thanks alpha, i see you have a pretty inside look whats going on there. seems like the businesses of daytraders and traders there are quite different. Maybe the intraday strategies in these investment banks are program trading action/automated or arbitrage. Its interesting that the large investmentbanks are FCMs. I think theyll accept only very big customers to clear their futures transactions?!?! What about hedgefunds? Do you think that hedgefunds would hire daytraders or is this businesssimilar to investment banks?
bank traders will often trade flow, as well as their own outright punts on direction. a good example of this would be the fx trader who gets a position given to him by his salesman. if he likes the customer's idea and knows/likes the strategy behind it, he might put a smaller trade on himself in the same vein. prop traders don't have clients but often have the advantage of seeing what the bank is doing at a net, intraday level - they are perhaps closest to your concept of a day trader. and arguably the most sought after of trading jobs at a bank. one important point, don't forget the majority of traders at a bank are people. although this may sound contrary to my previous post re automated trading strategies, it's valid none the less. the human element of trading (at a bank, or elsewhere) shouldn't be ignored. their advantage comes from leverage, good training, experience, customer flow / information and the all important spread. as for your other comments, bank traders are shopkeepers of a kind. hedge fund traders are selective buyers who have done their research. typically, the hedgies are ex-bank traders in the later stages of their career or "academics" with relevant market experience. finally, banks are FCMs because it's cheaper for them to clear trades themselves rather than pay someone else. if they are broking for customers, it also allows them to provide a full service to customers.
obviously bank traders have access to more cap and 10% of 5-10 mil is decent cash. however if they have the skil to make that much, i am talking about prop traders not dealers, why dont they put up a mil with slk or other clearing firm get some leverage and keep more for themselves?
risk reward i guess. good basic, good prospect for upside, relatively stable job, perks, employment mobility versus doing it all on your own, possibly freezing yourself out of the job market. some props do indeed go down the trade by yourself route, setting up as an embryonic discretionary hedge fund. 2 yrs track record, ruthlessly sell yourself, get the FUM up and away you go. with regard to your question, why trade $1m if you could manage $20m? alternatively, retire from finanace aged 35 and make lemonade / play golf.
I meant put up a mil with slkc refco or whoever and get some leverage on that 5 or 10 to 1. I think the best ones leave and eventually start up hedge funds, ones that arent naturals but benefit from the bank environment and do ok, stay and retire at 40 anyway.
I have yet to hear of a single person who did that and didn't turn into an extremely boring old fart before their time. How the hell can you go into the living death of conventional life/retirement at that age? Life - real life, not the day to day drudgery played out by all too many - is lived on the cutting edge, not sitting around getting fat, old and bald playing golf in Florida or the Costa del Sol. I would rather tear off my left knacker than endure such a fate. If the ultimate goal of being a hot young gunslinging trader is to turn into a millionaire version of your parents, then we might as well turn off our screens, close our accounts, put our savings in the bank and pack it in now. God help us if that's all there is to shoot for.
You're -absolutely- right. Strange thing is... this is what one aims for / I aimed for when starting out!!! The treachery of experience over ambition.... Plenty of people have done it though. And maybe stranger, some of them have come back to the markets. Because they miss a sense of purpose. (Poor people..... The markets are simple/dull things really. They may behave in seemingly complex ways but ultimately it's buy, sell or do nothing.) And yet we all want to retire in 5 - 10 years. I'm not sure if I've figured this out in an honest way yet - sad bastard.
Is there any possibility to get an insight view of the financial situation of proptrading firms? I dont like to get hired by any firm who can close their "shop" caused by a lack of financial backup. I know that FCMs have to publish their equity background. Is there something similar for prop futurestrading firms?