i can't believe it but i'm going to defend don bright. in the world of "professional firms" the example you blasted don about, i.e. (100 * 400 sh's per day) is very realistic. your comments about cuckoo land are totally unprofessional and lends no credibility to your argument. i've read many of your comments in the past and from what i can remember were insightful. i too have taken issue with some of don's comments in the past, but i feel attacking anyone on this board in the manner you did takes credibility away from the attacker.
Bryan, I stick by my comments... Don Bright was replying to Tony Oz (a home-based trader) and applying a yardstick of 100 trades a day from his professional daytrading firm... it is total nonsense for Don to apply a yardstick for a professional firm's trading frequency while addressing a home-based retail trader... Don's numbers may be indicative of Bright Trading and may even be indicative of a handful of prop. trading firms... but those numbers are certainly not "typical" across the entire universe of traders (and this is what matters, since Don was addressing Tony - a retail trader)... Don is totally incorrect to use Bright Trading averages in a reply to a home-based trader, in order to show the merits of trading at a proprietary trading firm. For what its worth, like Tony, I am home-based... I rarely do more than 5 trades a day... as a home-based trader, I am in the business of enriching myself and am under no compulsion to do any minimum volume whatsoever, in order to "keep my seat"... this allows me to cherry-pick, and maximise my profit:commissions ratio. As a result of having a 'permanent seat' (actually 2 seats; one in my study and one in my kitchen), regardless of monthly trading volume, commissions become a very minor consideration in my trading plan... the commissions I save at a professional firm on my average 5 daily trades (we are talking around a $50 saving, I guess) will be given back in seat fees and lifestyle issues, such as an aversion to commuting and a desire to be home-based ... and that's assuming a professional firm is actually even happy to have me (an 'undertrader') taking one of their seats instead of a massive commission generator (one of Don's 100 trades a day people). The only time I would consider trading at a pro-firm is if I could do it remotely from home and benefit from a great commission schedule, irrespective of minimum trading volume contraints... otherwise, I am happy to remain retail and do my 5 trades a day at slightly higher commission costs.
stoneroses posted a question a page back about the size an experienced trader can trader at Bright vs. say 30k in capital. Can you answer the same one in ref to wldc? specifics are always appreciated. Quote
You definitely need a series 7 and 55 to trade there. As for a deposit worldco is flexible most other firms are not. What you need to do is call worldco take a tour and interview with Walter if you have what it takes they will cut you a good deal.
I know a couple of guys who are interested but are not fluent in English. Are there any "international" versions of the S7? Also, does WorldCo offer trading on a customer basis as opposed to prop trading? (hence bypassing the need for an S7)
The series 7 I think is only given in english. Worldco does do retail but it is prime brokerage I think the minimum is a half million. Your probably better off teaching them english.
"But for the average trader who trades 400 shares at a time x 100 trades per day..." I can't imagine trading like that. The commissions would eat me alive, bones and all. Trading like that reminds me of a gambler sitting in front of a slot all day pulling a handle and watching their pile of quarters slowly disapear. Exciting but not profitable. I usually take a maximum of 4 or 5 trades a day and sometimes will go several days without taking a single one if I don't spot an opportunity. Why trade for no reason?
I think the idea of those traders who go 100 trades a day is that they are not concerned with commission and they see a hundred opportunities a day. For instance, you can be a retail trader, and make a few good trades one day, make a few thousand and pay up less than 50 bux or so in commission, but you are taking significantly less shots. Your profit to commission ratio will look nice, but prop/and professional traders rather give up commission so as to have greater coverage and higher net at the end of the day. I've seen prop trader's P&L's where they pay up to $5,000 in commission in one day, but net $30,000 after. The idea is, if I can make 20g's paying up $5,000 I don't care if it is $5,000. What's more important to them is the bottom line. Same applies to the guy making $20,000 net, but end up paying $10,000 in commission. These guys will be like, "If I make $50,000 and I had to pay $20,000 in commission, i don't give a f*&k" Also, in prop and professional trading, multiple positions like this can actually serve as a hedge, and is often used to defense against a single catastrophic loss. Now, there's the idea, that to make size, you must go size. One can make $20,000 net retail trading, trading a few times a day and make it on say, $50 commission.. but that would assume that you would have to buy/sell one or two stocks, 10,000 shares each and hope for a one or two point swing. If you're daytrading like this in a retail sense, the risk to reward would be enormous. Tho in Swing trading, I think you'd have some more success as I've seen some people do it. Point is, alot of successful professional traders simply don't give a hoot about commissions. To them, it's just a vehicle or rather a requirement to get to their millions. stone roses
I've seen prop trader's P&L's where they pay up to $5,000 in commission in one day, but net $30,000 after. The idea is, if I can make 20g's paying up $5,000 I don't care if it is $5,000. What's more important to them is the bottom line. Same applies to the guy making $20,000 net, but end up paying $10,000 in commission. These guys will be like, "If I make $50,000 and I had to pay $20,000 in commission, i don't give a f*&k" One of the dangers with a high churning, spray type strategy is that when you are just gross even or slightly profitable for the day, that low profit-to-commission ratio hurts. Using the above example, you make $2k gross but pay $5k commissions for net $3k loss. What if you had $5k loss gross, now add $5k commissions and you're sitting at net $10k loss. Now hopefully your up days are frequent enough to make up for your down days + acceptable net profits. If you have low profit-to-commission ratio (say 1:1) you need to maintain a high % winners because when you slip to slightly-profitable or break-even gross you will have net loss days. Obviously it call comes down to a probability/risk model and your trading style. I just want to caution traders who may think "I gotta pay commissions to make $" and overtrade without a method that has high % winners.