Ex Insti Trader... AMA
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Thread: Ex Insti Trader... AMA

  1. #1
    Hi ,

    I have been working in the financial markets for just over 7 years now and have recently quit my job to pursue a different career. I had been a Spot Trader for 4 1/2 years and have been around the Options Desk for its past 2 1/2 years. In this time I have been in two BB banks and 1 smaller European bank. While my experience is of course not representative for the whole sector I would say I've a fairly good grasp of how the markets work and what drives them.

    I would like to use this thread to answer any questions that you may have about what it's like to trade for an institution or anything else you may want to ask me. I am aware there is a couple other folks in this forum that have a lot of experience working for banks/funds or whatever so please don't hesitate to chime in and talk!

    Why am I doing this?
    I've been a long term lurker in many trading forums because I always found it fascinating to see what the retail sentiment would be like.I have been online more again since I ceased working and only need to give back in a way. I also noticed that there seems to be a lot of misconception of what is driving the markets (especially short-term moves ) and havent really found many threads in which this is discussed.

    Anyways shoot away in the event you have any queries...

  2. #2
    Hi, I'd love to ask about the notorious issue about struggle between evil market manufacturers and retail traders attributing market manipulation to search stops, imitation price movements etc.,.
    From what I know, the men who really do market making really dont give a damn about a few retail, as they're overhelmed with handling and hedging their Institutional flow. In addition they have only minimal directional positions as they try to immediately hedge flow they get. Flow can destroy you ?
    I donĀ“t know if besides flow based desks, there are nonetheless a few purely speculative desks as I presumed regulation put a end to this and you can just hide insecure positions behind market making.
    The gamers which move the markets are hedge funds which trade throught banks, but not banks , as the flow stems from those funds and banks are just hedging it available on the market.
    From your experience are my ideas straight or am I incorrect? Thank you very much.

  3. #3
    Do you profitably trade the markets?

  4. #4
    Quote Originally Posted by ;
    Glad to know somebody trying to help the community. Do not mind if I have a couple questions of my own. 1. Which banks did you work for? 2. In your view, what is the distinction between the trading styles/egies of banks/institutions versus retai? 3. Please elabourate more about the myths 4. When at all possible, how did your bank decide their trades? 5. What are the current perspectives for the FX markets now? Any specific currency of interest to you at the moment? It would be greatly appreciated if you can answer them!
    1) I'd rather not discuss the titles of the banks but it was a large US bank, a large Japanese bank and a small European bank
    2) Tough to answer on a general level since there is quite a broad array of egies in both the retail and institutional world. When it comes to prop place I believe the time horizon of your average bank trader is much longer than your typical retail trader. But a lot of the profit the bank makes also comes from the flow particularly in EM currencies in which you still have a bid ask spread. Besides that you'll always try to extract some value from your order publiion. However, you must distinguish between the banks prop positions as well as the managing of the customers flow since these are two completely different stories. Additionally in all of my time in banks I've just met 1 trader who took his rankings purely by looking on the technical side of things. I believe thats a whole lot more common in retail traders.
    3) I feel a lot of people underestimate how many motions particularly around fixing times (used to be ECB fixing now shing more towards the WMR fixings) are purely based on supply and demand and also have very little to do with market sentiment or technicals. However, if a few funds have orders on precisely the same side bc they're adjusting positions or there is some MA action then that is just what drives the markets for these few minutes. Also on quiet days things like alternative expiries can supply quite a good guie of what might happen which is completely overlooked in the retail world.
    4) The te I have been in I'd say 80% fundamental 20% technical. However, at a bank you naturally get a better sense of market sentiment since you see the flows of capital or big businesses so that gives you and idea of whats happening. But again the time horizons of prop positions I took were considerably longer than what seems to be common in the retail world. Of course I'd scalp around when I believe there was an overreaction to some news or lean against a few orders however, the directional positions were normally at least held for a few weeks.
    5) On the spot side I'm short EURSEK, EURUSD and Cable and I'm long USDHKD USDCHF. On the Bond side I'm long US 10y/2y spreads. As much as I dislike Mr. Trump I believe his perspectives on commerce will be good for the USD in the medium term. When the entire political insanity slows down a bit I believe the increasing yield spreads should do their job and we should observe a stronger Dollar. However it can be a bumpy ride .

  5. #5
    Quote Originally Posted by ;
    how can you profitably trade the markets?
    Discover what works for you and try to copy somebody elses egy.
    I am convinced that not everyone could be profitable in trading because I think there's a really unnatural thought process required in order to make money.

  6. #6
    Is it less or more likely to become profitable having an intraday trader?

  7. #7
    Quote Originally Posted by ;
    Can it be less or more likely to become profitable being an intraday trader?
    Of course its possible but I think it is essential to discover a way to keep your overhead (spreads comission) low while maintaining great execution quality.
    I don't think that I could daytrade profitable in a retail setting but I am sure there is enough people that can.

  8. #8
    Quote Originally Posted by ;
    Is it more or less likely to become profitable having an intraday trader?
    Thank you for a very detailed response alphaviech!
    To add on to this question

    How common are those group of traders at the institutional community?
    My personal observation is that there is widespread obsession using intraday trades and/or very short-term transactions (Few days horizon). What are your thoughts on the ability of traders to forecast/trade short-term price movements? Or does the institutional world subscribe to the notion that many short term price movements are only noise?

    Additionally, what are your thoughts about Technicals Analysis and/or Price action? As you appeared to have downplayed their significance from the institutional community.

    I am really sure your answers will shed some light to the retail community, based on your answers thus far!

  9. #9
    Quote Originally Posted by ;
    quote Of course its possible but I think it is vital to find a way to keep your overhead (spreads comission) low while preserving good execution quality. I don't really think that I was able to daytrade profitable in a retail setting but I'm sure there's enough people that can.
    I think you misunderstood me. What I was asking is the chances. Do you think the chances of becoming profitable in intraday trading for retail traders are lower or higher against state, somebody who is willing to maintain their positions over longer timeframes?

    Could you explain a little more why? Based on what you've shared, I'm guessing your answer is chances.

    Thanks.

  10. #10
    Quote Originally Posted by ;
    quote Thank you for your very detailed response! To add to that question How prevalent are these group of traders in the institutional community? My personal observation is that there is widespread obsession with intraday trades and/or very short-term transactions (Few days horizon). What are your thoughts on the ability of traders to forecast/trade short-term price movements? Or does the institutional world subscribe to the idea that most short term price movements are purely sound? Also, what are the thoughts about Technicals Analysis and/or...
    I would say there is Traders that in/decrease rankings a couple of times a day but it's pretty much impossible to run a book and do so purely on a day trading foundation and be square overnight.

    Yeah I guess that obsession with intraday transactions is human nature... We are impatient and need instant gratifiion. Again I enjoyed selling into rallies/buying drops when I believed there was an overreaction to news but apart from that I never bothered to attempt to predict which path the following 15 pips move might be. One thing that is unbelievable for me is the way tight lots of retail traders seem to put their stops... Just like opening a situation and stopping it out after 10 pips theres something that you barely if ever watch in Banks.

    Alright maybe I ought to have written a little bit different before - I think it is reall important to get a good grasp of technical analysis especially in pairs such as EURUSD in which a lot of people look at the technicals because it succeeds give you great clues where a few buying/selling curiosity may be. But I always used technicals to decide where I need to put my T/P orders rather than to make my choice of which direction I wish to position myself. I hope that makes sense. But something that constantly blew my head is retail transactions appearing at technicals in totally vague crosses that virtually nobody transactions.

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