they are market makers. mainly in option markets. this is NOT a prop shop or aracde. http://www.chicagotrade.com/home1.html
Chicago Prop Trading Firms
- Thread starter Vegas22
- Start date
Desk fees from $2000 to $6000.00. The REAL players. Unlimited IT budgets????????? First, I have never heard of any businessman, anywhere, with an unlimited budget for anything.
To be honest, this sounds like the desk fee justification used by many firms in the 90s for Stock Trading. Now most stock trading firms don't charge a desk fee, they are happy just making a part of your trading volume in gross (commission). Some still do, but the ones that do realize that IT doesn't cost that much. Each second these cost drop.
Realize, commodities (futures) are in a huge bull cycle for many contracts. Same situation as the 1990s for stocks, may continue, may end. There are historic highs in many contracts. Seems like that correlates highly with firms justifiying astronomical desk fees.
The biggest disadvantage any trader has, is 1. Believing that the difference between himself and the "REAL" player is technology. and 2. Not knowing the appropriate amount of fixed costs to assume for their level of trading and trading style. When you are Big enough as a trader, you need the goods, but not until then.
I would be cautious, especially for those newer traders who are excited by this talk. Also for those who have a wad of money they want to put into these firms charging high desk fees.
Make sure you need what you are paying for. As a beginner, its highly likely that you don't need to pay a huge desk fee. Remember, it comes out of your account in the beginning, and affects your bottom line.
Also, remember who writes this post. The manager of a new branch office. Its in his interest to make large desk fees sounds normal, reasonable and necessary for every traders. YOU must decide if it makes sense for your business plan. And err on the side of not paying the desk fees. You can always ramp up, once you know what you need after you have made money.
Of course, this depends on the firm. Know your trading style and level, and pay fees that makes sense in your business plan. The best and fastest data wont make you a great trader. And you can compete with the best without it on a ROI basis especially when you are a smaller or newer trader.
RefcoTrading
Guest
"Desk fees from $2000 to $6000.00. The REAL players. Unlimited IT budgets????????? First, I have never heard of any businessman, anywhere, with an unlimited budget for anything."
First you must realize that nearly everything we charge is going back into upgrades and keeping our technology on the cutting edge. $700 dollars goes to pay for the software (trading technologies x-trader), $700 to CQG, also included are bloomberg and reuters news feeds not to mention 24/7 tech support and staff.
I am not only a full time trader, but I also manage other traders. have been on both ends of the technology spectrum, I have paid upwards of 7000/ month from a remote location to get half of what I have access to in the office. You get what you pay for. When tens of thousands of dollars are on the line, every second counts.
"To be honest, this sounds like the desk fee justification used by many firms in the 90s for Stock Trading. Now most stock trading firms don't charge a desk fee, they are happy just making a part of your trading volume in gross (commission). Some still do, but the ones that do realize that IT doesn't cost that much. Each second these cost drop."
A majority of our profits come from our prop traders. Commissions are so competitive, very little can be added to the bottom line along this route. Shop around....if you are paying over .20 per side + exchange fees, then you are probably paying too much.
I.T. DOES cost that much. In our Miami office alone (where I trade) we have spent well over $1,000,000 putting in the technical infrastructure. True, the cost do keep dropping, but when you have to keep replacing the equipment to stay on the edge, it adds up.
"Realize, commodities (futures) are in a huge bull cycle for many contracts. Same situation as the 1990s for stocks, may continue, may end. There are historic highs in many contracts. Seems like that correlates highly with firms justifiying astronomical desk fees. "
Bull, bear, who cares. I make just as much money going down as up. If bonds are slow, I can trade crude, S&P's, currency, eurodollars, etc. This business has done nothing but grow since inception. everyone will always need to hedge somewhere.
"The biggest disadvantage any trader has, is 1. Believing that the difference between himself and the "REAL" player is technology. and 2. Not knowing the appropriate amount of fixed costs to assume for their level of trading and trading style. When you are Big enough as a trader, you need the goods, but not until then."
I agree with part of this. You have to be a good trader to make money. A beginning trader wil have a hard time psychologically and financially covering 2000/ month. Technolgy does nothing but give you that extra "edge".
I would never encourage a new trader to plop down his whole net worth of 20K and try to make it. Costs alone would eat you alive. The minimum account size for new customers is 50K for a reason.
"Make sure you need what you are paying for. As a beginner, its highly likely that you don't need to pay a huge desk fee. Remember, it comes out of your account in the beginning, and affects your bottom line."
Absolutely, get your feet wet slowly. Unles you are trading prop and the firm is picking up your tab, costs add up quickly. Everyone has a good chance of success......but only if you can affrod to sit there long enough. One of the best bund traders in the world took over 16 months to be profitable. The old floor trader rule of thumb is that if you are covering costs/living expenses after a year you are on the right track.
"Also, remember who writes this post. The manager of a new branch office. Its in his interest to make large desk fees sounds normal, reasonable and necessary for every traders. YOU must decide if it makes sense for your business plan. And err on the side of not paying the desk fees. You can always ramp up, once you know what you need after you have made money."
I am the branch manager, but first and foremost I am a trader. I get no salary, but I do get a cut of the prop guys. Therefore, it is in my best interest to make you the best trader you can be. Exchange rules PROHIBIT the trader from having ANY stake in the prop account. All the risk must lie with the firm.
"Of course, this depends on the firm. Know your trading style and level, and pay fees that makes sense in your business plan. The best and fastest data wont make you a great trader. And you can compete with the best without it on a ROI basis especially when you are a smaller or newer trader."
Agreed...........
Good post. Let's keep it going.
First you must realize that nearly everything we charge is going back into upgrades and keeping our technology on the cutting edge. $700 dollars goes to pay for the software (trading technologies x-trader), $700 to CQG, also included are bloomberg and reuters news feeds not to mention 24/7 tech support and staff.
I am not only a full time trader, but I also manage other traders. have been on both ends of the technology spectrum, I have paid upwards of 7000/ month from a remote location to get half of what I have access to in the office. You get what you pay for. When tens of thousands of dollars are on the line, every second counts.
"To be honest, this sounds like the desk fee justification used by many firms in the 90s for Stock Trading. Now most stock trading firms don't charge a desk fee, they are happy just making a part of your trading volume in gross (commission). Some still do, but the ones that do realize that IT doesn't cost that much. Each second these cost drop."
A majority of our profits come from our prop traders. Commissions are so competitive, very little can be added to the bottom line along this route. Shop around....if you are paying over .20 per side + exchange fees, then you are probably paying too much.
I.T. DOES cost that much. In our Miami office alone (where I trade) we have spent well over $1,000,000 putting in the technical infrastructure. True, the cost do keep dropping, but when you have to keep replacing the equipment to stay on the edge, it adds up.
"Realize, commodities (futures) are in a huge bull cycle for many contracts. Same situation as the 1990s for stocks, may continue, may end. There are historic highs in many contracts. Seems like that correlates highly with firms justifiying astronomical desk fees. "
Bull, bear, who cares. I make just as much money going down as up. If bonds are slow, I can trade crude, S&P's, currency, eurodollars, etc. This business has done nothing but grow since inception. everyone will always need to hedge somewhere.
"The biggest disadvantage any trader has, is 1. Believing that the difference between himself and the "REAL" player is technology. and 2. Not knowing the appropriate amount of fixed costs to assume for their level of trading and trading style. When you are Big enough as a trader, you need the goods, but not until then."
I agree with part of this. You have to be a good trader to make money. A beginning trader wil have a hard time psychologically and financially covering 2000/ month. Technolgy does nothing but give you that extra "edge".
I would never encourage a new trader to plop down his whole net worth of 20K and try to make it. Costs alone would eat you alive. The minimum account size for new customers is 50K for a reason.
"Make sure you need what you are paying for. As a beginner, its highly likely that you don't need to pay a huge desk fee. Remember, it comes out of your account in the beginning, and affects your bottom line."
Absolutely, get your feet wet slowly. Unles you are trading prop and the firm is picking up your tab, costs add up quickly. Everyone has a good chance of success......but only if you can affrod to sit there long enough. One of the best bund traders in the world took over 16 months to be profitable. The old floor trader rule of thumb is that if you are covering costs/living expenses after a year you are on the right track.
"Also, remember who writes this post. The manager of a new branch office. Its in his interest to make large desk fees sounds normal, reasonable and necessary for every traders. YOU must decide if it makes sense for your business plan. And err on the side of not paying the desk fees. You can always ramp up, once you know what you need after you have made money."
I am the branch manager, but first and foremost I am a trader. I get no salary, but I do get a cut of the prop guys. Therefore, it is in my best interest to make you the best trader you can be. Exchange rules PROHIBIT the trader from having ANY stake in the prop account. All the risk must lie with the firm.
"Of course, this depends on the firm. Know your trading style and level, and pay fees that makes sense in your business plan. The best and fastest data wont make you a great trader. And you can compete with the best without it on a ROI basis especially when you are a smaller or newer trader."
Agreed...........
Good post. Let's keep it going.
Thanks for your reply. It IS in your interest to help every trader become successful, in the long term. Its always good to present both sides of an issue.
Thank you and good luck.
Thank you and good luck.
Here is a good listing of Chicago prop trading firms- several of them have offices in other cities too:
http://www.traderslog.com/proprietarytradingfirms.htm
http://www.traderslog.com/proprietarytradingfirms.htm
I appreciate the opportunity to contribute to this interesting thread. A few observations:
1) Do your homework; the Merc's fine education department has materials on proprietary trading houses and arcades. These embody different business models, and it is in your interest to understand the relationship between yourself and the trading house. The Merc also sponsors seminars offered by the various houses that are quite informative.
2) RE: desk fees, see what you are getting for your money. I wholeheartedly agree with the observation on this thread that world-class technology and IT support aren't cheap. Do you *need* world-class technology? If you're a position trader making a few trades a day max, holding positions for sizable periods of time, technology that allows you to wring out that last tick may be less crucial than if you're a very active trader.
3) Find out how committed the trading house is to ongoing mentorship and training. Firms that have a sizable stake in your success will work hard to bring you along.
4) Getting into a good shop is becoming ever more competitive. Identify what you can bring to the firm; not just what they could and should do for you. Motivation is not enough.
One last plug for the Merc: If you can gain access to the Globex Learning Center, by all means do so. It's a phenomenal resource that allows you to test drive much of the software and order execution systems used in the major trading houses.
1) Do your homework; the Merc's fine education department has materials on proprietary trading houses and arcades. These embody different business models, and it is in your interest to understand the relationship between yourself and the trading house. The Merc also sponsors seminars offered by the various houses that are quite informative.
2) RE: desk fees, see what you are getting for your money. I wholeheartedly agree with the observation on this thread that world-class technology and IT support aren't cheap. Do you *need* world-class technology? If you're a position trader making a few trades a day max, holding positions for sizable periods of time, technology that allows you to wring out that last tick may be less crucial than if you're a very active trader.
3) Find out how committed the trading house is to ongoing mentorship and training. Firms that have a sizable stake in your success will work hard to bring you along.
4) Getting into a good shop is becoming ever more competitive. Identify what you can bring to the firm; not just what they could and should do for you. Motivation is not enough.
One last plug for the Merc: If you can gain access to the Globex Learning Center, by all means do so. It's a phenomenal resource that allows you to test drive much of the software and order execution systems used in the major trading houses.