Many don't bother with the JVC plan, many think of it as "easy money" - Nothing to stop them from actually "double dipping" - making money in both accounts - spread out the risk, etc. (Unless I am misunderstanding your question). Don
Let me try to understand this 80/20 better. We are talking about the 1st account only. Letâs leave JVC out of it for now. If I deposit 20k with BT . Scene 1: 1st month, I made 10K profit. Does BT get to keep 2K profit? (immediately or eventually)? Scene 2: 1st month, If I make a loss of 10K. Does BT absorb 2K loss? What is it? 100% traders capital, Zero % BTâs loss or 20% BTâs profit? Then it should be called 80-0-20. Yeah...I still think... "they got you by the balls"
In a lot of strategies I have observed that profitable entry points can be quite crowded, and become more crowded as more and more traders and capital are committed to the strategy. I know there are a million pair combinations you can come up with, but with fills the way they are, I wondered if a group of innovators could be cannibalizing themselves.
It's not really taking the best strategies, all that's going on is using some of the software tools to people that may not have had access to them before. There's more communication, yes, but for a lot of the experienced traders they already had their own groups/colleagues they were in contact with. And I definitely agree with you on the second point...I've been trading a pair with a low ATR over a period of 2 years i've had about a 90% success rate (winners/losers). Nothing spectacular, nothing amazing, just hitting a lot of singles...the irony is the typical 'screening stats' most guys flock too wouldn't pull this pair up in a result so it doesn't look that good until you start trading it. The liquidity is there, but there have been times premkt i've taken amazing anomalies that if others trade it would be lost opportunities for me....sorry for getting on a rant but there's one more point I want to make. I don't think I agree with the whole, let's put everyone in a room together and brainstorm/call out trades. There's clearly different types of traders where hearing other positions trades can affect your plan and this also creates dependency which hinders creative learning.
Exactly, and after the gold is all gone. As Szeven pointed out, any otherwise profitable strategy will lose it's effectiveness and become worthless when too many traders begin trading the same methods. Unfortunately, Bright's business model ensures that their traders have to continually find new trading strategies as the old ones constantly fail due to over use. This happened to OPG trading in the past few years, and you now rarely hear a word about that strategy (and Don's OPG thread is dead as essentially is the strategy). The same is now true for pair trading, as this strategy seems to be in the final stages of a death spiral as well. A profitable trader should think long and hard before trading at Bright with a new innovative and consistently profitable method (I would never, ever do it). Why? You will be quickly identified as a very good trader, and your trades will be evaluated to see if they can figure out how you are trading. Before long, your methods will be taught to 'bootcampers' and your successful edge will eventually be diluted to the point of it's demise. I know of a trader that had this exact experience. (the only winner will be the broker, that benefits from the additional flow of bootcamp training fees and subsequent commissions generated) On the positive side, few traders should see any adverse effect from the new 80/20 profit split, as I doubt a large percentage of the traders there have net profits in their accounts. Instead, they slowly bleed their accounts and will never pay a 20% share of their net profits. While this is good news for the losing traders (no additional 'fee' from the profit split), it is also bad news that they are destined to lose money in their trading. Hard to spin a good marketing angle from this 'good news', though.
I agree with you to some extent Eric but for the most part it's not that simple. For the first few months of 2008 I was in a group of remote traders (between 5-10) where my results were far and above everyone else's - I didn't know this at the time until several months later. The head trader could see all my positions and my trades; the group was using the same tools/information but my results were far and above everyone else's. I remember he kept asking what I was doing, i'm like fuck can't you see? And i'm telling you guys exactly what i'm doing...I'm not trying to brag but time and again i've seen multiple traders trade the same pair sitting side/side with entirely different results...
Contrary to the prevailing sentiment here, Bright is working hard to making those that aren't making money, profitable.
Hi Sun Light... Did you include the cost for eSignal or other charting and data feed service at about $200 a month... so it would be an extra $2400... unless i missed it in your writeup... also add on Exchange fee each year around $400 to $500 dollars...