A question for Bone & Rob Morse

Robert Morse said:
I wish I could provide a statistical response. I just don't have that. All I can tell you is that If my daughter wanted to learn to trade, I would suggest she focus only on futures and options on futures.

  • 1256 contract
  • Leveraged without the need for a large account like PM
  • No PDT
  • Most symbols are not fragmented
  • Trading almost 24 hours.
  • Many products to choose from and most uncorrelated to equities.
More...

It's really interesting to hear your perspective on this given your background and exposure to all sorts of different products/approaches. Your bulleted reasons are well taken, but I would have expected you to mention something with limited liquidity where there is less competition (and it's likely easier to find an edge). Would you push her towards strategy driven price taking or more of a MM role?
 
Lean and mean usually works best IMO. GS isn't exactly lean... but quite mean :)

Big banks profits rely mostly on clients right? So sales... and their prop desks (if they still have any) also lean on that flow... for retail that's impossible to copy.

HFT can be a lot leaner, but the infrastructure needs over the past decade has meant that the tech-costs have gone up quite a lot and the bigger the firm the heavier the infrastructure burden.

So you trickle down to a smaller HFT/MM, I think they could have the biggest return on capital because the overhead is smaller and they possibly can trade in and out more easily.
 
I think @Robert Morse's daughter would be smart to start out in a more liquid product like index products. Less liquidity issues means more transparant... more possibilities.

If someone would start in limited liquidity stuff like small cap options, you expose yourself to all kinds of risks you wouldn't be aware of. Potentially it's easier to make a buck, but if your risk params aren't in order you can lose your shirt... less so in index IMO... unless heavily leveraged of course.
 
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