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  • #361
  • Edited 1:22pm May 22, 2014 1:09pm | Edited 1:22pm
Quoting 21vs7
If Prop trader has a BIG big chunk order up as a SL. Market is lower atm. I as MM will need to worry about that imo. Ill dynamically hedge that fooker up by already buying the EUR now, when market is moving up. This is how market sees this strong moves to levels of interest. MM dont want your SL to be hit but closer it gets, MM will hedge it stronger. MM has its own limits. Holding a strong looser...hm, means you overhedged somewhere else. Hedging only with another pair? perhaps, dont really know the inside much When I get an order on EURCHF faghet...
You cant hedge on the same pair because there is no more liquidity, there is only the Prop guy and the MM, and some poor retailers (now i dont mean only 1 of them, but usually the same sum of money at prop guys and MM at disposition and some extra liquidity from retail)

So if the prop guy takes the extra money from the 90% retail ,the MM ends up in BE + comision , and the 10% retail also rips off the 90% retail.

So it may sound like a zero sum game, but also dont forget that new cash is added by central banks, and that cash may be from inflated sh*t, but usually comes from real wealth + labour + products/ services, as being circulated in the global markets.

So not always the 90% retail are robbed, but it can be any poor guy working at a company for low salary, so the markets extend to the entire world not only to the traders.

So its not really a zero sum game, techically all traders could be profitable (given that there will be some poor guy in the world that will give more labour than its payed for), so the market itself is not a zero sum game, but the world economy is

But because of their lack of experience/knowledge, the 90% of retail still gets it in their *ss on a regular basis
"There's a sucker born every minute" - P.T. Barnum
  • #362
  • May 22, 2014 1:36pm May 22, 2014 1:36pm
Quoting Proximus
{quote} Ok maybe in that example it didnt worked, but in the market there is no transaction until it is closed on atleast 1 end. So obviously the client must close his position, because the market maker cant close it for him because thats illegal. So if prop trader buys 1 milion EUR and sell 1 milion USD, the transaction is pending until closed, now obviously if prop trader closes it now he will lose comision and spread, and the MM cant close it. So the prop buy waits until the price goes higher and close, but he cant close either if no liquidity,...
The transaction happens at the very moment your order is filled. When you close your position it is another transaction, usually with someone else.
No greed. No fear. Just maths.
  • #363
  • May 22, 2014 1:41pm May 22, 2014 1:41pm
Quoting Proximus
{quote} You cant hedge on the same pair because there is no more liquidity, there is only the Prop guy and the MM, and some poor retailers (now i dont mean only 1 of them, but usually the same sum of money at prop guys and MM at disposition and some extra liquidity from retail)

So if the prop guy takes the extra money from the 90% retail ,the MM ends up in BE + comision , and the 10% retail also rips off the 90% retail.
you think this is how it goes down?
  • #364
  • Edited 1:56pm May 22, 2014 1:44pm | Edited 1:56pm
Prop guy buys EURUSD
MM sells EURUSD
Looks at the orders - sees less orders on GBPUSD than in EURJPY (which orders? - sees SL on EJ) best amount to match equivalent to EURUSD hit by prop trader
Hedges / buys EJ then at the market price
Another MM is fooked cus there is no liquidity..or MM is never fooked?

And this is year 2008/2009 all over again

hm
  • #365
  • May 22, 2014 1:48pm May 22, 2014 1:48pm
Quoting PipMeUp
{quote} The transaction happens at the very moment your order is filled. When you close your position it is another transaction, usually with someone else.
I dont think, because you have the margin requirement, which keeps the trade open.So is more dynamic, the order is activated when you get filled it, but the transaction is not complete until you close it.Now if you close it, the other guy on the end closes it too,unless there is some extra liquidity which keeps your trade open.

So for example take a stock to be more simple, if nobody buys it its value is 0$, if a market maker sells it to you at 1$ and there are 1000 shares available, and you buy them all, the price then its infinite.If you dump them all then its 0$, and anything inbetween will fluctuate as the market see's fit.

Of cours there is some other value coming from the capitalization of the company, which is the money he gets from selling his products/services.So the stock value will always grow, but if all guys would short the stock at the same time there would be a zero sum situation, unless there is some extra value of the stock coming from the company capitalization.So technically stock investors money come from the customers who buyed the company's stuff, not from zero sum speculation.
"There's a sucker born every minute" - P.T. Barnum
  • #366
  • Edited 2:29pm May 22, 2014 1:56pm | Edited 2:29pm
Quoting 21vs7
Prop guy buys EURUSD MM sells EURUSD Looks at the orders - sees less orders on GBPUSD than in EURJPY (which orders? - sees SL on EJ) best amount to match equivalent to EURUSD hit by prop trader Hedges / buys EJ then at the market price hm
This does not extend only to the FX, after the market makers run out of Pairs in FX they can go to other markets, there are plenty of them.Then wont run our of liqduity, if they do this in bond markets, then the government will pay the deficit, in the increase of their debt.

One thing is sure that MM never loses, maybe some smaller ones, but big ones never.

So the money must come from a few big boys who just made a mistake, or the 90% retail, or the Govt. by increase of national debt by messing up bond markets, or from the average Joe who works for lower than minimum wage, so that his company could sell their sh*t, and the company stock will go up with extra liquidity from their customers.

The money must come from somewhere and these are the potential sources, and its certain that not the MM pay.

And also hedgefunds hedge too, so you see many HF with -2% at certain years, not all of them do +60%, those guys just feeded the market with extra liquidity from their loss.
"There's a sucker born every minute" - P.T. Barnum
  • #367
  • May 22, 2014 2:02pm May 22, 2014 2:02pm
unlimited resources..perhpas, but only perhaps..
two Q

1. Who are MM? They work in packs?
2. UJ long and GU long isnt directly beeing GJ long?
  • #368
  • May 22, 2014 2:07pm May 22, 2014 2:07pm
Quoting 21vs7
unlimited resources..perhpas, but only perhaps.. two Q 1. Who are MM? They work in packs? 2. UJ long and GU long isnt directly beeing GJ long?
Not unlimited, because if poor people work for small wages and the big company's shares is going up then the liquidity of the market comes from the wage deficit of the worker.So that 1000 poor guys work at a factory, the factory's shares go up, but the average guy at the factory doesnt get paid fairly, so his unfair loss is the gain of the stock market.

MM dont work in packs, its not like some conspiracy theory
But all of them have the same goal, so they probably all know ahead the price movement, but there is still some uncertainty because dark pools exist.

2) Nope, GBP/USD + JPY/USD is GBP/JPY , but not USD/JPY

dont worry its hedged
"There's a sucker born every minute" - P.T. Barnum
  • #369
  • May 22, 2014 2:17pm May 22, 2014 2:17pm
If market closed in weekend,all orders is "frozen" or no more orders, why market opens with price gap? Who created this gap with so big order?
  • #370
  • May 22, 2014 2:17pm May 22, 2014 2:17pm
Quoting Proximus
{quote} Not unlimited, because if poor people work for small wages and the big company's shares is going up then the liquidity of the market comes from the wage deficit of the worker.So that 1000 poor guys work at a factory, the factory's shares go up, but the average guy at the factory doesnt get paid fairly, so his unfair loss is the gain of the stock market. MM dont work in packs, its not like some conspiracy theory But all of them have the same goal, so they probably all know ahead the price movement, but there is still some uncertainty...
MMs are?

any fair value so to speak anywhere?

GU L
UJ L
is GJ L

:nerd:
  • #371
  • May 22, 2014 2:21pm May 22, 2014 2:21pm
Quoting Naokia980
If market closed in weekend,all orders is "frozen" or no more orders, why market opens with price gap? Who created this gap with so big order?
No markets ever close.Its just your broker that doesnt let you trade.So if i go to a quick holiday to Switzerland in the weekend they dont let me exchange my 10 mil € pocket money to CHF in the weekend? I dont think so
"There's a sucker born every minute" - P.T. Barnum
  • #372
  • May 22, 2014 2:23pm May 22, 2014 2:23pm
Quoting 21vs7
{quote} MMs are? any fair value so to speak anywhere? GU L UJ L is GJ L :nerd:
Sorry MM are market makers, usually big banks which dont specifically trade for profit, but serve their clients and charge them comissions.

Quote
GU L
UJ L
is GJ L

Omg its not, i buy GBP and sell USD and also buy USD and sell JPY so GBP/USD -> USD/JPY, now i also buy and sell USD, so its hedge ...
"There's a sucker born every minute" - P.T. Barnum
  • #373
  • May 22, 2014 2:33pm May 22, 2014 2:33pm
Why big boys need our microlot stops for trading? Dont they activate their pending limits without retailers? If banks celebrate holidays on their country, why price consolidate like died horses? Isnt there other big boys want to trade?
  • #374
  • May 22, 2014 2:36pm May 22, 2014 2:36pm
Quoting Proximus
{quote} Sorry MM are market makers, usually big banks which dont specifically trade for profit, but serve their clients and charge them comissions. {quote} Omg its not, i buy GBP and sell USD and also buy USD and sell JPY so GBP/USD -> USD/JPY, now i also buy and sell USD, so its hedge ...
Talked to a lot of MMs. At least was with them laaandan cocksuckers there and heard loots of stories. Never stories like this

buy gbpusd equivalent of 50k USD
buy usdjpy equivalent of 50k USD

you hold none USD

you are exposed
GBP long
JPY short
  • #375
  • May 22, 2014 2:50pm May 22, 2014 2:50pm
Quoting 21vs7
{quote} Talked to a lot of MMs. At least was with them laaandan cocksuckers there and heard loots of stories. Never stories like this buy gbpusd equivalent of 50k USD buy usdjpy equivalent of 50k USD you hold none USD you are exposed GBP long JPY short

Not surprising at all. Most MM never needed to know these things, why would you, when the orders are on the books in plain sight. Some of them may place these trades without knowing all the ins and out, but just take the next best trade available. That's why some retailers can become better traders than the people who fixed the market, they never really had to dig too deep to find anything out. But us retailer normally have to move heaven and high water to learn the market backwards and reverse engineer how it works, and we become better traders for it.
Being a trader is lonely, but being a great trader is lonelier still
  • #376
  • May 22, 2014 3:00pm May 22, 2014 3:00pm
Quoting saneblane
{quote} Not surprising at all. Most MM never needed to know these things, why would you, when the orders are on the books in plain sight. Some of them may place these trades without knowing all the ins and out, but just take the next best trade available. That's why some retailers can become better traders than the people who fixed the market, they never really had to dig too deep to find anything out. But us retailer normally have to move heaven and high water to learn the market backwards and reverse engineer how it works, and we become better...
But how one can become better knowing this? Plus knowing what? That they hedge? that MM plays the market all around? or what?

I was sitting with a guy in a room in laaandan and he got three straight tickets for 100 mil. Never blinked. I suggested to tun it over the night as I saw he was not nervous. He said naaah
Then he got another 300 mil in next few minutes . Talking around 5 min . His machine (MM trader) already eaten 50 mil. He was long 550 mil. market went up 20 down 40 next and he was out of position in less than 1 hour.

He was flat
  • #377
  • Edited 3:29pm May 22, 2014 3:12pm | Edited 3:29pm
Quoting 21vs7
{quote} But how one can become better knowing this? Plus knowing what? That they hedge? that MM plays the market all around? or what? I was sitting with a guy in a room in laaandan and he got three straight tickets for 100 mil. Never blinked. I suggested to tun it over the night as I saw he was not nervous. He said naaah Then he got another 300 mil in next few minutes . Talking around 5 min . His machine (MM trader) already eaten 50 mil. He was long 550 mil. market went up 20 down 40 next and he was out of position in less than 1 hour. He was flat...

I am not going to assume that all market makers conduct their businesses the same because they don't. But they can make money on spread alone, heck if I was a MM right now I would make money hand over fist. I would market to retailers and since 90 percent of them lose anyway I would charge them spread, and then wait for them to lose the account to me by being a counter party, if someone comes in that can trade then I just charge them fee (spread or commission) and pass them straight through the market and let them be someone else's problem, or I could do all kinda bucket shop things like misquote him, short stop him, but I cann be fined too so that's another issue. i don't even have to know how to trade to do this either, the statistics of probability works way more in the favor of the MM.

Now If I put a MM and start him off the way I started in FX, he probably would become just another fish in a shark pool and lose his money too. That's why I said so, some of them know what is going on, but you don't need to know jack to be a MM. My statement was not meant to cover all MM but the information they have makes it that they don't have to know jack to make money. Now let's assume you are a big bank, and an order comes in all you do is front run the order with your own, then drive the price next, in FX this is perfectly legal by the way. So those are 2 ways that 2 different kinds of MM of different sizes can make money without knowing the ins and outs of what is going on in the market and coupled with the "chatroom" that they had to help drive prices together and you literally don't need to know much.
Being a trader is lonely, but being a great trader is lonelier still
  • #378
  • May 22, 2014 3:18pm May 22, 2014 3:18pm
Quoting saneblane
{quote} .. but the information they have makes it that they don't have to know jack to make money.
thats true and thats what I said
They are prepared to take large position just for information

to see the flow when sitting in a 2 bedroom home, well thats another story
  • #379
  • May 22, 2014 3:23pm May 22, 2014 3:23pm
Quoting Naokia980
Why big boys need our microlot stops for trading? Dont they activate their pending limits without retailers? If banks celebrate holidays on their country, why price consolidate like died horses? Isnt there other big boys want to trade?
They dont need to activate the order, because the MM will do that for them, but they need to take profit, otherwise the MM will be only at BE, but they also hope to make a little profit here and there + comission, but never lose.The fact that price consolidates in holiday is because the bigboy is on holiday, but the MM is always ready to execute, its is generally done by computer.

Quoting 21vs7
{quote}buy gbpusd equivalent of 50k USD buy usdjpy equivalent of 50k USD you hold none USD you are exposed GBP long JPY short
You are right, but still atleast i`m hedged, but if i were long on GBP/JPY there would be no cover

Quoting saneblane
{quote} Not surprising at all. Most MM never needed to know these things, why would you, when the orders are on the books in plain sight. Some of them may place these trades without knowing all the ins and out, but just take the next best trade available. That's why some retailers can become better traders than the people who fixed the market, they never really had to dig too deep to find anything out. But us retailer normally have to move heaven and high water to learn the market backwards and reverse engineer how it works, and we become better...
There are some PHD at banks too, they are not really amateours also that they control the market, and they have all the info.Its a pretty much disadvantage.
"There's a sucker born every minute" - P.T. Barnum
  • #380
  • May 22, 2014 3:25pm May 22, 2014 3:25pm
Quoting 21vs7
{quote} thats true and thats what I said They are prepared to take large position just for information to see the flow when sitting in a 2 bedroom home, well thats another story

Lol I guess that's another way of looking at it.

@Proximus
Yea man I added what I thought about the banks when I re-edited my post, I know there are some PHD there for sure but with that kind of information you can still make money without a PHD, my thoughts were just a broad generalization of how much things are stacked against us. Anyway ama step back out this discussion and just read. You guys have a good thing going here.
Being a trader is lonely, but being a great trader is lonelier still
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