Is anyone here an institutional trader?

you cannot compare retail with the institutional space; both are two different world, which require / gives your the ability to trade differently. Even within the institutional space there are different worlds...if you think retail (brokers) arnt transparent...im sure you will have a harder time understanding institutional space; competition is killing and nobody will give you some on a silver plate - you need to figure it out or you are a goner...

When it comes to retail trading itself; i believe setting up a position to ride a big wave is good (as long you are positive on the interest) and you have enough margin / capital to put up if require - but know when to go out (either side), however if you are in the black you can just day trade / scalp as a complementary piggybank - but the latter just requires a good plan on the money management and a really good understanding of leverage usage in general. Leverage is very powerfull, but o so dangerous if you did not covered all of your bases...

As a retail trader i do believe you should start with short term trading...scalping on tick charts or whatever...because this will teach you certain skills...you will make mistake, burn up accounts...going to be frustrated, stressed, angry, sad, greedy...maybe one or two sleepless nights...and few empty bottles...start all over - with more patience and less greed maybe - you would think... This will teach you the emotions and analytic skills you have as a person to see if trading is really something you have in you... However some people already have those skills (developed) from doing something way different then trading, but require the same kills; one in particular - being a good poker player...

But that said - one size does not fit all in FX generally....

Coming back to the institutional space...i do believe that this space isnt for everybody...it requires really hard work...a certain mentality...the attitude comes from you as a person...if you think you can make big money and life the easy life - think again...sleepless night - different social life - and once you smelt the money its really hard to not smell more (once you buy that big house, buy that new Maserati, getting bespoke clothing from LV - im sure you are not satisfied after a little while)...and if you trade for a bank - you manager will want you to smell more and will put you to the test and the pressure will rise...and you will start again, but this time with more stress, more sleepless nights... its not about greed perse, but its all about preserving what you have and moving forward - which is just our human nature.

So yes - 100% you can get rich from (sales) trading (just depends where you trade) - but once the money starts to poor in - you already need to have different plan and make sure you work towards all of them so you have very soft landing when shit hits the fan...because like everything else in life...nothing last forever - you just dont know when it stops for whatever reason and then it can be hard to fall back to the way you lived before, unless you become wise enough to know you need to have the right people around you to make you plan work. Also being rich is subjective...all abt how much you think being rich is...100k a yr for sure, 500k a yr sure, 1M yes...2M very possibly...3M a yr...doable...4, 5 m a yr??? very hard but not impossible... do you want to make 10, 20m a yr??? just build a company, be the CEO and exit - maybe easier...i dont know.

When it comes to the intraday moves....the big money will come in and out intraday yes - but before you even realized it , its too late....but at least try to scalp it The only way i see intraday making money is have a very good book with 1) enough capital, 2) having very good clients that want to trade with you so you can quote them your markup or 3) just trade on the microsecond timeframe. Im sure it looks like the 2nd option is the easiest...but being a sales trader is a whole different ball game, but once you have the proper clients that are commitment - that will be "easy" money. Wine - Dine - Travel - Being hours and days from home and collect your monthly commission check as long you do whatever it takes to get them in...

Also these days its good to be specialized in a certain field within the FX...if you want to be a trader make sure you trade something that nobody else does...you need to stand out - be different / special for the company....trade RUB indeed...or MXN...or CNH, bring something to the table... I would recommend MXN or ZAR, because the volumes are high there amoungst the EM's - however they are difficult to trade due to the algo's.
There are many aspects within FX where you can make a lot of money...trading for years on the retail front without any prior experience seems more difficult, if you truly want to make money in FX and are that risk taker you want to be / think you are....just quit you day job now and go find a job within the FX space in whatever role you think suits you.

From what im seeing, there will be a lot of new opportunities after the whole "refreshment" period thats happening now in the FX space and after the housing bubble...get a seat now, because the next best thing will probably not coming for a while. Im sure you are not even realizing how lucky you are living in this data driven age...

Anyway im not sure why i wrote all of the above, but just felt the need to do it...probably because its just end of the month...

OK Thanks, i just thought you had another way to work the stops.

Since you said sometimes you looked for them to get executed.

Skenobi and Jacob

tell us about tools you used:
- at small to medium institutionals what trading platform they mostly use?
- what kind of auxiliary instruments/sources are necessicuty apart from terminals?

- do you trade via Bloomberg trading suite as well? if yes, what are mininum deposit and what leverages are possible with it?

You're very much welcome here. This crowd needs to know of as many flavors of institutional experiences as possible... some positive, some negative, some regional, some one-size-fits-all...

For both FX spot and options, we had Reuters Dealing, Bloomberg, prop portals from UBS, Barclays, RBS etc... We still used interdealer voice brokers....

A simple desk calculator with large displays . And my trusty BA II Plus calculator for bond and TVM calculations (I traded some bonds, short term money and FX swaps too).

Minimum deposit? For trading FX? Never heard of such a thing. Bloomberg is not a clearer AFAIK. All our trades on Bloomberg were with bona fide institutionals with whom I (as a Bank) would need to have mutual credit lines and netting agreements. As I mentioned before to a similar query, there is SOME element of leverage but essentially we traded with real capital, with everything netted electronically.

You can trade any size on the FX interbank market. It's funny, but my smallest trade as a bank FX trader was as low as 200 (two hundred) euro. I was surprised when I had a phone call from the back office asking me "what is this 200 EUR/USD trade. After checking the blotter", I realized that I didn't type K after 200. The trade was executed thru a prop platform of one of the biggest banks.

You should have typed B instead of K, and change forex trend...

I see.'so which platforms are mostly used by institutionals.

It depends with which banks you have credit lines. I was trading mostly with Deutsche Bank's Autobahn and Barclays' BARX as well as SocGen's platform. Some deals with Reuters Dealing, but it's old fashioned and Bloomberg is much better. My trades were spot, FX forwards and swaps.

Absolutely.

@ institutional traders (poll )

Guys we know already from information you posted on this forum that majority of your budgets in the banks were made making market and some portion was prop trading.

The question now is how much was real prop trading (when you took real risk), please fill in the form

========================
budget breakdown form in %

1. market making - ?? %

2. prop trading - ?? %

3. other - ?? %

========================

THE RULES are you CANNOT consider following practices as prop trading, it should go to other:

a. front running your clients' orders

b. running stops or making bets because you have information that someone else will run stops

c. charging uninformed clients too much for your services (say client has no clue where the market is, and you take advantage of it)

Please be as honest as possible.

At the beginning of my career the makeup was the following
MM - 75%
Prop (discretionary) - 25%

At the end of my career the makeup was
MM - 40%
Prop (discretionary) - 60%

i exclude other only bc I have no idea what other would be

As I mentioned here, where I came from, all the prop guys had to wear the market maker's hat.

BUT even as we made markets 90% or so of the TIME, more than 80% of our BUDGET (i.e. PROFIT TARGETS) had to come from prop trading because THAT was the primary reason we were hired and trained to do.

To modify your poll:
========================
ACTIVITY breakdown in % throughout much of my career

1. market making - 80-90 %

2. prop trading - 10-20 %
========================

========================
BUDGET (PROFIT TARGET) breakdown form in %

1. market making - 10 %

2. prop trading - 90 %
========================

Notice the shift in weightage between what we actually DO and which activity we have to actually make more money from.

Not sure what "others" should be, so I'm excluding that item.

The main reason for the divergence between what I did and what I made money from: I worked for Tier-One commercial and investment banking groups with significant regional and domestic presence. As high profile banking service providers, we were expected to provide competitive rates to everyone, from the walk-in customer to the MNCs we arranged capital for. Therefore market-making is a collective responsibility of everybody on the prop desks.

If a Sales Trader pops up and shouts on the trading floor asking for a quote in EURUSD (for instance), whichever trader is assigned that pair (or ANY TRADER with an interest) is obliged to make a market in short order. Likewise, if a quote is requested from the voice brokers from some counterparty, we HAD to make a market for that, all in the interest of maintaining our name as bad-ass market makers within the domestic financial markets community.

ANYONE with minimal training can make markets but not just anyone can TRADE. Hence, the higher profit targets set for trading.

Damn right...

If anyone here uses Currenex or Hotspot or any other active ECN, try and make markets...go ahead, post bids and offers (inside the spreads) and see if you can trade those (out)...by placing passive limit orders, you already are acting like a market maker on the ECN.

What skenobi means is anyone can make market to ignorant voice clients who care less for good price. Electronic market making on ECNs is totally different beast and even tier1 banks are not doing that right now because they can't compete with sophisticated HFTs...

I dont know what he means, i just know what i read...but i dont believe its very difficult for anyone to trade out an "ignorant voice clients order who cares less for a good price", so im not sure if you read what he meant.

Anyway, from what the older guys in the markets told me is, up to 2004 they could make markets and arb manually on the IB platforms with just a calculator and had plenty of time, untill the algo's kicked in, but thats what ive been told first hand - i would not know otherwise...so based on that: very good observation on the electronic front...but for the record...tier1 bank are 100% for sure still proving liquidity on the ecn's, just they are more conservative to who they give it out to and they became more pro-active in the management of the streams. Note - im talking about lastlook liquidity here, not interest/orders only. Obv some non-bank firms are much better then some bank LP's out there indeed and even some banks are now using non-banks.

Other then that - still, if one would like to taste something to act like a market maker, just go an try it out - post the bid and/or offers when you think its the right time and see for yourself...always fun to try / experiment and see what happens...

Regarding market making, I don't know about skenobi's and I hope this is not the case, but a lot of banks fired a lot of traders and replaced them with HFTs.

There is also much less need for voice trading, since a lot of buy-side traders also moved to electronic venues and started using executions HFTs.

BBC:
http://www.bbc.com/news/business-23095938


Bloomberg:
http://www.bloomberg.com/news/2014-0...ce-humans.html

Indirectly, that's a fair implication. No dispute there.

Chillax, guys! Fair comments on all sides re:electronic market making, but I was just answering a poll to the point.

Hello,

Thanks a lot for this intersting thread.

What do you think about metal, gold especially ? Is there something particular to know about trading this strange beast?

@Jacob and skenobi,

well, you both excluded other, which is not by rules , discretionary, is other substantial contributor to the budget?

@skenobi

Was the size of your bonus dependant on your performance, if yes, how?