What do traders actually do? Watch

roussell
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#41
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#41
(Original post by crazyb)
Sure, some traders in banks take a view and retail traders are relatively insignificant. That however does little to change the fact that the bulk of traders lose money. Perhaps we should be discussing the ambiguity associated with 'trader'.
I think for the benefit of this discussion, and others in this forum, it's best to ignore retail traders (who are so insignificant as to have no impact on the wider market) and focus on hedge funds, institutional investors and market makers. In which case the majority do not lose money, and if they do they are fired.
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Teenage Pirate
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#42
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#42
(Original post by roussell)
I think for the benefit of this discussion, and others in this forum, it's best to ignore retail traders (who are so insignificant as to have no impact on the wider market) and focus on hedge funds, institutional investors and market makers. In which case the majority do not lose money, and if they do they are fired.
Aren't the markets ultimately a zero sum game?

I realize there are some market participants that generally lose (retail traders, corporations hedging etc.) but how does that all work out in the end?
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Byllie
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#43
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#43
I think he means 90% of retail punters lose money - in this you can also include people who work in prop shops.
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PorcineAviation
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#44
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#44
(Original post by Teenage Pirate)
Aren't the markets ultimately a zero sum game?
Assuming all products trade in perpetuity. Which they don't.
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mrr2
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#45
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#45
Zero sum game depends on the time horizon, instruments traded, and strategy.

High frequency trading in the stock market is nearly a zero sum game. On the other hand long term investment in the stock market is not a zero sum game.
Foreign exchange is a pure zero sum game that is partaken by pretty much every individual on earth.
A lot of derivatives trading is zero sum. However for both FX and derivatives you need to take into account the fact that hedging of physical/financial products (that might not be zero sum) constitute a major part of the market.

As for the question about whether most traders win or lose, I would agree that most traders that make directional/proprietary bets (even at bank desks) are likely to lose. Flow is an incredible edge. The reason why many banks have had incredible trading revenues for the last year and a quarter is directly due to flow. Number of participants was low so spreads and volume increased per participant dramatically. Prop is a significantly different game.
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doggyfizzel
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#46
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#46
Can someone explain the term 'market maker'?
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Nimiza
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#47
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#47
(Original post by doggyfizzel)
Can someone explain the term 'market maker'?
Market Maker
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doggyfizzel
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#48
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#48
(Original post by Nimiza)
Market Maker
Admittedly that would have been a simple option.
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fitzmanon
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#49
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#49
Hey guys,

Do any of you know if there are trading teams in corporate banking divisions? My question might make no sense but I was wondering if they don't need it for some clients?
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Nimiza
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#50
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#50
(Original post by fitzmanon)
Hey guys,

Do any of you know if there are trading teams in corporate banking divisions? My question might make no sense but I was wondering if they don't need it for some clients?
Try and explain further. Note that a corporate bank is a bank that deals with corporations, e.g. the bank account for nestle.
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fitzmanon
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#51
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#51
(Original post by Nimiza)
Try and explain further. Note that a corporate bank is a bank that deals with corporations, e.g. the bank account for nestle.
I will actually work (summer intern) in the corporate banking division of a british bank. I thought that they (in addition to the investment banking division of the bank) would also need traders for some services they offer their clients (as you said: corporations), such as portfolio management, or forex (exporting/importing corporations).

But either they don't deal with these activities (which might be possible given my knowledge of what's behind "corporate banking") or these activies are taken care of by the S&T teams of the investment banking division.
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Nimiza
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#52
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#52
(Original post by fitzmanon)
I will actually work (summer intern) in the corporate banking division of a british bank. I thought that they (in addition to the investment banking division of the bank) would also need traders for some services they offer their clients (as you said: corporations), such as portfolio management, or forex (exporting/importing corporations).

But either they don't deal with these activities (which might be possible given my knowledge of what's behind "corporate banking") or these activies are taken care of by the S&T teams of the investment banking division.
Companies will invest their money with a corporate bank. The corporate bank will usually outsource the management of the assets to a asset/fund manager. e.g. nestle want to invest in something commodity linked, the corporate bank will then whack it into a PIMCO commodity linked fund.

PIMCO fund managers will then call up the S&T guys in the banks in order to buy/sell some commodities off them.
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