Is anyone here an institutional trader? | Page 46 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Anyone here profitable? Show your Live Earnings here 3 replies

Brokers and Banks as an Institutional Trader 4 replies

Anyone can provide market depth snapshot for ATC Active Trader ? 0 replies

anyone can login to vt trader? 1 reply

Attachments: Is anyone here an institutional trader?
Exit Attachments

Is anyone here an institutional trader?

  • #901
  • Sep 13, 2015 10:09am Sep 13, 2015 10:09am
Quoting c2v4l
Second, was the daily chart ends with New York close?
#
Daily charts close at 10pm GMT.

I wonder if H4 has any significance to institutions or if it's an MT4 thing.
"Never Take a Trade You Don't Understand!" - Pres78
  • #902
  • Sep 13, 2015 11:52am Sep 13, 2015 11:52am
Quoting Aloen
Hi all Two questions about institutional trader. Do they trade every day like day trader? how long usually they hold their position? hope somebody can help me. thanks
This really depends, but there is no general rule for an institutional trader with regards to his/her style or trading horizon. The only thing which matters is whether you can make money or not, doesn't matter how you do it. I personally know many, and some of them are pure fundamentals guys with few weeks horizon, some of them are mix of fundamentals and technicals, some are day trading. In general, day trading is more typical of a sell-side (banks) market-makers as they handle a lot of client flow around. On the buyside (real money @ hedge funds) it is more likely that trading horizon is at least a day, or even more likely few days.
  • #903
  • Sep 14, 2015 6:20am Sep 14, 2015 6:20am
Quoting katrooo
{quote} This really depends, but there is no general rule for an institutional trader with regards to his/her style or trading horizon. The only thing which matters is whether you can make money or not, doesn't matter how you do it. I personally know many, and some of them are pure fundamentals guys with few weeks horizon, some of them are mix of fundamentals and technicals, some are day trading. In general, day trading is more typical of a sell-side (banks) market-makers as they handle a lot of client flow around. On the buyside (real money @ hedge...
Do you know any hedge fund or Asset management firm.that is trading their clients money by trading currency in a similar fashion that we retail traders do? I'd be interested to hear some names and see their performance. It should be significantly better than the usual Hedge fund making returns in the 6-60% p.a. range (Renaissance fund/Medaillon excluded^^)Thanks in advance for your imput.
Demo only
  • #904
  • Sep 14, 2015 1:21pm Sep 14, 2015 1:21pm
Quoting bg_sunny
{quote} Do you know any hedge fund or Asset management firm.that is trading their clients money by trading currency in a similar fashion that we retail traders do? I'd be interested to hear some names and see their performance. It should be significantly better than the usual Hedge fund making returns in the 6-60% p.a. range (Renaissance fund/Medaillon excluded^^)Thanks in advance for your imput.
No I don't know about single real money house or a hedge fund trading currencies in a similar fashion like retail traders. There are traders/PM within a firm who are more into technical analysis than the others, but you wouldn't find anyone scalping the market for 10 pips.

why do you think the performance should be significantly better? In my experience a big majority of people trading FX are losing money over long enough period of time.
  • #905
  • Sep 14, 2015 2:56pm Sep 14, 2015 2:56pm
Quoting katrooo
{quote} No I don't know about single real money house or a hedge fund trading currencies in a similar fashion like retail traders. There are traders/PM within a firm who are more into technical analysis than the others, but you wouldn't find anyone scalping the market for 10 pips. why do you think the performance should be significantly better? In my experience a big majority of people trading FX are losing money over long enough period of time.
Not sure if serious.

Let's do some math: (Assuming that we use leverage)
Let's agree that for a full time trader 7% per month is a piss poor performance, even if the trader is only trading with 1% risk.
If you annualize this you will make 125.22%
When was the last time you heard about a HF return that? Can you name any Hedge fund that returned 100%+? Without using google I just recall Quantum, maybe Renaissance Medaillon (not sure) and Talebs fund which was in the 150s as he bet against the mortgage crisis.

And yes, 7% per month can be returned consistently.

I work for a financial institution and in our department we are a distribution channel for (not exclusively) third party HFs. Boy, they suck sh*t. Stuff like 6% per year with 5% volatility. Some better ones manage to give you 20% per year, which is 1.53% per month... lol just lol.
Skenobi will not tell you how much he makes per month, also as far as I get it he has a high hit rate and Risk is higher than return, but I'm very sure that he is in the range of 8-25% per month.
You don't have to trade like this:
http://www.myfxbook.com/members/pano...1jLsXwNAQnRCKL

Just saying, this is awesome, I would like to see a larger sample size due to the low holding period, but man, this is an incredible statistic.


In my experience a big majority of people trading FX are losing money over long enough period of time.

Your experience, or is this sth you have heard, I have my troubles with this "95% are losers" kind of statements. They reflect a statistic of people who try for 3 months and then give up. It's not that the majority loses, it's that the majority gives up so fast, but the inflow of new inexperienced traders makes you believe all that.
You wouldn't say that a big majority of people who start playing an instrument become pros. There are many pros first of all, and there are MAAANNYY lil kids just fooling around and not becoming good enough musicians to be pros (been there, done that). It's a question of determination and perseverance.

Maybe you need to put into perspective the things you reflect upon a bit. You too can beat 7% per month I'm sure, but will you? That's up to you.
Demo only
  • #906
  • Edited 11:18pm Sep 14, 2015 10:50pm | Edited 11:18pm
Quoting bg_sunny
{quote} Not sure if serious. Let's do some math: (Assuming that we use leverage) Let's agree that for a full time trader 7% per month is a piss poor performance, even if the trader is only trading with 1% risk. If you annualize this you will make 125.22% When was the last time you heard about a HF return that? Can you name any Hedge fund that returned 100%+? Without using google I just recall Quantum, maybe Renaissance Medaillon (not sure) and Talebs fund which was in the 150s as he bet against the mortgage crisis. And yes, 7% per month can be returned...
I will only say if you can do 7% per month consistently (without any shady information like front running clients of your firm etc) then you are in top 0.0001% of investors. As size increases, trading gets difficult as you cant arb one lazy retail broker with another (ironically this is still possible in retail world as brokers have lags in prices sometimes and/or skewing prices for their axes) and pick 1-2 pips here and there.

big institutional money is perfectly happy with 10% annual return with expected drawdown of 5-8%.
Think : Trade : Live Life
  • #907
  • Sep 14, 2015 11:23pm Sep 14, 2015 11:23pm
Quoting stt
{quote} I will only say if you can do 7% per month consistently (without any shady information like front running clients of your firm etc) then you are in top 0.0001% of investors. As size increases, trading gets difficult as you cant arb one lazy broker with another (ironically this is still possible in retail world as brokers have lags in prices sometimes and/or skewing prices for their axes) and pick 1-2 pips here and there. big institutional money is perfectly happy with 10% annual return with expected drawdown of 5-8%.
assume you manage USD 1.000 million (ON THE BUY SIDE, i.e.e frontrunning impossible, because you only have your ideas and no client order flow). If you decide to trade retail style and risk 1% per trade, that means that your average ticket is USD 10 million. The market will absorb this I'm sure. Skenobi can confirm that, I'm confident. Why arb a broker? Not sure what you mean.

And once you manage 1.000 million USD with a "two and twenty" fee structure I see no reason to grow. You are a rich man. I know a company that manages USD 300 million with 10 people. Quilvest manages 36 Mrd USD and employs 400 people thereby returning double digits p.a. As you can see this business is scalable. YOur assets grow x 120, but your expenses on staff (the most expensive component) grow x40.

I think you are confusing buy side with sell side. The prop trading part for a fx trader in an investment bank has become very little if I am rightly informed. This is why the good ones are out and work for a HF/themselves. Their balance sheets have been decreased as a result of new regulatory requirements post '07/08.
Also, let's put the profit aside, what's intriguing that you can buy an equity ETF and get 20% per year, but you will pay with a Draw Down of 30% or similar (S&P500 and similar).
The big guy should be able to get a decent Profit/DD ratio of well above 1.3. But they don't. Traders here can do that.... Cherchez la faute...
Demo only
  • #908
  • Sep 16, 2015 10:36am Sep 16, 2015 10:36am
The thing is, the institutional trader work differently from us. Plus they have unlimited capital under their disposal (but of course they need to manage their PnL). If you have $1000 then you can say that it's easy to achieve $100 profit each month which is 10% a month. However when you have $10million, you will not be looking at 10% a month. Even 1% is way more than enough which translate to $100k a month.
  • #909
  • Sep 21, 2015 1:54pm Sep 21, 2015 1:54pm
Quoting traider
This has probably been asked of you skenobi and if so, please forgive me. The question being, just how advanced is price discovery in the institutions. Are there any practitioners you encountered who kept the process close to their chest.
Academics can write pages and pages of theory behind price discovery to their hearts' content, but really, there's nothing "advanced" about price discovery, nor is there some complicated secret sauce "process".

If a market maker doesn't know what the current price is, he'll just throw a bid/offer quote out there to see if there's any "bite". He'll find out soon enough what the current price is. Hence, price is "discovered."

This "process" (if you want to call it that) goes on and on seamlessly in any liquid market.

Quoting traider
I read somewhere that it is poorly understood. Is it another variant of order flow perhaps or just another name fpr support and resistance.
Support and resistance are formed by order clusters, both current and historical.

Quoting ZeeDeveel
{quote}# Daily charts close at 10pm GMT. I wonder if H4 has any significance to institutions or if it's an MT4 thing.
I'm guessing it's an MT4 thing. I've never considered using H4 before I knew about retail trading.

Quoting katrooo
{quote} This really depends, but there is no general rule for an institutional trader with regards to his/her style or trading horizon. The only thing which matters is whether you can make money or not, doesn't matter how you do it. I personally know many, and some of them are pure fundamentals guys with few weeks horizon, some of them are mix of fundamentals and technicals, some are day trading.
For the most part, you're right.

Quoting katrooo
In general, day trading is more typical of a sell-side (banks) market-makers as they handle a lot of client flow around.
I don't care much for categorizations, but to me sell-side involves market making activities solely. I would not consider day trading as a feature that is "more typical" of banks i.e. I would not consider that day trading is less typical for non-Banks.

Quoting katrooo
On the buyside (real money @ hedge funds) it is more likely that trading horizon is at least a day, or even more likely few days.
There are day-traders on the buy side as well. I would classify all retail traders as buy side as they are always victims of the market maker spread.

Quoting bg_sunny
{quote} Do you know any hedge fund or Asset management firm.that is trading their clients money by trading currency in a similar fashion that we retail traders do? I'd be interested to hear some names and see their performance. It should be significantly better than the usual Hedge fund making returns in the 6-60% p.a. range (Renaissance fund/Medaillon excluded^^)Thanks in advance for your imput.
People who ask this question usually are looking for something to benchmark against. Seriously, this doesn't matter. The trader should only benchmark against himself, otherwise he would get cocky when benchmarking other people's relatively poorer performance or get inordinately discouraged when benchmarking against better traders.

Quoting bg_sunny
{quote} Not sure if serious. Let's do some math: (Assuming that we use leverage) Let's agree that for a full time trader 7% per month is a piss poor performance, even if the trader is only trading with 1% risk. If you annualize this you will make 125.22% When was the last time you heard about a HF return that? Can you name any Hedge fund that returned 100%+? Without using google I just recall Quantum, maybe Renaissance Medaillon (not sure) and Talebs fund which was in the 150s as he bet against the mortgage crisis. And yes, 7% per month can be...
Anything is possible.


Quoting bg_sunny
I work for a financial institution and in our department we are a distribution channel for (not exclusively) third party HFs. Boy, they suck sh*t. Stuff like 6% per year with 5% volatility. Some better ones manage to give you 20% per year, which is 1.53% per month... lol just lol. Skenobi will not tell you how much he makes per month, also as far as I get it he has a high hit rate and Risk is higher than return, but I'm very sure that he is in the range of 8-25% per month.


Quoting stt
big institutional money is perfectly happy with 10% annual return with expected drawdown of 5-8%.
True that!

Quoting bg_sunny
{quote} assume you manage USD 1.000 million (ON THE BUY SIDE, i.e.e frontrunning impossible, because you only have your ideas and no client order flow). If you decide to trade retail style and risk 1% per trade, that means that your average ticket is USD 10 million. The market will absorb this I'm sure. Skenobi can confirm that, I'm confident.
Yeah, I can confirm it. I'm just not sure what your point is.

Quoting bg_sunny
Why arb a broker? Not sure what you mean. And once you manage 1.000 million USD with a "two and twenty" fee structure I see no reason to grow. You are a rich man. I know a company that manages USD 300 million with 10 people. Quilvest manages 36 Mrd USD and employs 400 people thereby returning double digits p.a.
Some people are just happy making income from "fees". All power to them.

Quoting bg_sunny
As you can see this business is scalable. YOur assets grow x 120, but your expenses on staff (the most expensive component) grow x40.
I can't put my finger on it (so don't ask me to explain further coz it's just my opinion) but on an intuitive level, I don't think the above bolded statement is true. I don't think the business is scalable nor do I think "scale" has anything to do with performance. As assets grow and shareholder equity composition varies, it's impossible to assume that attitudes to risk will remain the same.

Quoting bg_sunny
I think you are confusing buy side with sell side. The prop trading part for a fx trader in an investment bank has become very little if I am rightly informed.
You're probably right, although I can't confirm this.

Quoting bg_sunny
This is why the good ones are out and work for a HF/themselves. Their balance sheets have been decreased as a result of new regulatory requirements post '07/08. Also, let's put the profit aside, what's intriguing that you can buy an equity ETF and get 20% per year, but you will pay with a Draw Down of 30% or similar (S&P500 and similar). The big guy should be able to get a decent Profit/DD ratio of well above 1.3. But they don't. Traders here can do that.... Cherchez la faute...
Bottomline: why care what the Banks and the HFs are doing when you should only care if your edge works (and will continue to work) or not?
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #910
  • Sep 21, 2015 4:38pm Sep 21, 2015 4:38pm
@ skenobi

Thanks.

From your experience, is there a distinct bull/bear mindset in the institutions?
The road to pipland is arduous and fraught with challenge.
  • #911
  • Edited 8:05pm Sep 21, 2015 6:13pm | Edited 8:05pm
Quoting traider
@ skenobi Thanks. From your experience, is there a distinct bull/bear mindset in the institutions?

What's a "bull/bear mindset"?

You'll have to excuse my ignorance. Your question sounds like one of those philosophical musings that retail traders and junior bank traders seem to care about a lot.

Bank traders (where I come from) just buy if we think we can make money being long, and we sell if we think we can make money being short.

Is this an example of the kind of mindset you meant?
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #912
  • Sep 21, 2015 9:21pm Sep 21, 2015 9:21pm
Quoting skenobi
{quote} What's a "bull/bear mindset"? You'll have to excuse my ignorance. Your question sounds like one of those philosophical musings that retail traders and junior bank traders seem to care about a lot. Bank traders (where I come from) just buy if we think we can make money being long, and we sell if we think we can make money being short. Is this an example of the kind of mindset you meant?
Haha. Apologies for my obscurantism and that answers the point.

Thanks.
The road to pipland is arduous and fraught with challenge.
  • #913
  • Sep 21, 2015 10:06pm Sep 21, 2015 10:06pm
Quoting traider
{quote} Haha. Apologies for my obscurantism and that answers the point. Thanks.
No worries.

Just remember that trading is simple. Perhaps "simple" is just too hard for some people to accept.

Hopefully you're not one of these.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #914
  • Sep 21, 2015 10:58pm Sep 21, 2015 10:58pm
Quoting skenobi
{quote} No worries. Just remember that trading is simple. Perhaps "simple" is just too hard for some people to accept. Hopefully you're not one of these.
Absolutely. Its all there in the data.
The road to pipland is arduous and fraught with challenge.
  • #915
  • Sep 22, 2015 8:44pm Sep 22, 2015 8:44pm
Quoting skenobi
{quote} No worries. Just remember that trading is simple. Perhaps "simple" is just too hard for some people to accept. Hopefully you're not one of these.
Im curious, what lot size do you normally trade and with what broker?

I want to trade 1000 full lots (10,000,000) in nzd/usd but am wondering what will happen in anything. Maybe just scared to pull the trigger.
  • #916
  • Sep 22, 2015 9:04pm Sep 22, 2015 9:04pm
Quoting Gdi
{quote} Im curious, what lot size do you normally trade and with what broker?
As institutionals, we don't trade spot FX in lots. We deal in actual amounts of any size large or small but frequently in deal sizes in excess of USD 1 million. We trade WITH other banks either directly or THRU interdealer brokers, unlike retail traders who can trade only WITH (not THRU) retail brokers (even if you call them ECN).

If you're asking me how I trade as a retail trader, that's personal to me, I'm afraid. I don't have a reason for this; that's just how I choose to operate.

Quoting Gdi
I want to trade 1000 full lots (10,000,000) in nzd/usd but am wondering what will happen in anything. Maybe just scared to pull the trigger.
I can't help with you with that. But if you have to wonder "what will happen" and not have any preparation for whatever it is, then maybe you don't have an edge and shouldn't really be trading?

Good luck.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #917
  • Sep 23, 2015 3:53am Sep 23, 2015 3:53am
Quoting skenobi
{quote} As institutionals, we don't trade spot FX in lots. We deal in actual amounts of any size large or small but frequently in deal sizes in excess of USD 1 million. We trade WITH other banks either directly or THRU interdealer brokers, unlike retail traders who can trade only WITH (not THRU) retail brokers (even if you call them ECN). .....
It's funny you mention this as there was an interesting article on LeapRate making some distinctions between Prime Broker vs Prime of Prime vs retail. In terms of choosing a retail broker to trade WITH or THRU, would it be wise to pick one who has at least 1 verifiable Prime of Prime and ideally 1+ Prime Broker relationship? Direct bank and LP relationships might be asking too much for retail due to the cost, time, and minimum flow involved cultivating these relationships. Wise in terms of at least mitigating counterparty risk.

What has been your experience in how banks choose who to trade with other parties (banks, interdealer brokers, etc)? How does the bank themselves guard against counterparty risk?
Measure trends automatically with zero lag
  • #918
  • Sep 23, 2015 4:42am Sep 23, 2015 4:42am
Quoting ybfjax
{quote} It's funny you mention this as there was an interesting article on LeapRate making some distinctions between Prime Broker vs Prime of Prime vs retail. In terms of choosing a retail broker to trade WITH or THRU, would it be wise to pick one who has at least 1 verifiable Prime of Prime and ideally 1+ Prime Broker relationship?
Only you can answer that question. It depends on the individual and his personal circumstances. My own circumstances are private to me.

Quoting ybfjax
Direct bank and LP relationships might be asking too much for retail due to the cost, time, and minimum flow involved cultivating these relationships. Wise in terms of at least mitigating counterparty risk. What has been your experience in how banks choose who to trade with other parties (banks, interdealer brokers, etc)? How does the bank themselves guard against counterparty risk?
That's why Banks have credit risk departments, risk management departments, Chief Risk Officers etc etc.

It's their problem, not the traders'.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #919
  • Sep 23, 2015 6:07am Sep 23, 2015 6:07am
Quoting bg_sunny
{quote} Not sure if serious. Let's do some math: (Assuming that we use leverage) Let's agree that for a full time trader 7% per month is a piss poor performance, even if the trader is only trading with 1% risk. If you annualize this you will make 125.22% When was the last time you heard about a HF return that? Can you name any Hedge fund that returned 100%+? Without using google I just recall Quantum, maybe Renaissance Medaillon (not sure) and Talebs fund which was in the 150s as he bet against the mortgage crisis. And yes, 7% per month can be returned...
7% a month consistently is a very aggressive target. If you start with 10,000, you should have 34,000,000 in 10 years. I wonder why I don't see so many millionaires around here then.

Quote
In my experience a big majority of people trading FX are losing money over long enough period of time. Your experience, or is this sth you have heard, I have my troubles with this "95% are losers" kind of statements. They reflect a statistic of people who try for 3 months and then give up. It's not that the majority loses, it's that the majority gives up so fast, but the inflow of new inexperienced traders makes you believe all that. You wouldn't say that a big majority of people who start playing an instrument become pros. There are many pros first...

Yes, my experience, have been around for a while, have seen so many people fail and give up that I am quite confident that number is about right. What I mean by that number is that when 100 traders start trading, 95 will drop out at some point. You are full of enthusiasm, which is definitely great, but how many years of experience do you have if you don't mind me asking? It's the case pretty much with everyone when they start, thinking about making these millions but these expectations calm down after some time and one either adapts to something more realistic or gives up after blowing up the account because of bad risk management. If I can beat 7% a month, I don't know if I can, but don't think that would be my target if I was trading from home (on the insti side the business model is a bit different as you already mentioned). Are there traders who can do 7% a month consistently? I have no doubts there are, and I am not saying it is impossible.
  • #920
  • Sep 23, 2015 6:21am Sep 23, 2015 6:21am
Quoting skenobi
I don't care much for categorizations, but to me sell-side involves market making activities solely. I would not consider day trading as a feature that is "more typical" of banks i.e. I would not consider that day trading is less typical for non-Banks. {quote} There are day-traders on the buy side as well. I would classify all retail traders as buy side as they are always victims of the market maker spread. {quote}
hi skenobi,

mostly agree but not with everything. Of course prop shops or retail (if you consider them a buy-side) do a lot of short-term intraday trading. But I am quite confident you wouldn't find a guy doing day trading in one of the big real money companies. You would definitely find these guys doing it in macro hedge funds, but just statistically counting the ones I personally know the ratio is more like 7:3 (out of 10 PMs) in favour of PMs who are more macro oriented, i.e. trading with few days / weeks horizon. Don't have a statistically significant number to make conclusions though, but in my experience pure day trading is much more dominant on the retail side and prop shops, some decent on the sell-side as well. On the real money / hedge funds side it is more likely to be global macro style with some intraday trading in some hedge funds.

cheers,

katrooo.
1 trader viewing now