Quote from bone:
The commissions are really expensive across the pond as well - every European client I take on eventually moves his futures account over to a Chicago FCM.
Agree on the desk fee - very pricey. And you know the arcade/prop firm is taking a haircut with transaction fees also. Wow. Office space and ECN infrastructure over in London must be very pricey - or the local traders have a very high pain threshold.
Quote from Don Bright:
Are you saying 3200 pounds as in about $4500 or so? This must be some sort of different model than anything in U.S. Maybe a seat lease on an Exchange, but a "desk fee?"
A bit shocking, I must be missing something.
Don
Quote from Don Bright:
A $50,000 annual "nut" is a large obstacle to many traders. I was just a bit shocked. As I said, a seat lease on exchange might be worth that amount, but just a literal desk, come on...weird.
You can trade in my Chicago ofice for a measly $2,000, no, $1,000, no, $400 (and get a rebate), LOL.
All the best,
Don
Quote from broad:
Hi Don, sorry I probably didn't explain it properly. Desk I £1000 and kit brings it up to £3200. After 15 years of prop I have just started considering other options. A few friends I know spread bet in addition to their prop trading, which is free through the net reasonably fast and tax free. Just signed up to a few demo's to test. Lot's of smoke and mirrors to attract new clients but I'll see how I get on. I know what I'm looking for in my head anyway.
Quote from Maverick74:
Donny, Donny, Donny. Very different business model. Most these firms back traders 100%. In return for that they charge them what is called a desk fee. This includes space, TT or RCG, a Bloomberg terminal, etc. They take the desk fee out of their p&l at the end of the month before their 50/50 split. If they never make any money, they don't pay the desk fee. Do you understand now? This is the model in Chicago as well. Most of the top firms here charge anywhere from 2500 to 5k for a desk.
Quote from Don Bright:
Of course, and if they don't make money, they're gone. I understand that model of course.
As a debate topic (kinda slow). Done this before. Say you're a good trader, make $20K per month. Put up zero, pay $2000 desk fee and then give firm $9,000 each month...in lieu of putting up $15kor $20K and keeping the profits....made up for in 2 months. Don't make money, you're gone either way...risked some capital or risked time, or both.
(not really a debate, just a difference).
And, for the record... I have always supported, and sent people, to Chicago to be part of the action, get hired wherever you can.... best city to learn in, bar none.
Heading out soon, have a good weekend.
Don
Quote from Maverick74:
Don, you know I love to debate you. You should not have lobbed that softball at me. LOL.
Here we go. The difference is the amount of capital the trader has access to. Say I put down 20k with those friendly folks at Bright Trading. Let's be "very" realistic here. How much money am I really making on that small deposit. Let's say you give me 300k in capital on that 20k as a newbie. As a newbie, I would love to make 1% to 2% on that 300k at risk. That would put in the top 2%. But that is only 3k to 6k a month. And that's a 25% return on my deposit!
Now, say I go the other route and work for a full prop firm. They pay me a 5k draw right out of the gate. I haven't even done anything yet. They give me access to let's say 2 million in capital to start. I make 2% on that or 40k. Same 2% Don, apples to apples here. From that 40k, let's give them 20k on the split, 2500 back for desk fees and I still have 7500 or twice what I'm making at Bright. If things go well, in 12 months, I might be trading a 10 million dollar book with a 60/40 or even 70/30 split. If things go really well at Bright, I might have 50k in capital, my 20k plus another 30k or so I made (using the 3k a month mentioned earlier). With that 50k, maybe now you give me 500k in buying power, maybe 750k.
The scale on the full prop side is magnitudes larger Don. I know some outstanding equity guys, guys I use to work with. None of them are making over 7 figures. Good equity guys now, and we are talking the top 5% as most don't earn a dime, make 300k to 500k. You know this Don, you see your firms sheets. I know guys here in Chicago making 500k to 10 million on the full prop side. It's about the magnitude of the gains.
Now, let's go another step shall we. Those guys that are making that money are now becoming partners in the firm and earning a nut on the whole firm's revenues as well. How many of your equity guys Don are partners? I'm really curious. Don't PM it me. If you care to divulge it, tell everyone, not just me. I'm willing to bet you and your brother are the only partners. You don't give equity out to anyone.
Don, these are not trivial differences. They are huge.
Quote from Don Bright:
I can agree on some of this. The actual "number of new traders" is where we may disagree. You may know better than I. I don't think the number is "huge" (to quote Donald Trump, LOL)... much like my friends who own/run First New York... great job, 500 applicants, maybe 5-8 hired each year. I hope you can tell me Chicago is much better. You know we get a lot of our traders from some of those firms.
Not "softball" at all on my feelings about Chicago. My brother and I have always said "don't be geographically limited when starting out in the trading field. Go wherever you need to go to learn from the best." Chicago is always ground zero, next NYC of course, but we like Chicago a bit better...probably just because we spent so much time there.
Don