Hello Community,
Does someone of you maybe know a person who trades Forex for a bank or hedge fund? It would be great to know how the Pro’s are trading and what tools are they using. 
There is one on here…
Hi.
That’s awesome! Would you like to talk a little bit about institutional trading and what tools are you/were you using?
Cooll…waiting to hear more =)
Why would you want to trade like a pro, look what mess they made!!
hehe I never said I want to copy a “pro” strategy. I already have a strategy that works pretty well for me. I think it’s not that difficult to find a good strategy, but the more difficult part is Money Management and how you are managing the trades.
I was just wondering how it is to work in a bank or a hedge fund and maybe which indicators they use (if at all - I really don’t know).
Regards,
Risk is capped at .005%… that is to say one half of 1%
Indicators are more of a firms’ Propietary Trader’s realm… if a bank or firm has a algorithm… it follows things nobody talks about in here.
Large Funds and Insitutions use Key Support & Resistance levels with trend analysis over 3-6 months. The larger accounts do not rely so much on what is commonly tossed about in the retail circles as Technical Indicators. However, a few standards do find their way into the mix, like Momentum studies, Fibs and simple order flow.
Hope that helps!
[B]GLGT[/B]
Hi
What things are you referring to that nobody talks about in here InnerCircleTrader?
Which bank or hedge fund firm are you or have you worked for and what is your role there?
Thanks
kyle.
Bank and or Large Institutions which use algorithms are very complex and few know what go into how they trade their specific model. They use information the retail traders do not have access to, namely stops and order flow. I am not trying to sound snobbish… I’m just stating I know first hand they are making the means by which they trade public knowledge.
I do not work at or ever have worked at a bank.
I have managed private funds on the Insitutional level.
I am a propietary trader.
ITC,
Thanks for sharing, I appreciate it! I’m going through your “What every…”-thread right now.
Cheers for that.
It’s a fascinating subject, & as you say not one that’s covered much so a good opportunity to ask some questions if that’s ok.
Does the firm you trade for run a selection of algo’s or are they mainly flow based? I read somewhere that because fx is fragmented it favours high frequency models over carry or trend based ones, but I’m unsure what they meant by high frequency & the article never elaborated why this would be the case. Is that because of the relative costs (higher volumes/competitive pricing) or would other factors like liquidity & vendor choice have a bearing?
Obviously firms will have a much greater need & purpose for running algo’s but what percentage of your business on average is routed through algo’s as opposed to discretionary execution. And what circumstances or criteria typically influence your decision to use an automated approach over a discretionary one?
Thanks
kyle.
Liquidity won’t be an issue unless the program is attempting to enter or exit extroadinarily large amounts of size at periods of low volume.
Order function capabilities will already have been discussed & agreed with the brokerage house handling the algo, or the firm designing & operating it, so that won’t be a hurdle either. What’s more likely to be prioritized is the algo will be set up to split or slice large order blocks up & feed them through to ensure minimal market impact.
There are many different reasons a firm would use an algo. The size example above would be one, where they’re looking to achieve a specific objective tailored around a series of levels or time based options.
Pricing quality will be another. The algo will track best bids/offers on the interbank to assist with cost efficiency. As you alluded to in your post, the spot market is fragmented therefore it’s virtually impossible to keep track of everything out there so the algo can relay or filter the necessary information with greater degrees of accuracy & speed.
Risk will be another, where the program will track & monitor situations to either adopt a risk-neutral, under or overweight exposure relative to another currency or asset class for a specific time period maybe to hedge or streamline a portfolio.
They’ll also use options as a side-by-side addition to assist with offsetting/manging risk as well as maximizing speculative opportunity where appropriate. Not to mention combining & incorporating their spot team to handle jobbing objectives, where they identify potentially lucrative opportunities in aggressive, short time horizon one-sided directional flow, trading opposite (or contra) to their core positions.
The various strategies & market views employed by algo’s will depend on the size, stature & general trading objectives of the firm, the complexities of the market approach & whether they’re specialists or not (currency exclusive or asset diversified).
Some players prefer to maintain complete & absolute control over their order & risk management systems where the relationship between trader/s & price supplier is built on trust & 2 way familiarity. It might not be quite as cost or profit efficient as a totally automated or semi-automated approach, but in a lot of cases ita case of ‘better the devil you know’
Thank you for providing that information. It fills in a few more blanks & actually covers another question I’d thought of after my last post.