A few lessons I learned as an institutional trader

It’s rare that a person has an opportunity to experience the financial markets through the lens of both an institutional market maker taking down hundreds of millions of dollars on block trades.

However, I’ve been in the cryptocurrency trading space since 2017 when I was a freshman in college. I played through the ICO bubble, when I traded altcoins instead of studying for finals. I went through the summer of decentralized finance (DeFi) in 2020 during Covid-19, when I first started learning about liquidity pools. I experienced the exuberant bull run of 2021 while landing my first internship on the institutional side of trading, and I went through the crash of FTX.

I’ve learned several things from these few years, but here are a few of the key takeaways I’ve experienced after trading as both a retail and institutional trader.

Institutions require more wins — and they can wait for them

As a retail trader, I often found myself drawn to microcap assets, chasing those elusive 100x gains. The strategy was straightforward: make numerous small bets, hoping that a few significant wins would offset the inevitable losses. This approach involved constant monitoring of DEX Screener, Telegram chat rooms, Discord and other social media. My attention was 100% focused on finding the next opportunities, because finding them first was more important than being 100% correct.

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The institutional perspective, however, was much different. When you’re dealing with substantial capital, the focus shifts to more researched, concentrated positions over longer timeframes. We looked at complex datasets and overall market liquidity. A 10% return on a $1 million position was more feasible and impactful than seeking a 100x return on a small, speculative bet — especially from a risk-management perspective. We couldn’t make 100 bets of $1 million each and hope that more than one of them resulted in a 100x return.