# Thinking of setting up a trading room



## amarcus (27 April 2009)

Hey guys,

I'm thinking of setting up a trading room in Melbourne CBD.

It would be an open floor plan that could accomodate up to 10-15 people comfortably. 

It will feature ADSL2+ wireless internet. Foxtel TV and live market news displayed over a number of flat screen TV's & projectors all round the office. 

The office will be fully serviced. Heating/Air con provided etc...

Traders will have access to the room at any time of the day. All you would need to bring is your own laptop/computer.

In regards to pricing, it will be something like $150-$200 per week, paid monthly. No contracts. No leases. Use as much as you like.


Would you guys use this? Any ideas? pros/cons? 

I would greatly appreciate any feedback you can give me...At the moment, this is only something I am thinking of doing...


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## Trembling Hand (27 April 2009)

10-15 traders downloading games, music and pr0n aint gonna be fast enough on ADSL mate.


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## The_Bman (27 April 2009)

Interesting concept - Trading is a personal activity and we're typically a cynical bunch so unless you had a group of 'mates' that would be happy trading in proximity to each other you might find it hard to fill the room.

I like the flexibility of mobile trading though prefer my home trading room of which I name the Nebakanezer from the multi-screen config - I hate trading away from my 30" LCD too long.


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## moXJO (27 April 2009)

Maybe in the next bull market when money is getting splashed around. I think you missed the boat.


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## waz (27 April 2009)

For me the biggest disadvantage of using such a service is that whilst Im travelling between home and the trading room I can't trade. 

Also, besides the cost of using the room I also have to factor in the cost of travel between home and the trading room, takeaway lunches, and the fact that I will be forced to wear decent clothes.

You also have to take into account that if the internet connection goes down, and it will, you will have 15 angry people claiming compensation from you. Whereas if they trade at home, they have no one to blame but themselves and the ISP.

For $10,000 a year Id be better off trading at home and lowering my profit expectations by the same amount.


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## cutz (27 April 2009)

amarcus said:


> Would you guys use this? Any ideas? pros/cons?




Hi 

It's already been mentioned but serious traders use multiscreen setups with backup internet, a laptop just doesn't cut it, also IMO wifi isn't the best, the internet has to come in on an ethernet connection.


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## jersey10 (27 April 2009)

cutz said:


> Hi
> 
> It's already been mentioned but serious traders use multiscreen setups with backup internet, a laptop just doesn't cut it, also IMO wifi isn't the best, the internet has to come in on an ethernet connection.




what is the difference in speed between ADSL2+ wireless and ADSL2+ ethernet? isn't that the same speed but wireless may have a tendency to drop out?  what speed is ADSL2+ and what is a minimum speed a scalper would require in a trading room such as the one amarcus is thinking of?
I think in many ways it is a great idea but also has its limitations such as those mentioned above in this thread.


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## Trembling Hand (27 April 2009)

As good as wireless is I wouldn't use anything but a wired connection. You don't want your data dropping out because the cleaning lady starts the vacuum cleaner just as they release the interest rate announcement.


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## Trembling Hand (27 April 2009)

If you where going to set up a trading room I think whats is described in the first post is a waste of time. This is what a trading room needs,

Internet connection - Fibre to the exchange. redundant ADSL & wireless back-ups
Dedicated desks with a computer capable of running 4 screens per desk at-least.
TT servers spread between say no more than 5 desks.
An IT person on during Asian markets hours.
Some sort of pooling of brokerage costs to get attractive rates.
Someone with real experience on how to take money out of the markets as a Mentor.
probably will add some more later.

But with that said you are probably looking at desk fees of around $1500-$2500 per month.


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## alwaysLearning (27 April 2009)

I'm just wondering what the point of the trading room is?

I mean, any of those traders could just trade at home?

The news channels are crap as well mostly but if they're desperate they can view bloomberg tv online live.

I'm just trying to figure out the incentive.

If it were one of those prop trading firms where a trader comes in and trades the firms money then I could see that being different. But this just sounds like an internet cafe thing for traders?

Or am I way off?


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## moXJO (27 April 2009)

I once traded with a group of people. We all had different methods, time frames etc. It was fine if you followed your system. The problem is everyone else's different opinions. In the end it started to affect my trading (own lack of discipline), and I became very slack in my reviewing. I was too busy bumping my gums instead of studying the market. Putting a group of traders in a room, that follow different methods = ego fight fest. You don't need someone else telling you "that’s a bad trade to take" before you take it.

As TH said having an experience mentor and similar method would be more beneficial


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## MRC & Co (27 April 2009)

Agree with TH.

Difference is alwaysLearning, you get cheaper brokerage (as it's pooled, more round trips means lower brokerage), the costs are pooled, so you can share certain resources, and particularly, since it's not prop, though you trade your own account and you risk your own money, you take 100% of revenue, minus costs.


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## alwaysLearning (27 April 2009)

MRC & Co said:


> Agree with TH.
> 
> Difference is alwaysLearning, you get cheaper brokerage (as it's pooled, more round trips means lower brokerage), the costs are pooled, so you can share certain resources, and particularly, since it's not prop, though you trade your own account and you risk your own money, you take 100% of revenue, minus costs.




ahh ok, I see now. Pooled brokerage would be good.


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## Naked shorts (27 April 2009)

I think it would be a good way for me to get out of the house, staying in the same place all week every week can get pretty boring. 

Anything but a fibre connection is a no go. And I agree with the others, there would have to be an accomplished trader there to mentor when necessary.


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## helicart (27 April 2009)

Trading ain't about the place, it is about the person......the confidence to pull the trigger that only comes with adequate understanding of the markets and risk management.

If you don't get in with a group of like mindeds in that trading room, as others have alluded above, there'll be a lot of unfocused thinking and gas bagging. 

Apart from that, a lot of smarties will want to trade the US, and it'd be a pain traveling to the cbd to sit in a room from 11pm to 6am. Why risk getting mugged on the train or tram doing odd hours. If anything, I'd suggest you set up in a garage at someone's house first up....or even rent a house in the burbs....$350 a week for a house with bedrooms etc, would be a lot cheaper than the cbd I should imagine. Rent a room to a caretaker for $125 a week, and Bob's your uncle. Should imagine you'd pay 

A commercial lease near the cbd I would imagine would not be had for under $250/m2 and more if you want car spaces, then throw rates, BC, cleaning, utilities, insurance, fitout on top. It's all overhead....

I'd suggest you stagger your idea....the thing you probably need most now is knowledge, systematic discipline, confidence, and an opportunity to socialize with other traders....you can get all that via trading groups or having social meets with forumites, at the pub.

If you need mentoring, there's several reputable types on the net who can give you a reading and study program, and trading signals via a newsletter....I have used some and they have helped heaps (Teresa Lo and The Kirk Report). Darryl Guppie used to be well regarded in Australia though I don't trade ASX anymore. 

Some basics authors to get started with:
Alexander Elder
Van K Tharp
Perry Kaufman

Until you've been blooded, understand how serious you have to take trading, have done some serious reading, and realize it is more about a dispassionate boring systematic approach, rather than a day at the races or night at the casino, no one experienced will be inclined to coach you.


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## nunthewiser (27 April 2009)

Personally think its a great idea only IF i can set up around 5 cubicles running along an unused wall that i can hire out by the hour for bored traders and other types of scallywags 

contract ALSO involves that i have the monopoly on supplying the ladies for said cubicles.


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## ivant (27 April 2009)

nunthewiser said:


> Personally think its a great idea only IF i can set up around 5 cubicles running along an unused wall that i can hire out by the hour for bored traders and other types of scallywags
> 
> contract ALSO involves that i have the monopoly on supplying the ladies for said cubicles.




Well if there are ladies I will come without trading  haha. As of recently, I'm looking


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## marklar (27 April 2009)

I can give you a hand with the I.T. bits (networks & security), it's what I do for a living.  Plus if it's in the CBD it would probably be walking distance from my apartment. 

PM me if you're serious about getting this going.



> Anything but a fibre connection is a no go.



Rubbish.

m.


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## Naked shorts (27 April 2009)

marklar said:


> Rubbish.
> 
> m.




Every other decent shop has a proper connection, why allow others to get an edge over you? Have fun with your lag.


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## ivant (27 April 2009)

Naked shorts said:


> Every other decent shop has a proper connection, why allow others to get an edge over you? Have fun with your lag.




But the ladies Nunthewiser will bring.... The ladies! Have those proper shops got those? .... I THINK NOT!!!


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## Trembling Hand (27 April 2009)

marklar said:


> > Anything but a fibre connection is a no go.
> 
> 
> 
> ...




marklar I suck about 300 meg of data between the Aussie market hours. Times that by 20 traders + the ones that goof off download non-trading related Stuff and you have some serious data requirements. Get someone who wants to run an Algo Bot and they will be needing a stack more than what I pull in data.

And this has to be with very little latency. You would know more than me but do you think a ADSL+2 would cut it??


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## marklar (27 April 2009)

Naked shorts said:


> Every other decent shop has a proper connection, why allow others to get an edge over you? Have fun with your lag.



I used to work at Telstra designing, building & running Internet gateways and Data Centres for Federal Government & large corporates.  I do know what I am doing.

m.


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## Trembling Hand (27 April 2009)

marklar said:


> I used to work at Telstra designing, building & running Internet gateways and Data Centres for Federal Government & large corporates.  I do know what I am doing.
> 
> m.




So you would say that the data requirements I posted above would be OK over ADSL?


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## ivant (27 April 2009)

marklar said:


> I used to work at Telstra designing, building & running Internet gateways and Data Centres for Federal Government & large corporates.  I do know what I am doing.
> 
> m.





Slightly different requirements. They don't need it INSTANTLY. Trust me, my parents are both in IT. My mother is a project manager in HealthSmart where they are updating servers. The requirement is not speed when you are transferring data. You have obviously seen how long an average sized Oracle DB works on a decent server. Running a bot has to be instant. With traders you can potentially be exchanging packages of a few GB a day. Lag will kill. I wouldn't risk it with ADSL if I was a day trader. For me though, I use a laptop and I don't need fast internet. For a day trader, like TH, I think ADSL will be a little slow.


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## marklar (27 April 2009)

Trembling Hand said:


> So you would say that the data requirements I posted above would be OK over ADSL?



I never said it would.  Doesn't need to be fibre though, there are other circuit connection types like Frame Relay to explore.  

It could be done with ADSL, you could bundle multiple circuits together with something like this.


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## Naked shorts (27 April 2009)

Not to mention having a sqawk-box running, multiple traders on youtube downloading interviews/bloomberg crap while watching Bernake/Trichet/Geither speak. 

This all needs to be without lag.



You could of course avoid this problem and only take in traders who's average hold time is 30mins+.


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## Trembling Hand (27 April 2009)

marklar said:


> I never said it would.  Doesn't need to be fibre though, there are other circuit connection types like Frame Relay to explore.
> 
> It could be done with ADSL, you could bundle multiple circuits together with something like this.




Thats why I'm asking. I don't know. You would. What would be the best. Thinking that 10 GOOD traders will pull 1 to 5 g's a day each in profit so cost cutting a few dollars would not be the focus? Lowest latency connections with high reliability would.


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## ducati916 (28 April 2009)

*Chap's*

After you have sorted out your nuts & bolts, you need to find a provider for execution and leverage. Not retail leverage, but Prop. leverage, viz *100+

If any of you are actually any good, this will obviously be important to generating high dollar returns. When I say high, $100K/day are the amounts I've seen.

If you trade the US, there are numerous providers.

jog on
duc


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## Beenjammin (28 April 2009)

amarcus said:


> Hey guys,
> 
> Would you guys use this? Any ideas? pros/cons?
> 
> I would greatly appreciate any feedback you can give me...At the moment, this is only something I am thinking of doing...




Interesting concept...the first thing to ask yourself is what need are you looking to fill, and who for? 

Are you looking primarily to:
*A) *Generate Income - run it as a profit making business for traders:
*B) *Get access to / provide mentoring - an atmosphere to bounce ideas off others and learn from each other - trading can be lonely & boring at times:
*C) *Something else?

*If A* - you'd want to define what gap there currently is in the daily lives of your target market and establish what they would be prepared to pay (both to you and any associated costs) to fill it. For example,a lot of traders would need a damn good reason to shower/shave/dress and face a city commute to do exactly what they do each day from their living room in their jocks (Apologies if I have stirred up any unpleasant mental images) with no travel time - this is a personal cost in addition to what you would charge. A good trading library, professional speakers, courses, discounted data feeds, strategy reviews by peers and professionals - something they cant get at home (steady, nunthewiser!). 

Bottom line is to look at this as a revenue generator youll have to research and plan it like any business (which is what you are starting to do by the looks of things) so youll have to create a business plan coving the 5 C's: 

Company - Vision & mission, SWOT analysis, 
Context - business environment and influential forces, 
Collaborators - partners, financiers, suppliers etc - , 
Customers - segmented market profile - you are researching this one right now  
Competitors- alternatives to what you will offer, eg stay at home

and 7 Ps 
Products (define exactly what you will offer), 
Price points (how much youll charge especially in comparison to alternatives), 
Place (where you are operating eg Melbourne CBD serviced offices, suburban shopping mall, hired cybercafe), 
Promotion (how you'll advertise and get ppl in the door) 
People (Staff & Specialists), 
Process (described in detail for any services), 
Physical Evidence (referrals) 

Once you've got this together youll have a solid idea of it it will or wont be able to make money. 

*If B* - a value add in itself - it will be vvv expensive to hire and kit out office space in the city - maybe start small and start up, or join, a local traders group, get a bunch of people to commit to join you for  a months trial, and then look for cybercafes in the area with good facilities and an understanding owner. See if you can come to an arrangement to book out as many machines as you need with dual screens at a negotiated rate between 9am and 4:30 PM for a four week block to start with - you should get a good discount with a guaranteed months income on weekdays, as long as you are not near a school or uni (hard core gamer territory). This would also be a good test if you are considering option A as well.

*If C*, please let us know!

Hope this is of some benefit.


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## Mr J (28 April 2009)

Trembling Hand said:


> marklar I suck about 300 meg of data between the Aussie market hours.




You must have much more demanding feeds than I have, as ruynning IB/TWS during the day takes no more than 80mb.



> If any of you are actually any good, this will obviously be important to generating high dollar returns. When I say high, $100K/day are the amounts I've seen.




This sounds pretty ridiculous in the context of this thread. It sounds a gold digger in NYC suggesting 500k a year is poor.


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## marklar (28 April 2009)

Trembling Hand said:


> Thats why I'm asking. I don't know. You would. What would be the best.



The simple answer is "it depends", there isn't enough detail here to propose anything, give me a full requirements spec & approximate budget and I'll see what might fit.  As a general rule:

fast
cheap
reliable
pick any two.



> Lowest latency connections with high reliability would.



Ok, well, it's going to cost you quite a bit.  What is your budget? Can you codify your definition of "lowest latency"? (eg. average milliseconds round-trip time to where? U.S.A or Australia?) 300ms?, 100ms? per packet? can I tune your IP stack? What type is the data? HTTP? HTTPS? something proprietary? if it's HTTP can I cache any of the content? If it's HTTPS can i man-in-the-middle it to cache any of the content? How secure do you want it? Do you want traffic logging? complete traffic capture for non-repudiation? admissible in court? intrusion prevention? ...

Too many questions for a forum like this.

m.


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## Trembling Hand (28 April 2009)

Mr J said:


> You must have much more demanding feeds than I have, as ruynning IB/TWS during the day takes no more than 80mb.



I've got about 80 diff instruments up. And 3 DOMs. And a couple other live brokers. And other stuff....


ducati916 said:


> *Chap's*
> 
> After you have sorted out your nuts & bolts, you need to find a provider for execution and leverage. Not retail leverage, but Prop. leverage, viz *100+



Nuts and bolts still worthy of a discussion. As far as leverage I would think/guess you would be trading futs rather than stocks. Margin rates are fine already for Asian markets. I mean you are not likely to get position sizes bigger than 100 contracts for most prop style intraday scalping in Asian markets. that's only $500,000 if a 100 lot trader hasn't that up their sleeves then there not likely to be a 100 lot trader 


marklar said:


> The simple answer is "it depends", there isn't enough detail here to propose anything,




Yeah fair enough was just a general question to feel my way out. will work out more and maybe PM at a latter date. Thanks


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## jersey10 (28 April 2009)

Trembling Hand said:


> Yeah fair enough was just a general question to feel my way out. will work out more and maybe PM at a latter date. Thanks




sounds like you are thinking of setting one up yourself.  I'll PM my resume.


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## Mr J (29 April 2009)

Trembling Hand said:


> I mean you are not likely to get position sizes bigger than 100 contracts for most prop style intraday scalping in Asian markets. that's only $500,000 if a 100 lot trader hasn't that up their sleeves then there not likely to be a 100 lot trader




Or move to the ES, where they could get their 100 on the first level . Find a low-tax latin country or something and enjoy the scalability.


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## marklar (29 April 2009)

Trembling Hand said:


> Yeah fair enough was just a general question to feel my way out. will work out more and maybe PM at a latter date. Thanks



No problem, would love to help someone out doing this kind of work.  Would be a nice, reasonably challenging project to get up and going.  Might also help put to use some of the spare bits & pieces of network kit I've picked up over the years.

m.


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## jersey10 (16 December 2010)

Did anything ever come of any of the ideas in this thread?
Other than the prop firms do any trading rooms similar to what amarcus is talking about in the first post exist anywhere in Australia?


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