Forex Trading

[Kroeran]

Question,

Unrelated to how I pay my bills (pensions and real estate), about once a decade I dive into <paper> day trading, for the mental/emotional challenge of it, only to quit in frustration.

My current run at it is forex trading for the narrow spreads and bull bear flexibility.

My question here is, are there any profitable traders here, or, is there anyone who has <direct> knowledge of a profitable trader over time. A retail trader who actually paid for his beach house with trading, recently.

Starting to get the feeling I am in a casino.

 

[njhowie]

My last job pre-retirement was with a large bank doing software development in foreign exchange prime brokerage and supporting hedge funds and high frequency trading. So I had a front row view of how things operated. You are absolutely correct in comparing to a casino. The house always wins.

Because you (and most others who sit at the table) are looking for small moves, volume and trade size are big factors. The problem here for the small individual retail trader is that you are a guppy in a sea of whales and if you make one small misstep and a rate moves against you, you can be blown out of the water instantly. Heck, this was the case with a number of hedge funds that did blow up.

I did see one firm that was very successful - they had their own algorithmic trading system. Totally hands off, their system would just pump buy and sell orders all day long. Typical holding period for any position was under a minute or two with an average trade size of $1 million. Flipping in just seconds was the norm.

From the bank side, we were the house and would always collect our commission. Commission was negotiated individually with each client. Typical schedule was anywhere from $3 to $8 per million dollars traded.

For this one particular successful fund, we celebrated the month when the bank collected $1 million in commissions from them. I don't remember the profit the fund made that month (it was surely well under $1 million), but the $1 million in commissions was legendary within the bank.

 

[Kroeran]

Thank you !