Be careful when trading with prop's?

I just don't understand why "risk management" is such a big concern. If a trader can't handle his own "risk" then he will be out of the game very quickly. I think you guys should turn your focus more towards software and commission prices than risk management. Watch out for yourselves, don't leave it upon the firm because when you blow out, someone else will be quick to take your seat. Good luck.....:)
 
Originally posted by VOLUME
I just don't understand why "risk management" is such a big concern. If a trader can't handle his own "risk" then he will be out of the game very quickly. I think you guys should turn your focus more towards software and commission prices than risk management. Watch out for yourselves, don't leave it upon the firm because when you blow out, someone else will be quick to take your seat. Good luck.....:)
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How silly. Risk management should be your #1 concern.

I dont care if a trader takes himself out of the game very quickly, I just dont want another trader to take me out of the game period. That is why "risk management is such a big concern."
 
Originally posted by vinigar
Posted by Bone
Insist that you have your own account number at the firm, and specify that your funds are held as "segregated U.S. customer".

Don,
I am glad to hear about the things that you have in place...sounds like a good plan to me. What about Bones' question? In addition to the orientation that you give your traders...are they told about "segregated US customer" and your own "account number"?:confused:
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Our traders become actual members of the firm (partners), with all the benefits. We do not have "customers"...which is a good thing. All traders have a completely segregated Account ID and all their trades and costs are shown there daily. Since are traders are actual members, I don't think the there is any distinction about US customer....Everything is disclosed and discussed prior to any funding. We are firm believers in making sure things are right before the fact, rather than after.

Don
 
OK, time for me to chime in because I know a lot about this one.
Clearly sharper is looking like a plant from someone (Hmmm, I have my suspicions of who) trying to tarnish a reputation that is spotless. ECHOtrade has long been a pioneer in risk management, it is one of the big things I looked at when I joined them, and one of the main reasons I chose them over the other firms.


Don Bright


"that two months ago we upgraded our risk management software and we "can monitor by trader (up to the second), by stock (in case there is another Enron), by percentage of equity, and have the ability to intervene if absolutely necessary. We attempt to contact the manager, and the trader if there is a problem, if for some reason we cannot, we can take control of the positions, and close them if needed."

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I don't know which of these features are new ones, but I know that ECHOtrade has had all of these features for a long time now.

In addition to all the software features they have pioneered, there are two risk management teams, one in Chicago and one in Phoenix. There are a total of 6 full-time risk people that are always watching every order that is placed, in addition to every position and trade. That is in addition to Sterling's built-in risk management and an additional risk system that was written by in-house programmers that also monitors Sterling.

I'm sure the other people here are smart enough to see though a plant from another firm trying to knock something they cannot compete with. If you are going to try and say something bad about ECHOtrade, you should do it in an area that they are not legendary for. You are coming here doing the equivalent of trying to tell us that a Ferrari is not fast. Please..

Anyone who would like to see can see it with their own eyes like I have by taking a trip to Phoenix, or call the home office at 866-700-ECHO and I'm sure they would be glad to walk you through how it works. Now back to trading.

Robert




 
There was no "plant" involved in any of this, I hope that was not what you implied by your comment....

Our changes came from our move "up" to the full Spear, Leeds system from the First Option's system.

We don't monitor our traders trades as they put them in, as we think that may be looked upon poorly in this highly competitive business, but we do monitor each accoutn, as you do, and if we need to do anything we do.

The last thing either one of us needs is for someone to flip out and lose a big bunch of money.

Good Luck!!

Don
 
Originally posted by VOLUME
I just don't understand why "risk management" is such a big concern. If a trader can't handle his own "risk" then he will be out of the game very quickly.
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And he can take you with him. It looks like you think if a guy blows up, that it doesn't affect you. Not true, and a very DANGEROUS assumption. We are talking about 10-1 or 20-1 leverage here. 20-1 means a 5% drop will wipe out the trader.

Think about that.

That means that anything more than 5% drop and that guy is now losing the firm's money. And if the firm has no more money, guess what? He is now losing YOUR money. Think about it, if your prop firm is wiped out how do you get paid your money back? I mean gone bust, no more money, period. How do they pay you back? You are not a retail customer, you are a member of the LLC. Its like being in business with them. There are no guarantees.
 
That is a valid point you brought up. However, I never sit in front of my computer and worry that someone is blowing out my entire firm's prop account. (I have $50,000 in at all times)
My point about commissions and software is valid because of the style of trading that I do. Hypothetically, if I were to go to another firm with "the greatest" risk management and pay an extra .002 per share and do my regular monthly volume (8-12 million shares per mo.) and put up $50,000...In two or three months, I would have paid in extra commissions the total amount that would have been lost had someone destroyed my entire LLC. Also, that is not even mentioning the extra money I would have lost by using inferior software. (like Redi+)
To each his own. I guess it just comes down to what is more important to each individual trader.:)
 
Originally posted by VOLUME
That is a valid point you brought up. However, I never sit in front of my computer and worry that someone is blowing out my entire firm's prop account. (I have $50,000 in at all times)
My point about commissions and software is valid because of the style of trading that I do. Hypothetically, if I were to go to another firm with "the greatest" risk management and pay an extra .002 per share and do my regular monthly volume (8-12 million shares per mo.) and put up $50,000...In two or three months, I would have paid in extra commissions the total amount that would have been lost had someone destroyed my entire LLC. Also, that is not even mentioning the extra money I would have lost by using inferior software. (like Redi+)
To each his own. I guess it just comes down to what is more important to each individual trader.:)
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I still haven't heard a response from anyone explaining what bell or whistle i their software has that is actually making them money vs. RediPlus. I asssume you're trading nasdaq, and doing that much volume you must be making at least 7 figures, so I respect what you say about costs....but since Redi has made changes and additions at our request, I would like to know some of the details. I'm familiar with the Hammer, and some other systems, but would like to hear what you're using.

Just curious!!


Don
 
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