'Star' Traders Who Leave Banks To Strike Out On Their Own Are Realizing They Sti

[tommo]

what? A "super trader" with the weight of a bank behind him , unparalleled access to order flow, execution edge, research and capital cant make as much when they go it alone. Shocker!

There are some extremely talented people in this industry no doubt, but the amount of people I have known that got insanely rich from just being involved in the right department running the right strategy at the right time is in the vast majority.

As soon as that edge dries up and they dont have someone to literally push them somewhere new and point at a market and say "here this is how you make money in it" you never hear from them again.

 

[Alcibiades]

Quote from sle:

Once you are disconnected from the flow information and do not have an unlimited balance sheet to adsorb short-term fluctuations in your P&L, it's much harder to make money. Some of these people adopt, some would not.

I concur ... many traders who leave "in the know houses"
are plying their wares to unsuspecting firms who will
put up money for them to trade based solely on track
record they created with "in the know " firms . It is
totally different game when you have no news,no order flow
nor "in the know" info to trade off of . Firms NEED a tool to
vet out real traders ... A REAL TOOL , THAT ALLOWS FIRM TO MAKE ACCURATE ASSESSMENT ON TRADER WITHOUT HIS
CRUTCH ("in the know house "he came from )

 

[Specterx]

Quote from Swan Noir:

I know a guy who trades in excess of 500 contracts a day yet pays retail rates because he wants nothing to do with even the simple paperwork that any form of exchange membership would involve.

Doesn't exchange membership also cause your tax rate to double?

 

[Specterx]

Quote from sle:

Once you are disconnected from the flow information and do not have an unlimited balance sheet to adsorb short-term fluctuations in your P&L, it's much harder to make money. Some of these people adopt, some would not.

The logical conclusion is that banks themselves only generate trading profits by a) frontrunning clients/counterparties, and b) averaging down forever until the trade turns profitable, or you're bailed out by the government.

 

[sle]

Quote from Specterx:

The logical conclusion is that banks themselves only generate trading profits by a) frontrunning clients/counterparties, and b) averaging down forever until the trade turns profitable, or you're bailed out by the government.

No, it is not. There are plenty of ways banks generate trading p&l, some of them are based on balance sheet, and some on customer flows, some on beta positioning, on structured products. Some are based on actual "trading" as you call it - there are true alpha trades out there that are only traded by banks, e.g. treasury bond basis.

There is no reason to say that every bank trader that moves over to a hedge fund fails. When they do, there are usually a few reasons for it (I've seen all of the below):

Firstly, P&L fluctuation and capital/risk restrictions at a fund are usually tighter. A lot of guys that used to "sell gamma and go on vacation" types of trades, while hedge fund would probably require to rune a pretty diverse book of strategies.

Secondly, most true alpha traders in banks are semi-arbitrageurs - their trades are various kinds of clever spreads and depend on tight execution, predictable funding and good models. None of these are available in a hedge fund.

Thirdly - usually the guys who open the fund are not the guys doing the trades, but the guys running the desk. Managerial skill set is different from that of a true alpha trader.

 

[ammo]

when the pits shrank and the pit trader went to a desk and a computer screen, he lost all his intel on order flow and who was playing,it's a big adjustment to relearn a new way to trade, i would assume the banks had intel in 100 places coming thru the phones and emails, texts, now those resources would be decimated when you left the forest,you are outside peering in

 

[TraDaToR]

Quote from Swan Noir:

Some run businesses better than others. There are guys that trade at the genius level that need someone to cut their meat and dress them in the morning. Even running a small business can throw some of them off their game. I know a guy who trades in excess of 500 contracts a day yet pays retail rates because he wants nothing to do with even the simple paperwork that any form of exchange membership would involve.

That's a little bit extreme. I don't like to have to do some administrative stuff but getting a membership is next to nothing. He willl be happy when his edge will dry up and he will realize that he has pissed away 500$ per day for X years....

 

[shopster]

wall street bankstas front run and inside trade ahead of their clients.
have been doing it for 100 years.

it is hard to prove, so it is a dirty little secret.

when a banksta leaves, he soon finds out he cannot play on the same corrupt level as the clowns on wall scam street.

so they end up as a sub par trader.

s

 

[Rodney King]

There's less access to flow information within banks than outsiders think. Banks are compartmentalized. A bank trader might have no idea what the guys at a desk ten feet away are doing. Flow info is free money, and those with access to it aren't eager to cut others in on the deal, even their nominal colleagues at the bank.

 

[ammo]

cant gaurantee it but i woud bet the farm that every clearing firm trader has an indicator reporting the long short ratio of the trades cleared electronically with a computer model deciphering the above below and par avgs