looking to see what firms offer this scenerio. I'm curious about what firms fit under this umbrella. I know some prop firms that give you 250k in buying power (intraday) for just $5k deposited in your capital account(some with a year hold and some with none) Anyone else know what firms offer higher leverage? i'm looking for the best deal. rates not that much of an issue.
No takers? i guess the hybrid market has scared away the large sums of prop. money that was willing to back you when you could read/scalp the tape. lol gives new meaning to risk/reward
We like to see a minimum of $15K, but all traders can use a $million or more (not "gambling" on direction or something, but on working strategies). $5K is just too little of an account to allow for any fluctuations, IMO. Don
I say this not to be a dick, but how is betting on the direction of a spread any less of a gamble than betting on the direction of a single equity? Up, down, converge, diverge... is there really a difference? Obviously if you have a better edge in betting on spread-directions than it's less of a gamble for you, but the notion you're purporting seems absurd (though I may be wrong since I'm not an expert in pairs trading by any means) - that there exists less risk in pairs trading than in directional single stock trading.
yes, there is. the difference is that the Bright clan makes more money. the amount that they require to open an acct and the money one needs in order to pairtrade is significant. what does that lead to? simple. more commission $$$. cha ching.
Fair question, but with a lot of homework we are able to take out a good portion of the overall market risk with pairs. For example, on Feb 27 when the market moved 400 points or so, we did not have any of the pairs people in any trouble, but our directional guys got whacked a bit (and the day that capitulated was a bit worse, they ended up getting whipsawed a bit). A very big portion of our "family portfolio" is in about 200 very large pairs that are actively traded by the family members (with a little help), so we really do "put our money where our mouth is" when it comes to all this. Our guys at PairCo have done a tremendous job in taking this long time working strategy that my brother and I have used for decades, and refining it to a point that there have been months when virtually everyone in their group(s) have been profitable. We encourage newer traders to move slowly into pairs, and start by "crutch" pair trading, where they may simply end up scalping one side, while leaning on the other side (just in case they are caught in a market move), to save on commissions and lock in profits right away. If you have an interest: www.pairtrader.com has more info. But, also, I was referring to opening only orders where we don't mind traders using a couple of $million to make $1,000 or so in the morning, relying on being on the same side as the NYSE Specialist on gaps, etc. MOC orders, same thing. Don
Gee thanks, and all this "love" from a guy who recommends a non-member, non-broker/dealer, non-NASD, unlicensed, firm**...hmm, well, I guess that kind of explains it, LOL. And, if you read my above post, you'll see that we fully support pairs trading for ourselves as well. The $5,000 firms tend to push "scalping" which has not really been a viable strategy for years (as a single technique.... of course we all "scalp" at times), because they don't have enough capital to carry any type of longer term positions. And, I don't consider $15,000 a very large commitment for engaging in serious, professional trading. (**I know nothing about that firm except that they say all the above on their website) All the best, Don
In the sense that it removes market risk, I see how on the surface it appear be less risky, but provided your directional positions have reasonable stops, the risk of being long when the market crashes or short when it rallies isn't necessarily dangerous, even in thin POS stocks. Does pairs trading as you teach it have a higher risk/reward ratio and a better winning percentage than most typical directional strategies? What is a typical win percentage/risk reward associated with pairs trading (I know it varies for everyone and all that, but as a general guess). Market risk isn't everything; what happens when the leg of the pair you're short gets bought out at a 30% premium? I'd be scared of holding shorts overnight for just that reason; in pairs trading, you're always short something. Do you make sure that the pairs you track include companies which are highly unlikely to be bought out by private equity? Also, I must respectfully disagree with you on scalping. It may not be the most efficient strategy out there, but it is very much a viable strategy in today's hybrid market. I also think that learning to scalp is a great way to learn how the markets move and what moves them, and when a scalper decides to take a longer term perspective to earn a greater income, he can still use many of his scalp - based entries but use charts and wide trailing stops to exit, giving trades with 1:20 or greater risk/reward ratios.
I'm just relaying the information I see from our traders overall. We still have successful "scalpers" - but the bigger money is being made by longer term strategies...and, almost all the scalping is now done with automated programs. The hybrid has been good to scalpers with these programs because they tend to get filled on "sweeps" a lot, which sort of replaced "price improvement" on trade-throughs. Regarding the buy out question...we tend to be long the lower market cap stocks which has generally worked in our favor when private equity takes over a company (not always of course, most more often than not). Our traders rarely, if ever, use mechanical stops...as we don't like to give away our hands...we tend to use "alerts" so we can take notice (and advantage) of the overall market condition before executing the trade. A lot of ways to make money...and as long as you're making good money, keep "doin what ur doin"...as they say. I must apologize for my response to Mr. Corleone (above) - it was 4 AM, and I guess I woke up cranky, I tried to edit after my shower, but was too late - I generally try not to get "pissy" with anyone, stay above the fray, but the above was a bit rank, I do apologize All the best, Don