Do any prop traders out there trade DIA, SPY, or Q's exclusively? Or are they all just trading emini futures?
Trading indices at prop firm
- Thread starter blumartian
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Alright, so lemme rephrase -- does anyone in prop ever trade index ETF's?
Sure, some of our traders do, but primarily in a hedging type strategy. Very few traders in our firm try to "pick direction" of the market, which generally proves to be tough as we all know.
Don
I have to reply to that Don.
Hedging is "one" style of trading, but as I have seen with so many firms, they have one style that they seem to make good on, and that's it?
Direction is another, as well as there are a hundred other strategies, though in my opinion direction is the sure bet winner in all of them, though most can never even get one basic strategy to work.
Directional trading is very profitable, but you don't endorse it?
Hedging is "one" style of trading, but as I have seen with so many firms, they have one style that they seem to make good on, and that's it?
Direction is another, as well as there are a hundred other strategies, though in my opinion direction is the sure bet winner in all of them, though most can never even get one basic strategy to work.
Directional trading is very profitable, but you don't endorse it?
He does endorse directional trading; however, he only endorses trading the direction of a spread between two stocks. Why? Because when you trade spreads, you pay double the commissions. Bright already charges over twice what Schonfeld does; legging in and out of a spread with many thousands of shares at .004-.008 really brings Don the cash (not that I don't think it's fair; it makes complete sense for him, brom a business perspective). I do find it a little annoying, unprofessional, and perhaps even condescending to the experienced traders out there to try to propogate a myth that it's easier to find an edge in picking the direction of a spread between two stocks than it is to pick the direction of a single stock or a single ETF/futures contract is a little ridiculous. Personally, I believe figuring out if a single stock is going to make a move in reference to the US dollar is easier than figuring out in which direction a stock will move in reference to another stock, because I only have to follow one market in "risky directional gambles" as Don might call them... but to each his own...
So you're saying it's easier to pick the direction of an individual stock? I have to disagree with that.
Why do you find it difficult to pick a direction of a stock? That's the easy part, most of the time, experience comes in to let you know when to take profits, or start pairing out of a trade. And using stops allows one to makes a dozen mistakes in one day, and with one winner, still make money.
It's an odds game with psychology, but every trading style takes experience with that style. Personally teaching what Don does works. Guys make money that way, but putting it on a pedestal is what's wrong with most firms in the first place.
They have a system and simply don't understand or know how to trade another way, so they train one way, and it works, they develop profitable traders, so they continue in this way.
So usually I find with these A types, they diss anything else, it often shows how closed minded they are. And/or that is their business philosophy, so they must continue to sell it as "THE" way to make money, which is just not the case, it's only one style.
There are hundreds of styles of trading that are profitable, and anybody who tells you otherwise is just full of it. And you have to now discount everything they say, no matter how concocted and difficult to understand.
That there in lies the gimmick, the edge, the power, the sophistication, the braggart with the know how,
I'm not dissing Don or anybody else for that matter, but the arrogance of knowing it all. That is what new traders and experienced traders alike have to be careful of and understand.
I see all the time one guy with a strategy who makes money, and is somehow consumed by his ego, and then talks down all other ideas or concepts.
It's an odds game with psychology, but every trading style takes experience with that style. Personally teaching what Don does works. Guys make money that way, but putting it on a pedestal is what's wrong with most firms in the first place.
They have a system and simply don't understand or know how to trade another way, so they train one way, and it works, they develop profitable traders, so they continue in this way.
So usually I find with these A types, they diss anything else, it often shows how closed minded they are. And/or that is their business philosophy, so they must continue to sell it as "THE" way to make money, which is just not the case, it's only one style.
There are hundreds of styles of trading that are profitable, and anybody who tells you otherwise is just full of it. And you have to now discount everything they say, no matter how concocted and difficult to understand.
That there in lies the gimmick, the edge, the power, the sophistication, the braggart with the know how,
I'm not dissing Don or anybody else for that matter, but the arrogance of knowing it all. That is what new traders and experienced traders alike have to be careful of and understand.
I see all the time one guy with a strategy who makes money, and is somehow consumed by his ego, and then talks down all other ideas or concepts.
It's funny, I hear all this about "double commissions" when we actually charge much less for volume traders, and we encourage "crutch pairs" trading for most traders (until they're comfortable at the $100K yr range or so). Keeping traders profitable is a much more viable business plan than trying to encourage a few bucks in short term commissions.
Direction is just tough, and sure we have guys who trade that way, some good, some not so good....but keeping market neutral is simply a "no brainer" - since the old days on the options floor. Index Arb, hedge funds, etc. When the market moves 400 points, we have less than a handful of "directional guessers" we are concerned about, and the hedged guys are bringing in money (which usually happens during big moves either way).
And, FWIW, we have most of our "family portfolio" in pairs.. we lead by example.
Those that can predict well will do fine, we're just not that good at predicting I guess.
One last thing, please remember, Bright Trading acts as a facilitator for independent traders, with zillions of trading styles. For example, yesterday one trader used $10million to go naked short on the opening (expiration day), he made $38,000 within an hour...so I guess his plan works....BTW, he's up a Half Million this year, and looking good to make a Mil....(please understand that I don't endorse doing that on a personal level, but it sure works for him, LOL).
All the best,
Don
No, I don't like trying to guess the direction of a single stock or the market overall either - "naked" long or short overnight is what I'm referring to....and all I can go by is several hundred of traders over a couple of decades - but, again, we act as a facilitator and money provider, not a dictator of strategies.
All the best,
Don