Trading desks of leading investment banks
How much capital is provided to traders for their trading activities? I am referring to big IB such as JPM, GS, UBS etc…
What they do exactly? Day trading, swing trading ?
Do they trade only indexes (those who trade equities)? I guess that trading individual stocks with big sums of money involves market impact. The rogue trader of UBS was trading the DAX for instance.
Do traders take decisions themselves or receive some kind of assistance by other colleagues in their trading activities? And do they use technical analysis tools such as MACD, RSI etc… and if they do, do they use TA in conjunction with other methods?
They day trade... A LOT. Mainly penny stocks and ETFs (Kweku was on the delta one ETF desk at UBS), typically with at least 100:1 leverage. The RSI indicator is very popular at Goldman, along with MACD at J.P Morgan, Stochastic at UBS and CCI at Barclays. Lehman was known for using the ADX-DMI indicator better than anyone else on the street but they blew up.
AMAZING!!!!
The above mentioned indicators, are they modified? After all the crowd use these tools too, another question: do leading IB possess historical data of stocks that is less than 1 minute interval? True that not all stocks trade that frequently but some of course do and they are even relatively active on the pre and post market opening and closing.
Good question- a plethora of quants are hired from top tier quantitative PhD programs each year and they are assigned with the primary responsibility of backtesting each of these technical indicators to identify the optimal parameters. For example, only the quants and partners at Goldman are aware of the parameters utilized for the RSI indicator, not the traders or even the desk MD. Most of these investment banks do actively engage in day trading (they prefer to call it "high frequency trading") while utilizing their proprietary technical indicators on some of the most minuscule time frames. In fact, a quant from Goldman recently attempted to steal their proprietary intra-day RSI parameters in the pursuit of starting his own hedge fund and this turned into a horrific legal cesspool which you can read about here: http://blogs.wsj.com/marketbeat/2009/07/06/goldman-sachs-quant-code-cas…
I used to prop trade Bulgarian listed penny stocks for one of the aforementioned investment banks during the pre-volker rule era, and our desk used to obtain the intra-day data directly from Scottrade, who we also utilized for our prime-brokerage services as well.
Thanks for the educated posts, I had the incorrect belief that you were still in UG. If you get the time in the coming weeks could you do a background thread similar to compbanker.
Good times.
cot damn THIS IS TOO MUCH
lol, that's mean.
data from Scottrade? trading penny stocks? traders and the desk head not aware of the trading parameters?
WTF
Thanks for your insightful posting Macro Arbitrage. Market makers earn profits from the bid-ask spread and the appreciation or depreciation of the inventory they hold, Goldman Sachs is involved in this business and it makes market for many stocks, the question is whether prop trading desks can benefit from the special access to information MM have through the level 3, ordinary traders can’t have access to the central book order as they use level 2, I imagine that the NYSE provides level 3 only to MM and there should be a firewall between GS prop trading desk and GS Market Making, of course I am not sure it happens that way, because the HFT activities are conducted through the black box that allows access to central book order which the NYSE provides to anyone who can afford to pay tens of thousands of dollars per months for that service. If leading IB are not day trading, why they would need so many human staff on the trading and investment field? After all in HFT for every human trader or portfolio manager or anyone who has to do with investment and finance you need 20 quant or even more, the activity is about sophisticated mathematical models and sniffing algorithms etc… What news services GS use to get the unexpected macro-economic news? Bloomberg terminals? Reuters? CNN? Indeed for event arbitrage speed of acquiring and processing information is everything as this tables shows.
TABLE 12.1 Number of Persistent Trading Opportunities in USD/CAD Following the U.S. Inflation Rate Announcements 0 Estimation Frequency U.S. Inflation Up U.S. Inflation Down 5 minutes 0 0 1 minute 1 0 30 seconds 4 1 15 seconds 5 6
The minimum frequency of historic data that provided by firms who sell this service is 1 minute, I wonder if leading IB possess historic data with smaller intervals for stocks that trade frequently, the above table demonstrates that seizing profitable opportunities is a matter of seconds not minutes. I believe that a 10 seconds data of BAC for example gives any trader an edge, the IB have huge tech capabilities and I guess they use them.
I am a trader at the proprietary cash equities desk for an european bank in Latin America. Yes, prop desks still exist outside the US. We work basically as a long/short equities hedge fund, basically fundamentally driven. Feel free to ask questions.
Do you do daytrading? do you work for Banco Santander?
how did you end up on that desk?
I'd rather not name my employer since the financial community is really small in Latam, but think BNP Paribas, Barclays, Santander.
I was hired to work there by my former boss at the hedge fund where I interned in college. He went to be the desk head at the bank an invited me to work with him.
We rarely daytrade stocks, but it happens. Only if the trade happens to meet our profit target already in the day we make it. On the other hand, we daytrade equity index (S&P) a lot.
So basically, a TTT job in an unpreftigious institution
How do you trade SPY? event arbitrage? do you use TA?
This reminds me of the maturity level of some members on this board and why it is so hard to contribute in a serious manner. I have worked for McKinsey before so I won't even start about this "prestigious" issue. All I can say is that I love my job and I made more money last year than my friends at MS IBD that worked 2x times more than I did.
I don't trade SPY, I focus on long short pairs and directional stock picking. There is a trader who focus on the SPY and that guy basically follows the desk fundamental macro view (positive or negative for the SPY) and looks for intra-day opportunities to buy or sell. He uses TA a bit, but nothing esoterical, only look at supports and resistances since they are almost like self-fullfiling prophecies.
Thanks Nutry, how do you choose your pairs? Based on the betas? I have little knowledge on the matter, however, I trade to backtest a strategy on the IBEX35, basically I shorted the 2 big banks, Santander and BBVA as well as a insurance company and a construction company, the rational was purely fundamental, those sectors are completly fucked up, the burst of the housing bubble brought construction and therefore the Spanish economy to their knees, and the banks they are becoming zombies, their balance sheets are black boxes plenty of bad loans... In the other hand I went long energy and Telefonica, I did not seek to neutralize the beta, I do not know if that's the right approach. Needles to say that leverage is required and used CFD for that. The results of my backtesting were mixed. Any comment on the matter would be helpful Nutry. Thanks in advance
My point is that this "employer prestige" thing does not really exist in the real world and is the kind of BS that only college students care for. The "prestige" of your firm doesn't make you happier in your workplace, nor brings you more money. And by the way, it has nothing to do about what we were discussing, so I believe it made no sense for you to bring it up anyway. For the matter of fact, I am not even sure why I am talking about this with you, since this brought nothing to the table. My only guess is "u jelly, bro?" Bet you are one of those kids that wank to the GS website... good luck in real life, bro, you will need it. Your flames will be ignored from now on.
We consider our long short pairs if the companies are in the same industry/have the same drivers. We look for stocks that have correlation. If we go short a steel company and long a telecom company, we consider it a directional bet, not a long and short strategy, since there is little correlation between those stocks.
About the beta, we do both: beta neutral or net exposure neutral. We usually do beta neutral bets when we buy a stock against the index and zero net financial exposure when we do a intra sector long short, since the beta in these cases are almost the same.
About the strategies, I'd say 80% are fundamental driven (macro and micro, mostly micro - valuation discount, earnings revisions expectations,etc.) and the other 20% is a mix of merger arb/event driven (M&A targets/earnings seasons bets/MSCI inclusion, etc)
I'm an immigrant baby who graduated summa from HYPSW, worked at a top BB group, and now work at a preftigious hedge fund that would get your panties wet. U mad jelly bro? I would be if I were in your shoes. But of course, keep convincing yourself that you won't be one of the 90% of your trading class who will have been canned 5 years from now lol!
If you can't be constructive then please don't say anything at all.
I am here to educate the young masses the way you unpreftigious bros never will, to tell them to aim high as fuck and to never settle for a TTT IBD group at an unpreftigious bank, to tell them to join only preftigious buyside shops, and to assure them that it really is HBS or bust.
Hope that helps, brother.
If you want freedom of speech start a blog or march around on your college campus. Treat your fellow members with respect here or don't post.
But what do I get out of it? If you look at my prior posts, you'll see that even when I'm being "disrespectful" (i.e. honest), I've actually contributed a lot of useful information. Go flex your mod muscles at one of the trolls contributing nothing to the site, not at an alpha aesthetic as fuarkkk bro who you're gettin mad jelly at.
Lol just lol at me being "disrespectful". Is this place filled with so many beta sissies actually getting butthurt? Just lol! If ya'll are this sensitive, you won't last long in ARE industry.
NewGuy, usually I don't point the finger at others even when they become insane, what did you bring to this post? Nutry answered many questions, he is putting his skills and knowledge at the service of others, however, it seems that you are just here trying to boost your self-esteem, that's not the right place for that, good luck anyway.
For the amount of shit you talk and the hedge fund we going to all jizz about.... How about time to get a "star"...I am sure Patrick jizz right away and give it to you.
Nutry is literally the only person not trolling in this thread.
Hey Nutry, what are steps to take to pair-trade Banco Santander and BBVA?
Shit, that's what I get for not reading all previous posts... Guess I deserved that.
This has got to be the funniest thread EVER on wso. Trolls trolling trolls. Give NewGuy a break. He's kind of an asshole, but he does have a point with his "preftige" rants. The real guy everybody should be pissed at is MacroArbitrage, because he was trolling Cromwell right from the beginning and Cromwell actually never found out. But I still appreciate macroarbitrage's posts. Incredibly funny.
Quod odio aperiam laudantium veniam possimus. Est non autem atque sapiente. Iste autem fugiat necessitatibus temporibus. Delectus sint occaecati itaque necessitatibus.
Ut mollitia modi libero est rerum deleniti. Necessitatibus vel ipsum repellendus et. Quidem consequuntur labore rerum. Maxime id optio sint non sed. Ipsa esse laborum ut a quo eaque magni.
Rerum nulla officia reiciendis laboriosam autem doloremque. Exercitationem et officiis iure quas.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Temporibus omnis iusto qui magni nesciunt porro. Vel itaque possimus totam commodi illum earum. Voluptas quia deleniti qui. Voluptas nesciunt quidem maiores itaque enim harum commodi.
Ipsam dolores aut sit nihil in maxime. Aut labore aliquam et. Exercitationem ipsam eos eaque doloremque ratione quia accusamus.
Commodi asperiores deleniti perferendis magnam libero. Velit nihil hic qui accusamus sed. Eos reprehenderit facilis reprehenderit molestiae debitis.
Exercitationem amet illum facere incidunt consequatur saepe eos. Non est quibusdam vitae tempore iusto voluptates ex. Aut quis id sed vel dolore perferendis nihil. Perspiciatis ab eligendi repudiandae sit architecto. Architecto et deserunt quae enim possimus ut.