On Don Bright & his trading methods

Don Bright · Jun 17, 2011

OK, speaking of "adapting" and "change" let's check the notes inserted below:

Quote from EdgeHunter:

Yes, but you should also mention the $4000.00 in Expenses for new traders at Bright in the first year... not counting commissions... and the yearly $1000 in expenses thereafter...

Same fees apply at all professional firms pretty much. We are no different. It generally costs about $1200 to get fully licensed if you're not already. Series 7 exams and exchange fees etc. Annual exchange fees are $500 and hopefully going down.

and that the Bright payout has changed from 100% to 80% since the beginning of 2011... a 20% drop in profits for any profitable traders...
Not true, check with my traders or call me about this

and that it takes special permission to trade stocks OVER 100 in value (like SPY at 125, etc, etc, etc) and that it takes a bit of qualification by Bright and by Goldman Sachs to be allowed to use the GS API to REDI... Not all are allowed...
Also not true, we did ask in the past, to protect new traders from large bid ask spreads etc., however.

and that you had a trader lose well OVER a million dollars trading crazy pharma trades around the 2008 year period which makes one wonder about your risk management controls and basic common sense..
Yes, we have had 2 losses over 20 years. Part of the game, and the traders are working to pay it back.

and that Bright offers no written statistical proof in data base format or trader documentation that any strategy they teach in their quarterly classes has any real edge or proven return...
Of course, not...we also say that there IS NO system that will work over time, one must learn what is working currently and work within a framework with others, IMO to make money. And, yes, those who work harder seem to do better, 'whoda thought' LOL.

and that the training classes are required - By You - By Bright for new traders... and that you make money off them so there is a direct return to you in compensation for smooth talking ET'ers and others into joining Bright...
Never have required any training...though recommended, and we wonder why anyone who wants to be a trader would not want to learn about trading....(check all the inquirees here for example).

If your brother gives you half of what each newbie at Bright pays in their initial training program, and with about 25 to 40 in each quarterly class... That gives you a nice $100K to $140K salary each year for not really having to trade one single share...
Not even close, but would be nice, LOL. We have many traders who we fly in for these classes, and for $1000 (18 years) and now waaaay up to $1250, hardly a bad deal for serious traders. A Lifetime fee, by the way...many keep coming back over and over to learn what is new.

that would be nice... to mention that...
More...

And, seriously, thanks for giving me the opportunity to update everyone on how things work here.

All the best,

Don

Don Bright · Jun 17, 2011

Quote from Lucias:

@Edgehunter, good information and I think very relevant. I had someone email me about Bright versus trading the mini-futures. Of course I told him to email donbright@brighttrading.net with any concerns because he's easy to approach.

Basically, what I told him was that I believed that one should stick to retail trading and use options, forex, futures, to get leverage unless they had at least 50k risk capital (20k required) and enough savings to live on for 2 years. My reasoning was primarily based on all of the platform and desk fees and expenses. I personally believe the Bright model is just too expensive for anyone who isn't trading full time. Most of us retail guys have a hard time coming up with 5k (I do). So, really that's just how it boils down. This is not a slight on Bright but at the end of day, its just not a model that is suitable/available for me or available to most small traders.
More...

I have to agree, those with limited capital, and really want to trade, can get involved in futures....we did very well back in the 1980's trading futures, and wish everyone with extremely limited capital all the best in trading them. Hopefully, as many have, when they build up their accounts and start trading for a living, they can come join us.

Don

Don Bright · Jun 17, 2011

Quote from Lucias:

Don, your previous answers were very thought out. But, that's a terrible example. You can control 1 ES contract equivalent $60,000 for about $500 intraday. It does go up to about $5,500 overnight. Of course, that exposes one to huge directional risk and so one could use options/spreads. I routinely control what like $30,000 to $60,000 buying power at NADEX with only a few hundred dollars at risk. I do give up some edge but they cater to very small retail traders which is where I'm at. In addition calls, vertical spreads, and futures spreads may provide for even more leverage and possible reduced risk.

Your previous answer covered most of the points. Your setup is obviously better suited to the professional. But, you didn't write much to the effect of the floor trading or proprietary specific edges that you bring to the table. You talked about the need to adapt. Can you elaborate on how your firm is doing that? I'm still concerned about the "alignment of interests" issues. Is your firm suitable for someone with limited trading experience? Do you provide training and sufficient edge?

I don't trade stocks. So, I'm not sure what I'd do with all that leverage and only 20k of buffer.
More...

Again, the futures are fine for some... but most futures traders on the floor and upstairs at the exchange, tend to hedge most of the time vs. simply trying to day trade, in my understanding.

Don

Don Bright · Jun 17, 2011

After quickly replying to the last few posts, I thought I would simply say that we are proud of our Firm and what we have done in offering an alternative to those who wish to take trading past the retail level. No "matching of trades" no "wash sale rules" to deal with, some simply steps to join in the ranks of other professionals.

However, serious trading, trading for a living (as I've said many times) is just not for everyone. It is not for the person with a few grand going in and out of a trade between his or her work cycle...- our group comes from various trading floors, and from the group that is limited by PDT etc.

I don't feel I have anything to defend here...we, along with 3 or 4 other firms these days, are still offering this alternative....but, "not for everyone." Most of you know who you are, and call me every day... let me know if I can explain anything further.

I do my best to explain everything I can here on ET, doing my best to help as many as I can.

Don

Lucias · Jun 18, 2011

Don thanks for taking the time to answer all the questions. I will keep your firm in mind as a consideration when/if I get to that level.

HFStartup · Jun 18, 2011

It is important for any new trader to understand that a proprietary trading firm such as Bright's is a resource that can greatly enhance a successful trader's performance through greater leverage, functions and support. However, if one is not consistently profitable, it is a very epensive and dangerous tool to use while learning due to the leverage.

New traders are well served to develop a successful trading methodology through real time simulators until they can generate consistent profits, and only then consider moving on to a proprietary trading firm. Once there, minimal size should be used and increased slowly as confidence using real cash grows. This is the progression I wish I would have taken as opposed to blowing out my account several times on the path to learning to become consistently profitable.

While Bright does not require their traders to daytrade, it is also important to understand that IMO, daytrading is one of the most difficult ways to make money trading. I have a lot of respect for anyone that can do it because the psychological profile requires someone who is very risk adverse while concurrently being very comfortable with risk. It is a rare balance and the difficulty should not be under-estimated.

Best of luck.

ElectricSavant · Jun 18, 2011

How much does one need? Doesn't he need to know how to trade too?

ES

Quote from Maverick74:

I doubt anyone makes a living with 30k in buying power. Not going to happen. And yeah, I've been around the block a few hundred times.
More...

LEAPup · Jun 18, 2011

Quote from Rumblefish:

$30,000 intra-day buying power is what prop firms who don't require any deposit or any fees give to traders.

some traders only get $10,000 intra-day buying power.

the guys who get $40,000 intra-day buying power are top traders which is only $5,000 capital if you get 10:1 intra-day leverage.

that is the difference between a pro and amatuer. HFT machines are masters at managing leverage and daytrading.

Goldman Sachs daytrading prop desk is 100% fully automated.
More...

If a prop firm told me I could trade with 30k intraday, I'd find the exit as I don't know many who can make a living trading 30k equities intraday.

I DO know a guy who who doubles his money each month trading Fx, but he's not the norm. Btw, he was am member of ET for a while until all of the negativity turned him off.

LEAPup · Jun 18, 2011

Good post! Agreed completely!

And as far as Don Bright's Firm goes, I'm probably in trades that are 35-40% day, the rest 2-7 days. When I messaged Don, he was ok with this as it's profitable for me, and let him know what my methodology was. I don't understand why Don gets jabbed at so much while other prop firms are a joke, but go un-announced... Oh well. Again, good post.

Btw, when Mav "gets after" Don, that's a different story. Their interaction is always good reading! Lol!

Quote from HFStartup:

It is important for any new trader to understand that a proprietary trading firm such as Bright's is a resource that can greatly enhance a successful trader's performance through greater leverage, functions and support. However, if one is not consistently profitable, it is a very epensive and dangerous tool to use while learning due to the leverage.

New traders are well served to develop a successful trading methodology through real time simulators until they can generate consistent profits, and only then consider moving on to a proprietary trading firm. Once there, minimal size should be used and increased slowly as confidence using real cash grows. This is the progression I wish I would have taken as opposed to blowing out my account several times on the path to learning to become consistently profitable.

While Bright does not require their traders to daytrade, it is also important to understand that IMO, daytrading is one of the most difficult ways to make money trading. I have a lot of respect for anyone that can do it because the psychological profile requires someone who is very risk adverse while concurrently being very comfortable with risk. It is a rare balance and the difficulty should not be under-estimated.

Best of luck.
More...

LEAPup · Jun 18, 2011

Quote from ElectricSavant:

How much does one need? Doesn't he need to know how to trade too?

ES
More...

Depends on what you have in savings, cash reserves, other more passive investments, plus knowing what it will cost to fund your lifestyle. I would also say that it depends on what they're trading and do they employ a real risk management system.

For trading equities, I'd say not many people can pull off being able to live on the gains (if there are gains...) of a 30k account. Maybe if they lived with their family?

As for "Does he need to know how to trade too?" I would have to say yes, to an extent. However, if the firm U4's an experienced trader, and they're bringing with them bad habits for example, I wouldn't want him/her if I was the B/D, and would take a rookie instead. Of course, we all know the story of the Turtles when it comes to new traders being taught a system...

You ask tough questions. Lol!