pedro01
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I see a common theme in a lot of threads is that a lot of people think there is 'someone' on the other side of their trade taking the opposing view to them. That there are 'pro's out there that are actively taking you out of trades.
I'd say that this, in many occasions, is just not true. Many times, trades take place without thought to profit on that trade. The 'other side' might just not care at all what profit they make on the trade.
In FOREX, there are billions of dollars of transactions per day just because businesses around the world transact with each other. Even in my small business, we usually do about $110K in forex transations per month. This is simply wire transfers between banks. At no point, do we tell the senders to hold off because of the 200 EMA or tell them that the stochastics is looking oversold so better move quick.
In FUTURES, there is a lot of speculation but the futures are also used for hedging. Again, the hedge is not about making money on that transaction. In fact, if a hedge is placed and it proves that the hedge was not actually required, then a loss willl be made on it as it would with any insurance.
In STOCKS, you have Unit Investment Trusts - these ETFs are usually passive index trackers - like the SPY. The people running these funds have a goal to stay close to the underlying index (although rules for dividend accumulation mean they lag to some extent). They get paid a management fee, they don't care per transaction whether money is made or not. It's more complex than this and there are APs whose job it is to take arb opportunities to close the gap between ETF & underlying but basically blocks of shares in the underlying are brought/sold from time to time without thought to profit.
Mutual funds and actively managed ETFs are not like UITs and in their case, they do need to perform. Once again though - if they have a new influx of funds or if they have redemptions, then MUST transact. In the case of redemptions, they must get out that day, once again, a redemption transaction is not made with a thought to profit.
Statistical Arbitrage (OK - pair trading) buys 1 stock and shorts another. It does not matter if the buy rises and the short falls. In fact, the buy could fall and as long as the short falls further, they make a profite. Only the closing of the gap is that they need. So again, they don't care if one particular side makes a profit.
So - stop being paranoid. They might not be out to get you after all.
Pete
I see a common theme in a lot of threads is that a lot of people think there is 'someone' on the other side of their trade taking the opposing view to them. That there are 'pro's out there that are actively taking you out of trades.
I'd say that this, in many occasions, is just not true. Many times, trades take place without thought to profit on that trade. The 'other side' might just not care at all what profit they make on the trade.
In FOREX, there are billions of dollars of transactions per day just because businesses around the world transact with each other. Even in my small business, we usually do about $110K in forex transations per month. This is simply wire transfers between banks. At no point, do we tell the senders to hold off because of the 200 EMA or tell them that the stochastics is looking oversold so better move quick.
In FUTURES, there is a lot of speculation but the futures are also used for hedging. Again, the hedge is not about making money on that transaction. In fact, if a hedge is placed and it proves that the hedge was not actually required, then a loss willl be made on it as it would with any insurance.
In STOCKS, you have Unit Investment Trusts - these ETFs are usually passive index trackers - like the SPY. The people running these funds have a goal to stay close to the underlying index (although rules for dividend accumulation mean they lag to some extent). They get paid a management fee, they don't care per transaction whether money is made or not. It's more complex than this and there are APs whose job it is to take arb opportunities to close the gap between ETF & underlying but basically blocks of shares in the underlying are brought/sold from time to time without thought to profit.
Mutual funds and actively managed ETFs are not like UITs and in their case, they do need to perform. Once again though - if they have a new influx of funds or if they have redemptions, then MUST transact. In the case of redemptions, they must get out that day, once again, a redemption transaction is not made with a thought to profit.
Statistical Arbitrage (OK - pair trading) buys 1 stock and shorts another. It does not matter if the buy rises and the short falls. In fact, the buy could fall and as long as the short falls further, they make a profite. Only the closing of the gap is that they need. So again, they don't care if one particular side makes a profit.
So - stop being paranoid. They might not be out to get you after all.
Pete
but there are many reasons for competent traders to use S B.
