Rentention Rate at Prop Firms
- Thread starter axehawk
- Start date
Our traders enjoy both...all their profits and a room full of other traders....
With all due respect, while the case for the possibility that retention rates are better than ever may be plausible theoretically, it is not accurate. Retention rates are not as good at all! It's not even close! Volume is gone. Very little moves. The games played by MMs and specialists are currently worse than ever.
There are still stocks that make great moves each and everyday. Look at some of the nasdaq stocks like BRCD and EMLX. Great move today in BRCD on the short side...http://finance.yahoo.com/q?s=brcd&d=c&k=c4&t=1d&l=on&z=m&q=l
I think we should form a pool on how the retention numbers shake out 
While I admire you, Don, for wanting to post what you find, I'm taking 00, because I don't think the nasty compliance guy will let you do it
I'm guessing that the 5% success number that the media likes to talk about is primarily for retail traders, trading in the "old" $20 ticket shops, and losing all their money to commissions, crappy training seminars and materials, etc.
I've never heard any mention in the media of pro/prop firms. I'd expect that their retention rate will be much higher because building a base of successful traders is by far a better way to grow your business, especially if you're risking some of your own money, than to rely on there being an endless stream of newbies with enough cash to lose.
While I admire you, Don, for wanting to post what you find, I'm taking 00, because I don't think the nasty compliance guy will let you do it
I'm guessing that the 5% success number that the media likes to talk about is primarily for retail traders, trading in the "old" $20 ticket shops, and losing all their money to commissions, crappy training seminars and materials, etc.
I've never heard any mention in the media of pro/prop firms. I'd expect that their retention rate will be much higher because building a base of successful traders is by far a better way to grow your business, especially if you're risking some of your own money, than to rely on there being an endless stream of newbies with enough cash to lose.
i would be very interested in discovering the trading firm retention rates...although the mitigating factors (why would a great trader stay and pay the bro, split the dough?) are likely to weigh against high retention figures....
what i'm trying to find out is, are any, all or none of these firms actually "professional"...in that i mean, they don't charge people to train them and they don't let some novice blow his money trying to figure out how to make some, they don't eat up a good trader's profits with bro and other charges...
i asked in another forum what the revenue breakdown on these firms is.....is it largely brokerage or trader splits?....i also noted that i think its somewhat disingenous to suggest that daytraders are making tons of money at their firms when their profits are being eaten up on fees...
what's the story?
mbs
what i'm trying to find out is, are any, all or none of these firms actually "professional"...in that i mean, they don't charge people to train them and they don't let some novice blow his money trying to figure out how to make some, they don't eat up a good trader's profits with bro and other charges...
i asked in another forum what the revenue breakdown on these firms is.....is it largely brokerage or trader splits?....i also noted that i think its somewhat disingenous to suggest that daytraders are making tons of money at their firms when their profits are being eaten up on fees...
what's the story?
mbs
My follow-up thought is that trading is a business
when treated properly, whether it is done at a Prop
firm or Retail. 4 out of 5 (80%) of new businesses
fail in the first two years. I would venture a guess
that many Prop firms are seeing similar a type of numbers
for newbie traders. A "failure" may not be someone
who totally blows out their account, but may be a
person who struggles and barely breaks even
after a long period of time and decides to try
something different....
just my $0.02....
- Greg
when treated properly, whether it is done at a Prop
firm or Retail. 4 out of 5 (80%) of new businesses
fail in the first two years. I would venture a guess
that many Prop firms are seeing similar a type of numbers
for newbie traders. A "failure" may not be someone
who totally blows out their account, but may be a
person who struggles and barely breaks even
after a long period of time and decides to try
something different....
just my $0.02....
- Greg
I'll be interested in seeing the success rates statistics as well. To me, it seems that prop trading/daytrading is an excellent way to for the firm to earn HUGE commissions with relatively low downside risk.
I'm not just talking about the LLC stuff which to me is nothing more than a fancy brokerage. I'm even talking about firms that "backed" their traders and give them a cut of profits(though way significantly lower than 100% or even 80% probably around 40% range). They seem to encourage "scalping" above all. Telling their traders to get a nickel here and a dime there. And most of them are not really NET positive that big by the end of the month. Sure, there are days when the traders are net positive maybe a few hundred bucks. But one big losing day can wipe their entire week or in some case an entire month's gain!
This is true, because I see it happen everyday...
And it just confirms my conviction that trading isn't as easy as most people make it to be. Having worked on the institutional side before, I know we spent millions on research, execution platform, etc. so we can just maybe beat the market slightly. The game isn't as easy as it looks. And even if you could "consistently" scalp which of course is very possible, there's a problem with scaling. Perhaps you can scalp a few stocks here and there, but there's a "limit". You can't scale it up to 20,000 or 50,000 shares. Well, perhaps on very liquid issues or stocks in play. Think about it! A porftolio manager trading a few hundred millions CAN'T scalp for 10-20cents. haha.
Perhaps there's a point where one can't scalp with size effectively.. And that means one has to have a real valid strategy.
1) Valid strategy
2) Money Mgmt technique(risk mgmt)
3) Emotional Discipline
Those are the key to successful trading... Moving in and out furiously via reading the L2 box to get a nickel here and there and then get wipe out by a sudden 20-40 cents drop that can erase the last 6-10trades gain is a damn hard way to make a living...
Just my 2cents and reflection...
trader99
I'm not just talking about the LLC stuff which to me is nothing more than a fancy brokerage. I'm even talking about firms that "backed" their traders and give them a cut of profits(though way significantly lower than 100% or even 80% probably around 40% range). They seem to encourage "scalping" above all. Telling their traders to get a nickel here and a dime there. And most of them are not really NET positive that big by the end of the month. Sure, there are days when the traders are net positive maybe a few hundred bucks. But one big losing day can wipe their entire week or in some case an entire month's gain!
This is true, because I see it happen everyday...
And it just confirms my conviction that trading isn't as easy as most people make it to be. Having worked on the institutional side before, I know we spent millions on research, execution platform, etc. so we can just maybe beat the market slightly. The game isn't as easy as it looks. And even if you could "consistently" scalp which of course is very possible, there's a problem with scaling. Perhaps you can scalp a few stocks here and there, but there's a "limit". You can't scale it up to 20,000 or 50,000 shares. Well, perhaps on very liquid issues or stocks in play. Think about it! A porftolio manager trading a few hundred millions CAN'T scalp for 10-20cents. haha.
Perhaps there's a point where one can't scalp with size effectively.. And that means one has to have a real valid strategy.
1) Valid strategy
2) Money Mgmt technique(risk mgmt)
3) Emotional Discipline
Those are the key to successful trading... Moving in and out furiously via reading the L2 box to get a nickel here and there and then get wipe out by a sudden 20-40 cents drop that can erase the last 6-10trades gain is a damn hard way to make a living...
Just my 2cents and reflection...
trader99