I hope you have continued success in your trading endeavors, but I want to comment on my opinion of the skill of market markers. I rotated through the nasdaq and nyse desks at a bulge bracket bank and I was not impressed at all with most of the traders. The traders spent most of the day trying to fill large institutional orders at the VWAP price and took few if any directional bets. Like at other places there were layoffs and the desk laid off about 1/3 of the staff in the summer that I was there. I feel that market making is a skill that can be taught to the right person and that if you are a good daytrader you would be a superb market maker. By far the best traders on the floor I found were on the equity derivatives and program trading desks. Now those guys were putting on real positions and taking on market risk. I was most impressed with the two guys who made markets for the QQQs and SPYs. They had the best market feel I have ever seen.
I work for a prop firm that actually cares. They're constantly teaching me, going over any trade I need, and talking to us. They even tell you to cut your volume down when you're over trading. I didn't think any of this was true when I first started, and was worried going over there cause of some of the hecklers here made them sound bad, but right now, I am extremely happy with what I'm getting, considering all the horror stories I read on this board about other prop firms. In my opinion, all those hecklers seem to have been competitors trying to run them out of business cause the firm truly does care, and would be bad for the competition if others found out. IMO.
What firm are you with ? And I was wondering what the motivation is for your firm to invest in you this much. Maybe it is totally their risk capital ?, maybe you pay for the attention ?, maybe payout is their incentive ? Thanks
Some of the best trading headway for me has come out of the discussions and analysis of my trade history with another like minded trader. I can just imagine what kind of progress can be gained talking with a head trader that has years and years of experience. I believe the learning curve will be this much shorter when playing off the wisdom of a veteran, as opposed to reiventing the wheel for every little trading tidbit...ideas, technique, etc. No handholding stuff. When it is all said and done, it is only me and my hotkeys. It just does me wonders to get outta my own head for a while and vocalize and share. My partner feels the same way.
Our classic prop group is a sub group of millenium...the private capital is not.....Private capital is just that....The accounts are opened at millenium... Cheers
Good points. Realize this is a bit off topic, but that's my take on MM's too. So many traders think that MM's are out to job them on their 500-1000 share trade. From MM's I've talked to mostly they don't have time really. As you say they're just trying to get their larger institutional orders filled. This can be an all day affair.
Caliber Financial. I'm not sure what their motivation really is, except that they really want to build a firm of top quality traders. I had to put up 5K, but if I blow through that, they will let me use theirs until I get up to speed. But so far with their training in the last two months, I'm basically flat, which is good compared to what I've heard. They did also tell me that it would take 6 - 8 months to get up to speed. The training is part of working their. They've also lowered my rates already without me having to ask. I would stake my reputation on recommending these guys.
I don't think good market makers necessarily make good daytraders and vice versa. The trading styles are completely different and daytraders don't have the advantage of order flow, huge buying power and long-term investment horizons. MMs have the ability to average down on large positions and trade around VWAP whereas daytraders with limited capital don't have that luxury. Consistently profitable daytraders are very disciplined with their stops. Most MMs don't even use stops because of their large share positions.
when goldman bought out spear leeds kellogg, they fired most of the goldman MMs and used the SLK MMs. Goldmans MMs had the benefit of order flow most of the time, and as such, did not have to make the same type of decisions as do prop traders. Its much easer to make a profit when you got a 100,000 sh. order on your desk, then when you have to figure out the direction without that info.
In response to what you say above: the ideal for a market maker is not to carry a position and by that, not be exposed to direction. That's in a pure market-making sense, obviously sometimes you'll get stuck with position, but you're not going to be happy about it. The SPY and QQQ guys may be happy to accumulate a position in their product because they know they have a guy doing the opposite in the futures pit for them, thereby neutralizing the position that way while locking in a profit.