Proprietary Trading
Discussion
Thought i'd update this as it has been a while.
I was making very nice progress until mid March until I got some more size to trade and the last 3 weeks have been nothing short of a hellhole. I've lost the consistency that allowed me to trade more size and I'm making poor decisions when in a spread trade.
I've stripped things back to basics and dropped my sizing to try and build some confidence again.
This game is an absolute head wrecker. One minute you're loving life and the next it's pandemonium.
Desk fees have kicked in now too so it really is crunch time now to start making some good profits.
I was making very nice progress until mid March until I got some more size to trade and the last 3 weeks have been nothing short of a hellhole. I've lost the consistency that allowed me to trade more size and I'm making poor decisions when in a spread trade.
I've stripped things back to basics and dropped my sizing to try and build some confidence again.
This game is an absolute head wrecker. One minute you're loving life and the next it's pandemonium.
Desk fees have kicked in now too so it really is crunch time now to start making some good profits.
The market character changed in March after a pretty reliable 4-5 month focus.
The key is to take what you have learned while trading the old scenario and apply it to the new. The market ebbs and flows on styles and fads and the trader must apply his skills to the changing picture. Those who persist in one trading style when the market no longer is following that pattern will fail.
It's key to know yourself. The risk of a desk charge scenario is that it makes you feel like you have to trade. If the current market pattern doesn't suit your mental style then the only sensible option is to sit out the market and just pay your costs.
Sometimes, when your style isn't right for the market that is when you allocate funds to someone who does fit this environment.
The key is to take what you have learned while trading the old scenario and apply it to the new. The market ebbs and flows on styles and fads and the trader must apply his skills to the changing picture. Those who persist in one trading style when the market no longer is following that pattern will fail.
It's key to know yourself. The risk of a desk charge scenario is that it makes you feel like you have to trade. If the current market pattern doesn't suit your mental style then the only sensible option is to sit out the market and just pay your costs.
Sometimes, when your style isn't right for the market that is when you allocate funds to someone who does fit this environment.
Just like DonkeyApple said above, market conditions this month have been s
te and so was the second half of March. The key to longevity is being able to adapt your style to suit different markets and trade different ways according to conditions.
You need to know when conditions are right and hit it hard. Having 25 up days in a row means you aren't trading big enough. There is no point getting to the end of good run and then only to have it wiped out in a few bad days or one day when you upsize.
Likewise, it is a crucial skill to know when then market doesn't suit you have to scale down and find new ways to grind out money.
Unfortunately the main reason a lot of traders fail, something like 90%, is because they don't make enough to allow them not to force trades in the lean times. Desk fees (are yours about £3k a month?) mean that if you only make 10k a month in the good times it doesn't take long of a few flat months for you to feel the pressure.
Unluckily for you as you are just starting you haven't had the good times behind you to let you breathe a bit when things are tough like this. However, as above, just because desk fees are starting don't make it force you to trade differently and make you take on trades you don't want. That doesn't mean stop trading, just don't get you hand forced. Trade smaller, trade new things to see what works in this environment.
As you said it is a total head fk of a job and a lot of people can't take it or burn out. One day you are flying high and the next you are at the bottom of the pile. There markets are unforgiving, every day you battle against the best in the world who just want to fk you over.
Stay focused and keep strong. Good luck.
te and so was the second half of March. The key to longevity is being able to adapt your style to suit different markets and trade different ways according to conditions. You need to know when conditions are right and hit it hard. Having 25 up days in a row means you aren't trading big enough. There is no point getting to the end of good run and then only to have it wiped out in a few bad days or one day when you upsize.
Likewise, it is a crucial skill to know when then market doesn't suit you have to scale down and find new ways to grind out money.
Unfortunately the main reason a lot of traders fail, something like 90%, is because they don't make enough to allow them not to force trades in the lean times. Desk fees (are yours about £3k a month?) mean that if you only make 10k a month in the good times it doesn't take long of a few flat months for you to feel the pressure.
Unluckily for you as you are just starting you haven't had the good times behind you to let you breathe a bit when things are tough like this. However, as above, just because desk fees are starting don't make it force you to trade differently and make you take on trades you don't want. That doesn't mean stop trading, just don't get you hand forced. Trade smaller, trade new things to see what works in this environment.
As you said it is a total head f
k of a job and a lot of people can't take it or burn out. One day you are flying high and the next you are at the bottom of the pile. There markets are unforgiving, every day you battle against the best in the world who just want to fk you over.Stay focused and keep strong. Good luck.
Thanks guys, some good words of encouragement.
I think what hasn't helped is my mentor, if you will, has been giving me a hard time saying the rest of the office is killing it whilst I'm the black sheep who had a bad March. I freely admit I'm a person who thrives on confidence in anything I do and always trade better when feeling confident.
Desk fees are very reasonable at $2.5k and I'm also getting 50% rebate on my commissions as long as I hit 25,000 trips in my first 9 months, or something along those lines.
I've found my entries have been fine, I've just been struggling on my exits. Either exiting way too early or too late. I've also adjusted my clip size as I feel as I was going in too big too quickly and with the volatility in the Aus 10yrs it's caught me out.
Looking to branch into the SPI and Emini soon as just trading bonds has its setbacks when things get tough.
I think what hasn't helped is my mentor, if you will, has been giving me a hard time saying the rest of the office is killing it whilst I'm the black sheep who had a bad March. I freely admit I'm a person who thrives on confidence in anything I do and always trade better when feeling confident.
Desk fees are very reasonable at $2.5k and I'm also getting 50% rebate on my commissions as long as I hit 25,000 trips in my first 9 months, or something along those lines.
I've found my entries have been fine, I've just been struggling on my exits. Either exiting way too early or too late. I've also adjusted my clip size as I feel as I was going in too big too quickly and with the volatility in the Aus 10yrs it's caught me out.
Looking to branch into the SPI and Emini soon as just trading bonds has its setbacks when things get tough.
OK,
Firstly "mentors" are just other traders some of which are good and some are st at teaching. So if you thrive on confidence and he's putting you down, ignore him. This is a tough game and people progress at different rates.
Also the rebate thing is a load of crap. Your shop is getting a much lower rate than they are charging you, so the "rebate" is still making them profit. They want you to trade loads as they make money off your trades as well as your profit. If they had a choice between a guy who makes $100k a year and does 10k round trips month or a guy who makes $100k a year and does 50k trips a month they'd have an office full of the latter every time. So don't let them push you into trading more than you want to as that is how traders force things and then blow up in trades they "didnt really want", trust me I've heard it so many times.
Also, what are you trading the Aus 10yr against? And what time period? Have you access to the swaps or the short end reds?
Firstly "mentors" are just other traders some of which are good and some are s
t at teaching. So if you thrive on confidence and he's putting you down, ignore him. This is a tough game and people progress at different rates.Also the rebate thing is a load of crap. Your shop is getting a much lower rate than they are charging you, so the "rebate" is still making them profit. They want you to trade loads as they make money off your trades as well as your profit. If they had a choice between a guy who makes $100k a year and does 10k round trips month or a guy who makes $100k a year and does 50k trips a month they'd have an office full of the latter every time. So don't let them push you into trading more than you want to as that is how traders force things and then blow up in trades they "didnt really want", trust me I've heard it so many times.
Also, what are you trading the Aus 10yr against? And what time period? Have you access to the swaps or the short end reds?
This is the incentive program: http://www.cmegroup.com/company/membership/interna...
The shop makes $1 every r/t I make so no doubt they love active traders.
I'm spreading it against tnote and on occasions the Aus 3 yr known as the curve.
I do trade outrights in tnote but mostly always in the spread on an intraday basis. We can't hold positions over the a.m close or the weekend, which is a ball breaker as my longer term view tends to come to fruition more often than not.
I watch the Aus Bills for a lead but can't trade them yet.
The shop makes $1 every r/t I make so no doubt they love active traders.
I'm spreading it against tnote and on occasions the Aus 3 yr known as the curve.
I do trade outrights in tnote but mostly always in the spread on an intraday basis. We can't hold positions over the a.m close or the weekend, which is a ball breaker as my longer term view tends to come to fruition more often than not.
I watch the Aus Bills for a lead but can't trade them yet.
FadeTrade said:
Thanks guys, some good words of encouragement.
I think what hasn't helped is my mentor, if you will, has been giving me a hard time saying the rest of the office is killing it whilst I'm the black sheep who had a bad March. I freely admit I'm a person who thrives on confidence in anything I do and always trade better when feeling confident.
Desk fees are very reasonable at $2.5k and I'm also getting 50% rebate on my commissions as long as I hit 25,000 trips in my first 9 months, or something along those lines.
I've found my entries have been fine, I've just been struggling on my exits. Either exiting way too early or too late. I've also adjusted my clip size as I feel as I was going in too big too quickly and with the volatility in the Aus 10yrs it's caught me out.
Looking to branch into the SPI and Emini soon as just trading bonds has its setbacks when things get tough.
I'll be honest here and say that some of the things you mention above are a little concerning. Being incentivised through rebates is extremely dangerous and indicates that the firm is focussing on flow rather than performance/fees. That is only ever going to lead to fund destruction. Your mentor sounds like he is earning off your flow, so he is going to be running with a bias that will make him want you to create volume rather than profits.I think what hasn't helped is my mentor, if you will, has been giving me a hard time saying the rest of the office is killing it whilst I'm the black sheep who had a bad March. I freely admit I'm a person who thrives on confidence in anything I do and always trade better when feeling confident.
Desk fees are very reasonable at $2.5k and I'm also getting 50% rebate on my commissions as long as I hit 25,000 trips in my first 9 months, or something along those lines.
I've found my entries have been fine, I've just been struggling on my exits. Either exiting way too early or too late. I've also adjusted my clip size as I feel as I was going in too big too quickly and with the volatility in the Aus 10yrs it's caught me out.
Looking to branch into the SPI and Emini soon as just trading bonds has its setbacks when things get tough.
Also, what does your $2.5/month buy you?
DonkeyApple said:
I'll be honest here and say that some of the things you mention above are a little concerning. Being incentivised through rebates is extremely dangerous and indicates that the firm is focussing on flow rather than performance/fees. That is only ever going to lead to fund destruction. Your mentor sounds like he is earning off your flow, so he is going to be running with a bias that will make him want you to create volume rather than profits.
Also, what does your $2.5/month buy you?
Unfortunately that is how all the shops, even in London, run. They group together all the traders and get great rates, pass on some of the "rebate" to guys who trade a shedload and incentivise size and not profitability.Also, what does your $2.5/month buy you?
$2.5k/month is for computers, screens, access, IT support, CQG or other charting package and a front end system (TT, PATS or whatever). That fee is fairly standard but the business model overall is flawed and hence why many shops have closed or been bought out.
R11ysf said:
$1 a r/t and $3k desk fees. 
fk me, they must be coining it in!
What split do you get?
Split is 50/50 and goes to 55/45 in my favour after $25k profits which I wasn't far away from before mid March! fk me, they must be coining it in!What split do you get?
They've been around nearly 9yrs now and obviously have a good business model. They've expanded into Singapore recently also.
R11ysf said:
DonkeyApple said:
I'll be honest here and say that some of the things you mention above are a little concerning. Being incentivised through rebates is extremely dangerous and indicates that the firm is focussing on flow rather than performance/fees. That is only ever going to lead to fund destruction. Your mentor sounds like he is earning off your flow, so he is going to be running with a bias that will make him want you to create volume rather than profits.
Also, what does your $2.5/month buy you?
Unfortunately that is how all the shops, even in London, run. They group together all the traders and get great rates, pass on some of the "rebate" to guys who trade a shedload and incentivise size and not profitability.Also, what does your $2.5/month buy you?
$2.5k/month is for computers, screens, access, IT support, CQG or other charting package and a front end system (TT, PATS or whatever). That fee is fairly standard but the business model overall is flawed and hence why many shops have closed or been bought out.
There are two core models, the most common being a premium serviced office set up. I'e big fee for a small desk and rebate from clearers. The other being cost neutral and a need to find traders for capital allocations. Obviously, the latter is much more rare.
FadeTrade said:
Split is 50/50 and goes to 55/45 in my favour after $25k profits which I wasn't far away from before mid March!
They've been around nearly 9yrs now and obviously have a good business model. They've expanded into Singapore recently also.
Just because they have been around for 9 years and have a good business model doesn't mean they are good for traders. All it means is they've had enough guys come through the doors and take enough money out the market to cover their costs and give the company profits. You come second to their profits. I;ve interviewed probably about 100 guys who've been in your position, some with very good track records, and time and time again I say that whether we employ them or not the position they are in is not going to be good for them long term. They've been around nearly 9yrs now and obviously have a good business model. They've expanded into Singapore recently also.
To give you an indication, if you were in London you would be starting on 70% and moving up to 85-90% depending on how good you are.
Remember you are a business in yourself and what is good for them and good for you may be aligned, but also may not be.
DonkeyApple said:
I know
There are two core models, the most common being a premium serviced office set up. I'e big fee for a small desk and rebate from clearers. The other being cost neutral and a need to find traders for capital allocations. Obviously, the latter is much more rare.
Luckily enough we are the latter There are two core models, the most common being a premium serviced office set up. I'e big fee for a small desk and rebate from clearers. The other being cost neutral and a need to find traders for capital allocations. Obviously, the latter is much more rare.
JPJPJP said:
Do you need what they offer in order to trade to earn enough to keep yourself well fed?
Why pay them the desk fee, the $1 a trade and then half the profit?
Have you learnt enough to cut the cord? Do you have enough capital to trade independently now?
There is a huge difference between investing, which I believe a few people on here do, and actual trading. £2-3k an month might actually be good value depending on what you have. For example just to have level 1 access to the products I have on my screens would be in excess of £30k a month. They also provide the capital for leverage and the backup and IT support, which is invaluable when things screw up. Also all the clearing and balancing services too.Why pay them the desk fee, the $1 a trade and then half the profit?
Have you learnt enough to cut the cord? Do you have enough capital to trade independently now?
DonkeyApple said:
The market character changed in March after a pretty reliable 4-5 month focus.
The key is to take what you have learned while trading the old scenario and apply it to the new. The market ebbs and flows on styles and fads and the trader must apply his skills to the changing picture. Those who persist in one trading style when the market no longer is following that pattern will fail.
It's key to know yourself. The risk of a desk charge scenario is that it makes you feel like you have to trade. If the current market pattern doesn't suit your mental style then the only sensible option is to sit out the market and just pay your costs.
Sometimes, when your style isn't right for the market that is when you allocate funds to someone who does fit this environment.
I'm sorry, but I have to disagree with March being an unreliable month. It has been absolutely fantastic if you know what your doing. The key is to take what you have learned while trading the old scenario and apply it to the new. The market ebbs and flows on styles and fads and the trader must apply his skills to the changing picture. Those who persist in one trading style when the market no longer is following that pattern will fail.
It's key to know yourself. The risk of a desk charge scenario is that it makes you feel like you have to trade. If the current market pattern doesn't suit your mental style then the only sensible option is to sit out the market and just pay your costs.
Sometimes, when your style isn't right for the market that is when you allocate funds to someone who does fit this environment.
But if your using a trending strategy for a consolidating market for eg, then your making the most basic of errors which is you dont know how to read a chart.
P.S. Sorry for the thread hijack.
Regards
Mr Fox
Mr fox said:
I'm sorry, but I have to disagree with March being an unreliable month. It has been absolutely fantastic if you know what your doing.
But if your using a trending strategy for a consolidating market for eg, then your making the most basic of errors which is you dont know how to read a chart.
P.S. Sorry for the thread hijack.
Regards
Mr Fox
Eh? Who said anyone was using a trending strategy?But if your using a trending strategy for a consolidating market for eg, then your making the most basic of errors which is you dont know how to read a chart.
P.S. Sorry for the thread hijack.
Regards
Mr Fox
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