Scalping SPY till sure, then move onto ES

A

andy4

Hi,

I've moved over to ES from YM, getting to grips with it I think, on a sim (yes I know sim's are not real life) but was thinking of maybe trading (scalping spy) for a while just to make sure.

A few questions if I may.

Is there one ECN that's the better to use (all that swapping ECN's seems really a pain)

Do prop's allow trading of SPY ? (looking for less than 1c commissions with maybe higher margin)

Any prop's/companies (that offer less than a pennie commission and higher that 4-1 margin) that don't require a Series 7 ?

Other comments welcome.
Thanks,
Andy
 
I am about to use a single NQ contract -- $5 tick -- to swing trade on trend days and days with larger trading ranges.

I know the ratio of commission -- my cost per round trip is currently $5 -- to tick is horrible but since I am not scalping I think it is a reasonable approach to getting my feet wet.

Something you may want to consider.
 
Of course props let you trade SPY... DIA is another. It's NYSE listed... you can even trade the nasty SKF.

Props that are not registered as broker-dealers don't need their traders to obtain the Series 7.
 
Hi Monty,

"Props that are not registered as broker-dealers don't need their traders to obtain the Series 7."

What are the con's with using one of these brokers ?
Is my money safe ?

Any names ?


Thanks.
Andy

p.s. How long in time would you expect it takes to obtain a Series7, from applying for exam to getting results to trade. If that's the way I go I can devote 8-10 hr's a day studying.
 
Quote from andy4:

Hi Monty,

"Props that are not registered as broker-dealers don't need their traders to obtain the Series 7."

What are the con's with using one of these brokers ?
Is my money safe ?

Any names ?


Thanks.
Andy

p.s. How long in time would you expect it takes to obtain a Series7, from applying for exam to getting results to trade. If that's the way I go I can devote 8-10 hr's a day studying.
More...

Many prop's don't require their traders to have a Series 7. I'm going to my second prop firm in several weeks and I didn't have to get it at either company. As long as the firm is not registered as a broker-dealer than it is not necessary.

As for money being safe... that's a tough question. Google Tuco. But then think about Madoff's ponzi scheme at a seemingly "legit" firm. There will always be this risk anywhere on Wall Street. But yes, many props are designed as retail leveraged brokers with 100% payout and they feed off commissions. Sometimes you sign a contract where they freeze your money for x amount of months (can't withdraw).

I can't specifically name all the firms and give detailed information, so you have to do the research. Here is a list of firms (some are out of business and many are not listed):

http://www.tradersnarrative.com/list-of-proprietary-trading-firms-735.html

Do some research... search them on ET. The higher tier firms are those such as FirstNY, Trillium, Wolverine, D.E. Shaw, Jane Street, Citadel... but they are very competitive to get into.

Series 7 will take several months to fully obtain. Plus you can't just study for one 8 hr session... it's a fairly simple exam (I'm doing cfa so it makes it look like a joke) but there is a lot of material nevertheless. Also, Series 7 is designed for individuals that will have contact with clients... as a prop trader you have no clients. So it is irrelevant to trading. Hegde funds don't even need it. It's more for financial advisors at broker-dealers.
 
Quote from monty21:

Also, Series 7 is designed for individuals that will have contact with clients... as a prop trader you have no clients. So it is irrelevant to trading. Hegde funds don't even need it. It's more for financial advisors at broker-dealers.
More...

Bright requires Series 7 even though no contact with clients and you're trading your own capital. Definitely great leverage, though, (to get yourself in trouble with) :D
 
can also use (trade) SPY front month options, up buy call, down buy put, in this case you hdon't need margin and have much better leverage, round turn commissions is about 2 ticks (or $2).
 
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