Moving from OPM to prop firm

Discussion in 'Prop Firms' started by RockTrader1, Mar 31, 2013.

  1. 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.
  2. 1245


    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?

  3. 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.
  4. 1245


    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.