One of the core pieces of Online Trading Academy’s Core Strategy is to help traders succeed by trading in the same manner and direction as the large trading institutions. Many people have questioned the ability of being able to know where these buying or selling points lie; that is until they learn the strategy and see it working for themselves.
Many people even doubt that these large trading institutions exist. We commonly think that the large banks solely engage in businesses like managing client accounts and thrive on commissions. The truth is that trading activity constitutes either a large portion or even the majority of their profits. Need proof? Well, these large institutions are publicly traded companies so one only needs to view their annual reports to see where their profits really come from.
Bank of America, for instance, made 13 billion dollars from their investment and brokerage services but over six billion from their trading activities.
Morgan Stanley’s largest income producer was in fact their trading at over $9 billion. This easily dwarfed their moneys received from investment banking or commissions.
JP Morgan Chase is known as a banking center and a brokerage, but they also made over $284 million from their trading activities.
If you have ever been involved in trading the US equity markets, you should be aware of market making activity. If you do not know what this is, you definitely need to educate yourself before risking any more money in the markets themselves. Market makers create liquidity in the equity markets by buying and selling securities for themselves and their clients. But they are also able to manipulate prices in the markets. This leads to losses from the uneducated traders who still commit money to the markets.
One of these big market makers is Goldman Sachs. We know them as an investment banking company, but as you can see from their financial information, they made over $9.5 billion last year in market making activity. This is trading!
If you think that I am just trying to promulgate an “us against them argument”, let’s check out the facts. There are scores of data points that show that the big institutions are more interested in profits for themselves than helping you secure your financial future. In fact, trading activity for these institutions has become much more profitable.
Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.
Editors’ Picks
EUR/USD stays in daily range slightly below 1.0900
![EUR/USD stays in daily range slightly below 1.0900](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/MoneyEURUSD_3_XtraSmall.jpg)
EUR/USD continues to move up and down in a narrow band slightly below 1.0900 in the second half of the day on Monday. The modest improvement seen in risk mood makes it difficult for the US Dollar to find demand and helps the pair stay in range.
GBP/USD treads water above 1.2900 amid risk recovery
![GBP/USD treads water above 1.2900 amid risk recovery](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/british-banknotes-14144912_XtraSmall.jpg)
GBP/USD is keeping its range play intact above 1.2900 in the American session on Monday. The positive shift seen in risk sentiment doesn't allow the US Dollar to gather strength and helps the pair hold its ground ahead of this week's key data releases.
Gold struggles to hold above $2,400
![Gold struggles to hold above $2,400](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/stacks-of-gold-bars-19033163_XtraSmall.jpg)
Gold loses its traction and trades in negative territory below $2,400 after suffering large losses in the second half of the previous week. The benchmark 10-year US Treasury bond yield holds above 4.2% and risk flows return to markets, not allowing XAU/USD to rebound.
Crypto Today: Bitcoin is less than 10% away from all-time high as Ethereum ETF approval anticipation brews
![Crypto Today: Bitcoin is less than 10% away from all-time high as Ethereum ETF approval anticipation brews](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Coins/Ripple/ripple_XtraSmall.jpg)
Bitcoin trades around $68,000 early on Monday, less than 10% away from its all-time high of $73,777 on Binance. Ethereum ETF anticipation brews among traders and Ether investment products see inflow of over $45 million in the past week.
Election volatility and tech earnings take centre stage
![Election volatility and tech earnings take centre stage](https://editorial.fxstreet.com/images/TechnicalAnalysis/Volatility/Bands%20(bollinger)/stock-market-graph-gm532464153-55981218_XtraSmall.jpg)
The US Dollar managed to end the week higher as Trump Trades ensued. Safe-havens CHF and JPY were also higher while activity currencies such as NOK and NZD underperformed.
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