How much would it cost to open a Prop Firm Office (ie. Bright Trading Affiliate)

Quote from Maverick74:

No, no, no. LOL. Look, let me walk you through this. No firm outside outside of Mongolia is going to split commish with you 50%. Here is how it's going to work. Whatever the firm nets on commish, that is net, not gross, they might give you anywhere from 10% to 30%. So say Echo's cost on shares is 10 bips and they charge the trader 30 bips, that's a 20 bip spread. They might give you say 20% of that 20 bips or 4 bips. That's 40 cents for every 1k shares your traders trade!

They will also make you cover all the overhead which includes putting your name on along term lease (12 months). You will pay for all the equipment, connectivity, etc. If all your traders bail or blow out, you are on the hook for 12 months of over head.

Now, on to trading activity. Nobody is trading. NOBODY! There is no volume. You'll get 5 people to come into an office and trade 5k to 10k shares a day. Dude, you'll make $5 to $10 a day on these guys and you will own all their risk. Plus you will deal with all their headaches. This doesn't work, that doesn't work, my sheets are wrong, that's not my position, etc.

The only hope you have of making any money is if you can try backing some traders who can actually make some money. That's a 10 to 1 long shot.

Good luck bud. I honestly think you would make more money starting an Amway franchise.
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Thanks Mav...

That's the sort of input I was looking for...! I was doing an average of 7 million shares a day... About 15000 shares on my big trades... Counting both trips... You know... 15000 buy, 15000 sell counted as 2 trades...

Anyway,...

When you say they make you own their risk (your traders' that is) what do you mean by that...? H.O. won't eat any of the losses ever...? So if you're doing a 50/50 profit loss split with your trader, (I think that's what Bright does) H.O. wont eat that 25% of the loss...??? It will be on you the office owner but they'll always take that 25% of the win...?

What sort of deals does H.O. make with offices regarding profit/loss splits between H.O., the office manager and the trader...?
 
Quote from CoolTraderDude:

Thanks Mav...

That's the sort of input I was looking for...! I was doing an average of 7 million shares a day... About 15000 shares on my big trades... Counting both trips... You know... 15000 buy, 15000 sell counted as 2 trades...

Anyway,...

When you say they make you own their risk (your traders' that is) what do you mean by that...? H.O. won't eat any of the losses ever...? So if you're doing a 50/50 profit loss split with your trader, H.O. wont eat that 25% of the loss...??? It will be on you the office owner but they'll always take that 25% of the win...?

What sort of deals does H.O. make with offices regarding profit/loss splits between H.O., the office manager and the trader...?

As a trader I ate the loss if I was negative at the end of the month... My BP was unaffected unless I screwed up a lot and they decided to cut me down some...
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If you run your own office you are the risk manager of that office. If guy goes 20k debit, they won't make you cough up 20k most likely, but they will take that off your commish check. They won't let you profit from the commish while they eat the loss. No sir.

If you do a profit split with the trader that is a deal between you and the trader, not the firm. That means you own 100% of the losses and get 50% of the gains if you and the trader agree to a 50/50 split.

The math is horrible man. It doesn't work. I saw the balance sheets of my former firm. I did a double take when I saw how bad they were. Give Don a call. In private he will tell you what I'm telling you publicly.

There is a reason why Don closed all his offices except for Chicago. There is a reason why there use to be 50 to 100 equity prop firms and now there are 4 or 5. It's not because they were so profitable. LOL.
 
Quote from Maverick74:

If you run your own office you are the risk manager of that office. If guy goes 20k debit, they won't make you cough up 20k most likely, but they will take that off your commish check. They won't let you profit from the commish while they eat the loss. No sir.

If you do a profit split with the trader that is a deal between you and the trader, not the firm. That means you own 100% of the losses and get 50% of the gains if you and the trader agree to a 50/50 split.

The math is horrible man. It doesn't work. I saw the balance sheets of my former firm. I did a double take when I saw how bad they were. Give Don a call. In private he will tell you what I'm telling you publicly.

There is a reason why Don closed all his offices except for Chicago. There is a reason why there use to be 50 to 100 equity prop firms and now there are 4 or 5. It's not because they were so profitable. LOL.
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Florida
 
Quote from CoolTraderDude:

Thanks Mav...

That's the sort of input I was looking for...! I was doing an average of 7 million shares a day... About 15000 shares on my big trades... Counting both trips... You know... 15000 buy, 15000 sell counted as 2 trades...
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Sorry... I'm a fucking idiot...

That should read about 700 K shares give or take...! Not 7 million...!

50*15000 = 750000 is about right... So 25 big trades both trips counted... And a bunch of smaller 5000 shares etc... AND I'll just average it to 700 K... as an estimate of shares traded daily...

My bad...!
 
Quote from Maverick74:

If you run your own office you are the risk manager of that office. If guy goes 20k debit, they won't make you cough up 20k most likely, but they will take that off your commish check. They won't let you profit from the commish while they eat the loss. No sir.

If you do a profit split with the trader that is a deal between you and the trader, not the firm. That means you own 100% of the losses and get 50% of the gains if you and the trader agree to a 50/50 split.

The math is horrible man. It doesn't work. I saw the balance sheets of my former firm. I did a double take when I saw how bad they were. Give Don a call. In private he will tell you what I'm telling you publicly.

There is a reason why Don closed all his offices except for Chicago. There is a reason why there use to be 50 to 100 equity prop firms and now there are 4 or 5. It's not because they were so profitable. LOL.
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If that's true and I have no reason to doubt that it isn't... More or less what I'm hearing is happening at every firm...

Remember Canadian Swifttrade...? They collapsed as I recall...

Yeah... If that's true then it's pretty fucking bad for the office owner... Negative sum all the way...!

It's probably more reasonable to just open 5 FX accounts with IB, deposit 10K initially in them "hire" 5 traders on 40% commission alone and manage them... Add more money to their accounts as they make more money... With a 50K account they can do almost 2500000 at 50:1... Limit them to only 2000000 a trade which is the equivalent of doing 20000 shares...

Charge them desk fees of $100 and you've paid for internet and TV (news) subscriptions and then some... You'd have to cover utilities and rent...

Hell... You can probably do it all for 30K a year plus 250K of risk money...! Just guessing here...!:D

At 280K it would look cheaper than a prop firm and that's without making your traders deposit any money... If you make them deposit some money then it looks even better...!

Comments...?:D
 
Quote from CoolTraderDude:

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If u want to start a prop firm, start in florida. It is easy to recruit. There are a lot of small traders living in florida want to join a prop firm with NO barrier to entry.

If u are looking for quick buck, florida is the best place. Lots of desperate small traders living in florida want to make a living trading.
 
if u want to open a real LEGIT prop firm, first u need successful wealthy friends. Tons of friends. u need a successful business (salesman) trader trustworthy partner.

When u find that partner, u begin to draw blueprint. Best place to start a prop is in

1) New York
2) Chicago
3) Boston
4) San Fran
5) New Jersey

u can recuit Talent/skilled mature educated traders or beginner.
 
Quote from emg:

if u want to open a real LEGIT prop firm, first u need successful wealthy friends. Tons of friends. u need a successful business (salesman) trader trustworthy partner.

When u find that partner, u begin to draw blueprint. Best place to start a prop is in

1) New York
2) Chicago
3) Boston
4) San Fran
5) New Jersey

u can recuit Talent/skilled mature educated traders or beginner.
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Renting commercial space in New York is really expensive... I doubt you could do a start up there.
 
Quote from CoolTraderDude:

Renting commercial space in New York is really expensive... I doubt you could do a start up there.
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Then u are not ready. New jersey (Newark) which is cheaper than new york, u can recruit guys like so called Maverick74 or talented or soon to be potential successful traders. When u get those kind of people, CASH ROLLING IN like John Silvetz


"In the five years that John Silvetz made about $700 million for Deutsche Bank AG (DBK) by trading corporate bonds and credit derivatives"

http://www.bloomberg.com/news/2012-...traders-quit-wall-street-for-hedge-funds.html


Think about this. If u get people like Silvetz, u can make $300K rev per month minimum. To find those guys, need to establish an office in the financial district city.


Hard to recruit those kind of traders out side those top 5 cities. Can u find people like Maverick74 in New Orlean, or Salt Lake Utah? Those cities are cheap but no talent traders.


Like i said, u need tons of wealthy friends that knows the biz in order to start a prop firm.


Good Luck
 
Quote from Maverick74:

If you run your own office you are the risk manager of that office. If guy goes 20k debit, they won't make you cough up 20k most likely, but they will take that off your commish check. They won't let you profit from the commish while they eat the loss. No sir.

If you do a profit split with the trader that is a deal between you and the trader, not the firm. That means you own 100% of the losses and get 50% of the gains if you and the trader agree to a 50/50 split.

The math is horrible man. It doesn't work. I saw the balance sheets of my former firm. I did a double take when I saw how bad they were. Give Don a call. In private he will tell you what I'm telling you publicly.

There is a reason why Don closed all his offices except for Chicago. There is a reason why there use to be 50 to 100 equity prop firms and now there are 4 or 5. It's not because they were so profitable. LOL.
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There are good traders out there. Find some and you will have a positive view.
 
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