Alright guy. Looks like it's time for you to hit the unsubscribe button. You are getting way too worked up over this. It's a message board....relax. LOL. And for the record, I know very little about Don's model as it has changed dramatically since I last spoke to Don in person. Obviously this new 80/20 rule just came out and it is affecting all firms differently. And again, I'm not sandbagging Don. Although I think Don owes you a beer.
On the 50k account, to get the same 300k i.e. 6 times, the vig is zero according to what Don has written.
True but the 50k account would probably get 750k in leverage or 15 to 1. Look all prop firms get extended 6.6 to 1 leverage via the JBO. It doesn't cost the firm anything that is why there is no charge for that amount. Anything over 6.6 to 1 eats into firm capital so the firm has to decide what they are going to charge for use of that capital. Most traders, not all, most most, will use the max leverage that they can especially if they are trading pairs where they are hedged dollar neutral.
No, but if it means you'll stop sandbagging him like a third grader who's had his yo-yo taken away from him because your friend screwed himself, yeah, I'll unsubscribe. Don doesn't owe me anything, only reason I can think of you saying that is you've got a jealousy thing going here because he's getting valuable PR for his company, and you're not, which IMHO, is brilliant business smarts on his part. Why not use ET as a promotional tool, especially when you're paying the owners ad money to draw in business. Are you paying ET for your posts? Kudos to DB for putting up with you this long. It's not easy cursing someone through a smile. I know I can't. =oD
Good thread. I have read the material on the VTrader site on Haircuts, and that was helpful also. Obviously if the charge gets to the point of being loan shark like then it really isn't worth it, but each trader should be responsible for finding out how it works and what their costs would be based on their strategy. I maybe wrong, but I think both Mav and his firm, and the Brights would make sure a new "hire" understands the cost of trying to go to the max, or most likely wouldn't let them in the first place until they proved their strategy. Everyone needs to have an idea of cost of capital and how it affects your return. The other side of the equation, to me, is being able to expand your trading to strategies that need much larger capital than a retail firm can do, even IB. If I want to participate in opening orders in a meaningful way it seems I would need a fairly large base on my own, but have it if I am with a firm. The same applies to closings, or pairs. Try going to a bank and explaining this stuff and getting short term loans to cover yourself for trading. While I have thought about it; as I have a fairly detailed trading plan, I really have no need to have them call the county mental institution and haul me out of the bank, and have the story on the local news. While my wife would actually just laugh, it probably would really tick my Dad off and at 88 years old I've given him enough frustrations and annoyances in life. That being said I still haven't done my Series 7 studying, and for the majority am still a emini, and EC daytrader. Any thoughts from Mav or Don whether I need to buy new Series 7 material in light of regulatory changes? Mine is 2-3 years old now. I took a sample test when I got it and scored in the 60's before having read a thing. I admit I don't know my bonds material as well as I had in school decades ago. It seemed like regualtory was a good part, but you could pass without being perfectly up to date.
LOL. I did just that with all the major Canadian banks, and they all five offered me the maximum loan I could qualify for based on my balance sheets and income statements and projections. It took some explaining, the local bank managers were complete imbeciles, I ended up negotiating with VPs that knew and were willing to admit their banks were making more money from trading than anything else, but to get it done is like pulling teeth from a tiger or trying to teach a cat to sit. Morons, all of them. Now it's just a matter of hedging my own ownership risk if I CBSX myself, or I take the cash and dump it into nice safe Canadian bonds and leverage it close to retail within my own CM accounts for a year until I pay it off in full. It sucks having to sign over one's house to get loans these days, but when you're making 200% on your money from trading year over year, I can live with the litigation risk if I were to blow out. Great post. Made my day.
What the heck is the matter with you anyways? Are you going to be calling out every prop firm in the US on their payout models?
Tac, your 7 has to be renewed through continued ed every 2 years. If you fail to do that, it will lapse. Firms who use the CBOE as their SRO do not require a 7. Yes, you are right, traders need to understand all costs before they start trading but I can tell you right now that most guys do not understand capital charges and how it affects their trading. Most guys don't even know how to calculate their debit interest. Bright actually does their calculations very different then most firms, hence why I brought it up. It's not better or worse, just different.