prop firms: looking for course of action input/advice

Discussion in 'Prop Firms' started by resque, May 30, 2008.

  1. resque


    I'm looking for some input on my current situation and array of choices insofar as prop firms are involved, and I understand this is the place to be asking.

    First off:

    - I'm a self-taught trader, books and blogs, which means I have interesting gaps in knowledge and no useful connections in the trading industry. I've been trading in earnest for a year now, profitably in net, and quit the day job early this year.

    - This year has been, ah, interesting. For many, as I understand. Goodbye solid day trading edges that used to work well, suddenly switched off overnight, hello new short term swing trading strategy. Via a couple of months of cursing and hard work.

    - I can reliably make about 5% of capital/month from a retail brokerage account at the moment, based on said short term swing trading strategy. Overnight holds, 2x leverage. That is not enough at my present level of capital to both live on and grow the account. I'm about a factor of two short in leverage. So, the quest for leverage begins.

    - I have spent some time reading this forum, in particular the Tuco thread - which is very informative, by the way, for anyone trying to understand the basics of the prop firm world. You guys should archive that one, and thank you to the posters who made it worth my time to look at.

    - I'm based in California, probably shifting soon to Washington, but I don't really know how much physical location matters for dealing with prop firms. That's one of those interesting gaps in knowledge.

    So, as I see it, my options are:

    a) suck it up and take a contract position for a year to double up my capital. Seems like a step backwards, and cuts off time I could be using to work on resurrecting a day trading edge of one sort or another. I don't like being stuck on one working strategy without devoting a lot of time to creating more.

    b) suck it up and pass the series 7, then work with Bright or another similar firm prepared to give my 5%/month behind sufficient overnight leverage to make it worthwhile putting half my capital into an account with them.

    c) suck it up and keep working at building a day trading edge (3 months of failure and counting), while watching the capital ticking down for a while longer to feed my housing and food habits.

    d) find a [sub-LLC/whatever the SEC hates today] prop firm that's willing to give me some loony level of overnight margin based on the soporific, relaxing drawdown math for my present swing trading method. Put the bare minimum fraction of my capital in there that'll get me to my goal of 2x overall leverage, and proceed assuming that faction is written off if that business model falls out of official favor.

    Working with a prop firm, I should say, is also interesting because of the outside input, intentional or otherwise, to my process of developing trading methods. Seems I need that; 3 months is too long to fail there.

    So, comments please. In particular, even after reading these boards, I have no real idea of what a realistic expectation is for obtaining leverage under scenarios (b) and (d). For all I know, no-one hands out 4x overnight margin until you've killed your first enemy tribesman - or they might give out 4x overnight margin with the free candy in the front office. No idea.

    Equally, I have no idea where to start digging up prop firms of a certain type for option (d) on the West Coast of the US, nor how to tell good from bad once I have one in front of me.
  2. bkveen3


    I say keep doing what your doing with just getting by for another three months. Study forex or futures market at night and open a practice account. When you are nice and profitable switch over to one of those forums and get all the leverage you need. Just my two cents. Btw forex is not impossible as some will try and convince you, its just different. Study all you can and put some serious time in on the sims and anyone can master it. Good luck.
  3. Option B is best, IMO. You'd get 5-1 overnight leverage.
  4. resque


    So including PMs, that's an even split of votes for (a)-(c), and no-one likes (d). Anyone else want to weigh in?
  5. Do you have links to any threads on this discussion? btw fwiw, i say go with bright.
  6. resque


    Not sure what you're asking for here?
  7. It seems that you've found out that a lot of daytraders have lost their edges recently. I don't know anything about this and I would wondering if you could point me to some discussions about it on ET.

  8. resque


    Ah, no, nothing on this site. I'm getting that second hand from Brett Steenbarger's blog (, based on feedback he gets from the community, reinforced by my personal experience. Quite possibly selection effects at all levels, but you might ping him and ask if he thinks that's the case.
  9. I subscribe to his RSS feed but I haven't read anything like that.

  10. resque


    I did try to Google the twice I recall it mentioned, but my memory isn't delivering the exact phrases used, and these were paragraphs in posts on different topics. Really, email him - it'll be faster.
    #10     Jun 23, 2008