*****OK, with a "smile on my face" let''s do some simple math. We charge $400 per month, and give rebates early on. We charge $200 remote, and rebate that at 200,000 shares (which is rock bottom number of shares).***** Worldco provide all of above sans monthly fee, let's do some simple math. 200K a month is not rock bottom, it is 5000 shares each way every day, at 500 shares that is 10 trades a day, something a newbie should not be doing. *****You want to pay 1.5 vs. $400, even though you get back the $400. OK, come on in and pay 1.5 cents....isn't that easy. I will be happy to charge 50% too much.***** 1.5 is what you start with, after the first month it goes down quicker than a newbie trader's P&L. First month there is no way in the world 0.5 cent per share is going to make a difference of $400 in the guy's P&L. ***Say you are brand new, only do 20,000 shares per day (mostly openings). .5 cents x 20,000 = $100 PER DAY excess fees. Even at 10,000 shares per day = $250 per week, or $1,000 per month in excess fees. Is that what you want?*** A brand new trader should NOT be doing 20K shares per day. Period. They have to take 20 trades 500 shares a piece to generate that much volume, a newbie trader doing that kind of volume is asking to blow up his account. Your first two weeks should be 100 shares 2 positions 10 trades a day that is 2000 shares a day for ten days, even at our highest commission rate, it is a difference of 2000 * 0.5 * 10 / 100 = $100. Throw in the ticket costs, it is a difference of $200 versus Bright. In the beginning a trader should not even think about making enough to cover commissions, with 100 shares you are supposed to practice execution/cutting losers and all that stuff, forget about making money. It is so important to develop a strong fundamental game before you think size. Your next two weeks, assuming you are showing any progress, should be 200 shares 3 positions 10-15 trades a day. By then your commission will be lowered and eventually your commission will be as low as Bright's. Now if you put up just 3-5K so we have something to absorb your initial losses, you will start with much lower commissions and the difference will be minimal when you first get started. BY THE TIME YOU DO ENOUGH VOLUME, YOUR RATE WILL BE AS LOW AS BRIGHT'S. Don't get suckered into false advertisement, I mean what hell, in one of Don's previous posts he talked about people paying 0.7-0.8, I mean gee, that is the lowest rate you hand out to people doing 200K a day, and you use it to compare against our newbies starting out with no capital trading 1000 shares a day? Shame on you! We hand out half a cent a share for our best traders, so take that. As I said, if you have 25K to blow come to Worldco, I will make sure that you get a lower rate than anything Don can put up, sans the monthly fees as you should not be generating enough volume to get a rebate on those to start your career. ***Don't get caught up in the "come in with no money gambit" - it is a sham. The respectable firms who have been doing it for years, have cut back considerbly.*** We are not cutting it back, because we can afford to do so. If you have the financial strength to do it, you won't care because eventually you will get enough profitable traders to cover the losers. It is THE ultimate strategy if you can afford to swing it. ***Sure, we make some money, and we will be in business. We give the money back when asked, no 12 month "hold" - we pay 100% of the profits. We have the highest rate of successful traders that I have seen (70+ % profitable after a 1 yr learning curve).*** And 70% of the people who graduated from MIT are making at least 50K a year. What hell is your point? The first year is THE year. ***PS If we had no desk fee, then we would have many rooms of "movie watchers" who do nothing, do not add to the trading environment, and take up space...and we have enough of that already... You get computers, phones, and office, fax, DSL (or T-1)...pretty cheap I would say.*** At Worldco, you get all of above for free. And there is no pressure to do volume just so you can get your desk fee back.
To whomever said about sitting next to top traders: First of all, I don't deny that I lack the experience, size, and skill to be a legit trading desk manager. I am not going to pull a Don Bright and make up stupid excuses and dodge bullets. Right now, as I am typing this post, I am just a profitable trader, nothing more. I don't sugar coat it, I don't deny it. When Walter gave me this job, he invested in my future, because he believe in me that one day I will fully grown into top tier material. Whether I can make it or not is another story, but he has the confidence in me and I can not say no to a challenge. However, here is what I do that I don't believe any other team leader is doing. Everyone on my team gets my password to see my current position / P&L. They see me taking trades real time, real money, they know exactly what I am doing, they see my blow-ups, they see my best days, tick for tick. And as I become more experienced, more proficient, you can imagine this will be a bigger and bigger edge, as I don't believe any other team leader does it. I plan to do this for my team as long as I am trading. No I don't want anyone to ride my coat tail or anything like that, but I believe this is the ultimate way to teach people your style. They may not want to trade the way I do, but they will see exactly what I do and learn from my mistakes and draw from my strength. The point is, I give everything I do my 100%. Yes, you can find team leaders that make quadruple what I do. Whether they give you a similar level of dedication, average 10-12 hours a day in the office, is another story. We have a seven digit trader in every office, the problem is we don't have 2-5 men operations and those traders, even if they are team leaders, may, or may not give a damn about you. How many traders actually get to sit next to Bob Bright? I can at least assure you that we have two or more profitable traders on every single row of 5-6, that is the way we designed our floor plan. Of course, I don't beg for anyone's mercy, nor I beg people to join my team just because I give my 100%. A seven digit performer's 20%, is more significant than my 100%. I won't deny that. I can not contend with that until I overcome my own weaknesses and go top tier myself. All I can say is, that no one on this planet can make another person a successful trader, you get the mechanical knowledge, that is 10% of the game, then you go out there and lose money, that 90% of the game. When you lose enough money, you learn the game, why don't you let someone else to take the inevitable hit for you, just in case you don't make it? Or put up a minimal amount of capital, get a very competitive rate, and minimize the risk you take just in case you don't make it?
This has gotten silly, our traders do extremely well, and if some newbies want to play around with no money up, great. Like I said before, I will be glad to send you a bunch of people with no money and no experience, who want to gamble with your firm's money. I am sure that you will just love that, more nails in the coffin. Professional people take the time to explore alternatives, and we offer them a chance to see Financial Statements, Historical data, current statitstics, and all the things that anyone should review before diving into any business...money up or not. We'll just continue to do what we do well, and keep our place in the industry. I have gotten 3 phone calls from ET potential traders while I was trying to finsish this post....and your name keeps coming up...thanks...
***Like I said before, I will be glad to send you a bunch of people with no money and no experience, who want to gamble with your firm's money. I am sure that you will just love that, more nails in the coffin.*** Bring them on, have them e-mail me, I believe they are as good as those who can come up with the 25K. Just because a trader can't come up with 25K doesn't mean he is going to gamble your money Don. He has to pass the exams, spend months without income. You see Don their time is as valuable as yours, and they are wasting their life if they don't come out with 100% effort, and you have something called RISK MANAGEMENT to make sure they don't get blown out. Give me one legit reason why a person with 25K is more likely to make it than a person without? Sure, he can't soak up the damage with his own funds, sure, he can't trade 20K shares a day to generate you big commissions off the bat. Guess what, if you give them time, they WILL perform, I guess you can't afford to because you have to rob them with desk fees. ***Professional people take the time to explore alternatives, and we offer them a chance to see Financial Statements, Historical data, current statitstics, and all the things that anyone should review before diving into any business...money up or not.*** What make you think we don't do that? ***We'll just continue to do what we do well, and keep our place in the industry.*** Same here, same old lines again. ***I have gotten 3 phone calls from ET potential traders while I was trying to finsish this post....and your name keeps coming up...thanks...*** And I just got someone from Bright who is going to compare his rates . . . Wait a second, you only have a 2 men operation in New York, it is not like you have anyone to I can steal to begin with.
this is a bit off topic, but as many know I've been in the process of choosing a pro firm for a while now...from all the info I've taken in i have been leaning to Echo the whole time and I'll admit one thing that has been holding me back was the software...everyone I've talked to who is trading there said its crap...but everything else they offer is top -notch now I check the web site today and not only did they update the fees, but they're coming out with new software...which although i have yet to see it, it sounds like it solves all the problems people complained about so I guess what my question is , are these guys too good to be true? they seem to have the best rates, they're updating the software when they get complaints, the office's are super modern (I've been to NYC one, and someone told me the new san diego office was sweet)...and one person I know said that all the management are good business men and down to earth nice guys too.... so now it almost seems like its too good to be true. am i paranoid? or just being overly cautious?
Don, Do you have some inside info on this, or is this more a Philosophical statement that you feel that WorldCo's "model" is a death sentence? Just curious - I am considering Andover, Bright, Echo, WorldCo (please, in alphabetical order) nitro
Uptick2000: Actually one of Echo's greatest flaws is that they can not outbid other firms by going really low as far as rates are concerned, given that they are a relatively newer establishment. Other than that however, I have to say it is my first choice if I ever leave Worldco.
Robert, Agreed - anyone who is or has been in business knows about accounts receivable and accounts payable. I suspect people are talking about profit margins. Your posts should give people an idea. Thx. But in the end - who cares? I trade - I want the best commissions I can negotiate. If I make money, you make money. We are all happy! nitro
Hitman I would be a fool to have any preconceived notions about sitting next to Bob Bright as a newbie trader in his firm. All I said was I would prefer to trade in the same room with a trader of Bob and Don's caliber (and others)who have been doing this for years than in a room made up mostly of newbies and so-sos. There are no free lunches in this game (been doing this since 1999) and nobody of course gives a shit about me. I don't expect any hand holding nor spoon feeding from anyone, but I expect to at least be able to pick Bob Bright's brain a couple of times a week during their weekly office meetings. This for me would be invaluable. I have no doubt you give 100% effort to your recruits, but I would rather have top traders like Bob, Don & Earl answer a few of my questions a couple of times a week than have a limited experience trader like you spend an hour with me everyday. I look at the big picture, which goes beyond minute differences in commission rates between firms, and I like what I see so far.
Uptik2000, What about ecn pass-thorugh fees? Are all of the pro/prop firms eating them? It seems that I remember some of them passing various fees on to the trader.