Retail, institutional & brokers, what a chaos

Here we are going to talk about why exchanges platform are not always a good friend.

To understand that point, we need to understand how the exchange ecosystem works.

There’s few actor on the markets :

– Retail traders (most probably like you and me)

– Institutional traders (Hedge fund and big capital or “smart money”

– Broker (on CFD or other derivative market, who will play against traders)

All these different party, pushing the market one way or another, expect profitable moves, profit at the end of the trade.

But not everybody can win at the same time, it’s pure logic, when some people earn, some others lose.

What if the platform you are trading on, is actually hiring a group of professional traders, with loads of funds and tools to play with the market noise and actually systematically try to trap retail traders.
They have 0% fee on trades and can buy sell to themselves and direct market until someone is pushing harder the other way.

What if the platform offers you an interface that’s got it’s own limitation in therm of performance for something like high frequency trading or other Quant trading strategy.

If the platform itself doesn’t allow you to compete with their system, it’s just like in a casino, the perfect analogy, all system are calculated and anticipated to have more chance to win against you who take a bet.

Here it’s the same logic.

A charming and well decorated platform to seduce and comfort the trader’s feeling, so he actually trade on this platform and play against the system.
Once you feel comfortable you will feel confident to place more capital money into position and start a real trading activity.
But once again, platform isn’t really here to help you to win, it’s just not their plan and expectation, otherwise how do you think they earn so much capital.

Statistic study said that 90% of retail day traders will lose money in the long term. Market isn’t friendly, and there’s no free money, you have to grab it on your own.

Build your own trading system that can compete with platform, with tools you have. If you can trade high-frequency, then don’t try to, and I know that most of crypto platform won’t allow it for retail traders. They can block the API request system to a bigger time frame like 1 second, and that makes most of high- frequency trading obsolete.

Better focus on bigger time frame and be more patient with trades.

There’s always new opportunity, just matter of time.

Remember the broker always bet against the biggest side of the Long/Short balance. Their aim isn’t to make the most win, but the contrary, to make the most lose.

I think it’s important to be aware of that part of context, that charming place isn’t always that friendly in the end.

Be careful, learn and train with small position size, test the platform interface, get familiar with it so there won’t be no typo costly mistakes or other time waste because you are not used to the “move” process.

Doubt shouldn’t be part of the process, that would mean you are not confident enough and should train more to control that part of the process.

Sometimes the home made system ends up like this ^^


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