becoming your own broker dealer

As much as Don and TM have made a lot of sense, you really just cant deny the fact that heavy daytraders can not function on the Bright or TM business model on their bad days. For instance, look at this blotter:

http://www.elitetrader.com/vb/attachment.php?s=&postid=1798332

From Nordik, a daily poster in the P/L. Now im guessing he works at Title Trading, but im not sure. Title Trading has their own registered B/D, following all the rules with compliance, accountants, lawyers etc.

On this day, Nordik grosses, 2055, pays about 890 in gateways and fees, and $75 in commission to Title, which passes through at cost. If he paid .003, he would pay 890 in fees, and 1100 in commission. So whats better? 100% of 50 bucks? or 50 or 60% of 1100?

Different strokes for different folks.

That being said, if a trader is making good money trading 20,000 shares a day (or their profit per share is over 2 cents), then this the Bright business model makes WAY more sense. You have to find your own equilibrium where one deal passes another.
 
I have mentioned before that Charles Kim (Swift Trade co-founder) and I are friends, and we agree about the 2 different biz models. Title is same as Swift I'm told.

Charles told me last month that he only puts on 19-25 year olds, and he has sent those who wanted a long term career in trading over to us. As you said, different strokes. Different business models.

(2 cents, geez I hope so, LOL).

However, if you're going in and out for a penny, and keep 100% of the other penny, that's still a "living" at only 1 mil shares per month. Add a couple more pennies, not too bad.

All the best,

Don
 
Quote from Szeven:

As much as Don and TM have made a lot of sense, you really just cant deny the fact that heavy daytraders can not function on the Bright or TM business model on their bad days. For instance, look at this blotter:

http://www.elitetrader.com/vb/attachment.php?s=&postid=1798332

From Nordik, a daily poster in the P/L. Now im guessing he works at Title Trading, but im not sure. Title Trading has their own registered B/D, following all the rules with compliance, accountants, lawyers etc.

On this day, Nordik grosses, 2055, pays about 890 in gateways and fees, and $75 in commission to Title, which passes through at cost. If he paid .003, he would pay 890 in fees, and 1100 in commission. So whats better? 100% of 50 bucks? or 50 or 60% of 1100?

Different strokes for different folks.

That being said, if a trader is making good money trading 20,000 shares a day (or their profit per share is over 2 cents), then this the Bright business model makes WAY more sense. You have to find your own equilibrium where one deal passes another.
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Uhmmm...I've had heavy traders....ive had light traders....no matter how you slice up the pie you need two things:
1) profitable traders 2) equitable and profitable rates that allow traders and the firm to profit....on every trade, not just if the trader does 200k shares in a day

one other thing....may of these LLC's ( im not sure about Title but they are not listed in FINRA) are a time bomb waiting to go off so do your homework and for the love of man please understand that these LLC's exist for one reason: To circumvent Regulatory Rules and Regulations and ofer greater leverage....I know it all sounds great for you the trader.....But sub prime loans were really good for the homeowner for the last 10 years until the crap hit the fan...remember: If your LLC blows up and the owner dissapears who are you going to call??? FINRA,SEC and States will not lift a finger to help you if your wronged by an LLC
 
I'm with you TM on the sub-groups. But, only 50K a day to do a million shares per month. Heck, I do that doing the opening only's much of the time, LOL.

But, yes...keeping profitable traders is a must. Over half our guys have been with us for years. First couple years (for brand new people) is always tough, but we do our best to keep the mentoring going.

All the best,

Don
 
Szeven is correct don's model won't work for people trading big vol. don your traders pay .007 per share for trades less than 1 are 2k shares correct? so if i'm doing 500 shares per trade on 100k shares per day i'm paying $700 a day in commissions? for that i pay .001 a share are $100 a day in commissions. how the hell can i make up 12k a month difference in commissions?don you sat here for along time justifying your rates. how come echo are assent are 1/2 your rates? i can recall bright charging .01 cents a share back in 2001. you've barely lowered your rates in 7 years? others have cut there rates 90%. means you're making huge overides. if you can make people believe executing orders is worth 12k amonth god bless you
 
Quote from john12:

Szeven is correct don's model won't work for people trading big vol. don your traders pay .007 per share for trades less than 1 are 2k shares correct? so if i'm doing 500 shares per trade on 100k shares per day i'm paying $700 a day in commissions? for that i pay .001 a share are $100 a day in commissions. how the hell can i make up 12k a month difference in commissions?don you sat here for along time justifying your rates. how come echo are assent are 1/2 your rates? i can recall bright charging .01 cents a share back in 2001. you've barely lowered your rates in 7 years? others have cut there rates 90%. means you're making huge overides. if you can make people believe executing orders is worth 12k amonth god bless you
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BINGO!!!! you almost get it...He has not followed the trend and just kept lowering and lowering....you have to concentrate on being profitable as a trader ...would you rather trade 1 million shares today and pay .001 and have 100.00 in net profits or would you rather trade 50k shares and pay .005 and make 200.00 in net profits??? Too many concentrate soley on their commission rate and think that is the # 1 factor in their profitabilty...many firms go out of business doing this same thing,,," if only my clearing firm would lower my rates more more more",...sure its a fractor but like i sais in another post...If your buying 1000 goog and your more worried about paying 4.00 versus 2.00 for that trade.....you probaly shouldn' do the trade imo
 
Quote from metooxx:

Maybe you should tell him you run a clearing firm...
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I would love to know what the rate are for a company that does 10 billion shares a month. That would help me understand this all a lot more.
 
Quote from Szeven:

I would love to know what the rate are for a company that does 10 billion shares a month. That would help me understand this all a lot more.
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You guys get so caught up in Shares, Shares Shares...Let me tell you a true story about a discussion I had with the owners of another clearing firm In 2005...I asked how business was in 2005 and they told me it was awesome!! We just cleared almost 60 billion shares last month!...WOW! I said....so you guys must be makign a boatload now huh?.....his response was: " we are almost profitable now..To this day I still can;t figure out why you would take the risk of clearing billions if you can;t make $$$...I cleared 1/10th of that and made money in the same period....needless to say...this firm is no longer in existence and was almost in SIPC before another firm came in and bought them at a bargain.....

back to your question....on 10 billion shares it will depend on what stocks and what clearing firm...A clearing firm that has its own back office software may do it for a nickle to 10 cents a trade..pluse flipping,dtc/nscc charges .if they are using a serrvice bureau like ADP/BETA SUNG....A lot more
 
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