A former bank market-maker explains how institutions actually trade. Banks move markets and have access to privileged information, but today's illegal manipulation brings prosecution. Retail traders can beat the S&P 500, though it takes serious work. About 90% of successful traders use mechanical systems, not discretion.
This is a former market maker for a bank, and I'm going to ask you every single question you've ever had about institutional trading. Do banks hunt for our stop losses? No. Do banks move markets? Yes, banks move markets. Do banks manipulate markets? No, banks don't manipulate markets, otherwise the trader goes in jail. But they have in the past? Yeah, they did. Do banks have access to privileged information? The bank might have access to information that only the bank has. Think about it. Are markets efficient? Markets are efficiently inefficient. Can a retail outperform S&P? A retail can outperform S&P. It just requires a shit ton of work. Are prop firms a scam? Prop firms are designed to have you losing your money. You are the revenue stream of a prop firm. However, you can use prop firm if you have the right mentality of I use a prop firm to learn how to trade. But not with the mentality of, I use a prop firm to get rich. What's the biggest difference between professional trading and retail trading? Retail trading is based on hope and checking the charts. Institutional trading is based on knowing what you're doing and data. Can you be successful as a discretionary trader? You can be successful with any type of trading. However, if you look at the distribution of which are the successful traders, you see that 90% of them are mechanical traders.
