Who are we up against?

"I get a thrill out of watching the market, with pitting my wits against some of the sharpest, most intelligent and ruthless people in the world" ***

the quote above is an often enough stated concept in trading.
But I do wonder how much truth is there that we actually pit our wits against any other individuals / entities in the market really?

Looking at the FX markets - much of the activity is trade (ie international trade) related. Perhaps even the majority is.
The customers behind these trades are not pitting their wits against the market. They put their order to a bank who will generally provide them with a decent enough spot price. - No ruthlessness there just a commission order and a 'best execution' of sorts.

Swaps, fixes and other hedges - these may impact the FX market in that they create the support & resistance, especially around the big round numbers, but again - this is working to client orders. Quite useful for us small traders in fact, but we are only incidental.

Hot money - chasing interest rates. Theres a lot of volume in that. Its maybe ruthless in its own way but not pitting itself against other traders in the market.

All that said I have no idea how volume much of the FX trades are speculation rather than trade / commercial client driven. But given the enormous size of international commercial trades it takes a hell of a lot to impact it in anyway....there are the big speculators - prop desks of banks. How big is this compared to trade related fx volume?
Are they not just following the flows anyway?

It seems to me that small traders in these markets are using their skill to get between the cracks and /orfollow trends of these large trades and skim off a profit (sounds kind of obvious).
I only see in the 'stop running' where there can be a battle of nerves, but on the whole its rare we are pitting ourselves against anyone specific. Just taking our chances and hopefully cutting our risks. The otherside of our short term trade may well be a long term hedge totally indifferent to our aims and our profit or loss.
Of course there are always winners and losers but they are not always up against each other except indirectly.


Similar in the stockmarkets - the big players are the asset managers / pension funds.
These trade daily, but have a long term outlook on the whole - are we 'up against them' ? They are the big price movers maybe yes, but generally we are following them not up against them.


***Quoted (out of context )from Trader_dantes post at
http://www.trade2win.com/boards/gen...an-you-ever-wanted-trading-6.html#post1209628

I used this post to quote out of context of the original post because it is a reference I recently saw that got me thinking.
(Tom, I hope you don't mind)

I don't think I'm up against anyone most of the time, I just call the market wrong. There is so much information out there and so many parties with vested interest it's crazy. Sometimes I do think weak hands are forced out of the market. For example, during yesterday's melt up I reckon someone drank up all of my milkshake.

Congrats, Mr Smith. You have successfully synthesised the subtext of my post. A+ lol

No seriously though

R E Psmith said:

Well, everyone has a vested interest, otherwise they wouldn't be participating. Nothing in the market is random, it is all the result of somebody's decision.

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That's why I say I don't think I'm actually up against anyone. Most people who have ability to move a market are just going to work and doing their job. Business as usual.
Suppose I may have a different opinion if I had more experience. Especially with DOM.
Maybe you play against whomever you choose to play against I dunno.

There's only one person you're up against,....

Tip: look in the mirror

Thanks Mr Smith,
I've seen darkstars article .
You're right it adds to my belief that we are up against the market
in general as opposed to any specific sharp minded individuals / entities.
(and ourselves for sure,- but as you say, thats another topic).

I read so often in trading books that when trading (not just forex but shares commodities or whatever) we are up against the best and the sharpest. In some respect they are probably right there are plenty of sharp traders, but I began to question whether we actually are 'up against them' and if so how just directly. If everyone was a speculator I'd understand. But they aren't.

Theres also a good post on the workings of the forex mkt on J16 thread by Joelcf.

R E Psmith said:

Hi Glyder,

I tried to post a link to Darkstar's well known (and excellent) article "The Structure of Forex Brokers" over on Forex Factory, but apparently such things have to be approved by a moderator .

Anyway, it's well worth reading - the first bit addresses your question. Forex is not primarily speculative, and you're not trading against anyone (unless you count yourself, but that's a different topic ).

Regards,

Psmith

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You're up against me, and trust me im a *******

thats the issue, the chart shows YOU everything YOU need to know. but for other people it shows something else on different timeframes. Trading is a constant battle against your inner self

"Whom", surely ?

rathcoole_exile said:

"Whom", surely ?

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Rathe, well it seems maybe that is more traditionally correct but its optional these days...as I was taught at school, and instantly dismissed the need to use it.


http://en.wiktionary.org/wiki/whom

Who are we up against?

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Why not step back and have a punt on the stronger hands ! Let "them" make all the decisions !

Don't go against anything, go with it.

Hows that for some sexy theorising ? Now , of course it would help if it appears a chaotic environment, but out of chaos comes order.

hmmm so maybe one is up against their own level of perception and awareness and the required task of positioning oneself to be able to be free to view the flow of the market, to the point that will enable one to freely execute or place trades based on and with the markets fluid path on a continual basis.


Ahh It's short, ahh now its long, ahh its short, ahhh it's long. That's it ! Chop wood, carry water, go long, go short.

glyder said:

"I get a thrill out of watching the market, with pitting my wits against some of the sharpest, most intelligent and ruthless people in the world" ***

the quote above is an often enough stated concept in trading.
But I do wonder how much truth is there that we actually pit our wits against any other individuals / entities in the market really?

Click to expand...

glyder,

I have worked alongside some very clever people programming mathematical algos to take small profits out of the market and also some sharp and somewhat ruthless people that I have seen pushing the market around with a view to screwing other locals over. So it's those elements I talk about. Perhaps I got this mentality a bit from prop where a lot of the chat is about who is "caught", who has to "puke" etc. At the moment, the biggest guy I know simply watches for people making emotional decisions (running stops, buying or puking swing points etc) His record is phenomenal. But that's besides the point. I think there is some truth in what I say although of course you note the main market mechanisms and it is also a great point that the biggest enemy is often yourself.

Have you ever played him at poker?

Waterfield said:

Have you ever played him at poker?

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Nope he was pro for years.

Cheers for the viewpoint, TD, sorry for originally taking your quote somewhat out of context but reading it made me sit up and think. Its something I;ve also read in several trading books too so its a widespread view, perhaps its the attitude of the individual trader =some think they are in a kind of gladiator battle during their trades, others think they are surfing a wave etc....

trader_dante said:

glyder,

I have worked alongside some very clever people programming mathematical algos to take small profits out of the market and also some sharp and somewhat ruthless people that I have seen pushing the market around with a view to screwing other locals over. So it's those elements I talk about. Perhaps I got this mentality a bit from prop where a lot of the chat is about who is "caught", who has to "puke" etc. At the moment, the biggest guy I know simply watches for people making emotional decisions (running stops, buying or puking swing points etc) His record is phenomenal. But that's besides the point. I think there is some truth in what I say although of course you note the main market mechanisms and it is also a great point that the biggest enemy is often yourself.

Click to expand...

trader_dante said:

glyder,

I have worked alongside some very clever people programming mathematical algos to take small profits out of the market .

Click to expand...

Have you????

Personifying the market like this should be kept for TV drama and books you buy at the airport IMO.

Personifying it like what, honey?