Gene, I am working in a trading firm now and I am still learning, but I am not in the US. Would a foreign company be able to join a L.L.C? Thanks.
noddyboy, L.L.C.'s generally do not take customer accounts. Contact each individual L.L.C. for their membership & capital contribution requirements . Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
I'd like to add that risk is best controlled when you are diversified in your matched pair trading. For example, rather than having 2000 share positions in one pair, have 500 share positions in 4 pairs (or be even more diversified if you can). That way, if one breaks up, then your losses are 1/4 of what they would be.
cashonly, That is true, diversification is your best bet for any "positiion" type of trading . The profits in matched pair trading tend to be small, so traders end up many times with larger postions then they may normally carry, because they feel the positions are "hedged" or they add to positions. Like any style of trading, matched pair trading can be a good strategy. It's best to be aware of the risks & rewards . Leveraged in matched pairs trading is to be used and not abused. Leverage magnifies gains as well as loses. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
Gene, You hit the nail on the head there. It's a two-edged sword. Too many traders that go to a pro firm go so they can get that leverage and increase their profits. What they don't realize is that if not used carefully, you can magnify your losses just as easily.
That's why it's important also to understand the spread rate (between debits and credits) you receive at a professional LLC and the haircut charge that was mentioned before. I think an easier way to think about haircut is to calculate the haircut on your position. It is simply 15% of your long and short market values, added together. Take that amount and subtract your equity. If anything is left over, the cap charge rate is applied to that. Remember that industry standard is that cap rates slide up as the ratio of equity to haircut increases. Vito Sisto
Don, I try to vary my envelope and size on the opening depending on the stock price and volatility. Let's say I trade MMM which is a fairly volatile high priced stock, I use a .5 envelope on it besides only doing 600 shares where as my "normal" entry should be 1000 shares. In addition, .7 envelope if stock i priced below 35 bucks and .4 for stocks in the range of 35-80. If we however are facing significant spoo over FV envelope is raised to .5 no matter what. Any thoughts on this?
Well, I was going to give a long answer, but then I read the other posts (most of which were correct...not the one about haircut charges which do not apply to the questions here). There really is no "catch" - we have great economies of scale, and do our best. Read everything when you join, and correct me if you think we are missing something. Yes, we have recently doubled our "Bright-at-Home" number of traders, and we haven't really even promoted it yet (waiting for the expo next week). We'll be glad to add you to the first 250 traders we have been authorized to add to our remote ranks.
I don't think that being an at-home professional trader needs much advertisement. I think that there does need to be more public education as to what a professional trader is/does. Many people would love to switch who are fustrated with on-line brokers. I live in an area in East Texas where there aren't any firms around (nearest big city is two hours away), so it was great knowing that I could be a professional trader without having to move. I'm just trying to get past the series 7 exam now. I liked rtharp's article on being a proprietary trader that is on daytradingstocks.com. Bright, I noticed that you have an article also that you did for S&C magazine on your site, but it wasn't available it said. Seems like your site also froze my computer, didn't do that on other sites I visited. Thanks Why be Bud Fox, when you can be Gordon Gekko?
It is traders like yourself that put us on the pursuit of making true proprietary trading available to the person not able to make it to one of our trading rooms. We, too, feel that the training is important, and that (now that we have been authorized to expand into the remote arena full bore) we can combine the best of both worlds for the at home professional. If the site is messing up, you might try using a newer version of Nescapte or use Internet Explorer. I have found a glitch in older versions of Netscape...and am having trouble fixing it....sorry for the inconvenienc, feel free to call me directly with any questions.