Huh? I know plenty of good traders. That's not what this conversation is about. It's about the economics of running a branch office. The economics suck. And it has nothing to do with good or bad traders. It has to do with the compensation and risk that the branch manager is getting.
How much would it cost to open a Prop Firm Office (ie. Bright Trading Affiliate)
- Thread starter CoolTraderDude
- Start date
Huh? I know plenty of good traders. That's not what this conversation is about. It's about the economics of running a branch office. The economics suck. And it has nothing to do with good or bad traders. It has to do with the compensation and risk that the branch manager is getting.
Not really. Just get a few wanna be traders in your city. They put up $25k, they trade 200k shares per month, you charge them a penny per share trade, and all you need is 10 traders to make $20k per month which should be enough to at least break even on your shop. Anything after that is gravy. Even though only 1 in 10 traders make it, that one is going to increase his account size and do higher than average volume. All you need is 1 guy doing 100k shares traded per day and thats $1,000 per day in your pocket.
Yeah⦠Thatâs what I want to discussâ¦
Nevertheless, any other comments are appreciated if theyâre on topicâ¦
So far Iâve gathered that⦠H.O. (Head Office) takes no monetary risks at all on the venture. They only provide you with software, leverage and a very small percentage of commissions. For software use you get charged a fee although, this is standard for any DAT trader if you were to do it with a broker.
Office risks include the fact that many of your traders will bail on you and youâll be stuck with a lease and an empty office⦠thatâs besides the fact that losses are entirely yours and the traders' depending on your splits⦠Does H.O. force you to profit shareâ¦? I mean thatâs what Iâve gathered but is that the industry standard?
Are there any advantages out of operating an office for the operatorâ¦? The small commission kickback seems really small to make it worth itâ¦
Yeah... that can be done... But then you're just a brokerage for traders with 25K... If they quickly wipe out then you're left with nothing. The problem is that you'll burn out your supply of 25K depositors pretty quickly.
As for the sizes you're talking about they're easily doable today but the markets are way too fast. In 2006 it was really easy to do 10000-15000 shares on F and PFZ through ARCA and ISLAND and you could even get rebates... Now... Not so much... You get a swipe and with size you can end up done. Specialist markets were fun... Now we have liquidity replenishment points and computers!
I can't think of any advantage to running an office hence why they are all gone. The market is pretty efficient believe it or not. No hidden edge here. Back in the day there was a lot of edge when you could put 30 guys in a room who were all doing over 500k shares a day.
Well thanks for the honesty...!
I'm suprised there aren't any pro prop peddlers commenting on this.
There aren't any! LOL. Seriously, listen to me, they are gone. Plenty of guys that are remote prop trading from home but the offices are gone.
Well <Del>fuck</del> me then...!
I'm obviously out of touch with what's been going on in the industry...!
The answer: There is no more industry! :eek:
In regards to stock trading, there really aren't any short term edges left where a prop trader can push big volume. I would bet that most profitable remote prop traders (the few that are still around) generate the majority of their profits from longer term trades e.g. hours to days versus the good ole days of seconds to minutes. It takes more money to make money in the current market environment and you have to take more risk to make that money. I'm defining risk in terms of market exposure time and capital allocated to each position. Finding enough profitable traders to fill an office would be a very difficult task. I live in Tampa and I can't even round up a few real traders to talk shop!Quote from CoolTraderDude:
Well <Del>fuck</del> me then...!
I'm obviously out of touch with what's been going on in the industry...!
The answer: There is no more idustry! :eek:
Quote from CoolTraderDude:
Well <Del>fuck</del> me then...!
I'm obviously out of touch with what's been going on in the industry...!
The answer: There is no more industry! :eek:
EliteTrader is what's left of this industry
