Is anyone here an institutional trader?

The base is pretty standard bc we all knew what the each made and the "street" all knew it as well. It was just what the going rate was it had nothing to do with how much money you were expected to make. Budgets (pnl) were a function of what products you made markets in (Spot, Options, Forwards, NDF's IR, etc.) Some products were bigger revenue generators than others. For example at the beginning of my career I had to make markets in Forward Majors (Eur, Gbp, Aud, Cad, Jpy, etc. ) which at my bank were lousy books bc they didn't see any flow. But that was my proving ground. In the case of those books my budget was smaller than some other dealers bc there just wasn't any business to leverage off of. Towards the end of my career was making markets in NDF's, primarily China, Taiwan, Philippine, Malayasia, on top of that I also had the em forward books, namely Singapore, Hong Kong, and Thailand. Our bank had a very good reputation in those EM currencies which means we saw a good amount of business (flow) which we were expected to leverage off of. In those years my budget ballooned but I also had more to play with so to speak. In either case its a lot of pressure, with no flow you had to make something out of nothing and with flow you had to make a lot more.
The pressure in being a dealer at a bank is not whether or not you can make money (we all made money trading customer flow and prop trading) it's whether or not you made enough money.

You know...this is what I don't get...why don't traders get compensated accordingly when they make boat loads of money for their bank....now I understand that some banks are different than others but still.

I work at a major institution on eFX side developing market making and prop algos and have seen the transition from manual traders to etrading over last 5 years. we started with handling smaller orders via algos ... now over 80% of volume in spot is handled by algos (quoting very very large size via algos).

As for the spreads, last two years have seen major compression -- UBS and citi are both pushing hard to gain market share and have poached people from top FX players and started a spread war. Also to gain volume, these guys have been showing almost half the spread that used to be norm. . In some cases they are loosing money on these trades but it gives them higher $ volume to report.. this year citi ranked 2nd (from 4th last year). This has allowed retail brokers to make even more money and pass some of that spread to clients

as for retail brokers - after aggregating quotes from all their LPs, they often have inverted market and very frequently 0 spreads. so their game is simply to charge 1.5+ pips from retail traders and hedge at 0 cost. some of them do carry some risk and only hedge after their inventory is bigger than some threshold. In some way they use similar algos as banks - just not as sophisticated and not as good a connection to OTC venues.

just as jason said, some seats are money making and some require more hard work / intelligence to make money. For e.g. if banks has good presence in Asia, they will likely get good flow in asian currencies and will have more info about flow in that area. so those traders will make money without trying too hard (there is minimum skill set but banks can pretty much give that seat to any trader and he will make money). while as jason said, building a business in products that banks currently dont have good presence require much more work and not just trading and also networking with clients, providing them trade ideas, etc.. so those seats get paid more as a % of the pnl.

this used to be the case but not anymore. now EBS is crowded by hedge funds and high freq funds market making. over 40% is non bank volume and in fact banks are moving away from EBS.. their volume is dropping now.. for interbank, banks are trading on few mid markets..

@Jacob, skenobi

What trading platforms are you using now?

I don't know the motivations of other "fisherman". I only stop "fishing" when the net stops netting more fish. I don't target X pips, although the way I leave TP orders near my S/R lines, I almost always get my TP. And all that extraneous stuff you talked about "rapid movements" and waiting for retraces and whatnot... all that stuff doesn't matter to me. I just know there's a high probability my TP will reach. In the low likelihood market turns against me (sh!t happens), my hard stops will keep my losses manageable, with ZERO loss in confidence in my methodology.

Speaking for myself, it's never out of the blue. There's always a target level. "Attract attention of regulators"? What do you imagine they would do to us if we ran some stops?

I don't know how other institutionals decide which stops to hit and which not to. For myself, I only target the obvious stupid stops that stand in the way of a discernible technical trend or fundamental theme. " obviously there were situations when you could not do it" Can you suggest what those situations may be? I can't think of any.

I always break up large orders, but in the broad strokes, the answer is Yes.

1. The most open position I would leave is maybe 50 mio max. The only time I would leave a limit order in 200 mio is if it was an initiating position or it was a customer order, in both cases after breaking it up in manageable pieces.
2. I didn't leave orders with a broker. My order-taking counterparties had always been other Banks. If there was any dispute, Reuters 3000 composite price history was the final arbiter usually. If the history showed at least a couple of bids at or above 1.6830 for however brief a moment (before retracing, if ever it retraces) and the quotes were contributed by Big Banks (e.g. not some low tier East European bank), the order is mutually agreed to be filled. The order taking Bank will not want to look like an ass-hole for too long.

My original answer stands. It means what it means.

Why would anyone want to move a liquid currency using illiquid ones? It doesn't make any sense to me.

I'm not even sure you can even prove this point. I think you're coming at this in a too-convoluted way. If I trade GBPNZD (and I do trade that pair occasionally), I trade it on it's own merits, NOT to target GBPUSD.

Am not saying there aren't people who actually DO this, but, I'm sorry to say, these people are pot-heads.

For my part, MT4 almost exclusively.

I use CitiFX Pro platform.....they have MT4 but it wasn't recommended to me to use.

Tnx guys

The only way to have high probability TP is to have a very wide stop loss vs TP. That means you can have 0 loss for a few months, but when shit happens, ( it never fails to happen), it will wipe off a few months of profits as well. :-)

Not necessarily.

But if that works for you...

So please correct me if I'm wrong. Let me begin by saying that I'm a crappy scalper. But, the statements you just made could unlock the key to scalping.

Directional price movement for any period in time is in relation to the number or volume of orders that can be immediately filled at any given price.

So, f there are a lack of fillable orders the market gets locked in a range.

If the market is locked in a small range, it could also be said that there are an absence stop order clusters.

The market moves by filling orders, and continues to move in direction and proximity of clusters to stop of orders.

So theoretically, in a market that is simply not moving and not waiting for news, one could possibly move the market in either direction by placing limits above or below and simultaneously placing the same directional corresponding stop orders in the same direction above or below the limit order. Spaced evenly apart by a few pips each. If there were no other stop clusters on the board at that time, yours would be the only ones and the limit orders above or below would place additional pressure in the direction of the stop orders. This would last until there was more market volume traded at your set prices. Or until higher volume stops and limits came in at better prices than yours.

In essence that would be what market makers within a much tighter spread, but in the absence of immediately fillable orders via sizable market orders, or a cluster of stops at close proximity, a retail trader could "tempt" the market (makers) for a short time for a few minutes in a quiet volume period, to go a few pips in their direction by placing both stop AND limit clusters in the direction they wanted the market to fill orders at, or a more significant number of stop orders in that direction, as long as those orders were reasonably reachable and within range of the current trading range.

If the market moves in your direction, you delete the stops if quick enough if you don't want them filled, same goes if the market moves in the opposite direction towards the limit orders placed. If the market moves in your direction and then quickly retraces, then you repeat the process with clusters of limits and stop orders above and below.

Not my intent. I scalp occasionally, but it's something I do not endorse to the casual retail trader. It's your call how you want to interpret my prior remarks.

That's only part of the picture. Price movement is also affected by INTENT and the WILL to fill those orders. Without that, no amount of attractive bulls-eyes will move anything.

Conceptually, I don't think it's possible to move markets by "placing" orders as you described, so I'm going to give you the benefit of the doubt in that you actually meant that you're trying to attract ENOUGH attention to your orders that markets will be "moved". INTENT and WILL is still important.

Referring to the highlighted point above, absence or the proximity of stops to limit orders may be pressuring factors, but equally significant are the factors of intent and will.

1. You guys need to disabuse yourselves of the misconception that market makers move markets. They don't move markets. Period. Market makers "make markets" i.e. they provide liquidity to anyone who needs liquidity i.e. they're providing a service, nothing more.

2. I doubt very much that ONE retail trader can do enough to "tempt" market PLAYERS with his own set of clusters, so again I'm gonna give you the benefit of the doubt in that you actually meant TRADERS as a whole and not just ONE retail trader. Another misconception that retail traders need to disabuse themselves of is the notion that their trades matter in the larger scheme of things. Nothing could be further from the truth.

3. As for the rest of what you wrote, you COULD be right. All that's left is then for you to test your hypothesis in the open market. Good luck!

Disclaimer: I don't recommend scalping to regular retail traders if they're attempting to scalp "for a living". To me, the terms "scalping" and "for a living" should not go together. It's only safe if you have a stable of counterparties (or at least a trustworthy broker), if you have lots of time to spend in front of the screen, and if you have a deep enough reserve to tide you over in the event of a bad run. My two cents is that too much emphasis is placed by retail traders on "making a living" (which opens up a whole can of heartbreak when the shit hits the fan) instead of on "building equity". To scalpers who do make a living from it, I say 'Salut' .

When I said market makers what I really meant was institutional scalpers. I understand what market makers are and their role. However, I meant a much broader class of traders with better execution and deeper pockets.

I have read this forum for several years and this is my first post. I am retired from a firm, whose name I won't mention, but they were the largest IB to ever go bankrupt. I was on the floor/trading room for nearly 28 years. Of course, I worked primarily on the NYSE and then about 6 years on the CME. So my experience may not translate well to forex, which I do not trade because of the lack of transparency. I do believe they will establish an exchange and you will eventually get accurate volume and order flow data, which is an essential component of my particular style.

This is an interesting thread. I currently trade in my own boutique trading operation and have an independent contract with one of the big three trading credit default swaps, with particular attention to holdings in the lower tranches. My personal trading is in the CME currency markets and index futures contracts. I can say with the proper tools you can be quite successful in this sort of endeavor. However, most traders try to scalp with the usual cast of lagging indicators and generally lose. You simply cannot scalp when you start several bars behind a move. I trade basically the way I have always traded; order flow, tape reading, price action,volume, and support and resistance. Not very complicated, but mastering the psychological aspects of trading is paramount.

It is no simple matter to get on the institutional side of trading because of the intense competition from well-educated individuals from prestigious universities; they typically all have MBA's. If you know someone with pull you can get an "in." I would say that institutional trading is very hard on your personal health and psyche, as there is little room for error and you can easily be replaced, and Wall Street has no problem having security removing you from the building. There is a lot of stress. I am 56 and just turned down a lucrative offer to return to the floor because I feel that the stress level is simply more than I want to deal with at age 56.

Another route to institutional trading is starting with an internship as a runner on the floor and develop contacts among the traders. It takes several years, but I know of many floor traders, back when there were more trading pits, that found jobs as they worked their way up the ladder. That being said, I would not endorse a career in institutional trading as you are typically as good as your last trade. As I said, the stress level can be crushing. On the other hand, if you are successful, especially in the dark pool trading arena, the bonuses can be very lavish. It's a trade off between stress and cash. Most, but not all, traders are genuine "type A" individuals and will do about anything to advance further up the trading chain. They are happy to climb over your shoulders, if necessary. Of course, the real money is in the Investment Banking side of things which is nearly impossible to crack unless you have impeccable credentials.

Finally, you might start as a prop trader and learn the business. Unfortunately, there is a lot of "scammy" prop trading offers out there and you will want to try to get on with a major firm. Don't fall prey to the weasels that want you to pay for their training and post a security deposit...etc. There are real prop trading positions out there and if you can set yourself apart from the pack, in terms of return, you can write your own ticket. Of course, that is easier said than done. Best of luck in your trading, and remember the Street is all about numbers and performance. No good numbers, no job.

I figured that's probably what you meant.

Just that my brain was a lil' frazzled from the World Cup that I couldn't suggest something like "institutional scalpers".. LOL (anyways, in the little crews I worked in, I just call them "cowboys")

All good!

Well, I guess you just said which IB it was . May I ask you a question, with all your experience in trading, what have you been reading/looking for here for several years? By the way, have you seen Margin Call, is it a good representation of what really had happened?

Are you consistently profitable trading CME currency futures? How much return experienced guy like you can expect from the market? Obviously it depends on the market conditions and amount of hours you put in, however what number you confortable with? Maybe too personal question, but just to clear things up.

Do you think CME currency volumes paired with SR lines are very strong indicators of what the price is about to do? Do you think CME COT report is a good indicator of reversal of long term trend?

Do you think due to financial turmoil of 2007-08 its harder to make money on the market now than few years before crisis?

eQ1. Any recommendations on good small deposit, low commission, reliable CME futures broker?

eQ2. What is your favorite book/s on trading? And best book on CME currency futures if any?

eQ3. Your best advice to freshmen, apart from staying away from the markets?

eQ4. Have you heard of anyone who made fortune trading CME futures, well we all heared stories about stock market successful traders, but I personnaly have not heard one when it comes to forex/currency futures market, maybe we all here at the wrong place trying to make money

Following the repeal of Glass-Steagal Act in 1999, Investment Banks were allowed in mortgage acquisition, bundling, and sales. With this in mind, it is important to realize that Wall Street is geared to make money, not evaluate risk. So, the risk component was not part of the Streets' money making equation. On the other hand, investors wanted some assurances that the risk component have some contingencies in the event of individual default. The designers of these packaged mortgage bundles relied upon Efficient Market Theory, and modeled their product on this premise...which is to say that all the mortgages were worth the price the housing commanded. After all, home prices had consistently appreciated in value since the depression. That being said, investors still needed some assurances against default and thus the credit default swap came into existence. Credit Default Swaps are essentially insurance against mortgage default. The Investment Bankers were very careful not to use the word "insurance" lest state insurance commissioners require adequate reserves to cover losses in cases of default. It was a license for the mortgage industry to print money, as they mortgaged everything in sight with inflated home comps, fraudulent valuations, and liberal use of second and third mortgages on homes to extract cash from the appreciating homes. It created a bubble in the housing market, and individuals began to make credit default claims as the lower tranches of the swaps fell apart. People found themselves underwater by serious margins and walked away from their property and the investment bankers realized the level of fraud. The housing market contracted, prices fell, credit dried up and the Investment Banks were left covering unfunded liabilities, as they had put back minuscule reserves for these defaults. All the Wall Street Banks began to scramble, to no avail, to prop up their cash reserves, with varying levels of success. Most were hopelessly upside down on their unfunded liabilities and were absorbed, at the Fed chairman's' discretion into larger banks at a fraction of their value. Alan Ross Sorkins's "To Big to Fail" and Joseph Stiglitz's "Freefall" are great books on this topic.

I like all things trading and started reading Forex Factory initially for the daily economic announcements and then started to peruse the various trading systems out of curiosity. Since I am a derivatives trader, I didn't have a lot to contribute to Forex trading but still enjoyed individuals ideas on trading, whether it is Forex or anything else. Despite one's experience, the day you quit learning is the day you start moving backward in your trading. I try to read a book a week on trading, for example.


Yes, since retail traders essentially have the same data available as institutions, the transparency of the markets makes them very tradable with the right system. I primarily use real time data and shun any oscillators/indicators. I don't use tier 2 quotes, as most institutions utilize, but tape reading can alert you to HFC trading in real time using algos developed by some old friends from Wall Street. Use the old saying, 5% of the traders control the market, 10% follow the 5%, and the other 85% provide liquidity. I follow the big boys and have the tools to do so.


I live and die on volume around support and resistance, high volume generally indicates a a bounce off the s/r lines and low volume indicates a continuation of directional movement. It's fairly easy to understand, as price approaches s/r traders will bail out or reverse, and a new group of traders will enter the market in the opposite direction. It is, like all trading, a probability play with a reasonably high rate of success. Trading is all about probability, not indicators/oscillators..etc. I have massive spreadsheets were I enter every trade and the particulars of the trade...ie, entry set-ups, exits, time of trade, day of trade, stops and profit targets and can develop a relative understanding of my potential success. Since there are so man variables that contribute to market pricing, actual probability is impossible to mathematically identify; so traders need to isolate specific variables and develop their own set of rough probabilities based on grouping similar entries, exits and market conditions. I highly recommend study of game theory for traders along with market chaos theory. (specifically the study of long tails) Benoit Mendelbrot's book "The Misbehavior of Markets" is a great start on Chaos theory. I have quite a few game theory books, but a good start would be Morton Davis's "Game Theory: A Nontechnical Introduction." I should also mention a thorough understanding of auction theory is invaluable in reading order flow, and James F Dalton's. Robert B. Daltons, and Eric T. Jones "Markets in Profile: Profiting from the Auction Process" is a great starting point.


I will lump the last four questions together. Any of the established futures firms on LaSalle Street in Chicago are good choices. ie- Apex, Amp, Infinity. and a host of others. Ask the broker who they clear through and stick with the big boys. As for starting out, most traders start very undercapitalized and thus blow out their accounts with a few bad trades. Trade on a sim until you can consistently make $100/day at least 4/5 days. How do you learn? Well, I personally recommend finding a great mentor with a track record of success. There are many subtleties to trading you will not find in any books, and a mentor can help you identify the most important of these so you can recognize them and trade effectively. I would avoid systems based trading as the market has many moods and systems cannot cover varying market conditions. They work well in trending markets, which you don't need a system to trade, but fail during periods of market consolidation and range compression. Most importantly, learn to read charts in real time and evaluate each bar to ascertain what is occurring as they form. Avoid market formations, as they are not terribly reliable and stick with real-time data to understand the market internals, which are what make the market tick. Price is a function of market internals, not visa versa. Finally, I know lots of individuals who have done quite well trading on the CME. Remember, it's not a get rich quick scheme but a slow plod that must be accompanied by consistency in results. Too many traders trade too much, trade too many contracts, and don't understand the probability of trading. Make good trades and leave your ego at the door. Let your winners run and be quick to cut losses when you have misinterpreted an entry. I try to use a 2:1 profit to loss ratio, and under no circumstances get into the habit of trading anything less the 1:1; the math does not favor you.

Too many people are looking for simplistic systems to trade profitably. The market is a complicated beast and I use a variety of tools to understand what the market is trying to tell me. Learn to isolate variables, measure them, and make proper decisions. I also high recommend an intensive study of trading psychology, as this is the final arbeiter of your ultimate success. Until you can control your emotional responses to stressful situations, you will lose. I should say that emotions are far more difficult to understand and control than anything I have discussed above. Revenge trading, overtrading, trading on hope, trading too many contracts (money management) are the real keys to success. Mark Douglass's "Trading in the Zone" should be required reading. Implementing his insightful ideas is a challenging prospect, as the market does not work on logic or common sense, yet we are pre-programmed to think logically and use common sense. You have to think like the market. Many trading books suggest "turning off" your emotions. What a ridiculous idea! You feel what you feel, how you react to your emotions is a more workable idea. If you lose your first trade, as I did today, do you take a low probability trade and up the number of contracts to get back to even, or do you stick with what you know and be patient and work your way back into the black methodically? That is the key. Best of luck in your trading, I truly hope you succeed. Feel free to ask anything you want and I will respond, if I know the answer. Even after all these years, there are still trading days I just can't wrap my head around and am quick to admit that fact.

Scalpers Creed: Any time you think you know how the market is going to move for the day, shut the computer off and go golfing. You will have a better day

Great advice!

Anyways, hopefully your posts see the beginnings of more prop guys chiming in on the forums...