We have many ex MM's who have made the transition into trading exclusively for a personal profit motive, and I agree completely with the "if they can put their ego's aside, then they can do well" point above. Some have thought they were fantastic traders because they made their firm money by trading in and out of the order flow (which, is not as easy as it sounds, agreed), and found it to be a whole new game when they had to initiate trades from the get-go. But, the guys who were smart enough to make the change, get rid of the ego's, have done well. This is much akin to a floor trader who has to "re-learn" from basics, trading off-flooor...it really is a different game. We had to say goodbye to a couple of retired AMEX Specialist/Traders because they simply would not adapt...they wanted to keep funding their accounts,and we had to say .."no, no more, not with us....we don't want you to continue to lose money, it does us no good, and you no good...take that money and go fishing" Sorry to lose them, but wish them well!
I think the hardest thing for any ex-market maker to do is start small. There has definitely been a learning curve for me to cut losses and most importantly trade small. For any ex- market maker reading this thread, take my advice and start small. I know that my tendency to start was to add unmanageable positions that weren't working out. It is also extremely difficult to learn discipline and not be involved in every single move whereas a market maker I was always involved. If you have any advice or tips on how to settle down I would truly appreciate them.