i know the house can cut you off. i also know that 5k is easy to lose. you keep missing the point it does work for some people and the others are weeded out. if your dumb hey your going to lose it in the market or somewhere else. my question to you is if its so bad then how are you not a bad person for being in that business. i don't even know don i was making a joke and figured he would get.
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Pro Firms
- Thread starter YYNOTT
- Start date
i know the house can cut you off. i also know that 5k is easy to lose. you keep missing the point it does work for some people and the others are weeded out. if your dumb hey your going to lose it in the market or somewhere else. my question to you is if its so bad then how are you not a bad person for being in that business. i don't even know don i was making a joke and figured he would get.
Quote from Oldtimer:
>>>also oldtimer my comments came from what yynot was saying. he writes on here alot about not liking prop firms. he does not get it and so here i go. you put up 5k or 10k and you get a few 100,000 in buying power. so first the most you can lose is 5k or 10k technical of your own money(i no don does not like that comment). your commission cost is cheaper then any internet company or broker. you also get charts that most of the time the firm pays for and you also get fast execution. every trader needs to learn money management or you will fail. somebody tell me how this is bad. <<<
5-10K with leverage can evaporate after one day of trading. as far as Don's altruistic response, about how he's putting up money at great risk, in order to give poor, deserving traders a chance, I know that Bob Bright is a brilliant mathematician, and that the firm has excellent risk management. The model they employ has every trader sitting in a trading room, constantly overseen in their trading activities. From my own experience, I can tell you that the house seldom loses in this scenario. I don't fault the message, that leverage provides opportunity, just the altruistic tone. Don, you and I both know that you are in the business to make money. If you do your job well, then you have very little actual risk exposure. If the trader comes in with 5 or 10K, he has very little chance of success.
OT
Not really trying to set an altruistic "tone" here...I am, however, trying to show some of the newer people that there is indeed risk, as there is in any business....I don't need to go into detail about the demise of many larger firms (due in part to the reasons that you have given us credit for providing)....
Some people are going to trade anyway, no matter what others tell them, no matter how risky it might be...it does make sense that they should provide themselves with the best tools, and thus the best chance for success. Many brokers/frms will simply bring them in without offering either capital use or training.
We would hope that all of our traders are in agreement when they wish that we continue to monitor risk verly closely, and keep our status in the industry.
From trader to Firm management, the strong will survive, hopefully in unison.
All the best...
Don
Previously you accused me of not liking Prop. Firms. You are incorrect. I believe in Prop. Firms. In particular, I like Bright Trading. However, this thread was started by me to get opinions about the pros and cons of joining. Personally, I can think of reasons to join and not to join. I think this thread has run it's purpose thus far.
I do agree that certain people should stay out of prop trading... just like the nickel gambler who starts playing at a hundred dollar table....they need to keep things in perspective.
All the best.
Don
__________________
Don Bright (not an alias)
http://www.stocktrading.com
LMFAO.....and this comes from a guy who has ROOKIE training in Vegas....
And as far as i am concerned,,,,,with 4 years as A prop trader for Schonfeld during the "wonder Year".....BROKERBOY has no idea what he is talking about.....when it comes to "daytrading"...HENCE THE NICKNAME BROKERBOY.
and OT, who owned a PROP house back inthe WONDER YEARS...stated the situation perfect..
All the best.
Don
__________________
Don Bright (not an alias)
http://www.stocktrading.com
LMFAO.....and this comes from a guy who has ROOKIE training in Vegas....
And as far as i am concerned,,,,,with 4 years as A prop trader for Schonfeld during the "wonder Year".....BROKERBOY has no idea what he is talking about.....when it comes to "daytrading"...HENCE THE NICKNAME BROKERBOY.
and OT, who owned a PROP house back inthe WONDER YEARS...stated the situation perfect..
Quote from ertrader1:
I do agree that certain people should stay out of prop trading... just like the nickel gambler who starts playing at a hundred dollar table....they need to keep things in perspective.
All the best.
Don
__________________
Don Bright (not an alias)
http://www.stocktrading.com
LMFAO.....and this comes from a guy who has ROOKIE training in Vegas....
And as far as i am concerned,,,,,with 4 years as A prop trader for Schonfeld during the "wonder Year".....BROKERBOY has no idea what he is talking about.....when it comes to "daytrading"...HENCE THE NICKNAME BROKERBOY.
and OT, who owned a PROP house back inthe WONDER YEARS...stated the situation perfect..
I'm unclear as to exactly what you were saying, but we at BT do offer "rookie" (honest description) training, longer term "hands on" training (excellent results and response) ..and (for Bright Traders only), advanced classes taught by my brother and including some of our most successful and profitable traders.
I just wanted to clarify...training should never stop...stagnation equal ruination.
The Schonfeld program did work well in the time frame you mentioned. Ran into trouble, as we all know, after the bubble.
OK, time for "boot campers"...
Have a good trading day...
Don
Most traders here talk about stock as their trading vehicle. Why do most prop houses allow allow their traders access to options and futures as a hedging tool and alternative tool to trade????
Credit and debit spreads, butterflies and condors, straddles and a hand full of other positions will only enhance the ability of the "day traders" to make some income off a intermediate trading plan.
Emini and Bond futures can be used as a strong trading tool for the scalper that had been ruined by the penny interval on stock.
Their are products that have range and opportunity still exist. Look around.
To answer my own question. Margin on stock is bigger than other products and the churn factor is still there. The house makes more money. Traders should demand the best tool for their trade.
JG
Credit and debit spreads, butterflies and condors, straddles and a hand full of other positions will only enhance the ability of the "day traders" to make some income off a intermediate trading plan.
Emini and Bond futures can be used as a strong trading tool for the scalper that had been ruined by the penny interval on stock.
Their are products that have range and opportunity still exist. Look around.
To answer my own question. Margin on stock is bigger than other products and the churn factor is still there. The house makes more money. Traders should demand the best tool for their trade.
JG
I don't want to get into too much of a debate with Mr. Gus (Hi Jeff). And, btw, I am glad that you found out that there is quite a bit involved in the trading business....and I sincerely hope that what you said about "learning from your mistakes" will help you. We have "returnee" traders from GTT, and there were no bad words about you personally at all (that's a "good thing" LOL).
We offer futures and options to those who are really qualified and experienced, but since only the "really, really rare few" fit that description, it makes more sense to focus on the much easier and more successful (potential) game of stock trading.
As most of you know, Bob and I traded on the various options floors, and the CME (Bob) for quite some time. Even today we trade several hundred contracts between us every month. These games are more slanted, in our opinion, in the floor trading professionals direction. Since 90% of all "conversions and reversals" are trading within pennies of fair value, it is tought to beat the spreads shown by the DPM's etc.
Overall, with pricing so darn low these days...it is the "retention" of successful people via long and hard training programs that we find is the only way to insure continuing success. That is our focus. Teach them well, continue the train, repeat forever...this is what our "business plan" is, and has been.
The strong will survive, traders and firms.
All the best, Jeff...civil and intelligent conversation and debate fits the few successful firms left...the "bashing" and "rehashing" should be left to the politicians (and, boy, do we have enough of that comng this year).
All the best....
Don
We offer futures and options to those who are really qualified and experienced, but since only the "really, really rare few" fit that description, it makes more sense to focus on the much easier and more successful (potential) game of stock trading.
As most of you know, Bob and I traded on the various options floors, and the CME (Bob) for quite some time. Even today we trade several hundred contracts between us every month. These games are more slanted, in our opinion, in the floor trading professionals direction. Since 90% of all "conversions and reversals" are trading within pennies of fair value, it is tought to beat the spreads shown by the DPM's etc.
Overall, with pricing so darn low these days...it is the "retention" of successful people via long and hard training programs that we find is the only way to insure continuing success. That is our focus. Teach them well, continue the train, repeat forever...this is what our "business plan" is, and has been.
The strong will survive, traders and firms.
All the best, Jeff...civil and intelligent conversation and debate fits the few successful firms left...the "bashing" and "rehashing" should be left to the politicians (and, boy, do we have enough of that comng this year).
All the best....
Don
Here are some reasons why I think prop options are virtually non-existent...
1. risk-very few of the risk managers of prop know options let alone manage risk for several hundred traders. Could you imagine managing the net position 100-300 traders?
2. Revenue model-options are inherently swing intruments which means less commish. On the floors, there are lots of LLC's whcih flourish primarily in futures options. Their revenue is based on profitability of trader not from soft dollars from the broker.
3. Edge-there is a perception that there is no edge off the floor, but the ISE and the BOX is rendering that argument old. There is a nice prop firm in the tropics whose primary focus is putting on positions for an edge off the floor and they seem to be doing well. Case in point... XYZ gaps 25 cents and the calls move up in response except for 1 strike because a fund is sitting there with 10000 to sell, and you scoop up some of those and hedge with other calls or the underlying, you just put on a spread 80 cents on the dollar. THAT is a HUGE edge compared to oh..SP's are going up 3 ticks let me buy some stock....
4.Margin/leverage offered by the clearing firm. I could be way off on this but some prop shops are not capitalized big enough to allow option trading. Unlike stock which can be margined courtesy of the clearing firm, options must be paid off in full so prop's JBO can't lend them $ for that.
1. risk-very few of the risk managers of prop know options let alone manage risk for several hundred traders. Could you imagine managing the net position 100-300 traders?
2. Revenue model-options are inherently swing intruments which means less commish. On the floors, there are lots of LLC's whcih flourish primarily in futures options. Their revenue is based on profitability of trader not from soft dollars from the broker.
3. Edge-there is a perception that there is no edge off the floor, but the ISE and the BOX is rendering that argument old. There is a nice prop firm in the tropics whose primary focus is putting on positions for an edge off the floor and they seem to be doing well. Case in point... XYZ gaps 25 cents and the calls move up in response except for 1 strike because a fund is sitting there with 10000 to sell, and you scoop up some of those and hedge with other calls or the underlying, you just put on a spread 80 cents on the dollar. THAT is a HUGE edge compared to oh..SP's are going up 3 ticks let me buy some stock....
4.Margin/leverage offered by the clearing firm. I could be way off on this but some prop shops are not capitalized big enough to allow option trading. Unlike stock which can be margined courtesy of the clearing firm, options must be paid off in full so prop's JBO can't lend them $ for that.
Incubator Model
Opportunity cost and effort put forth to "newby" traders is just to tough to see fruits of your labor on a large scale. The smaller classes/programs with intense training over months (during trading hours and after market) will produce a much better success ratio than a week of "boot camp".
The ability to than build a business around successful and low risk traders is than available. This Micro-fund or Incubator Program will than pay dividends for years to come as a solid relationship is built between the trader and the Firm. Once a solid track record is built, money can be raised through many channels to adequately fund a trader/manager with capital that can allocated to many ideas and not just one methodology.
The funds that can be run through the JBO/ Non-segregated accounts are not for all traders/managers and do hold risks, but the industry standard 80/20 split of profits can be restructured and tilted to the trader/managers side or in some cases, the trader just needs their own capital invested in the fund and can take the full payout while returning capital to investors.
A new manager will not have to jump through all the legal hoops and start up costs are nil. A CPO/CTA manager can trade stock, options and index products and still execute the futures markets that he needs. The access to all these products under one firm will add flexibility to the traders that can trade all markets and skillfully execute their systems.
Don? Enjoy the equity pikers and the tenths of margin. They do add up, but the P/L model will still continue when commissions are zero.
Derivatives products are growing strong while equity volume is shrinking. The natural progression of successful traders to multi time horizons and other markets is taking place. Would you rather deal with semi-professionals or professionals? I will take the later.
Opportunity cost and effort put forth to "newby" traders is just to tough to see fruits of your labor on a large scale. The smaller classes/programs with intense training over months (during trading hours and after market) will produce a much better success ratio than a week of "boot camp".
The ability to than build a business around successful and low risk traders is than available. This Micro-fund or Incubator Program will than pay dividends for years to come as a solid relationship is built between the trader and the Firm. Once a solid track record is built, money can be raised through many channels to adequately fund a trader/manager with capital that can allocated to many ideas and not just one methodology.
The funds that can be run through the JBO/ Non-segregated accounts are not for all traders/managers and do hold risks, but the industry standard 80/20 split of profits can be restructured and tilted to the trader/managers side or in some cases, the trader just needs their own capital invested in the fund and can take the full payout while returning capital to investors.
A new manager will not have to jump through all the legal hoops and start up costs are nil. A CPO/CTA manager can trade stock, options and index products and still execute the futures markets that he needs. The access to all these products under one firm will add flexibility to the traders that can trade all markets and skillfully execute their systems.
Don? Enjoy the equity pikers and the tenths of margin. They do add up, but the P/L model will still continue when commissions are zero.
Derivatives products are growing strong while equity volume is shrinking. The natural progression of successful traders to multi time horizons and other markets is taking place. Would you rather deal with semi-professionals or professionals? I will take the later.