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ronin266
Registered: Jul 2006
Posts: 241 |
07-08-12 09:15 AM
Well, nobody had replied me to the question of the first post.....
Any trader at a normal prop please?. Looks that there are only arcades people around ET ffs. I know the payout structure of pure profit split firms. But i´m interested in the hybrid model that´s implemented in other firms.
Mav, why you find it so difficult to find a firm trading both instruments?. There are firms that trade far more than 2 things in various timeframes. Anyways, it doesn´t have ANYTHING to do with the damn payout structure that i´m asking about here. I know that you try to help etc, but common, you´re being over negative here, attacking the idea directly without giving any help.
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newwurldmn
Registered: Apr 2011
Posts: 2612 |
07-08-12 02:16 PM
Slightly off topic, but related:
Wouldn't starting a prop group be very cumbersome and very expensive? I would think the overhead of a prop group (where you are hiring new traders) would be very high. You would need a compliance guy, a CFO, a great risk manager, an HR person. This infrastructure would be comparable to an institutional statup hedgefund and would run like 700-1MM/year. Then you have market data, office space, etc. That could be another 100-200k/year.
If you are hiring 7-10 new traders (read college students) and want quality people. You'll have to pay salaries comparable to investment banks (70k + all the appropriate taxes = 100k.)
So your first year expenses would be about 1.5MM. To break even you would have to start with a capital base of like 5-10MM and that's assuming its all your own money (ie. no profit split with an LP, etc).
Are these economics reasonable, Don or Mav or anyone else who would know?
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Maverick74
Registered: Mar 2002
Posts: 17314 |
07-08-12 03:58 PM
Quote from newwurldmn:
Slightly off topic, but related:
Wouldn't starting a prop group be very cumbersome and very expensive? I would think the overhead of a prop group (where you are hiring new traders) would be very high. You would need a compliance guy, a CFO, a great risk manager, an HR person. This infrastructure would be comparable to an institutional statup hedgefund and would run like 700-1MM/year. Then you have market data, office space, etc. That could be another 100-200k/year.
If you are hiring 7-10 new traders (read college students) and want quality people. You'll have to pay salaries comparable to investment banks (70k + all the appropriate taxes = 100k.)
So your first year expenses would be about 1.5MM. To break even you would have to start with a capital base of like 5-10MM and that's assuming its all your own money (ie. no profit split with an LP, etc).
Are these economics reasonable, Don or Mav or anyone else who would know?
Those numbers sound about right. The overhead is outrageous. This guy is dreaming. He would be far better off going to an already existing prop firm and starting a group. Just last year he was actually looking to join a prop firm. Not sure whatever happened with that. But he should have stayed there if he ever got into one.
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Maverick74
Registered: Mar 2002
Posts: 17314 |
07-08-12 04:02 PM
Quote from ronin266:
Well, nobody had replied me to the question of the first post.....
Any trader at a normal prop please?. Looks that there are only arcades people around ET ffs. I know the payout structure of pure profit split firms. But i´m interested in the hybrid model that´s implemented in other firms.
Mav, why you find it so difficult to find a firm trading both instruments?. There are firms that trade far more than 2 things in various timeframes. Anyways, it doesn´t have ANYTHING to do with the damn payout structure that i´m asking about here. I know that you try to help etc, but common, you´re being over negative here, attacking the idea directly without giving any help.
This has nothing to do with the products traded. I only brought that up because I don't think you have the slightest idea of the capital commitments needed to trade products that don't have offsetting margins. I'm not being negative, I'm being real. My best advice is go join an existing prop firm.
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BlueTurtle
Registered: Feb 2012
Posts: 542 |
07-08-12 04:32 PM
Quote from ronin266:
Mav,
Only Equities and Futures daytrading, mostly market-making and neutral strategies. The group will not be a big one, since the strategy needs close cooperation among a controllable group of people (2 experienced traders and 5-8 fresh newbies from college ,7-10 ppl max in total).
Do you use the expression "5-8 fresh newbies from college" as if they are not that bright and will take a very low salary because they are hungry to learn how to trade? This makes me seem like you are not willing to pay the right amount, and why not hire a monkey and sell the normal crap about equity and low salary......
If you were serious, we would be reading a proper business plan. And I don't mean some crap on Microsoft Word. right now you are here:
http://www.entrepreneur.com/article/81188
and you need to be here:
http://inventors.about.com/library/..._biz_plan_1.htm
it's not the best, but it's more than you gave us.
you take us seriously, then we will take you seriously.
good luck
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operator
Registered: Mar 2008
Posts: 494 |
07-08-12 06:02 PM
Quote from newwurldmn:
Wouldn't starting a prop group be very cumbersome and very expensive? I would think the overhead of a prop group (where you are hiring new traders) would be very high. You would need a compliance guy, a CFO, a great risk manager, an HR person. This infrastructure would be comparable to an institutional statup hedgefund and would run like 700-1MM/year. Then you have market data, office space, etc. That could be another 100-200k/year.
He does not need to hire a CFO, Risk Manager, Compliance guy, or a HR person. If it is a small group to start he can do all of the above.
Also a lot of people trade from home now with just basic high speed internet. Maybe he might have to spend a little money here to get some dedicated lines, but not going to cost you 1MM year.
Let's assume OP has low 7 figure of capital. He can just open a Prop IB account and he can be in business the next day. Does not sound to cumbersome to me...But I do agree with Mav, might be easier to run a sub-group.
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