Bright Trading's new payout model

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Quote from Shreddog:

My understanding is that under this business model trader deposits are no longer allowed. So the risk falls fully on the firm. Correct Don?
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False. Trader puts up 100% of the risk.
 
Quote from Maverick74:

False. Trader puts up 100% of the risk.
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Seriously? 80/20 and there's still a deposit? Still sounds like a customer model to me if the trader is at risk of losing his own money.
 
Let's put it in terms we all understand, shall we?
No way in hell I'm handing over 20% to my broker.

Quote from Shreddog:

Seriously? 80/20 and there's still a deposit? Still sounds like a customer model to me if the trader is at risk of losing his own money.
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Quote from sulli:

As Far as the 80/20 payout - Couldn't you just give free commissions & interest up to 20% of the traders profits? If possible, that would be a good work around. Giving up 20% is a hell of a lot for taking most of the risk.
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Bear with me guys, much more to come.

Don :)
 
Quote from Maverick74:

False. Trader puts up 100% of the risk.
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That is not the spirit of the regulation motivating the 80/20 split in the first place.

Unless you folks are designing some workaround where the trader also shares in the profits of the firm, the standard model is going to be gone if/when the SEC weighs in in its official capacity.
 
Or rather, I would, but under a totally different structure. Commissions, risk capital, losses, leverage would all have to fundamentally change from the past models. At least for experienced traders. Rookies, 80/20 probably makes sense. I thought all the props used this as the starting point...

Quote from CQNC:

Let's put it in terms we all understand, shall we?
No way in hell I'm handing over 20% to my broker.
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Quote from sulli:

As Far as the 80/20 payout - Couldn't you just give free commissions & interest up to 20% of the traders profits? If possible, that would be a good work around. Giving up 20% is a hell of a lot for taking most of the risk.
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Sure there is probably a lot of things Don is working on right now as we speak and every one of them cuts into his operating margins big time. The pie just keeps getting smaller and smaller. Don is the equivalent of a buggy whip salesman that that refuses to accept the concept of the automobile.
 
Quote from Steelhead:

maverick-----just curious? what do you do? derivatives? do you believe day trading is finished for equities
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I trade futures mostly and some options. I don't think equity trading is done at all. I think equity prop trading is finished for good. At some point people like Don are not going to be able to find a way to justify the risk for such small margins. It's just not worth it.

Now, as I've said before, the Brights have capital and maybe they will create a new firm that will operate more like a hedge fund where they all trade for p&l. You know they teach all these guys how to fish, let's see if they put their money where their mouth is and see if they can actually live off the fish they catch, not their commissions.

Mark my words, the commission model for equities is over.
 
Quote from Maverick74:

Let me re-phrase what I'm trying to say. A trader with 10k in capital has close to zero chance of ever making it. I know that, Don Bright knows that, Bob Bright knows that and everyone on the street knows that. This is what I was trying to get at when questioning Don about taking in 10k accounts, or youngsters as he likes to call them.

Look, when I started at Worldco back in 2000, we had arguably one of the best markets in history to trade. The only way we could produce good traders was to let them go anywhere from 25k to 100k deep in the red in their accounts. Even the guys that came in with capital, usually 10k to 20k, we let them go 50k into firm money. The good ones dug their way out and did well. The bad ones we cut. Net net they never really lost that much money on them as it was mostly commissions.

I know I'm not suppose to say this but the biggest fraud of the prop firm business is not commissions, or leverage, or whether or not you need a series 7, it's the fact that firms sells the dream of success to young guys that don't know any better. Well I do know better. I know it not because I'm a smart ass trying to pick a fight with Don, this really has little to do with Don in particular, it has to do with the fact that I've been in this business for 10 years and have been around over 1000 traders who have gone through the system. I know the numbers because I've seen the numbers.

There is a direct correlation between the amount of capital you have to trade and your odds of success. Not leverage, CAPITAL! These numbers are indisputable. I know them, I've seen them.

At the end of the day, after 10 years, I realized the biggest edge in this business is not computers, not charts, not leverage, but equity. Pure old fashioned good american equity. If anyone tries to tell you otherwise, they are probably trying to sell you something.
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One of the top 100 posts on ET - bar none... :eek:
 
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