A Trading Edge at a Proprietary Firm?

Discussion in 'Prop Firms' started by Eugene, Jun 5, 2001.

  1. Eugene


    What I'm looking to discuss in this thread is proven methods and advantages which provide traders an edge by trading at an off floor professional firm.

    The following are what I have identified, but some I can't confirm are only available at a professional firm.

    Money - The ability to leverage 10-1 or more. Not so much to by huge blocks on a single issue, but to take low risks trades, Spreads, pairs, and have the capitol to increase your size to gain good profits on small movements.

    Market access - It seems they are truly direct. Does an IB or other remote platforms advise you of a specialists imbalance of orders he has for the next days opening? Becuase you don't go through a broker(ie Datek Direct) you are ie connected to the specialist.

    Bullets/Conversions- I don't think its possible for non professional traders to use these. This to me has to be at the top of the list as an advantage.

    "Open Only" orders - Unknown if this is available outside of a professional firm. Being able to put in 100,500, even a thousand orders(computerized if need be) and capture price improvements on previous day imbalances seems to be a huge edge. Need clarification here.

    Cost - Can be, from what I have seen. Depends on a lot of factors. Although for basic MoMo trading, IB and others are in the same ball park.

    Information - Not only what may be talked about at a particular office, but what may be going on in other offices. New methods maybe shared( I said maybe) on what is working in the market. Things change, new angles need to identified. Same issue may not be traded, but the methodology can be replicated. Team approach on new methods. Help verify certain set ups quicker.

    These are the main topics I can think of. Looking for input and additions.

    Bottom line, is there ultimately a financial edge?

  2. Eugene


    Thought of another.

    Connectivity - As it relates to price. Due to the size of the firm, the cost of the connectivity can be spread throught the traders and provides a cost per workstation than if you were trying to get the same as a stand alone.

  3. Professional leverage allows a trader to not have to worry about margin which is nice. There are very few traders who can afford to risk 2% per trade on the high flyers with stops of .05

    Well you forgot reliablity. IB warns you if they go down that you should have back up trading accounts when you talk to the reps. I can get a risk manager in split second to get me out of a position.

    Environment, what's it really worth to be surrounded by 20 traders who are doing extremely well, who can get together to exchange trading ideas, concepts, and offer mentoring.

    How about the ability to short more than most firms max of 2000 shares or stocks under $5 because professional firms aren't held under Regulation -T


  4. mjt


    After a very few frustrating days, I can add one more benefit: computer reliability/compatability. I have wasted the last 2 days trying to get Hold Brothers' software loaded on my computer. After several attempts, it became clear that I needed more space on my C: drive. So I had to remove all kinds of programs, and I still didn't have enough. So I had to install Partition Magic and resize my drives. That was 5 hours by itself. Now the software doesn't quite run right on my computer; some of the functions don't work, and I'm not getting the REDI book in my level 2. (Plus who knows what else is wrong with it) The programmers said they have never seen this problem before. Their solution was to uninstall and then reinstall it, but that didn't work. I doubt that onsite traders have this problem.

    It's now the middle of Wednesday, and I've barely traded this week because of this nonsense. I'm not about to relocate so I can trade properly, but the idea is starting to get tempting...
  5. Klaorman



    I've been with Hold Brothers for about 2 weeks. Remote traders are like second class citizens to them:

    * I talked to their support people and they said that only the ISLD book is available right now, although they're working to provide the other books. Onsite traders have all the books available.

    * Saving and loading the window layout doesn't work for me (the Message and Position windows open -near- where they're supposed to, but the main window opens wherever it wants) but they say it works for them.

    * All of the analytics don't work because they say the bandwidth use over the internet would be too much if they did work. They say to use RealTick for analytics.

    * I also have to inconveniently switch my quotes to RealTick to trade NYSE and AMEX and back to their own to trade NASDAQ (and mentally remember which quotes I'm currently hooked up to so that I don't trade using the wrong quotes).

    * Their quotes are also not very stable. They occasionally halt and stop updating and then I would have to bring up a Server dialog and click on Reset Connection. Even that didn't get the quotes rolling today. I sent them an email about the quotes today and they did say to try connecting to an alternate server. I'll try this tomorrow.

    But on a positive note, their software is fairly powerful and very fast. I just have to learn the keyboard shortcuts: Yesterday I shorted when I had meant to buy...
  6. MJT and KM,
    I trade for hold onsite and the problems you are experiencing hit home to a point. I have been on Graybox since its inception and I also had alot of the problems you are experiencing at first, like the windows not saving, redi books not working, quotes bursting. The bugs seem to be getting worked out for us inhouse.
    Some things are still problematic, like redi book only being available on some servers. Also, some servers allow redi to be used as it was meant for, to try to hit redi then preference whoever is there with the best price, and some servers have redi up for only fill or kill, and others with a post feature like island that doesn't preference others. Same for ARCA.
    We use Realtick for analytics still, so I don't know what else you would use.
    As far as loading software and such, Never had any problems with that because there are techs there to do it for you and if it is a computer problem, they yank the computer and get a new one for us.
    I tend to think you are always going to have problems being remote because you are just not realtime, and in house traders will always have the info a bit faster, and the way we scalp, that is key. You are also right about being treated as second class citizens. The tech guys have 250 traders in jersey and many others across the country yelling in their face to fix things. Remotes are on the phone somewhere else. They will probably always push remotes aside. I don't know how you guys trade, but if you scalp, I would suggest getting into a office where you don't have a disadvantage.
  7. Klaorman



    How long has Graybox been around?

    They told me ARCA and Redi are fill or kill only. ARCA has a feature where if you enter a short at or below the bid on a downtick, it will post an offer 1 cent above the bid and trail the bid down until your limit is hit or your offer gets taken. But with FOK this won't work. They do say that with Graybox, if you short on a downtick it will hold your order until an uptick occurs and then hit the bid. I don't know if this actually works. I tried shorting once on what I thought was a downtick, but the short got filled immediately. I'm not sure what happened. I asked them about it, but they never gave me an answer.

    Re: analytics. There are menu items that bring up separate windows that are supposed to contain Top Volume, Leaders and other analytics, but the windows are blank. Their website even has a screen shot that shows the windows filled with data. I guess you don't get them either, which is weird.

    I've asked this question on the IB Best ECN thread already: I want a Smart Order that will hit the nearest ECN within a certain price limit, so that if the inside is MMs only, I can hit ECNs away from the inside. But I don't want to do any thinking, so that if ARCA is 1 cent away I don't want to have to set up an ARCA order at that price level; I just want to hit a key that will automatically choose to hit ARCA. Someone replied that IB's Best ECN will exactly that. Is there a way to do this on Graybox? What I want is probably a combo of a Graybox Smart Order and a Swipe. I will be suggesting this feature to them very soon. I did talk to one of their traders asking about this, but he says the closest the software can come to this is the Blast order. However, I don't want to send multiple orders and get more shares than I want.

    The trader also says that he uses the SNET Preference box a lot to send out orders. Is this what you mostly use, too? He says with this box he can quickly hit any level with an order. It seems slow to me but I'll have to get used to it.

    I usually do intraday swing trades with no scalps. Orders (especially on ISLD) occur at blinding speed, faster than any other system I've tried.
  8. It depends what kind of a firm are you taking about ?
    LLC's or a real prop firm like Bank of America Sec or
    Robbie Stevens (I am a west coaster for the last five years)
    many are on the NY Metro. So - having spent some time with
    Robbie Setevens (actualy I worked on the floor at times)
    they have a bevvy of traders on the floor of the NYSE feeding them info, harrasing the specialist (also I imagine)
    getting some ideas or feed-back) they have their analyst
    (can trade against them if they wish) and a huge order flow
    from the funds. No LLC, or daytrading firms will ever have
    this kind of a ocean of info, not to mention the bankroll.
    There is no advantage being with an LLC, the margin will
    even hurt you rather than help !
  9. I have re-read the initial post and I see it - he is talking
    about LLC's. Anyway my post stands as is. I don't honestly think you would have a true 'pro' edge at any of the LLC's. The only two firms I have heard good stuff is Bright and Schoenfeld in NYC .Schoenfeld is (or was) truely a class by itself. They also are a member on the NYSE (unlike any of the LLC's).
    Bright we taked them to death already...
    I think you are better off trading futures or NL funds.
  10. Eugene



    I agree. Traders with the big firms are first to eat. But is an LLC or OFF Floor prof. firm next in line? next best thing?

    Also, can you help clear up my "Open Only" order question(see orginal post). Are these available to non prof. traders?

    #10     Jun 6, 2001