A Trading Edge at a Proprietary Firm?

Speedracer,

I've programmed the Smart Order for ECNs and SOES, but it and all of the individual ECN and SOES (except Limit) order types only try to hit the inside. That's why it's great if they can combine the Smart Order with Swipe.

With ALT-1 and CTRL-0, don't you sometimes get more shares than you really want? I just want to get the exact number of shares that I want. How about when you use Blast to get out and you sell too much? Will you be short?
 
In my opinion, there is NO advantage of trading at home whatsoever with the exception of "comfort zone" . . . As a matter of fact, there is no way I could have made my progress without working for a firm.

I started my job with $3 tickets (the one time fee you have to pay for each stock each day, in other word if I trade 6 stocks a day it is 6x3x2=$36) and 1.4 cent per share. Now it is 80 cents per ticket and 1 cent per share . . . There are traders at my firm paying no ticket charge and 3/4 penny per share (but you have to trade serious volume for them give you that).

So yes, the firm relies on high turn over rate because let's face it, a full time day trader, profitable or not, will make a lot more trades than your average IB customer.
Throw in bullet costs, a top trader can easily generate $2000 a day in commissions . . . My firm has 500 trades, you do the math . . .

Speedracer:

Congratulations on a great start . . . if you can generate 200K in commissions first year trading you are in VERY GOOD SHAPE :-)

Ronb:

Just send your resume to every trading firm (it doesn't matter if you don't have anything on it, because nobody know how to trade until they started trading) in the area, my firm will probably take you for sure, afterall they spend no money on you and unless you turn into a total disaster they can't lose . . .

If you want something you gotta go for it, networking is fine and dandy but nobody will lay out the red carpet for you, you got go knock on the doors . . .
 
Speedracer, Hitman,

Any of you guys doing spreads or pairs(arbitrage)? Takes alot of capitol, but spreads can provide a nice flow of profits. Pairs scare me a little bit more, only because there is no implied relationship. Atleast with a merger, you have a link.(letter of intent).

Eugene
 
This has really been an eye opening type thread. Really good information for us bathrobe traders :-)

One question for you with more experience than I...Let's say that trading capital is NOT a problem...account size is around $500k or so. Also let's assume that the at-home trader has access to a T-1 or the fractional part of a T1 line and the cost of the line is not a problem for this trader. Another assumption I would like to add is that this trader has a broker who has no ticket charge...just one cent per share commission or a little less, like IB. Also assume that this trader is willing to work in a time frame that is a little longer than the scalper.

Now, using the above, does this trader have much of a chance making significant money from daytrading? Or are the advantages the pros have still so great that this at home trader is fighting a losing war?

Any takers on this? I sure would like some input! Thanks!

Best,
Jim
 
<<Ronb:
<<
<<Just send your resume to every trading firm (it doesn't <<matter if you don't have anything on it, because nobody <<know how to trade until they started trading) in the <<area, my firm will probably take you for sure, afterall <<they spend no money on you and unless you turn into a <<total disaster they can't lose . . .
<<
<<If you want something you gotta go for it, networking is <<fine and dandy but nobody will lay out the red carpet for <<you, you got go knock on the doors . . .

Hitman:

I appreciate your response. Actually, sending a resume to every firm usually results in little response (there's nothing to distinguish you from everyone else submitting resumes), and this is exactly what I experienced with ETG. The networking approach is much more productive and represents the 'knock on doors' approach your suggesting.

I visited your firm's website, which states a degree and 3.5 gpa is required, plus the Series 7 (and two others over time). This is not a problem for me.

Have a few questions...
1. What is the salary range that one can expect?
2. Do I have to put up any risk capital?
3. Does the $150 fee for the Series 7 cover taking the exam?

Again, thanks for your feedback.
--Ron


 
Airspeed,

A quick distinction on the "pro" issue. The pros on the floor have an advantage over everyone. They're driving the bus. The pro's I'm referring to in this thread are the off floor pro's. Which I feel are next in line.

Now what I've been able to determine to be a clear edge over your scenario above is 2 things.
1. Bullets/conversions - this has be worth atleast 25% more profits per year. Only prof. traders can do this.
2. Risk - Why would you want to risk your 500k or even 250k of your own money, when these firms will let you leverage up to this amount or beyond with only 25k to 50k of your own money at risk. These firms manage risk very well, second by second. You can't be a maverick with their money, but if you position money well, you have alot of capitol at a very low cost(if no over night positions, no cost!!)

You can do this remote also. I know Echo will allow this, in fact they cater to remote users. Even bright allows traders to be remote, but they don't recommend it because they feel the office enviroment provides profitable opportunities you don't get at home.

Eugene

 
Oops...I made an error in the post I just put up a few minutes ago. Trader capital is $100k *not* 500k. That difference probably matters. Sorry.

Jim
 
Eugene,

I understand all of the advantages you wrote about and have to agree that the guys on the floor are the drivers.

I was just trying to get a handle on what the experienced players on this board thought that a very well equipped at- home trader could do. And how he might do it, using the examples in my post. But to answer one of your questions...the one about why the at home guy would risk his own capital...well, because there isn't a firm within 200 miles in any direction from his location. The proprietary route just isn't open to him.
Now that's not to say that he couldn't pass the Series 7 and other exams but that the requirements that firms justifiability place on the trader trainee couldn't be met (no 3.7GPA from Ivy League college, to name one).

Mahalo,
Jim
 
Airspeed,

That was my last point above. Sorry I wasn't clearer. You can be a member of an off floor Prof. firm and be remote.
 
Airspeed:

100K will get you . . . 200K purchasing power with 2 : 1 margin, assuming the average share price is $50, that's 4000 shares, a far cry from the 1500 shares, 12 positions limit I have . . . and trust me serious traders at my firm trade bigger than that in a single position. Even if you have 100K to toss away, why risk your money when you can work at a firm and let them take the hits? (Especially as a new trader?) Let's not go into the issues with maintaining equipment/software. Back in 2000 having bullets was an ENORMOUS edge, and it still is right now. If you work with a squad of other traders who are willing to share their research, then it is pure bliss . . .

No, I am not saying a home trader can't make a lot of money, I personally know quite a few traders working from home doing much better than I ever will, but it really is for those who have either no access to a firm or people who already know how to trade and just want the comfort of home. For new traders, there is NO comparison, if you can get into a firm, run, don't walk into one, because that's your best chance to survive. Remember most people do not succeed in this business and you want everything in your favor, having a firm backing you up is a HUGE advantage.

Ronb:

I am being very straightforward with my comments, so please do not take it personally, it is just the way I write and I really want to give you the best information I have access to.

You are not being aggressive enough. I had ZERO connection with the securities industry. Just under 21 years old, no degree, faxed my resume to every trading firm in New York (20 of them, searched every single web site for firms, this is the same approach I took when I looked for IT jobs, carpet faxing), got two phone calls. When Worldco called me they said I don't have a degree so no game, I told them how much I wanted it and they brought me in for the interview. Took me 2 and 1/2 weeks to get S7 and 2 weeks to get S55, I got the job. Believe me, they WANT you as much as you WANT them, because chances are, they will make money off you no matter what.

1) Salary? What Salary? Unless you want a 30% payout don't even think about salary.

2) People started without risk capital were given 50% payout's, but long before they get their first check (usually, at least 3 months into the game), it will be raised to 85%. Still, I would say put in a few K to get a better commission rate / payout off the bat, but if you don't want to put in any risk capital, no problem.

3) From background check to two exams, you have to pay for all the fees, it will probably take you $500 - $1000 to get everything done . . .

Good luck :-)
 
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