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Is anyone here an institutional trader?

  • #621
  • Jan 7, 2015 5:24am Jan 7, 2015 5:24am
Quoting foobar
Hi institutional traders, any thoughts on how the changes below will affect FX markets going forward?
FINMA sanctions foreign exchange manipulation at UBS
11 tech trends that will shape your finance career in 2015

Swiss currency automation move may reshape trading

I've read the FINMA decision twice. Have also read the article you quoted from and additional reporting on the matter.

In the FINMA case, I don't think "automate foreign exchange trading" means what everyone thinks it means.

In the 3rd article I listed, the reporter seems to be confusing 3 seemingly-related-but-actually-quite-separate issues: "automated trading", "price fixing fraud", and "algo trading".

Consider the following points:
1. From the FINMA ruling, it seems only UBS was slapped with the "only 95% automated" restriction. And remember, I don't think "automated" means what y'all think it means.
2. If it really does mean what y'all think it means i.e. REALLY automate the business of trading from A to Z similarly to the Algos, it doesn't solve the problem it purportedly is trying to circumvent, which is "forex manipulation". If at all, it may even increase the risk from forex manipulation, not reduce.
3. What I firmly believe FINMA's meaning to be: 95% of UBS's trading should be via electronic platforms (like EBS) instead of via interdealer brokers (i.e. human "voice brokers")

My definitions:

"automated trading": Certain processes are automated, key among which is "price discovery" which should be more economical when handled on common electronic platforms instead of via human brokers.

"price fixing fraud": unrelated stuff your mother's been reading about in the papers. Google-able.

"algo trading": more unrelated stuff your mother might be reading about in the press. Google-able.

My own thoughts as to how FINMA's decision will affect markets going forward? I'm guessing "nothing much", but that's just my 2 cents. But for sure, if this turns out to be a trend globally, there will be more out-of-work interdealer brokers because of this.

Bank traders are losing jobs also, but this would not be the reason.

Quoting foobar
Is it really that easy to automate a skilled dealer's work away?
IMHO, no.

In any case, a "skilled" human trader does not trade the same way as an automated program, so AFAIC the comparison (if there is one to be made) is not valid. Human traders have their exclusive uses as do algos, I'm sure.

I suspect even the most advanced algo systems require human tweaking from time to time during the life of the programs.

Disclaimer: I don't care if I'm wrong.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #622
  • Jan 10, 2015 5:28pm Jan 10, 2015 5:28pm
[quote=trader7757;7961400] 4. Study reversion to the mean techniques, they have a tremendous record of success. I use polynomial regression channels, 225 SMA, sigma 2 and sigma 3 as the parameters. The market seldom strays beyond 3 sigma; that's when I take trades back to the mean. This is outside-in trading and it works. quote]

Hi Trader 7757,
This is something I have tried before but was confused by conflicting signals when switching TF's, for example it could show a sell signal on the daily and a buy on the 4Hr,how do you cope with this?
I was thinking maybe to concentrate on one TF and trade when price is outside the zone and coincides with S/R then wait wait for a price action signal
Could you elaborate a little on how you trade this TF's,confirming signals etc?
Thanks
  • #623
  • Feb 12, 2015 6:31am Feb 12, 2015 6:31am
Hi all,

as FX trading is such a specialized skill. What happens to a dealer who has not made enough to retire but is laid off by his bank? Is there another career that he can switch into if he can't go back to being a dealer such as now where the entire FX market making industry is being automated and shrinking?

Thanks and regards
foo
  • #624
  • Feb 12, 2015 9:41pm Feb 12, 2015 9:41pm
Quoting foobar
Hi all, as FX trading is such a specialized skill. What happens to a dealer who has not made enough to retire but is laid off by his bank?
Don't worry about this guy. Nobody cares about him.

If he was smart enough to get hired in the first place, I'm sure he's smart enough to find another thing he's good at.

Quoting foobar
Is there another career that he can switch into if he can't go back to being a dealer such as now where the entire FX market making industry is being automated and shrinking? Thanks and regards foo
You can read my last post on this thread regarding the appropriateness of using the word "automated" to describe market-making or even whether "automation" is such a big deal (and it isn't).
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #625
  • Feb 28, 2015 8:03am Feb 28, 2015 8:03am
Hi all

A couple of questions: What brokers do institutional traders/banks use? A short list of these prime brokers will be great. The amount of leverage allowed? Also what is the minimum account size to trade with these brokers? Thanks a lot!
  • #626
  • Edited 11:04am Feb 28, 2015 8:29am | Edited 11:04am
Quoting disarmed
Hi all A couple of questions: What brokers do institutional traders/banks use? A short list of these prime brokers will be great.
Google "interdealer brokers".

Quoting disarmed
The amount of leverage allowed?
No leverage. Retail traders place a margin deposit with retail brokers, trade on margin, and trade WITH retail brokers on leverage.

Institutional traders trade WITH each other and THRU (not WITH) interdealer brokers. Interdealer brokers make money from commissions. The Banks do not place margins with interdealer brokers or even with each other because with Banks trade real money, not leveraged notional (i.e. IMAGINARY) contracts. Banks will have mutual credit limits for each other, but this is not nearly the same thing.

Quoting disarmed
Also what is the minimum account size to trade with these brokers? Thanks a lot!
There is no question of minimum account size because as I've implied above, interdealer brokers do not accept margin deposits; they make money from per-trade commissions. Interdealer brokers do not serve retail traders. They serve only institutionals representing Banks.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #627
  • Mar 9, 2015 2:42am Mar 9, 2015 2:42am
hello skenobi......since you want the question here..here it it is.what fundamental data do you use and what do you mean by money cant be made from trading constantly,i.e....cant trust it to put money on the table....if so why trade at all.
  • #628
  • Mar 9, 2015 3:14am Mar 9, 2015 3:14am
Quoting carbonado
hello skenobi......since you want the question here..here it it is.what fundamental data do you use
I don't use any fundamental data other than the scheduled dates and times the data are released i.e. I only use the calendar.

Quoting carbonado
what do you mean by money cant be made from trading constantly,i.e....cant trust it to put money on the table....if so why trade at all.
Trading is not a dependable source of putting food on the table i.e. it's not reliable as "regular" income like a salary. (to the naysayers, don't bother trying to convince me otherwise because you will NEVER be able to convince me otherwise.)

The main reason institutional traders can introduce any "regularity" in their trading income is because they can be market makers as well i.e. they can make money from the spread. Retail traders do not have that luxury and, as such, should not entertain any fantasy that they will ever have that luxury for any meaningful length of time.

The only proper reason for a retail trader to trade is to build equity i.e. to grow your account.

It doesn't matter to me if you don't believe me. Read my sig below.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #629
  • Mar 20, 2015 3:37pm Mar 20, 2015 3:37pm
Dear skenobi, pls answer why retailers losing on forex? can retailers feed big boys?do retailers need to compete or follow big boys?
  • #630
  • Mar 20, 2015 11:00pm Mar 20, 2015 11:00pm
Quoting Naokia980
Dear skenobi, pls answer why retailers losing on forex?
That's a leading question because it assumes that retail traders (in general) are losing on forex. That's not necessarily true because it could be that the losers are the ones that are crying like a biatch about their losses and therefore only the losers are VISIBLE.

I would prefer not to answer leading questions, thanks very much.

Did you mean to ask, "why do losers lose in the forex markets?"

Quoting Naokia980
can retailers feed big boys?
I'm sure they CAN (to answer your question directly), but they DON'T. The retail market is merely a parallel market piggy-backing the interbank market to draw direction from.

Heck... now that I think about it, the retail forex "market" is NOT even a market!

Losing retail traders feed the MARKET (and/or brokers), not the big Banks. Big Banks feed on each other and from their own customers (which do not include the retail segment as you know it).

Quoting Naokia980
do retailers need to compete or follow big boys?
No. And no maybe.

I said "no" just now about "following" "big boys". Now I say "maybe", because Bank traders leave a roadmap of PAST order clusters (as shown by judiciously drawn horizontal S/R lines) not to be confused with "order flow".

And what retail traders do with that roadmap is entirely up to them, hence the "maybe".
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #631
  • Mar 23, 2015 10:34am Mar 23, 2015 10:34am
Hi skenobi...

what do you mean by "judiciously drawn horizontal S/R lines"?
From back-testing, it seems that S/R lines have an approx. 50% probability of being blown through as any other randomly drawn line on a chart... I do realize that back-testing doesn't take into account knowledge of historical news events unless you have access to historical news data that can be aligned to the historical price data..so does this make back testing irrelevant?

...and thank you so much for sharing your experience/knowledge...

Best,

Dave
  • #632
  • Mar 23, 2015 11:24am Mar 23, 2015 11:24am
Quoting davelansing
Hi skenobi... what do you mean by "judiciously drawn horizontal S/R lines"?
Judiciously-drawn horizontal lines are lines drawn where there is a past history of price action or order levels e.g. significant highs and lows, price levels around which market players pivot etc etc.

Nothing new, as you can see.

Quoting davelansing
From back-testing, it seems that S/R lines have an approx. 50% probability of being blown through as any other randomly drawn line on a chart...
You mentioned back-testing. To me, back-testing is only amenable to strategies that have black and white rules of engagement (i.e. programmable rules) with zero arbitrariness. Drawing horizontal lines judiciously is too arbitrary to be back-tested.

You mentioned 50% probability of S/Rs being blown thru. I think you're assuming I even care about the odds, and even less, actually putting a number to those odds e.g. your 50% figure.

I don't care really. Besides, if the lines were drawn properly, I'd like to think I have a better than even chance of price behaving any way I expect.

I'm not going to go into my strategies as that's not the point of this thread. But, so as not to veer too much off-topic (relative to the thread title): institutional traders don't have to time to back-test.

It suffices to say that my methods are not amenable to back-testing.

Quoting davelansing
I do realize that back-testing doesn't take into account knowledge of historical news events unless you have access to historical news data that can be aligned to the historical price data..so does this make back testing irrelevant?
Not sure what part of your question makes back testing irrelevant. To reiterate, drawing horizontal S/Rs is too arbitrary to be back-tested. If that endeavor is already fraught with arbitrariness, I'm not sure if calculating the probability of breach would be of any use.

If you're really asking whether back testing in general is irrelevant, I would never say that. Just because I don't back-test, doesn't mean it's irrelevant. It's just not something I (or any institutional) would do, that's all.

Hopefully the above makes sense.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #633
  • Mar 23, 2015 11:33am Mar 23, 2015 11:33am
Hi skenobi,

I have a question regarding the price action around the start of each trading session that hopefully I can get answered. Especially if you think it is relevant at all.

So, how important is price action around the opening times of the Frankfurt, London, and NY sessions. Usually there is often a decent move away from certain price levels and was wondering if watching the price behavior around these opening times is important? I assume large money flows are coming in right at the start of each session so this really got me thinking about this subject.

Thanks
  • #634
  • Mar 23, 2015 12:12pm Mar 23, 2015 12:12pm
Quoting PacnyTuH0
Hi skenobi, I have a question regarding the price action around the start of each trading session that hopefully I can get answered. Especially if you think it is relevant at all. So, how important is price action around the opening times of the Frankfurt, London, and NY sessions. Usually there is often a decent move away from certain price levels and was wondering if watching the price behavior around these opening times is important? I assume large money flows are coming in right at the start of each session so this really got me thinking about...
My methods do not depend on session starts, so session starts are not relevant to me. I do know of other institutionals who practically earn significant portions of their bonuses just by trading session starts. But that's just them.

If behavior around session starts is observable to you, the question of relevance is something only you can answer.

Plus if you can already make money from trading session starts, then you don't need someone like me to validate your method. Just go ahead and make money.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #635
  • Mar 23, 2015 12:23pm Mar 23, 2015 12:23pm
Hi Bro Skenobi, I'm curious about the below, and hope you can enlighten me.

Eg, a FOMC statement release, how fast do an institution trader react and place their trades?

I realised the price moved upon the release time, and personally it took me at least 3 to 5 mins to finish reading it before I decide what to trade. So I wonder who can digest and interpret the news and place trade at the exact timing of the release that fast.
The only winner is the one who survive the longest...
  • #636
  • Mar 23, 2015 12:49pm Mar 23, 2015 12:49pm
Quoting kinspk
Hi Bro Skenobi, I'm curious about the below, and hope you can enlighten me. Eg, a FOMC statement release, how fast do an institution trader react and place their trades?
I've never traded around rate decisions or even the NFP in my entire career. (lol, actually that's not true ) I know people who do, but these guys are just action junkies. Interbank trading portals are just as illiquid as MT4 brokers can be during releases.


Quoting kinspk
I realised the price moved upon the release time, and personally it took me at least 3 to 5 mins to finish reading it before I decide what to trade.
This is the thing I don't get: Most retail traders ALWAYS want to read when they should be trading. Reading the release is not your job. Trading the REACTION to the release is. Maybe the Bank traders I worked with are just stupid country bumpkins who don't know how to read, but I don't know ANYBODY who actually READS the releases before deciding when to trade.

You can take from that what you will.

Try this as an exercise: On a demo account, form an opinion about direction before the release and place an order to match that opinion exactly 5 minutes before the release. Alternatively, just wait 20 to 30 minutes AFTER the release for price to settle down, and then just trade price action from then on.

You might be surprised at what you learn. (and please don't ask me what to expect. Teaching is not my business, I'm afraid. Sorry! )

Quoting kinspk
So I wonder who can digest and interpret the news and place trade at the exact timing of the release that fast.
Nobody. Price will go where it wants to go REGARDLESS of the significance of the news, or lack thereof.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #637
  • Mar 23, 2015 1:11pm Mar 23, 2015 1:11pm
Quoting skenobi
{quote} I've never traded around rate decisions or even the NFP in my entire career. (lol, actually that's not true ) I know people who do, but these guys are just action junkies. Interbank trading portals are just as illiquid as MT4 brokers can be during releases. {quote} This is the thing I don't get: Most retail traders ALWAYS want to read when they should be trading. Reading the release is not your job. Trading the REACTION to the release is. Maybe the Bank traders I worked with are just stupid country bumpkins who don't know how to read,...
Bro, thanks for clarifying and quench my curiosity of these amusements.

Btw, can I assume that those "traders" who traded on the exact timing of release may not be interpreting or moving the price at the right direction? (Aka gambling)

About your 20 to 30 min waiting do somehow tally with my technical trading of 30-45 mins of news cool down I usually waited to enter, but just thought that interpreting the news correctly do benefit me in getting a better entry.

Eg, when a new release which was not clear or uncertain, whereas the after reaction is bull, market may be pull down for a great 50 to 100 pips long entry.
The only winner is the one who survive the longest...
  • #638
  • Mar 23, 2015 1:42pm Mar 23, 2015 1:42pm
Quoting kinspk
{quote} Bro, thanks for clarifying and quench my curiosity of these amusements. Btw, can I assume that those "traders" who traded on the exact timing of release may not be interpreting or moving the price at the right direction? (Aka gambling)
Some gamble, some place stops in the direction of the original trend, some place stops to trade counter-trends, some just wanna run stops.

Quoting kinspk
About your 20 to 30 min waiting do somehow tally with my technical trading of 30-45 mins of news cool down I usually waited to enter, but just thought that interpreting the news correctly do benefit me in getting a better entry.
Don't take this the wrong way, alright? But with respect: fvck all that.

Interpreting the news is what junior traders and noob retail traders do. I'm not saying fundamental analysis is not important. It's always important to have some fundamental subtext in the back of your head. Just don't let it divert you from what the market is doing RIGHT NOW.

Quoting kinspk
Eg, when a new release which was not clear or uncertain, whereas the after reaction is bull, market may be pull down for a great 50 to 100 pips long entry.
If you're convinced that the reaction is bullish, placing a buy stop will still get you in the game, don't you agree?. There is no guarantee the initial pull back will hit your buy limit order or worse, the buy limit is executed and then your stop loss is executed as well.

There's a time and a place to wait for better entry levels (limit orders). Trading around events is not one of those times.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #639
  • Mar 23, 2015 1:54pm Mar 23, 2015 1:54pm
Thanks, sorry for your time but just the below confuse me.


Quoting skenobi
{quote} Interpreting the news is what junior traders and noob retail traders do.
So does it mean most senior institution trader are technical traders, who don't really bother about the changes in fundamental?
The only winner is the one who survive the longest...
  • #640
  • Mar 23, 2015 7:49pm Mar 23, 2015 7:49pm
Quoting kinspk
Thanks, sorry for your time but just the below confuse me. {quote} So does it mean most senior institution trader are technical traders, who don't really bother about the changes in fundamental?
Correct.

We care about it and file it away in our heads for the long term. But to depend on past economic data from suspect sources (instead of observing the REACTIONS to the data) in order to trade daily is pretty bone-headed.
I'm not trying to convince anyone. I'm not in the "convincing" business.
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