Quote from MohdSalleh:
Nothing to be sad about, the smart traders are making up for any changes with the JVC account and/or additional capital usage.
Not to worry....
Don
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Bright Trading's new payout model
- Thread starter Maverick74
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Nothing to be sad about, the smart traders are making up for any changes with the JVC account and/or additional capital usage.
Not to worry....
Don
Quote from Don Bright:
Actually, our commission revenue is down considerably, and doesn't even concern us that much overal - our net pricing is down 40%, obviously GS has not come down. As you mention, the use of capital, although cheap at 3% per year (for our JVC, and average for normal accounts) is "making" more money than commissions. As you noted, our firm's "edge" for traders is capital usage.
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Finally we get the admission why Bright has been pushing overnight equity pairs so hard the last few years - they aren't in the commission business anymore, they are in the loaning money for overnights business.
Capital is "cheap" at 3% per year, LOL. Do the math - Bright puts up $1, GS gives them $6.66 in leverage which Bright loans to traders at only 3% for a nice return of .03x6.66=20% a year on the initial Bright capital. Pretty expensive small business loan - Bright traders treat it like a business, right? Not a bad allocation of capital when you are keeping commissions and a 50% split on the profits too.
Actually, our commission revenue is down considerably, and doesn't even concern us that much overal - our net pricing is down 40%, obviously GS has not come down. As you mention, the use of capital, although cheap at 3% per year (for our JVC, and average for normal accounts) is "making" more money than commissions. As you noted, our firm's "edge" for traders is capital usage.
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Finally we get the admission why Bright has been pushing overnight equity pairs so hard the last few years - they aren't in the commission business anymore, they are in the loaning money for overnights business.
Capital is "cheap" at 3% per year, LOL. Do the math - Bright puts up $1, GS gives them $6.66 in leverage which Bright loans to traders at only 3% for a nice return of .03x6.66=20% a year on the initial Bright capital. Pretty expensive small business loan - Bright traders treat it like a business, right? Not a bad allocation of capital when you are keeping commissions and a 50% split on the profits too.
Maverick 74, are you an owner of a prop shop as well? I am stock trader myself (for the last 12yrs) and have been thinking for a while to start a new futures program within my trading plan. As I read what you have to say about the future of stock trading via a prop firm (which I have always used), I will like to know your insights.
Quote from Don Bright:
Nothing to be sad about, the smart traders are making up for any changes with the JVC account and/or additional capital usage.
Not to worry....
Don
Total b.s.
I know many "smart traders" who netted millions over the last few years and rarely had a down month. EVERYONE IS STRUGGLING NOW!
Maverick is telling it like it is. Stop sugarcoating everything with your usual "Bright rhetoric"
HFT algo's from Goldman, Getco, Tradebot, HRT, etc. have destroyed nearly every single edge and the collapse in volume has made it even worse. More than half the market volume is the huge HFT boxes flipping the same shares back and forth for rebates.
For once just stop with the company lines and tell the truth. Your guys are struggling too and many are only a few more months (at most) from dropping out of the industry like so many have over the last year.
Unless something is done to stop HFT frontrunning, the "prop" industry as we know it is dead within 2 years, probably much less. That is a fact.
The firms that are discussed here by the various posters are not prop firms. they are glorified retail firms that extend something called JBO leverage. that b/d rule has now been loopholed away from their original intent which was to provide leveraged market making in the70's. They then make traders into exchange members and payout something like 95-99%. Trader puts up a deposit and the moment he is down half his capital, he is cut down. When he approaches zero in his cap, he is completely shut down and asked to put up more capital. These firms are suffering the past few years because the principals of these firms are unwilling or unable to take any risk on trades and the HFT's know this. The HFT's are also the big swinging dicks and deepest pockets and can hold u over 48 hours, know everyone's open positions and screw everyone. the biggest swinging market making dick of all time. What's a thousand little subllc's with 100k up gonna do against these behemoths? They know where the easy stops are and where they are enforced by the firm prior to the close (since they don't want overnight risk). a trade that will make hundreds of thousands the next day will most likely need to be covered in an unrealized loss because these firms are not willing to risk anything. That model is over. The irony is that the big shops like GS and co. figured that out and said hey if 40% of the volume is done by this JBO thing why can't we? why can't we also f*ck the rules. If 40% of the total volume in the late 90's to mid 2000's were done by jBO'ed props then it's ok right? so they went on and bot SLK, became specialists and now run the system. So the whole market making thing got abused and the funny thing is you guys inadvertently created HFT's. HFT is just an evolution of discretionary daytrading of the 90's, 9married puts, naked shorting, frontrunning, etc.
Btw, The true prop models are still chugging along. Why? because the owners risk their capital. I think what you had the past decade was a free for all. The free lunch is over. Anybody from just about any background could open up a prop subllc or b/d and markup clearing. That this model is now unsuccesful doesn't mean prop trading as a whole is ending. like how online brokers killed the stockbrokers in the 80's. like how the mouse replaced the telephone call. like how daytraders replaced the specialist firms, lebranche, etc. Adapt or die.
Btw, The true prop models are still chugging along. Why? because the owners risk their capital. I think what you had the past decade was a free for all. The free lunch is over. Anybody from just about any background could open up a prop subllc or b/d and markup clearing. That this model is now unsuccesful doesn't mean prop trading as a whole is ending. like how online brokers killed the stockbrokers in the 80's. like how the mouse replaced the telephone call. like how daytraders replaced the specialist firms, lebranche, etc. Adapt or die.
Quote from Gurdjieff:
What happens when the trader loses the money? Doesn't bright have to absorb the loss? Sounds Like a poor risk reward to me. Bravo to don for keeping it real. Lots of little puss dogs nipping at your heels when you are top dog
the truly remarkable thing is 95% of all daytrading volume through the thousands of trading firms out there is cleared thru 1 of 3 or 4 of the major clearing firms. they know ALL your positions yet you all choose your predator. and they also have a buyside desk which "makes markets" off that.
Never understood why trading firms never teamed to self clear themselves. REal geniuses in this biz.
Never understood why trading firms never teamed to self clear themselves. REal geniuses in this biz.
(name deleted) â Chief Strategy Officer
(name deleted) has served as Chief Strategy Officer since joining Lightspeed in 2006 as a result of its acquisition of Schonfeld & Company. He currently focuses on the growth and expansion of Lightspeedâs Algortihmic Trading and Trading Group business lines. Previously, Mr. X served as CEO for Schonfeld & Company. He joined Schonfeld & Company in August of 2002 and was responsible for managing the activities of the overall operation of Schonfeld & Company and the supervision of all operational personnel. In addition, Mr. X managed the customer service, relationship management and retail branches of the firm. Mr. X joined Schonfeld & Company upon its acquisition of Broadway Trading, LLC.
http://www.forbes.com/lists/2009/54/rich-list-09_Steven-Schonfeld_5ISP.html
connect the dots folks..
(name deleted) has served as Chief Strategy Officer since joining Lightspeed in 2006 as a result of its acquisition of Schonfeld & Company. He currently focuses on the growth and expansion of Lightspeedâs Algortihmic Trading and Trading Group business lines. Previously, Mr. X served as CEO for Schonfeld & Company. He joined Schonfeld & Company in August of 2002 and was responsible for managing the activities of the overall operation of Schonfeld & Company and the supervision of all operational personnel. In addition, Mr. X managed the customer service, relationship management and retail branches of the firm. Mr. X joined Schonfeld & Company upon its acquisition of Broadway Trading, LLC.
http://www.forbes.com/lists/2009/54/rich-list-09_Steven-Schonfeld_5ISP.html
connect the dots folks..
Quote from Lights:
the truly f&cked up thing is 95% of all daytrading volume through the thousands of trading firms out there is cleared thru 1 of 3 of the major clearing firms. they know ALL your positions yet you all choose your predator. and they also have a buyside desk which "makes markets" off that.
Never understood why trading firms never teamed to self clear themselves. REal geniuses in this biz.
Are you saying that the Clearing firms have buyside desks?
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