Thanks for your reply, alpha monkey,. From what I know only LCG and Candlestick trading hire traders (no salary of course) the others are just brokerages/clearing houses. It's one thing not to be paid a salary it's another to see 2500 euros taken out from your account every month no matter what. If they just scalp and being there doesn't give them an edge (after all Eurex is all electronic) most of these kids ( visited one of them, I only saw a bunch of 20 something) must have big accounts or be exceptionnaly talented.
I think most of them do take on traders, trainee or otherwise. GHF is an exception - they are purely providers of market access rather than an outright trading firm. That said, the arcades run on a business model not far off a brokerage. You're right most are young. Most will receive inhouse financial backing in terms of margin. Most probably take too much risk versus rewards. However, arguably every position will be stopped out after a maximum of 3 or 4 ticks market movement against - addtionally, all these firms have very active/aware risk managers. Consistency, a defensive approach, low comms & comparatively small size are perhaps the local's edge. Anyone agree / disagree?
What's your trading angle, senor - what do you find works? Anyone else care to share their favoured approach to making money? --Seriously hungover today, not good--
Personally I don't believe in scalping on a PC, if you are on the floor it's different of course. So I thought these "prop firms" (most of them are just brokerages IMO, the UK not having US style direct acces brokers) used other strategies, spreads or something more sophisticated than just shooting from the hip 300 times a day. I never considered scalping as an option. Tell me if you shoot for a tick or two, how do you know, the moment you are in, the market won't drop a tick? Assuming you lift the offer you are already down 2 ticks, so what do you do, get out? How many times do you get out with a 2 tick loss? how many times do you make 2 ticks when you could have made 5,10 or 20? At the end of the day you count your profit after commish (if any) in ticks... you probably grind a quarter of a tick per trade after commish... if you are really good
OK, You don't believe in scalping on a PC, but it sure can be done! What's wrong with scalping on a PC? Bandwidth? Exchange ping? I have a 1.5 Mbps dedicated always-on line that delivers at a super-fast ping. I can get in & out faster than any trader in the pit ever could with the wave of a hand! Sure I understand what you mean, the pit guys can see all the insti orders coming in and trade between the bid & offer countless times before the market even moves, and easily scratch the trade with just one tick against them - and do this 300 times a day. But electronic scalping isn't, by principle, that different - you only have much higher comms, but then if you're serious about scalping in very large size for a tick a time, then you don't do retail rates, you go with a seat and high-volume FCM, so you're paying $0.60-$0.80 per round turn on the CME, maximum. I can give you references if you consider scalping like that (!) And yes, you have a point with only a quarter of a tick per trade on the end of the day... But then there's plenty of round-turns!!! What was it just with Mark's DAX journal? He only averaged, what, ~$4 per trade (1/3T) at the end of the day, but he did several hundred RT, no worries, and showed us how to make 2-3K a day trading ~5 contracts. Why? Because he did some 700 odd roundturns (~120+ per contract)? I am a scalper myself, but generally don't do as many RT as Mark. Mark does over 100RT in the DAX opening, no worries. I do this much in about a day, over at least 6 hours of active trading. It's still scalping. Mind you, my highest #RT once was ~260 in a day, and this was with IB, and on the ES on top of that! Now I do between 60-120 RT a day on the DAX, and that index is banging full of small scalp opportunities. Yes, most trades are scratch trades or just a tick gain, but the "bigger ones" over several ticks make up for it. Small chickens do shit, too. Everyone his own style. Cutten, you are a scalper, right? How many RT per day do you do?
Actually my ballpark # of a 1/4 tick per trade after commish would still be very very optimistic. Someone averaging 40 RT per day ( I can't conceive more than 6 trades per hour, 1 every 10 min! say for an average of 2 min hold , on 8 hours of trading if you still eat lunch) on 25 contracts average would still land 2500 euros at the end of the day. Obviously that would be a very good day because I very much doubt you can average 2500 euros/day over more than a week or two with that size and frequency or even with more turnover for that matter.
It's all a matter of perspective I guess... But for the 25 cars average - I can't befriend myself with that. Why? 1) Why would one want to trade 25 cars a click to only make E 2500/day? That would be E 100 or 4pts DAX per contract per day. Would you be happy with that? I certainly wouldn't! Far too much leverage relative to expected return IMO. I hope you realize you're trading ~US$ 125K face value per contract. So you're effectively exposing a position of US$ 3.1M every day on every trade, just to gain E 2,500 a day? This really doesn't make sense to me. I believe if you trade like this, then you can't put enough money aside for other investments and emergencies, such as the exchange crash which will inevitably come sooner or later in any futures traders' career. In this case, you're really better off going for longer kind of trades... And as said, Mark managed to show the same returns trading 4-6 contracts, which is a lot more realistic. 2) You can't scalp that effectively with 25 cars on the DAX, anyway, certainly not for single ticks! Best Regards
I am talking about what they are said to do in these London trading bureaus. I am sure a good portion of them make very good money but I am sure a lot of the folks there are lured by promise of riches and the appeal of being a trader, in London it's THE dream job for many. I have seen people on a presentation and lots of them were absolutely clueless about trading. It's not market making on a IB desk if it's freaking scalping IMO. I am surprised the FSA (local SEC) doesn't look more into these firms .