Hello,

I learnt about this trading arcades in other forum and would love to share it here at the forum and invite other people to give their perspectives and experiences in this area.


Here are the details:

What is a trading arcade?
A http://www.trade2win.com/traderpedia/Trading_arcade, http://www.trade2win.com/traderpedia..._trading_group or http://www.trade2win.com/traderpedia/Trading_bureaux are a few of the commonly heard names for a company that provides http://www.trade2win.com/traderpedia...entaction=edit, added leverage, professional appliions and hardware infrastructure, trading centers with http://www.trade2win.com/traderpedia/Analyst service and sometimes training and funding backing for traders in return for a share of trading profits and/or http://www.trade2win.com/traderpedia/Commission.
At an arcade, you would typically find a broad trading room full of desks: nicely equipped work place with high spec workstations, arrays of screens and terminals providing access to market information depth, quotes, http://www.trade2win.com/traderpedia/Chart, http://www.trade2win.com/traderpedia/Reuters, http://www.trade2win.com/traderpedia...ergaction=edit, http://www.trade2win.com/traderpedia..._TVaction=edit along with the all important trade execution platform. The name trading arcade originates in the fact that the rows of traders facing displays bears an amusing resemblance.
The origin of Arcades
With the rapid growth of http://www.trade2win.com/traderpedia/Electronic_trading along with the passing of http://www.trade2win.com/traderpedia/Open_outcry as many http://www.trade2win.com/traderpedia/Exchange near their http://www.trade2win.com/traderpedia/Trading_floor, a whole community of professional http://www.trade2win.com/traderpedia/Floor_trader was on the road searching for a way to revamp their livelihood and duplie a few facets of the ground trading atmosphere. A number of these former http://www.trade2win.com/traderpedia/Local formed their particular trading companies since they made the transition into the http://www.trade2win.com/traderpedia/Screen_trading. These trading companies came to be known as arcades, and since the majority of traders were former http://www.trade2win.com/traderpedia/Pit traders the definition of a neighborhood came to include expert display traders at arcades.
While there is no precise data readily available on the share of http://www.trade2win.com/traderpedia/Futures trading which Arcades account for, the evidence indies that it is significant http://www.trade2win.com/traderpedia/Volume. Http://www.trade2win.com/traderpedia/Euronext estimates that independent traders, its term for display based locals, individuals and companies trading for their own accounts, constitute about one-third of the full world of people trading on its Connect platform. Trading Technologies, the software vendor used by most local and professional traders claim to account for up to 50 percent of the futures traded.
Why trade having an Arcade?
There Are Many advantages which I will detail below:Commission Costs. A professional trader's biggest'cost of doing business' is. The main benefit with arcade affiliated trading is the huge savings which may be made in the costs each http://www.trade2win.com/traderpedia/Roundtrip trade (roundtrip = a opened and shut trade). The entire number of executed roundtrips at a arcade can easily number into the millions of trades. The arcade within a thing has huge buying power and may use this to negotiate low cost rates together with the clearing firm that a standalone trader may never expect to get. For example: An expert trader may easily perform nicely in excess of 50,000 http://www.trade2win.com/traderpedia/Round-turn per month and pay possibly 60p per round-turn trade his total monthly commissions paid at that rate would equal #30,000.00. By comparison, a http://www.trade2win.com/traderpedia/Retail_trader paying retail http://www.trade2win.com/traderpedia/Broker commissions at a company like TradeStation would pay $5 round-turn or approx #2.65 so the exact same quantity of roundtrips at this rate would include up to a whopping #132,500.00 of commission!! (as a further contrast, http://www.trade2win.com/traderpedia/Spreadbetting company Finspreads are today quoting a spread of 1.00pts on the March http://www.trade2win.com/traderpedia/SP_500 futures equivalent to an unbelievable $50.00 commission for an equivalent point worth trade as the futures contract)
Therefore for each 10p saved in commissions within this case makes an extra #5000.00 in savings/profits for the traders account. Competitive transaction costs are a large part of making sure a trader succeeds when the trader is http://www.trade2win.com/traderpedia/Scalping from miniature inefficiencies in the market pricing. The arcade will provide volume breakson a sliding scale in order that the more volume is discretionary, the more economical his commissions will be.
The arcade itself is a business in its own right, providing a support to traders, so the commission rate the arcade will probably pass to traders will typically include a margin to the arcade for a business. This is to be expected and the rate the trader receives will usually be aggressive as you can see in the example. Infrastructure: A commnt to trading that is fulltime also requires a commnt to invest at the best hardware and appliions which are available. A trader needs every advantage in a fast moving market and with much more traders competing against each other than ever before, you can not anticipate to be an aggressive player in the current electronic marketplace by utilizing an obsolete machine, unreliable appliions with inadequate screen space plus a slow link. Because of this, the initial outlay costs associated with establishing a trading desk using the best hardware and tools can be exceedingly significant. The continuing costs of maintenance, appliions progr, this data feed and service can be greater. The buying power of a arcade again comes into play: The high cost of infrastructure including high quality workstation, multiple displays, datacenter, contributors to professional appliions like http://www.trade2win.com/traderpedia...CQGaction=edit, http://www.trade2win.com/traderpedia...deraction=edit and http://www.trade2win.com/traderpedia...nalaction=edit, in-house pc technicians, multiple failsafe data lines and uninterruptible power backup can be united and work out extremely advantageously on a single cost each trader foundation.
The advantages of having the best hardware, software and support at prices unavailable to individual traders speak for themselves and provide the 2nd biggest benefit for arcade trading. Support: a lot of arcades will conduct an annotated desk where a market analyst(s) will provide live commentary and interpretation of news and http://www.trade2win.com/traderpedia/Fundamental_data. These will have sources who can get news releases early and set out trade recommendations before major announcements. Additional backup can fix them quickly in the event that you do, and comes in the form of onsite computer technicians IT service who make sure you don't have system problems. Environment: Certainly, working at a dynamic environment surrounded by other traders is currently going to be beneficial to anyone. Experienced traders can always give you tips if you're after an arcades in house methodology, and the air and buzz can help a lot with perpetuating that traders mindset. Offices are a stylish, well equipped environment with trader comforts such as playrooms with arcade games, pool along with possibly a sandwich bar, rest/sleep zones and lounges. What does all of the above cost?
The cost of leasing a chair and utilizing all of the associated services will vary greatly between arcades, based on what services they include on your desk/office package. A typical monthly cost might range from below #1,000 for a single trade up to #2,500.00 for five trades or more. To get a retail trader or a person uninitiated to professional trading along with the costs involved, this may sound expensive but compared to what a pro trader would have to pay anyway just for utilizing the same software alone, excluding all of the hardware, another support services and the office costs, these type of prices are usually a very significant saving! As an all inclusive package, a competitively priced desk fee is always a great value deal to get a professional trader.
A arcade generally does not make much, if any, money in the monthly desk fee these fee's cover the significant running costs and, even if competitive, aren't an earner for the business.
How does the profit divide work at an Arcade?
Generally, if you as a trader take advantage of the arcade's extra http://www.trade2win.com/traderpedia/Leverage centers, possibly to fund the complete margin demands for an http://www.trade2win.com/traderpedia/Overnight_position or to your intraday activities then your agreement with the company will include a pre-agreed share of trading profits for the arcade. This share will vary depending on the facilities you Use, but it might be around 10-20% of end of month Profits for your arcade.
If you're a fully self-funded trader and you don't use the companies funding, then a profit divide does not apply, but if you do make use of the companies capital and place that capital at risk on your trading, then of course the arcade will qualify for a return for its risk in creating this facility that is available to you.
How does an arcade earn its money?
The cost of running the office, supplying the equipment, data and appliions services will be covered by the workplace rental fee.
The main income stream will be via brokerage services at which the arcade offers ultra-discounted commissions to the trader by way of its joint buying power, also includes a margin for the company at the finished roundtrip price.
Another source of income is via leverage and http://www.trade2win.com/traderpedia/Margin services at which the firm will fund or part fund rankings, and take a pre-agreed proportion of commerce profits in return for its risk.
Finally, Arcades will benefit from funding and training their particular traders to trade the companies in-house methodology and capital.

Which are liquidity provider rebates for sports traders?
On account of the huge amounts of volume an arcade will perform, the firm will be enrolled as a http://www.trade2win.com/traderpedia/Liquidity supplier with all the exchanges that it deals with. Individual traders can benefit from what the exchange calls liquidity provider rebates that is the point where the exchange refunds part of their exchange fees on a sliding scale based on how much liquidity or volume the trader provides to the markets.
These refunds begin from approximately 5000 lots traded within a month. To get a trader doing even moderate expert volume in a month, the lien can add up to many tens of thousands, or even tens of thousands of pounds that are credited into the traders account.
Who'd use an Arcade?
Trading arcades mostly took over as the venue of choice for locals, brokers and professional traders where the exchange coping floors in London left off when http://www.trade2win.com/traderpedia/LIFFE shut the pits.
Most traders involved in trading professionally, to get a living, or as a broker would discover benefits in a trading association with an arcade. For new traders and people who would like to make a start in the trading business, an arcade is a superb place to learn many of the egies used by the pro's and arcades provide training and funding schemes for graduates.
Are all Arcade traders self employed?
As a majority principle, this is almost always yes, even when trading the company's funds as a financed trader. Traders will usually be regarded as external self employed consultants who make use of the facilities for a commission. There are definite http://www.trade2win.com/traderpedia/Taxation benefits available for prudent traders within this arrangement when considering the amounts of money demanded.
What about softball coaching and graduate schemes for new traders?
Some Arcades will also train and completely fund a new trader using the company's capital. Arcades will generally only accept graduates but there are no rules in this regard.
The Arcade will have a specific way of trading that they know works well and where they're able to accurately measure the risk/reward to the business. The trader will undergo an extensive training period, typically lasting several weeks or months. This training will include learning the Arcade's in house techniques and practicing it. When they are able to show consistent profits, they will be financed and begun around the market for real originally with size but scaling up since they prove themselves profitable.
Training might take two or three months before live trading where a new trader may not show steady profits for six or nine months. He should anticipate being break even or profitable over the first year, and that being the case the year should be a good year for both the trader and the arcade.
In return for providing the instruction, risk capital and either a basic wage, or a capped withdrawal in the firm financed account, the new trader will be expected to honour a contract to trade with the firm for two or three decades. In this manner the Arcade can expect to recoup its losses in training the trader, funds his basic commission and trading funds plus cover his initial losses. The profit divides under a training and funding deal will generally be more like a 50/50 split, which for a trader who's being shown to take money from the market free of risk to his own money is a very good thing.
In the end of the contract, a trader can renegotiate his terms when he wants to keep on trading the companies capital or he may have sufficient money in the bank to trade as a self financed trader when he wants to risk his own money.
Requirement for these financed trader positions is always large, Arcades have great trouble selecting in the hundreds of applicants for every new position.

What trading approaches perform Arcade traders employ?
Professional traders will usually either be standardized http://www.trade2win.com/traderpedia/Scalper or http://www.trade2win.com/traderpedia...deraction=edit (nothing to do with spreadbet). Generally, both approaches will likely be trading large size regularly for only single http://www.trade2win.com/traderpedia/Tick by trading off both sides of their http://www.trade2win.com/traderpedia/Bid/http://www.trade2win.com/traderpedia/Ask at the exact same or different markets.
Spreading is a sort of http://www.trade2win.com/traderpedia/Arbitrage egy where the trader is equally http://www.trade2win.com/traderpedia/Long and http://www.trade2win.com/traderpedia/Short two similar or correlated markets in the exact same moment. This type of trading qualifies for large margin breaks from the trades due to the more limited risk of these positions, so a spread trader can be operating orders of 100 contracts for possibly the same margin as could be required for an absurdly directional long or short position with only 10 contracts

con't