Maybe I'm giving the human race too much credit, but I'm pretty sure anybody with an average IQ can handle the math. Trading is all about probability and statistics. Most people (including me) probably don't have the programming skills to work at a company like Citadel though. All of these algo firms are all about trading the spread, sending out IOC orders in search for lucky good fills, and jumping in front of people (sometimes illegally) to get out. After fees and slippage they probably make less than half a penny on their trade, but it's easy to do this with millions of shares across hundreds of liquid stocks during the day. I spent the last half hour of the day today trading the spread in CTIC going offer to bid getting quick fills in darkpools on both sides. Made over $100 in the last half hour, probably could have pulled several hundred more if I were willing to risk a bit more.
No capital contribution
- Thread starter EliteTraderNYC
- Start date
Maybe I'm giving the human race too much credit, but I'm pretty sure anybody with an average IQ can handle the math. Trading is all about probability and statistics. Most people (including me) probably don't have the programming skills to work at a company like Citadel though. All of these algo firms are all about trading the spread, sending out IOC orders in search for lucky good fills, and jumping in front of people (sometimes illegally) to get out. After fees and slippage they probably make less than half a penny on their trade, but it's easy to do this with millions of shares across hundreds of liquid stocks during the day. I spent the last half hour of the day today trading the spread in CTIC going offer to bid getting quick fills in darkpools on both sides. Made over $100 in the last half hour, probably could have pulled several hundred more if I were willing to risk a bit more.
I'm not disagreeing with you. I'm just telling you there is little economic benefit to hiring or backing a guy to push buttons. Think of it in the way that you have computers replacing people in customer service type jobs. You don't need to pay someone $10 an hour to talk on the phone when an automated voice can do the same thing at almost no cost.
Traders add value when their marginal product of labor is high, usually in new or emerging markets. As you move out in time you get convergence and the law of diminishing returns kicks in. Your revenue curve gets flatter and flatter until you marginal product of labor approaches zero, and that is where we are in the trading game of "established markets" i.e. us stocks or futures.
Where there still is some margin is in the physical space and I've mentioned this repeatedly on ET. You want to get into energy and the physical markets. Eventually you will have diminishing returns there as well.
Here's my 2 cents: I agree with Maverick but that's also subjective. Something could happen overnight that would bring lots of opportunities in equity or currency markets. Right now, the FEDs policies are not targeted to create opportunities in the market but rather to keep prices up through any means necessary. It's been a great policy for investors but not particularly great for traders.
Couple that with the entitlement mentality & the tax and regulatory costs of hiring a trader - payroll tax, soc. sec tax, workers compensation tax, health-care, retirement, licensing, fees, etc. - There is very little possibility for marginal return on typical traders. The economic model for traders should be simple: net PnL from trades. Whether or not we like it or accept it, regulations and fees have priced out a lot of traders' opportunities the same way raising the minimum wage eliminates jobs for inexperienced people. On top of that, we have a generation of young adults in high debt with no opportunities so many can't even take the risk of something performance-based. They straight out NEED to be paid a salary simply to make ends meet. I don't think ANYONE in that situation should even consider trading.
I think the two options for new traders these days is
A. self-education & leveraged account - Bright, JC, WTS, etc. - The licensing fees alone can typically exceed $1000 USD. Minimum dep usually around 10k, some will accept 5k. Your capital is locked up for a year. Statistically speaking, you have a better chance of losing it in that year. I think this works for highly-independent people and those who prefer to be self-educated. The benefits is whatever capital you have left. If you lose half of your 10k, you can decide to stop and recover the difference at the end of the lockup period. I think groups like WTS and JC take 5k deposit. Bright was 25k last time. Echotrade is 10k. Some require a series 7, some a series 56.
B. educational firms that provide trading capital to traders who successfully complete the program - t3, smb, alpha 7, maverick trading - You pay around 3000-10,000 (non-refundable training fee) & they typically have some type of fund or trading group that will hire the ones they feel will be successful. The upside with these groups is they focus on training and helping you accelerate your learning curve. You'll probably need to learn on a demo and prove your ability before you get hired to trade firm capital. The down side is they your draw downs will be determined by the firm, not your deposit. These programs start at 3k at Alpha 7, 5k at Maverick, with SMB and T3 running 8-10k. t3 & smb offer in-house programs, the others remote programs.
A few years ago, you would get trained and get an account for $1500. BUT like health care insurance, the prices have sky-rocketed based on regulatory costs, inflation and a few other factors. It is what it is. The one constant thing traders have to deal with is change.
Couple that with the entitlement mentality & the tax and regulatory costs of hiring a trader - payroll tax, soc. sec tax, workers compensation tax, health-care, retirement, licensing, fees, etc. - There is very little possibility for marginal return on typical traders. The economic model for traders should be simple: net PnL from trades. Whether or not we like it or accept it, regulations and fees have priced out a lot of traders' opportunities the same way raising the minimum wage eliminates jobs for inexperienced people. On top of that, we have a generation of young adults in high debt with no opportunities so many can't even take the risk of something performance-based. They straight out NEED to be paid a salary simply to make ends meet. I don't think ANYONE in that situation should even consider trading.
I think the two options for new traders these days is
A. self-education & leveraged account - Bright, JC, WTS, etc. - The licensing fees alone can typically exceed $1000 USD. Minimum dep usually around 10k, some will accept 5k. Your capital is locked up for a year. Statistically speaking, you have a better chance of losing it in that year. I think this works for highly-independent people and those who prefer to be self-educated. The benefits is whatever capital you have left. If you lose half of your 10k, you can decide to stop and recover the difference at the end of the lockup period. I think groups like WTS and JC take 5k deposit. Bright was 25k last time. Echotrade is 10k. Some require a series 7, some a series 56.
B. educational firms that provide trading capital to traders who successfully complete the program - t3, smb, alpha 7, maverick trading - You pay around 3000-10,000 (non-refundable training fee) & they typically have some type of fund or trading group that will hire the ones they feel will be successful. The upside with these groups is they focus on training and helping you accelerate your learning curve. You'll probably need to learn on a demo and prove your ability before you get hired to trade firm capital. The down side is they your draw downs will be determined by the firm, not your deposit. These programs start at 3k at Alpha 7, 5k at Maverick, with SMB and T3 running 8-10k. t3 & smb offer in-house programs, the others remote programs.
A few years ago, you would get trained and get an account for $1500. BUT like health care insurance, the prices have sky-rocketed based on regulatory costs, inflation and a few other factors. It is what it is. The one constant thing traders have to deal with is change.
Ev,
In my opinion Option A is the best way to go. Option B is usually a scam. In Option B you give these guys money for education and maybe they will let you lose a little of your money and then comeback and ask you to take another class. And what do you get? Old videos showing you support and resistance, or some "set up" that you can find in 100 different trading books.
The best option is A. Join a firm and put down your money. You put down $5,000 then you know you can lose $5,000. Then Read, Read, Read, Read....and then read more. Start trading with 100 shares and then when you are consistently profitable go to 200, 500, 1000, 2500, 5000 etc. You will be better off and know more than paying these guys for education where when you are done they will let you lose $1,000 AND charge you commissions!
In my opinion Option A is the best way to go. Option B is usually a scam. In Option B you give these guys money for education and maybe they will let you lose a little of your money and then comeback and ask you to take another class. And what do you get? Old videos showing you support and resistance, or some "set up" that you can find in 100 different trading books.
The best option is A. Join a firm and put down your money. You put down $5,000 then you know you can lose $5,000. Then Read, Read, Read, Read....and then read more. Start trading with 100 shares and then when you are consistently profitable go to 200, 500, 1000, 2500, 5000 etc. You will be better off and know more than paying these guys for education where when you are done they will let you lose $1,000 AND charge you commissions!
Do NOT go to Tower Hill. LOL.
All of the BS with the firms was making my head spin. Luckily I have parents who have extra $ laying around and are willing to put in 25k while I make a 5-7k deposit. With the understanding that if I blow my deposit, they get their 25k back. If I can keep my profitable trading up I will study for the Series 56 and trade with a WTS branch or Echotrade.
EVO or Mav, do you know anything about www.remotedaytrader.com?