I am a college sophmore in a Finance/Economics program and have been trading retail off and on for a couple of years. I've had mixed results due to inexperience but feel I have progressed and matured as a trader and have a good handle on what this line of work entails. I am positive that proprietary trading is the career for me and would like advice for what I can do to get started, or at least prepare and educate myself so that I become a desirable candidate when I do decide to enter the industry full-time. As of right now, I am almost 20, living in Tucson and attending UofA. I do not currently have the $25,000 most firms require as collateral but am willing to put up what I can to get licensed and get experience or training. While I would love to enter this career right now on a full-time basis (as I plan to within 2 years), I realize that this may not be possible and am just looking to get my foot in the door. Any input would be appreciated.
When you master and successfully apply you finance/economics degree to the real world. Then ask the question. mktman
Do yourself a favor, get some real world experience in the form of an internship and such so if trading doesn't work out, you have something to fall back on that will pay the rent.
If you want to trade, you will do what it takes to learn to trade within your personality. Most people will give the above type of advice. I will give the following.... My advice would be to forget stocks and look into futures. There are places you can open and account with $1,000 and start trading. I am a commodity trader and as such have no interest in stocks. Read Hitman's March journal and see the effort he puts into a few hundred dollars a day. This can be made, imho, much easier in the futures market. I think of the potential in this way, E-mini Nasdaq 1 point = $20; Trade for 3 points = $60; Commissions $10 per round turn; Total profit $50 on one contract. Trade 2 lots and its doubled and so on. Yes you can loose, as I did for 4 years, but you can also win. Whatever type of trading you wish to do, if it is what you want to do - get the money and spend it on the learning curve. I spent my college money that I never went to, on learning to trade; because I WANT TO TRADE! I guess all boiled down is - if you want to trade pay for the education and just do it!
When I read about proprietary trading on these boards, it seems a bit of a misnomer. In most cases it appears you need to provide your own capital, so you are risking your own money and not your "employers". The brokers that don't require a capital contribution will give you such small trading limits that it would be hard to make any real money. So it is really just a fancy brokerage account with access to leverage. I do prop futures trading for a private company. They allocate me a certain amount of money to trade with, and I get a percentage of profits. I am not liable for any losses whatsoever. The company has no affiliation with any broker so they don't care how much commissions I generate, the bottom line is my risk adjusted return. This is what I call real prop trading - access to external capital with no personal liability. To get a deal like this you need a substantial real $ track record. Stock daytrading isn't the only way to make a living from speculation. There is swing trading, position trading, and you can use other instruments like futures, options, or fx. I was in a similar situation to you some years ago. The route I took was to get a good job and trade part-time to build experience. You can trade exchanges that are open when you are not working, or develop a swing trading strategy that doesn't require you to monitor the market intraday. Aim to be trading full time by the time you are 30. With up to 10 years of part-time trading you should have built up the necessary capital to be able to quit your job for a year or two and do it full time. And if you fail, you have sufficient experience to be able to get back into the workforce. Hope this helps.
cdgtrader, Prop trading at a L.L.C. with no experience is very hard, especially in this environment. If you have a degree, I would suggest you get in a training program at a Market Making firm(upstairs or on the floor). You would probably have to relocate to a Chicago , SF or NYC. There are several hundred hedge funds and market making firms in the NYC(NYC,NJ & Conn.) area alone , so it would be best to try to go where the jobs are. I would suggest you write to some firms and get in a training program. The best way to get a job in these fields is personal networking. I'm sure an Alumni at your school works for a Pension fund,Market Making firm or Hedge fund. Talk to some of the Economic Professors at your school, many have contacts in business or may be on the board of a hedge fund or Firm. You can also go to firm web sites like Spear, Leeds & Kellogg at www.slk.com and call their human resources dept. and ask about their training programs. You can easily find more trading and MM firms on a web search. The job market is tough, but hopefully things will improve when you graduate. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
If you REALLY REALLY REALLY REALLY want it and you will give up everything in life to become a trader. Save up money, relocate to New York area, find a shared room (hell a shared room in outerborough can run less than $500 a month) outside of Manhattan, come to my office, fill out the paper work, study for S7 / S55 while possibly working at the local MCD's or whatever short term gig you can get your hands on (a guy on my squad did bar tending) if you need to crank out as much living expenses as possible. If you show me THAT MUCH heart, you will get a LEGIT shot on my team, guaranteed. No, you will not get a salary, but you will get a real shot at day trading with none of your own money on the line. The conservative approach, is of course, to take anyone else's advice on this thread, EXCEPT ***Read Hitman's March journal and see the effort he puts into a few hundred dollars a day. This can be made, imho, much easier in the futures market.*** This is total BS, as the person who made the above comment lost for 4 years, and I went profitable 3 and 1/2 months into the game (although in a much better market environment). Asking a new guy to trade futures in this market is suicide.
First advice - experienced advice from an internet message board can be a most valuable tool - no...wait...you already figured that out. Hell, your are about five years ahead of me on that one at least. fwiw: Proprietary trading can often be a sleazy business. Trusting someone to honor their word can get you hurt. If you can find someone to back you when you put up no money, you at least know that you will lose none of your own money. If you have to put up money, make sure that in your mind you are prepared to kiss it goodbye. If losing your money concerns you, do not put it into trading. Show someone enough "heart" as it has been said, and get them to back you without you putting up money. There's probably about a 90-95% chance that finishing your degree now will benefit you at some point in your future. College is not that hard. Go to night school or part time or whatever. You can still trade and finish your degree. <i>I am positive that proprietary trading is the career for me</i> This is another one that you beat me to, man, and I consider myself a quick learner. Congrats on that one. Some people have destinies, imo, and feeling that you know yours will add a purpose to your life. Remember that <b>Pride Cometh Before a Fall</b>, and welcome to trading.
Having gone to a top school, worked on both sell&buy side institutional world, and now doing this prop trading thing, I can HONESTLY say prop trading is the HARDEST thing I've done so far! It's extremely difficult to make a good living at it. I mean it's possible, but the learning curve is very very steep. THe failure rate is extremely high. One has to have a 1)valid strategy 2) good risk mgmt(cutting losses) 3) overcome transaction cost with rapid trading 4) something to live on while you get better at it! In fact, the curve is steep enough that I'm considering going back to the institutional world with a steady salary and bonuses and giving up the personal freedom I have in prop trading. I hope someone on this board maybe Gene, Hitman, or Don can rekindle & reignite my dreary, tired spirit with words of encouragement as to why I should continue doing this prop thing instead of going back to the institutional world? There must be something at the end of the rainbow right? hehe. But anyhow, getting back to advices. I would definitely suggest you finish your degree and pursue a standard job in finance for a while before you go onto this prop trading thing. trader99
CDGTrader, The bottomline is that the markets are not going anywhere. They will still be here tomorrow, next week, and 2 years from now. So whatever you decide to do in the future, just make sure you stick it out in college for the next two years and GET THAT DEGREE FIRST. I realize you didn't say you were dropping out to start trading now, but in case that thought crossed your mind, forget it. Gene provided some excellent advice, make some contacts and get those internships. The experience gained from internships will be beneficial once you have graduated and start to look for a "trading" position.