Don : All shares in excess of 2500 per trade are absolutely free to the traders (no money for firm, period!).... Maybe no money for the firm, and excuse me if I'm mistaken, but this is not true. 1. NYSE specialist fees apply if the order is in the market for over 5 min. (.01/sh.) 2. My understanding there is a NYSE fee for orders between 2000-10,000 shares. How much is that again? 3. SEC fees (avg for me about .001/share) Even a .01/sh. additional fee is a 100% increase on the commissions to the trader. Maybe no money for the firm, but shares in excess of 2500 are NOT FREE. I see this all the time in prop firm marketing, and I believe its misleading. Don't get me wrong, I have no problem with firms doing business, and I respect what the Brights and others have accomplished and the opportunities they provide, but the REAL FACTS about daytrading is reflected in the deals that prop firms offer, just read between the lines: They make money on commission markup. That's the deal. Not a split of profits (with clearing fees only charged to the trader), in fact, does anyone at all offer this? Assuming the firms are in it to make money (perfectly OK), they choose this model because ALL traders generate commissions and almost all NOT big profits. The firms get paid, regardless of trader profit. How well do traders really do - a secret - but I promise you most churn. Now maybe the firms are good guys, and they want you to succeed, but if their training, etc.. really resulted in big profits, and their first concern was the trader making money, they would make more off a profit split, and set their business model accordingly, it seems to me. My goal here is not to "bash" anybody, but I think we need some "Buyer Beware" to balance the endless prop firm hyping on this board.
I really hate doing this, but I will correct you again for the benefit of others....(not that I hate discussing things with you, it just appears that I am "debating" or "defending". 1. NO Specialist fees (we have order entry that avoids the 5 minute rules). 2. That fee is gone since we negotiated with SLK months ago. 3. SEC fees apply to everyone, that has nothing to do with it. I hope this clarifies for everyone. We are always working to keep our costs the best in the business, and we in the fortunate position to have enough clout to do it. Thanks for helping me show what is going on with "REAL FACTS" again (not being confrontational, I just wonder why people cannot accept the truth sometimes). Don
Hi Don, Nothing wrong with "debating", a think a healthy debate is a good thing. Thanks for correcting me on the fees, glad to see those fees are gone. How would this offer go over with a firm? I'll put up $25k, pay .003/sh. for clearing costs, and we split my profits 50/50. I'll take all my losses. Currently, if a firm pays about .003 for clearing, and brings in (figuring in volume discounts, and capped trades) on average about .008, makes for a .005 profit per share to the firm. .005 is 50% of .01, so doesn't the business model suggest that the firm assumes that the average trader will not make .01 (plus clearing of .003) per share profit overall? If they do, wouldn't the firm make more money on a split like I suggest above?
I think they are just being realistic. It would be good for firm if majority of people were profitable but they know it won't happen. Do you know why? Because it's just like any other freaking business. In any business endeavor vast majority of people (who try) lose. What's the point of saying (for whatever reason) majority of people in trading lose? There is no point in statement like that.
This would depend on two things. 1. Your experience and style of trading. 2. Your feeling that you cannot make any money causes great concern to us. Imaginge anyone getting into this business without the idea of making $250K or so per year? If they did, why would they give away $125K per year! Any "deal" is possible, but one would question the authenticity of a suggestion that would assume the trader feels that they cannot make money. Back to you: Take the same example, and take out the $25K (as in "prop" firm), they charge 1.5 + cents per share, and still keep some of the profits, wouldn't that be even worse for the trader? Trading is a business, and you seem smart enough to come with some valid examples, and we assume that our traders can do the same. Since clearing costs are "variable" not "fixed" for the most part, more comes into play. Whay would you do if I said, "done"? Don
Have any experienced NASDAQ scalpers tried changing their style to become more longer term traders (i.e., hours and maybe overnight instead of seconds and minutes)? This market has shown me that the scalpers just can't make consistent money. I know about twenty very experienced traders at Momentum (where I used to trade) and they made millions in 1999 and 2000, but now they're barely breaking even (if they're lucky!). Most of them have now stopped trading before they blow what's left of their account and others are content with just being trading desk managers and teaching newbies and getting a cut of their commissions and profits (what little there is). The few other stout souls are trying to experiment with longer term trading with varied degrees of success. Also, they've moved away from liquid stocks to illiquid stocks where the moves are a little clearer (but riskier). The traders who have never experienced the bull market are doing better. The top traders of the post-2000 market are netting between $1K and $3K a month (their end) which isn't bad. The rest are languishing. How are you experienced traders doing and have you been able to make the adjustment away from lightning quick scalping? I used to be pretty good at it in 2000 and it was not uncommon for me to make 2K-5K almost each day before commissions (which took about 2/3 of that since I wrote alot of tickets). Now I'm just trying to make $500 each day on low tickets and stop or slow down for the day once I hit it (if I do!). Even such a modest target is pretty difficult. I used to hit it in the first five minutes of the open! Now, I make 100, lose 100, and usually churn. I used to trade 4000 to 7000 share positions in mid-priced, liquid stocks. Now I've reduced my share size to 500 to 2000 shares max since I can't get a feel for all of the "noise" that decimilization has created. I need to adjust my style before I churn myself to oblivion or else I'll need to get a stable job until the market picks up (if ever). Let's face it, the glory days of the NASDAQ are behind us and now we're faced with the ugly truth as to whether or not daytrading is a viable career move (unless you own a prop firm of course). Maybe I should open a prop firm, at least I can make some money charging commissions and giving trading seminars! There are tons of newbies out there who think they can make it big as a daytrader. If they only new... Please help!
Did you see the CNBC special interview with a Naz trader from 2 years ago, with a current reference as well? He says he is still doing ok, but had to adapt to the changes in market conditions. The other guy that was interviewed never made it even in the "old days." Our firm has done well, only because the traders do well. I noticed that you seem to have some animosity towards firms, and although I don't understand that, it's no big deal to me.....but you may want to read on a bit... We have never embraced the nasdaq as a viable trading vehicle for professional traders. I don't want to really get into the discussion again here, but the point is that we came from the trading floors, where market conditions change all the time, and we had to adapt or die. Most people will never make it as traders, no matter what, that's just a fact. Those that do seem to be able accept the markets as an unbeatable foe, and try to simply trade the "old fashioned way" - with the Specialists, reading the tape, and all the rest. There is no easy route to success, but traders enjoy the freedom of their profession as much as they enjoy the money. I wish you the best!! Don
Goldenarm--is this the reality of todays day trading market? The best day traders in yesterdays market arent making anything and day trading isnt a viable option for making a career. that is pretty harsh...or is it the truth. i would love to hear other daytraders(experienced) opinion on this. I was recently hired by a momentun type comapny and was hoping to learn the ranks. Also, when do you guys think the market will become more volatile or become a bull market. I am guessing this is when day traders are most profitable due to my newbiness.. I would hope to someday make 250k a year. is this viable in todays market? hoping, considering I gave up an entry level(anayst) ibanking job at bear stearns with base 60k and typical bonus of 20k. jc
If you learn/do the basics (oo, moc, pairs, m&a), you should do fine. Learn to trade the right markets, and don't get stubborn, and you should do fine. This is a business like any other, be sure to treat it that way. Don't get dragged down by the people who haven't made it, since most don't...as in any business. Only the strong will thrive. Good Luck!! Don
Quite the contrary, Don! Prop firm owners are just trying to make a living just like the rest of us! I don't begrudge them that at all! In fact, if not for my old prop firm, I wouldn't have learned to trade and I wouldn't have a modest nest egg saved up. Plus, I learned to trade with other people's money! I am very grateful to my old prop firm! Prop firms are essential for daytraders since they help keep commission charges low (especially if you own an ECN like Momentum does and Datek/Heartland did) and the best ones have great training programs for newbies. They also provide a collaborative environment where traders can feed off of each other which is invaluable. Even experienced traders don't do as well trading in a vacuum. I'm just pointing out that today's market is tough and the majority of traders I know aren't making squat. Even the equity traders I know at Bear Stearns and UBS are struggling. I was ruminating that the business model for a prop firm is far superior than that of today's daytrader. Commissions will be made regardless of whether a trader is profitable, flat or not profitable. If the trader fails, the worst that will happen is that he loses his $25K stake and leaves the firm. There are many warm bodies who can take his place. If the trader succeeds, prop firm owners can point to him as an example that you can make it in this business and attract new blood. Either way, the prop firm wins! That's the American dream! I just wish that prop firm owners were more forthcoming about how tough this business is. They shouldn't entice newbies to leave decent paying stable jobs, knowing how tough the job market is. They should fully disclose that probably 8 out of 10 won't really make it and the remaining 2 won't make 6 figures unless the market improves. Of course, fully disclosing this would be like shooting themselves in the foot so I don't really expect them to.