Why dat?
What Do Hedge Funds Think of Technical Analysis?
- Thread starter SunTrader
- Start date
No, brokers are “sell side” and investors/traders/speculators are “buy side”.
Think about it in terms of real estate agents lol. They don’t really hold inventory as their primary job is to help their clients buy or sell properties. Whereas buy side, you own the property or are trying to acquire it.
"Please forgive me for what i am about to say",but by and large they are a bunch of talentless fooks who make a shit-ton of money by developing relationships,drinking and whoring around.not necessarily in that order..
Which in hindsight,doesnt sound like a bad gig
Which in hindsight,doesnt sound like a bad gig
Because the flow comes to them lol. There are 3 primary jobs on the trading floor: sales, sales-trading, and trader (risk taker). There’s typically 3-4 sales people per product on the institutional covering territories (e.g. g10 rates Asia or g10 rates west coast). Usually 8-10 sales-traders per product (in regions, so also g10 Asia etc). For trading there’s usually just 3 per product — London, NYC, and Tokyo.
Salesperson talks to customers all day and is very consultative. “You want to trade XYZ? What kind of payout are you looking for?” And they’ll help you figure out how to make a decent idea into a great trade (or that’s what they’re supposed to do!).
Sales-traders receive orders for customers. Can be through chat, phone, etc. Their job is to take orders and complete them within a very short timeframe (20 to 90 seconds is usually the benchmark). A big part of their job is figuring out the best way to get the order filled. If the security trades on an exchange, they can use electronic trading or an algo to complete it. If it’s more complicated, they’ll get prices from their traders, or others. Etc. These are the guys usually shown on a trading floor (because they’re loud, constantly yelling into their phones, and such).
Traders (risk takers) at a bank will use the banks balance sheet to warehouse risk that the buy side doesn’t want. Typically this is because of a mismatch in a mandate on the buy side — e.g. A value investor just wants to own value stocks and may sell some names that turn “growthy”. That’s an example of why buy side would want to off load risks that may still be ok/good. So the job of the bank trader is to look at incoming orders and see which ones they like the risk on (or if they want to do a favor for the customer). These traders are very smart and usually a bit more introverted in style, think google or Microsoft software engineers. They rarely yell and are typically the opposite of the salesperson (who is usually an Ivy League athlete lol, etc).
None of these guys are using technical analysis for trading decisions. Salespeople will use some TA charts to illustrate a point — e.g. “real rates have crept up due to fedspeak this week, hitting against the 50dma”. But these guys don’t trade, they just act as consultants.
Sales-traders may have “watch list” or “charts” open but purely for their own interest. When customers put in orders they’re pulling quotes off screens, and the “decision” factor is driven by bid/ask spread, what their trader is willing to do, and other items (stuff not on a chart).
Traders (risk takers), are looking at their portfolio mix (probably have hundreds or thousands of positions at any given time), analyzing risk, and making trades. Most of the risk work (if they like risk or not) and parameters are done pre market, and is updated for every trade they do and other large trades that hit the tape. Risk takers at the bank are the only ones who actually “hold” positions and take risk. These folks are acting as principals and are making a market for the trade.
Last edited:
Definitely possible but you need to have a verrry robust filter. I recommend you pick up a few textbooks written by ex-pros (everything by Adam Iqbal, Howard Marks, etc) to learn how they view and analyze markets. From there, start researching papers (can google “momentum anomaly review pdf” for example lol), and then you can stitch together a trading process.
Loving your answers @longandshort. Very informative. This is much appreciated. Thanks for this.
A few counter-questions for you...
1. By payout you mean profit target here?
2. They're helping out here...but why would the bank make the same trade themselves? Or does that happen anyway? And if so, is this not frontrunning?
1. What's an example of "best way"? A trade with the least spread? Or one closer to the customers stated price? I'm guessing both..
2. What's an example of a complicated trade? A large order that has to be filled through various entities?
Thanks for the name recommendations. Will do research on that.
A few counter-questions for you...
1. By payout you mean profit target here?
2. They're helping out here...but why would the bank make the same trade themselves? Or does that happen anyway? And if so, is this not frontrunning?
1. What's an example of "best way"? A trade with the least spread? Or one closer to the customers stated price? I'm guessing both..
2. What's an example of a complicated trade? A large order that has to be filled through various entities?
What do you mean by filter? Turn off the rubbish and focus on the right/good stuff, I assume?
Thanks for the name recommendations. Will do research on that.
1. No. More like , not price target. More like a complex option trade to get a better payout e.g. 5:1 or 10:1. Not every trade can fit into a structure like that, but that's something a good salesperson can do for you. Another big value add is acting as a sounding board, helping you develop an idea, and understand what's going on.
If you're trying to fit 45k shares within a penny wide b/a with screens showing 8k shares, you'll need to source shares from other avenues and that's where a sales-trader can add value.
Big orders that can take days to complete, multi-legged options orders, etc. Displayed liquidity is very low so even trades of 500 option contracts or 10k shares can have a big market impact.
Yep
Which instruments do you trade?Any mentor in the room ping me please
I can offer so many questions you'll want to run far away into deep space
Google various programs and check their reviews.
I would not rely just on this forum...
Currently only UCITS ETFs and spot currencies. Not day trading. I hold for days or weeks depending on XYZ.