Institutional Traders

[showyouwang]

The people at institutions who derive strategies and execute them are the very few, like the ones who run an entire trading desk. I have a friend who works at Lehman as a financial engineer, and many of the people in the "trading" departments do financial modeling, etc. Or they're on the trading floors just buying stuff that comes through the phone like automatons.

Ie., you'll get a call... buy 300,000 shares of XYZ today under the price 63.50. And the person will just buy stuff all day and try to minimize average purchase price.


I dunno, most "traders" at institutions can't trade in my opinion (but there are many superstar traders there who can, they bring the firm the big checks...). I've seen many times people at institutions thinking they can go independent and failing, either due to pure lack of skill or because once on their own they lose to their own psychology and lack of a risk manager.

 

[Scalper007]

Quote from Spectre2007:

Institutional traders just follow orderflow sooner. Thats the only difference. Herd mentality of institutions drives the market. So no talent needed at institutions, but it helps.

Retail and independent traders need to decipher orderflow on their own.

Perfectly said. Good retail traders can crush former institutional traders who do not have access to order flow anymore. Once the nyse went hybrid, a lot of specialists were let go and then they joined prop firms. I hear they are no better than a beginning day trader... Order flow is what makes them look like kings. Without it, they're dog poop.

 

[cashmoney69]

Quote from showyouwang:



Ie., you'll get a call... buy 300,000 shares of XYZ today under the price 63.50.

from who?..just another trader?. If I just sat behind a desk all day and bought x number of shares for some guy, that'd be pretty boring. You mean MOST traders dont make their own decisions?

 

[Spectre2007]

no they dont.

 

[SteveD]

Another broker gets a call to SELL 300,000 shares of XYZ over 64.00.....

That is what makes a market......


SteveD

 

[subban]

Quote from cashmoney69:

from who?..just another trader?. If I just sat behind a desk all day and bought x number of shares for some guy, that'd be pretty boring. You mean MOST traders dont make their own decisions?

Yes, this would be a flow trader. Institutional traders are flow traders like this, sales traders(who buy and sell for a book of clients), and proprietary traders who solely trade the banks money.

Prop traders are basically the million dollar superstars. good Sales traders and flow traders make six figures.

 

[MyOwnBoss]

Institutional equity trader = Beats the VWAP, has employee trading policy, limited earnings potential. Yawn.

 

[Surdo]

It's not like the good 'ole days, plenty of Sales Trader's are still pulling in a $400-$500K package. Not too shabby for taking orders, regurgitating research, and entertaining customers.

el surdo

 

[TSGannGalt]

I have to agree on most parts on what's been said above, if they are "dealers".

There are prop. divisions in banks where individuals/teams are expected to make money solely on their skills. Even if you're a systematic trader, you'll simply act as an "internal hedge fund". In general, the average traders in those divisions are better than an average retail trader. The reasons are:

1. That you need a solid "no joke" track record.

2. You'll have to go through a rigorous screening process, close to a major funds of fund screening for new fund. They'll get into details of your performance, risk management, and trading style and etc.

Why don't more people get into that part of institutional trading?

-Not a lot of people can take the pressure within the politics within a firm.

-Not a lot of people actually have a solid track record. (1-2 years of trading with a less than $100,000 account is not solid)

Reality is, if you actually have the skill sets and experience they want, you'll be doing it on your own.

 

[ChiBondKing]

Quote from TSGannGalt:

I have to agree on most parts on what's been said above, if they are "dealers".

There are prop. divisions in banks where individuals/teams are expected to make money solely on their skills. Even if you're a systematic trader, you'll simply act as an "internal hedge fund". In general, the average traders in those divisions are better than an average retail trader. The reasons are:

1. That you need a solid "no joke" track record.

2. You'll have to go through a rigorous screening process, close to a major funds of fund screening for new fund. They'll get into details of your performance, risk management, and trading style and etc.

Why don't more people get into that part of institutional trading?

-Not a lot of people can take the pressure within the politics within a firm.

-Not a lot of people actually have a solid track record. (1-2 years of trading with a less than $100,000 account is not solid)

Reality is, if you actually have the skill sets and experience they want, you'll be doing it on your own.

You hit the head on the nail with the politics

Spot on