A question for Bone & Rob Morse

themickey

themickey

A question for Bone & Rob Morse

Asking these two directly a question as my impression is they have experience and insight with the overall market participants. However other experienced professionals in trading feel free to contribute. Trolls and negative doomers please keep away from this thread.

Question:
Regarding trading in general; stocks, bonds, options, futures, fx etc.
Which players across the spectrum pull in the largest profits in terms of their own money and as a percentage of their bank over a year by year?
For example a total % profit on their total trading capital.
Own money I mean not including traders trading institutional money. However, again I'm not referring to total $ returns but % returns of total portfolio money.

Is it the hft types running algos?
Is it the short term scalpers who are more discretionary?
Is it the long term investors?
Which group, stocks, bonds, options, futures, fx etc
Other...?
Thx
 
themickey said:
<snip> For example a total % profit on their total trading capital.
<snip> Is it the hft types running algos?
More...
While I doubt it's possible to be an HFT player on your own these days (the technology investments are too high), they certainly take the cake in terms of return on capital. The truly UHF players easily produce hundreds of percent on their capital with unbelievable Sharpe ratios.

However, at that level it becomes a profit over expenses type of game more than anything else. If you look at the high frequency funds/firms, they usually run a very small amount of money as capital and that amount if frequently dwarfed by the tech expenses.
 
I wish I could help with this one, but I have not examined the earning of the GS, B of A and Citadels of the world to see who is on top. My best Guess is that GS is top 2 or 1. If you make me guess where most of that profit comes from today, I would have to guess Fixed Income. Just a guess. I would also guess that they make most of the their money facilitating customer orders vs picking a side of the trade and taking risk. The equity/option business is all automated except the trading desk, that again, makes two sided markets not just for their clients but many institutional clients.

Not sure if that helped or what you would do with the information.
 
All b/ds file focus reports. Head over to your nearest Federal building and check out the SEC office Not a perfect measure and much of the detail isn't in the focus report.
Some are public and you can see greater detail in their filings and annual reports.
Firms like VIRTU let you sign up to receive all their filings and even an EOD stock quote.

There is actual a firm that collects all of this data on a for profit basis. If you have a friend at a firm see if they can put their hands on a recent McLagan survey. Too expensive to buy individually, but there are copies that many branches or branch office managers would have access to.
 
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Robert Morse said:
I wish I could help with this one, but I have not examined the earning of the GS, B of A and Citadels of the world to see who is on top. My best Guess is that GS is top 2 or 1. If you make me guess where most of that profit comes from today, I would have to guess Fixed Income. Just a guess. I would also guess that they make most of the their money facilitating customer orders vs picking a side of the trade and taking risk. The equity/option business is all automated except the trading desk, that again, makes two sided markets not just for their clients but many institutional clients.
Not sure if that helped or what you would do with the information.
More...
What I was hoping to know, was, on a retail level of traders (a typical ET type trader) for a noob starting out in this high risk game, if they were starting this journey, what species of trading would they best tackle in order to get most bang for their bucks, so that at the point where when they were ready to fold it in on retirement, they would have accumulated the biggest booty. Statistically.
 
themickey said:
What I was hoping to know, was, on a retail level of traders (a typical ET type trader) for a noob starting out in this high risk game, if they were starting this journey, what species of trading would they best tackle in order to get most bang for their bucks, so that at the point where when they were ready to fold it in on retirement, they would have accumulated the biggest booty. Statistically.
More...

I wish I could provide a statistical response. I just don't have that. All I can tell you is that If my daughter wanted to learn to trade, I would suggest she focus only on futures and options on futures.

  • 1256 contract
  • Leveraged without the need for a large account like PM
  • No PDT
  • Most symbols are not fragmented
  • Trading almost 24 hours.
  • Many products to choose from and most uncorrelated to equities.
 
Not a bad starting point and - as you point out - available online.

McLagan is a bit more detailed, but you need a subscriber friend to see those.
 
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