I think its pretty obvious that a trading job at a major investment bank is a career, and going to a prop trading shop is not. Even if you could find a totally honest prop firm you are still there to generate commissions for them, not profits for you. Its a fundamental conflict of interest.
There seems to be some confusion on this point due to the fact that there are two types of prop trading firms. 1. Firms in which the capital being traded is entirely the firm's capital. An example is First New York Securities. This type firm obviously wants to maximize the profits derived from trading its capital. The trader's compensation is directly or indirectly tied to the firm's profits on the trading account that he is handling for the firm. For this type of prop trading firm, there is no conflict of interest. 2. Firms in which the capital at risk is entirely the trader's capital. Here, there is indeed a certain conflict of interest as stated above. However, this type of prop firm does want the trader to make a profit sufficient that the trader will be willing and able to continue trading at the firm and thereby continue generating commissions for the firm.
My firm cares and they have been responsive. I was dining at a Wall St. bar and of the managers came in. I was with a fellow trader and the company picked up our tab. It was pretty cool and it's smart business sense.
I think the environment is different in a market maker such as SLK (who has been shut down for 3 months due to consolidation w/GS) b/c firms who pay you $$ or give you a draw have more to lose than a firm where you supply your own $$. Anyway, I heard that only places to offer salary is Heartland and First New York Securities.. Good luck gettting a repsonse from them though. From what I hear, First New York wont look at you unless you are an Ivy league grad and were a captain of a sports team... that is their hang up
I agree and disagree with what you are saying. I think that many if not all prop shops do have some sort of a conflict of interest, but its all about risk. My firm has offered to make me a true prop trader.... No risk at all !!!! but the payout and tickets are ridiculous. I am more comfortable trading my style and getting a higher payout than a no risk style and getting a lower payout. The deal has to make sense for both sides. If the firm is making money in tickets and I am making good money trading.... then it works !!! It is important for me to put up some capital because I trade a lot of volume. I need to trade at the lower rate. 2/10 of a penny for me can equal up to 15k per month in extra commissions that I would rather have. Also, if anyone would like to trade in central NJ area... I am looking for a few people to start a trading group and share the costs of an office. I am already trading there and could use some quality traders to share ideas with. Equipment is already set up and ready to go. I hope this is not a blatant solicitation because I am not touting any firm or rates. If anyone is interested please PM. Banker
Prop firms that care!! LOL! What was that line from Wall Street - "No feelings, and if you want friends - get a dog!" Generally, they care as much as Sprint cares about your mobile phone service, or Ford wants you to like your new car - they aren't necessarily bad guys, but they are running a business and you are a customer. Some businesses treat their customers well, some don't - you don't have to stick around if they don't. Comparing to a trading job where you are an employee is apples to oranges. It is not like you are their employee. The difference is their payoff/reward. In the case of shops with marked up comms, they don't do well when you do well, they do well when you trade. Their payoff is your volume, not your profits (success), and the rate deal they give you. Not that they want you to fail, but your success/failure is not so relevant to their business success. Your ultimate success has nothing to do with what they do, but with what you do.
At major investment banks, if you know how to play politics and have good connection, you can be a trader getting a salary of several hundred thousand dollars plus bonus without making any profit for years. I doubt that you can survive in a prop firm by doing so.
Omcate, they're not handing out free money at Wall Street to anyone who can walk in and sit down at a desk with a phone. Alot of those guys are pounding pavement looking for jobs now. Wall Street sales traders (brokers) have to sell products to clients. But they have to have a very good knowledge of their products and have to have the risk control not to blow up the bank or their customers. The Wall Street proprietary traders that I know and have worked with are some of the smartest and savvied people you'll ever meet. They have excellent academic credentials, are smart as whips, think quickly with conviction, and have the ability to go for the throat when they know they're right.
Yes. I know that a lot of people at Wall Street are very smart. But a lot of people at Wall Street can survive by playing politics too. I met both of them.
I do agree with you. Getting a job at Wall Street now is much tougher than three or four years ago. If the stock market continues to tank, it may get even worse.