My Experience at a Prop Firm

Geez, seems like we're getting a bit nasty again, that's too bad.

Regarding Bob Kanter, whom my brother and I haven known for nearly 20 years. Jeff Mester is also a long term friend (President of ETG before leaving and closing up shop).

Bob Kanter did help his traders, but he had several business models. We nearly bought the Firm in (I believe) 2004, and we went through all the trading roster, P&L of traders, etc. I have to say that their commission structure was much higher than ours for most of their traders, but they still had long term relationships with some very good traders. We ended up with several traders from ETG, but chose not to buy the Firm.

So, just commenting about ETG, good firm, various business models.

Don
 
Just another comment, for those that may not be aware of the Exchange Floor trader (and Options Market maker) business model.

Back "in the day" - when my brother and I started on the Floor of the PSE (CBOE, CME all the same), we had to buy memberships which can be pretty expensive, but after doing so, we thought it was absolutely fantastic that we could put up $25K or so, and use a $million or more of (what is now) Goldman Sachs money to trade with. This allowed us to engage in strategies that worked (very well), and all the firm asked is that we clear our trades with them, and paid for execution and clearing fees. We had desk fees at times (waived based on volume). And, we thought it was cool that we kept 100% of our trading profits, were not treated as "employees"- and didn't have to answer to anyone (as long as our risk was under control).

This same model launched Timber Hill (who started Interactive Brokers), Hull Trading, Group One, Chicago Research (CRT), and I believe, Vtrader's owner was on the floor with us back then (Herb Kurlan? Mav? PSE, right?)and to some extent Susquehanna. There are many more, of course, this is just off the top of my head.

We simply duplicated that business model in 1992. The good part is that our traders don't have to buy memberships or anything (just become licensed). We provide the capital to particpate in more advanced strategies, and do our best to show newer traders what others are doing to make money. We cater to the entrepreneur, not the "employee type" trader. And, as Mav has said, this is certainly not for everyone.

Another point that seems to be overlooked, is that the advancement of technology has greatly reduced the "prop" firms need for any discretionary traders (there are still some, of course, but not nearly as many as in the 1990's and before).

Are there less than reputable firms out there? Sure! Are all firms "scams"- absolutely not. This business is tough, but if you're going to attempt it, regardless, you may as well give yourself the best possible chance to succeed.

Just my feelings, no need for flaming, but if you must, you must, LOL.

Don
 
Quote from Don Bright:

Geez, seems like we're getting a bit nasty again, that's too bad.

Regarding Bob Kanter, whom my brother and I haven known for nearly 20 years. Jeff Mester is also a long term friend (President of ETG before leaving and closing up shop).

Bob Kanter did help his traders, but he had several business models. We nearly bought the Firm in (I believe) 2004, and we went through all the trading roster, P&L of traders, etc. I have to say that their commission structure was much higher than ours for most of their traders, but they still had long term relationships with some very good traders. We ended up with several traders from ETG, but chose not to buy the Firm.

So, just commenting about ETG, good firm, various business models.

Don
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Don, there is nothing wrong with Bob Kanter or any other owner for that matter. The point is that all the equity prop firms ran on the same model. At the end of the day, if a prop firm does not have good traders, they will not survive. The big money is not made on the pikers that come in and trade 100 shares, it's made by the monsters that do 1 million shares a day. So every prop firm has a vested interest in their trader's profitability unlike what Mr. Pine was saying.

ETG's business model fell apart because they could not hold on to their good traders. We took most of them. Worldco made the kind of money that we did because we had monster traders. We probably had at least 50 guys that traded 500k shares a day and 5 to 10 guys that did a million plus. That is where the money is made. This idea that equity prop firms love to just rake in the cash by screwing the newbie is preposterous.
 
Quote from Don Bright:


(edit) ("edge" in knowing the econ numbers ahead of time, LOL - that is pretty funny).

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I'm not sure what you find so funny about that edge. The edge was real and lasted for many years. Traders and "real" prop firms made multiple millions for the several years that it lasted. I'll bet this hilarious edge made more money for traders than anything you teach in your boot camp. This still goes on today, it's just out of the reach of prop firms, with major news providers charging 7 figures to automate the econ numbers trade. Someone is still making money on it.

And you know what? Some people actually learned to trade while making millions on hitting econ numbers. It's not bad to get a head start in your bank account while you learn to trade.
Eprado got in at the end of it. I wonder if he would be complaining if he was making free money while learning to trade.

All edges go away or evolve. I just don't see why you laugh at this one and not at shorting nyse stocks on downticks with bullets.
 
Quote from SDticks:

I'm not sure what you find so funny about that edge. The edge was real and lasted for many years. Traders and "real" prop firms made multiple millions for the several years that it lasted. I'll bet this hilarious edge made more money for traders than anything you teach in your boot camp. This still goes on today, it's just out of the reach of prop firms, with major news providers charging 7 figures to automate the econ numbers trade. Someone is still making money on it.

And you know what? Some people actually learned to trade while making millions on hitting econ numbers. It's not bad to get a head start in your bank account while you learn to trade.
Eprado got in at the end of it. I wonder if he would be complaining if he was making free money while learning to trade.

All edges go away or evolve. I just don't see why you laugh at this one and not at shorting nyse stocks on downticks with bullets.
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Don't get me wrong, I of course realize that a lot of "information" trading (front running, IMO) has taken place in the past (probably still going on). My point is that in this day and age, it's pretty hard to "know" anything before someone else "knows" it.

It did work with Frozen Orange Juice in the classic Eddie Murphy movie "Trading Places" LOL. That movie always comes to mind whenever I hear about "news" trading.

There are a lot of ways to make money in this business.

Don
 
What is the typical tuition or fee for any training provided by prop shops, and what kind of training can one expect for that fee/tuition?

Is a prop shop better or worse based on tuition charges?

What do you think of a shop that charges $6000+ tuition for a week of training but does not require a risk deposit to trade a $50,000 account?

Thanks for your input.

Susan
 
I LIKE and agree with most of this thread BUT the physical appearance is irrelevant towards deciding success .......there are 2 brothers (we all know ) who are far more successful than myself and almost everyone else.........yet my first impression of them was based upon judging their physical appearance..........BOY , WAS THAT A MISTAKE !!!!!!!!!!!!!!
 
Geez, I hope you're talking about the Hold Brothers...Bob and I have made most of our money based on our physical perfection, LOL. Maybe the Smith Brothers of coughdrop fame!

Don :p
 
Quote from Maverick74:

What I am trying to do is get you guys to understand you are not addressing the real issues here. You are simply attacking the symptoms and not the disease.
.....
You see, like anything in life, there is good and bad everywhere. You can't just make blanket statements.
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Great point. There are pieces involved. You have the firm, the group (most of the time) and the trader. If the trader just does not have it, the rest don't matter. But if the trader has potential & the drive, the other two factors can negate it.

The prop firm business model clashes with the trader's best interests on more than one front. These decisions are made by humans, so fault can and should be placed. A refusal to adapt and change the business model is made by a human element.

Don Bright correctly states that a good trader can make money in any market. So why such a stubborn atttude against other markets which are less competitive & more opportunistic. Don, you guys can't even look past NYSE, let alone US equities. It's not like you do not have the resources, the brains & capital to explore & identify other markets and then allow your traders to exploit them.

The original equity prop firms started out exploiting the market. Now they exploit the trader.
 
Quote from Maverick74:


The bottom line is, holding their hand and telling them what a great guy they are and buying them pizza and telling them everything will be OK is bullshit. Trading should be like the military. You should get the shit kicked out of you.
Well, I did just that. I didn't get a single dollar out of Walter. I was the first guy in, last guy out and I busted my ass. I eventually joined a group, busted my ass some more, and eventually turned things around. At the time I hated Walter with a passion and Worldco. How could they treat me like that right? Well, I thought, f*ck them. I'll out hustle everyone there and I did. Through sheer hard work and determination I became the most profitable trader in our 40 man group.

You can't treat traders like children. The job is already like a fraternity or childcare facility, depending how you look at it. You need to treat these people like adults. And accept the fact that you are not suppose to succeed!!!. I would always cringe when I heard a group leader saying nice things to a newbie trader and taking him out for drinks. Why? Because that newbie was not going to make it and the group leader was lying to him so he would not quit. He bought him drinks, took him out to dinner, cottled him, the guy hung around and never made a dime. He never had that hunger in him. I have a lot more respect for a group leader that just tells these guys the truth. This is not summer camp. They are not your "friends". You are there to make a living! And yes, it's a very tough job. The only way to succeed is toughen yourself up.
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Very good points here, I couldn't agree more.

no such thing as a free lunch in the world, especially in trading business.

trading is a tough job, it can't be taught.

first thing first, make sure that you really want to trade.
 
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