Best Prop OPTIONS Firm?
- Thread starter Eric1977
- Start date
Less than 10%.
Caveat: Many take short directional moves intraday with a "plan" if things go wrong, but few pure directional players.
Don
I'm going to play devil's advocate here... I spoke some years back with an expert in the proprietary scene and asked him this question, the % directional vs spread trading and he said the vast majority of Chicago props traded directionally. I was surprised by the answer myself. At the time, I was asking in regards to Bone's advertisements and wanted to get more information. Bone probably knows who I'm referring too. Anyway, he said vast majority were directional traders.
Also, I don't know why you would think you could compete with low skill trading forms like arbitrage. Such a trading style puts you in direct competition with HFT trading and those with tons of capital.
Maverick, you said before that you thought for the retail trader the pure directional space was the way to trade. Don't bother with pairs or anything. Are you changing your story? Or are you saying.. okay if you don't have prop backing then direction is the only game but if you have prop backing then you can try to do some of this other stuff? Is that due to the capital requirements? What type of capital would you say that requires 500k? Maverick, you've also been quoted as saying you don't believe the type of mean reversion pairs trading that Don Bright teaches offers an edge/is a good way to trade. Can you elaborate on that? Most professional traders I know have been dismissive of the possibility of pairs to make remarkable returns.
Also, I don't know why you would think you could compete with low skill trading forms like arbitrage. Such a trading style puts you in direct competition with HFT trading and those with tons of capital.
Maverick, you said before that you thought for the retail trader the pure directional space was the way to trade. Don't bother with pairs or anything. Are you changing your story? Or are you saying.. okay if you don't have prop backing then direction is the only game but if you have prop backing then you can try to do some of this other stuff? Is that due to the capital requirements? What type of capital would you say that requires 500k? Maverick, you've also been quoted as saying you don't believe the type of mean reversion pairs trading that Don Bright teaches offers an edge/is a good way to trade. Can you elaborate on that? Most professional traders I know have been dismissive of the possibility of pairs to make remarkable returns.
You know, there is a lot of "interpretation" and "detail" in the question about directional trading. The question I answered was about "pure directional" trading. And I stand by that. The matter of entries and exits based on our knowledge and understanding of HFT, sub-pennies, etc. is a different thing. We can, and do. use HFT traders to our advantage in our entry/exit decisions.... nice to use a 4 decimal place view to know when the hft guys are about to move a few pennies etc. I guess that might be considered "directional" - but,, in our case, only as in better entries especially (sometimes exits).
Anyway, whatever is making you money... all I can offer is what I see from our people....
All the best everyone....
Don
Anyway, whatever is making you money... all I can offer is what I see from our people....
All the best everyone....
Don
Lucias, whoever you talked to did not know what they were talking about. Most of the futures firms here as I've said before are spread shops. There is a real reason behind this as I stated earlier, and that is because most of them have a real edge to capture in that market. I've been in this business for 15 years and I can tell you it's a lot easier teaching guys to trade when you have a real edge to give them.
And yes, I believe as I stated before that for the "retail" trader, the best way to trade is directionally because of the cost of capital issue. You simply cannot generate meaningful returns in a retail account if you try to compete with the spread strategies of prop firms. For equities putting up REG T on pairs is going to kill you. For futures, if you trade any multi-exchange spreads you do not get margin relief and have to post the full margin on both legs. So as a retail trader, you are better off trading directionally.
I don't have anything against mean reversion pair trading per se. I simply have debated Don on the actual merits of it. Trading pairs has a huge embedded cost associated with it. One, the cost of capital. Two, high loan rates on hard to borrow stocks. Three, the double commissions. And four, the embedded short option in the pair. For a very highly skilled and competent trader, he can overcome these costs. But for most average traders, I don't see how they are going to make any kind of meaningful income. To be fair, they won't lose money quickly and therefore have the ability to at least put a lot of time into to get good at it.
I would rather just sell option premium to trading mean reversion pairs. I feel I can control my risk better then coming in one morning and finding out some stock I'm short is up 50% on a buyout. No way to hedge that.
Quote from Peternam:
I am beginning to think that Maverick talks like a salesman , non directional traders expose them to minimal risk, tie up less capital and generate more commissions, best risk/reward for the firm...
Will call to some prop firms and ask for numbers.
Peternam, let me throw you a bone here. The "true" prop firms I'm referring to trade at cost. Their commissions are practically zero. And since the trader puts up no capital, the firm is not making hardly any money on whatever commish they charge them. Why is this so hard for you to comprehend. I'm not referring to the Bright model here. I'm referring to actually "working" for a firm. Comprende?
Quote from Peternam:
Si, si senor ...
Like I said I will call to some true prop firms and ask for some numbers..that's what I and others should believe , capice ?
OK, you do that. I'll be looking forward to that report.
Hey Donny, how do I get a copy of that book "The Art of the Arb". Is it any good?