Ok, so you want to open an office (trading floor) some place to find, and teach new traders?.. great, however: 1. You dont have much experience, and are fairly new yourself..why would people pay to have you teach them, unless it was cheap? 2. Whats going to stop people from leaving you after you train them, and trade on their own? 3. What would be your primary source of income?.. commissions..or cost of training? cm
Thank you for your thoughtful response. I am in a southern state where there are virtually NO trading companies. We have 9 relatively large colleges within 3 hours of my target location, and I think that could be a good source of young, hard-working talent. My income will be based upon commissions. For instance, one firm I am speaking to sent me 3 year projections for their affilliate program. They are a scalping outfit (which is fine by me), and the income came from commissions. SLightly profitable by the end of year one (barely), but turning good profit by the end of year two) Oh, to address question number 2, nothing is to stop them from leaving me. That's a risk you always take when you teach others anything. With several good colleges around, I don't think there will ever be a shortage of people wanting to give it a go. I am learning there are a few trading outfits that are willing to give you a shot at opening an office. I may be naive, but I feel if I can learn their platform and get good training and mentoring from the firms existing traders and ongoing tech support (which they all say they offer), I can open the office and teach others the way I was taught. I am NOT saying I think trading is going to be easy...But if a company teaches you the fundamentals and you understand them, you could make it. And to me, running the business is the true goal here.
Did you think about the fact that a lot of college students dont have that kind of disposable income?..how much do they need to put down?.. a student living off ramen noodles probably wont have the money to "learn".. or "waste" as my parents liked to put it, on their trading activities. No to mention the fact their parents are probably paying for their college, so how would they explain to them that.. "hey mom..can u send me 25,000?"... if THEY are the ones paying for everything, then about every dime will go into living expenses or savings accounts. I like the idea but I think your target market is WAY off.
trading floor is a confusing term. To a trader this would mean the CBOT or CME etc. You say you don't know how to trade so that it seems you would bring capital to a trader. Based on the posts on ET there are probably only 10 or 15 guys I would give my money to. You could rent a space down at the board of trade and hire someone who is competent but this is easier said than done. The costs are a writeoff but finding trading talent to work for you is going to be a pickle. You can start your own prop firm if you are ambitious it can be done, but if you don't know how to trade how are you gonna figure out what talent is?
Bottom line is that Sue Smallbones said it best. The fact is that you are very late to the party. I don't know if you took business classes or economics but starting a trading firm has the following traits: A) Low barriers to entry B) Highly fragmented C) Saturated D) Decreasing profit margins No matter what some bullsh*t projections say by some firm who is just trying to skim your money, the reality is that there are few profits for new entrants. Most likely, you will lose some of your money and move on to something else. Whether it's trading shops or selling widgets, the particular industry environment leave little to be desired by those who aim to establish a growth business. Unless you have big capital reserves to play price wars or an extremely innovative approach, honestly, your idea is a waste of time. P.S. The college kid angle is very played out also. Most of them won't have money to put up and most of those that do, will probably lose it.
If you want fast money, the only angle i see is to open a chat room and charge a few 100.00 a month per member and teach them to trade. I know a few guys who do this. Of course they make SO MUCH more in a day, that the membership fees are small beans and they probably do it out of the kindness of their hearts rather than to line their pockets. ...of course you'd have to learn how to trade, and be GOOD at it..most dont ever get at that point.
Honestly, thanks for your input and your position on this matter has been noted. I do have a degree in business management with a minor in finance. It should be noted that I was refering to recent college graduates, not those enrolled living on "ramen noodles". That is not my only anenue for finding potential traders, but seemed like a logical choice. Any other takes? I do appreciate all those who have sent the helpful PMs. I will look into your suggestions further. I agree with a previous poster on the thread that there are probably 12-15 people on this entire site who are worth giving any money to, and that's a shame. I am getting a large number of PMs from helpful (I suppose) folks who have not posted on my thread. It appears the best way to get along on here is keep your ideas to your self and share helpful comments in private. All opinions are just that-opinions but will be used in my decision. Thanks for all the input (well, most of it anyway- Congo and I started a trading company in the Amazon, but it has been two whole days and no prospective traders ), and please feel free to keep it coming.
I have offered to be helpful on several occasions in this thread and I ask the same question all the time. What size capital are you bringing to the table? Itâs going to dictate what products you trade and in what ways you trade them. Do you have any experience in soft money deals, rebate trading, payment for order flow? Have you negotiated commission deals and incorporated them into platform deals? Whatâs your experience with clearing firms? Do you have your own b/d? Are you thinking about going the JBO route or straight reg T capital? Have you considered the tax structure for you and any potential traders? Are you versed in mixed straddle tax status and who gets it? Do you really believe that a fresh graduate is the kind of potential trader you want? Sure they may be hungry but the learning curve is steep and youâre going to have to pay a complete neophyte some sort of money to live on, with a low to negative expected return in the short to medium run. If youâre paying a company to do all of the above for you where youâre just looking for a turn key operation its going to be expensive and youâre going to be giving up a ton of revenue to them.