Best Prop Firms For A Beginner

Quote from monty21:

No offense, this doesn't make sense for a new trader.

If you trade for a firm that gives out 100% payout, then it doesn't matter if you are profitable. Yes, they can make more commission dollars from you, but considering the high turnover rate of traders it doesn't really matter.

A new trader should look for a firm where HE HAS NO FINANCIAL RISK. For this reason, the payout will be low... could be 50%, but the firm is invested to make you profitable. The firm only makes money if you are profitable. They will do whatever it takes to make you profitable. THAT IS THE BEST SCENARIO. You could have 100% payout, but what does it matter if you loss money? You also can lose your entire initial contribution ($25,000 in Bright's case).

From what I understand, bright charges a fee for a "learning" seminar. That's bullsh!t. Never pay for training. Bright also allows remote traders to newbies.... newbies should only start on a trading desk because that is the best place to learn.A new trader also should not risk $25,000 in capital... as Bright requires. With 100% payout, he doesn't make money from you having a positive P/L. He makes money from you for commissions and other fees.
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We treat trading and traders as a business venture, the same one my brother and I enjoyed when we bought seats on various stock and option exchanges. We put up money, kept all of our profits, learned from and helped other traders. In our opinion, a person's time is just as valuable as their capital. There is no "franchise fee" or other major expenses in trading with us (as opposed to virtually any other business venture). Yes, education can cost a few bucks, but to speed up what could be a years long learning curve, the time and money saved far outweighs and minor expenses.

More than half our traders have been with us for over 6 years, many since the 1990's, so this can be, and is, a long term career opportunity for those interested in this business (as opposed to a basic job).

The way our traders view it is that we offer a very limited downside (the capital is still yours, and we don't hold it for 12 months or anything, payout twice a week if you like), and unlimited upside (as evidenced by our very successful 7 figure traders), and we give the ability to borrow a $mil or more for free (intraday) and cheap overnight.

Traders will either learn to trade and make money (keeping 100% in our case), or leave the industry at some point. The firms that keep a % the profits, do just that, for the life of the traders career with them. You either risk months of your life and living expenses, or choose to go into business for yourself (a simple choice).

Again, not for everyone, but I'm sure glad my brother and I made the choice decades ago to not just go to work for someone, and I'm sure many of my top guys would agree.

EXchange members since 1978, Bright Trading since 1992. Haven't been bought out or forced to merge. I would think we're doing something right.

Anyway, this is still America, land of choices and opportunities.

All the best,

Don
 
Quote from logikos:

My friend was a remote trader and was ridiculed several times by somebody there for trading low share amounts, even though he had explained that he was working on a trading strategy and did not want to risk too much money while it was being refined.
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Is this behavior typical in "arcades?"
 
Quote from Don Bright:


More than half our traders have been with us for over 6 years, many since the 1990's, so this can be, and is, a long term career opportunity for those interested in this business (as opposed to a basic job).


Don
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important points don.

50%+ retention ? pretty damn good stats.

retention should be a key question for any newbie. find out how long their traders actually stay.
 
Quote from monty21:

No offense, this doesn't make sense for a new trader.

If you trade for a firm that gives out 100% payout, then it doesn't matter if you are profitable. Yes, they can make more commission dollars from you, but considering the high turnover rate of traders it doesn't really matter.

A new trader should look for a firm where HE HAS NO FINANCIAL RISK. For this reason, the payout will be low... could be 50%, but the firm is invested to make you profitable. The firm only makes money if you are profitable. They will do whatever it takes to make you profitable. THAT IS THE BEST SCENARIO. You could have 100% payout, but what does it matter if you loss money? You also can lose your entire initial contribution ($25,000 in Bright's case).

From what I understand, bright charges a fee for a "learning" seminar. That's bullsh!t. Never pay for training. Bright also allows remote traders to newbies.... newbies should only start on a trading desk because that is the best place to learn.A new trader also should not risk $25,000 in capital... as Bright requires. With 100% payout, he doesn't make money from you having a positive P/L. He makes money from you for commissions and other fees.
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i have news for u. that shop your headed to - it doesn't matter if you are NET profitable also.

remember the 20% of gross part ? isn't that making money off your commish and other fees ?
 
Quote from CarolinaCpaGrad:

important points don.

50%+ retention ? pretty damn good stats.

retention should be a key question for any newbie. find out how long their traders actually stay.
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He didn't say 50% retention, he said 50% of their traders have been with them for at least six years. Big difference.

For example, consider this scenario. A firm had 200 semi-active or inactive accounts as of year-end 2003.

In 2004, the firm added 200 new traders, but all of them quickly blew out their accounts. In 2005, 2006, 2007 and 2008, the firm added 200 new traders each year, and all of the traders quickly blew out their accounts (and dreams of becoming a trader). In 2009, the firm has added 400 new traders YTD, and half of them have already blown out their accounts.

So, how many clients does the firm currently have? They've still got the 200 semi-active or inactive accounts from 2003, and they have 200 traders from 2009 that have not yet blown out their accounts.

Overall? 50% of their traders have been with them for at least six years. But 50% retention? Not quite.

Having 50% of a firms traders being with them for 6 years or more does not really indicate much of anything. Although it tends to imply that they are either (1) not growing quickly at all, (2) seeing the vast majority of new traders blow out their accounts or quickly leave the firm, or quite likely (3) both.
 
Quote from EricP:

He didn't say 50% retention, he said 50% of their traders have been with them for at least six years. Big difference.

For example, consider this scenario. A firm had 200 semi-active or inactive accounts as of year-end 2003.

In 2004, the firm added 200 new traders, but all of them quickly blew out their accounts. In 2005, 2006, 2007 and 2008, the firm added 200 new traders each year, and all of the traders quickly blew out their accounts (and dreams of becoming a trader). In 2009, the firm has added 400 new traders YTD, and half of them have already blown out their accounts.

So, how many clients does the firm currently have? They've still got the 200 semi-active or inactive accounts from 2003, and they have 200 traders from 2009 that have not yet blown out their accounts.

Overall? 50% of their traders have been with them for at least six years. But 50% retention? Not quite.

Having 50% of a firms traders being with them for 6 years or more does not really indicate much of anything. Although it tends to imply that they are either (1) not growing quickly at all, (2) seeing the vast majority of new traders blow out their accounts or quickly leave the firm, or quite likely (3) both.
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Good post, Don runs a retail firm and tries to market is as a prop firm. he is a good marketer.
 
The numbers presented are that (a) 90% of all business ventures fail the first year. We have over 50% of our people with us in the second year, so, yes we may lose up to 50% vs. 90%. The long term career part about having so many long term traders is simply to point out that this is a long term career for many.

And, again, the term "prop" is just semantics. We are a professional trading firm vs. retail, and that is a legal distinction that allows for our traders to use our capital to trade with, have direct routing, mark to market accounting, exemption from FICA, and the other benefits involved.

The prop model of hiring traders, or allowing low or no capital is fine for some. FNYS is a fine example. Our model just replicates the Exchange floor trading model designed for those who wish to keep all their profits, and run their own trading business within our structure.

Not such a big deal guys, really, LOL.

All the best,

Don
 
Quote from CarolinaCpaGrad:

i have news for u. that shop your headed to - it doesn't matter if you are NET profitable also.

remember the 20% of gross part ? isn't that making money off your commish and other fees ?
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Nope... I have no financial risk on my side. Commissions are deducted from trading profits and not from my personal pocket in the event I have a negative P/L.
 
Quote from Don Bright:

The numbers presented are that (a) 90% of all business ventures fail the first year. We have over 50% of our people with us in the second year, so, yes we may lose up to 50% vs. 90%.
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Just curious, Don. From your point of view, you have 50% of 'our people with us' in the second year.

Taking this from the traders point of view, are you stating that 50% of your traders are net profitable in their first year of trading? Or, are you simply saying that while losing their money, they are still around making some for you in the second year?

Just trying to see through the marketing haze. :)

Reminds me of an old TV show, Hawaii Five O, was it? "The facts, ma'am, just the facts"
 
Quote from Don Bright:


And, again, the term "prop" is just semantics. We are a professional trading firm vs. retail, and that is a legal distinction that allows for our traders to use our capital to trade with, have direct routing, mark to market accounting, exemption from FICA, and the other benefits involved.

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Just to clarify the "benefits":

Other than access to your capital, I have the same "benefits" trading retail: direct access routing, MTM accounting (if I so choose), and exception from FICA.
 
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