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Is anyone here an institutional trader?

  • #1,001
  • Nov 25, 2015 9:46am Nov 25, 2015 9:46am
Quoting skenobi
I can only answer from my own experience. Other bank traders (who care about S/R) will have their own approaches. I was taught how to draw horizontal S/R lines at places where there are likely occurrences of order clusters. Thereafter, how I interpreted price moves in relation to the lines was entirely up to me and yes, it really is a matter of screentime. Some of us take to it like a duck to water. Some (like me) had to struggle a little bit, but we made our bones in the end.
Thank you, much appreciated.
  • #1,002
  • Nov 25, 2015 10:07am Nov 25, 2015 10:07am
@Skenobi,

Much appreciated that you take time to answer questions so patiently.

I would like to know how institutions traders think when they are looking to enter markets. Sorry if this question is a repost.

Assuming you are a day trader , what S/R levels would a institutional trader look for? Round nos/TLs/Fibs/etc? you say institutional traders look for order clusters , I m assuming this is because you need to fill your own large orders. Where and how would they find order clusters? Please elaborate on this.

If possible could you give an example on a chart.

Thanks again Skenobi.
  • #1,003
  • Nov 28, 2015 11:54am Nov 28, 2015 11:54am
Quoting zamfir
I would like to know how institutions traders think when they are looking to enter markets. Sorry if this question is a repost.
I believe if you've read this thread from the beginning, you should get an idea of what bank traders think about. It's only been 50 or so pages so far and shouldn't take you longer than a weekend to digest.

Quoting zamfir
Assuming you are a day trader , what S/R levels would a institutional trader look for? Round nos/TLs/Fibs/etc?
Any or all of the above.

By the way, if by TL you meant non-horizontal "trend lines", there are some of us who feel trend lines cannot logically be used as support and resistance due to the arbitrary nature of the way trend lines are drawn.

I've mentioned before that it's much easier to get other people to agree on the validity of horizontal S/Rs as opposed to trend lines where you can get as many opinions (on to how to pick reference points for the lines) as there are traders who care about trendlines.

Disclaimer: I know traders who do have a talent for trading trend lines so I'm not discounting their usefulness (too much).

Quoting zamfir
you say institutional traders look for order clusters ,
I don't know about other bank traders, but I already "know" where the order clusters are i.e. I don't have to "look" i.e. the orders are clustering around the S/Rs I've been taught to draw.

Quoting zamfir
I m assuming this is because you need to fill your own large orders.
I'm not sure what this has to do with "looking for order clusters". AFAIAC, if the order levels are hit as per convention (whether we as order book runners force it or not), the orders are filled.

Quoting zamfir
Where and how would they find order clusters? Please elaborate on this.
In general, I don't think bank traders have time to "find" order clusters. If they drew their S/R lines judiciously in the first place, then all their lines have orders clustering around them. What they don't do is go around classifying this or that price action as "order clusters".

Quoting zamfir
If possible could you give an example on a chart.
Sorry, mate. This thread is about institutional traders, and is not a Systems thread. I don't want any "example" of mine to be held up as Gospel i.e. as an example of how a typical bank trader draws S/R lines or "finds" order clusters.

In any case, my way of drawing S/R lines is nothing special.

If you google "How to draw support and resistance lines" or search for the same term here in Forex Factory, you should find many great tips for drawing S/Rs which, incidentally (sometimes without the authors even realizing it), are great ways to "find" order clusters.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #1,004
  • Nov 28, 2015 12:49pm Nov 28, 2015 12:49pm
I'm not reading all of this; but what exactly would you like answered? Give me a list and I will answer all.
  • #1,005
  • Edited Nov 29, 2015 7:22am Nov 28, 2015 9:57pm | Edited Nov 29, 2015 7:22am
Quoting zamfir
@Skenobi, Much appreciated that you take time to answer questions so patiently. I would like to know how institutions traders think when they are looking to enter markets. Sorry if this question is a repost. Assuming you are a day trader , what S/R levels would a institutional trader look for? Round nos/TLs/Fibs/etc? you say institutional traders look for order clusters , I m assuming this is because you need to fill your own large orders. Where and how would they find order clusters? Please elaborate on this. If possible could you give an example...

As skenobi accurately points out in his posts, trading fx isn't all that different for retail traders as far as analysis techniques go. Yes, bank traders often have access to order books but even then what they are legally allowed to do with that info can limit its usefulness.

The S/R levels are usually a mix of lower time frame highs and lows (the outer bounds of ranges), fib levels and round numbers. Sometimes they are composed by just one of these, other times several together. There are times you will spot a relevant level and without being able to obtain its exact origin. In general, the more sources a level has the greater the cluster of orders around those levels, since you get various traders entering limit orders for various technical reasons. Crisply defined levels usually produce the strongest and immediate price reactions since orders are clustered together at overlapping highs and lows and not just spread across neighboring levels where price would otherwise pick them up and digest them one by one.

Understanding price behavior around these level is what will tip your trading into profitability and it should absolutely not be ignored since it remains the one element that can change on a dime and reflects what is going on in the market right at the moment. Your aim is for price to more toward the order cluster, pick them up and pull away from the level enough for you to exit the trade with your trade sufficiently in profit.

There is more to say, but it could not possibly be condensed into a single post, however a general rule is that if price flutters around a given level in a low volatility range (or near the level), price is less likely to build momentum in the opposite direction. Price is telling you that it is not ready to bounce off that level or the level was not significant enough to begin with. Either way, a clean exit or a reduction of your market exposure is probably in order if you are already in a trade.
  • #1,006
  • Nov 29, 2015 12:04am Nov 29, 2015 12:04am
The Force is strong in this one.

Quoting Quinton
In general, the more sources a level has the greater the cluster of orders around those levels, since you get various traders entering limit orders for various technical reasons.


Quoting Quinton
Understanding price behavior around these level is what will tip your trading into profitability and it should absolutely not be ignored since it remains the one element that can change on a dime and reflects what is going on in the market right at the moment.


Quoting Quinton
There is more to say, but it could not possibly be condensed into a single post, however a general rule is that if price flutters around a given level in a low volatility range (or near the level), price is less likely to build momentum in the opposite direction. Price is telling you that it is not ready to bounce off that level or the level was not significant enough to begin with. Either way, a clean exit or a reduction of your market exposure is probably in order if you are already in a trade.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #1,007
  • Nov 29, 2015 8:56am Nov 29, 2015 8:56am
Quoting Quinton
{quote} As skenobi accurately points out in his posts, trading fx isn't all that different for retail traders as far as analysis techniques go. Yes, bank traders often have access to order books but even then what they are legally allowed to do with that info can limit its usefulness. The S/R levels are usually a mix of lower time frame highs and lows (the outer bounds of ranges), fib levels and round numbers. Sometimes they are composed by just one of these, other times several together. There are times you will spot a relevant level and without...
Great post, thanks!
  • #1,008
  • Nov 29, 2015 9:02am Nov 29, 2015 9:02am
Quoting skenobi
The Force is strong in this one. {quote} {quote} {quote}
skenobi's reference to Star Wars holds more than just comical value.

Unfortunately it is just this crucial aspect of trading that a beginner must develop an intuitive understanding in which is usually replaced with indicators.
All indicators do is churn price through a mathematical formula and translate (or reduce) the concepts of oversold / overbought to a theoretical format that is manageable and digestible by algorithms (ie. if RSI > 70 then do...). Beyond this they offer little to no value to the discretionary trader. If anything they keep your eyes off the all important PA and prevent one from developing this intuition.

Algorithms require this type of format, humans do not. We luckily have eyes in our heads and can easily include the fundamental context into what we see on a chart. In short, indicators fall short of what a trader, with some experience and screen time can glean from pure price.
  • #1,009
  • Nov 29, 2015 9:23am Nov 29, 2015 9:23am
Quoting Quinton
{quote} skenobi's reference to Star Wars holds more than just comical value. Unfortunately it is just this crucial aspect of trading that a beginner must develop an intuitive understanding in which is usually replaced with indicators. All indicators do is churn price through a mathematical formula and translate (or reduce) the concepts of oversold / overbought to a theoretical format that is manageable and digestible by algorithms (ie. if RSI > 70 then do...). Beyond this they offer little to no value to the discretionary trader. If anything...
Yes that's why I come to the point where my charts have only simple candlestick.
did you people( institutional trader) think that commodity/stock trading and Forex trading are same thing. as most of technical indicators are developed for commodity/stock trading.I don't think so.
the oversold/overbought concept is relevant for commodity/stock trading but in Forex it does not have any value or impact.
in my view Forex trading is totally different ball game than commodity/stock trading.
don't predict direction, but dance with flow of water
  • #1,010
  • Nov 29, 2015 9:54am Nov 29, 2015 9:54am
You are a quality poster. Your recent post in other threads, quality as well. Be prepared though, many know-it-all, inexperienced, non-profitable knuckleheads full of opinions will contradict and or mis-read your post. I saw it start to happen already in another thread. I hope you frequent FF often. Take care Pal....

Quoting Quinton
{quote} skenobi's reference to Star Wars holds more than just comical value. Unfortunately it is just this crucial aspect of trading that a beginner must develop an intuitive understanding in which is usually replaced with indicators. All indicators do is churn price through a mathematical formula and translate (or reduce) the concepts of oversold / overbought to a theoretical format that is manageable and digestible by algorithms (ie. if RSI > 70 then do...). Beyond this they offer little to no value to the discretionary trader. If anything...
SPC * Swollen PocketZ Crew!
  • #1,011
  • Nov 29, 2015 9:59am Nov 29, 2015 9:59am
Quoting priceaction1
{quote} Yes that's why I come to the point where my charts have only simple candlestick. did you people( institutional trader) think that commodity/stock trading and Forex trading are same thing. as most of technical indicators are developed for commodity/stock trading.I don't think so. the oversold/overbought concept is relevant for commodity/stock trading but in Forex it does not have any value or impact. in my view Forex trading is totally different ball game than commodity/stock trading.
Yes, you are right and good observation. Candlestick analysis was carried over from the equity trading world, where trending momentum tends to be so strong (bear market sell-offs are strong and bull markets are difficult to short) that these confirmation patterns are necessary before entering trade. The good thing about strong trending momentum is that when it is on your side, your trades tend to yield high R:Rs. In this environment, you can afford to give up a little bit of the move (profit) in order to "pay" for the confirmation and prevent being run over by a freight train. In FX however waiting for this sort of confirmation more often than not means giving up a chunk of the entire move which we as traders simply cannot afford.

This is not to say that they are completely useless in FX. However, I would not apply them as the core of a FX trading strategy--this is what quality levels are for.

Just like with indicators, they simply show you another form of what is already present in the charts. I still use candle sticks as a sort of short-hand on higher TFs for summarize what is going on on lower TFs.
  • #1,012
  • Nov 29, 2015 10:17am Nov 29, 2015 10:17am
Quoting JoeNY
You are a quality poster. Your recent post in other threads, quality as well. Be prepared though, many know-it-all, inexperienced, non-profitable knuckleheads full of opinions will contradict and or mis-read your post. I saw it start to happen already in another thread. I hope you frequent FF often. Take care Pal.... {quote}
Thank you for your kind words, Joe. It's human nature to not want to shaken from one's beliefs. Esp. in an industry where participants are faced with the very personal task of learning about themselves as they set out to tackle the markets, this is to be expected. In fact, it is even understandable.
  • #1,013
  • Nov 29, 2015 10:26am Nov 29, 2015 10:26am
so the main issue is MM ,lot size, attack and rescue .
any trading model base on only simple price move with MM of lot size and rescue??
don't predict direction, but dance with flow of water
  • #1,014
  • Nov 29, 2015 6:40pm Nov 29, 2015 6:40pm
reading this thread makes me want to throw up. How can so many of you 'experts' be so absolutely wrong about almost literally everything?
  • #1,015
  • Dec 3, 2015 2:22pm Dec 3, 2015 2:22pm
Quoting disker23
reading this thread makes me want to throw up. How can so many of you 'experts' be so absolutely wrong about almost literally everything?
i agree with you this thread is very interesting
  • #1,016
  • Dec 3, 2015 6:38pm Dec 3, 2015 6:38pm
Quoting disker23
reading this thread makes me want to throw up. How can so many of you 'experts' be so absolutely wrong about almost literally everything?

Care to elaborate?
Wealth comes from what you keep, not what you earn
  • #1,017
  • Dec 4, 2015 5:44am Dec 4, 2015 5:44am
Quoting disker23
reading this thread makes me want to throw up. How can so many of you 'experts' be so absolutely wrong about almost literally everything?
The only experts here are Skenobi, JacobFordFX and one other guy also an institutional trader..had one post about time compression, can't remember his name. The rest you can just ignore.
  • #1,018
  • Edited 6:59am Dec 4, 2015 6:49am | Edited 6:59am
Quoting merquise
{quote} The only experts here are Skenobi, JacobFordFX and one other guy also an institutional trader..had one post about time compression, can't remember his name. The rest you can just ignore.
I wouldn't call them 'experts', I believe they will not call themselves that but I could be wrong. These guys had employment as institutional traders. It's great they share the other side of the story with us. My question to them is this - how much 'advantage' does it give them in their current pursuit as retail traders, assume they are, when compared to most of us without this background and did this 'advantage' materialise or not ? I did not read the thread so maybe this q was asked earlier. I ask because my impression is they are no more than experienced, well paid, consumate marketers, licenced clearing clerks, I could be wrong again.
  • #1,019
  • Dec 4, 2015 6:58am Dec 4, 2015 6:58am
Quoting skyway
{quote} I wouldn't call them 'experts', I believe they will not call themselves that but I could be wrong. These guys had employment as institutional traders. It's great they share the other side of the story with us. My question to them is this - how much advantage does it give them in their current pursuit as retail traders, assume they are, when compared to most of us without this background and did this 'advantage' materialise or not ? I did not read the thread so maybe this q was asked earlier. I ask because my impression is they are no more...


You asked and you answered, period!
  • #1,020
  • Dec 4, 2015 7:11am Dec 4, 2015 7:11am
Quoting skyway
{quote} I wouldn't call them 'experts', I believe they will not call themselves that but I could be wrong. These guys had employment as institutional traders. It's great they share the other side of the story with us. My question to them is this - how much 'advantage' does it give them in their current pursuit as retail traders, assume they are, when compared to most of us without this background and did this 'advantage' materialise or not ? I did not read the thread so maybe this q was asked earlier. I ask because my impression is they are no more...
They suit the definition of expert just fine to me

http://www.merriam-webster.com/dictionary/expert
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