No, prop firms will always ( as far as I know ) add a haircut to the commissions they are charged from the FCM (s) they use. So, for example, if you traded 60K RT's per month and the firm collected a 5 cent haircut that would be $3K in revenue for that month. Plus, they want a desk fee. If there's a way that a prop firm can figure out how to take money from you - they certainly will.
Oh, absolutely. I've seen firms keep on traders for a couple years who could barely keep their heads above water in terms of "P&L".
I think thats pretty fair to be honest. Even with an extra 5 cents added to my RT my roundturns are still WAAAAAY lower than what I would be paying if I went direct through an FCM. If my firm does 200k roundturns in my market the exchange gives me the group discount plus their 5 cents. Its still decent business compared to the alternative. I get EUR.90 a round turn on Eurex (some people I know get 0.70 cents a round turn) thats including prop firm mark up. I pay a little over $2 a round turn on ICE (including prop firm markup) Maybe im totally wrong but I doubt I will get anything close to that if I went through an FCM directly. As for desk fees at prop firms its a mixed bag. Some places make a markup on desk, i guess its their prerogative, but I think traders are wise to that now. I know what my software costs are and if they put another £2-300 on top for IT support a month im cool with that. But if I saw a prop firm charging me any more than that above wholesale costs i wouldnt trade with them. My last firm charged me nearly £3k a month in desk. I now trade remotely and just pay software fees.
Well, we can probably conclude that Marex is up for sale not because they are making money hand over fist. There are at least a dozen Chicago futures prop firms specializing in automated strategies that appear to be doing well.
Do you know of any prop firms with traders using discretionary TA and DOM scalping that are doing well (while following tight money management rules like Top Step Trader) in this HFT era?
Are there many successful traders of this type who didn't start trading prior to the HFT revolution circa 2008?
Yeah lots. HFT's killed off one group of strategies but opened up a load of new strategies. It's about adapting. I started off in 2005 as a trainee just as HFT's were starting to become more prevalent and the old school traders wer dying off. Nobody had a clue what was going on but eventually people figured out the new rules to the game. Generally people don't trade as much as they used to. Guys used to do 70,000 round turns a month in bonds. Now they might only do 10,000 or less . But still make similar amounts. I think you have to be more selective now. HFT's boss those low volume low volatility days. But when it all kicks off the HFT's are there to be picked off. Most arcade traders (myself included) made our year off of the Greek stuff in June and the China stuff in Aug/Sep when there's real markets with real traders unloading and unloading positions. Then October was terrible personally. No real volume or volatility and the HFT's are back in charge. You just pick your battles.