That's why everyone should trade Currencies
No comissions , no fees , whatever you make is what you take home.
No comissions , no fees , whatever you make is what you take home.
Is 30% from a Prop Firm fair?
- Thread starter dnaj65000
- Start date
And what about the spread?
There is a spread in evey market you trade
Why does everyone look at spreads in FOREX with such a surprise ?
If you know how to trade spreads should not bother you, because they disapear in no time.
Spread will allways be in any market and in FOREX , still there are profiatable traders out there , spreads should be the least of you problems . There is money to be made in FOREX
Why does everyone look at spreads in FOREX with such a surprise ?
If you know how to trade spreads should not bother you, because they disapear in no time.
Spread will allways be in any market and in FOREX , still there are profiatable traders out there , spreads should be the least of you problems . There is money to be made in FOREX
I have heard they are opening offices in places such as India, China, and some other Indo asian countries. Haven't heard about the plans to pay the traders 5% but that doesn't even raise an eyebrow when were talking Peter Beck. Love em' or hate em' (most seem to been in the later camp) the guy is always looking for an angle. His ethics may not suit some but this guy is an extreme capitalist (or opportunist depending on your views).
I think MACD addy is probably right about getting the trading down before worrying about the commission. But not completely. I was with a hog for a few months with $20 round turns and high margin levels and had my ass handed to me as steak tartare. Yum!
Then I went to Global and started with a small stake (less ass, in other words) and got it all back and then some.
Now I'm pretty certain that I did not get to be that much better at trading in the two week interval between firms. Probably the low rates made me more comfortable in taking trades and the low margins let me pyramid up quickly.
There's the rub. Risk should therefore also be rising but, strangely, I don't seem as nervous as I did at the higher commission rates. Quiet before the storm?
So I'm up 530% on a small deposit (yeahh Baby!) and enjoying it more with less worry on costs. I can't help wondering if commissions might not really matter.
BTW, don't ask me how since I don't really know myself, I just FEEL it.
Albert
Then I went to Global and started with a small stake (less ass, in other words) and got it all back and then some.
Now I'm pretty certain that I did not get to be that much better at trading in the two week interval between firms. Probably the low rates made me more comfortable in taking trades and the low margins let me pyramid up quickly.
There's the rub. Risk should therefore also be rising but, strangely, I don't seem as nervous as I did at the higher commission rates. Quiet before the storm?
So I'm up 530% on a small deposit (yeahh Baby!) and enjoying it more with less worry on costs. I can't help wondering if commissions might not really matter.
BTW, don't ask me how since I don't really know myself, I just FEEL it.
Albert
Good posts...elaborate and intelligent. I understand what you are saying however I do approach it from a different angle.
Don is saying treat it like a business. The Brights are running a business for businesses right? So for the prop firm, they risk nothing because their traders put up capital (10k minimum, 25k max) so if a trader loses, the Brights never have to worry about the company losing money. Every single day the prop firm will be gross positive to pay their bills because of the commissions their traders generate. They will never have a 'gross negative day'.
Consider it from Bright's angle. Their best volume rebated rate is 0.75 cents per share. Please correct me if I'm wrong Don, I don't wish to give you a bad name, but for the sake of analysis I believe that is the correct rate. They pay out 100% b/c of the capital contribution. Average trader trades 500,000 shares x 0.0075 = $3750 in commissions (before $400 desk fee and haircuts). So in total say the cost is $4000. To be at 30% means 4000 / 0.70 = $5714 gross. If a trader makes more than $5714 gross per month under this model, then it's better than 30%. Nothing wrong with that. However, note that $5714 / 500,000 shares = 1.14 cents/share gross. And if you are a day trader, that's a decent batting average.
Under this example, the firm is making a riskless $4000 every month. However, the trader is risking that he will have a month when it is negative. If you take on more risk, you should have a higher reward. Suppose this trader does well and makes $15,000 gross on the same volume. His take home will be $15,000 - $4000 = $11k or 73%. That's good no doubt. In the following month, if the trader loses $2000 gross and then minus $4000 commiss = $6000. Over the two months the trader's made $5000 net, paid out $8000 in commiss, on a gross of $13k. That is 38.5% net with this 100% payout structure.
Bottom line is the prop firm made a RISKLESS $8000 in two months. The trader is risking a lot more and getting paid less than 50%. That's what my concern is about. Does that seem logical MACDaddy?
This is why firms love traders..especially if the firm's fees are based on volume, they love high volume traders. They know every trader they sign up will generate a good $500-$4000 per month in revenues to pay for their rent, etc. I am a business student myself. The marginal cost of bringing in another trader is near zero. The marginal profit percenage of each trader is infinity. They have to pay for their networks, rent, exchange privilages if there is only 5 traders or there are 500 traders. Every new trader is pure gravy for their business.
But for us traders running our 'business', we never have a gravy train. Everytime we press the button, commiss is generated for the firm, but we are never ensured a profit with every execution. So our risk to our business is much higher. And getting a bottom line of 30% to even say 60% doesn't seem right. It's the rules of the game and I choose to play, that much I admit. I don't blame the players (Prop firms) but I do blame the game. It's no wonder why so many traders fail to earn a living at this game.
Don is saying treat it like a business. The Brights are running a business for businesses right? So for the prop firm, they risk nothing because their traders put up capital (10k minimum, 25k max) so if a trader loses, the Brights never have to worry about the company losing money. Every single day the prop firm will be gross positive to pay their bills because of the commissions their traders generate. They will never have a 'gross negative day'.
Consider it from Bright's angle. Their best volume rebated rate is 0.75 cents per share. Please correct me if I'm wrong Don, I don't wish to give you a bad name, but for the sake of analysis I believe that is the correct rate. They pay out 100% b/c of the capital contribution. Average trader trades 500,000 shares x 0.0075 = $3750 in commissions (before $400 desk fee and haircuts). So in total say the cost is $4000. To be at 30% means 4000 / 0.70 = $5714 gross. If a trader makes more than $5714 gross per month under this model, then it's better than 30%. Nothing wrong with that. However, note that $5714 / 500,000 shares = 1.14 cents/share gross. And if you are a day trader, that's a decent batting average.
Under this example, the firm is making a riskless $4000 every month. However, the trader is risking that he will have a month when it is negative. If you take on more risk, you should have a higher reward. Suppose this trader does well and makes $15,000 gross on the same volume. His take home will be $15,000 - $4000 = $11k or 73%. That's good no doubt. In the following month, if the trader loses $2000 gross and then minus $4000 commiss = $6000. Over the two months the trader's made $5000 net, paid out $8000 in commiss, on a gross of $13k. That is 38.5% net with this 100% payout structure.
Bottom line is the prop firm made a RISKLESS $8000 in two months. The trader is risking a lot more and getting paid less than 50%. That's what my concern is about. Does that seem logical MACDaddy?
This is why firms love traders..especially if the firm's fees are based on volume, they love high volume traders. They know every trader they sign up will generate a good $500-$4000 per month in revenues to pay for their rent, etc. I am a business student myself. The marginal cost of bringing in another trader is near zero. The marginal profit percenage of each trader is infinity. They have to pay for their networks, rent, exchange privilages if there is only 5 traders or there are 500 traders. Every new trader is pure gravy for their business.
But for us traders running our 'business', we never have a gravy train. Everytime we press the button, commiss is generated for the firm, but we are never ensured a profit with every execution. So our risk to our business is much higher. And getting a bottom line of 30% to even say 60% doesn't seem right. It's the rules of the game and I choose to play, that much I admit. I don't blame the players (Prop firms) but I do blame the game. It's no wonder why so many traders fail to earn a living at this game.
Well your numbers are pretty far off the mark. Traders get most or all of their desk fees rebated back to them. Nearly all remote traders pay zero (200K shares a month, come on....pretty low bar). All trades above 1,000 are only .4, and we have dozens of pricing plans.
And of course we pay fees for everything, SLK, Penson are not free...and we have taken some pretty big hits ($millions over the years), from allowing traders to trade with our money....
but we run a pretty tight ship, and I'm certainly not complaining. The family works a zillion hours every week, we enjoy what we do, but it saves the traders money...we don't "outsource"...
We have adapted over the years, never got into the excesses of the bubble days, never had our traders money at risk, and have the best long term training and assistance around .... My brother keeps the long term traders adapting to the markets, working with each other, etc.
And, as I said, the "race to zero" for commissions is pretty much over....and if a trader can't be taught to make more than a penny or so (gross) per share, then maybe they should re-consider the whole business.
Back to work....anly 4 fills on the opening today.....
Good Trading everyone...... "May your trading business Live Long and Prosper!"
Don
And of course we pay fees for everything, SLK, Penson are not free...and we have taken some pretty big hits ($millions over the years), from allowing traders to trade with our money....
but we run a pretty tight ship, and I'm certainly not complaining. The family works a zillion hours every week, we enjoy what we do, but it saves the traders money...we don't "outsource"...
We have adapted over the years, never got into the excesses of the bubble days, never had our traders money at risk, and have the best long term training and assistance around .... My brother keeps the long term traders adapting to the markets, working with each other, etc.
And, as I said, the "race to zero" for commissions is pretty much over....and if a trader can't be taught to make more than a penny or so (gross) per share, then maybe they should re-consider the whole business.
Back to work....anly 4 fills on the opening today.....
Good Trading everyone...... "May your trading business Live Long and Prosper!"
Don
Quote from Don Bright:
Well your numbers are pretty far off the mark. Traders get most or all of their desk fees rebated back to them. Nearly all remote traders pay zero (200K shares a month, come on....pretty low bar). All trades above 1,000 are only .4, and we have dozens of pricing plans.
Don
Don, I apologize for the numbers.
If you don't think it fair, then go and do something else. It's that simple. You have a choice in life. There would be many folk who would just love to have the chance to even trade others money, and be around those that have obviously done well enough to be in the position to finance others. The real issue is this. If you are a properly profitable trader, then the deal will change won't it? Why, because when a prop firm gets a good trader, it will adjust it's parameters to keep the trader happy and make the returns long term - that's where the money is for everyone.
Don't forget, its our money, that means it's our game. Don't like it? Tough. Want the game your way - put up the cash. Oh, and by the way, rent the office, buy the servers, put in the comms, pay the IT guy, pay the heat and light, do the deals with the clearers, make sure you get the right software, work out how you are going to pay for that too, get a good data provider, like CQG, pay for that, while you're at it pay for the computer to run it on, and of course the trading station. Oh, back office. Yea, employ a couple of guys to keep the accounts straight. Oh of course, engage an accountant to make sure all the tax and accounts are properly done. Don't forget the lawyer to make sure the contracts are properly done too.
This isn't a game, it's a big boys world and there is a price for joining the best clubs. Go it alone then, keep all your profits. But I tell you this, had I not been through that stage of paying away alot of my profits, which in dollar terms were not insignifiacnt, I would never have made it. Why? Because I got to trade around some of the best traders in the world. I read, I reasearched, I worked 16 hours a day to learn, but most of the real lessons came from being lucky enough to stand next to these guys in the pits, and later to sit next to on the screen. What do I now know about that? It was cheap. IT WAS CHEAP. If you worked for me and I saw you were bitching and moaning like this, I'd sack you on the spot.
Don't forget, its our money, that means it's our game. Don't like it? Tough. Want the game your way - put up the cash. Oh, and by the way, rent the office, buy the servers, put in the comms, pay the IT guy, pay the heat and light, do the deals with the clearers, make sure you get the right software, work out how you are going to pay for that too, get a good data provider, like CQG, pay for that, while you're at it pay for the computer to run it on, and of course the trading station. Oh, back office. Yea, employ a couple of guys to keep the accounts straight. Oh of course, engage an accountant to make sure all the tax and accounts are properly done. Don't forget the lawyer to make sure the contracts are properly done too.
This isn't a game, it's a big boys world and there is a price for joining the best clubs. Go it alone then, keep all your profits. But I tell you this, had I not been through that stage of paying away alot of my profits, which in dollar terms were not insignifiacnt, I would never have made it. Why? Because I got to trade around some of the best traders in the world. I read, I reasearched, I worked 16 hours a day to learn, but most of the real lessons came from being lucky enough to stand next to these guys in the pits, and later to sit next to on the screen. What do I now know about that? It was cheap. IT WAS CHEAP. If you worked for me and I saw you were bitching and moaning like this, I'd sack you on the spot.
Well, a little stronger than I would have said it...but well said nonetheless....
Don