Bright Trading's new payout model

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"Don" (i.e. the industry), should be looking at converting their shops to hedge/prop trading funds using bank capital in a new secondary tier to bypass the pathetic 3% restriction the volker rule has imposed.

to assume GS and the followers won't find ways to dump more than the 3% outside their leftover prop shops in the four years they have left to rape the system for as much as they can, would be to assumed a fool.

so yes, "someone" should do this...
be interesting to see who comes out of the gate first with the best model.



Quote from Maverick74:

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.
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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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This is probably one of the best posts I have seen here in some time! Give a newbie with 10-20k 100:1, and he's a gonner sooner than later.

Maverick needs to get paid for that post!
 
I think a guy like Maverick should step up and form his own group, back up what he knows with real world commitment, and in the process, get filthy stinking rich.

It's one thing to say it, another completely to prove it.

Quote from LEAPup:

This is probably one of the best posts I have seen here in some time! Give a newbie with 10-20k 100:1, and he's a gonner sooner than later.

Maverick needs to get paid for that post!
More...
 
what im learning is position sizing is important these days. I have friends who are used to trading 50 lots in the bonds who now trade 10 lots with the intention to add. I personally got smoked in 09 trying to jump in with the spurs jingling and jangling trading equities. Maverick thanks for the insight.
 
Quote from JamesVU2000:

No one is going to make any money until the US fixes its longterm problems. No one is killing it this year. HFT is bogus, it was great in 08 and now there is no money in it
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Interesting -- I've been wondering how the HFT's are doing, now that markets seem to be becoming mercilessly efficient in the short term. IBKR is, by my reckoning, one of the largest (as well as one of the original) HFT firms -- the IB brokerage was seemingly tacked on to their existing HFT model, somehow magically making them a non-HFT in the minds of the press. That said, going forward they might indeed become more of a broker than a market maker given how much market making margins are shrinking.

http://www.zacks.com/stock/news/37452/Interactive+Brokers+Misses+Again

I wonder how the others such as Automated Trading Desk, GETCO, Wolverine, Optiver, Tradeworx, etc. are doing in this environment.
 
Quote from Maverick74:

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.
More...

I'm not arguing with you, I'm just kinda curious as to why you believe the commission business is dead.

In both models really the trader is doing the same thing... trading.
So I'm not really sure what the difference is by charging him commissions or by charging him a % of profits like a hedge fund.

I don't understand how one model can work and one model not work, when really they are the same thing, at the end of the day the firm gets a %... either in the form of commissions or % of profits
 
Quote from WhiteOut56:

I'm not arguing with you, I'm just kinda curious as to why you believe the commission business is dead.

In both models really the trader is doing the same thing... trading.
So I'm not really sure what the difference is by charging him commissions or by charging him a % of profits like a hedge fund.

I don't understand how one model can work and one model not work, when really they are the same thing, at the end of the day the firm gets a %... either in the form of commissions or % of profits
More...


You are not making sense. Assuming profits is very weak and a recipe for total disaster for anyone.

How can you have a % of profits if there are NO PROFITS?

You can always make commission vig--trader wins or loses.
 
Quote from Bloomberg13:

You are not making sense. Assuming profits is very weak and a recipe for total disaster for anyone.

How can you have a % of profits if there are NO PROFITS?

You can always make commission vig--trader wins or loses.
More...

...which would imply the commisson business is still more viable. I'm asking why maverick thinks the commissions biz is done and the hedge fund model is in when they are really the same thing.
 
Quote from CQNC:

I think a guy like Maverick should step up and form his own group, back up what he knows with real world commitment, and in the process, get filthy stinking rich.

It's one thing to say it, another completely to prove it.
More...

He does run a group.

:D
 
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