Survivor III "Day-trade firms that Last"

Discussion in 'Prop Firms' started by bmwstox, Nov 15, 2001.

  1. bmwstox


    It seems alot of firms come and go. Reading these boards & talking to traders, I notice we are all searching for that holy grail, i.e. Exceptional technology, payout, commission schedule, offices (remote & onsite) as well as a reputable name.

    I believe that in the coming years we will see which firms will survive and how we can harness that power as an industry to proliferate. Yes, daytrading has gotten some slack, but remember this: the most profitable Wall street firms, the goldmans, morgan stanley's & merrill lynch's of the world are all daytraders, whether they care to admit it or not.

    We as traders, owners of firms, etc. have the opportunity to make this work. Much like the mutual fund industry popularized itself in the past century. One step which all firms, daytrade & wall st. should take is to get lobbyists to repeal the "short-term" capital gains tax, (which is a scam). As well as educate the public on what traders do. There is great potential, our industry is still in it's infancy. So I am waiting to see, who will survive and set the standard for all us short-term traders. Any comments, questions or ideas, I'm at

    - B.W.
  2. There are few firms that have lasted through the initial phase of the industry. Bright, etg, schonfeld are a few that come to mind that have been around since 1992 or thereabouts. The firms that offer more to a trader than just a clearing firm, i.e training of some sort, risk capital etc. and more importantly the firms run by people who have been successful traders themselves through all types of markets have and will survive. The firms that offer just the lowest cost and are run by industry novices as a "widget" business cannot survive on margins that are so thin that a downturn in volume like we've seen in the past year doesn't allow them to meet their fixed costs. Those costs are enormous. More than we think. Gene Weissman briefly outlined them in another thread started by Andrasnm called something like "Why not just start a prop firm" The need for compliance, human resources, techies etc go on forever it seems. Gene's post is worth a read!

    In the old days, the only way to be a "day trader" was to be a floor trader like the brights, Kanter, and Weisman. They learned to trade from the old traders almost as an apprenticeship. They learned the culture of the industry and to respect the business. They learned that they weren't entitled to a living, but had to struggle for it everyday. A new trader can learn a lot from these people. In the short run it may not be cost effective, but over the course of a career, the knowledge these old timers can impart about ALL types of markets, not just momentum markets is enormous and compounded is worth millions.

    The firms like Bright, etg, Leiber Weisman or others that have good relationships with the regulators, that write op-ed type articles and push the trader cause help the industry as a whole. There will always be firms that offer the lowest costs and for many, those firms are the place to be. If you are on the margin in terms of profitability and the extra few mils will make you profitable then those firms are excellent. You may have to switch every few years. Some prefer to associate with firms that provide more than just clearing.

    While it may appear that some firms take advantage of traders by not charging the lowest cost possible, that is short sighted and often misguided. Those firms that are honest and clean, that interact with regulators, lawmakers and the industry actually help the "day trading" industry as a whole by keeping the business from being hijacked by the big (Goldman, Merrill, etc) firms that were astutely pointed out as being day trading firms too.

    Anyway, the community as a whole benefits from all types of firms. The ones in business the longest seem to offer the right balance between helping the trader and helping the industry. Some of the new low cost providers also fill a vital niche. As members of this often maligned community we must stick together and make our opinions known not just to each other but to the finance world as a whole!