Do's and Don'ts of trading at a prop firm

Discussion in 'Prop Firms' started by Bluedog, Aug 9, 2003.

  1. Bluedog


    Hi folks!

    I will be beginning prop trading within a month or so. I would appreciate any input from experienced prop traders about "any" Do's and Don'ts of trading at a prop firm.

    Looking forward to your comments. Thanks.

  2. I've been prop trading for over 2 years, and am with my 3rd firm. Prop trading is paying my bills. Seen a lot of people successful traders and a lot of people fail.


    1. WORK HARD: Come in early, stay late, go over all of your trades. The learning curve is steep, and a lot of people never make it. With hard work you can become profitable in 3-6 months.

    2. KNOW THE OTHER TRADERS: Find out who the profitable traders are, learn from them. Find out who the unprofitable traders are, they are often the ones most willing to give advice, be skeptical of their advice, learn what they are doing wrong.

    3. STUDY INDEPENDENTLY: Supplement any training you receive with outside reading. Learn as much as you can about technical analysis, trading styles, successful traders and trader psychology.

    4. KNOW YOURSELF: I've seen a lot of people fail, and it almost always comes down to the psychological stuff. Recognize when you are pissed off, fearful, greedy, too aggressive, too risk averse, etc

    5. KEEP RECORDS: Keep track of your daily and monthly results, keep a trading journal. Be able to track your progress, be aware when you hit a slump and figure out what you need to do

    6. STAY POSITIVE: The most vocal traders tend to be the ones losing money. You can make money in an market conditions. If you are in a slump, find ways to make money. Ignore the losing traders who are complaining and waiting until "the market is good again"


    1. DO NOT BLAME THE MARKET: Accept responsibility for all your trades

    2. DO NOT BLAME THE PROP FIRM: They're a dime a dozen. If you have legit complaints or can get a better deal elsewhere, then just go. Don't expect them to hold your hand, this is a business for independent people.

    This is the best job in the world if you can make money at it. Good trading
  3. I assume you will be trading stocks only. Learn from the best traders your firm has. Learn the sectors and stocks within each sector. Find sectors and stocks you feel you can trade. Early in the day don't fight the daily trend. Only look to buy strong stocks/sectors, only look to sell weak stocks/sectors on the day. But recognize that sometimes during day the strong stock/sector can become a weak stock/sector too.

    I would recommend experimenting and finding a few stocks you have a feel for and just focus on a few and learn to trade them well. The usual cut your losers and let your winners ride is important. I am still working on the letting my winners ride more. Be patient and wait for opportunities, don't just trade for the sake of having a position. The best trading is early in the day so the 1st 2 hours should be your busiest time for volume and maybe the last 2 hours as well depending on the day. I don't know if you will be trading NYSE like me or NASDAQ stocks which I don't trade. Personally I don't waste my time with stocks with a daily range below $1. I prefer it $1.50 or up.

    Also cut your losses on bad days as well. If your average up day is $200, you should look to cut your day short if you lose $100 or so. Don't let one bad trade ruin your day and don't let one bad day ruin your week, etc. Your firm should set some stop loss parameters for you I would think anyway. One of the hardest things for a new trader too is pulling the trigger. That is the only way you are going to learn and nothing worse than not taking a trade you like and see it go 50 cents or more your way.

    I hope this helped some and good trading! Who are you trading with anyway? I'm with Andover.

  4. Bluedog


    PnL Rally,

    Thank you for your reply, great points! I could sense a winner's attitude in those points you mentioned. It is always encouraging to hear a trader saying trading "can" be profitable! Very helpful hints though. Thank you.

  5. Bluedog


    Load the boat,

    I will be trading NYSE stocks only also. I am beginning to narrow down the sectors and the stocks already. It seems like each stock has its own sort of personality and trading pattern, specially in the short term trading..
    Thanks for the recommendations and your helpful reply.

  6. PnL was correct except he left out the one thing to do as a Prop trader or any trader, MAKE MONEY. Seriously, just "find a way". Don't give up. If you truly want to you can.
  7. axehawk


    What firm will you be starting at?
  8. Bluedog



    To prevent this from turning into spamming one firm or bashing another, pm sent.

  9. why would saying who you trade with turn into spam bashing? All firms have their pluses and minuses and perhaps mentioning the firm would encourage others to give their insight.
  10. axehawk


    Are you kidding me? Every frickin' thread on this board turns into Andover/Don Bright/Worldco bashing if you give it time.
    #10     Aug 11, 2003