working on it for long time and we have good stuff for reasonable good results, but how to keep it from being reverse engineered if presented to anyone??? That is a different history.
Couldn't agree more.
  • #4
  • Mar 30, 2013 10:24am Mar 30, 2013 10:24am
Quoting ARTjoMS
As extra I just meant commission per volume traded which is usulllay around 4-5 per 100 000 traded.
yea.. I think I misunderstood. You are correct , may a bit less then that, We already have retail Brokers that charge only $25 per Mil with no minimum traded, which makes it $5 per round lot.. and that for sure has been mark up from what they pay for.

Quoting ARTjoMS
Here i disagree that technical analysts is worthless w/o knowing volume.... that is like saying there is no profitable srategy/system that doesn't use volume. After all tick volume or volume traded in futures is usually a quite good estimation if one really needs it. Besides... as we all know, volume in fofrex ... is very big and my intuitive guess is that it doesn't change from day to day (and in the same hours of days) as much as it does in stocks.
It is ok to disagreee.
In "my opinion" tick volume is mean-less. What could we conclude from it? we can have same move in pips with 3 tick in a minute then 300 tick in a minute... it does not mean people are trading more or less because of number of ticks.
Also, in theory the most volume being traded could be with no tick at all... meaning that no tick it means the orders are coming fully balanced... but the bottom line is that we do not know any of these facts.
The volume traded in futures is insignificant compared to the spot...if you think about it, Brokers that
offer "futures" hedge it /buy it from the spot market... so any time anyone put an order for a future is at the spot market price. They buy from the spot , sell it to you, make a commission and a spread mark up and done.

Yea.. we know a daily average but impossible to make a relationship to price moves. In the same manner that would be impossible for a stock trader to make entries by knowing only the average per day instead of the 100% volume tick per tick as they see with regulated instruments.

Sure, There are forex strategies that do not use volume.. dozen for a penny, but we go back to the same point. It is the "trader" the one that makes them profitable, and those are the ones hard to find. If a trader is good enough in a consistence base, soon or later would be picked up by their own brokers, a bank or hedge fund. There is a real need for them... and if you have somewhat of a mechanical strategy, never disclose it fully to any one. The moment you do you become disposable.

J.
  • #5
  • Last Post: Edited Mar 31, 2013 7:24am Mar 30, 2013 10:02pm | Edited Mar 31, 2013 7:24am
Quoting ARTjoMS
Title speaks for itself. This post contains some quotes from the other thread i found interesting. Q1) What is their trading costs? My guess is that they are operating in an enviroment with spreads similar to ones provided by good ECN broker, but with the difference that they don't have to pay extra commission. Q2) Why is that? next quote sums it up very well. Q3) But aren't there any large speculators who are likethis: lets trade only eur/usd; usd/jpy; eur/jpy and follow our system? How are they called? Q4) Do banks also hire traders and if so...
Yeah, not many pure currency funds out there. probably in their portfolios for hedging measures only. Why? I would say because Forex is harder and not as profitable as e.g. stocks. reasons:

1.) market too big -> too many players -> not many pairs to trade = market very efficient. thereīs not enough extra/insider-information out there to put you ahead of the curve. but thereīs 1000s of stocks. better chances of finding a real gem, the next "google". edit: or shorting the crap out of a scam company. which leads to my next point.

2.) limited upside. the right stock (say some obscure 3D-printing-technology-company hits it big) can rise by 20, 30 times of its initial value in 12 months. currencies donīt.

so why would they trade currencies?

edit2: global macro funds speculate in currencies, of course. almost forgot about them. trend-followers, I suppose.


and i think any hedge fund trader putting a trade on for technical reasons would be fired immediately. but thats anecdotal information. dont know anybody there.
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