What is the purpose of bringing in clients if you are losing money on the negative selection trades? Wouldn't the banks be better off investing the entirety of their capital into prop trading, considering they are using this mechanism to win back the losses from those negative selection trades?
THE ANSWER: because 80% of the trades are ZERO RISK & FREE PROFIT.. While ONLY 20% are the “negative selection trades” u/he mentioned . Not all of these 20% = losing money, only a portion. That is what the 10% Prop trading aims to recoup.
Hence why the 80% Risk Free is the “bread & butter” ... ITS FREE MONEY!
because it gives them a sense of where the money is going before everyone else. see, they first take commission and fees on everyone else's trades and once they figure out which way the money is flowing they'll assign traders to do prop trading. or piggy back riding on the flow of money
The trader "makes a market" by matching a buyer with a seller (so they don't have to) and charges a commission for doing so. A FOREX works the same way.
Marketmakers are "middle-men".
They're like an Estate Agents that buy properties from sellers then finds buyers for them.
Estate Agents don't go this far because property isn't liquid enough to justify the risk.
From my understanding trading is not all an investment bank does. They help make the prospectus for a company's IPO, help with bond issuance, do sell side research and advisory, handle M&As, raise capital etc... I think he misses a big point which is that a lot of people do investment banking for the exit opportunity. You learn fundamental skills in modeling and network within the industry, many then go into PE or start a fund, it's not just to stay their whole life at one company slaving away. I'm always skeptical of these financial gurus, as they say "those who can't do, teach" and I think that especially applies to finance more than any other subject.
trade on your own its easy and fun manage your own funds gather people around you who got a real life job giving them a nice lifestyle ask them if you want a manager if they said yes risk will be theirs and the profit will be yours
I generally figured if one is getting involved in trading these days that it would mostly involve understanding/creating computer algorithms. Of course it's not literally a guy sitting there thinking, "I should buy x shares of y," anymore. Learn the computers instead.
I think you're refering to High Frequemcy (aka Algorithmic) trading which increasingly does makes up most of the trading on today's markets. The days of humans doing this job are indeed coming to an end.
However, I think he's trying to explain "How it Works" (in layman's terms) without giving away such trading secrets - pun intended!
Dealing with you lads sure is a lot of fun except for the fact that your bloody settlements/operations are all Indians that barely speak English. Jesus fucking Christ, god forbid if you have to process a coupon claim with UBS, I'd rather eat a sock than do that if it can be avoided.
Goldman does the same thing, but their Indians appear to be better at English at least.
Anton, can you help me out? I'm at University on an investment course but there is next to no technical analysis and fundemental analysis. Is there any books you would recommend as I am too poor to afford the institute courses.
13,500,000 GRAM Plan to sell.
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