Day Trading & Forex Forum

What markets are traded?

Depending on the methods being traded, professional traders operate in most all of the worlds futures markets. UK traders might typically follow strategies in the interest rate STIR futures - such as Euribor, or Eurex traded bund, bobl and shatz futures since these markets are all linked and move in similar ways that allow spread trading approaches to work.

Can I trade my own trading method at an Arcade?

If self funded... yes, you can pretty much trade how you like and benefit from the low transaction costs at an arcade. If funded by the arcade, then no, if using their money at their risk you must trade their method because they will have a consistent & proven track record and precisely understand the risk-reward ratio's for a new trader undertaking this strategy.

The good, the bad and the ugly...

Like in any business, be that the direct access brokerage or spreadbet firm you choose to use, or the garage you take your car to, there are the good deals, the average deals and there are bad deals along with the very occasional outright cowboy.

Certainly in the forums and when it comes to professional traders, you generally only get to hear about the bad deals or cowboys when it comes to discussion about arcades because apart from a few helpful Trade2Win forum stars, most traders who have an average or good deal are usually very busy happily making a huge amount of money and probably aren’t going to take much time up writing in great detail on forums about what a good arcade he is at and how much money he makes. Although the opposite certainly seems to be the case.

Dont let this slightly one sided negative press colour your opinion of all trading arcades in general. Trading arcades are designed and exist to cater for a particular kind of trader, just like retail brokerages and spreadbet shops cater for other, very different, types of traders - but for their specific customers the services provided by many arcades are generally very advantageous to them.

As with choosing an SB firm or a retail futures broker any pro trader worth his salt will also have a brain and know how to use it to read the terms he is being offered and ask the right questions to ensure he is getting a good deal from an arcade.

The most important considerations a trader will need to evaluate before joining an arcade are:

• Commissions – generally anything over £1 per round-turn is considered expensive.
• Desk Fee – what is included for your money?
• Contract duration – how long will you be tied in to a particular deal, commission rate or profit share for?

Anyone thinking of joining a graduate scheme as a trainee trader should take their time to read all the threads on this subject in the Trade2Win forums, as this site IS frequented by professional traders who trade at a variety of arcades and there is a wealth of information about what is considered a good deal and at which arcades you can find them - here on this very website.

Pelican West trading floor

The future for Arcade Trading?

The legacy of Arcades also being a profitable venture in their own right through taking a profit margin on commissions and desk fee's may not be a scenario that will continue for much longer.  Recently Refco Trading Services, formerly an arcade known as Mac Futures slashed their commission rates in response to the launch of a new venture called The Traders Clearing Alliance. The TCA are an association of member traders who operate on a “not for profit” basis – meaning they offer desk fee's and clearing commissions at cost, with commissions being a flat rate and not on a sliding scale. A development like this is going to change the industry forever since no Arcade is going to want to clear trades at cost, and high volume traders ultimately want the lowest costs for their trading. As more traders join the Alliance, their total volume will increase and their costs will fall still further – likely, the Clearing Alliance is set to dominate the entire industry and will almost certainly represent an exciting new development for professional traders.

In conclusion

For professional traders, a trading Arcade can give access to significant advantages and cost savings that you cannot get as an individual trader. For a graduate looking for a career an arcade can certainly be the launch-pad for new traders in a profitable trading career.

For more information:

Traderpedia Entries:  Trading arcade, Trading arcade index

Arcades Discussion Forum