Arcades - sanity check please

Arcadian

Junior member
18 0
What's more satisfying than a profit?

tsuntzu said:
I would look for an arcade thats gives you support to develop a trading style of your own, and learn to trade out-rights. More bang for your buck and, I find personally more satisfying.
 

TWI

Senior member
2,536 254
1 None of the guys I met looked me in the eye when talking to me. Is that normal? Does it mean what I think it means?

Don't be too hard on yourself I am sure you are not that ugly?

2 All the guys I met claimed to have excellent retention ratios: "We've only ever lost one trader."; "A total of two guys have left, I forgot when."; "Who we take on, we keep - we have a great community here." How true is that? (Draw your own conclusions from the fact that I'm asking ;-)

Depends where you went, varies hugely. Shouldn't make a difference to you. If you are not good, better you know about it sooner rather than later. I think it is reasonable to give most people 6 months before deciding one way or another unless they are obviously a "wrong un".

3 They are all dead keen on traders doing volume, volume, volume - unsurprisingly. They also all want it done in LIFFE Euribor - they're not keen on Short Sterling, Eurex Euribor, Globex Eurodollar etc. I suspect that's because LIFFE Euribor is a deep and liquid market with tight spreads and to make any money there one really has to do huge volume - in the other short term interest rates the spread is often larger and the profit/volume ratio should be better, which is against the arcades' interest - is that correct or am I missing something?

LIFFE Euribor is best place to tart for low risk spread trading, it is the most liquid contract on Liffe and has more friendly characteristics than Sterling or Swissy. Some places only trade Eurex bund/bobl/schatz as transaction charges are cheaper on Eurex. As for Eurodollar this is starting to look possible on CME but not liquid enough on Liffe. As I said before, it is about getting stuck in, volume has a relationship to PnL. You also will get rebates from the exchange if you make volume, I would hope most places pay that to the trading account and don't take it for themselves.

4 Some hold funds in segregated accounts, some in non-segregated ones. Does the difference matter in practice? (Yes, I know it depends on the, erm, quality of their risk management, but are there other pitfalls ?)

It should not concern you if you are funded, the risk is with the company.

5 What expectancy should one have for trading STIR spreads? Round turn costs for butterflies (four contracts each) vary from GBP3.20 to GBP7.20(!) between the folks I talked to, so assuming a 50% win/loss rate there isn't much potential when going for half ticks, right?

I would think as a funded trader you should expect upto ~£4 for a fly is OK. The costs should decline as your volume increases. You do not need to fly up all the time.

6 Is PATS really better than the rest? Does it have limitations regarding the number of orders like some other ISVs' software?

Definitely not. IMO TT and easyscreen are the best systems. Most people use TT but for calendar spreads it is hard to say which has the edge.

7 What's better psychologically, no capital backing and 100% payout or capital backing with a profit split?

The first is better as you will earn more due to no split and cheaper costs but you need to have the capital to put up. The latter is better for people starting out as they may struggle initially but by the end of 18months-2 years if they survive they will have learnt how to make a sustainable living with great upside and freedom.
 

wisestguy

Well-known member
471 0
a couple of points:

- it seems that arcades are just bucket shops which want " traders" to scalp in volume so they earn their comms .

that is the reason why you risk your own cap first before theirs comes into play , which I feel is more theorectical than real , since they can boot you out before then .

this is not an efficient way to trade as your profit margin will be razorslim , after the broker's comm and what you bucket shop takes from you , hence the need for VOLUME !

scalping is a perverted term these days and conceals a lot of hidden costs . to begin with , the best kind of scalping is when you are a local with direct access to one of the big exchange contracts - eg ) s&p , nekkei .

here your costs would only be exchange fees and discounted comms for locals , so effectively you could scalp all day and make money .

BUT before you even get to that , you have to buy a local's seat and that can set you back US 100k + .
yeah , so you are in the red already before you even start .

and don't forget just because you are scalping doesn't mean you can't lose , there are always big price gaps , false bids and offers and when you trade size, a few points slippage can mean losing A LOT .

- the best $ for $ traders, taking set up costs in account are swing traders with good risk control

kind of disappointing when someone pulls the wool back away from the old eyes , isn' it ?
 

wisestguy

Well-known member
471 0
oh yeah right .

anyone can bandy about generalised statements like - " that's rubbish etc " , why don't you back it up and then we 'll see.
 

TWI

Senior member
2,536 254
wisestguy,
The comments you have been posting on this board with regard to funded trader schemes is rife with generalisation and inaccuracy. I have tried to correct those on a number of occasions in the past but you obviously were not listening. I can only assume you have some axe to grind because nobody has been prepared to fund you, despite a letter from some dodgy spreadbetter claiming you are a market guru.
 

wisestguy

Well-known member
471 0
what a joke .

the guy gives no coherent explanation as to what he does and accuses me of asking for funding , despite numerous posts stating that I am NOT repeat NOT . I suppose it's because my comments put people off his dodgy " little schemes " , if so good , at least I am doing the trading public a good turn.

he then defames Finspeads , of whom he knows nothing of , since he is in America .
May I alert them to your opinion since you are so sure of it ?


you might try the same to me , as I am now in Malaysia , but the problem is that I have had a long association over many years with FS as client , and as a consultant , so I know them well.



" It is quite unreasonable for anyone to generalise all trading arcades / prop shops as being bucket shops. This just is not the case. "


maybe not ALL , but I stand by what I say and generalise that most are dodgy .



" Granted there are ones out there who have questionable business models and I believe these can be easily spotted with a tour of the facilities and infrastructure. "


No, I don't see how that can be , the best way would be in BB's like this , where people can discuss their experiences.


" In response to wisestguys comments about buying a seat on an exchange. With all European futures being screen based, locals seats are the desks in a trading arcade / prop shop, "


sorry , you are obviously not that experienced , SIMEX has a thriving business selling local seats at the exchange ( NOT some lousy bucket shop ) , for both screen and floor based locals.

I know I was trained there with BZW.



" and the costs of the business are of an order of magnitude to what they were when the products were floor traded. "

I would say that it would be more , being a local = exchange fees and discounted comms from the member firms , that's basically it , simple as that .

with bucket shops , you have all sorts of hidden extras , conditons , false funding schemes etc.

but whatever the case localing has a high INITIAL payout cost, which has to be factored in .



" I am very surprised that you would also say that you can only scalp the big contracts like the S&P and Nikkie, have you been down to the floor of the CBOT recently? are you aware of the daily volume of the Bund, US 10 year ext? "


why scalp/trade for 0 .25 points , when you can have moves of 150 on the Nekkei and S&P . silly


" These markets are scalped all day in many offices though out the world. "


so what , so are the Nekkei and S&P .


" I personally do not think that trading schemes selling spread trading are the best way to go about learning to trade but your comments here tend to suggest that your have an inappropriate screen name. "


Vince S seems to be doing ok
and a self important guy like you replies to inappropriate screen names ? yeah right , pull the other one .
 

Arcadian

Junior member
18 0
wisestguy said:
- it seems that arcades are just bucket shops which want " traders" to scalp in volume so they earn their comms .

that is the reason why you risk your own cap first before theirs comes into play , which I feel is more theorectical than real , since they can boot you out before then .

this is not an efficient way to trade as your profit margin will be razorslim , after the broker's comm and what you bucket shop takes from you , hence the need for VOLUME !

scalping is a perverted term these days and conceals a lot of hidden costs .

The good bit:
I have watched some short term interest rate arcade scalpers in action. Good (and lucky) ones averaged about GBP2 per round turn, less good ones about GBP0.50 per round turn, but all of them, even newbies, were profitable, which was impressive.

The not so good bit:
The higher earners were very selective about the trades they took and made fewer round turns, albeit with much higher average profit per trade. The guys earning less made about five times the number of trades, scratching lots more.

Since both types of traders used the same tactics, the ones with the fewer trades and higher average profit per trade clearly had the best risk/reward ratio. Arcade management, however, criticised them for not trading "enough" and lauded the high turnover folks for being "good" traders.

The whole thing is a viable business model, even with the skewed incentives of arcade owners. Having 90% of gross profit vanish in costs isn't nice, but 10% of a large gross is better than 0% of nothing.

wisestguy said:
kind of disappointing when someone pulls the wool back away from the old eyes , isn' it ?

Oh, I never was under any illusions. I can swim with sharks and dolphins. The dolphins are nice to me and I'm nice to them in turn. The sharks treat me with professional respect. ;)
 

TWI

Senior member
2,536 254
wisestguy,
LOL, the more you post the more you discredit yourself and hence your argument.
Incidentally I know exactly who finspreads are, Patrick Latchford, the MD, used to be head of Equity products at GNI.

Arcadian,
Not exactly true on the volume thing. Some traders actually trade for their exchange rebate and will end the month down on PnL. If you do 200,000 lots in a month on Liffe and drop 10k you will still receive something in the region of 40k in rebates. I can assure you that the more experienced tend to have higher volumes because they have higher clip sizes. New guys might start with 2-5lot clips rising to 30lots when they have a bit of experience, 50 lots when they start making money. Experienced spread traders will be always trading 50-100+ lot clips, indeed there are guys who will regularly throw around 1000+ lot clips. As you get better you are also able to cover more spreads at the same time and often people will cover 2 markets at once so you get more fills. I am not saying there is a relationship between volume and PnL because I am trying to persuade funded guys to make volume, I have no reason to say that here. I say it because I see the numbers every month and I so I know the truth of it.
It is bad if newbies think they are being ripped off and I would advise nobody to sign up to anything if they think that you must negotiate a deal you are happy with or not sign. If you are unhappy about the deal you are working with then you will not do well.
 

wisestguy

Well-known member
471 0
tzuntzu,


you might want to take a few lessons on how to use the T2W website too .

and I am sure you will post here again very soon , you won't be able to resist it.



arcadian,


10% of the large gross is better than 0% of nothing - this is from the bucket shoppe owner's point of view , yes ?



twalker,


well , if you prize being close to Mr. Latchford , as something credible , as your retort implies , then why the all this BS about " some dodgy SB firm " . either you think he / it is a OK company or you don't .

make up your mind , or rather drop the convenience of blowing with the wind .

that is the trouble with your type , very difficult to believe you , since you story seems to change to suit the hype.
 

Arcadian

Junior member
18 0
twalker,

As I understand it now there are three styles of making money from trading STIR spreads:
1 Form a view on steepening/flattening/convexity change of the forward curve and enter a position accordingly, then wait for days if necessary.
2 Scalp spreads with a view to either making half a basis point or scratching, every time, and hope that you make enough to cover your commish and overheads.
3 As in 2 above, but on such a low profit per round turn that you only make money after getting LIFFE's volume discounts.

They are all viable business. In your example, style 3 on 30k a month before desk fees is nothing to sneeze at. What worries me a little about it, though, is the very low profit per trade it implies.

Style 1 involves the highest risk of the three, but also the highest profit potential, so if you're comfortable with the risk it should offer the best return on capital for the trader. Styles 2 and 3 have the same risk per trade, but lower rewards. Style 3 offers the lowest reward, and is dependent on LIFFE continuing its incentive programmes. I wouldn't want to be a one-trick pony when that ends.

Or am I being too pessimistic here?

twalker said:
Some traders actually trade for their exchange rebate and will end the month down on PnL. If you do 200,000 lots in a month on Liffe and drop 10k you will still receive something in the region of 40k in rebates. I can assure you that the more experienced tend to have higher volumes because they have higher clip sizes.
 
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Strategic Trader

Active member
100 2
wisestguy

instead of being negative about issues you either know nothing about, or don't understand - why not take a step back - learn about the business, then learn about trading, and then make some good bucks and chill out - might take you a few years or so - but its worth it
 
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BBB

Experienced member
1,071 3
wisestguy said:
what a joke .


" In response to wisestguys comments about buying a seat on an exchange. With all European futures being screen based, locals seats are the desks in a trading arcade / prop shop, "


sorry , you are obviously not that experienced , SIMEX has a thriving business selling local seats at the exchange ( NOT some lousy bucket shop ) , for both screen and floor based locals.

I know I was trained there with BZW.


HAHAHA!

And the November award for ' I just shot myself in the foot' goes too.....


Drum roll.........



WISESTGUY!!! Well done!

Considering you were trained by BZW, I'm very surprised that you never realised SIMEX isn't in Europe!! What did you do for BZW? I'd also be interested in knowing how long ago that was.


Wisestguy - I think you should call it a day on this one ;) . Lets face it - if you did know anything about anything you wouldn't be spread betting would you!
 

wisestguy

Well-known member
471 0
strategic trader ,

learn the business ? have been in the markets as a paid pro for 5 years before I traded my own account of which I am in the top 20% at finspreads .

I think you flatter yourself rather easily , perhaps you shoud " sit back and learn as much about the business " .



>>Considering you were trained by BZW, I'm very surprised that you never realised SIMEX isn't in Europe!!


HAHAHAHAHA . DRUM ROLL .......

it's in singapore and it is a darn site bigger and better exchange than that piddly LIFFE , so what .

your foot must be blown right off by now.


>>What did you do for BZW? I'd also be interested in knowing how long ago that was.


you are in no position to demand so much , suffice to say I was in derivatives.


>>Wisestguy - I think you should call it a day on this one . Lets face it - if you did know anything about >>anything you wouldn't be spread betting would you!


not at all , most people here do SB's and to be at the top 20% takes some doing , given all the disadvantages trading tro SB's have .


jealous are some people , aren't they .
 
 
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