I am sorry to hear that you are impatient. rebate trading is very tough, requires alot of determination, and patience. You are trading passively which means you are advertising for shares at the best price and waiting for someone to fill you , sell to you or buy from you. This requires patience. You will have to condition yourself, yoga, meditation, working out, BJJ, sauna, something to help you stretch your patience and still and calm your mind. A physically fit trader is also mentally fit. How you think is everything in this business.
Part 2, Why no one will post which prop firm to join
- Thread starter gpstrade
- Start date
I am sorry to hear that you are impatient. rebate trading is very tough, requires alot of determination, and patience. You are trading passively which means you are advertising for shares at the best price and waiting for someone to fill you , sell to you or buy from you. This requires patience. You will have to condition yourself, yoga, meditation, working out, BJJ, sauna, something to help you stretch your patience and still and calm your mind. A physically fit trader is also mentally fit. How you think is everything in this business.
It really varies by "type" of Firm. We use smart routing and hot keys etc. to maximize the benefits of both providing liquidity and even taking liquidity. You can check www.stocktrading.com/Tradinginfo.htm about 6 inches down on the right side is a "click here" to show how much you can make in rebates, just by routing your orders correctly. You can actually get a rebate that covers your commissions in some cases (mid point pricing).
The actual "rebate trading firms" as in Swift Trade and their many similar firms tend to (paraphrasing my friend Charles Kim, one of the owners of Swift) "...we hire mostly 19 year olds to play the rebate game like a video game..." and, "if they want to actually start trading for real, I send them to you (BT) for training." Charles actually came for training many years ago.
Swift and some others have negotiated with generally second tier clearing firms to have a "ticket charge by symbol" each day. For example, they may pay $500 per day to trade only GE. So, they have hundreds of traders trading 10,000 shares at a pop for maybe 20 cents per thousand shares, trying to get rebates of about 20-30 cents per HUNDRED shares, by always being on the bid and the offer of really liquid stocks like GE. You can watch price tickers set to several decimals, and/or level 2 to see this action. They then split the profits with traders who do well. They may lose full pennies at times, which is part of the "plan" - and those they simply get rid of (traders). Just not normal trading.
FWIW,
Don
Well, I think Don pretty much covered the basic idea. I would further explain that rebate trading, trading for rebates solely as your bread and butter is dead as high frequency traders and their machines are far faster than normal discretionary hotkey traders. This allows machines that are colocated at exchanges to get priority spaces in line at the higher paying ecns. Rebates only fatten your bottom line and bring down your costs as you most likely will only get rebates on one side. My people trade for pnl and use liquidity aggregators, ATS, smart routes, floor routes, ALMMs alternative market maker routes, dark pools, to get fills at hard to fill thick liquid places and use traditional ecns with rebates for closing their position.
To me, if you are trading for pnl, doing the pnl game and not dark pool arb(nothing wrong with it) you are learning the game the right way, and it will cost you far less than trading directionaly in higher priced names , longer time trades. The market at best only gives a few pivots throughout the day, which allows very few correct entry pts throughout the day. how will anyone learn hotkeys and everything else like this I dont know. scalping, the better term for it allows the trainee to be wrong countless times throughout the day and still be able to come out ahead at the end. This is pretty much for younger people, who are competitive and like to push buttons. It can be alot of fun, and also very stressful at the same time.
Well, I think Don pretty much covered the basic idea. I would further explain that rebate trading, trading for rebates solely as your bread and butter is dead as high frequency traders and their machines are far faster than normal discretionary hotkey traders. This allows machines that are colocated at exchanges to get priority spaces in line at the higher paying ecns. Rebates only fatten your bottom line and bring down your costs as you most likely will only get rebates on one side. My people trade for pnl and use liquidity aggregators, ATS, smart routes, floor routes, ALMMs alternative market maker routes, dark pools, to get fills at hard to fill thick liquid places and use traditional ecns with rebates for closing their position.
To me, if you are trading for pnl, doing the pnl game and not dark pool arb(nothing wrong with it) you are learning the game the right way, and it will cost you far less than trading directionaly in higher priced names , longer time trades. The market at best only gives a few pivots throughout the day, which allows very few correct entry pts throughout the day. how will anyone learn hotkeys and everything else like this I dont know. scalping, the better term for it allows the trainee to be wrong countless times throughout the day and still be able to come out ahead at the end. This is pretty much for younger people, who are competitive and like to push buttons. It can be alot of fun, and also very stressful at the same time.
It's the nature of the industry. No one doing well wants to talk about it, and by the same token, why would someone doing well with a firm want to advertise where they are working? There's only so much edge to be had.
That's why you hear about the same crap firms all over this board all the time. All the equity trading "prop firms" that take capital contribution, and the bottom feeder futures firms that have tons of turnover and have a revenue stream from fees/commisions just like the equity trading model.
My advice would be to go to the exchange websites (CME, Eurex) and find a list of the member firms. Eliminate the firms that are purely FCMs (although very few probably are), and pursue the rest of the firms on the list, asking for a job starting at the bottom. If you don't personally know someone, thats the way in.