Proprietary Trading
Discussion
Hi all,
I was looking for any info some of you may have about the above subject.
I've been selected from a few hundred to go down to Sydney and get some training in derivatives as I only have experience in spot FX.
If I show enough aptitude I'll be offered a position to trade their money and take a profit split.
I am self taught and have no qualifications in trading. I've heard any IB would be put off by seeing a prop shop on a CV?
I was looking for any info some of you may have about the above subject.
I've been selected from a few hundred to go down to Sydney and get some training in derivatives as I only have experience in spot FX.
If I show enough aptitude I'll be offered a position to trade their money and take a profit split.
I am self taught and have no qualifications in trading. I've heard any IB would be put off by seeing a prop shop on a CV?
There's prop trading an then there is prop trading. 
Most are bucket shops run on a similar model to the 'model agencies'. You end up paying them money regardless of what they tell you to get you to sign the contract.
First step will be desk costs. They will run their model so that the premium for renting your desk actually covers the whole running cost with profits.
Next is likely to be a charge even for using their 'system'. Payable over a period.
Then they might tell you that you didn't quite make it, only just missed but they'll offer you a deal based on you bringing in money from your frail grandma.
Most will be looking to make money from renting a desk at just stupid mark ups and also charging high comm markups on having your business cleared.
I would let Google be your friend and remember that if you are good enough for them to want you they'll be paying you not vice versa.
Most are bucket shops run on a similar model to the 'model agencies'. You end up paying them money regardless of what they tell you to get you to sign the contract.
First step will be desk costs. They will run their model so that the premium for renting your desk actually covers the whole running cost with profits.
Next is likely to be a charge even for using their 'system'. Payable over a period.
Then they might tell you that you didn't quite make it, only just missed but they'll offer you a deal based on you bringing in money from your frail grandma.
Most will be looking to make money from renting a desk at just stupid mark ups and also charging high comm markups on having your business cleared.
I would let Google be your friend and remember that if you are good enough for them to want you they'll be paying you not vice versa.
Chilli,
I think he means Investment bank not Interdealer Broker.
Dubai,
Will they see it as a put off? Maybe, maybe not. It really depends on what you do, for how long and how successfully. However, the upside is that if you are good enough then you never need to worry about sucking that corporate pole at all and will retire happily from prop trading!
However, read what DA wrote. Firms vary hugely in reputation and what they actually do. $1k in Oz sounds like less than minimum wage considering the hours you'll be working, 60+ hours a week x 4.5 weeks is <$10 an hour.
Some firms will provide huge amounts of backup, advice, training and most importantly push you when they see you doing well. This will also mean increased size and bigger limits. If you are there for 6 months, pick up nothing and leave it will be a waste but not a big one. If you genuinely "get it" and start at a good firm you can get bigger and then renegotiate any costs. once you are making $20k+ a month then desk fees don't really matter that much.
Just be careful not to do what a lot of guys do in London, which is dick around for 5-10 years getting £30-40k a year not working that hard just for the "lifestyle" so they can tell people they are a "trader". They are the guys who get to 35-40, realise they have no savings, the type of trading they do no longer works and they have no CV to get a new job. They are then f
ked.
If the company is good and will actually teach you to trade then definitely give it a go as the upside is unlimited and exponentially faster than any IB. Just be careful as DA says there are a lot of bucket shops out there.
I think he means Investment bank not Interdealer Broker.
Dubai,
Will they see it as a put off? Maybe, maybe not. It really depends on what you do, for how long and how successfully. However, the upside is that if you are good enough then you never need to worry about sucking that corporate pole at all and will retire happily from prop trading!
However, read what DA wrote. Firms vary hugely in reputation and what they actually do. $1k in Oz sounds like less than minimum wage considering the hours you'll be working, 60+ hours a week x 4.5 weeks is <$10 an hour.
Some firms will provide huge amounts of backup, advice, training and most importantly push you when they see you doing well. This will also mean increased size and bigger limits. If you are there for 6 months, pick up nothing and leave it will be a waste but not a big one. If you genuinely "get it" and start at a good firm you can get bigger and then renegotiate any costs. once you are making $20k+ a month then desk fees don't really matter that much.
Just be careful not to do what a lot of guys do in London, which is dick around for 5-10 years getting £30-40k a year not working that hard just for the "lifestyle" so they can tell people they are a "trader". They are the guys who get to 35-40, realise they have no savings, the type of trading they do no longer works and they have no CV to get a new job. They are then f
ked.If the company is good and will actually teach you to trade then definitely give it a go as the upside is unlimited and exponentially faster than any IB. Just be careful as DA says there are a lot of bucket shops out there.
R11ysf said:
Chilli,
I think he means Investment bank not Interdealer Broker.
Dubai,
Will they see it as a put off? Maybe, maybe not. It really depends on what you do, for how long and how successfully. However, the upside is that if you are good enough then you never need to worry about sucking that corporate pole at all and will retire happily from prop trading!
However, read what DA wrote. Firms vary hugely in reputation and what they actually do. $1k in Oz sounds like less than minimum wage considering the hours you'll be working, 60+ hours a week x 4.5 weeks is <$10 an hour.
Some firms will provide huge amounts of backup, advice, training and most importantly push you when they see you doing well. This will also mean increased size and bigger limits. If you are there for 6 months, pick up nothing and leave it will be a waste but not a big one. If you genuinely "get it" and start at a good firm you can get bigger and then renegotiate any costs. once you are making $20k+ a month then desk fees don't really matter that much.
Just be careful not to do what a lot of guys do in London, which is dick around for 5-10 years getting £30-40k a year not working that hard just for the "lifestyle" so they can tell people they are a "trader". They are the guys who get to 35-40, realise they have no savings, the type of trading they do no longer works and they have no CV to get a new job. They are then fked.
If the company is good and will actually teach you to trade then definitely give it a go as the upside is unlimited and exponentially faster than any IB. Just be careful as DA says there are a lot of bucket shops out there.
Thanks R11, sound advice.I think he means Investment bank not Interdealer Broker.
Dubai,
Will they see it as a put off? Maybe, maybe not. It really depends on what you do, for how long and how successfully. However, the upside is that if you are good enough then you never need to worry about sucking that corporate pole at all and will retire happily from prop trading!
However, read what DA wrote. Firms vary hugely in reputation and what they actually do. $1k in Oz sounds like less than minimum wage considering the hours you'll be working, 60+ hours a week x 4.5 weeks is <$10 an hour.
Some firms will provide huge amounts of backup, advice, training and most importantly push you when they see you doing well. This will also mean increased size and bigger limits. If you are there for 6 months, pick up nothing and leave it will be a waste but not a big one. If you genuinely "get it" and start at a good firm you can get bigger and then renegotiate any costs. once you are making $20k+ a month then desk fees don't really matter that much.
Just be careful not to do what a lot of guys do in London, which is dick around for 5-10 years getting £30-40k a year not working that hard just for the "lifestyle" so they can tell people they are a "trader". They are the guys who get to 35-40, realise they have no savings, the type of trading they do no longer works and they have no CV to get a new job. They are then f
ked.If the company is good and will actually teach you to trade then definitely give it a go as the upside is unlimited and exponentially faster than any IB. Just be careful as DA says there are a lot of bucket shops out there.
Indeed, the $1k isn't going to go very far but as DA rightly says, an awful lot of these types of firms actually charge the trainee for the privilege. At least I'm getting some small recompense for my time even if I do not make the cut. I've got some money saved from my own trading and work so there isn't pressure from that side.
I feel like I've reached a personal limit with my own trading. I'm lacking in discipline on occasions and I think some professional trading will help me enormously and as you say, even if it doesn't work out, at least I'll have learnt a new area of trading and gained some more experience.
Dubai said:
Thanks R11, sound advice.
Indeed, the $1k isn't going to go very far but as DA rightly says, an awful lot of these types of firms actually charge the trainee for the privilege. At least I'm getting some small recompense for my time even if I do not make the cut. I've got some money saved from my own trading and work so there isn't pressure from that side.
I feel like I've reached a personal limit with my own trading. I'm lacking in discipline on occasions and I think some professional trading will help me enormously and as you say, even if it doesn't work out, at least I'll have learnt a new area of trading and gained some more experience.
Exactly. Give it a crack as there's no point dying wondering! If you turn out to be good it is a really fantastic lifestyle.Indeed, the $1k isn't going to go very far but as DA rightly says, an awful lot of these types of firms actually charge the trainee for the privilege. At least I'm getting some small recompense for my time even if I do not make the cut. I've got some money saved from my own trading and work so there isn't pressure from that side.
I feel like I've reached a personal limit with my own trading. I'm lacking in discipline on occasions and I think some professional trading will help me enormously and as you say, even if it doesn't work out, at least I'll have learnt a new area of trading and gained some more experience.
Good Luck
The essential mechanics of trading remain the same through all asset classes.
It will be their task to ensure you are taught the specific nuances of the classes they trade. That's their core roll and what they will focus on before letting you loose with their funds so I wouldn't be overly concerned.
Spot fx is a derivative and while more liquid than bonds the macro drivers of movements are very similar. What you will get because of lower liquidity is more movemt from smaller factors which is why guys who have worked on a desk in an institution have an early edge as they will have learned who and what the entities are that can drive movements.
Brokers love fx as it is OTC, cheap and totally liquid. Clients love it because they can use nothing but TA, have no understanding of the markets. With TA it is te charts fault if they lose, they have deniability so they keep losing more before giving up. All those losses go on the broker's book.
Other asset classes require a better understanding of what events and who makes them move and you learn an innate feel in time and that added to your natural ability equals profit.
They should in theory just be looking for that natural ability and then overlay the market nuances on top.
I trade UK large cap equities because that's the small universe that I've learnt my brain can work well with. It's profitable but not scalable, the liquidity aspect means you risk being the market rather than scalping it and for the last couple of years the fall in liquidity ha meant I've had to reduce deal sizes. I only trade a dozen or so equities. My business partner however trades a larger equity universe and relies on breakout calcs as well as volitility pick ups but makes returns.
My view is that so long as they are paying you you should go for it as there is very little to lose and lots to possibly learn about a new area which will always help your own trading. Good luck.
It will be their task to ensure you are taught the specific nuances of the classes they trade. That's their core roll and what they will focus on before letting you loose with their funds so I wouldn't be overly concerned.
Spot fx is a derivative and while more liquid than bonds the macro drivers of movements are very similar. What you will get because of lower liquidity is more movemt from smaller factors which is why guys who have worked on a desk in an institution have an early edge as they will have learned who and what the entities are that can drive movements.
Brokers love fx as it is OTC, cheap and totally liquid. Clients love it because they can use nothing but TA, have no understanding of the markets. With TA it is te charts fault if they lose, they have deniability so they keep losing more before giving up. All those losses go on the broker's book.
Other asset classes require a better understanding of what events and who makes them move and you learn an innate feel in time and that added to your natural ability equals profit.
They should in theory just be looking for that natural ability and then overlay the market nuances on top.
I trade UK large cap equities because that's the small universe that I've learnt my brain can work well with. It's profitable but not scalable, the liquidity aspect means you risk being the market rather than scalping it and for the last couple of years the fall in liquidity ha meant I've had to reduce deal sizes. I only trade a dozen or so equities. My business partner however trades a larger equity universe and relies on breakout calcs as well as volitility pick ups but makes returns.
My view is that so long as they are paying you you should go for it as there is very little to lose and lots to possibly learn about a new area which will always help your own trading. Good luck.
Dubai said:
Think I may keep a journal going during these 4 weeks of online training.
Interesting day so far, low volume as to be expected with the BH in the U.S but learning stuff all the same.
I you are going to be a good prop trader you'll be needing link like this todayInteresting day so far, low volume as to be expected with the BH in the U.S but learning stuff all the same.
http://www.mousebreaker.com/games/bbgold/playgame
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