Wouldn't you want to wait to see how all this FINRA and SEC rulings for the Props settles out completely before committing yourself to the task of getting your Series 7 and other time and money expenses
Bright Trading's new payout model
- Thread starter Maverick74
- Start date
- Status
Wouldn't you want to wait to see how all this FINRA and SEC rulings for the Props settles out completely before committing yourself to the task of getting your Series 7 and other time and money expenses
Quote from EdgeHunter:
Wouldn't you want to wait to see how all this FINRA and SEC rulings for the Props settles out completely before committing yourself to the task of getting your Series 7 and other time and money expenses
Too bad prop trading is finished. It was a good business while it lasted.
Maverick, Don
Thank you for this thread. And thanks to Don for replying. I am (or should I say, I Was?) in the process on joining BT, but what i have learned from this thread and new 80-20 development that did put some doubts in my mind.
This is how i compared BT with my IB account. Points that I considered in favor of BT, assuming the previous 100% model are as follows.
1. DB charges about $235 per month (that includes NY/NASDAQ exchange charges, GS software charges etc). This money does not go to BT directly, but goes to exchanges as professional membership fees etc. If you are Just retail trader(IB), you don't have to pay this fees.
These charges (or about $200) can be waived if you generate enough volume per month. I do not have exact number.
I looked at it like cost of doing business. about $2500 per year. It is worth trying for at least a year.
There is no point in taking trades, generating volumes for the sake of it so that one can save $200 per month on commission rebate.
At least not for the new ones starting with them.
2. It seems, you can get "streaming quotes" from the software (Redi plus?) for about 800-1000 tickers. Note that IB gives only 100.
to get that 1000 streaming quotes, one may have to pay about $120 per month from other service providers.
You can use streaming quotes to hook up with Excel and generate alerts based on strategies etc. And I have process/programs in place for that.
3. DB provides a audio conference call daily. Teamspeak, I think. They have at least few hundred traders and lot of them are experienced.
You get to interact with experienced traders. You can develop peer relations. the forum/conference can alert fellow traders on some stock that is moving. Traders Collaboration. Though I have a account with IB, it does not provide me that kind of forum. IB's traders chat sucks. This type of traders collaboration is in itself a great value for those who consider it. I think such service with (audio conference moderator) is available for about $100 per month for a good program. The loneliness of a full time retail trader and the need to connect with same species can be understood by only those who gone through it.
4. DB provided 100% payout earlier. (no longer I think. Though I read this forum frequently, I am yet to see words from Don that says "our Normal account pay out is 80/20 now, which was 100% earlier")
5. The capital use of firm. This point is less important for me or a new trader. Capital/leverage is two edged sword.
No point in using all that leverage that Don gives in initial years of trading.
6. The JVC program is 2nd account. Not the primary account. You can not have it without primary account. for simple reasons, i can not understand what is there that an able trader can do in 2nd account that he can not do in 1st account. If it is program driven pair, trader can generate pair trades using his own or third party program and trade it in 1st account and keep more than 50% profit. The benefit BT giving is Zero risk up to $5000 and I guess that is only one time. Once you loose $5000 your 2nd account is closed. I look at like $5000 sign on bonus. The primary account is what I have to trade to make my living. The "Normal" account is the only what I considered. With 100% payout it was still a sweet deal.
7. The commissions is again not too bad compare to IB. (0.007) I am not talking about high volume though.
8. Honesty. Reputation. I think Brights are there in market for years and even the strong critics also will hesitate to blame them on this front. If you want to stop trading with them, they will return your money. That is not the case with ease with so many other props.
9. You can still keep IB and trade a good volume there, if you are concerned about commission.
All in all, with earlier 100% payout, for a cost of doing business of $2500/year one will get good streaming quotes, opportunity to interact and stay connected with other good traders. It was worth a try. In a year or so, one will know if he can make that volume trades that will rebate his commission of $200per month back. Also if one can learn enough to use BT's capital/leverage. Basically to know if you are cut out as a professional trader. If yes then it all makes sense, otherwise still trying it for a year is worth.
But now if it is 80-20 then all bets are OFF. I mean really, in the first year if i am not big on the capital advantage or the JVC program is there still a point? The only advantage that i see here is my 3rd point i.e. Team interaction/peer support/ management support. I have to weigh that with all the odds to see if it still make sense.
That being said, I think the struggle is between the Big boys who can do HFT and all that, and the small guys likes us who used to seek shelter under the leadership like brights. I am with BT and other good firms here. They let us come together and do things as a team. But With this 80-20 rule, the Big boys have just hit back big time. It will test the zeal of prop trading as business. Unless BT shows me more "value" than what I see, joining them is pointless, I think.
One solution that I can think of is BT funding 20% capital and trader provides 80%. I am not talking about leverage, pure capital in the primary account. then 80-20 makes sense. In this case BT is willing to share 20% loss and entitled for 20% profit. BT should "let it go" i.e 20% loss if i closed my account with them when the loss is still outstanding. If i made 30% loss, I will pay 10% back even if I close the account.
Off course to trust a new trader with 20% of firms capital, they have to screen a trader well or should have to establish a process to qualify such traders. trading experience, Programming experience, understanding of Risk reward etc. These restrictions could come in the play. And the last thing I want to see is increase in "Training fees" to provide that 20% contribution as firms capital.
I am still supporter of BT even if it does not works out for me in coming weeks. I am not exactly a believer in "conspiracy theories" per se, but now I know what George Carlin meant when he said..."what can you do? They got you by the balls..."
Thank you for this thread. And thanks to Don for replying. I am (or should I say, I Was?) in the process on joining BT, but what i have learned from this thread and new 80-20 development that did put some doubts in my mind.
This is how i compared BT with my IB account. Points that I considered in favor of BT, assuming the previous 100% model are as follows.
1. DB charges about $235 per month (that includes NY/NASDAQ exchange charges, GS software charges etc). This money does not go to BT directly, but goes to exchanges as professional membership fees etc. If you are Just retail trader(IB), you don't have to pay this fees.
These charges (or about $200) can be waived if you generate enough volume per month. I do not have exact number.
I looked at it like cost of doing business. about $2500 per year. It is worth trying for at least a year.
There is no point in taking trades, generating volumes for the sake of it so that one can save $200 per month on commission rebate.
At least not for the new ones starting with them.
2. It seems, you can get "streaming quotes" from the software (Redi plus?) for about 800-1000 tickers. Note that IB gives only 100.
to get that 1000 streaming quotes, one may have to pay about $120 per month from other service providers.
You can use streaming quotes to hook up with Excel and generate alerts based on strategies etc. And I have process/programs in place for that.
3. DB provides a audio conference call daily. Teamspeak, I think. They have at least few hundred traders and lot of them are experienced.
You get to interact with experienced traders. You can develop peer relations. the forum/conference can alert fellow traders on some stock that is moving. Traders Collaboration. Though I have a account with IB, it does not provide me that kind of forum. IB's traders chat sucks. This type of traders collaboration is in itself a great value for those who consider it. I think such service with (audio conference moderator) is available for about $100 per month for a good program. The loneliness of a full time retail trader and the need to connect with same species can be understood by only those who gone through it.
4. DB provided 100% payout earlier. (no longer I think. Though I read this forum frequently, I am yet to see words from Don that says "our Normal account pay out is 80/20 now, which was 100% earlier")
5. The capital use of firm. This point is less important for me or a new trader. Capital/leverage is two edged sword.
No point in using all that leverage that Don gives in initial years of trading.
6. The JVC program is 2nd account. Not the primary account. You can not have it without primary account. for simple reasons, i can not understand what is there that an able trader can do in 2nd account that he can not do in 1st account. If it is program driven pair, trader can generate pair trades using his own or third party program and trade it in 1st account and keep more than 50% profit. The benefit BT giving is Zero risk up to $5000 and I guess that is only one time. Once you loose $5000 your 2nd account is closed. I look at like $5000 sign on bonus. The primary account is what I have to trade to make my living. The "Normal" account is the only what I considered. With 100% payout it was still a sweet deal.
7. The commissions is again not too bad compare to IB. (0.007) I am not talking about high volume though.
8. Honesty. Reputation. I think Brights are there in market for years and even the strong critics also will hesitate to blame them on this front. If you want to stop trading with them, they will return your money. That is not the case with ease with so many other props.
9. You can still keep IB and trade a good volume there, if you are concerned about commission.
All in all, with earlier 100% payout, for a cost of doing business of $2500/year one will get good streaming quotes, opportunity to interact and stay connected with other good traders. It was worth a try. In a year or so, one will know if he can make that volume trades that will rebate his commission of $200per month back. Also if one can learn enough to use BT's capital/leverage. Basically to know if you are cut out as a professional trader. If yes then it all makes sense, otherwise still trying it for a year is worth.
But now if it is 80-20 then all bets are OFF. I mean really, in the first year if i am not big on the capital advantage or the JVC program is there still a point? The only advantage that i see here is my 3rd point i.e. Team interaction/peer support/ management support. I have to weigh that with all the odds to see if it still make sense.
That being said, I think the struggle is between the Big boys who can do HFT and all that, and the small guys likes us who used to seek shelter under the leadership like brights. I am with BT and other good firms here. They let us come together and do things as a team. But With this 80-20 rule, the Big boys have just hit back big time. It will test the zeal of prop trading as business. Unless BT shows me more "value" than what I see, joining them is pointless, I think.
One solution that I can think of is BT funding 20% capital and trader provides 80%. I am not talking about leverage, pure capital in the primary account. then 80-20 makes sense. In this case BT is willing to share 20% loss and entitled for 20% profit. BT should "let it go" i.e 20% loss if i closed my account with them when the loss is still outstanding. If i made 30% loss, I will pay 10% back even if I close the account.
Off course to trust a new trader with 20% of firms capital, they have to screen a trader well or should have to establish a process to qualify such traders. trading experience, Programming experience, understanding of Risk reward etc. These restrictions could come in the play. And the last thing I want to see is increase in "Training fees" to provide that 20% contribution as firms capital.
I am still supporter of BT even if it does not works out for me in coming weeks. I am not exactly a believer in "conspiracy theories" per se, but now I know what George Carlin meant when he said..."what can you do? They got you by the balls..."
Just a clarification. The "second acount" JVC is zero downside risk, and is a $10,000 "credit line" so to speak. You can run this automatically, in conjunction with your normal account. If qualifed, this acts as a training/grouping type of thing for about 150 or more of our traders - share ideas, share technology - and sure, you can use all those ideas in your "normal" account as well... that was the initial hope...that traders would both augment their income ...and add new ideas to their "normal" account.
All the best,
Don
All the best,
Don
Sun Light,
I agree with your post.
My understanding from looking at their model is if you're doing lower voume (less than 200k/shares), which is 10,000 shares per day on average, your FIXED COST is around $6,000/annually ($250/month professional fees plus $245/month desk fees).
If you're depositing 20k with the firm, and if you're not doing the 10k/shares/day average, then you will incur a drawdown of 30% annually just in fees! Of course, this is simply a cost of doing business and is not an issue for experienced traders who can benefit from the added use of capital.
Like I posted earlier, the "opportunity cost" of trading with this new payout model has to be evaluated, and that will vary depending on what other firms can offer in terms of upfront costs, monthly fixed fees, access to capital, platforms, and commissions per share.
The questions any new trader looking into doing business with Bright should ask are as follows:
1. How will I structure a trading plan to leverage the capital and minimize the drawdowns? There are plenty of postings here about "using a million or so" and "holding 6x overnight." But who in their right minds holds 6x overnight in THIS market! So, you're willing to wake up tomorrow with a 2% gap down on the Spiders while holding some long S&P equity positions, even if it's hedged? Overnight margin is the eventual killer of all traders. Retail allows you to use 2x overnight, and even that can give you heart palpitations in a choppy market, lol!
2. Even if you leverage the capital on your 20k while daytrading, like Sun Light posted, it's a double-edge sword. Would you really build a 20k share position in a highly liquid stock such as BAC/INTC, and withstand even a ten cent drawdown? That puts you out 2k, or 10% of your initial deposit, in just ONE trading day. Sure, it works great when it goes in your favor, however I don't see it as being a wise use of the capital. And if you're NOT building size, then why the hassle of getting a ser 7, and paying higher fixed costs and commissions? Perhaps the firm is best suited for those who do basket trading at the open, pairs trading, or are familiar with witing algo trades in the jvc sub-account.
3. The connections made with other traders does have a huge benefit, and perhaps that alone is worth the extra fees, but you really have to think long and hard before giving up your 20% when you are putting up ALL the risk and paying higher fixed costs, especially if you are holding positions overnight.
Bright has a well capitalized structure (just pull up the focus report from the SEC site and you'll see), and solid reputation in the industry. Perhaps he would consider adopting a CBSX model, or even swtiching clearing firms that does not mandate this new payout? There are many traders who are in search of a well capitalized firm given all the shady deals and firms who are highly levered, and it would seem very plausible to go this route.
I agree with your post.
My understanding from looking at their model is if you're doing lower voume (less than 200k/shares), which is 10,000 shares per day on average, your FIXED COST is around $6,000/annually ($250/month professional fees plus $245/month desk fees).
If you're depositing 20k with the firm, and if you're not doing the 10k/shares/day average, then you will incur a drawdown of 30% annually just in fees! Of course, this is simply a cost of doing business and is not an issue for experienced traders who can benefit from the added use of capital.
Like I posted earlier, the "opportunity cost" of trading with this new payout model has to be evaluated, and that will vary depending on what other firms can offer in terms of upfront costs, monthly fixed fees, access to capital, platforms, and commissions per share.
The questions any new trader looking into doing business with Bright should ask are as follows:
1. How will I structure a trading plan to leverage the capital and minimize the drawdowns? There are plenty of postings here about "using a million or so" and "holding 6x overnight." But who in their right minds holds 6x overnight in THIS market! So, you're willing to wake up tomorrow with a 2% gap down on the Spiders while holding some long S&P equity positions, even if it's hedged? Overnight margin is the eventual killer of all traders. Retail allows you to use 2x overnight, and even that can give you heart palpitations in a choppy market, lol!
2. Even if you leverage the capital on your 20k while daytrading, like Sun Light posted, it's a double-edge sword. Would you really build a 20k share position in a highly liquid stock such as BAC/INTC, and withstand even a ten cent drawdown? That puts you out 2k, or 10% of your initial deposit, in just ONE trading day. Sure, it works great when it goes in your favor, however I don't see it as being a wise use of the capital. And if you're NOT building size, then why the hassle of getting a ser 7, and paying higher fixed costs and commissions? Perhaps the firm is best suited for those who do basket trading at the open, pairs trading, or are familiar with witing algo trades in the jvc sub-account.
3. The connections made with other traders does have a huge benefit, and perhaps that alone is worth the extra fees, but you really have to think long and hard before giving up your 20% when you are putting up ALL the risk and paying higher fixed costs, especially if you are holding positions overnight.
Bright has a well capitalized structure (just pull up the focus report from the SEC site and you'll see), and solid reputation in the industry. Perhaps he would consider adopting a CBSX model, or even swtiching clearing firms that does not mandate this new payout? There are many traders who are in search of a well capitalized firm given all the shady deals and firms who are highly levered, and it would seem very plausible to go this route.
Just for clarification.
Annual exchange fee = $500
$200 per month desk fee covers NYSE etc. But is fully rebated at the 200K month share level.
So, even if you did have to pay the monthly fee it's only $2900 - and most will get the $200 back anyway.
Don
And, we're still working on various ways of working all this out with our traders....
Annual exchange fee = $500
$200 per month desk fee covers NYSE etc. But is fully rebated at the 200K month share level.
So, even if you did have to pay the monthly fee it's only $2900 - and most will get the $200 back anyway.
Don
And, we're still working on various ways of working all this out with our traders....
I agree with Sun Light, it's hard enough making money trading as it is, having to overcome a 20% handicap will be nigh impossible.
I'm still not really clear on when/how the 20% is calculated...
Perhaps Don could shed some light on this?
As to the advantage of the live chat with all of the traders: sorry, but I really don't see that. My logic is as follows:
Most traders lose money, so why would I want to expose myself to a room full of people who are losing money on average? There are probably a few good ones out of the multitudes...as with everything else.
Better, in the words of Livermore, to play a "lone hand."
As for me, I'll be canceling my registration for the sept class. I think Bright is probably the best out there, so don't get me wrong, but the model is broken. FINRA has just done everything possible over the past several years to make trading profitably as difficult as can be.
I'm still not really clear on when/how the 20% is calculated...
Perhaps Don could shed some light on this?
As to the advantage of the live chat with all of the traders: sorry, but I really don't see that. My logic is as follows:
Most traders lose money, so why would I want to expose myself to a room full of people who are losing money on average? There are probably a few good ones out of the multitudes...as with everything else.
Better, in the words of Livermore, to play a "lone hand."
As for me, I'll be canceling my registration for the sept class. I think Bright is probably the best out there, so don't get me wrong, but the model is broken. FINRA has just done everything possible over the past several years to make trading profitably as difficult as can be.
No, it's always better to share. Sharing is caring.
- Status