25,000 Roundtrips a day?!

[pinetboltz]

recently came across an article (published quite some time ago) that talks about a prop trader in London who makes seven figures a year:

http://www.financialtrading.com/lawrie-inman/

a couple details that really stood out:

he now takes such big trading positions that for every one-point movement in the market he wins or loses £10,000...

He started out trading 15 ’round trips’ a day – marketspeak for the buying and selling of an options contracts and its subsequent closure. Now he does 25,000.

this is truly amazing, and humbling to read..! how do the prop firms in London provide enough leverage to do this? what are the mechanisms involved (eg. contracts per trade, trade per day, profit/loss per trade, types of trades, commissions paid), in going about trading 25,000 round trips a day? any ideas?

 

[CALLumbus]

This was 10 years ago, times were different then for the (futures) prop traders.

I would say today there are very few individual prop traders that are trading anything near that size. I see many trading 5, 10 or 20 a clip, a few maybe 100. But 1000s... dont think so, time of the Flipper has ended many years before.

 

[pinetboltz]

This was 10 years ago, times were different then for the (futures) prop traders.

I would say today there are very few individual prop traders that are trading anything near that size. I see many trading 5, 10 or 20 a clip, a few maybe 100. But 1000s... dont think so, time of the Flipper has ended many years before.

CALLumbus, could you please elaborate? is there something different about today's environment that prevents futures prop traders from being as active as they were in the past (eg. limited leverage, lower risk limits by prop firms)?

 

[sprstpd]

CALLumbus, could you please elaborate? is there something different about today's environment that prevents futures prop traders from being as active as they were in the past (eg. limited leverage, lower risk limits by prop firms)?

I don't trade futures. But if it is like all other markets since 10 years ago, liquidity is worse and algos are prevalent. Plus if you show/trade big size as part of your strategy, the powers that be might throw you in jail for spoofing.

 

[pinetboltz]

I don't trade futures. But if it is like all other markets since 10 years ago, liquidity is worse and algos are prevalent. Plus if you show/trade big size as part of your strategy, the powers that be might throw you in jail for spoofing.

yes, the Flipper had mentioned in another interview that he himself had been transitioning away from his earlier techniques...

yet, surely there are still some major individual prop traders out there doing very well, trading large volumes with a robust, fair edge?

perhaps more importantly -- What's their setup like in terms of leverage, capital backing nowadays, in order to most effectively implement their strategy in a business-like way? How might a trader who wishes to trade prop for his own account go about securing the best terms?

many thanks!

 

[comagnum]

There are US futures traders that once accounted for a large ammount of the daily volume that today will put on about 2- 3 trades per day. Seems like the HFTs eliminated their scalping edge so now they trade less and hold longer.

 

[JackRab]

@CALLumbus is that the Bund Future flipper you're talking about? Mates of mine traded on the German bond futures and the hated that guy!

I guess the flipping isn't as good anymore because of algo's? I think the flipper mainly made money on other manual traders that chickened out when the bid was flipped and they wanted to close out their position....

25k roundrips a day, that's 1 every second on an 8 hour day... that sounds like a lot for one guy...

 

[garachen]

yes, the Flipper had mentioned in another interview that he himself had been transitioning away from his earlier techniques...

yet, surely there are still some major individual prop traders out there doing very well, trading large volumes with a robust, fair edge?

perhaps more importantly -- What's their setup like in terms of leverage, capital backing nowadays, in order to most effectively implement their strategy in a business-like way? How might a trader who wishes to trade prop for his own account go about securing the best terms?

many thanks!

50,000 contracts a day is kind of a strange number. It's not high enough to be getting the lowest fees but it's too high to be just taking the best trades. Ten years ago the available dollars per trade was higher at that volume. Nowadays, you are either trying for high value trades and doing under 10,000 contracts a day or you are trying to make up for the thin margins by doing high volume of over 100,000 contracts a day and focusing on getting your fees down.

Capital isn't really an issue. You don't need capital to trade. You need risk - which is independently allocated. When I first started trading I had about $100M worth of risk with no capital in my account. It's an extreme example that wouldn't happen in today's environment but it demonstrates just how disconnected they can be.

 

[JackRab]

50,000 contracts a day is kind of a strange number..

Where do you get 50k contracts from... you mean 50k trades (25k roundtrip)?

This guy was trading bobl futures... which are very very liquid. At 1k underlying value he traded 1.000 contracts per trade to get to his 10k Euro per tick... I doubt he traded that full size on his 25k roundtrips... but he would definitely have traded more than 50k contracts 10 years ago if he would trade that many roundtrips... You don't just trade 1 lot....

 

[garachen]

Where do you get 50k contracts from... you mean 50k trades (25k roundtrip)?

This guy was trading bobl futures... which are very very liquid. At 1k underlying value he traded 1.000 contracts per trade to get to his 10k Euro per tick... I doubt he traded that full size on his 25k roundtrips... but he would definitely have traded more than 50k contracts 10 years ago if he would trade that many roundtrips... You don't just trade 1 lot....

Nobody goes in and out 25k times a day. The largest firms today do about 1M contracts a day. At 25k round turns that would mean using a 20 lot on average. They use bigger size. Fewer round turns.

That's how I get 50k contracts. 25k round trips would never have been possible for an individual trader. Especially not manually. Things just don't move enough to support that.