Trading ES in a prop firm?

Quote from taclander:

Don, I was curious about the .75 cents vs. $4 a r/t comparison also? If a futures trader were paying $4 r/t all in per contract, wouldn't you compare that to an equivalent position in equities? Say 1 mini NQ contract would be roughly 800 shs. of the QQQQ's. I can't say for sure what the approriate equity commission is, but .003/sh all in for each side on equities ends up being the same or a bit more for a roundtrip on the QQQQ 800 sh equivalent. Let me know if I'm off base here, as I would like to know. Thanks
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The .75 vs. $4.00 (approx) refers to the shops who have memberships on the CME, all their traders, and other individual members (like my brother) who have such low rates. My brother even has a cap where he can trade 5,000 contracts or more for pennies each.

And, it's not just the cost comparison to equities that makes it more difficult, IMO...it's simply that you have to be "right" on the direction of the market (unless you're doing index hedging, which is fine, of course). Pretty tough to be "right" on market direction in the long run.

Equity hedging strategies, to me, seem to be a lot simpler and "safer".

Gotta run, but we can certainly chat about all this again...Mav and I may disagree somewhat on this, but the conversation can certainly take place again.

All the best,

Don
 
Quote from Don Bright:

The .75 vs. $4.00 (approx) refers to the shops who have memberships on the CME, all their traders, and other individual members (like my brother) who have such low rates. My brother even has a cap where he can trade 5,000 contracts or more for pennies each.

And, it's not just the cost comparison to equities that makes it more difficult, IMO...it's simply that you have to be "right" on the direction of the market (unless you're doing index hedging, which is fine, of course). Pretty tough to be "right" on market direction in the long run.

Equity hedging strategies, to me, seem to be a lot simpler and "safer".

Gotta run, but we can certainly chat about all this again...Mav and I may disagree somewhat on this, but the conversation can certainly take place again.

All the best,

Don
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Don, nobody pays 4.00 to trade futures, at least not prop. And anyone can lease a seat and get their exchange fees down to .50 or so. Equities usually cost 2 to 3 times more to trade when compared to the same dollar size. For example comparing 800 QQQQ's to one NQ or 1000 shares of IWM to one ER2.

And Don, I have said this before, and I'll say it again. Everyone trades direction. Some trade the direction of the underlying, some trade the direction of volatility (option traders) and some trade the direction of the pair (you!). But we all trade direction one way or the other.
 
I know people that are just under $4, in fact I'm not much under, but the lease doesn't make sense dollar wise for my volume. Its close and maybe I could pump it a bit to take advantage of it, but haven't. Part of the reason being my trading slows considerably in the summer when I'm chief cook and travel guide for the kids. My volume is made up of the ER mainly, plus the EC and NQ. If I were to focus exclusively on the ER I could probably go with a GEM. I would definitely just as soon be at member rates for the obvious cost benefits. and perhaps a group would be a benefit to be able to maintain a steady volume. This is going to be year 4 for me full time in futures, so despite my rates I guess its still possible to make it.
 
Sorry for the ramble there, roughly my point was you can make it at higher rates, but obviously better at the lower rates, and the futures as far as I can tell are much cheaper than the equities. I also agree with Mav on the concept that we all trade direction in some manner.
 
Quote from Maverick74:

Don, nobody pays 4.00 to trade futures, at least not prop. And anyone can lease a seat and get their exchange fees down to .50 or so. Equities usually cost 2 to 3 times more to trade when compared to the same dollar size. For example comparing 800 QQQQ's to one NQ or 1000 shares of IWM to one ER2.

And Don, I have said this before, and I'll say it again. Everyone trades direction. Some trade the direction of the underlying, some trade the direction of volatility (option traders) and some trade the direction of the pair (you!). But we all trade direction one way or the other.
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No, we don't trade the direction of the Pair, by definition that would be wrong. We look for spread expansion or contraction, of course.

To be fair, because I respect you and your knowledge of the industry...we do use a 10% or so "long bias" - but that is simple to adjust $$ values, long and short, based on the historical upward bias of the market.

(Come to Vegas, my friend...let me show you some numbers...you know why I can't post them for the public, or email them or anything, but I will show you some numbers that may make you say: " hmm? Intersting, I never realized" )....

And, again out of respect..."yes" - a good chunk of what our family $$ is involved in is directional - but our finger is always on the button to reverse direction (as I know you are).

Don
 
I'll fly out to Vegas for you Mav and verify Don's numbers! :D

I'm tired of the cold weather here in MI. Let me know what your fax number is so, I may send you my expense report! :D

p.s. Don, if I come trade prop at Bright, can I sleep in your basement?
 
Quote from sulli:

I'll fly out to Vegas for you Mav and verify Don's numbers! :D

I'm tired of the cold weather here in MI. Let me know what your fax number is so, I may send you my expense report! :D

p.s. Don, if I come trade prop at Bright, can I sleep in your basement?
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No basements in Vegas, all slap on the top of the desert, LOL.

But, at $29 per night, including maid service ain't bad...:-)

Don :p
 
Quote from Don Bright:

No, we don't trade the direction of the Pair, by definition that would be wrong. We look for spread expansion or contraction, of course.

To be fair, because I respect you and your knowledge of the industry...we do use a 10% or so "long bias" - but that is simple to adjust $$ values, long and short, based on the historical upward bias of the market.

(Come to Vegas, my friend...let me show you some numbers...you know why I can't post them for the public, or email them or anything, but I will show you some numbers that may make you say: " hmm? interesting, I never realized" )....

And, again out of respect..."yes" - a good chunk of what our family $$ is involved in is directional - but our finger is always on the button to reverse direction (as I know you are).

Don
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Don, what I meant by direction of the pair is you are trading the value of it. If I buy the HD/LOW spread for .30 and sell it for .55 I am said to be long the spread if I'm looking for the spread to widen. There is always a directional aspect to a pair trade as you want the spread to either narrow or widen.

Don, I'm not questioning your numbers, simply that every trader trades direction in one form or another. A bond trader that trades the NOB spread (notes over bonds) is trading direction. A trader that is long dispersion (trading long equity vol/short index vol) is trading direction.
 
No basements in Vegas, all slap on the top of the desert, LOL.
But, at $29 per night, including maid service ain't bad...:-)
Don

DAMMMM Don
It cheper staying in $29 per night with maid service then staying in a basment in NYC ehehehheheeheh
By the way don are the rent cheap for a studio in Vegas
:)
 
Quote from Maverick74:

Don, what I meant by direction of the pair is you are trading the value of it. If I buy the HD/LOW spread for .30 and sell it for .55 I am said to be long the spread if I'm looking for the spread to widen. There is always a directional aspect to a pair trade as you want the spread to either narrow or widen.

Don, I'm not questioning your numbers, simply that every trader trades direction in one form or another. A bond trader that trades the NOB spread (notes over bonds) is trading direction. A trader that is long dispersion (trading long equity vol/short index vol) is trading direction.
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And....LOL....to define "direction" as I see it..."Market Direction" - that's always been the tough part. Yes, we have made good $$ over the years with long and short deltas/shares, but the most has been made being somewhat market neutral (ala Blair Hull and early Timber Hill, and the rest of the boys). Spread widening and narrowing can happen in a flat market, up market, or down market.

Isn't it nice when we either don't "need" to be "right" - or can both be "right" LOL...

BTW, heading to "Schaumburg, Illinois - Nov. 30 - Dec. 2, 2007"

Long time away, but I assume that Schaumburg is somewhere near Chicago. www.thewealthexpo.com

I'll probably be there sooner than that, apparently we're moving to a bit bigger office on one of the Goldman floors....your turn to buy dinner, LOL.

Don
 
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