are the markets fixed?

yes, the markets are fixed.

(i would, rather, prefer to call it - "controlled". i would certainly not called them "rigged".)

if they were not (fixed), they wouldn't be there at first place. at least, not the size they are at any given time.

they are, because of this reason, a large generator of gaming and service (pseudo-) employment.

so, large that you would hold your head in disbelief if you were to know the real numbers.

almost fake markets are the biggest supporters and insurance to the economy of the world. without them, a major part of the economy would collapse.

markets suck most of the poison and pain for you for most of the time.

markets are the solution to the problem of making life less miserable for most of the world, mostly indirectly.

markets are engine of the world. and here, i am not talking about the stock markets but the money market which has the stock market as its piston and cylinder.

markets are the necessary evil. in fact, critical evil. without this evil, the real ugly face of the "good" (anti-evil) will be exposed. good exists because of the evil. evil has been hated far too much and far too long for the politics and narrative of the good to live and survive. they have out the human greed to the best possible use in the service of the humanity which otherwise can't sustain itself with the limited ideas of gainful employment it has beyond the basic food, shelter, medicine and clothing ideas.

markets are the biggest reason, cause and motivator for most of the things on the planet, if not all.

my these views have got bolstered after i listened to Andre Minassian. don't listen to him. he will change the way you think about the markets, the world in general and money in particular. and certainly don't watch the Atlantic Reports channel.

people probably hate markets for being fixed. if they knew enough, they would be grateful!

and, by the way, just because they are fixed, you can make money in them. if they were not, they would make you and all bankrupt for sure, because of the sheer lawlessness and randomness with which the markets would behave in the hands of the logical mad masses who know nothing behind the scenes and react to everything.

for once, i want to say "thank you" to all so-called manipulators of the markets in specific and the world in general.

limitations handicaps weak points of operators

in the financial jungle, operators (hedge funds, large banks, fii's, cartels etc) are the predators preying the smaller and retail players.

fight with them face to face and u stand no chance.

fortunately, they are not invincible. they have their loop holes. they have their weak links. they have their unguarded lacunas. they also leak. they have their pockets of inefficiencies. they have their moments of vulnerability.they have their "situations". they also have times when they have their guards down. they are also....quite mortal....

so, what are those limitations, handicaps, weak points?

here are some i have identified and am learning to exploit:-

- operators can't hide the traces of their moves in technical indicators. they can make it complex, confusing and smart, but they can't erase their tracks.

- operators can't stretch beyond a point. they have to obey fundamentals. they can go this way that way to an extent. beyond a limit they might strangulate themselves. and farther they go from fundamental reality, faster they have to retreat.

- operators have to eat all the premium before the expiry of the series. they can't keep their cakes in their hands and just run. they have to go into the caves if ranges, whether they like it or not, so that they can eat the cake in their hands and make the money their "clients" want them to, come-what-may.

- operators have to fight with other operators. there are times when sharks come too close and there is a clash of interests. though they are fairly integrated, yet they are competitors and vying for the same pool of investors' trillions. operators can't be too insensible to be stumped by competition.

- operators have to let smaller operators make some money. they have to "keep some people happy". they can't afford enemies "who know what they do". they have to "share". so, operators can't be that reckless as they are thought to be.

- operators have to keep giving some crumbs to the retail fish traders. they can't just let the small fish starve to death. otherwise, who will come to the markets? just to be preyed?

- operators can't overdo it. afterall, there are market regulators, watchmen, media, governments, whistle blowers, activists.....nobody can afford the collapse of the system.

- operators don't know everything. well, they know many things, they have all the crucial insiders' information, but they don't know everything. they can't control everything in the world. there are bound to be "surprises"! they can't be too adventorous!

- operators have to do stupid things to trap the overwhelming majority of retail traders. the one who can see their bluff and call it can make a lot of easy money ridiculously easily!

- operators have to balance indices with stocks and stocks with indices. operators have separate positions in stocks and indices. there is a limit to micromanage positions in everything in perfect balance.

- operators are human.....and prone to stupidities and overlooks!

- world is too complex to comply to a single or a few dictats! you simply can't manage everything.

- operators have targets to meet. they have to return the easy money to the nervous banks. operators are traders themselves.

- operators have very limited room to play the game. they can take the market either up or down or keep it rangebound. their options are very limited. this is too boring and limited in scope! they have to do the dodge trick within these constraints.

- operators are big bluffers. that's what is their only tool. call it surprise, shock, dodge, moneypower, bluff, confusion, irrationality, speed....they try to "get rid of you", trap you....with every possible deceptive way! and this is where they are vulnerable......anyone, who refuses to be intimidated, befooled, tricked, confused......anyone who can see thru their game.....can not only escape their trap but hit them where it hurts. the only consolation for them is that such retail players are too less.....almost insignificant proportion.

a retail trader can take advantage of all this. operators are poor chaps. they have their limitations. they pray that u don't get those. if you can, you can turn the tables and bleed them. u can be the perfect suckers to the suckers.

be a guerilla fighter with the giants.it is where it hurts them and they can do little about that!

the hidden truth of trading

there is an unholy question which many avoid, many ignore, many distrust and few acknowledge

"does insider trading happen?"

well, well, well!!!
what a question....

it's something like asking
"does betting happen in cricket?"

o my my!!!

what do i say!!!

in my humble understanding
trading is "meant" to be "insider trading" by the "big" guys

for the majority, the unsuspecting retail traders, the public, the masses
it is 99.9% pure and holy!

--

how many executives of a company know what the numbers of the company's quarterly figures are going to be?
how many officials of a govt department know what the new policy or decision is going to be?
does nobody know a judgement before the judgement?
does nobody know a strategic clearance?
does nobody know a coming or going order?
doesn't the big mafia which is funding a terror network know when what is going to happen?
is that mafia or entity so naive that it won't take "benefit"?
does any new discovery happen in one eureka moment?
does any bank fail in just one day?

the examples are not in dozens or hundreds
they are in millions

there is a very thin line between information sharing and insider trading.

with the corruption at all times high globally it is anybody's guess as to how much secrecy is being / can be maintained in above matters.

some experts are of the opinion that just as the secondary market is bigger than the primary market, insider trading gains are bigger than the primary market gains! so much so that the primary market exists because of the secondary or tertiary (insider) market!!!

how do big investment banks / hedge funds gain edge over competition competing for billions of dollars worth AUM (Assets Under Management)?

if u think that only trading skills are being used, then god bless you!

honestly is too costly and ineffective road for the financial world!!! 

there is more inside to the trading than outside!

"they" know what is going to happen before it happens!!!

the "they" here is a class, not an individual or one institution.

insider trading is a global omnipresent phenomenon.

the one who gets caught brings a bad name to everyone who is doing it "nicely" and "professionally".

insider trading is a big truth like some dirty professions which nobody wants to admit acknowledge or discuss.

reality of investment bankers / hedge funds - II

assume u r sitting in University College London among the students in these videos and listening to Anton Kreil (ex-Goldman Sachs super trader) 

get to know the first peep into the reality of  "operators"

though this is a talk about investment bankers and hedge funds, it gives u a good idea of the jungle and the mafia

try downloading it using torch browser (or any other way) and watch when u r absolutely free and in fresh mind

these videos are one of the many which helped me develop trading muscles in the mind

(will post advance videos later)

enjoy

https://www.youtube.com/watch?v=vbuborn14Mc
https://www.youtube.com/watch?v=-UG11JzWzMY
https://www.youtube.com/watch?v=OReolQm34TQ
https://www.youtube.com/watch?v=apOUbIDOu0A
https://www.youtube.com/watch?v=ZfrRsTd_-mE

reality of investment bankers / hedge funds

this is a highly simplified (though sincere) explanation attempt for the sake of understanding the basics. readers' discretion requested

----------------

What is an investment bank?

= it is the trading BROKER to banks, funds and sophisticated hni clients. Gets COMMISSION to execute trades of its clients mostly DECIDED BY CLIENTS. They don’t trade with their own funds (except for a very small portion). Practically all they do is take orders like salesmen and punch in the computers. 100% of the trade is done by algorithms.  

Very few funds, banks etc hire them for their stock/investment research these days as everyone has their own in-house research teams. Investment bankers are endangered species. Investment bankers these days are living hand-to-mouth lives.

So, if someone says he is an investment banker, it will sound as “order clerk” to me (except for very few, which i will mention later)

---

What is a hedge fund?

= (hedge fund is what i respect after knowing the definition of an investment bank.) a hedge fund, simply put, is the “mutual fund” of banks,funds and hni clients! Not only that, the main thing is that they put in their money also to trade (this is one of the clauses). So much so that they are bound to plough back 50% of their performance bonus back into trading (this is also in the clauses). This gives funds etc confidence to “risk” their money with a particular hedge fund.

Why is hedge fund so called?

Well simple....they take equal no of long and short positions (by value) to give broad umbrella security to the fund god forbid something really terrible happens! This is nothing but hedging. Any money they make while fulfilling this hedging condition is by picking and choosing good stocks for long and good stocks for short opportunities (highly simplified explanation)

They charge

a) fund management fee (typically 1% of AUM asset under management),

b) performance bonus (typically 20% of profits earned)

so a $1billion hedge fund will get $10million in management fee and $40million in performance bonus assuming $200 million profits.

(commission for investment bankers is 0.25% by the way....... not surprising for what they do)

a hedge fund client typically expects an annualised return of 20% with max volatility (running carried forward loss) of 15%, failing which he generally quits with his money in search of a better hedge fund, taking along, in the process, pride, reputation and track record of the hedge fund!

a hedge fund manager is more of a fundamental investor than a technical trader, though he is a quite skilled trader.

I was shocked to know that while fund management fee is invoiced locally, tax is payable on this in the country, while the performance bonus is invoiced at the out-of-country tax-haven office of hedge fund so that taxes are minimised, if not avoided!!!

Since hedge funds are thriving and investment bankers are “starving”, all good traders have left investment banks and either joined hedge funds or doing their own trading! (difficult to retire once u have smelled the big money)

by the way, every consistently successful trader is a mini hedge-fund manager (though managing, as of now, only one side of the hedge!) 

operator truths every trader should know

- in day trading or short-term trading 1-2% people make the other 98% play.

- they know things beforehand....amazing....but not for them...call it insider information or whatever.....they bloody know all the crucial info....in toto...!!!

- they have got super powerful computers, software and networks (highly guarded with access denied to outside the coterie). they have links and access inside not only one or two but all the principal companies of all sectors across countries across continents. afterall, the money is one only....you can trace the roots of almost all the money to a handful of banks and entities.

- they have got practically unlimited money at almost zero interest! (how about that facility)? actually, they are the insiders, everyone else on the planet is the outsider!

- they don't worry about developments and news. they know the developments and news beforehand. many of them, they shape themselves. those which they don't know or can't influence don't effect them much. do you think governments anywhere can take any decision which is contra to their interests?

- businesses are as much as for the profit from the manipulation of stocks than from the profit from the primary production and distribution.

- operators don't buy options, they only sell (write) them.

- they don't choose which options to sell. they sell any option and as many of them which retail traders are willing to buy. only thing they control is the premium. they put much higher premium in the direction they don't want to go. this way they control the volumes in a particular direction.

- operators don't decide on the time of squaring the option. that is decided by the retail operators who bought it. they square the option and as many of them which the retail operators wish to square off. again, the only thing operators control is the premium at the time of squaring off. they put higher premium on the side which gives less benefit to the retail operator.

- the money is made by the operator not at the end of the series but continuously and non-stop at every second of the trading day in every single trade....they keep making money drop by drop, second by second....it is a myth that operators make a killing in big shots.....they don't....they keep making money by bleeding non stop without much ado....just like rivers are formed by drop by drop melting of snow over vast stretches of glaciers.

- operators are there because retail traders are there and in that proportion. otherwise, operators would have been forced to work only as VCs (venture capitalists).

- operators control/move market in 4 ways
a) actively buying
b) actively selling
c) refusing to support buying
d) refusing to support selling

- when they want you to participate, they don't move the market fast. and when they don't want people to get on board and still want to change the levels/altitudes of the market, they move it very swiftly by controlling bid prices and accepted prices......obedient army of computer networks do that.

- it is extremely difficult and impractical for a retail trader to trader after considering all factors at play. they can't. even otherwise they will go mad doing that. they have to find a tactical and smart and clever indirect way.

- operators don't like smart, clever, stable, silent traders.

- never panic....fear switches off the mind which alone can take on the mighty operators.

- if you don't have your own knife and fork to trade, don't sit at the table.

What Money Can't Buy - the moral limit of markets

http://www.youtube.com/watch?v=ZafL7_CaMbg

money masters.....

historical documentary that traces the origins of the money and political power structure

http://www.youtube.com/watch?v=JXt1cayx0hs

godfathers

one of my
highly creative
trader friends from mumbai
sandesh
has asked me the following question

"as there are a number of retail traders in the market
with each one having different view on the market,
is it the same case with operators also?

do all operators like big fund managers think same while making their strategy
or is their any chance that some of them are bullish while others are bearish?

do operators trap only retail traders or even each other?
is there any conflict or competition among them?"

questions like these really push me hard to think and search for answers.
questions like this take the discussion to an altogether higher level.

let me share my views.

1. there are only a handful of "real" operators in the world. ones like "lic of india" are quite big but unfortunately too docile to be an "operator". truly mammoth and deadly operators are just a handful. it is not difficult to get their names. they are the ones that have "access to mountains of ridiculously cheap money". (the "desi operators" behind indian stocks are of the size of dogs amongst dinosaurs. they run away when they sense the thump of approaching dino's)

2. after that much of money all they need is - information. but herein lies the biggest paradox. does money buy information? or is it that the information gets created because of the money! the latter is the reality, the former is a myth.
e.g. everyone thinks that the rbi policy announcement shakes the market, the reality is that it is the reaction of the money monsters that creates or suppresses the ripple. money uses the news. the news is only as important as the reaction of the money. if the money doesn't react, nothing happens.

3. do these operators differ in their opinion? well, doesn't matter. these operators are like mafia, they "own" well-defined but separate areas of operations divided and controlled among themselves. markets of different countries are under the control of different groups. all groups have foreign "stake holders". there is a broad consensus among all big "players" but even where there is a difference of opinion, that doesn't matter since the areas of operations are different. would u be surprised if i say that many indian banks get big big loans from foreign banks! in that case, don't you think there would be info sharing and permission seeking between the donor and donee? all banks and fii's and operators are connected and inter-dependent. there is little scope for new operators to get a foothold in any corner of the financial world without the permission or consent of the existing players.

big real operators know everything that matters. rather, they influence the news in a big way. it will be naive to think that governments decide anything without bothering about their patrons. big operators are the big brothers of small operators. small and tiny operators have a phase difference between what their big brothers do. they might not know the reason absolutely but they do follow suite!

operators are wise enough to keep their hands and feet off fellow operators and their domains!