Trading the Firm's Capital?

[Myshkin]

WinItAll,

Thanks so much for the information but each answer creates more doors so now I wonder how you can have an account directly with GS when their website says they only take broker-dealers, mutual funds and hedge funds? Are you with a subsidiary or if not, can you possibly send a link that indicates how a regular Joe with $25k can open an account that clears directly through them as I can't find anything about a retail department, which with just 4X leverage, that is what that would be, right? What are the commission rates with them which I imagine is volume dependent and I know you said you use them only for swing trades and info so I am guessing not good?

Correct me if I am wrong but from reading posts on here, the people go with Bright because they are pairtrading friendly, are more stable than a lot of the new "props" where a Tuco-esque meltdown could occur, are "negotiable" on their commissions for the big players and they clear through GS with its Redi platform. You have all of these benefits with the exception of the "prop" leverage which is probably good.
Anyway, I know I am like a kid with the perpetual "why" question but hey, this is a forum, after all and you seem filled with knowledge and like to share

Quote from WinItAll:

Myshkin,

Yes I wouldn't trade at firms like those..... Some people gain enough from these firms to justify the teaching fees and overbearing commission fee structures. The one thing you have ot think about is whether you want to be with the firm down the road b/c paying much larger commissions can take away large chunks of your profit.

From what I've been told Bright and similiar firms charge relatively high rates.... I would rather just clear straight thru a clearing house than pay a middle man, especially since they require the same 25k fee that you'd need to trade professionally thru a clearing firm. You'd have less leverage but that's probably a good thing. I'm from the old school and believe that trading with more than 4 times leverage is just asking to get blown up.

And before I forget I have an account at GS so I use redi right thru them. I don't do the majority of my trading on that platform though, more for swing trading and information.

 

[WinItAll]

Myshkin,

My acct with GS is a little more complicated than what you'd be looking to do...... I have a relatively small fund that I use them for and without going into more detail I do fit the requirements but that's just for long term buy and hold trading.

When I was talking about going 4 to 1 I was suggesting you go straight thru a self clearing day trading firm. For example, a hold brother or assent. This way you eliminate the middle man and make sure that your money is with a safe house.

 

[Myshkin]

Quote from WinItAll:

Myshkin,

My acct with GS is a little more complicated than what you'd be looking to do...... I have a relatively small fund that I use them for and without going into more detail I do fit the requirements but that's just for long term buy and hold trading.

When I was talking about going 4 to 1 I was suggesting you go straight thru a self clearing day trading firm. For example, a hold brother or assent. This way you eliminate the middle man and make sure that your money is with a safe house.

WinItAll,

Thanks a lot for the information. I will look into Assent and Hold later in the year to possibly start the year off fresh somewhere new. A buddy of mine had problems with an Assent sub-group a few years back but again, they were just clearing through Assent so it should be OK.

Best of luck and thanks again

 

[leela]

Quote from TsTrades:

Yeah, okay, that's technically true, but I don't think that's what most of think of when they hear the words "trading someone else's capital." I mean, if you look at it that way, whenever you buy on margin when trading independently, you're trading your broker's capital. Yet I don't hear brokerage firms advertising the chance to trade their capital! I'm sorry, but advertising the chance to trade the firm's capital when all you're really doing is gaining more leverage (a double-edged sword, obviously) in trading money YOU put in is deceptive. Not false, but deceptive. There's a difference.



Actually, since I started this thread (a few weeks ago already), I've become a little more educated about this "world," and have discovered that there ARE in fact firms out there in which you are TRULY trading their capital. There are even some in which you get a base salary too! The catch? They're extremely hard to get into, especially now, but that's a different subject. The other catch is that they take a lot more of the profits, but I don't think that's a problem if you're trading some else's capital and have the chance to trade more of it as you improve. But my point is that there IS a business model in which the firm can let people trade their capital and make money themselves -- they're not charities, so I'm sure they do in fact make money themselves.

To sum up, the main point I've become aware of only in the past few weeks is that there are two kinds of prop firms out there -- actual prop firms, and trading "arcades" that call themselves prop firms. I actually wasn't even familiar with the term "trading arcade" when I started this thread. And they're what you seem to be defending. Which is fine I guess -- I'm not saying they're evil. They're a certain kind of business, and like all businesses, they try to make money. Fine. I just think that they should be more upfront about what they are and what they're offereing people. Some of them even advertise on Monster.com, by the way, which I think is extremely disingenuous. A non-salaried job would be one thing -- there are sales jobs like that, but they're still jobs. But these firms are advertising on job sites, but only offering you the chance to become a customer, not just a non-salaried employee. If they were, in fact, more upfront, it would avoid a lot of confusion from people like me a few weeks ago!

Many advertise in Monster.com and other Help Wanted listings when what they are trying to do is selling their outrageous "trading education" (usually 5k to 12k) to you. It is very deceptive.

It is like employer that telling a job applicant that they get the job only after paying many thousands to the employer in training and other fees. By the way, it is a commission-only job.

It is a great business model. Very little downside for such a prop. Bundle together the fees the suckers paid put it in a basket called "firm capital".

 

[WinItAll]

Hey,

If you're going to use hold, assent or any other shop that does most of their business clearing short term trading then make sure you go directly thru the clearing house and not with a sub group that uses the clearing house.

Not only are you paying more but your money also is not as safe. Also, this way no one else has access to your capital like they would in a sub group.