Bright Trade

Maverick,

You are being far too hard on the pairs strategy. For example, I employ in a style very similar to Bright, where I don't necessarily trade both legs, but will trade one side of the pair and "lean" on the other. I realize that if I don't have both legs on at once it is hard to call it a true pair trade, but I assure you that it is not a strictly single sided trade either.

I agree, or should I say, I wish, that firms should offer a special rate for pair trades executed as such on equities in the same sector long/short. So in your execution software, you enter the order as a "pair order". If only one side of the leg gets executed that day, you pay whatever your normal rate with your firm is. But if you execute the other leg, then that leg gets rebated on a very aggressive scale per 100 shares mached. I think this is a win/win situation for trader/firm, but it won't fly.

nitro
Quote from Maverick74:

Yes, Nitro, the daytrading stock model is a churn model. Does Echo and Schony also focus on pairs? Because pair trading is the (churn model)^2.

Double the commissions, double the fun. :)
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Quote from nitro:

Maverick,

You are being far too hard on the pairs strategy. For example, I employ in a style very similar to Bright, where I don't necessarily trade both legs, but will trade one side of the pair and "lean" on the other. I realize that if I don't have both legs on at once it is hard to call it a true pair trade, but I assure you that it is not a strictly single sided trade either.

I agree, or should I say, I wish, that firms should offer a special rate for pair trades executed as such. So in your execution software, you enter the order as a "pair order". If only one side of the leg gets executed that day, you pay whatever your normal rate with your firm is. But if you execute the other leg, then that leg gets rebated on a very aggressive scale per 100 shares mached. I think this is a win/win situation for trader/firm, but it won't fly.

nitro
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Nitro,

It's not my intent to say whether pair trading is a good or bad strategy. I am simply saying, one of the reasons Don is still around in the stock game is because of the fatter then normal margins pair trading provides for it's firm's owners.

In other words, even if 100% of Don's pair traders were net profitable, it would not change my argument. Nor would it change if none of Don's pair traders were net profitable.

There is a reason why most stock firms have gone the way of the dinosaurs. Bright Trading is still in business today for better or worse because of pair trading. You guys can start another thread arguing the validity of it as a strategy. I'm not debating that one way or the other.

Let me put this another way. If the SEC made pair trading illegal tomorrow and Don was forced to become an options prop firm, good old Donny boy would leave the prop firm business with his brother and play poker for the rest of his life. Perhaps open a Poker school.
 
Maverick,

I hesitate to comment on this because I honestly don't know how the histogram of profit margin at Bright is accounted for. But the statement you made that pairs is the make or break strategy for a pro firm today is truly surprising to me. I hope that Don and perhaps other pro firms would affirm or repudiate this assertion you made because I find it hard to believe.

nitro
Quote from Maverick74:

Nitro,

It's not my intent to say whether pair trading is a good or bad strategy. I am simply saying, one of the reasons Don is still around in the stock game is because of the fatter then normal margins pair trading provides for it's firm's owners.

In other words, even if 100% of Don's pair traders were net profitable, it would not change my argument. Nor would it change if none of Don's pair traders were net profitable.

There is a reason why most stock firms have gone the way of the dinosaurs. Bright Trading is still in business today for better or worse because of pair trading. You guys can start another thread arguing the validity of it as a strategy. I'm not debating that one way or the other.

Let me put this another way. If the SEC made pair trading illegal tomorrow and Don was forced to become an options prop firm, good old Donny boy would leave the prop firm business with his brother and play poker for the rest of his life. Perhaps open a Poker school.
More...
 
Quote from nitro:

Maverick,

I hesitate to comment on this because I honestly don't know how the histogram of profit margin at Bright is accounted for. But the statement you made that pairs is the make or break strategy for a pro firm today is truly surprising to me. I hope that Don and perhaps other pro firms would affirm or repudiate this assertion you made because I find it hard to believe.

nitro
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No, I think it's a make or break for Bright. Most pro firms left stock trading behind years ago. At least in terms of being only a stock firm. I am going to take a guess here and obviously Don will post tomorrow and either agree with my number or post his own numbers. I say at least 75% of his revenues are derived in one form or another from pair trading.
 
Nitro, the 10K sub acct deposit is not just a way to keep score. Class B contributions determine how much leverage u can get but the most critical aspect of that "mere" 10K is the fact that that is the floor after which the Class A owners will push the" liquidate all positions" button.
 
Quote from GATrader:

BTW, let me go out on a limb here that when Reg NMS goes full implementation in 3-5 months , OO's will be relegated to the "Do you remember the time when?..."
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Can you explain why you think this will happen? The opening print (and closing print) will be exempt from Reg NMS as a benchmark exception from what I've read. Page 155 if you're curious.
 
I should've phrased it as Reg nms could be one of the final nails in the OO's. As much as I hate to see and admit it, here are some probable reasons..

1. fragmented market-with Reg NMS, the buysides might have other alternatives than routing solely to NY since they know that their order at the Pcoast or Chicago will have equal footing with NY. In that scenario, there would be far less 500K shares to sell at the Opening in NY. While there might still be 500K to sell, 100k of that might be in Pcoast, another 100k in Chicago. Smaller blocks=smaller imbalance at 1 place.

3. The specialist can't lock the quote and do a clean up print since the algos will auto cancel/replace /reroute any partials to another exchange. Think of it as "musical chairs" for the 100k share order where any unfilled order after 1 second goes to the next chair.(ie. exchange)

4. Algos-a whle back the order goes to a $2 broker to be done at the opening . Now, the Fidos of the world gives it to an execution firm who then plugs it into algos offered by REDI or Lava and leaks out the sell orders throughout the 6 hour day.

Please don't shoot the messenger.
 
Quote from Maverick74:

Yes, Nitro, the daytrading stock model is a churn model. Does Echo and Schony also focus on pairs? Because pair trading is the (churn model)^2.

Double the commissions, double the fun. :)
More...

ok... this is starting to irritate me. mav... define churning? i want actually parameters. what pairco is doing, i dont consider churning.
 
howdy folks
didn't know i was gonna create so much conversation, lol.

anyway, just want to use options for hedging, not solely trade options. i like trading options, but if i start trading stocks, i gotta have options for protection, that's all. i would rather trade stocks since they trade tick by tick with little spreads compared to option spreads which are outrageous for volatile stocks.

peace out....:)
 
Quote from larrybf:

i am not looking to join bright trade BUT if i was my primary consideration would be whether being a member of a prop firm would help me be a better trader.........some people say yes.... some say no .... so basically who knows ????
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Personally, I know most of the traders that joined with the New York (thieves) at Onsite Trading only wish they had lucked out with the Bright Brothers, or another more honest firm that the marmalukes and grifters at Onsite.

Those jacks boasted of having taken a Federal judge's wife for over $80,000.00 in her account, and never having repaid it, whatsoever.

Its a wonder why there weren't "visitors" to the doorsteps of those long island snookers sooner. Seems the men in black finally caught up with most of them, but for other reasons.

So, all in all, Wall Street, in New York City was loaded with the bodies of want to be traders, whether it was with the thieves at Onsite, or with the chop shops of fame that have disappeared, Bright Brothers guaranteed their traders monies. When Andover went over to the Assent name, and changed or added the terms in their contract where by one office would guarantee the debts of another office, or something to that effect, then you can see the value and differnece, both in disclosure and in honesty.

I would say, sit down with the Brights and work your own deal. I am certain their heavy hitters are happy and allowed to keep their money instead of those (I won't mention their religious affiliation, but will say they made it a matter of discussion, as if they were more honest than other faiths) firms that play games with ones balances...

cheers
 
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