I don't see institutional traders (the pros) giving up. I see a transition into different markets then traditional markets that were traded by them. In contrast, retail traders (most of us here at ET) tend to get married to a particular trading instrument without testing to see if a different trading instrument is more suitable for current market conditions. Heck, the past week its been confirmed that Light Crude Oil (WTI) markets have now been replaced as a normal benchmark by the world. Its now the Brent Oil markets the benchmark. Also, its no longer just the FED. We now have to be concerned with the ECB and IMF events. That's part of the adaption that many retail traders need to make in their understanding of market context but will fail to make...they are so damn worry about the FED that they are forgetting that markets/economies/politics from around the world are so damn interconnected. That disconnection for most retail traders about what's going on in the world and how it impacts the trading instruments they trade will be costly.
That's what I'm driving at. Where has the volume gone? I'm thinking OTC derivatives, like ABS, CDS etc.
I really don't know what markets the institutions (the pros) have been moving their billions into. As for the individual investors that have pulled billions out of the markets...they sure aren't reinvesting in other areas of the markets. I'm sure with a few hours of research, the answer is there on Google or already discussed a few times on one of the financial networks (bloomberg, CNBC).
first part is really easy answer...they didn't give up cause #1-it's ITS NOT THEIR MONEY.. #2-I've said thi s long time ago-the markets will continue to do "fairly well" for one and very simple reason- CAUSE AS LONG AS PEOPLE WORK IN US-they have to invest somewhere their pension money. get this trought your head-THEY ARE FORCED TO INVEST...it's stock market economy on kindergarten level..at least to me..common... as for second part-that's where i agree. globalization is the name of the game now..like it or not..
I can guarantee that a significant chunk of that money being pulled from the markets is being used to "just get by". (i.e. with ZIRP, many who could live off of some form of interest income aren't so lucky any longer), combined with the fact that after a certain age investing in equities (especially a market that collapses every 5 years or so) just ain't gonna happen any more...think demographics. IOW, those investment accounts aren't coming back.
I am so confused by these absolutely irrational thoughts, not only that this guy above is having, but that are pervasive throughout main stream thought. This idea that more money was made or that it was easier to make in some long ago past. Let me ask you ---do you understand that trading is a ZERO sum game? Futures are a completely zero sum game --the amount of money made is EXACTLY equal to the amount of money lost (factoring out commissions and other structural costs). Stocks are near zero sum, the shorter the time horizon the closer one gets to a zero sum game. The reason stocks are a positive sum game over time is due to their earnings. But even here, if you're trading over even a long 6 month holding period, you're still very close to a zero sum game. So how can it be easier to make money in the past? There were the same amount of losers as there are now. Someone has to lose for you to win. So if there were winners in the past, however many their numbers (in monetary terms not in numerical terms), there were just as many losers. And now, if there are a lot of loser then there are the same amount of winners (again, not numerically but monetarily). In a zero sum game how can there not be winners if there are losers? If you're losing now and were winning before, it simply means you've moved from a winner to a loser. It does not mean that there are more losers now. There are the same number of losers as there has always been.
Very interesting. As a relatively new trader (early 2008), some of these conditions are relatively new to me. I was wondering how you would rate the current conditions on a scale of 1 to 10? How does that compare to 2004-2006? And 1991-1995? Were those times significantly worse? Thanks.
Yes as I stated, I've seen a lot worst than current low volatility market conditions and my reference to such is 1991 - 1995/2004 - 2006. On a 1 to 10 scale... 2012 = 7 2004 - 2006 = 6 1991 - 1995 = 4