A trading office, also known as a trading floor, is a place where traders analyze and execute all their trades. In the past, these floors were known trading pits. In most cases, a trading office is owned by a larger institution like an investment bank or a hedge fund.
At times, you can also have your own trading office, where you provide the financing and hire traders to help you execute your orders. At other times, you could also own a trading office if you are part of a proprietary (prop) trading firm. Prop firms like Day Trade the World (DTTW) provide their customers with funds and encourage them to hire extra traders. In this article, we will look at some of the top strategies that will make your trading office more profitable.
Hiring trading floor traders
If you own or manage a trading floor, the most important thing that will make it more profitable is the hiring process. This is an important step since these traders are the ones who will be responsible for opening and executing trades. As such, the traders can make or break your trading office.
You can do several things to ensure that you have the right team for your trading office. First, keep friendships or family relations at bay. Since there is too much money involved, you want to ensure that you are hiring the right traders.
As such, you should avoid hiring people simply because they are your family members and friends. Instead, you should hire professionals who have a passion and experience with the market.
Second, after hiring the traders, you should spend some time testing their knowledge about the market. Fortunately, many trading platforms offer demo accounts, which give you access to the market and virtual money.
If the traders are experienced, you should have them trade in the demo account for a few days or weeks. You should then assess their performance and their trades in general.
Third, depending on the size of your trading floor, you could hire traders using the headhunting process. This is where you hire them directly from other companies.
Finally, you should focus on hiring people who are passionate about the market and those who have some experience in it.
Another strategy of making your trading floor more profitable is training your traders. Ideally, when you have a trading floor, it means that you have many years of experience in the market. As such, you know what works and what doesn’t. You also have a system of researching forex pairs and other assets.
Therefore, you should aim to train your floor partners in your strategies to implement them in their trading. Such training can take several weeks or months, depending on their experience. In addition to training them, you should also test their knowledge by placing them in a demo account for several weeks.
Managing your trading floor
The next stage of making your trading office more profitable is how you manage it. Ideally, the office will be more profitable if you have rules that all traders understand. Some of the rules are about office time, relations between traders, and hierarchy among the members. These rules are similar to those that exist in normal offices. For example, the rules can explain how a trader can be dismissed.
At the same time, you should work to ensure that traders love the working environment. As such, you should implement things that make it a fun place to work. For example, the senior members of the team should always work well with the junior members. Similarly, you should create activities that improve the bond among traders. Some of these activities include after-work parties and team-building events.
Most importantly, you should compensate your traders well. It will not look good if your traders are making all the money while making a small amount for themselves.
Doing all these will help you make more money on your trading floor. It will also make it a fun environment and reduce the turnover of traders.
Work environment and equipment
Another thing that will make your trading floor more profitable is the work environment and the equipment you offer them. Ideally, most people want to work in a great place and use the best equipment. In this case, you should have a good and comfortable office that has great quality furniture.
You should also have quality computers and high-speed internet. It is even recommended that you have separate internet vendors to act as a backup. Having quality traders will make them more productive.
In most cases, your trading floor traders will love it when they know that they are working in a conducive environment.
Working in shifts
A good thing about forex trading is that the market is usually open 24 hours a day from Monday to Friday. Therefore, if you decide to make your floor open just during the day, you will not be maximizing the returns of the floor. As such, you can optimize these returns by having most of the traders work during the day, and others work at night.
The benefit of doing this is that you will make more money while not having more incremental costs since most traders make more money through commissions.
Finally, you should encourage a culture of openness on a trading floor. This is where the traders are free to disclose their profits and losses. Still, you should have rules about risk in the market. This includes rules about the maximum lot size that traders can use.
Running a profitable trading floor is often a difficult process since members of the floor don’t share the enthusiasm of the owner. In this article, we have looked at what a trading floor is and some of the tips to use to run a profitable one.