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Non-Tech : Meet Gene, a NASDAQ Market Maker
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To: booters who wrote (1095)9/27/2000 1:38:36 AM
From: Bilow  Read Replies (1) of 1426
 
Hi booters; Re the relative return for market makers...

I'm saying something like $300 per day $100K is a good return. That's a return of .3% per day. With 250 trading days per year, the yearly return is well over 100%. I know that to today's jaded bull market investors, a 100% return doesn't seem too good. Alternative small businesses would cost more than $500K to purchase, and return profits per year considerably below $500K. What is the saying, a bull market makes everyone a genius? You have to look at the risk adjusted rate of return to appreciate the beauty of making 100% on your money per year. The draw downs on a good high speed trader are going to be very small compared to typical stock market volatility. This is because the returns are averaged over so many trades per day. The strong law of large numbers takes over, and the variance is decreased.

Believe me. If you find a way of consistently (i.e. week after month after year after year) taking $500K and making better than 100% interest on it, you are going to find plenty of people willing to fund it. That is a stellar return.

There are a lot of traders who beat that number, but the original question was what a satisfactory return would be, not what a hot shot would pull in. And I think that the above numbers is right at the margin of the difference between unsatisfactory and satisfactory.

-- Carl
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