Hello, I've recently applied to a number of prop firms (Kershner, Trillium, Evo, Bear, SwiftTrade, etc...). I've received responses from a number of them. My dilemma is that I do not know how to properly distinguish the quality firms from the not so quality firms. I can distinguish b/w automated email responses and so forth, but as far as comparing firm characteristics, I'm a bit lost. What types of questions should I ask recruiters? In addition, quality training services are very important to me. I want to be a part of a firm that has a true commitment to training new traders. Which ones are the best? Thank you in advance for any intelligent and quality responses that you may offer. Lastly, I inquired at Bright, but I can't presently meet the capital requirement. Eventually I think I may move there. Titan Securities responded and said that they only hire experienced prop traders -- which is understandable. I want to know if this firm is as good as it looks on its website? If so, in the future I may move there. Thanks again for your responses. Background: Recently graduated from VMI; traded online accounts for 3 years; read tons of books (all 3 Market Wizards books, Alchemy of Finance, Jesse Livermore bio, Hot Commodities, Security Analysis, etc...); have done and continue to do my own research on equities and futures; I track the DJIA, S&P, NASDAW, 100-oz Gold, mini-Dow, and the 30-Year T-Bond daily; not a novice but certainly not an expert; want to improve my present strategy and learn new ones; goal is to become a full-time independent global trader
there are no questions that will really uncover bad prop firms because they will just tell you what you want to hear. you should ask to see the P&L of who will be your designated trader. if he/she makes less than $50K a year, you know your trainer sucks. you need to look for hard evidence. you cant really count on their word. ever. look at the office surroundings. is it dirty and messy or professional looking? how many trainers do they have relative to trainees? (1 trainer : 10 trainees is not a good sign) what sort of physical training materials do they have? and of course, search for reviews on ET.
Some "propaganda" - mostly real...all honest and truthful. http://www.stocktrading.com/reasons.html Don
You might as well ask for their rates and payouts, and while you're at it, the tax returns too. Get real. Any office manager will tell you how their top guys pull in 500-1000 a day and you can too. But of course it would be rude to ask them, so forget about it. If you can't meet the cap req of 5k or whatever, which a career trader can make on a good day, then you're probably not profitable just starry eyed. Forget about other traders P/L. Are you willing to post your P/L here to prove you're profitable?
Here is a question to Don: Prop firms make money via frequent trading of the clients and in return they give them good margins like 1:3 to upto 1:10 ratios, with nearly 90% keep the profits scenario. Why would not a prop firm NOT go for 'frequent trading' type model and rather GO for 'percent of profits' basis where a successful trader confidently making 25% a year utilizes margins and gets to keep 50% instead of 90-100% of the profits. Don't you think in the second 'percentage of profits' model, there are higher chances for Prop firm to make more money from more people than the first 'frequent trading' type where the chances of getting blown up due to margin calls are much higher. Ex: Client with 100K gets 1:5 margin ratio. Means If he returns 25% on the 500K total buying power, i.e. $125K, he gets to keep 50% of the proifts i.e. 62.5K net of commissions etc. Prop firms gets commissions plus 50% of the profits i.e 62.5K profits.
OK, fair questions...first off, 10:1 margin is not nearly enough to participate in strategies that actually "work" (Pairs, market making, M&A, automated openings, etc.)...it take generally between $1mil and $5mil to make a good living (yes people, some of you may make $$ using less, it's just harder). Secondly, most good traders would be foolish to give away 25 or 50% of their profits. Why would you? In general, it's the newbie who wants a "job" that get involved in that type of arrangement. AFter they make decent $$, they seek out capital and rates, and move to a firm like ours who pay out 100%. "Employee type" traders either make money for the firm or they are let go.... a short lived proposition for most. An independent trader will always be able to work, as long as he/she is profitable for themselves. Trading is a business, self employment is always a better way to go, IMO As far as "frequent trading" - we really don't care as much about frequency or volume as we do about profitablilty and continuity...much better to make a little for a long time than to bring in new people all the time. If a trader makes $250K or more, he wants to keep it. Don
i have nothing to prove to anyone but if a potential trainee asked me for my P&L to show that i was profitable, i most certainly would. its not like you arent going to know your trainer's P&L once you start trading under them. the fact is that there are many sub-par trainer traders who simply sweatshop herds of trainees into generating commissions for them.
I mean this with absolutely no malice whatsoever, as I respect you guys and I think you are THE firm to go to for training. If I met a serious potential trainee <i>who has the capital to burn</i> I would suggest you guys over everyone else. But everyone in the standard prop situation knows that it's the rate and not the payout that matters, and to be honest, I haven't heard of any seasoned trader who has moved to Bright. Those of us who have been through the indentured servitude prop model have come out knowing that any rate above .004 is highway robbery unless you are doing < 300k a month. I currently have an avg. of .003 myself and the guys under me have .0045 and we're not doing volume intensive strats. From what I can see from ET, it seems like your real strong suit is training new traders where you can justify a .007+ rate, which is valid.
Thanks to everyone that decided to post and offer a response to my questions. I really appreciate it.
I beg to differ somewhat....we have had an onslaught of traders come back, primarily for capital....all shares above 1,000 are .004 anyway. Volume traders get what they need. The "old school" type of trader is still trying to recapture some $$ with "rock bottom" pricing, but very few big traders are scalpers anymore (not since the 1990's really)....And, yes, the returnee's are from the other 2 main firms for the most part. I check rates from others periodically, and what you see here on ET is pretty much a "lowball" - my "competitors" are virtually the same price (sometimes even higher than I expected) when all things are considered...our guys aren't limited in capital usage like the other shops tend to do. (no "malice" back either, and I understand your point(s) ) but, all I can do is report the facts from this end...and, as always, all this goes to the regulators. Anyway, I believe in due diligence and making an informed choice wherever you guys decide to trade..and (some) competition is always good. All the best, Don