As this is my first post I will briefly introduce myself.
I am a mathematics/economics senior at Northwestern University in Chicago and am an aspiring to be a trader. I have read and learned the basics of technical analysis and have read the entire pips guide, which was very useful in learning how to apply the basics knowledge and begin charting. Right now I have a demo account with FXCM and am using their trading platform to practice charting and backtesting simple trading methods. Basically this is all shenanigans at this point, but I’m having fun trying to “predict” chart movements (I’m almost always wrong at this point).
With the intro out of the way, here is my question. Most people I talk to who work at the large banks (mostly IBD not trading so they aren’t necessarily authorities on the subject) say that it is futile for me to even consider trading independently, and that a large bank, hedge fund, or large prop firm runs the market using economies of scale. When I ask them to specify, they usually say that the firms usually have a larger capital base to work with, smaller spreads, and have access to superior technology. My intuition tells me that the forex market is different than derivatives or equities because currency prices are determined by entire nations’ economies and thus is different than trading securities around with other traders.
Thanks for reading my lengthy post. Let me know if any part of my question doesn’t make sense and I will rephrase it.
I’ll give an answer, but others much more knowledgeable and experienced than I am will hopefully post as well…
It’s pretty much true that the institutions are what move the market. But so what? If you can figure out where and when they are likely to move, you can ride their movements to profit.
In regards to capital, the leverage offered by forex brokers allows us to enter into the massive market. In regards to technology, the platforms available are quite advanced and allows a trader to approach the market from whatever angle they think is best.
when J P Morgan was moving the markets with pre inflation millions, he was making decent bux back, but those who traded on his coat tails sure did just fine thank you !
without breaking a sweat or getting “deals” from the banks, liquidity providers or any tier of the banking system and simply using what the retail trader has available, making $300K a year or more, is NOT a super hard deal and thats with NORMAL spreads, slippage and any tricks !
the bank peoples are speaking from a corporate culture point of view but i presume youre speaking from a normal people point of view — its all out there once you learn and gain experience — enjoy it !
enjoy and trade well
mp
[B][I]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !
As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !![/I][/B]