Equity prop firms in 2021?

Discussion in 'Prop Firms' started by meatyoaker, Feb 22, 2021.

  1. I have been looking into Bright Trading (http://stocktrading.com) but wanted to get some more opinions and weigh my options. Been having some trouble finding info on them that isn't 10 years old or equity prop firms in general.

    Any other equity prop firms you would recommend I look into or experiences you can share working with one?

    About me:
    - comfortable trading with $100k's of my own money, would like to trade with $1m's firm capital
    - can show a profitable live track record with smooth equity curve
    - trading is daily, EOD, fully systematic algotrading
    - run strategies like: mean reversion day trade, mean reversion multi-day, trend following, relative momentum
    - don't want to have to give away the full details of my strategies
    - would prefer fully remote
    - would prefer to kinda just be left alone and do my own thing with the capital, don't need handholding/training/mentorship
    - don't want a boss or someone giving me a hard time about my performance
    - don't mind paying a deposit
    - Computer Science degree from top school, but bad at coding puzzles and math puzzles lol

    Thank you!
     
    qlai likes this.
  2. Baron

    Baron ET Founder

    One of our new sponsors is Trader2B and they are offering trader funding for stock trading.
     
  3. Robert Morse

    Robert Morse Sponsor

    meatyoaker-It is not clear to me that you understand the Prop firm relationship. You will not be able to use your returns toward a future business easily, they will want to know your strategy, they will monitor your trading as you are trading their firm account, they will be your "boss", you will need your FINRA exams etc.
     
    yc47ib, VPhantom and qlai like this.
  4. I do not believe they give me enough capital to make it worthwhile i.e. if "Get up to 85% profit share from funded live trading accounts ranging from $25,000 to $250,000.", I would rather just trade my own $250k because I already have it.

    Yes, I do not fully understand the prop firm relationship, am asking about it. I am aware they will monitor my account that I am using it responsibly, with a rational amount of risk, and not let me trade if I 30x leverage and blow the account like a moron, reasonable stuff like that, etc. I am aware I will need the SIE and Series 57 exams, which is also reasonable.

    But I was looking into Bright Trading because with their wording it seems like I will be given a decent amount of freedom to do whatever I want i.e. "Let us Capitalize your Trading Business". "Bright Traders can engage in their own personal trading strategies, models and techniques and retain their Intellectual Property." If I am completely mistaken about that, then I would rather just go solo. I am aware of the deposit, commissions, fees, profit split.
     
    Last edited: Feb 22, 2021
  5. traider

    traider

    What is your combined sharpe ratio?
     
  6. Combined uncorrelated strategies? You mean the holy grail? On their own they’re 1-2, but combined it’s calculated to be a 3-4, and I’m pretty skeptical of it myself.
     
  7. AFAIK Bright is just giving you leverage to work with based on your deposit, you don't actually trade their money like an employee.

    In the OP you mentioned 100K of your own money and 1M of firm capital. If I'm understanding you correctly this means you would be using 10x leverage. 3-4 sharpe is no where high enough for 10x leverage especially if you are skeptical about it and it might actually be lower. You definitely will draw down 10% and blow up.

    For comfortable 10x leverage you should be running at least 8 sharpe, preferably 10+.
     
    yc47ib and meatyoaker like this.
  8. This is great info. Yes, 10% is the max drawdown of my combined strategies. I'd think I'd do something more like a $250k deposit and trade firm capital $500k mean reversion + $500k trend following/momentum. I also think I could benefit from the cleaner execution because I do run into a few execution issues related to margin, shorts, fills, etc. Honestly I'd probably be satisfied just running with portfolio margin, but I have been unable to afford that as of yet on IBKR as I run each strategy on a different account, so not all of them meet the requirement. So my options were to just be patient for a few years as I grow my equity solo or go prop, and I might even learn how to pairs trade/hedge there.

    I think I can achieve 5 sharpe if I discover and add more on the short momentum side, but unfortunately I do not think 8-10+ sharpe is within my ability.
     
    Last edited: Feb 22, 2021
    cruisecontrol likes this.
  9. can you post your equity curve to show the performance of your model?
     
  10. You will get higher sharpe and capital utilization if you can figure out how to combine all your strategies into one portfolio and jointly hedge everything. Then it will be natural to run your system in a single account.
     
    #10     Feb 22, 2021
    meatyoaker likes this.