The New Brokerage Model....coming soon?

Status
Not open for further replies.
Quote from NYSEat21:

Mecro, my previous firm ran them through like cattle not the firm that I am part of now. That is the major difference.
I understand that a trader might be more profitable on small amount of shares relative to a trader that trades any type of size. We have guys and girls that tend to position trade throughout the day which leads them to trader fewer shares. If that works and they can make enough money at it...then I am all for it...green is green. But, I can count on one hand that amount of traders I have seen that have made it as a full time trader trading small shares each day. What tends to happen is that traders become complacent and will get comfortable with a certain total share size...which is not a bad thing in itself. But, this becomes a problem when you are doing the same size lots when you were positive. Now you are doing the same size lots to the upside and downside or worse bigger lots when you are down. You are not adjusting your size you how you are trading...you are adjusting your trading to your size. In my experience those traders that trade some size ( and not even big lots...500-2000sh) on an average day had the experience to lay into the market on a volatile day and clean up. Up to a certain point, I strongly believe the volume will directly effect the profits. Once you are overtrading, then you are shooting yourself in the foot. But, undertrading isn't getting you anywhere either. At best you will be treading water. How many true prop traders do you know that are making a living trading 5-10k shares a day? (There is a HUGE difference between trading 10k retail and 10k prop in order to keep the lights on) On the other hand, a guy running a grey box pumping out 300k a day and 50k in bullets isn't going anywhere either.
More is not better. QUALITY IS BETTER! A good trader will trade what the market will bear. If there is nothing going on...you back off. If things are rolling you lay into stuff and you can make a whole year in a month or less.
Finally, since my thinking that size correlates with profitability is stupid I wouldn't mind putting my sheets side by side with yours.
More...


Well the reason why Vaquero has good points is because he focuses on profitability, not on volume. Almost every major prop firm focuses on volume, which encourages churning and forces traders to focus on their commission rates and so on.

"How many true prop traders do you know that are making a living trading 5-10k shares a day?"

My best days have been with volume of 5-10k.
 
Thank you for your excellent responses....

Remember no single business model is perfect...but there are those that are preferable to some...

For investors ...they will follow the firms that advertise the most...which in effect raises their cost...but they don't care about another $20 a year...they just want to feel good....

For scalpers averaging 1.5 to 10 cents objectives...their greatest need will be to get their costs low...for sure their firm will not be spending major advertising dollars...

There will always be front end firms...because they are easier to form than a successful back end firm...think of it this way...how many firms have one person who trades successfully daily..and has the daily blotters posted on their website...

Today...the cost of cut and paste...for daily blotters is nothing...the cost of printing and exhibiting charts is nothing...the costs of email distribution is nothing...the cost of delayed data is very small....

My interest is building a firm that has talented people that want to be a part of this model...they will paid from the profits of their group...for something they do anyway...

You know when you look at the quarterly reports of the major brokerage houses...you often see considerable profit levels...
These decisions were made by people....not companies...I hope that there will be a number of profit-based firms forming so that
aspiring traders will be able to view actual firm profit levels and commensurate trading styles...

The structure will be much like distance learning...no big bricks and mortar costs...the structure is virtual...which in turns enhances the freedom aspects of trading...


Hopefully there will be alternatives for aspiring traders...a good selection of profit centered firms...
 
Have to like that Vacquero's read on paying for ads....

I prefer to be paid for those full pages (informative in nature, not "in your face BS promotion) in the magazines, and those full hours on the Radio, etc. than to have to pay money to get our name out.

Education is another way to focus attention on the "good guys" in this field... Internship programs in major Universities has certainly helped with the younger groups....and Community College classes has helped inform the adults.

Our "virtual" or "cyber" King has done a tremendous job with our non "brick and mortar" applications as well.

So, you have some good ideas, perhaps not new (but certainly valid in concept)...!!

Now, get down to the nitty gritty, get to Clearing Firm and start arm-wrestling with the CEO's for lower rates will you? Tell the Exchanges to stop charging those exchange fees. Tell traders to "stop worrying about where there money is being held"...Tell the telcom people to lower those bills...get those "web hosters" to give us their services, get the banks to give us "Money for Nothing" (and chicks for free).... oops, getting carried away, yet again...LOL

(serious again)...these are valid ideas, and NYSEat21 and others who understand both sides of the business will emerge with groups who can make enough money to be viable and strong, and yet provide the leverage and capital to allow traders to make a good living..... and, the Bright Family will be there all along the way, doing what we can to help. There is no free ride, for either side....

Keep the "Evolution" going....

Don
 
Again...thank you for your excellent responses....

Questions for Don Bright and all other Pro Firm Managers....Traders...

1) Approximately what percentage of your clients have been profitable every year...?

2) Do you have any traders that do not hold overnights...that are profitable every day...? If so...for a year or more...?

3) How many traders are still clients after a year...percentage...numbers...?

4) Do you feel that the success numbers would improve if
the capital versus expense ratio was more favorable....?

5) Do you think that it is possible to form and maintain a profit based organization....based on trading profits....not front end costs...?
 
Quote from Vaquero:

Again...thank you for your excellent responses....

Questions for Don Bright and all other Pro Firm Managers....Traders...

1) Approximately what percentage of your clients have been profitable every year...?

2) Do you have any traders that do not hold overnights...that are profitable every day...? If so...for a year or more...?

3) How many traders are still clients after a year...percentage...numbers...?

4) Do you feel that the success numbers would improve if
the capital versus expense ratio was more favorable....?

5) Do you think that it is possible to form and maintain a profit based organization....based on trading profits....not front end costs...?
More...

Yeah, sure, Like I'm going to share my business model with the World....I can tell you the same numbers that I reported to regulators. After a one year "learning curve" 70% were profitable, after two years, over 90 percent. More than half don't make it the first year (our numbers are much better than most).

Let me ask you a question or two.

1. Do you have the capital to buy an exchang membership?
2. Do you have a Clearing Firm behind you ($10Mil?)
3. Will you personally guarntee the traders money (or are you simply using the OPM" ....)?? (Not a bad thing, just a different model).
4. Do you want to trade or manage or both...did you have a good year yourself?

Your turn...

(BTW, Not one other Firm will respond, thus proving my point about success rates)....

And, since this is a purely Individual Sport, all the numbers in the World don't mean squat....we simply cater the best traders in the World by giving them the best chance for success...period!

Don (again, having a little fun as those who know me realize)

:p

BTW2: Thanks for allowing me the opportunity to once again arouse interest in new traders....keep the IM's coming all...
 
1. Do you have the capital to buy an exchange membership?
2. Do you have a Clearing Firm behind you ($10Mil?)
3. Will you personally guarntee the traders money (or are you simply using the OPM" ....)?? (Not a bad thing, just a different model).
4. Do you want to trade or manage or both...did you have a good year yourself?

Your turn...

Thank for your responses.....

Please answer 2..4..5....this is for information in general..professional questions...professional answers...

For example 20% success is good...if that's the best there is....

Answers:
1) yes
2) approx. $4Mil
3) studying this ....preferable small initial...
4) trade...have managers...

Thank you...
 
Give me at least as much information about you as you have about me, and I might be inclined to consider your requests as professional and serious.

Name.
Phone
Address
Clearing Firm
Email
Website

I'm much to good a poker player to get involved in a no win debate with a phantom.

Your turn...

Don Bright
800.249.7488
4850 Harrrison Drive, Las Vegas NV
Spear Leeds (Goldman)
don@stocktrading.com
below...
 
Thank you for your responses...will give you the details after the initial unveiling of the new firm...will keep you posted...

I have the utmost respect for you and your firm....my firm will indeed be smaller in terms of bricks and mortar...and the number of traders...

Will keep you posted....


Would still like to hear your opinion if the profit-based model will work in this industry...
 
Profit based model should work....no overhead, no protection for the traders...they will have to "trust one another" with their money for a while *Unless you plan on using 100% of your personal capital to guarntee everyone*

You may want to check the history of such firms...

Don
 
Firstly....after experiencing the difficulties of maintaining high returns for a hedge fund as assets grew...it has led me to believe that small is good...you can't bet $25 million if the rate of return is best with $5 million...

What could be better than a group of individuals who are trading for their own interests for their own money that have carved out their own niches where large amounts cannot be traded...They obviously have the motivation for higher returns...

Simple example.....structure....
Traders: $1000 to $5000...trade $50,000 to $100,000
Firm: $4 million
Traders: 40

Lead trader: alone makes $100,000
Trained traders: make $1,000,000
Lead trader nets $200,000

Trained traders become lead traders...etc...

This is the thinking....
 
Status
Not open for further replies.
Back
Top