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What is the deal with BANKS as brokers...?


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What is the deal with BANKS as brokers...?

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  #1 (permalink)
Revan
Brisbane, Australia
 
 
Posts: 95 since Mar 2018
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I look at some of these banks offering trading services, huge round turn commissions, is that because they are usually based around investment and deemed "full service" brokers? the other thing is I always hear is that banks themselves trade, how so? what do they use? charts? DOM? tape? what are their usual strategies? I hear of it but have never seen it.. mysterious entities indeed, so to those in the know, tell us about banks, they create money from nothing, but for us (non members of the Illuminati) that's an illegal practice, so we do the next best thing - create money from "money" via the same interbank system that (they) create the money into via commercial bank loans.

That ended a little off topic and into my own philosophy but heck it can stay there..

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  #3 (permalink)
 SMCJB 
Legendary Market Wizard
Houston, TX
 
Experience: Advanced
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Broker: Primary Advantage Futures. Also ED&F and Tradestation
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Revan View Post
I look at some of these banks offering trading services, huge round turn commissions, is that because they are usually based around investment and deemed "full service" brokers? the other thing is I always hear is that banks themselves trade, how so? what do they use? charts? DOM? tape? what are their usual strategies? I hear of it but have never seen it.. mysterious entities indeed, so to those in the know, tell us about banks, they create money from nothing, but for us (non members of the Illuminati) that's an illegal practice, so we do the next best thing - create money from "money" via the same interbank system that (they) create the money into via commercial bank loans.

That ended a little off topic and into my own philosophy but heck it can stay there..

Most US Banks have both retail and commercial services. If your a retail trader and want to trade odd lots through them they will let you but they will charge you for it. If your a large commercial that uses the Bank for credit lines, IPO offerings etc etc, they might let your trade almost commission free as they make their money on the other fees. Many of the largest FCM's in the world are banks, because being an FCM involves dealing with very large amounts of money, and that's what they do. Some of the large trading houses will have multi hundred million, even billion dollar margin requirements. That's not something they are going to leave at a small shop. Additionally the FCM has to have risk capital which is calculated as a percentage of the margin of their customers, which again means for big accounts, you need to have large FCMs behind it.

Regrading why they trade - in most cases it's because they make a lot of money doing it. For banks, trading can be both customer and proprietary in nature. If I'm a bank who is the lead bank on a small production companies credit revolver/line - I might not only force that production company to hedge, to protect my loan - but I might also require them to hedge with me - and my trading group will probably make money on your hedge!

I see your in Australia. Did you know that MacQuarie have a large 100 person energy trading operation here in Houston?
Macquarie's World Part 2: American dream built on energy and infrastructure | afr.com

JP Morgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman & Morgan Stanley, the six largest banks in the US all also have similar energy trading groups, although Wells Fargo's is small in comparison to the other five. (Three of the six are also based out of Houston).

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  #4 (permalink)
Revan
Brisbane, Australia
 
 
Posts: 95 since Mar 2018
Thanks: 72 given, 26 received


SMCJB View Post
Most US Banks have both retail and commercial services. If your a retail trader and want to trade odd lots through them they will let you but they will charge you for it.

And for some reason charge more than your typical AMP, Optimus, or Gain capital. I wonder what the reason for this is.. do they charge more for a round turn or is it just my imagination..?


SMCJB View Post
I see your in Australia. Did you know that MacQuarie have a large 100 person energy trading operation here in Houston?

I've recently switched to Macquarie bank, I wasn't aware, "Macquarie has overtaken Wall Street banks such as Goldman Sachs and Morgan Stanley to probably become the largest player in commodity trading revenue globally" - impressive and also crazy that they have a meteorologist in there to predict the weather, we should of just become meteorologists.

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  #5 (permalink)
MarkB
Ontario, Canada
 
 
Posts: 136 since Jan 2014
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Revan View Post
I look at some of these banks offering trading services, huge round turn commissions, is that because they are usually based around investment and deemed "full service" brokers? the other thing is I always hear is that banks themselves trade, how so? what do they use? charts? DOM? tape? what are their usual strategies? I hear of it but have never seen it.. mysterious entities indeed, so to those in the know, tell us about banks, they create money from nothing, but for us (non members of the Illuminati) that's an illegal practice, so we do the next best thing - create money from "money" via the same interbank system that (they) create the money into via commercial bank loans.

That ended a little off topic and into my own philosophy but heck it can stay there..

Banks do not create money from nothing. Only a central bank can do that. All other banks 'create' money through legitimate deposits via fractional reserve banking.

Trading desks at a bank are not using the dom to scalp a few ticks here and there. They are the elephants in a market with hundreds of millions in assets, and in some cases they are making markets; as such, they move large size using conventional trading techniques based on short and long term fundamental economic views.

I read before that most bank trading desks actually, on balance, lose money but I'd have to rummage around to find that article.

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  #6 (permalink)
Revan
Brisbane, Australia
 
 
Posts: 95 since Mar 2018
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MarkB View Post
Banks do not create money from nothing. Only a central bank can do that. All other banks 'create' money through legitimate deposits via fractional reserve banking.

Trading desks at a bank are not using the dom to scalp a few ticks here and there. They are the elephants in a market with hundreds of millions in assets, and in some cases they are making markets; as such, they move large size using conventional trading techniques based on short and long term fundamental economic views.

I read before that most bank trading desks actually, on balance, lose money but I'd have to rummage around to find that article.

I should try to arrange a visit the trading floor, it's still quite mysterious.

I don't think it works through fractional reserve lending anymore here is why I say this, you're saying they are not creating money to the loanee but giving them other peoples money who have it "stored" in the bank and aren't using it however according to my research banks aren't doing this today, they are creating the money into the economy for the loanee and charging interest on it, their is interest owed on every dollar in the economy, the Australian system is similar in that fashion to the US system, I have an email response from the reserve bank of Australia stating this..

"The majority of money in the modern economy is created by commercial banks making loans, however the amount of money created in the economy ultimately depends on the monetary policy of the central bank, i.e. the Reserve Bank of Australia."

I've noted various sources claiming the privately owned "federal" reserve system operates in a similar way.

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  #7 (permalink)
 SMCJB 
Legendary Market Wizard
Houston, TX
 
Experience: Advanced
Platform: Trading Technologies
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
 
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Revan View Post
And for some reason charge more than your typical AMP, Optimus, or Gain capital. I wonder what the reason for this is.. do they charge more for a round turn or is it just my imagination..?

Probably because Banks focus on individual clients is Wealth Management and not Trading.

Revan View Post
I've recently switched to Macquarie bank, I wasn't aware, "Macquarie has overtaken Wall Street banks such as Goldman Sachs and Morgan Stanley to probably become the largest player in commodity trading revenue globally" - impressive and also crazy that they have a meteorologist in there to predict the weather, we should of just become meteorologists.

Morgan & Goldman, who were some of the largest players in the energy space, significantly scaled back their operations due to Dodd Frank. That opened the door to other players, and Macquarie Energy, not being a US Bank but a subsid of an Australian Bank benefited heavily from that with their purchase of the Constellation Energy Trading Group.

With regards to Weather, depending on the size of the desk, and whether they are supplying any full requirements power, most groups will have two to five meteorologists on staff. Not only so that they have their own in house weather analysis, but also because there is a traded weather derivatives market. (Randall on the hit TV show "This is Us" is a weather derivatives trader!). Also meteorologists are cheap compared to top traders.


MarkB View Post
Trading desks at a bank are not using the dom to scalp a few ticks here and there. They are the elephants in a market with hundreds of millions in assets, and in some cases they are making markets; as such, they move large size using conventional trading techniques based on short and long term fundamental economic views.

I read before that most bank trading desks actually, on balance, lose money but I'd have to rummage around to find that article.

I guess it depends which banks, and in which arena's, but Goldman, Morgan etc make Billions. Goldmans results last week included
Revenue from equities trading surged 38 percent to $2.31 billion, trouncing the $1.92 billion consensus analyst estimate from FactSet.
and
The bank reported fixed income, currencies, and commodities trading revenues of $2.07 billion, which was slightly below the $2.13 billion consensus analyst estimate from FactSet.

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  #8 (permalink)
MarkB
Ontario, Canada
 
 
Posts: 136 since Jan 2014
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Revan View Post
I should try to arrange a visit the trading floor, it's still quite mysterious.

I don't think it works through fractional reserve lending anymore here is why I say this, you're saying they are not creating money to the loanee but giving them other peoples money who have it "stored" in the bank and aren't using it however according to my research banks aren't doing this today, they are creating the money into the economy for the loanee and charging interest on it, their is interest owed on every dollar in the economy, the Australian system is similar in that fashion to the US system, I have an email response from the reserve bank of Australia stating this..

"The majority of money in the modern economy is created by commercial banks making loans, however the amount of money created in the economy ultimately depends on the monetary policy of the central bank, i.e. the Reserve Bank of Australia."

I've noted various sources claiming the privately owned "federal" reserve system operates in a similar way.

No, I'm saying that in terms of creating money out of nothing, which is what you originally asserted via your illuminati comment, only a central bank can do that. A commercial bank can certainly add to the money supply by lending money at interest that it has received as deposits less reserves but these loans are based on the premise of a deposit... not on nothing.

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  #9 (permalink)
Revan
Brisbane, Australia
 
 
Posts: 95 since Mar 2018
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MarkB View Post
No, I'm saying that in terms of creating money out of nothing, which is what you originally asserted via your illuminati comment, only a central bank can do that. A commercial bank can certainly add to the money supply by lending money at interest that it has received as deposits less reserves but these loans are based on the premise of a deposit... not on nothing.

You are indeed correct Sir. Let's say the fractional reserve ratio is %10, I have $100 cash and because of that I will now create $1000 on my printing press and give it out to people via loans which they must pay back including interest, that is what a commercial bank does, our "differeces" are merely you call it, money created from a "deposit" and I call it money created from "nothing" - what if I forged $1000 right now and gave it to your hard working family member and they had to pay me back via their wage salary while I simply printed it? would you still call it money created from a deposit then? or would you get pissed and say "This bloody bastard is creating money from nothing!" I know what I would be saying, either way you are right so that's settled.

The thing I want to know is if the central banks govern the commercial banks I bet it owns them too, I bet if you try to start a commercial bank and do (this) you wouldn't be allowed to because "they" do it. CEO's are not owners, Shareholders are not owners, Dividend recievers are not owners, nobody knows who owns the banks, nobody knows who owns the federal reserve but notice how their are various layers as previously stated to make people think they know who owns it, "nobody owns it" or "shareholders own it" or "a democratic goverment own it" or "it's a Federal institution" (which is isn't.) etc.

Anyway, that said it sure is a beautiful day outside.

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  #10 (permalink)
MarkB
Ontario, Canada
 
 
Posts: 136 since Jan 2014
Thanks: 0 given, 64 received



Revan View Post
You are indeed correct Sir. Let's say the fractional reserve ratio is %10, I have $100 cash and because of that I will now create $1000 on my printing press and give it out to people via loans which they must pay back including interest, that is what a commercial bank does, our "differeces" are merely you call it, money created from a "deposit" and I call it money created from "nothing" - what if I forged $1000 right now and gave it to your hard working family member and they had to pay me back via their wage salary while I simply printed it? would you still call it money created from a deposit then? or would you get pissed and say "This bloody bastard is creating money from nothing!" I know what I would be saying, either way you are right so that's settled.

The thing I want to know is if the central banks govern the commercial banks I bet it owns them too, I bet if you try to start a commercial bank and do (this) you wouldn't be allowed to because "they" do it. CEO's are not owners, Shareholders are not owners, Dividend recievers are not owners, nobody knows who owns the banks, nobody knows who owns the federal reserve but notice how their are various layers as previously stated to make people think they know who owns it, "nobody owns it" or "shareholders own it" or "a democratic goverment own it" or "it's a Federal institution" (which is isn't.) etc.

Anyway, that said it sure is a beautiful day outside.

Sadly, your description of how our banking system functions is still incorrect but that is just an opportunity for you to keep learning.

I'm confused by your rant about central banks. Anyone can access their websites and peruse basically everything they've done, are doing, and are going to do, as they're fairly accommodative. Technically they are an arm of the Federal government although by necessity they have to be independent lest politicians start messing around with monetary policy; however, an act of congress could veto the existence of a central bank altogether.

In any event, if you have a desire to learn, then educate yourself. Your conspiracy theories are not an accurate reflection of reality.

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  #11 (permalink)
Revan
Brisbane, Australia
 
 
Posts: 95 since Mar 2018
Thanks: 72 given, 26 received


MarkB View Post
Sadly, your description of how our banking system functions is still incorrect but that is just an opportunity for you to keep learning.

I'm confused by your rant about central banks. Anyone can access their websites and peruse basically everything they've done, are doing, and are going to do, as they're fairly accommodative. Technically they are an arm of the Federal government although by necessity they have to be independent lest politicians start messing around with monetary policy; however, an act of congress could veto the existence of a central bank altogether.

In any event, if you have a desire to learn, then educate yourself. Your conspiracy theories are not an accurate reflection of reality.

Well what exactly am I getting wrong? I'm all ears..

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