This is precisely the pt. Daytrading firms in NYC who put up money make it very difficult for thier traders to make money because they don't evey allow them to take on very much risk. A 22yo guy trading at a firm that doesn't require a deposit will likely pay around .01/share and have a profit split of 75% (to him). Then, the firm won't up his size until he demonstrates that he won't lose money over time. Same thing here only that even if the guy only made $50 per day, he's likely be thrilled enough to stay with you for years, whereas in NYC, they couldn't survive more than 3 mos of that. This is the sole reason behind the revolving door at daytrading firms in the US - it's not that daytraders necessarily blow-up (the firm putting up the capital rarely let's them get into enough size to do so)... it's just that after a year of netting 2k per month, they realize thier time is better spent elsewhere. My only pt is that this is the opposite when considering daytraders in India, trading a USD denomiated account sponsored by a firm.
Why the fixation on India or China? Why not focus on a market with a lower business cost, stable government, business friendly laws and lots of unemployed but somewhat educated people? If warm bodies and cheap operating costs are key then Vietnam might be a good idea. Also, you might be able to start your biz by striking a deal with a prop where you can get overrides without a physical location. There have to people in these countries with their own pc and connection that haven't been exploited yet.
It's always an issue when mulling over a business idea whether or not you want to go full boar into it and put up money to open an office, pay traders a draw, and get the requisite infrastructure up and running... But, if you do a half-assed job of opening a firm or try to just recruit remote traders, your chances of success over the long-term would be smaller if for no other reason than if the traders smell BS, they won't trade with you to begin with. Additionally, as a competitive space gets more crowded, the more shoddy established ones are the quickest to go - despite the fact that startup costs are low. Example would be in NYC. Tons of daytraders have thier own "groups" within trading firms. Sure, they make money on commission rebates, but they aren't making near what they could make were they to open an office and establish themselves as a reputable operation. But, here in the US with incomes being so high, which leads a daytrader after about three months to quit once he realizes he isn't going to get rich daytrading, coupled with very high rents, coupled with the compeitition from established firms, the risk/reward ends up on the side of just establishing a shoddy "group" within a daytrading firm - not much risk taking on trainees if you're already trading yourself. So, my sole pt then nets out to be that I believe India to be wide open as a function of thier captive audience, and per capita income being so low as to basically guarantee that everyone wins: The Indian can make his $20 per day while churning away hundreds of dollars in commission per day. And if you establish yourself on the high-end: Solid technology, financial stability, etc, then as the field becomes increasinly crowded and margins begin to shrink, your firm will be affected less. Just think about how you differentiate between say, SwiftTrade and Schony.
CutsThrough: Its important that you have a Local person to help you establish this business, as India can be the land of cheats, just like any country. I think you can be successful, I would suggest visiting India to get a feel of the rules and regualtions first hand. Many people here will offer advice, but mostly that advice is pure speculation. Do you speak the langauge? If you need help in that department I can offer some guidance and contacts.
i currently, i am in the middle of setting up a shop. not a prop firm, because prop needs 10x capital. prop model is mainly making money off commissions. it is no way to control fools to trade on my capital. my plan is to hire programmers to do automated trading, or use programers to pre screen stocks. it is in my area of business. does not cost me much extra.
Read the Journal article about daytraders blowing up over there during the May selloff. That guy's goal of $10 a day means they're not trading our securities and they're not paying our commissions.
India.. a largly populated country... business there........... good idea Lots of business there, just have to know the intensity of the market. Lots of links, both locals and top levels..
India.. a largly populated country... business there........... good idea Lots of business there, just have to know the intensity of the market. Lots of links is needed, both locals and top levels..
I started day trading at one of the major prop firms in 1995 and did well after the initial struggle. I know one of the countries very well and I am currently living there. I am also interested in starting a trading firm in the near future, can you email me?
Cutsthrough, I am an indian national and I trade on the NYSE myself. Let me outline a couple of concerns that might clash with your business model: 1. The churning part you mention is lopsided as mentioned; because no-one would be long term profitable if she/he churns out a commission of 30 times ($280) her/his net ($10). Besides, would you be paying out 100% of his net? Would it not be more sensible (in terms of risk to reward) to provide the trader with a profitable model rather than hoping for him to get profitable on his own and in the meantime get smoked on the commisions which you can pocket? From a businessman point of view, i would like my trader to be loyal - read profitable - after all, he is the customer. 2. The per capita income calcuation is misplaced as most indians do not get past 5th grade of schooling and the per capita income is drawn down because of this. In the current scenario, no indian graduate would like to take home less than $250 pm home. The topline fresh out of college employee earns around $3000 (USD) pm. It could help if you could get your hands on the per capita income of the educated youth. On the positives, I like the way you think of providing decent infratructure for trading. New Delhi might not be a bad idea either, as most of the finannce related jobs are centred in Delhi or Mymbai. Mumbai has more of it, but the cost of living is higher in Mumbai and the traffic situation out there is crazy. Delhi also has a pool of talented educated youth ready to try out new endeavors. PS: please do not offer $67 pm as a deal. People might think you're joking