it's a nice model for the underfunded but how do you intend to keep your highly profitable traders whom you are taking a 15% haircut?
Profitable traders have an option to leverage their time by getting paid for instruction flow...for something that they are doing anyway.... This is also a volume/commission question at .001 debit versus volume at outside firm rates...
Glad to see Don Bright was once again able to jump in someone else's thread and find the time to hype his firm.
Thanks....just trying to add some reality to the whole concept. Why bother with "what ifs" ...when all the serious trader really wants is a secure place to learn and hone their craft without putting up a lot of money. Heck, I thought this was a serious question for traders who have an interest in trading... As always, just trying to help.... Don
There are no barriers to entry for existing firms...the more...the better... This does however call for firms to move away from the front end approach in terms of their profit motivation...
I know I am going to get ripped for this, but here it goes. V, if someone came to me and offered me .01 there is no way I could walk away from that... I would run. I would rather pay more on a per share basis to be with a well capitalized and stable firm rather than go straight for a comm. cut. The bouncing around from firm to firm instigating price wars is pretty much over. Now, look at it from the firm side and not the traders side. What firm is going to basicly give away the comm. revenue when the margins are very slim right now as it is. That would be suicide really. Each trader needs a platform, order entry, access to ECN's, Direct+ (NYSE access), futures quotes, maybe a squawk box, maybe a bloomberg. Some of these traders will want multiple platforms and we haven't even touched utilities, technicians, compliance, etc. All this without a trading min. So, essentially you could trade 5k a day at .01 and make X a month with $50k in buying power. Say, the firm nets $500 at the very most, with the stars aligned in the right quadrant, off of this trader and this trader loves the Realtick platform, just to keep it simple. A RT Pro Plus with NYSE OB and some mini quotes would cost about $345 not including Xchange fees. So, theoretically, you would take in about $100 after everything was said and done. What firm would go through the trouble for $100 before the other costs. To make this work you need guys doing volume that you can calculate on a percentage basis relative to the exchange and CONSISTANTLY netting insane amounts to make it worth while. Trading remote is much different, but you will still need the majority of the things listed above. A trading firm is not UNICEF, they are not a non-profit organization. SLK is not going to clear trades for free because they had a sudden change of heart after bullets were taken away. A firm and a trader have to find a happy medium. I agree that comm. are very important for the trader. 1/10th over the course of a year can add up to a large sum of money. V, your theory is good, but it has to be rational. You have to look at both sides as I do.