Pro Firms

daytraderpete · Mar 17, 2004

Quote from Mecro:

LOL are you serious? Look it's not 1999-2000 anymore where any monkey can flip around size. Trading takes skill and quality trades. Churning size for 10 cents is not the way to trade if you want to make money.

I know a trader, in fact I spoke with him today, who uses less than 150k in buying power. His trading is so damn good that he can make a 1000 bucks a day on small 100-500 share lots and minimal number of trades. When I was turning profitable, I was able to make 500-1000 a day trading no more than 500 share lots. I did not touch my 150k buying power at all. Later I needed more BP because I was starting to trade more size and was trading more expensive NYSE names. I was also starting to take more positions at one time. But 150k buying power is more than enough for a skilled trader.
More...

Thank You. That was my point. Most traders are not skilled traders.Giving an unsklilled chef a bigger knife doesn't make him a better cook. Learn how to trade, you know how to use your BP.

YYNOTT · Mar 17, 2004

Agreed.

jimmyz · Mar 17, 2004

Way to go Mecro.....great point

I have sat next to the guys that swung the big stick in 98 and 99 but got killed in 2002 as the market changed.

They only guys I have seen that are still around are the great traders with a passion for the business, emotional and fiscal discipline. The size of the account doesn't matter. It all comes down to....can you find your edge and can you keep trading when the sh*t hits the fan.

You don't start with a big account and are therefore a great trader....you find your niche and either develop and refine your abilities. I know great traders that do trade size and others that stick to 500-1500 shares and still make a hell of alot of money.

Stick to your skill and push the envelope when ready. More leverage only makes a bad trader worse and a great trader richer.

YYNOTT · Mar 18, 2004

Oh yeah! Exactly what I am saying. Any trader who is good can come up from zero.

Oldtimer · Mar 18, 2004

Brokerboy wrote:

>>>>well i make money and i could not trade if i did not have firm capital. i also know alot of others like me so in the end people who can't do this will just be weeded out. so why do we have banks and creditcards and loans so people can use it as a tool right. i think thats the same thing a prop from does or am i crazy. lets be real there are people in this world who are going to screw up. so how will the guy who can handle it get his shot. also i don't understand you since you are saying basically part of your career you were wrong. maybe even worse your saying you proposely hurt people by letting them trade with alittle capital up so you can have nicer things. i just don't think you can go both ways. <<<<

Your credit card analogy is accurate to a point. Itâs true that leverage is like a bank issuing a credit card, and allowing you the ability to get in over your head. The difference, in my opinion, is that learning to trade with leverage is a process, with a learning curve and opportunity to evaluate your mistakes, correct them, and become a better trader. Credit from a bank, although an open invitation to overextend and screw up, doesnât lend itself to the same type of process.

However, the difference between a good trader who uses leverage, and the other washouts to which you referred, is their ability to handle this enhanced power and, to use it for good, rather than evil.

Regarding my personal experience in the industry, we actually had a high rate of success among our traders because we did modulate their use of leverage, and allowed them to make their mistakes without blowing themselves up. The unfortunate failures among our group were the ones who âalready knew what they were doingâ. In those cases, we hit the wall where we couldnât force them to liquidate losing positions, nor could we force them to learn from their mistakes.

As far as my former traders (both successes and failures), my partner and I maintained contact with most. Not all, but most. I didnât have it âboth waysâ in my firm. I offered the opportunity to learn a skill, and mourned those who didnât take full advantage. I never viewed my traders as âfilling a seatâ, and I think that made a difference. I'd assume a smart trader like you could grasp this.

brokerboy · Mar 18, 2004

Quote from Oldtimer:

Brokerboy wrote:

>>>>well i make money and i could not trade if i did not have firm capital. i also know alot of others like me so in the end people who can't do this will just be weeded out. so why do we have banks and creditcards and loans so people can use it as a tool right. i think thats the same thing a prop from does or am i crazy. lets be real there are people in this world who are going to screw up. so how will the guy who can handle it get his shot. also i don't understand you since you are saying basically part of your career you were wrong. maybe even worse your saying you proposely hurt people by letting them trade with alittle capital up so you can have nicer things. i just don't think you can go both ways. <<<<

Your credit card analogy is accurate to a point. Itâs true that leverage is like a bank issuing a credit card, and allowing you the ability to get in over your head. The difference, in my opinion, is that learning to trade with leverage is a process, with a learning curve and opportunity to evaluate your mistakes, correct them, and become a better trader. Credit from a bank, although an open invitation to overextend and screw up, doesnât lend itself to the same type of process.

However, the difference between a good trader who uses leverage, and the other washouts to which you referred, is their ability to handle this enhanced power and, to use it for good, rather than evil.

Regarding my personal experience in the industry, we actually had a high rate of success among our traders because we did modulate their use of leverage, and allowed them to make their mistakes without blowing themselves up. The unfortunate failures among our group were the ones who âalready knew what they were doingâ. In those cases, we hit the wall where we couldnât force them to liquidate losing positions, nor could we force them to learn from their mistakes.

As far as my former traders (both successes and failures), my partner and I maintained contact with most. Not all, but most. I didnât have it âboth waysâ in my firm. I offered the opportunity to learn a skill, and mourned those who didnât take full advantage. I never viewed my traders as âfilling a seatâ, and I think that made a difference. I'd assume a smart trader like you could grasp this.
More...

i am just having fun with you. most people fail in this business we both know. also i never met a firm owner who did not think he had a better rate of helping guys become successful. i never said that a guy should walk in the door and swing a big bat. i am saying leverage is needed to trade for most traders. i started with 100 shares and worked my way up. this is a game that takes years to learn but my point is on leverage. i could not buy 3000 shares of ibm without it for a daytrade.

jztrading · Mar 18, 2004

YYNOTT, I dont know daytraderpete but everything he said is positviely true I would just add when you check out firms check ticket prices because you dont want to churn yourself to death.Good luck

brokerboy · Mar 18, 2004

Quote from YYNOTT:

Ok somebody make the case for me. I put my money up to trade and get more leverage. Sounds terrific, however the more leverage, the more the loss. Obviously if you are starting with limited funds to begin with and most traders do when they go to a prop firm then leverage is ultimately the source of their demise as they are overleveraged and often pushed to trade VOLUME for the prop. firm.

I would be particularly interested in turnover rates at many prop. firms. To me if the turnover rate is high then basically it's a slow bleed to the death for a newbie.

If their are any prop traders out there with more than 5 years of experience let us know the positive aspects please.
More...

also oldtimer my comments came from what yynot was saying. he writes on here alot about not liking prop firms. he does not get it and so here i go. you put up 5k or 10k and you get a few 100,000 in buying power. so first the most you can lose is 5k or 10k technical of your own money(i no don does not like that comment). your commission cost is cheaper then any internet company or broker. you also get charts that most of the time the firm pays for and you also get fast execution. every trader needs to learn money management or you will fail. somebody tell me how this is bad.

Don Bright · Mar 18, 2004

Quote from brokerboy:

also oldtimer my comments came from what yynot was saying. he writes on here alot about not liking prop firms. he does not get it and so here i go. you put up 5k or 10k and you get a few 100,000 in buying power. so first the most you can lose is 5k or 10k technical of your own money(i no don does not like that comment). your commission cost is cheaper then any internet company or broker. you also get charts that most of the time the firm pays for and you also get fast execution. every trader needs to learn money management or you will fail. somebody tell me how this is bad.
More...

Actually "don" understands exactly what you're saying, and am aware that we (BT) assume a great deal of risk, every minute of every day, from traders who use our capital with very little of their own money up. I understand, and am glad that you are pointing it out...a lot of people complain, but for the most part, I don't see them putting up any money to help other people trade enough size to make a living....

Thanks !!

Don

Oldtimer · Mar 18, 2004

>>>also oldtimer my comments came from what yynot was saying. he writes on here alot about not liking prop firms. he does not get it and so here i go. you put up 5k or 10k and you get a few 100,000 in buying power. so first the most you can lose is 5k or 10k technical of your own money(i no don does not like that comment). your commission cost is cheaper then any internet company or broker. you also get charts that most of the time the firm pays for and you also get fast execution. every trader needs to learn money management or you will fail. somebody tell me how this is bad. <<<

5-10K with leverage can evaporate after one day of trading. as far as Don's altruistic response, about how he's putting up money at great risk, in order to give poor, deserving traders a chance, I know that Bob Bright is a brilliant mathematician, and that the firm has excellent risk management. The model they employ has every trader sitting in a trading room, constantly overseen in their trading activities. From my own experience, I can tell you that the house seldom loses in this scenario. I don't fault the message, that leverage provides opportunity, just the altruistic tone. Don, you and I both know that you are in the business to make money. If you do your job well, then you have very little actual risk exposure. If the trader comes in with 5 or 10K, he has very little chance of success.

OT