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Institutional Traders’ Advantages



If you’re unfamiliar with institutional traders, they are traders that handle large funds for financial institutions (private and public) and organizations. They frequently manage amounts ranging from $100,000 to millions of dollars. To learn more click

With that in mind, I’d like to discuss some of the many benefits institutional traders have over regular traders (retail traders are small-time traders that trade for themselves). I’m comfortable sharing this because I’ve previously worked as an institutional trader.

Okay, one of the most significant advantages of institutional traders is that they receive better pip spreads and rates than retail traders, which is unsurprising given their larger trade sizes and volumes. So what do you think of a one pip spread on GBPUSD?

Do not overlook the importance of the pip spread. One pip less for the broker equals one pip more for you.

Short selling was outlawed in Europe’s bond and currency markets, and most recently, “No High-Frequency Computer Trading!” Europe and Asia were struck particularly hard, and the US markets hadn’t even started, but holy crap, the volume of trade in the US touched a one-day record level inside the first hour, and it was all over the place. Throughout the day, the market slammed the brakes one by one. Surprisingly, Mexico City had a 7.5 magnitude earthquake barely 35 miles distant at 10 a.m. local time on the same day. Was this the final chapter? Or was it just a front for computer trading algorithms to profit trillions by crashing the market?

There had been debate in the US about regulating or outright outlawing high-frequency trading, and the Franks-Dodds Bill, which had passed, actually protected the “too big to fail banks,” which were all profiting from algorithmic trading rather than lending to small businesses.

Another benefit institutional traders have is that their broker will often inform them of the location of the majority of the orders in their system. This provides a significant advantage since it reveals where the major money is betting.

In my opinion, institutional traders have a few other advantages that aren’t as significant, such as speedier newsfeeds as compared to regular traders.

With all of this in mind, it’s easy to understand how institutional traders have a significant advantage over regular dealers. However, if you don’t know how to trade profitably in the first place, having an institutional trading account won’t benefit you nearly as much.

The US Congress returned from its Christmas hiatus, resolving the flash-crash, high-frequency problem once and for all. Still, the banking lobby had already profited hundreds of billions on the downside and upside of all that volatility. So was there a way to avoid this from happening in the future? According to reports, a think tank proposed employing holographic imagery, supercomputers, and the new Intel processor running Oracle software, as well as IBM’s new spectrum imaging, to monitor every single worldwide transaction in real time.


The device was about the size of a ping-pong table and displayed money flows in different colors across a map of the United States. The operator may isolate the system for currency exchanges in any of the main currencies and monitor it in real time by clicking on particular nations or all of them at once. The system would be built with the aid of some of the same high-frequency trading software programmers, and it could be managed in the same way that the Federal Aviation Administration could regulate airline traffic by monitoring each flight as it took place with

The system was clever, and it worked; not only could it be used to track money movements, but it could also be used to monitor our electricity grid, observe and anticipate the weather, and even track the spread of influenza during flu season. Moreover, it was a system that used net-centric military computational theory X’s ten to the tenth power to monitor all of civilization’s flows.

There was only one problem: the system, with terminals, would cost around $30 million. In addition, the terminals and systems would be redundant. When the markets were not open, the supercomputers would be employed for something else, such as monitoring all Internet traffic flowing into the US from key data centers to avoid cyber assaults from rogue states.

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1 Comment

1 Comment

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