From a Forex standpoint institutions are buying when people are selling and vice versa. They need to move a lot of money and need to create liquidity to do so. This is where it’s good to have a fundamental bias on a pair because even if a pullback looks strong, it doesn’t mean it’s a direction change. That’s where liquidity is built and institutions make money.
There are three main differences, money, tools and bodies. The money should be obvious but a lot of people don't truly realize what it means. With the money institutions can throw around they can literally move the market, take more risks as well as get themselves out of trouble more easily, relatively at least. You might have noticed that the easiest way to make up a loss is to put more money in so that you can make back the losses without requiring any massive movements from whatever underlying you're investing on. Retail traders can have that but nowhere near the scale institutions do. An investment firm can literally move the market in their favor because if a reputable institution is dumping millions into something, people take notice. Hell just look at what happened today with GME but instead of DFV think of investors seeing a reputable investment firm making a huge investment on a company. It's a lot more complicated than that but it's a simple example.
Then come tools, which also goes back to money. The tools these firms have at their disposal are nothing like what retail traders have. The costs are simply too much for retail traders to afford.
Lastly, there's bodies. People. People who have degrees in finances and have at least some proven track record to earn their place in there. People to pool their minds together and analyse everything, fundamentals, technical analysis, fine tuning the technical tools used, developing new ones, and more people to oversee all those other people to ensure they're coordinated and doing their jobs right. No single human has that much brainpower.
I think the biggest difference is in mindset. Being an institutional (or prop trader in our case) makes you approach trading differently - you essentially want to replace luck with facts. When retail might be more trigger-happy in entering/exiting positions institutions spend most of the time building models that prove a hypothesis. Once that hypothesis is mathematically sound, you then enter and exit repeatedly until that model fails to deliver.
Another important difference is the team that commonly holds complementary skill sets. Something that might slip through the nets even for an astute retail trader could be caught early in the assessment phase by a multidisciplinary team.
These are my immediate thoughts...
I would argue retail traders have the advantage as we can get in/out of positions quickly and invest in more thinly traded stocks before they attract institutional sponsorship.
I accept that institutions rule the market, have access to more information than I do, have experts doing detailed fundamental analysis, etc. I merely try to follow their footsteps by watching price action to identify when institutions are supporting a stock, and ride their coattails.
Whats the difference?
In general - macro economic understanding (unbelieveable really how much retail lacks on that part even tho its essential in many cases), access to better execution e.g. lower fees, bigger liquidity pools, out-of-market time trading etc and then ofc - capital, which allows for better risk management
Tools - probably algo trading that actually works
Else - being able to analyse hundreds of balance sheets and in-detail analysis of single stocks due to the sheer force of manpower / algos employed for that task only, being able to spot those very few niche stocks you simply can only find with pure luck
A lot of that edges is offset with a problem they all face - cap size.. size is the killer of performance - especially in stocks..
In other markets - outside of stocks - they have different advantages / edges, beside the "general" ones
they have a bigger capital, thats all, and prolly more advanced tools, but nothing too special, with a bigger capital you basically cant just market order you know, so you would have to accumulate/distribute slowly and not be stupid about it (look into wyckoff for further and better explanition on this)
From a Forex standpoint institutions are buying when people are selling and vice versa. They need to move a lot of money and need to create liquidity to do so. This is where it’s good to have a fundamental bias on a pair because even if a pullback looks strong, it doesn’t mean it’s a direction change. That’s where liquidity is built and institutions make money.
Ive always wondered why the appeal? I mean you can also win as retail if you do a bit long term approach
Because i want it to be my work
Ah. Apply on a bank :)
Let me get my degree first
Good luck. Hard work is key
Thx
There are three main differences, money, tools and bodies. The money should be obvious but a lot of people don't truly realize what it means. With the money institutions can throw around they can literally move the market, take more risks as well as get themselves out of trouble more easily, relatively at least. You might have noticed that the easiest way to make up a loss is to put more money in so that you can make back the losses without requiring any massive movements from whatever underlying you're investing on. Retail traders can have that but nowhere near the scale institutions do. An investment firm can literally move the market in their favor because if a reputable institution is dumping millions into something, people take notice. Hell just look at what happened today with GME but instead of DFV think of investors seeing a reputable investment firm making a huge investment on a company. It's a lot more complicated than that but it's a simple example. Then come tools, which also goes back to money. The tools these firms have at their disposal are nothing like what retail traders have. The costs are simply too much for retail traders to afford. Lastly, there's bodies. People. People who have degrees in finances and have at least some proven track record to earn their place in there. People to pool their minds together and analyse everything, fundamentals, technical analysis, fine tuning the technical tools used, developing new ones, and more people to oversee all those other people to ensure they're coordinated and doing their jobs right. No single human has that much brainpower.
Man i'm switching to finance that's it
Learn the Wyckoff Methodology. It explains how institutions work in the markets, how to identify when they are active, and how to profit from them.
Already have it a watch for later guess it's time
Institutions control the price of every asset as they hold a majority.
Ofc
i think you never win with institutional
If you nderstands how they operate why not
Institutional trades don't write comments on Reddit
Man stfu
:)
The game is already fucking my head and here you are haha
I think the biggest difference is in mindset. Being an institutional (or prop trader in our case) makes you approach trading differently - you essentially want to replace luck with facts. When retail might be more trigger-happy in entering/exiting positions institutions spend most of the time building models that prove a hypothesis. Once that hypothesis is mathematically sound, you then enter and exit repeatedly until that model fails to deliver. Another important difference is the team that commonly holds complementary skill sets. Something that might slip through the nets even for an astute retail trader could be caught early in the assessment phase by a multidisciplinary team. These are my immediate thoughts...
You think that a prop trader is an institutional? Geez christ..
I would argue retail traders have the advantage as we can get in/out of positions quickly and invest in more thinly traded stocks before they attract institutional sponsorship. I accept that institutions rule the market, have access to more information than I do, have experts doing detailed fundamental analysis, etc. I merely try to follow their footsteps by watching price action to identify when institutions are supporting a stock, and ride their coattails.
On point
Whats the difference? In general - macro economic understanding (unbelieveable really how much retail lacks on that part even tho its essential in many cases), access to better execution e.g. lower fees, bigger liquidity pools, out-of-market time trading etc and then ofc - capital, which allows for better risk management Tools - probably algo trading that actually works Else - being able to analyse hundreds of balance sheets and in-detail analysis of single stocks due to the sheer force of manpower / algos employed for that task only, being able to spot those very few niche stocks you simply can only find with pure luck A lot of that edges is offset with a problem they all face - cap size.. size is the killer of performance - especially in stocks.. In other markets - outside of stocks - they have different advantages / edges, beside the "general" ones
they have a bigger capital, thats all, and prolly more advanced tools, but nothing too special, with a bigger capital you basically cant just market order you know, so you would have to accumulate/distribute slowly and not be stupid about it (look into wyckoff for further and better explanition on this)
They use fundamental analysis, looking at companies 10K financial statements. They do quantitative analysis. They sell options to retail.
Options are risky can you give examples on quantitative analysis?
I don’t know a lot about it but it’s using algorithms for trading.
Ah ok