Prop vs. Arcade

[NY0BScalper]

Quote from Szeven:

I think your trying to compare apples to oranges. How many of the traders with 500k BP can hold 500k of stock directionally unhedged overnight? I would guess if they are at a regular prop firm, the answer is 0 of them.

Stat arb, and extensive enveloping most definitely requires many millions of BP. Don has repeatedly encouraged traders to not be directional scalpers, but rather to be Opg, stat arb, and envelope traders for as long as ive read this board.

I realize those are valid strategies which require more than 500k BP, and it is not unreasonable for Don to promote them since they are the core of his firm. My issue is with Don trying to imply to new people coming into this business "my shop is the only acceptable shop," which is what he is indirectly saying since very few other places will provide the kind of BP Bright does and Don is trying to convince new guys that not having access to a million dollars may keep them from being successful when in actuality paying .008 is what is going to keep them from being successful.

Just calling it as I see it.

 

[Red_Ink_inc]

Quote from Szeven:

I think your trying to compare apples to oranges. How many of the traders with 500k BP can hold 500k of stock directionally unhedged overnight? I would guess if they are at a regular prop firm, the answer is 0 of them.

Stat arb, and extensive enveloping most definitely requires many millions of BP. Don has repeatedly encouraged traders to not be directional scalpers, but rather to be Opg, stat arb, and envelope traders for as long as ive read this board.

I think what NYOBscalper is referring to is day trading. When you overnight positions you're no longer day trading, you're swing/position trading.

A decent day trader can make 150-200k+ with 500k BP. Without any overnights (unless they get stuck in something at the bell). I know several who do so.

 

[traderpro]

The BP for day trading is only an issue if you are trading high priced stocks. You can day trade 100,000 - 200,000 and take out 100k or more for the year. Don is going in the direction of a different strategy.

 

[Don Bright]

Quote from NY0BScalper:

WTF ARE YOU TALKING ABOUT?

Most of the pros I know who make "a good living" trade with less a million BP. How can you even seriously keep a straight face polluting noobs with that fraudulent misinformation? 300,000 BP is enough to make a good six figure living with. If you have 6k shares of a $45 stock you can stand to make or lose $1500 quite easily on a trade. I just don't see how that can't equate to a good living if the trader is skillful.

I realize you encourage pairs, but the fact that you want your guys doing that doesn't mean that it "generally takes a $million or more to make a good living," since traders who trade pairs (which I guess MAYBE requires that kind of BP) make up a miniscule percentage of profitable daytraders out there.

I can think off the top of my head of 5 traders who make over 100k with 500k BP or less.

Nothing "fraudalent" at all, LOL. The last couple of years have brought a good number of traders from other firms simply to access BP, FWIW.

Some may make good money with less, and that's fine. My brand new people start off doing well with opening only orders. To enter 40 stocks, 2000 to buy and 2000 to sell, you need quite a bit of buying power. Still one of our best strategies. (40 stocks x 4000 shares, average price of $40

Many of my guys do like to keep positions as well. Some use over 30 to one their equity. We do a lot of M&A as well, that can require some BP.

We have guys who constantly use $10 million or more daily and over-night...and, yes, we have those who stay under a $million and do fine...and, yes, we still have some "day"traders as well. Whatever works for the trader.

All the best,

Don

 

[coolice]

One thing everyone should be aware of! Most of the prop firms requiring capital contribution and emphasizing 100 % payout should be avoided. Firms requiring capital contribution fully transferring risk to the trader therefore they are financially not interested in the traders success ( no matter how nice people they are and promising
the best training) . It is just their business model. So 100 % payout firms should be avoided.( Exceptions: wealthy traders with unlimited resources, who can ensure their
growth by financing their large losses). By choosing a prop firm with lower payout (70-80%) WITH NO CAPITAL CONRIBUTION! is a better choice. The firm is interested in the traders’ advancement. The same time the trader will be able to incur larger capital drawdowns due to the firm stronger business model, which is key for generating larger
profits! Anyway by foregoing the 20 % payout difference the trader will be able to receive much higher leverage and practically will be able to make more money than ever
than at a 100% payout “places”.

 

[Don Bright]

The other side of the above argument is why pay out Tens of Thousands of $$$ every year vs. putting up a little money of your own. This is what most Floor traders do and have done over the decades.

And, FWIW, it is in our best interest to train, nurture, and Retain traders forever vs. that bring in brand new people. We do our best to do both, but long term traders trade more, and obviously make more money for them and us.

More than half our traders have been with us for 5 years or longer.

Another note is that even if you don't put up money initially, most firms require that you keep profits in accounts, and only pay you sporadically. Our traders are running their own business within our structure, take money when they like.

Another note is that successful traders have withdrawn far in excess of their initial deposit.

Just keeping "fair and balanced." LOL.

To each his own....

Don

 

[NazSpaz]

Quote from NY0BScalper:

WTF ARE YOU TALKING ABOUT?

Most of the pros I know who make "a good living" trade with less a million BP. How can you even seriously keep a straight face polluting noobs with that fraudulent misinformation? 300,000 BP is enough to make a good six figure living with. If you have 6k shares of a $45 stock you can stand to make or lose $1500 quite easily on a trade. I just don't see how that can't equate to a good living if the trader is skillful.

I realize you encourage pairs, but the fact that you want your guys doing that doesn't mean that it "generally takes a $million or more to make a good living," since traders who trade pairs (which I guess MAYBE requires that kind of BP) make up a miniscule percentage of profitable daytraders out there.

I can think off the top of my head of 5 traders who make over 100k with 500k BP or less.

I'm not at Bright, but I have to agree with Don on this one. If you told me I had to make a living on 300,000 in BP like you say I would ask you, "WTF ARE YOU TALKING ABOUT?"

You are assuming that all traders watch one stock and just trade in and out of that one. I have no interest in discussing how I trade here, but I can definitely say I need way in excess of 1MM in BP to do what I do. I know many other guys as well that would be out of business if we were limited to less than $1MM in BP.

 

[illiquid]

I would tend to side with NYOB, it's very possible to exceed 1:1 on yearly profits vs daily bp. You have 30 dollar stocks moving 2+ pts daily, $100+ names moving 5-10.

In fact, I'll make the claim that you can make more than 1:1 on 300K bp with a MAX size of 1000 shares per position -- the volatility is there.

 

[traderpro]

Quote from illiquid:

I would tend to side with NYOB, it's very possible to exceed 1:1 on yearly profits vs daily bp. You have 30 dollar stocks moving 2+ pts daily, $100+ names moving 5-10.

In fact, I'll make the claim that you can make more than 1:1 on 300K bp with a MAX size of 1000 shares per position -- the volatility is there.

I agree. If a trader has the A/ Desire and B/ Motivation the sky is the limit. And the most important discipline.

 

[NazSpaz]

Quote from coolice:

One thing everyone should be aware of! Most of the prop firms requiring capital contribution and emphasizing 100 % payout should be avoided. Firms requiring capital contribution fully transferring risk to the trader therefore they are financially not interested in the traders success ( no matter how nice people they are and promising
the best training) . It is just their business model. So 100 % payout firms should be avoided.( Exceptions: wealthy traders with unlimited resources, who can ensure their
growth by financing their large losses). By choosing a prop firm with lower payout (70-80%) WITH NO CAPITAL CONRIBUTION! is a better choice. The firm is interested in the traders’ advancement. The same time the trader will be able to incur larger capital drawdowns due to the firm stronger business model, which is key for generating larger
profits! Anyway by foregoing the 20 % payout difference the trader will be able to receive much higher leverage and practically will be able to make more money than ever
than at a 100% payout “places”.

If you told me when I woke up this morning I would have back to back posts agreeing with Don I would say you are crazy!

But, again have to agree with him. The firms that require no capital and give lesser payouts are ok if you are starting in the business and do not know what you are doing, as you can lose their money instead of your own. But, once you are enlightened and have figured out how to sit behind the computer and be consistently profitable, the Bright, Echo, & Assents of the world that require capital contributions are absolutely the way to go. Please don't take this personally, but I have been in this business a loooong time and that blanket statement to only go to firms that take a cut of your profits is one of the most uninformed and misguided statements I have ever seen on these boards.

I am at a prop that requires a cap deposit, and the amount I have to leave in is next to nothing to get the BP that I get, and I don't have to share my profits. I would lose many hundreds of thousands of dollars a year if I had to share 20% or 30% of my profits with the firm, what sense would that make? No way possible any of those firms would give me more BP, the 100% props are extremely generous in BP if you prove you can handle it responsibly.

To me the best progression in the business is this: Start your career at a firm that requires no upfront capital and give them a cut of your profits, then if you make it and know how to make money, switch to one of the big three props (B, E, & A) and keep what you make. (Bolded for emphasis )