The truth about trading arcades

[arjunr]

All,

My feeling is that anybody who feels suspicious and doubtful about the fact that arcades cannot guarantee they will make it as a trader, should probably not trade. I will however say that I welcome anybody to come up to the office for a chat with myself and our traders.

I am also happy to answer any questions on this board.

[email protected]

 

[Robertral]

All,

Just to simplify things about trading arcades.

I am a director at the Candlestick Trading Company and my name is Arjun Rose.

Our desk costs are £500 in both our Essex and Canary Wharf offices and this includes 2 pcs, 2 flatscreen monitors, telephone calls, internet, email address, usage of a 100mb leased line and access to our three trainer/analysts. I think everyone should understand that there is no profit in sitdown costs.

The truth is that there are two revenue streams for arcades, the first is the volume (mac based model) which means constantly expanding and getting more traders to do more trades and earning as a result. Or for a smaller company such as ourselves we rely on long term business from existing clients as well as training and retaining junior traders and taking profit share. Please understand that neither model is wrong and that arcades are still businesses.

My feeling is that anybody who feels suspicious and doubtful about the fact that arcades cannot guarantee they will make it as a trader, should probably not trade. I will however say that I welcome anybody to come up to the office for a chat with myself and our traders and will guarantee to give experienced traders a 30-day no risk, no cost period to try the bureau environment for themselves.

Obviously though, since I am offering something for nothing it becomes a sales pitch.... nature of the industry

I am also happy to answer any questions on this board.

[email protected]

That is very nobel of you to say the above...
I know many people that have joined an arcade and have had to sign a 2yr contract.....is that the same at candlestick???? Reason why I ask this is so that people wanting to move into arcades have a full picture......

My advice for people looking to trade in these arcades that haven't traded before is be careful......if you haven't got the expiereince then you will find the first year very very difficult.....

 

[arjunr]

re

That is very nobel of you to say the above...
I know many people that have joined an arcade and have had to sign a 2yr contract.....is that the same at candlestick???? Reason why I ask this is so that people wanting to move into arcades have a full picture......

My advice for people looking to trade in these arcades that haven't traded before is be careful......if you haven't got the expiereince then you will find the first year very very difficult.....

For those who are financed and trained by the company, there is a contract. This is because as you recognise, the trader may struggle for the first year and the company needs to know that there is a return at the end of all the training through profits after the first year. In a perfect world we would all rely on loyalty, but doesn't always apply!!

I agree though, I have seen a lot of new traders struggle for their learning period which I always suggest as 6 months. Obviously those who have some type of capital find it easier and often progress more quickly.

In my opinion, this is the nature of trading and I believe the facilities and training that an arcade can provide make this process much easier and encourage the best from potential traders.

 

[anley]

For most people that go into these arcades they never think that they're just a number there to work for the company, not the other way around.

I'm not complaining because business is business these days, but a lot of good people have been sacrificed in order to make the shareholders rich.

Good luck with your Candlestick firm arj

 

[TWI]

I think a lot depends on the arcade and what their transaction costs are.
Also for funded traders what the profit split is on top of the costs and whether rebates are retained by the arcade or placed in the trainee account.
How does this work for candlestick?

 

[arjunr]

re

Anley, I think that saying 'a lot of people are sacrificed' is a bit harsh, especially if they are being trained by and trading the company's money. Obviously the company wants all trainees to succeed!

 

[anley]

arj

Not so in my opinion. How many good prospects have been ruined (maybe not their own money but their careers) because they were pushed into doing more and more size? Even the best trader in the world will go broke at some stage if he continues to take on too much leverage in relation to his account size.

Lose 50% of your account and you've got to make 100% just to get back to breakeven, and as simple as that maths is, not many people realise it until it happens.

And so what if the good prospect does blow up, there's another 500 applicants all panting and dribbling for a job. "Trader" is a sexy job, right up there with movie star and fighter pilot.

Just telling it like it is, but don't think I'm a hypocrite because if I was a shareholder of an arcade then this is what I would likely do myself.

Remember the financial markets for 90% of people ALWAYS hang that juicy carrot out for you, it's always there always bright orange but to get a bite, not as easy as it looks.

 

[anley]

arj

If I was working in your business and employed 100 then this is how I would expect things to turn out.

2-5 people make a lot of money for you and themselves over the next 5 years.

5-15 people, make a very tidy profit for you and themselves over the next 5 years.

And the rest either lose, breakeven or make such a small amount of money that it's not worth their while to carry on.

As to who the winners will be, this is impossible to tell and one can make them take all the stupid tests that everyone thinks are so useful (can you divide 158458654 by 5.658 etc in under 5 secs, the answer by way of my calculator is 28,006,124.779 before anyone tries to get clever ) but in the end you'll just get a load of random data. Better to just let time take care of the problem.

So in the meantime if you know that a large percentage aren't going to be around then treat them like a number and make sure you get most if not all of the money that is invested in them back via commissions and bigger revenue numbers in your accounts, then who knows you may get some dumb commission merchant to buy your company out for about 5 times more than it's worth.

This would be how I'd run the show anyway.

 

[arjunr]

Anley

Anley,

I think that you are describing 'A' model which it sounds like you have experience with. But personally I don't think you can guesstimate success percentages, because you are dealing with individual people. Training traders properly costs money and on the numbers we bring in, we try our hardest to retain participants. I understand your point about pushing volumes though and we do not do this. I think you've got to remember that different bureaus are run by different people/organisations and like with any business you can't judge all on one model.

Arj

 

[divinci]

Arj

How do you train your recruits? Do you set them up with certain systems and rules they have to abide by - or do you give them the basics and then let them riegn free. Can they only trade stocks or can they trade options and forex?

Thanks,

 

[anley]

arj

Point taken, of course there's an A, B, C etc model, not putting your firm in any of the pigeon holes.

However I still believe that what ever training one gives those numbers are pretty accurate and have been proved over many years, even before arcades came on the scene. Ultimately it's down to the individual and that's the whole problem, you've either got something within you you can build on or you haven't.

I might spend 2 years being trained by Rembrandt but that doesn't mean I would be a good artist. The Masters had many students, a few very very good, some good, with the majority never destined to appear in the history books.

 

[TWI]

Anley,
I would like to mention that Trading Connections have never had a trader blow up their account and have retained all their graduate intake. It is true that different people have different abilities but so long as you follow the rules in a disciplined fashion you will make a living. Admittedly the people running the arcade make money out of you too, but they took the risk of setting the business up in the first place and they offer you something that you otherwise would not have.
All these businesses are not the same. It is the ones who you seem to be refering to that give us all the bad press.

 

[anley]

Twalk

Good for you and TC. Nothing wrong with the bosses making money out of their employees.

This then looks like being a very good thread for aspiring applicants to the Arcades because we seem to have defined two main camps.

Camp 1 - Where there's a very strong likelyhood that you're being used by the shareholders to 'make and increase the revenue numbers' with the added bonus that you 'might' get rich.

Camp 2 - Where you're activly in a partnership with the shareholders and they're not so worried about the numbers rather their plan is to invest in and help the applicants future.

Perhaps it's prudent approach for the applicants to interview and fully research the firms/shareholders just as much as the shareholders interviewing the applicants. Both need and want the other but often for different reasons.

TC looks from what you tell me to be firmly in Camp 2, maybe Candlestick as well - time will tell.

 

[BBB]

I think we've got to get real here.
a/ Arcades are not charities - what ever model they follow.
b/ I'm sure the 80/20 rule applies to the intake of traders just as any other line of business.

Nice one Arj. It's great that you are clarifying these issues as there have been many new grads on this BB wondering what it's all about.

 

[tieler]

CTC is a scam for new traders, its a trap and I'd be very careful if i were you

 

[wisestguy]

what exactly is a trading arcade ?

is this an amusement arcade ?

 

[zow]

Wisestguy.....
Are you serious?

 

[tieler]

if you traded for a living you wouldnt call it an arcade, trading is a serious and difficult proffession to do full time, where did 'arcade' come from?

 

[fastnet]

I wonder whether Arjunr is still reading this thread? If so I have a couple of questions about CTC and wonder whether he would reply?

a) Are you able to divulge details of the profit split you make with new traders on this board?
b) How does this split change with the capital traders provide? What if they could provide 10K, 20K or 50K?
c) What are the guidelines for position sizing and risk taking? If a trader didn't feel like trading for a week would he be free to do?
d) Are CTC looking for a daily, weekly or monthly return? How much of your stake would you have to lose before the traders ''parted ways'' with CTC?
e) Is the GBP 500 monthly seat fee fixed and across the board (is there a reduced fee for those bring capital?) -
f) is there a basic salary?
g) what profit would you have to make before you received a cut? is there a minimum. Please give a conditional example - I imagine it will depend on the capital share arrangement.
f) Do all new traders receive the same initial training? Is everyone trading the same system? Which markets are involved?

Okay - enough questions. I would be very grateful for quick replies to these. I consider them to be the most basic questions that anyone considering joining a company such as CTC should ask.

PM is okay if you prefer although where possible it's probably best to keep the discussion in the public domain so that others can contribute where appropriate. . .

Thanks, FN

 

[tieler]

I can tell you fastnet that ctc will ask you to put up £10k on completing a short training course in Euribor spreads. they say they also put up £10 k to make up a £20 key margin, however in reality what they are doing is more sinister: if your initial stake goes as low as £2k which isnt unrealistic as a beginner you will be required to put up more margin before they lose any of thier "£10k". You are basically taking 100% risk for 70% of profits. These profits are after paying allot more for trips than you should or would anywhere else.