If you had a prop firm, how would you develop traders?

Discussion in 'Prop Firms' started by newwer, Sep 28, 2019.

  1. Real Money

    Real Money

    If you take long/short exposure in indexes, for example buy YM and short NQ, then you can trade (roughly) three times the size in notional amount using the exchange variance margin (SPAN).

    ***This is stuff like having $2,500,000 in long DOW contracts and short $2,064,303 in the NASDAQ (you are risk adjusting exposures so that the overall risk of the trade is lessened).

    [many times a pro trader has to manage exposure, but a perfect hedge is unavailable, so they use cross hedges]

    this could be stuff like hedging out the commodities risk in stock (british petroleum, royal dutch shell, etc) position by selling crude oil futures. This is a cross hedge that is long stock and short commodities to cut the overall risk while still earning the dividend from one of the supermajors.

    ***Technically, this is a cross hedge. However, you can trade this position like a market maker by initiating the position just before a large move, or inside a range that is being traded in. You can be long and short equities at the same time and just be adjusting the net exposure.

    So if you think the market is bullish, you get neutral or net long (while still holding significant positions). If it's ranging, you act like an MM and scalp legs at the ranges. Likewise, when conditions breakdown you adjust to be neutral or net short.

    Here is something to think about.

    Imagine you're a pro trader that has no exposure at 5:00AM and your boss tells you to get a list of exposures going in the UK and US equities markets in order to hedge a portfolio of (long/short) stock holdings and to not fuck this up. You also have to deal with all kinds of ad hoc shit all day like filling client positions and getting positions on at VWAP or better.

    You are going to need to be A LOT BETTER AT TRADING than just picking entry, take profit, and stop loss.
    #41     Sep 29, 2019
    tommcginnis, comagnum and trend2009 like this.
  2. MrMuppet


    My friend, I hope you know a little more about trading than you know about poker.
    Have you ever realized how high the variance is in top level play? With trading it's the exact same way.
    Also, you benefit from the infrastructure advantage of a prop house as well as the concentration of knowledge and experience.

    I still think you don't know the difference between a prop house and a trading arcade. Google it. Hint: Prop houses make money purely from P/L, not from commissions and desk fees
    Last edited: Sep 29, 2019
    #42     Sep 29, 2019
  3. Turveyd


    Errrrrmmmmmm SERIOUSLY!!!!

    You haven't got an edge ( but no time ) which you can teach them ??

    If can take a trader 10years to develop an edge, so I guess you've got Amatuers and well you'll be funding them for possibly years.

    My advice, give up, save your money!!
    #43     Sep 29, 2019
  4. trend2009


    Many thanks
    #44     Sep 29, 2019
  5. I would only recruit people from the Ivy League regardless of how good their grades are. I would have a mandatory 95% wash out rate and never give the ability of all the traders I have combined to wipe out the firm.
    #45     Oct 12, 2019
  6. trend2009


    Ivy League graduate can be a better trader?
    #46     Oct 12, 2019
  7. schizo


    Sounds like one more boiler-room antic that's collecting dust. So what's happened to those 5? Did you let them go after their first disappointing week?

    If I were a prop house, I would make sure of the following:

    1) No 20-year olds: immaturity, impatience, impertinence, and other im's.
    2) Must have a minimum of 1-year trading experience.
    3) Must have a solid understanding price action and money management before going live.
    #47     Oct 12, 2019
  8. orbit23


    I'd be willing to trade on a demo, but only if the offer is serious. I primarily trade cryptos, but i've been tracking indices,usoil and gold and i'm doing pretty well. Trading with lame brokers because i use crypto as collateral and swap fees are insane.
    #48     Oct 18, 2019