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Jun 09

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Beers with Merrill Lynch FX Traders

Managed to squeeze in 30pips in the afternoon session 10pips short on GBPUSD and 20pips on EURJPY, would have been more on EURJPY but was off to London to meet up with some traders from Bank of America (ex Merrill Lynch) so had to cut my trade short when T1 was hit.

This meeting was put together by a friend that works in The City and happens to know a couple of guys that trade FX for the bank.  They were almost your stereotypical traders…young, cocky and from Essex! One guy trades mainly Aussie, Kiwi and Loonie the other is mainly a Cable guy.  So what did I learn from this encounter ?

1) They know of lots of ex-traders from banking institutions that try to go it alone and fail. A couple of reasons for this they say Once the trader is on his own and outside of the information loop and say Bloomberg Chat they are lost. They don’t have the knowledge of where the big orders and what the noise is on the wires. They lose their touch. Second is the camaraderie. Both guys love the floor chat, it keeps them focussed and on their game and they get the support. Without that trading room sentiment the ex-trader struggles. Both guys said they couldn’t trade alone and would almost definitely lose loads.

2) Fundamental or Technical based ? These guys probably are a bit of both or neither. Chart analysis certainly doesn’t feature much in their trading plan. One guy does look at hourly charts, the lowest timeframe he’d look at. Anything else he says is just noise. Both guys trade on the news they are hearing on the wires, where and when orders are likely to be placed and play off these. I got the impression that they take quite long term views with regards direction and play on that when making orders. e.g. At the moment they are short on everything NZD. Anytime the Kiwi bounces up they are selling hard right now….they say expect both the AUD and NZD to tank sometime soon.

3)Working Hours…….they work a full day. 06:30 -> 17:00 most days and not much time in-between for food. One guy said that he can make his money for the bank and himself in the morning but ends up giving a lot back in the afternoon. He says that he would love to close his book at lunch but he has customer orders he just has to fill in the afternoon and for whatever reason can’t pull the same profits on those than he can in the morning.

4)Bloomberg Chat for them is their lifeline. It’s the traffic on the chatrooms in Bloomberg Chat that is pivotal in helping make their trading decisions. At $1500/mo a little out of my league!

5)Most trades are in and out within the day, about 20-30% of their trades they leave overnight.

6)They like to take out the Asian stops in the morning – easy money! The Asian crowd love to use stops apparently. These guys rarely put stops on the system so everyone can see.

On the train home with a  fuzzy head I wish I had asked more about more……but there you go.

This morning, a little hungover……not the best of days to trade. It will have to be a “jump out the screen setup” for me to take one this morning.

Jimmy

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Permanent link to this article: http://intradayforextrading.co.uk/2010/06/09/beers-with-merrill-lynch-fx-traders/

2 comments

  1. FXTraderPaul

    Good post there Jimmy.

    It’s true that instituional traders tend to to struggle when they decide to go out on their own.

    You can also see why we use the Fox In The Box to be able to take advantage of bank traders moving price around early doors between S&R levels to clear out stops.
    😉

    FXTrader Paul

  2. Black

    Great experience there Jimmy, thanks a lot for sharing.

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