prop firm

Discussion in 'Professional Trading' started by tentenequals20, Dec 19, 2006.

  1. Hi,

    I have an MBA and MS in engineering. Made some $ in stock by day trading using models I developed/borrowed...
    am loking to quit my day job and go into trading.

    any advice on how one might proceed. I only have about 100K, which is not a whole lot in the silicon valley.

    any advice on how I can proceed?
    prop firms, self..

  2. You don't have to quit your day job to go into trading. In fact, you shoud work on longer-term models with EOD data (the Seykota way - only probably just not trend-following), do your research at night, let your system trade for you, and keep your job for awhile. After you try this, after carefully paper trading your system in real time, then starting with a portion of your funds, then get enough annual profits to live on, then quit your job.

    I say this because I made the mistake of quitting my day job to trade full time. Now you really HAVE to make money, and that sucks as a trader and you have NO CHANCE right from the beginning, in my opinion. You will overtrade and trade when you shouldn't, because if you don't you can't make money.

    If you are at that point now, since you said you made some money in stocks, I would say your still nuts with only 100k to quit your job. AGain, my paranoia is coming out here, because I did that, and I had more than 100k. I was trading and investing for over 10 years while employed in an top-tier Investment Bank. WHen I left to trade on my own, it was a whole different animal. I would definitely not do it that way again. I would have AT LEAST 5 years of annual income in the bank, plus my trading stake. Of course, that's picture perfect. In reality, I'd probably roll the dice again, because that's just me. But it would be risky.

    ANyway, I blew up and faced personal bankruptcy. I didn't have to file, but I was damn close. I almost lost my home, my cars, and my family. And I am an Ivy League educated ex-IB, so it can happen.

    I wish you well, but please keep that job and the benefits it provides until you build up more than 100k. I would say $1mm. Then you can start your own little fund, and have a track record that you've been working on, collect some OPM, and you are all set.
  3. Oh, and with those degrees, you should be able to get in with a hedge fund making some decent dough to start, understand the processes, get to know the principals, have access to the best technology, etc. to test and build your models.

    Just my opinion.
  4. thanks much! i understand your experience and it's great to see you share it. let me know make the mistake again.

    unfortunately, i am not sure on building a model that autotrades yet. got to figure it out first.

    thanks again
  5. yes. imo daytrading fulltime (quitting a fulltime job) without less than 1mill in net worth is too risky imo

    but that's me
  6. Tentequals

    It's a tough choice and one which I also made. The route I took sounds similar to Whoknows? - I was trading at an IB then stepped out on my own. I haven't faced bankrupcy (yet) but I'm not financially free yet either.

    bottom line is that the "best" route depends on how aggressive you want to be with your career and, of course, your circumstances.

    the conservative route is obviously to keep your day job and work on EOD trading and other research in the evening & weekends. i wanted to dedicate myself to research full-time and besides, i didn't particularly enjoy my job and i think that is fairly important. i was working 12hr+ days already and didn't have much energy for anything else in my "free time".

    the next choice, as others have mentioned, is to try to get a position at a HF where you can learn from others and still get a salary. the applicability of this will depend on (a) ability to get into a HF which is not easy even with a good CV and (b) whether you want to work for yourself or not. if you join a HF you will be mr junior for the first couple of years. nothing wrong with that but not what i was looking for.

    the last choice is to be ultra-aggressive and go it alone. even then there are multiple choices - ie via a prop shop, trade from home, etc etc. be prepared to work hard and even then be prepared for possible total failure and having to go back into salary land in another job. but it is possible to really make it, with unlimited financial upside whilst also working for yourself. happy to give you some advice if you go this way - PM me.

    then there is all the obvious stuff - ie if you are young, family / committment free, etc then it is a much "safer" risk to take.

    i made the gamble and am not sorry. i really enjoy the work and am profitable & growing my size all the time, with a view to managing OPM relatively soon. i see no reason why others can't do the same provided they are well prepared and don't have unrealistic expectations.

    where are you based BTW?
  7. If you have a good model, goto the hedge funds or IB and develop a partnership.

    If you're not a strong programmer, I'll suggest you to study a bit. If you have the skills to implement those models into their system, you'll have a stronger edge of getting in.

    If you can't program... then they'll take your source code and mess with you. (Most are fair with your models but there are scums out there)

    If the system performs as it's supposed to be, it can lead to a step towards your own hedge fund.
  8. you have been kind and thanks for your reply. If you celebrate, Merry Christmas!

    I am based in the silicon valley area.

    Got some serious thinking on which way to go...
  9. I can program a little will work on it.
  10. #10     Dec 22, 2006