Direct Access vs. Professional Firm

What are traders' opinions on being a DIRECT ACCESS TRADER vs. trading at a PROFESSIONAL FIRM?

Obvious differences are:
1. Margin (4:1 vs. 10:1, intraday)
2. Licensure (Professional trading requires Series 7 license, DAT does not)

 

Simba..

you missed the three most important benefits of being with a pro firm.. i mean seriously, market access is not any different(with the exception of bullets.. well, and the 20 second nasdaq fills that plague certain firms ::cough:: ).. and most strategies dont require alot of margin.. the real advantages are..

1.) education by people who have a clue..
2.) association with profitable traders..
3.) entertainment.. i mean come on.. have you read hitmans journal? its a regular soap opera.. =)

ive been trading for 2 years.. at first i was trading spreads on NYSE.. made money no problem.. then i switched to nasdaq trading because decimals were coming and got my head handed to me.. in hindsight the learning curve probably wouldnt have been as expensive if i had been able to use the experience of other traders to guide my education.. but, at the time i didnt know how stupid i really was.. i have a real good understanding now though =).. in fact, im thinking of making a move at the beginning of the year.. there are people making a million a year trading, but none of them ever come to trade here at my house.. so i figure if i want to learn from them, i might ought to go where they are..

-qwik

 

That's the main reason I've decided to go with a pro firm. To associate with and learn from top notch traders.

 

>well, and the 20 second nasdaq fills that
>plague certain firms ::cough::

Now qwik, that is HILARIOUS!!

JB

 

Magna..

well.. i want to take a look at the worldco offices.. they seem to have more traders in one place than anyone else.. and they structure their commissions so as to give senior traders an incentive to teach those in their group.. the biggest downside would be having to move from georgia to new york.. on the other hand i practically lived in hotels for 4 years with my old job.. so what the heck..

in the end, i doubt there is all that much difference between firms.. the main thing is the stability of the firm and knowing enough going in that you can negotiate effectively.. besides, maybe hitmans princess has a sister =)

-qwik

"The opportunity of a lifetime must be seized during the lifetime of the opportunity." -Leonard Ravenhill

 

here's a good tid bit that I picked up on in my never ending quest for the ideal firm;
Heartland Securities is in Atlanta. There's not much on these posts about them, but they are definitely a quality choice for NAZ prop firms. check em' out.

 

Well, since there is no limit of 10:1 at Bright Trading, I guess that would be of extra benefit to those using "capital intensive" strategies (Opening, Mergers, and Pairs)...so sometimes you need 20:1 or 50:1, it shouldn't matter as long as you are watching your risk.

License is no big deal, it takes a couple of weeks of study.

I don't want to raise the ire of some of the readers so I won't mention the access diffences afforded a proprietary trader.

I agree with those posts above me here about the atmosphere of successful traders, and the benefits involved.

Good Luck!

 

Quoteboy,

thanks for the tip.. interesting website.. i may swing by and take a look at them.. do you trade or work there? how many traders do they have? thanks..



Don,

in fairness, i suppose there are a few advantages concerning access.. i was referring to execution speed and quality.. of course some pro firms have bloomberg terminals, instinet terminals, s&p squawk etc.. and probably a few things i havent considered.. but my point was that retail traders at direct brokers dont have someone trading against their order flow anymore.. feel free to correct me if im wrong.. i promise not to call you any names you havent already been called =)..

-qwik

 

don,
i disagree with unlimited or 50:1 margin/leverage. as you know I run a derivatives trading desk in Asia and we carefully manage risk. every strategy has its limits- even pure index arbitrage. putting on a strategy is one thing, taking it off is another. I think you need to look at the worst case scenario. For example, putting on a pair - what if one side gets a take over bid or declares bankruptcy. I can't speak for your firms risk management but from what you state it is probably pretty good. However, I've seen a number of firms, hedge funds and noble laureats who have gone bust from taking on excessive leverage while believing they had all the risks under control.

the fact is people are greedy. unseasoned professionals have a knack for abusing risk. i've got to imagine that you aren't freely extending the type of leverage that you state to all traders. otherwise i wouldn't be sleeping well at night.