Hi, I'm curious to the strategy employed by First New York. Are there any ex-traders from the firm that have any insight?
50% payout is a nice number but I'm more interested as to how they are taught to trade. If it was just a matter of buy low and sell high, I'd just buy myself an option that gives me the right to do so! No doubt some of them would have been laid off recently and maybe able to provide some inside knowledge.
Reactor, can you be a bit more specific about your question in regards to what u are looking to know?
The strategies they use, risk management and tools. Bearing in mind they are a company that pays a salary, lets you trade their money and gives you a cut of the profits, I think a lot of people on the board would find the information useful from an ex trader there or even a current one.
FNYS does not pay you a salary. FNYS gives you a draw against your PNL which is totally different. IF you are not a PNL producer and they fire you then are not obligated to pack the draw that you negotiated. The percentages are 35% for commodities and 50% for equities. Respectfully, to ask a question such as what kind of strategies do they use is hard to answer bc there are over 150 traders and many of them have very different styles and strategies. You can just then ask how do traders in general make money bc FNYS traders are not doing anything top secret or UNKNOWN to the rest of the trading world. Most of the successful traders are experienced former bank or hedge fund traders who came to FNYS to seek a higher payout. The secret to FNYS' success are listed below: 1) They have lots of capital to allocate for EXPERIENCED traders. 2) The risk management is such that creates a day trading culture as they monitor all posiitons closley. - SO a trader who lost 100k might get fired before a trader who lost 300k simply bc the firm did not understand, like or believe in the strategies that the trader who lost 100k was using. If the trader who was down 300k was doing something, depending on his style, views and how and why he managed his risk...he may need more time. First NY risk management filters out bad talent quicckly so there is a lot of turnover. ANd bc the firm is run by traders, they understand that a losing day does not immediately mean the traders suck. SO they involve a level of subjectivity in their risk management. Because they do monitor postions daily, however, the underlying result is a day trading culture. Traders, with proven track records and large PNL producers ulimately get a huge leash and trading Var, where junior guy would have to carefully build up his reputation. 3.) The firm promotes a culture to share ideas as some traders put on positions outside their core markets. So you can easily walk over to the commodity desk if you are an equtiy trader and ask, "what is going on in crude" and vice versa. 4.) The junior trading program died down a bit and they tried to revive it. There have been a few guys who came out to do very well from the program to make millions but this is not a large number. Most of the junior guys struggle to find themselves bc a junior guy with no experience usually just tries to understand the strategies that the senior trader teach them. But can learning from that trader equal the outside trading experience that they senior trader has? in most cases no. So as a junior its kind of hit or miss, either you have a senior trader who will look after you and put in the effort to teach you his strategy or he may half-fast teach you as he maybe absorbed in making money for himself or he does not want to share all the pie with this assistant who will just try to mimic the senior traders strategy. OVERALL, in the long run, the firm has showed committment to producing talent within through the junior program as well as searching for the BEST external talent. Some junior guys rotate desks and traders to get a better expereince. 5.) Desks are usually grouped by market segments naturally. Within the desk you may have a few guys doing similar stuff or stuff totaly different within that sector/segment. This helps create the edge of idea generation and support.