I was just curious to know if you ever ran a total on this to see what the ratio of commissions paid on utilizing this trading strategy to net profit of the traders using it on an annual basis. My wild guess will be at least 4 to 1, where if the total net amount the traders made in one year is $100.00, the total commissions charged by Bright will be $400.00. If I was a prop firm, I, too, would teach this strategy. Firm is at the lowest possible risk, yet commissions are coming in. Again, I would be very interested in your "honest" posting of this ratio. But then again, I don't expect you to disclose that. As to trading, I closed my QQQ position from yesterday +2574, I closed my ORBK from Friday +$13. I entered small positions in the following and closed them all: HAIN - New Kid Scan +521 MANH - Knock Down Scan +240 BBOX - Sky Scraper Scan +156 Commissions for the week about $200. I missed entries on the following (I was a dick for a tick!) HSIC WEBX ENTU I slept in on Monday. We had a long weekend (lots of fun), so the only trade I took was QQQ short afterhours. Going golfing now, have fun with Greenspan
Actually we do our very best to train our traders to keep their costs to a minimum. That is why we don't encourage trading both stocks at the same time using some automated software strategy. This actually reduces their commissions by a considerable amount. As an overall business model, we have found it much better for the firms (and obviously the traders) to encourage individual money management, and to keep trading costs to a minimum. This way we keep the traders (since they are profitable) as opposed to trying to replace those who have not done well. If we were really as greedy as you may think, then we would have charged the "going rate" for the last 10 years as opposed to lowering costs to keep our traders doing well.
Don if you could please expand on this. If you don't feel comfortable posting it could you email me (dust247@pacbell.net)? I have put many hours into this type of strategy and was hoping you could answer a few questions. I track my price difference in excel and have an alert for when the price is 1.5 and 2 st dev's from the mean price differential over a certain period of time. The problem I run into are that the prices will often take 2-4 days to revert to the mean. Are your pairs trades overnight? How many pairs do you track? Could you list a couple favorites? Are there certain correlation numbers you require (.8+)? Thanks for any help you can provide. Dustin
ok so Don did give a little more insight to the "bright" strategies. My hat goes off. And here's my addition for those wanting to find correlated stocks...this comes from a Bright trader , or so he said he was... www.market-topology.com i don't do pairs, i don't have any affiliation with that site(it's form the UK i think, and I'm a native New Yorker) Now maybe it would be good for some other pro firms to share some strategies, not to the T, but maybe give us an idea of what their traders are doing. I think this is good not only for attracting traders who want to learn strategy, but it also shows that they have a good risk management department, and that they are less likely to have "rogue" traders(which was a cool movie about Nick Leeson too) Peace
I think we can all just ignore any more posts on the supposed subject of Bright Trading strategies. The thread(s) should be renamed Bright self-promotion. I'll summarize for those who haven't read the whole 9 yards: Bright traders make an absolute mint and pay incredibly low expenses, using the very best software and systems. They have secret strategies that involve buying low and selling high and also profiting from divergences in closely related stocks. It is one big happy family and they share all strategies with each other, but it would be inappropriate to reveal anything to the outside world.
I have pointed out www.market-topology before, and thanks for bringing them up again. Kinds weird though, only a small percentage of our pairs came from this service....but they are a good research tool. I agree that in the rather small "universe" of "real" traders that we can share information. Going back to my days on the trading floors, where we competed vehemently (while trading) and were rather secretive with our data (what vol, beta, theta, and all that stuff) that we were using ...it sometimes became a 2 edged sword. Often times I would share something I was doing with a new person, they would adopt the strategy, and I would forget about it. I would hear from them a month later and they would say "gee, I got killed with that "front spread" how did you do?" And I would sometimes say "well, actually I reversed it last week to a "back spread" when the put pricing went below fair value" (or something to that effect, you get my drift). So you can be a hero, or a villain for helping others at times. In these times when strategies sometimes change intra-day...it can be a bit tough keeping up (for anyone).
AAAintheBeltway, I would agree that the details of the strategies have not been explicitly given, but I do feel that enough general information on Don's firm's preferred strategies has been given, and I have read them with interest. For what its worth, here are my conclusions: 1) For the pairs strategy to work, a trader must have very significant trading capital. This is because (as Tony Oz has correctly pointed out), the commissions:reward ratio is likely to be very high for an intraday pairs trading strategy. The only way to mitigate the effect of this ratio is to have high trading capital, which will facilitate a net positive profit outcome. 2) For the given strategy to consistently work, sophisticated software and money management will have to be used and applied. It should be the case that Bright Trading has developed the software and money management approaches to a sufficient extent, given that they are still in existence. This is a definite plus point for Bright that it can provide to its in-house traders. I personally could not do the pairs trading strategy because my belief sets have moved to the larger timeframe (i.e. swings) and I am averse to paying a high percentage of commissions relative to my gross profits. For these reasons, I have evolved to a style that is modeled on the Tony Oz set-ups. Nevertheless, I think there may be merit in Don Bright's approach for very highly capitalised traders with a solidly intraday mindset. At the end of the day, it is up to the individual to introspect and to assess a) what kind of personality he has b) the extent to which the effectiveness of a given strategy is constrained by i) the amount of trading capital available ii) the commission generative propensity of the strategy. There are a plethora of strategies that can be aligned with one's personality and size of trading account: some strategies are complex, some simple, some intraday, some multiday, some intensive, some less intensive. When mapped intelligently to one's personality and capital resources, any strategy can prove successful. Just my 2 cents, Candle
Don Can you please explain what you mean by 'real' traders. I respect every trader whether they trade in an office or in their pyjamas, whether they trade NYSE, NASDAQ or Pork Bellies, whether they trade a $1000 account or a $1,000,000 account. I consider them all 'real'. The only traders that I don't respect are the ones who show disrespect to others. I was considering looking into trading at a Bright office as it's the only game in my town, however I decided to take the pyjamas route after listening to either yourself or your brother (sorry, I can't remember which) trying to give a recruitment speech at last February's NY Expo. I got up and left (leaving only one other person listening to you), when I heard you ranting and raving about how every firm and every vendor at the Expo was out to rip us poor gullible trader wannabes off and that your firm was the saviour who would gladly take our commissions and show us the right way. I consider myself a 'real' trader even although I don't trade with Bright. I consider every trader in this forum a 'real' trader (except TraderX). Please give myself and others the respect that we deserve and perhaps your firm may get the respect that it deserves. One more question: Did you decide to visit and post in this forum in order to discuss trading and to share your knowledge, or, in the hope that you may be able to recruit a few amateur traders and turn them into income producing 'real' traders?
Don isn't such a bad guy. He expressed numerous times to email or call him for details. Some may disagree but I don't see anything wrong with not wanting to post detailed trading strategies here for the world to see. Don quickly emailed a reply to my earlier post about pairs trading. I suggest if you want to know more call him. And if you don't have anything nice to say...well you know. Dustin
>Some may disagree but I don't see anything >wrong with not wanting to post detailed trading >strategies here for the world to see. Then don't start a thread on a public forum with a title which says that this is precisely what you desire to do. JB