Proprietary Trading
Discussion
DonkeyApple said:
It sounds like his money is in your account and he is suffering from the classic fear that somehow it’s all a con etc?
If his money is in your account then I would move it out to an account in his own name and just connect it up to yours to mirror. Most brokers have a PAM system these days.
Ultimately you are going to lose him as a friend if you have a bad year and you get nothing if he has a good year so there is absolutely nothing in this relationship for you only downside anyway. Especially now that you are no longer a trader but an unpaid pension plan.
We've had separate accounts since we began as I didn't want any joint account association.If his money is in your account then I would move it out to an account in his own name and just connect it up to yours to mirror. Most brokers have a PAM system these days.
Ultimately you are going to lose him as a friend if you have a bad year and you get nothing if he has a good year so there is absolutely nothing in this relationship for you only downside anyway. Especially now that you are no longer a trader but an unpaid pension plan.
I had a pretty good chat with my wife about it yesterday and I'm going to sit down with said friend and explain my issues/worry and that I'll be terminating the trading relationship after the new financial year.
Interesting.
From my less knowledgeable point of view there doesn't appear to be a huge practical amount of difference between a PAMM and copy trading given the wide gap in what an individual's regulation is required to be. I did read somewhere that automated strategies (EAs etc) didn't require any regulation but that doesn't sound correct.
- Followers have their own account and control their own money.
- Followers choose to link their accounts with the primary trader's.
- The primary trader makes money the more people who link to / follow him.
I guess it depends on the pay structure i.e. is the primary trader being compensated with a share of the spread and makes more money the more they trade, or if are they receiving a % of 'AUM' like eToro.
I've tried eToro and looked at others, but as you point out they're not suitable for short-term 'scalpy' stuff. My average trade is about 9 minutes long so anything other than rapid executions (as opposed eToro's slippage) and tight spreads ruins my edge.
From my less knowledgeable point of view there doesn't appear to be a huge practical amount of difference between a PAMM and copy trading given the wide gap in what an individual's regulation is required to be. I did read somewhere that automated strategies (EAs etc) didn't require any regulation but that doesn't sound correct.
- Followers have their own account and control their own money.
- Followers choose to link their accounts with the primary trader's.
- The primary trader makes money the more people who link to / follow him.
I guess it depends on the pay structure i.e. is the primary trader being compensated with a share of the spread and makes more money the more they trade, or if are they receiving a % of 'AUM' like eToro.
I've tried eToro and looked at others, but as you point out they're not suitable for short-term 'scalpy' stuff. My average trade is about 9 minutes long so anything other than rapid executions (as opposed eToro's slippage) and tight spreads ruins my edge.
From a personal point of view the model of making additional income through simply trading my own account is attractive. Unfortunately, my current trading style is, and always has been, very short-term, so is subject to spreads / executions. For example, eToro has a 5 point spread on the DJIA, which is my most heavily traded market. I couldn't work with that. I need to really add longer-term to my skill set. Although I've been saying that for years.
The problem with copying, as you've mentioned, is a lot of the copiers have no idea about investment / realistic returns. Someone making 300% in a year on BTC is thought of as a god rather than someone doing 50% per year with much lower risk. When you have such of large pool of people trying to trade, it's inevitable a few will produce atypical returns over the short term.
I find the hedging side interesting. There are firms out there who claim to hedge all volume (Spreadbet / CFD). I don't know much about the back-end but I can't see how they can possibly do that. It sounds similar to firms who claim to only make money out of the spreads rather than net client losses. I've also thought about the hedging side of BTC from your end. How would a firm do it with 95%> of people have been long? Buy the actual coins? I know there are BTC Futures but what about the other coins?
Sounds a nightmare.
The problem with copying, as you've mentioned, is a lot of the copiers have no idea about investment / realistic returns. Someone making 300% in a year on BTC is thought of as a god rather than someone doing 50% per year with much lower risk. When you have such of large pool of people trying to trade, it's inevitable a few will produce atypical returns over the short term.
I find the hedging side interesting. There are firms out there who claim to hedge all volume (Spreadbet / CFD). I don't know much about the back-end but I can't see how they can possibly do that. It sounds similar to firms who claim to only make money out of the spreads rather than net client losses. I've also thought about the hedging side of BTC from your end. How would a firm do it with 95%> of people have been long? Buy the actual coins? I know there are BTC Futures but what about the other coins?
Sounds a nightmare.
Thanks, that article is interesting.
What are your views on the FCA’s proposed leverage caps of 25/1 and 50/1? Is that a starting point (an ‘anchor’) which is likely to rise due to the consultation? IG were very keen to have customers email the FCA. I also note that IG’s share price has pretty much recovered from that FCA proposal drop (albeit there could be a load of factors at play).
I know they’ve put it on pause since the ESMA are looking at similar issues. Why didn’t the FCA (I expect I’ll know your answer) know the ESMA were going to going to cover the same ground?
Is there any end in sight for an implementaton?
What are your views on the FCA’s proposed leverage caps of 25/1 and 50/1? Is that a starting point (an ‘anchor’) which is likely to rise due to the consultation? IG were very keen to have customers email the FCA. I also note that IG’s share price has pretty much recovered from that FCA proposal drop (albeit there could be a load of factors at play).
I know they’ve put it on pause since the ESMA are looking at similar issues. Why didn’t the FCA (I expect I’ll know your answer) know the ESMA were going to going to cover the same ground?
Is there any end in sight for an implementaton?
DonkeyApple said:
IG’s reaction was slightly odd at the time. The FCA has been caught napping by the Govt and rushed out a response before getting it approved by IG. 
. They subsequently went around trying to hire a few burnt out punters in the hopes of finding some people who knew what a CFD was while apparently being requested by the powers that Be not to rush into any changes that would cost British jobs.
Coincidentally, IG have just sent another email inviting people to email the ESMA. . They subsequently went around trying to hire a few burnt out punters in the hopes of finding some people who knew what a CFD was while apparently being requested by the powers that Be not to rush into any changes that would cost British jobs.Doing it solely on £PP seems quite crude to me i.e. £20 PP with a 20 point stop vs £10 PP with a 40 point stop have dramatically different margain requirements even through the risk is the same. I appreciate the higher risk with higher leverage / tighter stops, but it seems disproportional.
Do you think they're doing the old anchoring trick i.e. starting deliberately low and then willing to move up during the 'consultation'?
From a client's perspective I hope it doesn't diminish competition, even if it's just the big boys fighting for each client.
I'm not sure why the proposed margin / leverage for FX is higher than indices. I'd have thought the former has much greater potential for large unexpected, account-damaging moves than the latter. What was the last time something like that happened on an index? DJIA 2010 'flash crash'? I guess there are more considerations than that.
If the margin / leverage is uniform across Europe, maybe that'll encourage people simply to put more into their accounts who otherwise wouldn't. Or go to some dodgy broker somewhere outside the regulator's reach...
I was thinking, could a broker based somewhere potentially trustworthy like Australia attract UK / EU clients and place hardware this side?
I'm not sure why the proposed margin / leverage for FX is higher than indices. I'd have thought the former has much greater potential for large unexpected, account-damaging moves than the latter. What was the last time something like that happened on an index? DJIA 2010 'flash crash'? I guess there are more considerations than that.
If the margin / leverage is uniform across Europe, maybe that'll encourage people simply to put more into their accounts who otherwise wouldn't. Or go to some dodgy broker somewhere outside the regulator's reach...
I was thinking, could a broker based somewhere potentially trustworthy like Australia attract UK / EU clients and place hardware this side?
DonkeyApple said:
Liquidity really. The order books for equity futures are really quite thin so once you’ve lifted what’s showing at best then you can gap down very rapidly trying to get a fill. FX is much more liquid.
I assume index futures are also thinner in that case. traxx said:
I keep getting the impression from IG that they feel that "big", "experienced" traders will be exempt from new regulations and can keep existing leverage
Although many people have also said they expect Binary to be banned all together - which I find illogical because its actually quite a fun product to trade against an existing position but I guess a lot of retail investors have blown up trading binaries in isolation.
I think it's like this. Although many people have also said they expect Binary to be banned all together - which I find illogical because its actually quite a fun product to trade against an existing position but I guess a lot of retail investors have blown up trading binaries in isolation.
The FCA have proposed two tiers of traders. Inexperienced and experienced. The latter would be allowed greater leverage than the former. IG are referring to the latter as 'professionals'.
The ESMA have proposed banning binary products but not banning them for 'professionals'.
I assume IG are thinking that if they can get traders to prove they are 'professionals' then they will be able to offer both higher leverage and binary products.
I note when asking people to declare themselves as 'professionals' they have written (I don't have it to hand) that they don't need to follow best execution rules or something similar. Hopefully DA can expand on that.
This the FCA wording from 1.16 where I think the two tiers are from: https://www.fca.org.uk/publication/consultation/cp...
The FCA are talking about 'experienced retail clients'. Is that what IG are calling 'professional' in the form posted by traxx? Perhaps not as the FCA's proposed requirements are lower.
IG also produced a document (I think it was launched in the platform) which spoke of some 'best execution' rules which they don't need to follow when classing someone as a professional. Do you know anything about that DA?
Would there be any greater spread betting tax implications when classing oneself as a professional?
The FCA are talking about 'experienced retail clients'. Is that what IG are calling 'professional' in the form posted by traxx? Perhaps not as the FCA's proposed requirements are lower.
IG also produced a document (I think it was launched in the platform) which spoke of some 'best execution' rules which they don't need to follow when classing someone as a professional. Do you know anything about that DA?
Would there be any greater spread betting tax implications when classing oneself as a professional?
I'm glad January has finished, it dragged and dragged and dragged some more! I had 5-6 single trade days and it was genuinely boring for a stretch.
February is shaping up a lot better already and plenty to look forward to with my parents arriving for a nice holiday at the end of Feb and I also booked a friend's 40th birthday to Pebble Beach in July which should be fantastic.
February is shaping up a lot better already and plenty to look forward to with my parents arriving for a nice holiday at the end of Feb and I also booked a friend's 40th birthday to Pebble Beach in July which should be fantastic.
I guess it depends on your instruments. I really liked January. Most of my trades were on the DJIA and most were longs which was helpful as it pretty much went up for the month. Although one of those months where you'd perform better if you went long on the 1st and closed on the last day. Good old market hindsight
What were you looking at?
What were you looking at?
La Liga said:
I guess it depends on your instruments. I really liked January. Most of my trades were on the DJIA and most were longs which was helpful as it pretty much went up for the month. Although one of those months where you'd perform better if you went long on the 1st and closed on the last day. Good old market hindsight
What were you looking at?
I only trade spot fx and futures fx. My predominant pairs were at several month lows in terms of volatility despite the big drop off in the $ index. I also trade intra-day and couldn't ever trade over a month long period, I don't have the patience for it unfortunately.What were you looking at?
I expect more people have been burnt trying to top-pick the DJIA over the last two years.
For the extra focus and stress short-term trading brings, it's worth it to be on the sidelines 99% of the time and not hold overnight so I can sit and watch when the markets go a little bit crazy like the past few days.
For the extra focus and stress short-term trading brings, it's worth it to be on the sidelines 99% of the time and not hold overnight so I can sit and watch when the markets go a little bit crazy like the past few days.
Flipfloptrader said:
La Liga said:
I guess it depends on your instruments. I really liked January. Most of my trades were on the DJIA and most were longs which was helpful as it pretty much went up for the month. Although one of those months where you'd perform better if you went long on the 1st and closed on the last day. Good old market hindsight
What were you looking at?
I only trade spot fx and futures fx. My predominant pairs were at several month lows in terms of volatility despite the big drop off in the $ index. I also trade intra-day and couldn't ever trade over a month long period, I don't have the patience for it unfortunatelyWhat were you looking at?
This is my strongest week since going full time (yes, we all always like to talk about when it's going well - I lost money in November to balance it out).
The DJIA has been brilliantly extreme, volatile and a great 'stress test' for one's trading psychology, which I'm more pleased about how I've managed than any profit. A higher than normal temptation to over-trade, revenge trade, get over-confident, suffer from fear and greed etc. Average winner held for 6 minutes, average loser 2 minutes so very fine margins.
La Liga said:
ow did you find this week? I hope you've done well.
This is my strongest week since going full time (yes, we all always like to talk about when it's going well - I lost money in November to balance it out).
The DJIA has been brilliantly extreme, volatile and a great 'stress test' for one's trading psychology, which I'm more pleased about how I've managed than any profit. A higher than normal temptation to over-trade, revenge trade, get over-confident, suffer from fear and greed etc. Average winner held for 6 minutes, average loser 2 minutes so very fine margins.
It was slightly better than an average gain in terms of profit but similar to you, the pairs I traded had very high volatility especially GBP. GBPAUD managed a nigh on 350 pip reversal in less than 24 hour period without any sustained pullback until late in the US session. This is my strongest week since going full time (yes, we all always like to talk about when it's going well - I lost money in November to balance it out).
The DJIA has been brilliantly extreme, volatile and a great 'stress test' for one's trading psychology, which I'm more pleased about how I've managed than any profit. A higher than normal temptation to over-trade, revenge trade, get over-confident, suffer from fear and greed etc. Average winner held for 6 minutes, average loser 2 minutes so very fine margins.
Patience has never been my strong point so having to wait and pick the right spots has been very mentally testing but also satisfying when getting it right. Looking forward to what next week offers up.
It's been 3 months since update so thought I'd pop in.
On a personal front, things are going okay. Charlie is off to see the orthopaedic surgeon in a couple of weeks to see what can be done regarding his walking. He's developed what I'd call a rolled in arch and he complains of pain often when walking for any period of time and running. Unfortunately these are conditions associated with his disease and will most likely keep popping up as he keeps developing.
On an education front, he's moving along nicely. We came very close to keeping him back a year as his reading/writing was of a low standard compared to his peers but we decided he'd blossom more if he moved onto year 1. Thankfully that has proven the case thus far and he's improving weekly.
Trading has definitely been tougher this year compared to the the same time frame last year but it's a matter of evolving and moving with the market to try and stay ahead. Due to my timezone, I usually stop around midnight (local) which is only 9/10am US time. For whatever reason, a good majority of action has happened in the NY session the last few months which means I've not been able to take advantage of it.
On a plus side, the Trackhawk looks to be loading onto the boat within the next couple of days and I should have it before the end of June. The wait has been extremely long but finally on the final stretch.
On a personal front, things are going okay. Charlie is off to see the orthopaedic surgeon in a couple of weeks to see what can be done regarding his walking. He's developed what I'd call a rolled in arch and he complains of pain often when walking for any period of time and running. Unfortunately these are conditions associated with his disease and will most likely keep popping up as he keeps developing.
On an education front, he's moving along nicely. We came very close to keeping him back a year as his reading/writing was of a low standard compared to his peers but we decided he'd blossom more if he moved onto year 1. Thankfully that has proven the case thus far and he's improving weekly.
Trading has definitely been tougher this year compared to the the same time frame last year but it's a matter of evolving and moving with the market to try and stay ahead. Due to my timezone, I usually stop around midnight (local) which is only 9/10am US time. For whatever reason, a good majority of action has happened in the NY session the last few months which means I've not been able to take advantage of it.
On a plus side, the Trackhawk looks to be loading onto the boat within the next couple of days and I should have it before the end of June. The wait has been extremely long but finally on the final stretch.
Getting an edge is hard enough, but it's primary the execution of the edge and acting in a professional matter with the correct mindset that is harder.
You have to remember the advantages most retail / professional retail trader have; one of scale. If I were managing significant sums of money then I'd need to be trying to assess the risk of the FOMC meeting later and what impact it may have on my positions, if I need to hedge, use options etc etc. I can't just get out of the market and then get back in in a few hours.
Due to my scale and time frames, I'm flat and couldn't care less. I won't even be in over the meeting. That nimbleness and ability to be 'flat', in my view, alleviates a significant area of risk trading.
You have to remember the advantages most retail / professional retail trader have; one of scale. If I were managing significant sums of money then I'd need to be trying to assess the risk of the FOMC meeting later and what impact it may have on my positions, if I need to hedge, use options etc etc. I can't just get out of the market and then get back in in a few hours.
Due to my scale and time frames, I'm flat and couldn't care less. I won't even be in over the meeting. That nimbleness and ability to be 'flat', in my view, alleviates a significant area of risk trading.
Flipfloptrader said:
Trading has definitely been tougher this year compared to the the same time frame last year but it's a matter of evolving and moving with the market to try and stay ahead. Due to my timezone, I usually stop around midnight (local) which is only 9/10am US time. For whatever reason, a good majority of action has happened in the NY session the last few months which means I've not been able to take advantage of it.
The US has certainly led a lot of the volatility. Perfect for those on a GMT timezone. I think one aspect of trading overlooked is the mental strain it takes. It may not be so prevalent in part time traders but for myself who trades full time, I experience a lot of emotions and fatigue from trading. I was discussing with my parents and wife and we all agreed that 10-11 weeks at a time is the maximum before needing a break. Sitting down every single week day and starting with a blank canvas having to find ways to do the best job possible to make money is often very tricky.
With the timezone I work from, I often don't get to bed until 12.30-1am in the morning and I find it quite hard to switch the brain off so it takes another 30 mins or an hour to get to sleep. With the kids up at 6.30am I've had to find a way to adapt to not a huge amount of sleep and when the kids are at school I'll often have a morning snooze to try and recharge. However, I feel guilty for wasting the day so I'll often either try and take the ski out or play some golf to get some fresh air and energise myself.
I'm a very optimistic person, sometimes too much so but on occasions I'll stop and think what would happen if my trading stopped working and I could no longer make money. The notion of having to find another avenue literally scares the life out of me as I've had dreamt of trading full time for such a long time. I guess all of these thoughts/feelings add up during a trading period and lately I'm finding myself mentally exhausted from trading and it's just an ongoing circle. Thankfully I've got 8 days off in a couple of weeks as I'm off to the States to play some golf which will be a fantastic experience.
I don't think I've really written anything of use, haha but it has helped to write a few things down.
With the timezone I work from, I often don't get to bed until 12.30-1am in the morning and I find it quite hard to switch the brain off so it takes another 30 mins or an hour to get to sleep. With the kids up at 6.30am I've had to find a way to adapt to not a huge amount of sleep and when the kids are at school I'll often have a morning snooze to try and recharge. However, I feel guilty for wasting the day so I'll often either try and take the ski out or play some golf to get some fresh air and energise myself.
I'm a very optimistic person, sometimes too much so but on occasions I'll stop and think what would happen if my trading stopped working and I could no longer make money. The notion of having to find another avenue literally scares the life out of me as I've had dreamt of trading full time for such a long time. I guess all of these thoughts/feelings add up during a trading period and lately I'm finding myself mentally exhausted from trading and it's just an ongoing circle. Thankfully I've got 8 days off in a couple of weeks as I'm off to the States to play some golf which will be a fantastic experience.
I don't think I've really written anything of use, haha but it has helped to write a few things down.
Nearly 4 months since the last update so here I am.
July and most of August were the most productive I've had for quite a few months. On the back of that, the last week of August and September was exceptionally difficult. With Brexit in focus, unannounced texts/articles were causing GBP pairs to be exceptionally volatile, A pattern began to emerge where person x would say something and then person y would contradict person x and the move would snap back.
I've focused a little less on GBP pairs for October and I've had some solid stability. Really cannot believe how quick this year has gone, only 7 weeks left of trading before finishing for the year.
July and most of August were the most productive I've had for quite a few months. On the back of that, the last week of August and September was exceptionally difficult. With Brexit in focus, unannounced texts/articles were causing GBP pairs to be exceptionally volatile, A pattern began to emerge where person x would say something and then person y would contradict person x and the move would snap back.
I've focused a little less on GBP pairs for October and I've had some solid stability. Really cannot believe how quick this year has gone, only 7 weeks left of trading before finishing for the year.
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