Bright trading and any thoughts

[Moneyball]

Quote from Szeven:

Would you trade for 5 years full time and make 0 or less than 0? Would anyone?

I think silly arguments like this just hurt the credible arguments of others on this thread.

It's actually more than you'd think. I find it odd myself, but I know a few group leaders who have had guys trading under them for several years without making any real money (not Bright traders mind you, I just mean in general).

I think the main point of his statement was "intraday". It seems Bright's costs are must more palatable for traders who take overnights and don't trade as actively. That's when most of their "benefits" can make a difference. For guys who don't need those extras, the higher commission costs just don't make sense.

Financial stability is obviously important, but at what cost? Eric said he's saved over $1MM over the last 18 months at his firm vs. Bright, so even if he had $500K in his account with a "shady" prop firm, it went out of business and he got $0 back (not likely, but just for argument's sake), he's still up over $500K. Obviously most traders don't put up the numbers he does, but everyone needs to weigh all factors for themselves. For some people, Bright makes a lot of sense obviously, and for others, it's not even a reasonable option because of the commissions. Don himself has said this over and over.

 

[EricP]

Quote from Szeven:

Would you trade for 5 years full time and make 0 or less than 0? Would anyone?

I think silly arguments like this just hurt the credible arguments of others on this thread.

I see your point. I suspect that he was probably probing at how many of the clients maintain open accounts, but trade extremely infrequently. For example, if I'm not mistaken, Chris Jesus Ferguson is a Bright Trading client, but if my memory is correct, Don has mentioned that he has traded little if any during many years (as he focuses on playing poker). Taking this example to the (unrealistic) extreme, there might be 500 'traders' like Chris Ferguson with inactive accounts at Bright, enabling Don to state that "over 50% of our accounts have been open for over 5 years".

If I'm not mistaken, I think that's the point that NYOBScalper may have been making. Since Don repeatedly states that "over 50% of their clients have been with them for over 5 years", I think it's a valid question to ask what percentage of those 5+ year clients are consistently successful (his threshold being $25k+ per year), versus the rest that might be net losers or more likely inactive accounts. I will take Don at his word if he answers directly that 90%+ of the clients that have been with Bright for over 5 years are consistently making over $25k per year. (Don: You know that I don't view you as dishonest, but you are indeed a spinmaster - so, if you'd like to duck on this question, that's fine, but if you'd like to answer it, I think most of us will trust your direct answer to this question).

 

[NY0BScalper]

Quote from Szeven:

Would you trade for 5 years full time and make 0 or less than 0? Would anyone?

I think silly arguments like this just hurt the credible arguments of others on this thread.

I agree most people who get churned by a prop firm will only last 1-2 years at most. Getting behind on a year's living expenses and making use of credit can take many decades to pay back.

If you refrence this thread, however, http://www.elitetrader.com/vb/showt...126483&perpage=6&highlight=years&pagenumber=6

Where I ask him this:

Don,

you say 50% of your traders have been with you for at least 5 years.

What percentage of your overall traders have taken out over $125,000 net in that time frame (i.e. $25k/year)?

----

To which Don replies

"Regarding $25K....LOL...look, I'm not going to go back through 16 years of accounting to check for sure. And, I have traders who just let the accounts build up to carry bigger size home. And, if some trader wants to continue trading, it's up to thm about his draws or continuing. IMO, why would anyone keep doing this if they weren't making a good living."

From the sounds of that answer, more people have been with Don for 5+ years making under $25k/year than you would imagine.

I'm not sure which part of that response gives Don away more: the part where he tries to act like it's too difficult to give a factual numerical answer, or the part where he pretends he can think of no reason why someone would continue to fail (addiction? gambling problems? people with lots of money who are bored? people who trade 200 shares per day in volume?).

Also, can you really trust a salesman who types LOL so often, when there is no humor involved whatsoever? I can't, but gee does seeing that LOL make me feel warm and fuzzy... not warm and fuzzy enough to throw away an extra $90k/year of my profits in Don's pocket, however.

 

[UDon'tKnowMe]

Quote from reg:

No I don't. I take Goldman Sachs' word for it.
If Bright Trading is good enough for Goldman to do business with, then they're good enough for me.

Bright clears through GS because bright cleared through Spear Leads before it was bought by GS. Bright was grandfathered in. And before GS bought Spear Leads, Spear Leads reputation was about the same as Penson's is today.

And for the most part GS will take anyone on as a new client as long as you are willing to pay higher commissions to use their name brand as your clearing, and you pay them a specified minimum in commissions each month. And you put down what they require for a security deposit. Especially if your BD is only an exchange BD like Bright and not a FINRA BD. Big difference between exchange BD and FINRA BD especially in terms of commission rates and and having to get passed the credit committee. An exchange BD is just one acount for the BD with sub-accounts. And there is no FINRA restrictions and compliance (exchange's restrictions and compliance are a joke compared to FINRA). So it is so much cheaper and easier for a clearing firm to clear for an exchange BD. That is why clearing firms love exchange BD's, it is easy no hastle money for them. If Bright was a FINRA BD I would guess that the rate GS would want to charge Bright would cause Bob to switch to Penson. As long as you are willing to pay them, GS will do business with anyone. Clearing through GS doesn't mean a BD is better than a BD that clears through Penson, it just means that BD pays higher commissions.

 

[Don Bright]

Quote from RedEyeFly:

Don,
So far the greater portion of the discussion has been over trading fees and basic overhead conditions. If I could I would like to ask a few questions of your operation and how it may appeal to equity option traders.

I've been trading equity option positions for several years now, focusing mostly on income based, positive Theta strategies with the goal of netting 5-15%/month. My positions frequently become semi-complex and are risk/portfolio managed with greeks.

Are there many traders in your firm who may match this profile? Do you have individuals or groups who focus on option/index option/equity option strategies? What benefits would a prop shop offer to an options trader. Do you support traders who may use options for positions which could potentially be held for over a month? What commissions are involved with this? What profit sharing structure does your firm employ (unless this is confidential)?

Thank you for your time,

Best,
Eric

We don't really trade options much. A few do, but not many. As far as holding for month(s), sure. Option commissions are very high since we have not bothered to negotiate volume pricing.

Not much call for "leverage on leverage" overall.

Try Maverick's firm, Vtrader.

Don

 

[Don Bright]

Quote from NY0BScalper:

So GS only does business with ethical parties, never pure scumbag criminals? (Not saying that Bright is that, but if they were, I don't see any evidence to show that GS would avoid business with them unless GS thought they would be prosecuted and tarnish GS' name, making other parties less likely to do business with GS).

So again, Don, I asked you this in another thread... what percentage of your guys who are daytraders, guys who predominantly trade intraday and go home flat everynight have made over $25,000 pre tax income for over 5 years? You talk about your excellent retention rate, yet of those who retain you never show proof that they're profitable guys and not lost hopeless junkies.

I'm not going to search the records, maybe you can show us your records? If you really think traders are going to continue trading for a decade not making any money, well, that just doesn't make any sense. Ask Serge how many Genesis guys are (I assume he's still in charge over there?).

One more thing...I chatted with my brother about your comment about sub 20 cent commissions and 10 to one overnight leverage (maybe more).

He said, excellent...call Serge and ask if we can open an account with $10million and use $100 million. Before I call Serge, do you think that would be doable? I really am curious since I personally pay much more than that for execution and clearing.

(I do appreciate keeping the Bright Trading thread at the forefront, an abundance of phone calls this last couple of weeks).

All the best,

Don

 

[Don Bright]

Quote from UDon'tKnowMe:

Bright clears through GS because bright cleared through Spear Leads before it was bought by GS. Bright was grandfathered in. And before GS bought Spear Leads, Spear Leads reputation was about the same as Penson's is today.

And for the most part GS will take anyone on as a new client as long as you are willing to pay higher commissions to use their name brand as your clearing, and you pay them a specified minimum in commissions each month. And you put down what they require for a security deposit. Especially if your BD is only an exchange BD like Bright and not a FINRA BD. Big difference between exchange BD and FINRA BD especially in terms of commission rates and and having to get passed the credit committee. An exchange BD is just one acount for the BD with sub-accounts. And there is no FINRA restrictions and compliance (exchange's restrictions and compliance are a joke compared to FINRA). So it is so much cheaper and easier for a clearing firm to clear for an exchange BD. That is why clearing firms love exchange BD's, it is easy no hastle money for them. If Bright was a FINRA BD I would guess that the rate GS would want to charge Bright would cause Bob to switch to Penson. As long as you are willing to pay them, GS will do business with anyone. Clearing through GS doesn't mean a BD is better than a BD that clears through Penson, it just means that BD pays higher commissions.

Actually, we started with SLK back in 1978...they were the largest NYSE Specialist firm for decades, which gave us a lot of help with our trading and market access.

When Goldman bought SLK, they only kept a few trading firms, and we were very glad to have been kept on. We spent a lot of time in NYC and Chicago during the change over, and still enjoy an excellent relationship.

We tried another firm for a short time, but at one point we checked the total capital and it made us nervous to have our money with a "bank" who had less money than we did at the time.

As far as the LOL goes, sorry that I enjoy my life rather than being miserable and hateful all the time (not that you are, but you get my drift).

Don

 

[Don Bright]

Regarding FINRA etc. The way I understand it (I rely on my Compliance Officer, the best in the business for this kind of stuff)...Any firm can be a simple Introducing Broker with basically zero money when going that route (vs. a standard Broker Dealer, not a big deal) . FINRA is mainly for retail accounts anyway. Our traders are all registered with FINRA now anyway. (Just to clarify). All new registration packets since April.


Don ...... Expiration opening yea!

 

[tango29]

I liked to thank all who have posted and expanded this thread. Sometimes cranky, but I have actually learned a lot more about the equity side of life reading the various posts.

 

[EricP]

Quote from Don Bright:

One more thing...I chatted with my brother about your comment about sub 20 cent commissions and 10 to one overnight leverage (maybe more).

He said, excellent...call Serge and ask if we can open an account with $10million and use $100 million. Before I call Serge, do you think that would be doable? I really am curious since I personally pay much more than that for execution and clearing.

C'mon, Don. You know that you don't have the volume nor the track record to support that, even including the boot campers. If you are looking for a better place with lower rates, however, you might want to call other firms discretely, to reduce the impact on your brokerage business.

Spin, spin, spin. Just curious, Don. How many of your <i>clients</i>, have capital accounts of $10M? Don't trouble yourself, if it's too much difficulty to filter through '18 years of records' to find out.

P.S. And I talked to my big brother as well, but I'm going to leave him out of this.