Well I guess that option is gone, lol.
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Would this work
- Thread starter shortthelows
- Start date
Well I guess that option is gone, lol.
Quote from Hydroblunt:
I am sure you and your friends are making millions. I never claimed noone is making money, I personally know at least a few that are doing good.
I am talking about real edge. Real edges existed in equities and even index futures, but at this point, they have been marginalized to an absolute minimal value and chopped up by HFTs. Going long a stock because the charts seems to suggest so is not an edge. Bullets, NYFIX, CHX/PHLX/Cincinatti/Boston arbs, ECN arbs, tape reading and more, now those were real edges.
The most commonly traded grounds are ultra competitive and oversaturated. It makes no sense to do an incubation program in such environment unless you actually have a real edge that is scalable and that you can teach. However, due to competition and market saturation, such edges will not exist. And that is the main reason why your concept would fail.
Why do you think all the current "prop firms" charge a "training fee"? It's a risk deposit, nothing more.
I guess you and I have different views on what an edge is. The things you mentioned, I would called them gimmicks that are not going to last. To me an edge is a strategy or method that can work on in different markets, time frames, etc. Perhaps my view on what is edge is wrong.
I know there a lot of "prop" firms that require a training fee or what not, but there are firms such as swift, title, WTS that don't require these fees and seem to be doing fine. If I was to ask if opening a Title Office would be a good idea, and not require a deposit but I didn't pay a salary would we be having this same conversation?
I fail to see how paying a small salary to a few traders is such a bad idea. Having that 2k a month will allow to focus on developing strategies and not trying to make money right out of the gate in order to pay their cell phone bill. It has been my experience that having that small amount of income goes a long way.
But this is what this thread was designed to do, to have experienced guys like you tell me what you think, I appreciate it.
Quote from tradingjournals:
His plan is to pay a trader $2K as salary. My proposal is no salary, and giving $1K to cover losses. The difference is at least 3K (in salary version he has to pay other things, less tax deductions, other liabilities). But assume only 3K.
I gave the example to show that the discussion in this board is just bull crap, because if it were real they would take my proposal because it is cheaper and more convenient. I am that no one will take it which will prove that it is just empty talk around here.
I still have no idea what you are talking about. And why is this bullshit, I am not selling anything or asking for anything at all, just a simple question whether or not this concept would be worth while. Some have said no some yes. It's just a discussion, calm down.
Quote from shortthelows:
Hi,
I have been trading for about 5 years now and have been completely automate for 2 and I am thinking about starting up a sub llc under one of more well known prop firms. But instead of running your traditional subs I was thinking of going a different direction.
Instead of of having any trader come in and put money up, I would hire traders. They would be paid a small salary (2k a month) and 50% of their profits or 75% of their profits (which ever is greater). But we wouldn't be focusing on manual trading, everything would be automated.
They would have access to in-house programmers, back-testing software, and other infrastructure to develop trading strategies. I would be looking to hire college grads without any trading background. Teach them the basic of the markets and electronic trading and them let them at it.
Each trader would have 1 year from their hire date to develop 1 trading strategy. Once they have developed on, their day would consist of research and monitoring their models.
The reason why I feel this is a good business model is because most new traders fail because of three things, they are under capitalized, don't have trading plan (a stick to it) and they have poor risk management. This new model would address all three of this issues.
This is the basic overview of what I would like to do. What to you guys think, is it worth the time and effort? Any suggestions and comments would be great.
I like the idea. It reminds me of AlgoDeal, www.AlgoDeal.com
Quote from shortthelows:
I still have no idea what you are talking about. And why is this bullshit, I am not selling anything or asking for anything at all, just a simple question whether or not this concept would be worth while. Some have said no some yes. It's just a discussion, calm down.
What is it that you did not understand?
You are not going to do it because you either do not have money or you do not plan to, and to prove my point I gave you an alternative business plan that is cheaper and you did not take it, which is evidence that what we have from you and other shop talkers is hot air.
Quote from Maverick74:
Did you hear why? I can't believe that they don't have really good traders there that don't want to escape the state and city taxes of NY.
Hey Maverick74? Do you have a shop? If you do, am I wrong/right in understanding that the money of the shop owners is made from selling picks/shovels, and lending capital using SPAN margin and the commingled money of other traders?
If I am right, and one thinks deeper, the shop owners are actually seekers of capital, but tell some go around in forums to tell traders that they offer capital. It is similar to banks, except that in this case the bank lender and the bank borrower are the same guy.
If you have a shop, do not be afraid to put the link here. I will defend you. I am serious and I will honor what I wrote.
If addition if you want visitors to your site, I have actually a site. As soon as I make a post on my site, 1000 visitors show up on my site because google displays my site on Google finance. I can even send you traffic, or if you want to write a nice column I can consider publishing it.
Quote from shortthelows:
I guess you and I have different views on what an edge is. The things you mentioned, I would called them gimmicks that are not going to last. To me an edge is a strategy or method that can work on in different markets, time frames, etc. Perhaps my view on what is edge is wrong.
I know there a lot of "prop" firms that require a training fee or what not, but there are firms such as swift, title, WTS that don't require these fees and seem to be doing fine. If I was to ask if opening a Title Office would be a good idea, and not require a deposit but I didn't pay a salary would we be having this same conversation?
I fail to see how paying a small salary to a few traders is such a bad idea. Having that 2k a month will allow to focus on developing strategies and not trying to make money right out of the gate in order to pay their cell phone bill. It has been my experience that having that small amount of income goes a long way.
But this is what this thread was designed to do, to have experienced guys like you tell me what you think, I appreciate it.
Call it gimmicks, call it whatever, but those were real edges which were great risk/reward and made traders a lot of money. They did not last and were not expected to last just like your automated system will not last and is not meant to last. Smart traders look for good edges to exploit on capitalize upon, rather than battle it out with the toughest conditions. Those edges were easily taught and let the "prop" firms generate some very nice revenues as well. Due to these "gimmicks" I was able to start daytrading with no money down.
Bottom line is that you business concept has a bad risk/reward ratio. In fact, I would stipulate that is extremely likely to fail. You cannot compare yourself to Swift, who has an extremely excellent clearing deal (an edge!) or WTS, who charges a 2 grand tuition fee or Title which I think does have a risk deposit/ tuition fee.
Let me put it this way. Obviously, there is much more profit in developing profitable traders and then taking a significant cut of their net earnings. But noone, except FNYS & Jane Street, is practicing that concept and has not for years. Even FNYS has scaled back significantly. Putting them aside, all other firms are focused on making sure that they take almost zero capital risk when bringing in new traders & even experienced traders.
What does that tell you? Think about it. Once you realize what that suggests about the trading environment of stocks & index futs, ask yourself what edge do you really have when applying this concept? The answer is none.
Interesting prop business model if you are for real. I like the deal b/c you actually invest in the trader unlike most chop-shops. So your firm will be in between a real prop firm and a chop-shop, if you will.
Since you actually pay/invest in the trader, you might not suffer the revolving door effect so to speak and will get decent human beings to trade for you. Whom you trade with matters a lot. It's hard to trade with and around traders you can't trust.
Ever since I stopped trading for WorldCo, I haven't found a decent chop shop in NYC. (I hear Bright Trading is so great but why don't they have an office in NYC?) They are all skewed in favor of the chop shop. They take almost no risk and the traders bear almost all the risk. The conditions are so "unmotivating". I even know a chop shop that pays once every 2 months. I don't know how a trader can live to trade under that condition, especially in times like this.
I am skeptical that you have an automated system b/c most chop shops don't. Technically, they might have one, but it doesn't work and the trader basically bleeds his tuition/risk capital.
There are a lot of naysayers on your business model, but they are all based on what they know and their perspective. If you are for real, have a profitable system, and have decent intelligent human beings working for you, then sky is the limit.
Since you actually pay/invest in the trader, you might not suffer the revolving door effect so to speak and will get decent human beings to trade for you. Whom you trade with matters a lot. It's hard to trade with and around traders you can't trust.
Ever since I stopped trading for WorldCo, I haven't found a decent chop shop in NYC. (I hear Bright Trading is so great but why don't they have an office in NYC?) They are all skewed in favor of the chop shop. They take almost no risk and the traders bear almost all the risk. The conditions are so "unmotivating". I even know a chop shop that pays once every 2 months. I don't know how a trader can live to trade under that condition, especially in times like this.
I am skeptical that you have an automated system b/c most chop shops don't. Technically, they might have one, but it doesn't work and the trader basically bleeds his tuition/risk capital.
There are a lot of naysayers on your business model, but they are all based on what they know and their perspective. If you are for real, have a profitable system, and have decent intelligent human beings working for you, then sky is the limit.