How can individual traders compete with large trading houses?

[F430]

I assume the individual trader is at a huge disadvantage compared to large commodities trading houses. These large firms have all the resources, experience, expertise, and deep roots in the industry. Not to mention the capital for detailed weather reports and forecasts, niche sites for market analysis and fundamentals that are very costly.

How is the individual trader able to compete? Or are they mostly people from these big firms that leave and trade their own account.

 

[1245]

How is the individual trader able to compete?

Size can be your friend. You might find a niche strategy that works well up to $1mm while a firm with $1B can't allocate enough to be interested. Just find your own edge and don't worry about what large firms are doing. You can't compete in their space and they won't bother with your niche.

1245

 

[Handle123]

Or it is individuals that work their rear ends off for handful of years and figure it out themselves. You stick with classics of McGee and Edwards on charting, John Hill books in late 70s, you read-study to memorize, stay away from indicators first few years, you have to be more knowledgeable of price making patterns before indicators can add to your trading. Don't open an account until you have well back tested Trading Plan, have answers to all the questions, and when you think you are ready, for long term, paper trade for a year. Just remember, you are trading risk first before making signals or targets. How much risk is needed for Support/Resistance. Have at least 300 sample size for each signal so you know what drawdown to expect.

You can do it better than Brokerage Houses, Price contains all you need, information is already factored into Price. You are not really competing against them, you compete against yourself.

 

[globalarbtrader]

I assume the individual trader is at a huge disadvantage compared to large commodities trading houses. These large firms have all the resources, experience, expertise, and deep roots in the industry. Not to mention the capital for detailed weather reports and forecasts, niche sites for market analysis and fundamentals that are very costly.

How is the individual trader able to compete? Or are they mostly people from these big firms that leave and trade their own account.

http://qoppac.blogspot.co.uk/2015/11/david-versus-goliath.html

 

[K-Pia]

Retail or not. Big house or not,
We all compete against each other.
Even if you need friends to "Follow Up" ...
You're more of a stowaway than a friend of theirs.

 

[qxr1011]

I assume the individual trader is at a huge disadvantage compared to large commodities trading houses. These large firms have all the resources, experience, expertise, and deep roots in the industry. Not to mention the capital for detailed weather reports and forecasts, niche sites for market analysis and fundamentals that are very costly.

How is the individual trader able to compete? Or are they mostly people from these big firms that leave and trade their own account.

what did you mean when saying "compete"

the roads of individual and those corporations rarely cross in the market

so i would rephrase your question: how an individual can better the so called professionals in this game?

the answer is simple: through extreme individual talent and personal abilities (simple to say but very rarely happens)

the talent and abilities can not be replicated by any corporation (their can hire talent , but it is something that is not available on mass scale to build a business upon)

that's why most corporations not in the business to make money on trading in the sense that individuals attempt, they make money by being a broker or utilizing they place in the market (market makers etc)

that's why institutional traders in reality are mostly executioners of orders, if you pull them from their jobs and make them trade their own money for living most will show miserable results ( same as general public) ....

why is that?

because so called professionals do not know how to make money on the market (same as general public ), corporate professionals mostly make money off the market skimming (in different ways) off the huge flow of money that goes thru the market

that's why when big corporations abandon their role as brokers or market makers (based on the place in the market) and invest directly in the market results are usually miserable - they go out of business

so when average John attempts to trade on his own what he is really saying by his action is : "I am better that the so called professionals, I can do what they were not able to do - I will make money on the market !"

but most of the time average Joe is what it is - just average Joe (without extreme talent or abilities) ... and he surely fails

 

[Stockmarketmap]

In taking positions representing longer term trends underlying economic growth and productivity ( U.S. economic trends and markets especially ), there is nothing to "compete" against. Short term price movements are, most likely, dictated by institutional / sovereign fund flows, headline risk/ data reaction, etc. The bid and ask spread discrepancies and slippage become much more impactful to the bottom line profits than transactions conducted for positions held over long time frames.
James
Director of Quantitative Research
XOXOXO
Boulder, CO

 

[wrbtrader]

I assume the individual trader is at a huge disadvantage compared to large commodities trading houses. These large firms have all the resources, experience, expertise, and deep roots in the industry. Not to mention the capital for detailed weather reports and forecasts, niche sites for market analysis and fundamentals that are very costly.

How is the individual trader able to compete? Or are they mostly people from these big firms that leave and trade their own account.

You're not require to compete with them.

They mainly compete with each other.

 

[Handle123]

Retail or not. Big house or not,
We all compete against each other.
Even if you need friends to "Follow Up" ...
You're more of a stowaway than a friend of theirs.

What you really want to do is tail coat Big Brokerage, you don't want to fight them, you will lose, they have much more funds. Figure out what Big Funds/Brokerage does and tag along.

 

[speedo]

Surf alert....