It does make good business sense. I read an article on Don Bright. He said Bright had a 30 percent success rate. I've heard the same from guy at ProTrader. With the desk fees and commissions they charge, they're easily making over a grand a month with NO RISK on a trader. What can they lose if you're losing your own money. So it's easy money. And the ones who succeed and make more than the desk fees are usually pretty good. Guys who pull down maybe a grand a day easily. So it's either you're really good or you suck and get blown out by commissions, desk fees and losses combined. The good traders then grow large, trade large and generate a large amount of commissions. From the traders I watched at Bright, they seem to have a high number of trades in a day. They account for 3 percent of the volume on the NYSE. That generates a lot of commissions. I think that the desk fees are actually a weed out mechanism for a prop shop. So that the mediocre, make 20-30 grand trader will wash out real quick. I mean, add up the desk fees alone and they're a fortune. It's a good system for the Prop shop. Really high barrier for new traders.
Fletch, Bottom line, bright doesn't like remote traders. that's $400 plus $300 for data feed.....high speed access another $50-$100 or higher depending on whether you do it right or not. and then you are on an island.....don't call them when you have problems, you will get chewed out. "see, we told you not to trade remote" is what you'll probably hear.
The costs of being with a prop firm compaired to a retail firm don't seem that different to me. If you're with MBT your paying $250 for the RT3 unless you do certain amount of trades. Same thing with ECHO, do volume don't pay. Of course this is only good if you're a good trader, and thats the point anyway. What's this squawk box thing? Are they calling out plays? If so that sounds cool...unless they're just trying to increase vol. As far as the in-office thing goes...sounds good, but you have to figure in commute costs and worry about some psycho Mark Burton guy coming in and shootin' the place up. Trade what you see, not what you think.
uptik2000 I think you hit the nail on the head. The bottom line is that real time trading has overhead costs whether you are retail or professional. The at home trader does not have to spend time commuting nor have the stress of being the little guy in the office where people around you (not the same one necessarily) are making $10k-20k/day on a regular basis. It only takes an average daily profit of just over $1k/day to rake in $250k/yr (a lot of doctors don't make nearly that much). My opinion is that the pressure of comparing yourself to the office heavy hitters may be a hindrance to new (profitable) traders without firmly established styles. I guess if you're totally new to trading you need to be around successful traders. BTW, I started recently with ECHOtrade and trade from home. There is no ECHOtrade office near me though there is a Bright office which I've never visited (Wash, DC area). I ruled out Bright early on because of their bias against remote traders. Funny thing is that I also didn't like their bias against Nasdaq traders but I only trade NYSE since going full time (and usually only 1 stock). The squawk box that rtharp refered to is of the action in the S&P futures pit that many traders use to get more detail of big buyers and sellers signalling possible turning points in the market. I have a cable modem and multiple monitors running Realtick, and RavenQuote (seperate machines). I use the ECHOtrader app only for order entry.
base-hitr- Are you trading with their capital, or our own? Or a combination? Could you give some details on your arrangement with Echotrade? Thanks.
mgkrebs I provided 25k but of course since I trade positions considerably larger than that intraday (often well in excess of 4:1), I use their capitol as well. I trade for myself (100% payout) and have not yet held anything overnight (my choice). I just got my series 7 license at the end of August and started trading with ECHOtrade a couple of weeks ago. No complaints.
A note of clarification. In keeping with my tag line, I recently decided to trade one stock exclusively. Its a big cap, high share price stock. I am never managing more than one position (stock) but rather scaling into and out of it, most of the time being flat. Currently I feel comfortable scaling my size up to ~ 2000 shares. Doing so requires more than the 4:1 leverage that a retail broker might provide, so consequently I am trading the firms capitol. I am happy with the results of my "keeping it simple" strategy and will stay with it for as long as its working. I find it much less stressfull than trying to chase 50 stocks around. How many things do I need to trade to make a living at it? One!
base-htr Thanks for the comments. Like your posts, and willprobably be in a similar situation soon....sounds like you're laying out some cash for all that data...I'd love to use RealTick(hint hint RTharp) cause I've been using it for a yr now and love it... Base-htr, how much are you paying for all that data? Thanks. Trust the charts
uptik2000 RealTick is ~$260/mo including E-mini quotes. RavenQuote is $40 on top of QCharts which is $100/mo. So my total is ~$400/mo or $100/week or $20/day. I've just done a little fiddling with RavenQuote so far but I got it for its scanning, filtering, alerts, color studies etc. I tried a trial of A-T Attitude but had used RealTick quite a bit before and found my A-T learning curve too steep. I'm lazy and RealTick is relativley simple to set up tons of charts and stuff. I like having backup charts and a third level 2 screen (counting the L2 in ECHOtrader). The cost is nothing compared to losing trades. Another reason is that I have a bunch of computer equipment from my recently shut down consulting business and wanted to put it to good use. My trading setup has 3 computers and 10 monitors. Overkill? Probably, but I already had the stuff before "turning pro" and have been somewhat of a computer geek since the Compaq 286 PC was state of the art at a blazing 12mhz. They share my cable modem using a router (SMC 7008BR).
base- your set up sounds nice, but aren't you gonna have to pay ECHO fee's too after your free months are over? that would bring your monthly costs up to $700 also, can I just go to townsend and get RT3 without having a broker with it? and would it be easier just to pay echo for the use of First Alert? Maybe I'm putting too much weight on chart/quote feeds...but I'm just worried that I'm gonna hate the Echotrade software after using RealTick . I was thinking of getting the first alert, but I'm gonna check it out at the echo office first. "I feel bad for people who don't drink. When they wake up in the morning thats as good as they're gonna feel" Frank Sinatra