To prop or not to prop...

[Don Bright]

Quote from Maverick74:

The key words here are what is GS charging you and what is Bright charging you. Combine the two and you get the total. Don is telling you only what THEY charge you. Subtle difference.

Where am I "not" telling anyone anything. From my post above yours:

I am giving you full disclosure. You pay to borrow cash to GS of around 6.5, you get back on short stock and your cash amount 5% approx., meaning that your net is 1.5% approx.

0-6 times equity, no haircut

(I've posted the calculation several times already) 30 times equity= haricut of approx. 3.6%

????

Don

 

[Maverick74]

Quote from Don Bright:

Where am I "not" telling anyone anything. From my post above yours:

I am giving you full disclosure. You pay to borrow cash to GS of around 6.5, you get back on short stock and your cash amount 5% approx., meaning that your net is 1.5% approx.

0-6 times equity, no haircut

(I've posted the calculation several times already) 30 times equity= haircut of approx. 3.6%

????

Don

Yes Don, but you have to understand, these people are coming from the retail world. They don't understand interest calculations. They don't even understand that GS is charging them 6.5% for any debits. That's going to go over most heads on this board. That is why you need to be extra careful to make sure they understand what you are saying. I wasn't saying you were being coy with them. Just that 99% of the people on here don't know what debit and credit rates are.

 

[Don Bright]

Quote from Maverick74:

Yes Don, but you have to understand, these people are coming from the retail world. They don't understand interest calculations. They don't even understand that GS is charging them 6.5% for any debits. That's going to go over most heads on this board. That is why you need to be extra careful to make sure they understand what you are saying. I wasn't saying you were being coy with them. Just that 99% of the people on here don't know what debit and credit rates are.

OK, well that makes sense (I was beginning to think our love affair was fading, LOL).

Retail people pay fully for using margin, and don't get paid for short stock, so I would assume that a 1.5% spread would be thought of as a fantastic opportunity (vs. 6%-10% they pay now.)

And, even with a 1% net haircut charge for 12 time equity use of capital must look super.

OK, all is fine with the World again.

Don

 

[yip1997]

Quote from Don Bright:

Where am I "not" telling anyone anything. From my post above yours:

I am giving you full disclosure. You pay to borrow cash to GS of around 6.5, you get back on short stock and your cash amount 5% approx., meaning that your net is 1.5% approx.

0-6 times equity, no haircut

(I've posted the calculation several times already) 30 times equity= haricut of approx. 3.6%

????

Don

Don,

You don't want to disclose the operation of your company, and I don't want to know your cost. As I mentioned, I am only interested in finding my cost (the interest charge in my account). I don't care if GS or Bright charges me that amount.

A trader is a businessman who has to understand its cost, and decide if it is a profitable business for him. I really don't care about the profit of my suppliers! The suppliers told us too much about their operations without clearly telling me about my cost. LOL.

 

[Don Bright]

Quote from yip1997:

Don,

You don't want to disclose the operation of your company, and I don't want to know your cost. As I mentioned, I am only interested in finding my cost (the interest charge in my account). I don't care if GS or Bright charges me that amount.

A trader is a businessman who has to understand its cost, and decide if it is a profitable business for him. I really don't care about the profit of my suppliers! The suppliers told us too much about their operations without clearly telling me about my cost. LOL.

I totally agree with you, and we have all costs communicated during our New Trader Orientations, which usually takes a couple of hours (for everything, not just costs of course).

Don

 

[Traveler]

You guys are talking about two different things. Let me see if I have it straight.

Haircut- This is a premium paid to Bright by the trader to subsidize the risk that Bright takes on in allowing you to hold a leveraged position in excess of their guidelines.

Margin or debit balance- This is money borrowed from Bright's broker dealer (GS?) to pay for purchases of stock in excess of the actual cash balance of the trader's account. It is offset by money received from short sales of stock.

I'm also assuming that the risk fee varies widely from firm to firm and is negotiable depending on how well they know you and how risky your trading is. The desire to price it individually would explain why no firms list it on their websites and there are a million threads here about overnight leverage.

Correct me if I got it wrong.

Traveler

 

[Don Bright]

Quote from Traveler:

You guys are talking about two different things. Let me see if I have it straight.

Haircut- This is a premium paid to Bright by the trader to subsidize the risk that Bright takes on in allowing you to hold a leveraged position in excess of their guidelines.

Margin or debit balance- This is money borrowed from Bright's broker dealer (GS?) to pay for purchases of stock in excess of the actual cash balance of the trader's account. It is offset by money received from short sales of stock.

I'm also assuming that the risk fee varies widely from firm to firm and is negotiable depending on how well they know you and how risky your trading is. The desire to price it individually would explain why no firms list it on their websites and there are a million threads here about overnight leverage.

Correct me if I got it wrong.

Traveler

You pretty much got it right. There is a lot of "low balling" that going on in this business, and I respect those who seek to know all the costs involved, it usually leads them here (judging by the seasoned groups from other firms and what they tell me).

Anyway, I think we can put all this to rest for a while. However, feel free to email me with anything else.

donbright@brighttrading.net

All the best,

Don