I've been trading equities via IB managed accounts with my own RIA since 2005. Before that I was a full-time private trader. I've supported the family trading independently since 1997. Short-term strategies. I currently get a 25% performance fee. Averaged about $4 mil under management since RIA inception. Record is solid--no down years, about 80% months profitable, averaged about 20% net annual return. Minimal leverage--usually hold lots of cash. Up 23% in 2008. Worst DD a brief 12%. Have supportive trade records with IB. I've decided to leave trading OPM behind and am actively seeking affiliation with a prop firm for the following reasons: 1. I've developed an edge in the intraday timeframe that I'm excited about. IB trader workstation is costing me--I know there is vastly superior trading software out there. Also, my trading volume is increasing--currently 150K+ shares/day. IB rate of .005/share is beginning to feel confiscatory. 2. I take fiduciary responsibility seriously and error on the side of conservatism trading client funds. On my own, I can apply my edge more aggressively, without the stress of client responsibilities and oversight. There is also the administrative/regulatory burden of the RIA. Focusing exclusively on trading will be very liberating. 3. Split would be much higher at trading firm. Even with initially less buying power at a prop firm, it's easy to envision netting significantly more $$ vs my current 25% cut of profits (before RIA expenses). 4. Automation. I am a very good tape reader/discretionary trader--with one or two symbols in front of me and a disciplined strategy to follow, I'm confident I can make money consistently, with small drawdowns. However, there are many opportunities I miss every day. I'm looking for a firm that will support me as I automate many aspects of my strategies. (I have limited programming skills.) Also, I'd like exposure to new ideas, technologies, etc.--things are evolving quickly these days. 5. Trading Culture. I trade remotely, and know very few traders in my area. I would enjoy interacting with successful people in this business. I also enjoy supporting new/developing traders. Have family in Chicago, so I had the thought of remotely joining a firm with a trading office in Chicago so I could periodically spend time there. I've researched past posts on EliteTrader and have the following short list of quality firms to contact: EchoTrade, Avatar, WTS & Capital Traders Group. If anyone has any insight on these firms, or can think of any other firm that might be a good fit, or has any other thoughts on my situation, I would appreciate the feedback.
What if you could get better rates and a better trading platform? Do you still need a prop firm? If you have enough capital to trade in a PM account, why join a BD and commingle your money? 1245
If I were to trade only my account, capital for Portfolio Margin is not a problem. I have used PM for longer term trades, long stocks, hedged with puts. But does intraday PM get one beyond 4-1 max day trading leverage? I suppose I would have to ensure offsetting longs and shorts, or hedge positions intraday as they are entered. That's interesting, but maybe complicated. In any case, I would like to have at least a couple mil buying power available and that's probably not possible currently with my personal account at a retail firm. I'm not crazy about an uninsured deposit, but risk appears small with some of these firms.
Up to around 6:1 unless your account is over $5M. Over $5M you can have more buying power during the day but 6:1 over night because the Prime Broker does not have to monitor PM during the day for accounts over $5M. 1245