I would value quality of traders over volume of traders and branch offices. I would only hire experienced traders and teams with proven track records and provide them with firm capital and low commissions for a larger percentage of profits. In return, they would have access to the best equipment and software money can buy. I would take on new traders who show exceptional work ethic and intellectual aptitude and provide free training. I would provide a healthy collaborative environment and treat everyone fairly and with respect, while running a tight ship. I will not engage in actively recruiting newbie retirees and mid-life career changers but will interview at top colleges and universities for talent. Naturally, this will require a large investment to get started and there is a cap on how large you can grow while staying true to the company charter. I'm not looking to become the McDonald's of prop trading, rather a Smith & Wollensky. I would want to develop a reputation as the best environment for prop traders and retail customers.
Then do it...why not. There have been several firms who were started by ex Bright Traders...and you know what...their business models are almost exactly the same as ours. Your model is not so dissimilar...we have great people, who understand the business, work hard, respect one another, and have good work ethics. Let me know if you want to buy a membership on the exchange, perhaps we can help you out. Don
well, of course... one model is where you sell gold digging equipment to gold diggers and have to ensure that you find a way to constantly replenish the supply of gold diggers buying your products, ie you are in the brokerage business and have the success rates of brokerage customers, sthg like maybe 10% net profitable after all costs, maybe half of that able to carve out a living from their trading income alone... the other model is where you start a firm that is in the gold digging business for itself, as in a real proprietary trading firm like the one trader vic is talking about in the quote, where you have far fewer traders for far longer periods like in firms such as susquehanna etc or large sell side institutions... for the first model, anyone can apply, and out of the initial bunch of applicants a select few will earn good money, the rest will hold on for awhile and eventually rejoin their white collar (or blue collar, for that matter) brothers and sisters... for the second, you need a first class education for screening purposes and undergo extremely tough and endless interviews. so, sthg for every taste and background, as long as the marketing doesn't get out of hand cheers
If it walks like a duck and talks like a duck it is a duck. 100% payout is a customer. Anyone with this model is selling leverage. While the exchanges may not come down on this model, the Federal Reserve has the ability and right to regulate margins to customers. They could come down on this model as a sham to get around the regulations.
Ahh yes, the perfect world! And everyone would get the company car of their choice, every trader would also get to live in a mansion and everyone would make ten million dollars a day! I'm sure if you asked any trading firm about your ideas, they would love to see them implemented, but they would all go broke. I have been at a few of the prop firms, and have friends that have traded at the ones that I haven't, and I can say a few things in their defense. First, every firm wants you to be successful. For some reason many people here seem to think that all the firms are out to suck you dry and spit you out. I have not found this to be the case anywhere. Given the choice, every firm makes more money off of a trader if the person is around a long time. Second, from what I have seen I will agree with others who have said this before: The majority of the traders that I have seen complain about a firm are unsuccessful. Many of them attribute this to the firm they were unsuccessful with, but from my experience the people I have seen in this situation I believe would have been unsuccessful at any firm, maybe to a greater or lesser degree is all. I have found that good trader can be a good trader on any trading system and at any firm. So I think instead of hammering one firm or another because of a trader's failures, the trader needs to look inside. Finally, I know many traders that do very well, and none of them attribute their success to someone's book or someone's seminar. And none of them went into the business expecting to be shown how to make money. I have seen many an unsuccessful trader come into the business and sit behind a computer for months throwing sh*% at the wall with nothing sticking, then leave pissed that no one showed them how to be a millionaire. I would think that all the successful people would agree that if you want to be good at this game you need to take it upon yourself to truly learn the game. Learn the stocks you trade inside and out, study every trade again after the market. Analyze your day, your profits, your losers, where could you have more, what moves you missed. The guys who treat this like a job and make it their life are the ones that do well. Sounds obvious, but honestly I would estimate that 50% of the traders I have seen treat trading like a part-time ATM machine: they want to put in as little work as possible and live the millionaire lifestyle, they just expect the market to pay them like it does the good traders and get pissed when it doesn't, and many of them seem to think that whatever firm they were with may have had something to do with it. You want to make money, don't expect anything and don't think some magic seminar or book will do the work for you. This is a job, plain and simple, treat it like one. Anyways, sorry for getting off topic. I'm not a fan of Bright but I don't like it when people bash any firm for the trader's own failures. In my experience though I will say that I have found this to be VERY VERY true: IF YOU DO THIS FULL-TIME, THE PROP FIRMS ARE THE WAY TO GO! Any of them!!! I will always trade prop, I could never have learned what I have or made the money I have in a retail environment. BULLETS ARE HUGE! LEVERAGE IS HUGE! Not to take large positions but to float multiple orders. If you do this full-time you owe it to yourself to talk to the prop firms. OK, my essay is over, back to trading. -Jim
Hi Newatthis. I agree with most of your posts here such as nx compliance, retail vs. prop., risk issues BUT there are some llc's out there that will let you walk away if you are in deficit. If a 'witch hunt' against prop firms ever materialize along the lines you talk about--i.e. customer in disguise, all the LLC's have to show are the traders that have left the company with negative balances and they are off the hook.
100% Correct. There are many other differences as well, but that and the Series 7 requirement are two of the biggies. I believe newatthis is very incorrect and this structure will be allowed to continue indefinitely, the SEC already has reviewed this structure many times, and thank the Lord for that because I cannot make this kind of money without the prop firms.
I could be not right. (hard time ever being wrong). In fact i hope I am incorrect. If run properly, with enough capital, the LLC structure works. (Bright appears to have plenty of "owner" capital!) I do think there is risk that if the Fed wants to pin the markets problems on someone other than the CEO's who are working the accounting magic, then they could shut down these customer/100% deals. The SEC has nothing to do with the fed.
well the pessimistic view is that prop firms only really make money when they aren't relying on profitable traders to do so. Certainly from a strictly business point of view, a firm that only needs commissions and fees to survive will do well as long as there is a steady stream of new traders coming along to replace the ones that blow up or burn out. Certainly the "churn em and burn em" business model has always been around and probably always will be. Maybe if you really believe in the "quality group of traders" business model vs. the "churn em and burn em" business model, the thing to do is just form a hedge fund and don't mess with the prop firms at all. I have read a lot recently about the "new breed of hedge funds" that are really groups of experienced daytraders.