T3 Live.com: Prop Traders Go Virtual

With all the talk about social networks, it's not surprising that traders want to interact and learn from each other. Proprietary trading firm T3 Capital launched an online trading community that reaches out to active traders and shares its positions with subscribers.The site T3 Live.com is a virtual online community that offers news clips, live broadcasts of professional traders giving stock tips and interactive trading courses. Yesterday, the hot topic in the morning was the spread of the swine flu and what impact that would have on biotech stocks, but soon that was overshadowed by the latest bankruptcy/bailout plan from General Motors.

"It's a grass roots subscriber base," says Scott Redler, partner and trader at T3 Capital in New York, whose main trading floor is at 120 Williams Street. When Redler is not appearing on CNBC, Fox News or Bloomberg, he is teaching technical analysis via the online educational platform. "We put it together for anyone who wants to trade and feel like they're in an office with other traders. They can use our resources, whether they're at home in our firm, or in another country," says Redler, who runs the site and the proprietary trading firm with five partners.

After appearing on CNBC 25 times in the past year, Redler says, he "pretty much called the market crash accurately. I kept people from buying Lehman Brothers, or AIG," he notes. Perhaps what is pulling in the public is Redler's own success story. "I'm a blue collar trader that is in the office every day at 7:00 a.m. using common sense. I work hard. We don't let anyone bully us around," says Redler. Still, he finds time to trade and share strategies with the masses of wannabe active traders. And if that's not enough, Redler is also training for a New York City Triathlon to raise money for the Lukemia Lymphoma society. Redler preaches discipline and the value of a well-balanced lifestyle to the online community, also takes spinning classes during lunch hour. "It's a great way to blow off steam," he says.

There are two sides to T3's business: First, T3 Capital has about 400 prop traders who trade in different sectors, strictly trading the partners' money. "We monitor their risk. We get returns based on how our traders perform, " explains Redler. Structured like a hedge fund, T3 traders follow about 350-to-400 stocks, futures and options. In 2008, T3 was up 150 percent, which was its best year ever, according to Redler. T3's traders mainly trade intra-day or use one -to-three day strategies. "That's what the market has been giving you," says Redler. But T3Live, the educational trading platform has nothing to do with those traders, says Redler.

The idea for the online community started because T3 Capital has multiple offices. Based in New York, the firm has satellite offices in Boca Raton, Chicago and Philadelphia. The traders use Lightspeed Trading's technology. To communicate with traders in the remote offices, Redler would put together price sheets in the morning, for instance, showing support, resistance levels, for instance, so it began posting that online. Then it built a studio to simulcast a morning call to all of its offices, "so they felt like they were in the New York office," says Redler. It also began to scale to other traders who were not working for the prop-trading firm. Then traders wanted to hear what they said as if they were on the trading floor, so T3 created a virtual trading floor, so that external traders could see the positions that it was in. There are also newsletters that go out the night before.

For example, everyone can see that Redler wants to buy Apple Computer shares if it breaks through a certain price point. "If we're long 6,000 or 7,000 shares, it kind of helps to hold their hands through what you execute." The day starts at 7:15 am when Redler prepares his price points. "I try to get it uploaded by 8:30 am, so they can see my positions and price points and they can look at the charts, so they can follow along," he explains. At 8:30 a.m., Redler conducts a morning call with the T3 community and then at 9:15 am he has meetings with traders on the floor. As soon as trading starts, the online community can hear their thoughts. "We go on the radio and let them listen in on the monthly meetings." Redler's firm lets the trading community hear everything that's going on with the firm, he says.

"By us showing our positions, it doesn't help us, it doesn't hurt us," says Redler. "Also, they're seeing us practice what we preach," he says. "We're being totally transparent for everything we're targeting, including S&P futures, the Dow futures, ETFs. Later on, partner Evan Lazarus in "Trade for Thought" talks about big stock picks for the day and partner Marc Sperling does a segment titled "Master the Trade," in which he teaches short-term trades of the day.

While Redler says T3 doesn't want to expand beyond the 400 traders it currently has, he can accommodate 10,000 virtual traders. The typical subscriber pays around $180 a month, and it can provide one-on-one training if someone needs coaching in-house. T3 's partners also do consulting for a group in China on how to trade the U.S. markets. There's a two-week free trial on the site, but typically the subscriber is already a trader at say Charles Schwab or Goldman Sachs who subscribes to one of its services on its computer as a tool, claims Redler.

Once traders are using the site for two-or-three weeks, they learn the styles of the different partners and decide which one they want to follow. Evan Lazarus (or Laz) is the more methodical and he holds positions longer and he is calmer, notes Redler.

Clearly, there are a lot of online brokers with active traders operate trading communities, but this one is worth watching for the daily ideas and analysis. "We're very conservative disciplined accountable traders who make money every day and do it with the least amount of risk as possible," he says.Proprietary trading firm TM3 Capital launched an online trading community that reaches out to active traders and shares its positions with subscribers. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio