Prop trading (Black box)

"Speed counts" for some things, not everything. My personal trading would not be affected if a full second went by, which never happens.

We mostly trade limit orders, know where we want our entries and exits, not looking for sub-pennies...much easier on the brain.

Yes, we do have some guys who "need the speed" and have set up FIX connections to make that work, but only a small percentage.

FWIW,

Don
 
Quote from Don Bright:

Yes, we do have some guys who "need the speed" and have set up FIX connections to make that work, but only a small percentage.

FWIW,

Don
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right, you mentioned FIX earlier, which is why i asked... have never heard of anyone running a FIX engine over the internet.
 
Quote from propseeker:

right, you mentioned FIX earlier, which is why i asked... have never heard of anyone running a FIX engine over the internet.
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I have. A clean connection with very few hops. The big different come from a direct data feed. Only part of the latency is solved by being located at the exchanges. Sometimes clean data make a difference. I think Rediplus only uses their own data and you can't use a firm like Activ.
 
Bottom line is that a prop firm is just another customer - exactly like you could be if you were large enough. Because all a prop firm is is a customer they also end up being a "middle man" most often.

The problem with prop firms is that back in the 2000/post 9/11 era everyone was making a killing trading manually and many of the banks backed or were "affiliated" with many of the decent prop shops. As the banks started to lay off the prop trading, and in 2005, 2006 and 2007 a lot of the manual edges started going away, the prop firms were required to upgrade their own infrastructure. The days of "money is no object" were over and to make matters worse pre 2008/2009 recession they kept upgrading based on the old business models when huge offices of manual traders made money.

Single threaded applications were no big deal just like XP 32-bit, slower risk checks, slower TCP data, etc because when you are manually entering orders it doesn't matter. In 2007/2008 & 2009 new generations of CPU's came out that changed the game - as well as gigabit Ethernet. Up until later in 2008/2009 many computers still came with 10/100 connections and DSL was a very popular and common internet connection.

Enough of the history lesson - what all this means is that the prop firm's business model changed drastically around 2008/2009/2010 and as a result many of the firms have either gone out of business or have been scrambling to keep up with the times. You will generally find that the desktop API's are OK but they all have drawbacks.

The real HFT guys are all buying the data directly over equally or more robust networks than the average prop shop just like they bypass the front end and execution of a prop firm and send orders directly to the matching engines.

It all depends on your holding times and what you really need - but most of the time dabbling with a prop firm's desktop API is considered for the retail trader and a waste of time if there is any latency sensitivity.

Good luck with your search, PM me if you need an objective person to bounce any ideas or platforms off of.
 
I actually agree with a lot of what you say, Mr. WinstonTJ. The industry has evolved as our politico's like to say. The few stronger firms have survived, and we're doing ok - we have to focus more closely on our individual traders vs. betting on the come of new people all the time. I actually prefer having perhaps fewer, but more strongly committed traders (makes it easier on my and my trainers, LOL for sure).....

The time frame and holding time is a point I really agree with. Those who just don't care about a half second or even a half penny (I hate to say that, but many do so well - some even prefer paying for status on routing and destinations vs. getting paid for it, whoda thought, eh?) and still making the bigger money.

We've been very fortunate to have a diverse group, from the various models out there, thereby giving us the ability to interact within the disciplines available.

I had a great conversation with a smart guy from another Firm today, invited him to come to Vegas to chat (I think he will) - to discuss technology etc. I also had a great conversation with a group that could care less about latency (within reason of course) - they just need some safety and leverage (fearful of some firms).... The game is still here, just constantly changing, and we all have to take a step back, evaluate what we really care about, and evaluate our trading plans ... are we trying to beat the others in their game, or are we willing to work to simply make money?

FWIW,

Don
 
Wait! I was at that 70's seminar!

I had a great conversation with a smart guy from another Firm today, invited him to come to Vegas to chat (I think he will) - to discuss technology etc. I also had a great conversation with a group that could care less about latency (within reason of course) - they just need some safety and leverage (fearful of some firms).... The game is still here, just constantly changing, and we all have to take a step back, evaluate what we really care about, and evaluate our trading plans ... are we trying to beat the others in their game, or are we willing to work to simply make money?
More...
 
Quote from ElectricSavant:

Wait! I was at that 70's seminar!
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In the 70's we (me, my brother, Blair Hull, John Olagues, Eddie Franco, the Engman Brothers, and few others. WERE the computer generation - we laughed at the "old timers" - and now, we are the "old timers" - but with an advantage - we know that some of history cannot be repeated, and know a bit more about what "can go wrong" thus I see some "back to the future" things happening in this business. Remember, making money from trading is still the goal, right?

Don
 
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