Job as a Proprietary Trader when capital investment is needed for a new trader

Discussion in 'Professional Trading' started by Smash255, Jun 16, 2011.

  1. Smash255


    I have a potential to start a new job as a Proprietary Trader for a firm in Manhattan, but it involves a capital contribution and before I commit to anything just have a question on it.

    First I guess some background, I'm in my late 20's a college graduate in the NYC metro. I previously worked as a Pricing Analyst dealing with Mutual and Hedge Funds for a large bank in NYC. When the economy crashed the bank let go a couple thousand employees, I survived the first few round of cuts, but not all of them. I have since gone back to my old retail job (which I worked in college), and obviously trying to find something better.

    Anyway I always have had an interest in the markets and have done some very low level trading on my own and in my job search came across some trader positions.

    I recently had an interview with one of the firms in Manhattan and have a likely offer for it. I knew going in that it was going to be commission oriented (which I was fine with) and had an idea some capital contribution might be required, but the amount needed to start was a bit of a sticker shock.

    I would get $100,000 to start trading, but would need to make a capital contribution of $5,500 for it. Now I know some (and probably most) companies require some form of capital contribution, and the ones that don't tend to be harder to get into.

    I'm basically just trying to get thoughts on needing to make a capital contribution of $5,500 in order to get $100,000 to trade with as a new trader. Also how that matches up to the Industry standard/ average if such a thing exists?

    I know that was kind of long winded and might not be easy to follow, but thanks for any help anyone can offer
  2. kwalta


    Will some kind of training be provided?

    If not, why not scout around for a prop firm that does not require you to cough up a fee for joining?
  3. It's the same old metaphor- you sold and repaired bicycles.. now you want to race the Tour De France... make sure you get on the right team!
  4. mickmak


    is it $5500 a fee to join? i.e. that money is theirs no matter if you make or lose as a trader? If it is a fee, I say that is highly unusual.

    If it is just the capital contribution to a trading account, then that is fairly normal. They are giving you 20x leverage (100k). Did you ask them about the split on the profit? (The term commission based is a bit misleading since that would mean you are a flow trader, but this is a prop).

    One note of caution, if you start to lose, do you need to maintain 5500 of your own money? For example, if your 100k account lost 4000, do you need to replenish that 4000k? Most prop would since they only provide you the leverage up.

    good luck, hope this is what you want to do. tough living, but fun.
  5. Smash255


    The firm does provide training. The $5,500 is basically to cover any potential losses that may occur. I'm pretty sure you do not need to continue to keep $5,500 if you need to use that amount to cover losses, but that is certainly something I will look to get clarification on prior to going forward with it if I choose to do so. I wouldn't have to make any decisions for a couple weeks anyway.

    I just got another interview for next week with a separate trading firm that advertised no capital contribution required.

    As far as commissions/ payouts for profits go, its something that slipped my mind to ask in the previous interview (likely because the capital contribution of $5,500 was quite a bit to take in), but will make sure I ask about that for that position as well as the one for the interview I have next week.

    Is their a typical or industry average for the commission or % of profits for a new trader?? Would I be correct if I assume the commissions are typically higher when capital contribution is needed as opposed to when it is not??

    I have always had an interest in the markets, and after getting laid off from my previous position with the collapse of the economy (which was on the Pricing side of Hedge Funds) I have been stuck in retail.

    I know I will be the one ultimately having to make the decision if I should go that route, I know its a huge commitment and its quite possible I could work for one of these firms and make no money or even lose $$$ (if I work for a firm with a capital contribution). So I'm just trying to find out as much about the industry as possible, how everything works, what kind of payout %'s on profits is considered good for a new trader, what isn't and so on before I jump on with any of these companies or the industry in general.
  6. mickmak


    The best way to start is get on a grave yard shift for a firm. night or day... same shiz. A bit more vix during the day, but I think the nights will be more important as focus _will_ shift to asia eventually. Think long term.

    Anyway.. good luck. I think based on your comments, you are still pretty young. So got time to start fresh on a desk.
  7. emg


    100:5 1/2. will be hard to find a legit prop firms with that kind of ratio
  8. A $5,000 capital contribution is pretty common at those types of firms. I'm not sure what's up with the extra $500, but that's not too far off from the norm.

    Maybe you can try to negotiate the capital contribution down in exchange for less buying power. Experienced active day traders for example could make $1,000 a day with just $25,000 in buying power.