I am interested in learning what is required to open a prop shop in Dallas. I would assume the best route would be through an existing avenue or through teaming up with an existing prop shop and running the office. I know the estimates would vary but how much approximately would a prop shop be willing to put up as far as costs? Would I be required to put up the majority of the costs in regards to hardware and operation costs? Has anyone here considered opening a prop shop. Could you please share some information in regards to the process or what you know? And would anyone here even be interested in seeing a major prop shop operation brought to Dallas? Please respond in this thread and not via PM so others may participate in this discussion. Thank you.
It would depend on the company and type of prop shop you would be opening. Can you elaborate on the companies you were considering, the vehicles traded, or the structure of traders/management?
I would be interested in a prop shop in Dallas. Maybe bright, echotrade, schonfeld or anything really. If you can't get some of the top props, I would take anything. Just look at the Texas Traders thread. http://www.elitetrader.com/vb/showthread.php?threadid=54484 It's one of the largest threads on this board in that section. Tons of interest in the idea. Two major trading firms are in the DFW area, TD Ameritrade and Fidelity Investments. TD Ameritrade has only around 2 major facilities and one is in DFW. And Fidelity has I believe around 6 and one is in DFW. Not to mention all the other firms throughout Texas. How difficult would it be to put one up in Dallas? You'd have access to a large pool of candidates who already have their Series 7, some basic trading knowledge at minimum, and the cost of living is very reasonable in the area. Not a lot of people can afford relocating to California or NY to trade prop. Remote trading is fine if you have the right equipment. But who has a 2-4+ screen layout on $5,000 worth of equipment that's backed up on two high speed internet connections? Nobody has that layout unless they've been doing trading for a while. That's an added bonus of going prop and trading at a desk. You get to use their equipment.
There are a lot of active traders in Dallas. The AFTA is probably a good place to start if you are looking to recruit people to your prop shop and get things going. Ameritrade has around 1,000 active trading brokers and employees alone in the area. Then you have all the equity traders in Dallas who work for hedge funds and investment banks. There's a lot of market share untapped right now. Steve Nison will be a guest speaker at AFTA-DFW in September, which should draw a lot of attention to the area. I would guess at least a few hundred will attend just to hear him speak. It's only $25 for a one day pass. I will be there. Good luck on starting your prop shop! http://www.afta-dfw.com/ "The DFW Association for Technical Analysis (AfTA) is recognized as one of the nation's largest and most active volunteer organizations focusing on technical and investment analysis." Speaker: Steve Nison, CMT Date: Tuesday September 19, 2006 Time: 7:00 p.m. (Registration 6:30) Duration: 2 hours +/- "Steve Nison holds the distinction of introducing the Western world to Japanese Candle Charting. He is not only a pioneer, but a master of the charting technique. Mr. Nison has authored three acclaimed books on the topic, selling over 100,000 copies and translated into nine languages. As the expert in his field, his work has been highlighted in The Wall Street Journal, Worth Magazine, Institutional Investor and Barron's. As a sought after speaker, he has presented his trading strategies to traders from almost every investment firm on how to apply - and profit from - these methods. He has also lectured at numerous universities and, by request, at the World Bank and the Federal Reserve."
I would also love to see a prop shop in Dallas. I don't have any money to pitch in to starting the prop shop but would be willing to help out in any way I could. Just PM me if you need any help. I have all my licenses and some trading experience. I could help manage the operation and help market it.
All you have to do is get an existing prop firm to buy the equipment/computers/etc. They also supply the capital just like usual to all their traders. You then cover the office space costs with desk fees. Dallas office space is very cheap in comparison to California or New York office space. You could find some nice commercial property for real cheap and have it all covered with just 4 to 5 trading desks. The rest would be supplemental income. You then charge the basic comission structure of that prop shop, working out a deal to get a small percentage from the prop firm off of commissions. The prop firm gives that up because you are managing the operation and are just providing them with additional revenue for something they couldn't have done without you. You work closely with your traders to insure success. Provide daily updates, briefings, etc. If your traders are very good, you could make millions on the operation. Especially in the Dallas market. At least, that's how I see it playing out in my head. The only question is how many trading desks do you need? In the Dallas market I would assume there would be a lot of demand so you'd maybe want 40 or 50 trading desks? That just seems like a lot to manage though. Maybe start off with 15. 3 rows of 5 computers lined up. Would that be enough? You could run that operation out of a fairly small office or a decent sized one paying $2,000 roughly a month for commercial rent and $1,500 for internet/electric/phone. If each desk fee is $400 a month, that would be 15x400=$6,000. Which would more than cover operation expenses. You could probably get away with just 5 desks and be ok in a small office. As an incentive, you could have AFTA-DFW guest speakers swing by the office to speak with your traders. Bring in a few guest speakers on ocassion from other operations in the area. make it a real extensive learning environment. Put up a trading library in the office with rare trading books and materials. Make the operation exclusive. Then get some marketing done on it via the newspapers, career sites online, etc. It's easy to market jobs. You just post a few ads on Monster or on some industry sites and everyone will know about the new prop firm in Dallas. You could even be a guest speaker at a AFTA meeting and talk about it. Or visit a few of the colleges in the area and talk about it. Two of the largest colleges in the U.S. are in Texas (Texas A&M and UT-Austin) with around 50,000 college students rotating through each school during any school year. You could contact the investment clubs there and have them arrange an event on trading. You could then come out and do a presentation in front of a large audience. A lot of those students at those schools are from Dallas. You could also arrange a presentation by speaking with a few finance college professors in the Dallas area and present specifically in their senior classes. UT-Dallas has the top Chess program in the U.S. Lots of very intelligent analytical types at that school. SMU has a great group of students. Lots of very wealthy people in the Dallas SMU/TCU/Highland Park areas. There are a number of firm in the area that I know of that have millionaires looking for more independence in their trading and more leverage. You'd be swamped with applications. I would personally start a prop shop in Dallas if I had the capital to do so.
I thought we don't need capital because the acting broker puts up all the trading capital and pays for all the computers. All we need, would be pay for the internet connection and office space. Not much capital needed. Right?
I was referring to most major expenses. You are right though, some props probably wouldn't put up most of the capital, whereas other may. Either way, I would recommend having enough capital before partnering on any business deal. Even if they cover costs and everything looks great on paper, you still want to be prepared. What if you can't cover costs of the first month because you are still recruiting traders that month? Will the prop firm put up the capital to cover that initially until you get up and running? You'd have to work that out of course but either way it would be smart to have your own capital just in case.
There are a few rumors going around that a major prop firm is going to be opening up a prop shop in Dallas soon. Has anyone heard anything?
What would you charge me to come watch? I might give up my noontime nap if it's entertaining enough. Maybe sell ice cream bars to the kiddies? Oh, and BTW, I hope Nison is better the next time. When he was at AFTA about three years ago he was an absolute hoot. Gurus who do not trade are so much more dogmatic about the efficacy of their methods than those who do. The translation of Seiki Shimizu's book is worth a thousand times more than all the American imitations put together, Nison's especially.