Trading Arcades have had their day

[weakpunter]

weak punter - which fcm are you with?

parky - kyte dont clear business do they? last time i was talking with them, they only did execution - all the clearing was done by newedge. £38m is a lot of money for an out fit that keeps it's 'datacentre' in a converted broom cupboard above a pizza restaurant - next door to a brothel. lol.

@charliechan
Lol , parky loves talking up the arcades he thinks 38 million is a lot for a clearing company lets compare an FCM like RCG who are worth about 400 million.
then lets go down to the premiere league arcades .you all know who they are no need to mention names, theyll be lucky to be worth 5-10 mill, the difference between the Uk and stateside is in Uk thses arcades go to the Mfglobals/fortis´s etc etc to get a deal to then sell on to you the trader , because the likes of those big Brokers/ clearers are not competetive to the average intraday trader jobbing the market, too much margin too expensive commission..so they rely on the arcades to plow the field, in the US they dont need arcades thats not saying there arent any, but the difference is that the likes of RCG or PGF will offer deep discounted commissions and low intraday margin, coupled with umpteen hosting/platform/algo/connectivity solutions and cut out the need of an arcade to service the needs of high frequency or intraday traders, coupled with superior customer service, multi lingual trade support. and a much broader spectrum of exchanges/products/platforms, with the surge of cheaper technology and communication over the last 5 years and the heavy investment in data centres, they can offer you the same ability to host your trading as you would get sitting in an arcade, I speak to American traders all the time and they laugh when they hear english traders pay desk fees of around $40,000 per year, they think we are fools.

 

[gmarx]

You keep adding a split, as I said above if you willing to leave sufficient capital on your account no split would be applicable at some trading rooms so you keep 100%. You also keep inflating the desk costs to £ 2,500, they range from £ 1,500 upwards, of the 75 traders we have in our central London office, only two or three pay £ 2,500.00 and they have enormous rigs and make full use of the onsite IT.
However you are right, commuting is a pain, I was 20 minutes late again this morning courtesy of network South Eastern, where is that lottery win when you need it!

Sorry Parky but I was at a well established arcade up in Liverpool street and there werent any desk fees for 1500 with platform etc. I was paying 2100 pounds for x trader 1 exchange with x study and when I asked them about a 100% account they said I needed 20 k streling in my account for 30 bobls, where Iam now I got 20 Bobls for 6500 pounds roughly and 100% of my profits.

 

[Parky]

charliechan,
No they don't clear but GFI want to self clear and KYTE have lots of experience and like their competitors don't self clear because they do not have the balance sheet and there is no commercial advantage in them doing so as the rates they get from Newedge are very low.
However with the new drive towards everything being exchange traded and the volumes GFI already have it makes sense to by the expertise and diversity of a company like KYTE and then go self clearing which is exactly what GFI are going to do.

 

[Parky]

gmarx,
Obviously I cant talk for others but we charge £ 950.00 for a desk, a one exchange access via TT is US$ 625.00. So you can see a one exchange trader can sit down for £ 1,500.00 per month, but obviously a TT Pro for example costs more because that is the way TT charge, nothing to do with the Arcade.

 

[gmarx]

gmarx,
Obviously I cant talk for others but we charge £ 950.00 for a desk, a one exchange access via TT is US$ 625.00. So you can see a one exchange trader can sit down for £ 1,500.00 per month, but obviously a TT Pro for example costs more because that is the way TT charge, nothing to do with the Arcade.

Yes terrific I think NOT, what about VAT and even if thats right thats a 1000 pounds more per month
than Iam paying, Iam paying 500 pounds or all in 780 odd pounds if I want to have a desk in their office with a leased line and x-trader , and what about my 100% owned account with 20 Bobls for 6500 pounds??

 

[Parky]

I wasnt trying to compare trading from home, obviously that is cheaper and as weakpunter has already identified you save on the commuting as well. But yes VAT is applicable so £ 1,600.00 including VAT.
But again there are cheaper front ends than TT, that tends to be the platform of choice.

 

[gmarx]

Yes, I was offered a free platform also but just stuck with what I know, I know there are some really big traders that dont mind paying 2-3 k per month because they are making 50 k a month. I took my first draw at the new place yesterday of 5 grand which would have been 2800-3000 k at the old arcade I was at and Iam chuffed to bits and can treat the GF to a weekend away . Just think this has done me a favour and I know its not huge trader money that ive made but it means a lot to me and it has a big impact on my quality of life.

 

[pboyles]

Parky,

I'm currently trading about 10 contracts on the Bund, Eurostoxx and occassionally on the ES as well. To date I havnt had any major issues with slippage, I always enter/exit on a limit/stop order. At what point, in terms of contracts traded, would I start to get slippage? When I get to that point what,if any, advantage would there be to coming into an outfit like yours? I'm assuming it would only be connection time to the exchange and I see some people are even disputing that.

This is a serious question I'm not trying to wind you up. At present there's no point me considering such a move but I'd be willing to look at it again if/when I am trading bigger size.

 

[Parky]

gmarx,
Congratulations, despite all the hot air I don’t think weakpunter and I have a real issue, working from home works for some and not for others, the trading rooms, or "arcades" offer a choice or alternative but as you say for you they are too costly for you and you are able to make money remotely.
I wish you continued success.

 

[weakpunter]

Yes I concurr with Parky we are only having a bit of banter and there is no real issue with us Ive even had the odd frappucino with him at the coffee shop down the bottom of old jewery in the ole days lol, and as the man says its down to choice at the end of the day.

 

[charliechan]

Don't forget chaps- if you sit in an arcade, you have the advantage of being told what to trade as the arcade will get better discount on some products, and you have the advantage of having other traders mouthing off their worthless opinion about which way the markets going.

if you're really lucky, you will find out youre not in fact there to trade at all, but to provide liquidity at a scratch, simply to live off exchange rebates - another favourite trick, especially among kyte arcades - i wont mention names

 

[weakpunter]

Don't forget chaps- if you sit in an arcade, you have the advantage of being told what to trade as the arcade will get better discount on some products, and you have the advantage of having other traders mouthing off their worthless opinion about which way the markets going.

if you're really lucky, you will find out youre not in fact there to trade at all, but to provide liquidity at a scratch, simply to live off exchange rebates - another favourite trick, especially among kyte arcades - i wont mention names

Good point Charliechan,

Defo some arcades will only let you trade spreads for obvious reasons , there are others that wont let you trade a particular exchange or if they do then they create problems i.e increase rates ....they also only offer limited amount of platforms etc. yes esp for the guys giving some profit away they defo want you to do whats in their interest.

 

[Pento]

Think everyones giving Parky a hard time here.

Yes arcades take 30-50% of your profit but they provide you the margin with which to trade. In these volatile markets if you blow up its the arcades money you'll lose (after whatever trading profits are sitting in your account from before) rather than your own £20,000 hard earned deposit.

In all of the cases where you put down £10,000 and can trade x bunds/bobls/schatz when you lose money it comes out of your £10,000 first and then comes out of the arcades pocket after that.

Trading on a floor is very different to trading remotely from home. Very different. Yes you don't have some idiot talking the market up/down next to you and shouting out how wrong the market is etc. But this noise can help in your own trading sometimes. It can give you a sense of what and how other people trade.

IT. Don't know enough about the speed of filling trades at arcades vs at home. But at home or at a shared office rental you don't have IT staff on hand when the system freezes, power goes down, your computer explodes next to your balls etc. This IT support is worth a lot in my opinion.

I don't work for an arcade. I just wanted to balance out all the arcade hating in this thread. Now that I've rebalanced the force I'm happy.

 

[weakpunter]

Think everyones giving Parky a hard time here.

Yes arcades take 30-50% of your profit but they provide you the margin with which to trade. In these volatile markets if you blow up its the arcades money you'll lose (after whatever trading profits are sitting in your account from before) rather than your own £20,000 hard earned deposit.

In all of the cases where you put down £10,000 and can trade x bunds/bobls/schatz when you lose money it comes out of your £10,000 first and then comes out of the arcades pocket after that.

Trading on a floor is very different to trading remotely from home. Very different. Yes you don't have some idiot talking the market up/down next to you and shouting out how wrong the market is etc. But this noise can help in your own trading sometimes. It can give you a sense of what and how other people trade.

IT. Don't know enough about the speed of filling trades at arcades vs at home. But at home or at a shared office rental you don't have IT staff on hand when the system freezes, power goes down, your computer explodes next to your balls etc. This IT support is worth a lot in my opinion.

I don't work for an arcade. I just wanted to balance out all the arcade hating in this thread. Now that I've rebalanced the force I'm happy.

@pento Apprecite your contribution, but sorry your very wrong.........things have changed nowadays. Let me address the first thing you said about giving you "Margin" or leverage,well the point is you can get the same leverage without being at an arcade 4:1 (Point 1) . Point 2 they are not going to let you lose 10k nowadays they will stop you out when you have 1k left in your account and tell you to give them money or leave the company.I have a suspiscious feeling you are probably referring to newbie grad programm recruits, well check out parky´s statement earlier on that most arcades have stopped them because they dont work and for your knowledge parky´s in charge of one of the very well known arcades. Lastly on the IT front as I have mentioned numerous times already if you are with a quality FCM you get all of the same treatment ,they have back up power supplies, if you freeze up you call they answer first ring and pull your order or get you out manually if necessary, but if a pc blows up on your balls then the last thing you´d care about is your PC LOL !. Sorry mate you´ve rebalanced nothing as firstly if youve never been at an arcade you dont have the experience to know enough to make such comments, and lastly I was addressing the experienced locals who stump up 10k to go and trade.......not really about grad programm trainees who granted will obviously go to an arcade because they dont have any money of their own to trade , Iam saying this because you mention 50% splits and there are no experienced traders that would go on a 50% split, so nice try ! but your arguments and statements are irrelevant to this thread and even wrong and this is not Arcade hating but a discussion really on the different choices and options out there for existing actively trading locals!!

 

[A Dashing Blade]

. . . I'm currently trading about 10 contracts on the Bund, Eurostoxx and occassionally on the ES as well. To date I havnt had any major issues with slippage, I always enter/exit on a limit/stop order. At what point, in terms of contracts traded, would I start to get slippage?

Depends on time of day obviously, but even at around 50 lots during "normal" hours I wouldn't expect more than 1 tick slippage on those instruments.

When I get to that point what,if any, advantage would there be to coming into an outfit like yours? I'm assuming it would only be connection time to the exchange and I see some people are even disputing that.

None imo.
If you got top that size your trading style wouldn't be broken so why try to fix it?

 

[pboyles]

Depends on time of day obviously, but even at around 50 lots during "normal" hours I wouldn't expect more than 1 tick slippage on those instruments.

None imo.
If you got top that size your trading style wouldn't be broken so why try to fix it?

If I can get to 50 without major issues then I wont be going anywhere, thanks for the reply.

 

[Pento]

@pento Apprecite your contribution, but sorry your very wrong.........things have changed nowadays. Let me address the first thing you said about giving you "Margin" or leverage,well the point is you can get the same leverage without being at an arcade 4:1 (Point 1) .

When I say "margin" I mean the deposit placed with the clearer in order to allow you to trade. I don't dispute the amount of leverage you can get at arcade vs FCM

Point 2 they are not going to let you lose 10k nowadays they will stop you out when you have 1k left in your account and tell you to give them money or leave the company.

I don't think that is correct at every single arcade. Sure some of the less reputable and less well capitalised will probably take this approach. I have heard of people being cut for less than 5k down. But I also know others who are able to go down a lot lot more than this and not face being cut. It's a case a case situation. The arcade won't cut someone when they are 10k down if they can see the trader is able to make that money back for them. Simple business decision.

I have a suspiscious feeling you are probably referring to newbie grad programm recruits, well check out parky´s statement earlier on that most arcades have stopped them because they dont work and for your knowledge parky´s in charge of one of the very well known arcades.

Correct I was referring to newbie grad programs. Sorry if I've taken this thread on a tangent because of this, but I'm sure a lot of grads will read this so its fair they get every side of the story.

Lastly on the IT front as I have mentioned numerous times already if you are with a quality FCM you get all of the same treatment ,they have back up power supplies, if you freeze up you call they answer first ring and pull your order or get you out manually if necessary, but if a pc blows up on your balls then the last thing you´d care about is your PC LOL !.

It ain't blown up on my balls yet, lucky so far! But it does get awful hot under the desk! Ok you can call the FCM and they will get you out of your position just like at any arcade. However, IT does a lot more than that. When starting out from home you need the whole trading kit and have to set it up a network etc. I know that isn't too hard but IT do it for you. They build the PC's, keep them maintained and upgrade stuff when needed. If the PC does explode then they have a spare one rather than me having to call Michael Dell and ordering another. They install and update the trading software as necessary. They sort internet issues out quickly, compared to me calling up Richard Branson and asking why my torrents are downloading. If and when there is an issue I'd prefer for it to be resolved quickly so I can get back on with trading rather than spending hours sorting it myself and then consequently losing out on a few hours trading.

Sorry mate you´ve rebalanced nothing as firstly if youve never been at an arcade you dont have the experience to know enough to make such comments, and lastly I was addressing the experienced locals who stump up 10k to go and trade.......not really about grad programm trainees who granted will obviously go to an arcade because they dont have any money of their own to trade , Iam saying this because you mention 50% splits and there are no experienced traders that would go on a 50% split, so nice try ! but your arguments and statements are irrelevant to this thread and even wrong and this is not Arcade hating but a discussion really on the different choices and options out there for existing actively trading locals!!

I am a local. I have worked at an arcade and from home, so feel I have enough experience to make comments about this topic. I've never used an FCM so can't comment or dispute anything with that. Fine that you are addressing self funded locals, but I think this topic also affects the new grads or current grads on arcade schemes.

 

[weakpunter]

Ok point taken , you just hadnt made any reference to the fact that you had been at an arcade hence my answer, but if you want to talk about grads or grad schemes then to be honest with you unless you are in such a position that you absolutely have no money and you are one of the 3 % of applicants that get taken on at an arcade grad scheme, sure go for it because the options are limited. I know and have traded most strategies that are taught throughout grad schemes more or less from basic outright scalping on price action to TA to multi exchange ARB strategies /calendars etc I could go on forever..these trades are not company secrets, neither is the theory and application of self discipline and money management, you can learn, read, come on T2W there are umpteen resources available for free throguhout the web. Practice on a simulator moreorless for free, in my experience and I had been a stalwort at arcades from their conception is that most grads will blow out not on the back of losing money but simply because they cannot keep up with the desk fees et all whilst they are learning the art roughly 80-90% of them,coupled with travelling to the city and living expenses it becomes very hard for even a promising grad to get profitable, even worse they then get put off trading by the experience. Please dont be under the illusion that grad schemes are giving you some secret holy grail strategies that are not obtainable elsewhere for free...........and at the end of the day if you open a small FCM account and are profitable and can demonstrate a decent P&L you can walk into most prop/arcades and then get backing at more advantageous rates than you would do in the first instance and save yourself having to probably cover 40,000 quid in desk fees and then your spins on top before you get a poultry 50% split. Also I must agree with charlie chan on a few points he made, In most instances you will be ordered to trade something thats particularly beneficial to the arcade as they have a particularly good clearing arrangement on those products or you may fall into the "new market blood category" where the arcade will receive free clearing on specific instruments and then charge you for them, LIFFE and EUREX in particular offer arcades these solutions of free clearing if they take on grads who havent traded before. I spoke with a pal that runs one of the most respected grad schemes in the city and he patently and laughingly said he couldnt give a stuff about the split as most there where unlikely to see a penny from their trading anyway.Arcades are just like any broker or FCM ......they want to make of your clearing thats it fullstop, so in that case Id rather give it to the firm that gives me the best service and charges me the least.

 

[weakpunter]

Sorry but I had to add a bit more reading back through your answer, downloading and installing TT or any other platform is childs play and besides reputable FCM´s will hold your hand and do it online with you if you ask them, are you serious trying to justify 2-3 grand a month for an IT guy to replace your PC lol , I could buy 3 spare ones every month with the kind of money spent on desk fees, also I suggest you read up a bit more on FCM sites about their IT support ,backup customer service and and hosting and connectivity, and silly quotes you made like calling richard branson or Michael Dell are ludicrous , I have a deidcated or leased line indoors Iam not using virgin or BT , I have full IT support instantly if I need it , its not like your IT man in the arcade can do much if all lines go down, your in the same boat as me, youll be queing in a line with the other traders at the arcade begging the broker to pull your order......I would have had mine pullled whilst your still standing in a queue, and about PC´s blowing up cmon how often is that gonna happen are you really saying that warrants the exorbitant desk fee, never happened to me once in 12 years at arcades.
and lastly about going 5 grand or more down and them letting you carry on trading lol sure thats if youve done 100 grand in commissions before you went down.....try that one for size if you havent traded that much see how far you get and anyway your only 5-10 grand down because you are at an arcade and you wouldnt have been down at all if you were at the FCM becuase you wouldnt have been charged 40 k in desk fees for the year. Sorry cant accept your arguments seriously mate.

 

[gmarx]

Pento,

I got taken on as a grad a few years back , went down 10k approx in fees I clawed it back then spent the next 2 years in profit i had to make hundreds of thousands over 2 years to end up drawing roughly 30 k a year after all my fees, and they forced me into a trading spreads at the beginning, thats why I think I went down so think some of the guys here are right saying that the firms want you to trade whats good for them rather than what good for you.