I would say if you think you can compete long term trading size on this time frame more power to you. If you are trading 2 lots for a tick or whatever the equivalent size is in stocks then in MY OPINION you won't be making enough to make up for the periods where you will have to figure out a new anamoly to trade. It not really about who is on the other side but on who or what you are competing with. If you are competing on speed with a computer for a fill and that fill determines if you make a profit or not on a trade I would say the trader is focusing on a long term losing game. You are playing a game that changes characteristics the fastest, with the most competition, the least amount of room for mistakes, and the stategy that makes the least amount of profit unless you are trading really relatively large size. I am not saying no one can compete but would say most can't compete. I think the success of prop firms would be a lot higher if they focused on a different game assuming the firm is not using technology comparable to those they are competing with. At one time the scalping thing worked but things changed but the firms for the most part have not. However all the above is just my opinion.
The Real Cost of being a Proprietary Equity Trader
- Thread starter limitdown
- Start date
I would say if you think you can compete long term trading size on this time frame more power to you. If you are trading 2 lots for a tick or whatever the equivalent size is in stocks then in MY OPINION you won't be making enough to make up for the periods where you will have to figure out a new anamoly to trade. It not really about who is on the other side but on who or what you are competing with. If you are competing on speed with a computer for a fill and that fill determines if you make a profit or not on a trade I would say the trader is focusing on a long term losing game. You are playing a game that changes characteristics the fastest, with the most competition, the least amount of room for mistakes, and the stategy that makes the least amount of profit unless you are trading really relatively large size. I am not saying no one can compete but would say most can't compete. I think the success of prop firms would be a lot higher if they focused on a different game assuming the firm is not using technology comparable to those they are competing with. At one time the scalping thing worked but things changed but the firms for the most part have not. However all the above is just my opinion.
I have to strongly disagree with the above statement. A professional trading firm that requires members to put up capital in exchange for leverage, software, etc is doing nothing more than offering a service for a cost (commissions). The same way most other businesses are run. Many make no claims whatsoever about offering training, holding your hand and making sure you're on the same side as them (whatever that is supposed to mean). They tell you how their business is run, what's required of you and what they offer. If they meet your needs, you sign up, if not, you move on.
May I also ask why you continue to harp on this subject? This is at least the third thread you've started presenting exactly the same argument, as well as numerous posts warning against the evils of prop firms who fleece the innocent lambs of the trading world.
Trading is a business, run in the real business world. The seller of the service presents things in the best light they can, trying to make their outfit look the best. The buyer should do their homework and not take everything at face value, maybe consult other sources, check references, etc. This is how all business is conducted, what's so hard to understand? Are traders dumber than the rest of the population that they can't navigate their way through the jungle of making business decisions?
don why not share with us how many total traders you have at bright? i'm talking full time traders trading at least 10k a day vol. also since your company's been around since the early 90's why not share with is what % of your traders lasting 2 years are more? based on everything i've read from motely fool to many articles the % of traders even lasting a year is less than 5%. and of that 5% very few make 50k or more net a year?i've personally financed several traders the last year and not one made it even 3 months
I don't know anything about the other threads that were written but I guess there needs to be a common definition established. I was talking about Proprietary firms NOT Pro firms. Proprietary firms hire traders to trade their money (at least at futures firms), pay a small salary, and split profits. In that case you should be aligned with a firm. At pro firms you are just provided extra buying power. You are basically on your own and taking all the risk yourself. In that case there is no reason to be "aligned" with the firm as they are only making money if you are trading a lot. In that case you are just being provided a service. Once again I was only talking about proprietary firm.
Hey Les,,
At one time I appreciated your posts too, but I'm not interested in gaining one's praise, favor or otherwise, so it really doesn't matter whether you agree or not, nor does it matter to oh so many traders and former traders looking to right-turn their efforts at trading as a business.
Pro Firms, really are just as you described, and as Cornholetrader just clarified. On that, I fully agree. You know right from the start, after talking with them that their hard edge approach is service and facilitization only and nothing more. In fact to a very snobbish extent they will tell you that unless you come in with $50,000 account they don't even want to meet you in person, and will only waste their time with you on the phone. They brag that traders from their ranks get noticed and eventually open their own hedge funds and they back them with their track records and fund them to the tune of millions of dollars. Those firms are on a different track and offer different services and clearly aren't the ones being discussed here. How one could confuse the two, well, simply put, thanks for clarifying them.
Those clearly aren't the firms that offer these services I have described, nor provide the opportunities that have chewed through just so many formerly well off individuals and created this mass affinity towards this splinter business group call Proprietary Traders.
Open discussion of these issues is what these boards are for, whether its described as being repeated or being harped upon or being touted or being exposed it really doesn't matter. Clearly you're one of the successful long term traders and GFU (good for you)...
Are traders really that stupid? you asked:
..no but the results leaves them in such consternation that they wonder how they were separated from their monies (what was that definition of being made a fool, someone who is separated from their money and savings?)
..most are sufficiently more educated than either of us, no matter how many degrees we each hold
..some are lured to the hopes that the lifestyle and freedom of being independent as a business engaged in this electronic funds churning business really is the next wave (for them)... only to see they would have been better off not even trying
...Waxie did it, why can't more? and why can't even more do it using the leverage that being proprietary offers or claims to offer? Wow realities are vastly different from advertisements...
Whatever the case, the realities are those persons you described are whom who have responded to the call to become traders... and these are some of their shared experiences being expressed and collectively they are not adding up to complimentary praise as such for this industry.
Clearly there needs to be far more significant effort in improving the results of the responding customer base and potential customer base for this industry to continue.
Again, I point you to (sheerly by coincidence) the article in SFO Magazine, October 2005, pg. 18 as they are pointing up the very same issues, conclusions, frustrations and general lack of praise for what was a statistical anomaly (if that's spelled correctly), namely this phase of semi-pro trader status.
All I can say is that the wells have run dry long ago and those responding are not flooding through the doors like they once did, and as a result, self interest in these firms dictates that something in the business model change, more in favor of those responding than what it is presently.
I am not trying to be clever with you, and I understand why you feel this way because for years I said the same thing - but you are wrong and I was wrong. However, discovering how to trade against machines in stocks dominated by them was no easy task.
Basically what I am saying is that for you it is a good thing that you hold the opinion you do - but realize that it is at least as much a truth (a limitation) about you and not necessarily a fact about the world and others.
nitro
Basically what I am saying is that for you it is a good thing that you hold the opinion you do - but realize that it is at least as much a truth (a limitation) about you and not necessarily a fact about the world and others.
nitro
With commissions as low as .0015 there has never been a better time to go prop. When I started 5 years ago I paid .0125.......... and gave a % of my overall profits to the company.
It is safe to say fees and commissions are rock bottom at most of the prop firms left standing.
Sure there is a cost of doing business............. There always is.... The ice cream man that drives around my town has a higher overhead than the #s you posted.
Sure there is a high turnover rate but you have to take into account that many leave this career not because they lost money but because they did not make enough, they did not like the mood swings, did not have enough time to devote, or they had better opportunity elsewhere. This is not to say that there is a high failure rate (there is and it is high) but these numbers are also skewed by the traders that come and go for other reasons.
For instance I traded full time for 4 years and made 100s of thousands between 2000 to 04. Then I left to start a business. Was my departure due to failure ? not likely.
When I go back to trading part time next month I will not hesitate going the prop. route............
It is safe to say fees and commissions are rock bottom at most of the prop firms left standing.
Sure there is a cost of doing business............. There always is.... The ice cream man that drives around my town has a higher overhead than the #s you posted.
Sure there is a high turnover rate but you have to take into account that many leave this career not because they lost money but because they did not make enough, they did not like the mood swings, did not have enough time to devote, or they had better opportunity elsewhere. This is not to say that there is a high failure rate (there is and it is high) but these numbers are also skewed by the traders that come and go for other reasons.
For instance I traded full time for 4 years and made 100s of thousands between 2000 to 04. Then I left to start a business. Was my departure due to failure ? not likely.
When I go back to trading part time next month I will not hesitate going the prop. route............