There are many competitive firms where it is difficult to get into. Think of First NY or Citadel. They even pay a small base salary just to get you by on living expenses. But these top-tier firms generally hire individuals that have MBAs or other important qualifications. Then there are other second-tier firms that pay no salary, but provide a strong training base and capital. They don't ask for any desk fees (software or quotes) or have their traders be held responsible for commissions in the event they are net negative (commissions are deducted from a positive P/L though). Although these are less competitive, it is difficult to get into many of them. Also, just because a firm asks for a initial contribution shouldn't also frighten anyone. Think of it as a business partnership where your $5,000 gives you access $100,000...that's leverage a bank cannot provide. There are even some firms that require $50,000 in capital. They are generally legit when they are at that level. I prefer ones w/o any initial contribution. Be careful of the bottom tier boiler shops. They require that you pay for quotes, provide a tiny initial contribution and sometimes attempt to persuade potential traders to take their $1,500 training seminar! Paying a price for training is almost a red flag. They seemingly promise that you will become profitable because they have "secrets" too... bullsh!t. These shops also want their commission dollars even if your P/L is in the negative. Many let inexperienced people trade remotely w/o even with no track record of proven profitability. This kind of remote access is another red flag. These shops essentially just provide a "brokerage" service to you and "fire" you when you go through your initial contribution. Stay away from these! You're better off saving $25,000 and opening your own retail account like IB.
good post. I remember reading your thread about time trading prop and moving to Conn, what are you doing now?
Hi... I used to trade for a good firm in Stamford, CT. The model resembled prop, but it was more like a private fund w/o outside investors. Anyway, we had many ups-and-downs but ultimately were unprofitable in January and February so our parent-company decided to close shop in May 2009. When I learned of this I resigned towards the end of February. I was fortunate because 50% of the traders with similar P/Ls/skills/etc. were subsequently fired in the beginning of March. The operation is 90% done, with just three traders remaining. Now I'm working with a start-up company that deals with the emerging bond and stock options markets in China. I'm also trying to pad my resume by learning some basic computer programming and am studying for my level I CFA candidacy in December 2009. I still follow stocks, but without money in the market its obviously not with the same intensity.
I never understood the point of starting or joining a trading "group" if you are already successful. Either your edge resides in niche situational setups which would blow itself up if shared with other traders, or you are trading liquid and deep markets wherein you just up your size and keep everything for (and to) yourself.
1) The biggest advantage is leverage. If you have an $100,000 account and are confident you can achieve similar results with a $300,000 would you rather wait years to chip away your 100K to 300k or get that funding immediately? 2) Many people enjoy trading with a group of guys they can trust. If you're having a rough day, they may help you to regain your confidence or at least they will try to prevent you from doing stupid. You have more eyes watching the screen so to many this is quite beneficial.
cannot stress those 2 enough. being down and have your buddy help you out is worth it. (if I was at home. Id blow up and go nuts, but trading in a team environment helps)
Absolutely. I've been through that phase earlier in my career, trying to trade at home. It takes a very particular type of person to achieve emotional stability in trading while being alone 8 hours a day in front of a computer.
I meant joining a group working as a team, not merely trading within a prop office and using leverage. I much prefer trading in an office now versus at home, but beyond sharing a few war stories we pretty much keep to ourselves (at least those that seem to know what they are doing).
Exactly. So unless the "group" is sharing profits, forget it. No advantage to prop other than the leverage.
i know some remote guys. they are never online. never seem to be making any money. always asking what is going on (Im no expert either) they are missing out big time if you ask me. plus it is nice to get out of home. shoot the shit with the guys, have a nice lunch out, look at the good looking females in the office a prop office isnt a typical office setting, you dont have to come in everyday if you dont want too as you trade for yourself