Prop Trading - New trader to ET

Discussion in 'Professional Trading' started by marbus, May 6, 2006.

  1. marbus


    About myself, I am a graduate from the University of Chicago and the LSE. Worked as a consultant for a few years before quitting to open my own account with a prop shop a few weeks ago in San Francisco. Just wanted to introduce myself, network and learn.

    I read a lot of books on trading, and I am preparing to go live. On the first two weeks on demo, I was profitable every day except the last 2 days scalping VLO/TXU later in the day and going long on stocks near 52 weeks high in the morning. However, I noticed a huge problem on demo, my orders kept getting filled as long as my price hits the bid/ask which makes me doubt that the demo is a good indicator of success since I doubt I can get fill so quickly live. I also overtraded last week to practice getting in and out, but I started losing. Now I believe that I need to limit my trades when I go live and do just maybe 10 a day instead since most of my trades were just going sideways and not making a big move. Most of my trades were about 1 minute or less with the longest being only about 5 minutes.

    I enter a position by looking for stocks near a 52 weeks high and look for pullbacks to buy. I shorted by guessing the peaks and this worked few times but I got caught with TXU and would have lost big on a live account. This shook me a bit, and I realize now that it was stupid to try to guess a direction. As a scalper, I don't have much of a strategy, my goal is to trade very small and then get out as soon as two ticks go against my direction. I try to limit my loss to .05 although this still seems high to me considering the commission is about less than .02 and I need to make that much just to break even on a trade. I am thinking of getting eSignal to use their stochastic indicators to help me id an entry point and slowly synthesize Herschey's method. However, at my level, I am thinking of putting this off as my impression is that I do better without indicators. My losses seem to stem from not having a clear entry strategy. Just by entering a position, I feel like the market is already against me. I thought of using S&P futures as leading indicator but I find this distracting. For VLO/TXU, I found $OIX useless. I look at intraday support and resistance, but mostly I go by the bid and ask and orders on NYSE/ECNs for support/direction. I dont look at the chart at all when I am in a position. I noticed there's possibly a delay on level 2, although I am not sure. I trade on the Anvil platform. My goal is to limit my losses at this point when I go live in a few weeks.

    The reason I have posted is because my shop is still new although it is established elsewhere, so it does not have many experience trader on the floor to learn from. It's not much of a strategy, and I wish I had something better. It seems really hard to me to only be a scalper, but I don't know any other ways to start as I am having trouble finding a firm that will give me salary to learn and execute. I am still looking for a place, perhaps at a big bank or whereever I can learn a lot. I am willing to relocate (London, Chi, NY, etc) for the right opportunity. I chose equities because I feel it's the easiest to learn with lesser external influences than FX or commodities for example, but I am open to trading other markets. If anyone with experience has any comments/suggestions, please share or pm me I will be in NYC May 7th - 13th for some informational interviews and visit friends at MIT/Harvard later, but I will try to check the forum during the week. Thanks for reading and sorry if this was overly long.

  2. MDTL on the opening or, I think Bud FoXXX, recommended MNCS. Good luck with the equities.
  3. Here is some advice... read this thread:

    You don't really have to pay attention to what I say, but pay attention to what the original poster had said.

    May save you a lot of pain if you properly interpret it correctly and take the right precautions to protect yourself.
  4. It sounds like they're teaching you the standard scalping, tape reading NYSE stocks style.

    Tape reading is complex and takes a while to absorb. Right now, if you're buying on dips on 52 week highs and nothing beyond that, besides looking for leading indicators, you're unfortunately lacking a decent edge.

    Also, your commissions are astronomical. With commissions that high your account will get chewed up by scalping and you'll unconsciously try to gravitate toward holding for longer periods (undercutting the basics of scalping, and leading you to hold losers as well). Take it very very slowly and try to identify higher probability setups before you go live. With ridiculous commissions like that, you're going to need be very picky with your trades.

    Depending on what you're being taught, I'd suggest giving these basics a read.

    For tape reading:

    (Read everything Deeman writes). Tape reading may become obsolete with Reg NMS developments, but there are some gems in there.

    For basic technical analysis:

    For some good insights into the psychology involved:
  5. I see you have MDTL on the brain which may work, but MNCS is a longer term high spec hold, no possibility for any type of daytrade.
  6. short101


    Hi I have been trading for many years very successfully and have a system in place to possibly help you out . I would be willing to train you for free. please contact me at Looking forward to hearing from you
  7. Pabst


    I couldn't disagree more. There's all kinds of information floating around that can influence a stock's price. You'll be the last participant to receive such news.
  8. I like equities better.

    Sometimes it gets to me that sometimes I don't get filled or Laser will let me know that I can't short a stock or something like that.

    But, I don't feel stressed out when I trade.

    Trading with futures, I was at a 4.90 r/t, and I sometimes risked 50 - 60 dollars a trade. I had a stop loss of $100 a day, it was just too much pressure. The only reason I stuck with it is because... "Well, if I lost that much in a day... maybe I can make it back in a few weeks as well"..... yeah, well that never happened.

    The leverage was just too much for a beginning trader. To konw any single trade can take a good chunk out of your account. It was impossible for me to think about trading, but instead I was always hoping I wouldn't lose any more money, that the next trade would go my way. My streaks of bad trades was flat out amazing some times. Very many times, I had the right idea, but my 5 to 6 point stops were knocked out and paralyzed me so I couldn't enter again for fear it might continue to go lower or something.

    Now I feel, if I went back to trade Futures, *which I wouldn't though, not yet* that I'd understand better what I have to do to make good trades.

    I just like equities so much. I was going to only trade the Q's, but now I just love scalping AAPL and BRCM and all those. Trading had become FUN again!!! :)

    I'm now interested in what this Forex news is going to bring to us, I hope it will become regulated and safer and not fill like a rip-off.

    I was also stupid funding a Mini forex account *which I still have 49 USD in my account* with FXCM.

    Good stuff.

    Edit: sorry about typos, i'm on my sister's laptop, and hate htis keyboard.
  9. newguy1



    You've got an impressive academic background.

    just tell me you aren't with assent in SF.

    I say this for a few reasons, but it all makes more sense when you see where i'm coming from.

    My personal background goes something like this. I'm from a similar caliber undergrad, got interested in trading, and took a year off. So i've been at it for about 8 months. I just recently went from a backed situation (at a fairly shady prop firm) to putting up my own capital.

    Now i'm ok with this for now. Why? Because i'm going to be heading back to finish out in the coming semester. What I didn't want to do is obtain some kind of pedigree and than waste it on a prop situation that does not require fancy names/grades/school/blah bllah lsdslks.

    My plan would be to see that trading is for me, and then find a place after college that recruits and trains if I haven't made enough capital to earn a living after graduating. Thats what I figure places like ETG/OPUS are good for those who don't have any cash. sure, it sounds like a minor exploitation for the experienced/succesful equity trader....but for the complete newb/undercapitalzed schmoe, its the only real option you have...or you can just open up your 5k account and shit on your resume.

    Now i'm actually kind of old ( i know, i don't sound it), 25 to be exact. My first backed situation was "interesting. My second blew up 3 months after I left. Now i'm with a more regular/standar/household name you'd find on ET ...(You a bright/echo/assent....not a trillium, fnys..even hold)

    What Im saying is this. Move to chicago or new york, and find yourself a legitimate, real, backed situation. You have the pedigree to get into places most people cannot. The backed situations i got into were not the kind of caliber i am talking about...(think of swifttrade...not bashing on them...but you get the idea vs. a place like optiver/mako/smw/drw/blahblahblah whatever, you take your pick)

    I am suggesting you seek out a place like this because you can do better. The only reason you'd ever want to get into a situation where you throw down 5k (like me) is if you a) are an experienced trader (not me) b) don't have too much to lose with respect to your future career and money/doesn't hurt your resume yet (me)

    You have a lot to lose considering you went to name brand schools...not to mention the consulting gig. I on the other hand have jackshit to lose for the moment. That would change the min i finish undergrad next year, I will have lost the opportunity to find wishy washy jobs that don't require any specific skill set yet do require connections/on campus recruiting/passing a rigourous interview process like i-banking/consulting = nonspecfic skills, vs. plumbing, engineering, accountancy, being a chef, blah bla hblah. they'll take anyone who's got the smarts...not necessarily the specific skills.

    Lastly, if you don't want to move out there and you want to go solo, thats cool. Just make sure you do one thing. Make sure that whoever you are going to be trading with...either your manager or whoever...I'm not saying they are your mentor, because most likely you don't find those at these kinds of shops. But just that someone in your general vicinity is GREEN. I can't stress that enough. It will be very hard to do this alone. I had the misfortune of finding two backed situation where no one in my sight, no one there was green. (you think they would be if they are going to back you). Its sad when i'm the most profitable, and by profitable i mean thats supposed to be some kind of accomplishment. Putting up my own captail and now finding 2 green traders. awesome. Don't even get mentored by them, hell not even in the same room as them. but they help me when they can, and it makes a difference. (and about the green thing...i'm not sure how you'll be able to find out. the 2nd place i was at the guy always said he was green...nope. The way i found out these guys are green is because they make great calls everyday..and when its off, they dealt with it appropriately.

    Alright, well good luck friend, and I hope everything works out for the best.