[PokerPaul]

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All the traders traded with the SAME counterparts and other traders from competing firms for the most part day in day out.



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Don't know exactly but they probably have different goals and timeframes. One may be scalping while one may be taking a longer term position and one may be hedging. There are lots of reasons to make a trade and guys with different goals, strategies and timeframes can often trade with each other and still have things work out well for them.

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Seems my question may have been a little confusing so i'll try to clear some of it up.

Our floor was strictly institutional Bond and T-Bills trading. So our traders only traded with the other institutional trading firms and their traders there such as Merryl Lynch, cantor fitzgerald, TD securities, Deutsche Bank, solomon brothers, etc.

I monitored, cleared and settled all of those trades on a daily basis. Average trade between them was for about 5 million face value bonds. And each trader i'd say made about 14-30 trades on average per day. So when you think about it quite a fair chunk of capital flowed in and out of our office on a daily basis. Biggest single trade i ever cleared through was a T-bill one for half a billion. Most of the clients we had were for big mutual funds, or just straight new bond offerings coming onto the markets from governments, provinces and states, and some corporations.

Quite a few trades were obviously done on behalf of clients, who would then obviously take the win/loss as the values of the bonds changed. But quite a few of the traders were out there trading on their own as well to make profit for Goldman, just the same as many of their counterparts at other firms.

So all things being equal, given that their trading circles only extended to maybe 7 or 8 other traders to trade with, shouldnt at least half of them take losses?

With bonds obviously everyone can make profits as interest rates go down, but that would be counter balanced by the increased losses for when rates go up.

I remeber the rough average compensation some of those traders made, and it came in around $320K (this was like 13 years ago).

Maybe i myself am missing something, but how can all these guys be so well compensated when statistically there should be a very high percentage of losers?