On Don Bright & his trading methods
- Thread starter Lucias
- Start date
I am surprised that more firms don't get into the futures markets. All I have heard from my equity trading friends the last few years is "these stocks suck...they don't trade like they used to". It gets worse each year. The firms they trade for are very reluctant to let them trade futures...probably because futures don't generate nearly the same amount of commissions the firms make on equities. The traders would be MUCH better off P/L wise in futures.....but then the firms would keep less and pay out more to their traders.
Bingo! Stocks are a much better commission generator then futures. What's better then stock? Pairs!!!! Double the flavor, double the fun. I would like to have a serious conversation with Don on here about pairs trading.
Yeah. I have also heard that over the last year or so some of the prop firms have been giving their guys much bigger trading size in lower priced stocks and away from the AAPL's of the world.
They get into the traders heads by saying "You can trade 200k shares of Citi (before the reverse split)" making them feel like giant traders.
They would rather their guys lose .03 on a stock like C, then 2 points on 3000 AAPL.
Hmmmm...I wonder why.................
don always says. no one makes money on directional trading. its gambling. most experienced traders would probably disagree with that viewpoint. the fact is probably most traders & various funds make their money taking directional trades. bright does like to encourage various strategies with the idea of generating more commission dollars for the firm but not always with the traders profitability in mind. however don is a straight shooter & friendly for the most if you agree with his viewpoint .. their niche is for short term traders with flexible leverage for position trading within reason. they are not your typical daytrading firm with their non competitive commissions & now only 80 % payout of profits to its traders. ouch... just a good way to burn up your capital trying to daytrade with bright. a good firm if it fits your style of trading. to each his own.
No one makes money directional trading????? Wow....that's a good one. Actually a lot more money is made in directional trading. The hedged/pairs strategies have become so overcrowded over the years that the profit margins have been reduced to very little. It happens in a lot of strategies. I remember when half the traders I hung out with in Chicago were yield curve guys. I would say that a majority of them are now gone. the ones left are the ones with superior technology. Directional trading will never go away. It's a strategy that has been used for since the beginning of trading. It takes a lot more discipline...and I guess for a better lack of word....balls.
To say that directional trading is pure gambling is hilarious......and uninformed.
yea that's the way some people think. go figure.. if you can't make money taking a direction then someone should not be trading . all this pairs & hedging positions is overkill for daytrading. the best traders are not playing both directions of a stock intra-day unless their some specific reason to do so (mergers) possibly. Overnight positions that's a different story.. then hedges are important. many daytraders make their money being long or short a position. pick a direction & manage the trade.
I think the pay-for-training model is split by the customer. On one hand you have the groups who operated the sub-LLC model who could charge a vig on their trainees. That became crowded with rent-seeking behavior and churn and burn, not least of which were former WorldCo traders who were on the margins of proiftability but found a home with the standard JBOs in NY. A few good groups came from that (maybe SMB and JC found a niche). FINRA's been slowly dismantling that model.
On the other hand you have trainers in the retail area targeting mid-to-late-career professionals and retirees, and are almost universally ripping people off by selling nothing.
I wouldn't disagree with your criticisms, which is why I would not trade at Bright, and never have, even years ago when I was in that area. However, those with no skills could do a lot worse when seeking entry to the field which offers either fraud or no entry whatsoever.
Maverick, I agree. I would like also to direct this discussion to pairs. In this video, Paul Tudor Jones describes the ways he has has seen traders make money in the market. He stresses the importance of knowing what your business/your edge is.
He lists the following methods:
Special Knowledge
(.. on a particular instrument)
long/short equity hedge funds "few stocks" bottom up research
floor traders on nymex
Exploiting Inefficiencies/Arbing
intercommodity spreads
arbing new york/london, cash futures arb, convertible arb (corp/corp debt)
Momentum/trend trader
Systematic funds.. day trader catching a trend day "momentum in that time frame"
Reversal traders
Rare bunch.. taking advantage of irrational exuberance
http://wm9-streaming.soundfront.com/NYMEX/SYMPOSIUM_2003/jones.wmv
I think he calls most of the commodity spread trading, also, speculation. I would guess in today's market understanding both momentum and reversals provide the bulk of the futures traders profit.
He lists the following methods:
Special Knowledge
(.. on a particular instrument)
long/short equity hedge funds "few stocks" bottom up research
floor traders on nymex
Exploiting Inefficiencies/Arbing
intercommodity spreads
arbing new york/london, cash futures arb, convertible arb (corp/corp debt)
Momentum/trend trader
Systematic funds.. day trader catching a trend day "momentum in that time frame"
Reversal traders
Rare bunch.. taking advantage of irrational exuberance
http://wm9-streaming.soundfront.com/NYMEX/SYMPOSIUM_2003/jones.wmv
I think he calls most of the commodity spread trading, also, speculation. I would guess in today's market understanding both momentum and reversals provide the bulk of the futures traders profit.