Bright Trading's new payout model

[Finchy]

Quote from GGSAE:

I don't think Bright's model is in danger (i'm not exactly sure why Don hasn't mentioned it, although I can think why), one word - haircuts. I think bright's made more off me in haircuts than commissions and if not it's pretty damn close.

Exactly, Bright is no longer in the commission game, they are in the lending money game. Nothing wrong with that in itself, but it affects the advice they give to their traders, which is frequently not in traders best interests but in the interests of Brights bottom line. For example,

They bashed low-volume intra-day momentum trading in favor of first, high-volume scalping of low-priced stocks in the earlier part of this decade, and second, in favor of overnight pairs during the last few years. They are not in the business of traders making the most money for themselves, they are in the business of making the most off traders that they can. Again, nothing wrong with that, but they shot themselves in the foot by not partnering with better traders in a true prop model in favor of incubating mediocre traders that they could steadily milk over the years. Those traders that could barely make a living before are just bleeding away now. Meanwhile the true prop shops that worked to maximize their traders' take-home (sometimes at the expense of the owners' bottom line in the short term) have committed highly skilled traders with the capital to be patient in low-vol, HFT difficult markets.

You also see it in their encouragement of low-capital traders to carry large overnight positions - "only" 2%, 4%, 6% haircut interest works out to 13%, 27%, and 40% returns on Bright's capital (with 6.66 leverage) - no wonder they want guys to break even and hold the maximum amount of overnights, and no wonder they dont want traders putting up large amounts of capital. And no wonder they bash the hedge fund model - they dont want well-capitalized traders paying profits to investors to manage/borrow their money, Bright wants to charge the haircut themselves. Meanwhile when those traders struggle, they take 100% of the losses at Bright and have no cushion or support.

Bright can run their business any way they want to, and they are certainly not the only churn-and-burn prop shop, but they are one of the more outspoken ones in claiming that they aren't churning-and-burning, which seems a little off.

 

[shortie]

Quote from GGSAE:

Well swing trading will always be profitable (for the experienced trader), but yes the common theme is that the risk/reward setups are just not there, I think the only edge is taking it over the longer timeframe...I've just started looking for doing something else during my days, since most of what I do is automated anyway it's really tough to justify sitting here scratching my balls in favor of something else.

\

have you tried one of these?

 

[GGSAE]

Quote from shortie:

\

have you tried one of these?

I prefer the tightened rope (always have some onhand) and you get lower sperm count as an added bonus...I don't know why we're not having any luck honey, something must be wrong with you!

 

[zdreg]

Quote from Finchy:

Exactly, Bright is no longer in the commission game, they are in the lending money game. Nothing wrong with that in itself, but it affects the advice they give to their traders, which is frequently not in traders best interests but in the interests of Brights bottom line. For example,

They bashed low-volume intra-day momentum trading in favor of first, high-volume scalping of low-priced stocks in the earlier part of this decade, and second, in favor of overnight pairs during the last few years. They are not in the business of traders making the most money for themselves, they are in the business of making the most off traders that they can. Again, nothing wrong with that, but they shot themselves in the foot by not partnering with better traders in a true prop model in favor of incubating mediocre traders that they could steadily milk over the years. Those traders that could barely make a living before are just bleeding away now. Meanwhile the true prop shops that worked to maximize their traders' take-home (sometimes at the expense of the owners' bottom line in the short term) have committed highly skilled traders with the capital to be patient in low-vol, HFT difficult markets.

You also see it in their encouragement of low-capital traders to carry large overnight positions - "only" 2%, 4%, 6% haircut interest works out to 13%, 27%, and 40% returns on Bright's capital (with 6.66 leverage) - no wonder they want guys to break even and hold the maximum amount of overnights, and no wonder they dont want traders putting up large amounts of capital. And no wonder they bash the hedge fund model - they dont want well-capitalized traders paying profits to investors to manage/borrow their money, Bright wants to charge the haircut themselves. Meanwhile when those traders struggle, they take 100% of the losses at Bright and have no cushion or support.

Bright can run their business any way they want to, and they are certainly not the only churn-and-burn prop shop, but they are one of the more outspoken ones in claiming that they aren't churning-and-burning, which seems a little off.

your post answers the question in main why Bright has never commented on the FTT (financial transaction tax)

 

[Lights]

That's what Goldman argued too.

Quote from USAtrader:

It is perfectly normal to see "your trader's" positions as someone who runs a group or trading firm. 1) If and when they blow through their capital it is your money that is being bled, and 2) If you are training you can learn a lot about a trader's (bad) habits from seeing their activity. Normally you're just looking mainly at trader's p/l to manage risk, but have ability to drill down on any detail, and all depends on kind of operation.

 

[AMT4SWA]

Quote from Maverick74:

I'm not sure I understand the question. If you are asking about payouts we are at 95%. However we back some of our market makers so there is a bigger profit split there.

What arrangement or set up is at 95%.....is that the futures proprietary or equities only model?

TIA!

BTW, I have always heard good things about your firm!

 

[Magna]

I remind everyone this thread is about Bright's payout model so please stay on topic. If you want to have an ongoing discussion with someone else about their firm please do it via PM. And this is not a thread about Maverick's firm (who has promised me, on many occasions, that he will not discuss here even if it's just answering questions). Thanks.

 

[Maverick74]

Quote from Magna:

I remind everyone this thread is about Bright's payout model so please stay on topic. If you want to have an ongoing discussion with someone else about their firm please do it via PM. And this is not a thread about Maverick's firm (who has promised me, on many occasions, that he will not discuss here even if it's just answering questions). Thanks.

Yes Magna and I have honored that promise. I have also asked posters to stay on topic. Now back to Bright Trading...

 

[Maverick74]

Quote from Maverick74:

Don, I'm curious why you have the 1000 share threshold on your rates? For these smaller traders, you are encouraging them to trade size that maybe they should not be trading. Hell when I started trading at Worldco back in 2000 I had a 100 share limit to start. And even when I was trading 300k shares a day, I would say 75% of my traders were under 1000 shares per order. In fact many of them were 100 share orders when I carried 5k to 8k share positions. The reason for this is we liked to tick the listed stocks. Do you think it's smart to incentivize newer and smaller traders to trade that kind of size?

BTW, I got your messages.

Don, would love to get a response to this earlier question. I know a previous poster mentioned 1000 shares is not what it use to be however I would argue that really depends on capitalization. If it's true that Don really is taking guys in with 10k (which I highly doubt) but 1k shares is a lot of risk not just in trading terms but in terms of commissions. A guy can easily blow through 10k in 3 months while trading flat gross.

 

[AMT4SWA]

Quote from Magna:

I remind everyone this thread is about Bright's payout model so please stay on topic. If you want to have an ongoing discussion with someone else about their firm please do it via PM. And this is not a thread about Maverick's firm (who has promised me, on many occasions, that he will not discuss here even if it's just answering questions). Thanks.

Actually this is a complete failed mentality imo....why not compare various prop models in this thread under the current market and regulatory conditions. It is very obvious things are changing right before our eyes and this overly sensitive approach to some of these threads is very disappointing imo. And I do not give a damn if this firm or that firm does or does not advertise here.....sheeesh. So we only get to talk about firms who advertise here.....come on???

If mav had initiated promoting his firm that is one thing, but I asked a very simple question and I have been here since 2002 for cripes sake......and much of this thread is a stupid back and forth between some posters......lets get that garbage resolved and move on with discussions about prop payouts (of course the Bright model too).

Bob is not even here to answer the Q's so lets get something of value to talk about.......OTHER PROPS!

:eek: :eek: