Ecco le DIFFERENZE tra il trading istituzionale ed il trading RETAIL

Summary

The speaker discusses the differences between institutional and retail trading, highlighting the challenges faced by institutional traders due to liquidity issues when managing large sums of money. He shares personal experiences, including an offer to work for a significant British fund, and emphasizes the importance of understanding market mechanics and the potential risks involved in trading. The speaker also touches on the ignorance of the general public about financial markets and the pressures and lifestyle associated with a trading career.

Takeaways

• 📈 The main difference between institutional and retail trading is highlighted, with institutional trading dealing with larger volumes and facing liquidity issues, while retail trading does not have such problems.
• 🗽 The speaker shares an anecdote about the 'Charging Bull' statue in Wall Street, emphasizing the importance of fact-checking and using reliable sources like Wikipedia for information.
• 🌐 The challenges faced by institutional traders, such as liquidity and the need for counter-parties in transactions, are discussed, which are not concerns for retail traders with smaller accounts.
• 💡 The concept of market liquidity is explained, emphasizing that even large players can face difficulties if there's no one to buy or sell on the other side of the transaction.
• 📊 The importance of order placement and not revealing one's trading intentions to the market is stressed, as institutional traders often break up large orders to avoid market impact.
• 🚀 High-frequency trading and algorithmic trading are mentioned as areas where retail traders cannot compete due to lack of access to the same level of information and execution speed.
• 💰 The speaker reflects on the potential earnings in retail trading, stating that it is possible to achieve significant earnings even with smaller accounts, unlike in institutional trading where performance is often capped.
• 🏦 The conflict of interest within financial institutions is highlighted, especially between proprietary trading and client trading departments.
• 🤝 The speaker emphasizes the value of first-hand experience and direct interaction with market professionals to gain a deeper understanding of financial markets.
• 🚫 The script warns against the dangers of speculation and the potential for financial ruin, especially for those working in high-stress environments within financial institutions.
• 🌍 The global nature of financial markets is acknowledged, with the speaker mentioning the presence of various criminal elements even in major financial centers like London and Wall Street.

Q & A

What is the main difference between institutional trading and retail trading mentioned in the script?

The main difference mentioned is that institutional trading deals with large amounts of capital and liquidity issues, whereas retail trading does not face such problems as the accounts are relatively small and do not impact the market significantly.

How does the speaker describe the perception of the 'bull' statue on Wall Street?

The speaker humorously corrects the common misconception by stating that the 'bull' statue on Wall Street was created by a Sicilian artist, Arturo Di Modica, and not by the American financial industry itself.

What is the speaker's view on the importance of having a large amount of capital in retail trading?

The speaker argues that having a large amount of capital is not as crucial in retail trading because even with a significant account balance, it is still a small fraction compared to institutional trading and does not grant the same level of market influence.

What is the speaker's opinion on the role of information in institutional trading?

The speaker believes that institutional trading often relies on having access to certain information and the speed of execution, which retail traders do not have access to, making it a different game in terms of trading strategies and information advantage.

What is the speaker's stance on the use of algorithms and high-frequency trading in institutional trading?

The speaker acknowledges the existence of high-frequency trading algorithms, often referred to as 'machines,' which execute millions of operations and are a part of the institutional trading landscape due to their ability to generate profits, albeit relatively low compared to retail trading.

How does the speaker describe the challenges faced by institutional traders in terms of market liquidity?

The speaker explains that institutional traders face challenges with market liquidity, especially when dealing with large volumes of trades. They have to be careful not to reveal their intentions to the market, which can lead to issues like being left with unsold assets if there are no buyers.

What is the speaker's view on the performance of institutional funds?

The speaker suggests that the performance of institutional funds is often not as impressive as one might think. He mentions that many funds aim to minimize volatility and risk, and their real gains often come from fixed commissions rather than high-performance trading.

What is the speaker's advice for retail traders regarding the information they have access to?

The speaker advises retail traders not to rely solely on the information available to them through news and public sources, as this is not the same as having direct access to inside information and the real-time market pulse. He emphasizes the importance of understanding the difference between retail and institutional trading environments.

How does the speaker describe the potential risks and downsides of working in institutional trading?

The speaker mentions that working in institutional trading can come with significant risks, including high pressure, substance abuse issues, and even the possibility of ruining one's life. He also talks about the ethical dilemmas and conflicts of interest that can arise within financial institutions.

What is the speaker's perspective on the freedom and flexibility in retail trading?

The speaker highlights that retail traders have the freedom to make their own decisions and are not bound by the same structured mechanisms and risk management constraints that institutional traders face. This freedom allows retail traders to pursue different strategies and opportunities.

Why does the speaker emphasize the importance of following Real Trading Group?

The speaker emphasizes the importance of following Real Trading Group because they provide accurate and reliable information about trading. They offer insights and knowledge about the trading field and help traders make informed decisions.