How can individual traders compete with large trading houses?
- Thread starter F430
- Start date
If you are profitable it is not important with who you compete. And if you are profitable it means you beat the counterparty. That's all that matters.
"Surf on the price waves."
"Surf on the price waves."
As alluded to earlier, it is a symbiotic relationship. We are not in competition with the big's. Any movement in any time frame represents a potential for a gain or a loss. No individual or institution has a position in every permutation. Collectively, we individual traders provide liquidity, make markets and well as provide provide fee's to the industry at large.
We traders, large and small are all part of the markets.. The skilled. prepared and disciplined will make money and the others will be the donors.
We traders, large and small are all part of the markets.. The skilled. prepared and disciplined will make money and the others will be the donors.
Through having extensive education and experience (just like the institutional traders).
And to some extent perhaps by taking advantage of leverage, and being less regimented and rule-bound than many institutional traders.
Bear in mind that we're talking about a small minority, here: most "independent traders" lose money, whoever's figures you believe.
There are no officially collated figures on this subject. It's hard enough to find out what proportion of traders are profitable at all, let alone who they are/where they came from.
Almost all the successful "independents" I know personally are ex-institutional traders (but that's for reasons to do with me, not with trading in general, and it may well be unrepresentative).
This - exactly.
%KPa;
Thats exactly what i was thinking; not so much offshore, but exactly the same whale-shark principle. An elephant always leaves tracks[usually-LOL].Especially as IBD founder says, he gets in a bathtub, so to speak.LOL-liquid..........................................................
I should elaborate a bit.
I am in energy trading, specializing in wholesale electricity. Aside from huge margin requirements due to extremely volatile prices (power can jump from $50 to $500 in one minute, yes in one minute), you cannot trade power with at least a few core products (Genscape Power RT which gives you real-time power plant data and is a very expensive service close to 100k a year, and maybe YesEnergy which is essentially historical pricing information with a great visual mapping feature (some may be able to get away with this if you are a CS major and can build your own platforms for mining historical information). Not to mention all the hedge funds, utilities, investment banks all have a dedicated development team to continually provide up to date fundamentals.
There is simply no way that you can trade power without these basic tools, which are very costly. This is specifically for power, so I am not sure if this too applies to some other products. But my point is there are very niche data services that are very costly that present barriers to entry for an individual trader wanting to get into these markets. The exception is if you have worked for a large company for many years, have enough capital to start on your own and prior experience in these markets. If you do not have some of these services, you are at a huge disadvantage and the odds are completely stacked against you. Every trader that I know has these services simply because they will be left behind.
My question relates to other commodities (cotton, cattle, coffee, gas, sugar etc.) Obviously the large trading houses have way more resources, access to much more information etc. I am not sure if these commodities require some of these very niche and expensive subscriptions.
If you are trading ags for example, are there also crucial subscription data services that you guys use for fundamental analysis and are a requirement to have? Or is the barrier to entry not as high and you can basically google search free reports and websites online to perform fundamental analysis and make trading decisions.
I am in energy trading, specializing in wholesale electricity. Aside from huge margin requirements due to extremely volatile prices (power can jump from $50 to $500 in one minute, yes in one minute), you cannot trade power with at least a few core products (Genscape Power RT which gives you real-time power plant data and is a very expensive service close to 100k a year, and maybe YesEnergy which is essentially historical pricing information with a great visual mapping feature (some may be able to get away with this if you are a CS major and can build your own platforms for mining historical information). Not to mention all the hedge funds, utilities, investment banks all have a dedicated development team to continually provide up to date fundamentals.
There is simply no way that you can trade power without these basic tools, which are very costly. This is specifically for power, so I am not sure if this too applies to some other products. But my point is there are very niche data services that are very costly that present barriers to entry for an individual trader wanting to get into these markets. The exception is if you have worked for a large company for many years, have enough capital to start on your own and prior experience in these markets. If you do not have some of these services, you are at a huge disadvantage and the odds are completely stacked against you. Every trader that I know has these services simply because they will be left behind.
My question relates to other commodities (cotton, cattle, coffee, gas, sugar etc.) Obviously the large trading houses have way more resources, access to much more information etc. I am not sure if these commodities require some of these very niche and expensive subscriptions.
If you are trading ags for example, are there also crucial subscription data services that you guys use for fundamental analysis and are a requirement to have? Or is the barrier to entry not as high and you can basically google search free reports and websites online to perform fundamental analysis and make trading decisions.
Its all about game selection. Find a market that is less competitive where the larger players and hft are not speculating. The one big advantage you have is that you dont need to trade size to make money compared to a fund that needs to take large positions.
Never assume your reasons for a trade are the opposite of the guy taking the other side of the trade-their motives might be very different-of course it's academic anyway but perhaps the other trader is closing out a profitable position,adding to an existing position,legging in, netting off against other positions, arbitraging against another timeframe- no point wondering, just find what works for you.