$25 Million A Day

This is a discussion on $25 Million A Day within the General Trading Chat forums, part of the Reception category; you're all mugs. jesus. goldmans is a market maker, in general they're onside as soon as they trade with a ...

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Old May 11, 2010, 7:51am   #11
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Re: $25 Million A Day

you're all mugs. jesus. goldmans is a market maker, in general they're onside as soon as they trade with a counterparty.
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Old May 11, 2010, 9:14am   #12
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Re: $25 Million A Day

They're doing God's work, and I'm sure He is happy with their achievements.

But seriously, not ONE losing day? It's beyond the realms of probability. Let's say you have a 95 pct chance of making money on a given day, then the chance of NO losing days over 62 days is 0.95^62 = 0.04, thus 4% chance of no losing days in a quarter if you have the (simply astonishing) probability of 95 pct for making money. Ok, my arithmetic here is a bit crude, but you get the idea.

In fact, it's not until you get to 99 pct chance of making money that the odds for a no-lose quarter rise to 50 pct.

Ok, so they're market makers so it's more a case of capturing bid/ask rather than taking proprietary risk per se. But nonetheless, it's a mindblowing statistic.
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Old May 11, 2010, 11:21am   #13
 
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Re: $25 Million A Day

What makes you think they are trading directional strategies as a large proportion of their trades ?

They are an MM - but it seems that being an active MM is going out of fashion right now, this is probably the fault of those pesky HFT algos.

The problem is - people tend to think within their own domain. Of course, within the domain of any member of this site, 3 months without a losing day is exceptional.

Given quite a few billions, the ability to manipulate prices and to step in front of trades and then it doesn't seem like such an outrageous proposition.

Of course - limit Goldman to MACD, stochastics and a moving average crossover to trade off and their performance may deteriorate somewhat.
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Old May 11, 2010, 11:27am   #14
 
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Re: $25 Million A Day

Quote:
Originally Posted by gooseman View Post
you're all mugs. jesus. goldmans is a market maker, in general they're onside as soon as they trade with a counterparty.
At last. An accurate statement on t2w.
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Old May 11, 2010, 11:28am   #15
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Re: $25 Million A Day

We know it's unusual because no other bank comes close to this, so either they have unfair advantage, they are simply better than anyone else or have been sensationally lucky (or all 3).
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Old May 11, 2010, 11:36am   #16
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Re: $25 Million A Day

i don't disagree that it's a cracking performance but when you make markets in illiquidi instruemtns you can charge great edge. and yes, if they were trading from pin bars or cuckoo clouds i suspect they wouldn't perform so well.

you pay the best you get the best. and despite the fact the world hates you people come to you first for a price.
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Old May 11, 2010, 12:08pm   #17
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Re: $25 Million A Day

Wouldn't it be awesome if Fred Goodwin ended up at Goldman, then they'd truly be public enemy no. 1.
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Old May 11, 2010, 12:08pm   #18
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Re: $25 Million A Day

As someone once said --- who is the man who has done the most for Barclays?

Answer - Fred Goodwin. He outbid them for Amro. Without him, Barclays would be on life support.
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Old May 11, 2010, 12:09pm   #19
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Re: $25 Million A Day

Dunno quite what all the amazement is about...

This is the first time ever that they have had that...

and we are only talking about one quarter and a firm that doesn't put on just a couple of trades / day but instead thousands, meaning you just have way more opportunities to end the day net profitable, and, more specificaly, they are also using an algo to frontrun orders which helps things along nicely...

But as far as their now again sizeable prop trading goes: a Uni buddy of mine, Uli, was one of the first to get hired there way back when they opened their new office in Frankfurts Messe Turm in the early nineties and he traded there there for almost ten years before moving on and, what can one say, all the usual loony conspiracy theorists apart, in their discretionary prop trading they don't do anything else anyone else isn't doing...

one of their best and most profitable currency traders was a gal called Mei Ping Yan who traded off of 5 min charts and went looking for elliot waves (Paul Tudor Jones likes those too btw9) and had a hit rate of below 50%, which she made up for with great risk / reward ratios...

You had everything there from guys and gals just looking at the order book to people trading off of patterns, using bollinger bands, moving averages as trade filters, etc etc.

They understand the obvious, that trading is just a probability game, no more, no less.

Grasp that and you can eventually move on and start a fund to make really big money.

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http://www.superfund.com/HP07/Superf...%20System.aspx
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Old May 11, 2010, 12:52pm   #20
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Re: $25 Million A Day

The HFT/flash orders/front-running is risk free. thats the reason they are not losing. There are losing days in prop trading, and in market making, no losing days in HFT. Specialists in the pits get sanctioned for frontrunning orders, but the only difference between them and firms that use HTF is the HFT firms have paid (ie: bribe) to have their computers co-located so the SEC turns a blind eye. If anyone still thinks the stock market is free market capitalism they are woefully misguided. The markets are rigged so certain firms can skim money off of everyone else essentially risk free.

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