Round lot costs at prop shops - 120p?????

[jtrend]

Round trip costs at prop shops - 120p?????

Hi there

I've been offered trainee positions at some prop shops in the city but don't know whether I'm being ripped off with regards to commissions.

After rejecting one daft contract I have spoken to the other firms about costs (because loads of you on here say this is more important than desk fees). One manager (cleared by Refco) started saying that it depended on volume etc. but mentioned figures like 50p/40p for round trip. Another manager not cleared by Refco said first 50,000 at 120p (that's some difference!) then dropping to 74p.

My question is....what sort of figures in commissions should I be paying to these firms.

Any help appreciated.

 

[eldrechr]

Firstly, it is a round trip not a round lot.

Shows you have absolutely no experience in these markets yet you seem to think you are entitled to the best deal on the planet.

Anyone who is putting up the money for you to trade, is risking a lot on the chance that you might be semi decent at trading. Therefore they will charge your round trips according to the risk they see, they need to recoup some money somewhere!! If you want to trade then you either put up your own dough or risk someone else's. You expect them to do that with no reward, get real!!

I trade thro Refco, probably the most professional outfit on the street. And i have been around the houses. I know a couple of groups within Refco umbrella, such as League, Futex etc and they are pretty tough to get a chance with especially for someone with no experience. If you have been offered something you might want to appear grateful , do you have any idea how many cv's Refco get. take the opportunity and then if you make good money you might be in a position to improve any deal with a year or so's track record behind you.

 

[jtrend]

Not a helpful post

I don't think that is a helpful post. I say that this is a trainee position. I have no experience in futures (equities yes, futures no).

I am not concerned at all in getting the best deal. I am, however, concerned about being exploited or ripped off as I hear nightmare stories about these prop shops and their new recruits. As the difference between the two (40-50p and 120p) was so great it would be stupid not to ask about it. If these figures are fair then that's not a problem but why are they so different?

 

[Verno]

Jtrend, in most of these places it will eventually depend on the volume you are trading. In addition initially you are likely to be trading small size and looking for consistency so don't expect to take home a fat wade of cash each month. Thus if your costs are higher and you are still making money after costs then you can be confident you can do it (so it is not such a bad thing pyschologically)

I would choose the firm based on the vibe you get and the training they offer and the sort of support you are likely to get.

Additionally you could always go back to the firm you like and say someone else has offered me 50p per round trip, are you negociable?

 

[eldrechr]

Joel,

I can tell you now. Refco do not negiotiate rates. Everyone here knows the rates, they are scaled so that the more you do the cheaper it costs, but everyone knows the benchmark. There is nothing worse than being at an outfit and sitting there wondering if the guy next to you has a better deal. I KNOW....

 

[mikeyk]

I'd say 120p (or is that 126p) per round trip is too much. Think the benchmark for someone setting out is about 90-95p.

 

[Anonymous]

It might depend on what type of facilities one gets while trading there. Are the facilities better than other firms? Are the computer equipment, software good, well serviced, etc.

I don't think such a position should be classified as "employment", describing it anywhere near employment is quite misleading if the trader has to fork out his/her own money, but if someone knows what he or she is getting him/herself into, granted some people do have characteristics that make them work better when given the impetus to do so, like, knowing that there is the possibility of getting into debt makes them work smarter to avoid getting into debt, etc.

Although deep discount brokers may advise: "Have An Adequate Financial Reserve, If you don't think you could go without steady income for six months or even longer, we do not recommend active trading as a career choice ".

 

[SHarrison]

when looking at the round trip costs at arcades, you have to bear in mind the actual costs to the company and what they are making from you. liffe charge 56p per round trip for trading euribor futures and a clearer will maybe take another 6p at the most so for you to pay 120p, they are taking a hell of a lot.

then consider that in about a year or so you may be doing 20,000 round trips per month and it works out at £11-12k per month to them for maybe a £20k initial investment in you. also consider that this may go on for a second year of your contract and that is a bit of a rip off?!?

admittedly the costs are usually on a sliding scale whereby the more volume you do the cheaper it is but you have to consider why they want you to do the volume and who really benefits from it.

i think that it may be wise to avoid anything over 90p and also consider that the trading alliance are now offering 70p or less flat rate regardless of volume for self backed traders, so the whole industry should be more competitive.

 

[bundbaby]

At the end of the day its only about being profitable - do that and then you can get a better deal

 

[TWI]

The Traders Clearing Alliance now offer round turn on Liffe at 64p that is what you need to compare it to. You decide if you are being ripped off now.
120p is robbery, you will not make any money for yourself.

 

[$spreader]

The Traders Clearing Alliance now offer round turn on Liffe at 64p that is what you need to compare it to. You decide if you are being ripped off now.
120p is robbery, you will not make any money for yourself.

I totally agree.I'm assuming that daily profits are calculated at arcades on the same basis as the rest of us i.e. ticks minus round trips.Paying that much per round trip is going to severely hinder any attempts to maintain consistent profitability.

 

[bundbaby]

Hi JT
Where are you thinking of going? Maybe i can give u a more rounded view?
regards
BB