As a straight directional trader I would stay independent. Once you have a 3 year track record you can try to raise assets. It's tough though. Very competitive.
Yes, I highly recommend everyone to read my take in my journal. I think a lot has to do with the path you've been "pegged" into. For example as a retail trader with sub 25k then your only option is trading futures due to PDT (or trading stocks on a lower frequency basis). I think the prop model is thus more important to the equities trader. The futures trader is much better to get a job, save capital, and trade own funds. If you go to a proprietary model then you are risking already a few hundred thousand in lost opportunity cost. It would only be worth it if you are very confident in the firm and they have some strong proprietary/exclusive edges.. I mean I'm a directional trader but I'm still looking at spreads and things of that nature where I may pick up any edge possible. I would not go to a prop shop that didn't pay a salary to trade my own edges. It doesn't add up. The cost and risk is way higher then taking my own savings into the market. As for getting funding, you shouldn't look to others. Make others come to you. Be your own boss. Do what you want to do. http://www.youtube.com/watch?v=zO6HbzZPxvc
Salary opps are nearly impossible to find. The cost/risk issue is one that is strictly due to the incredible leverage you get relative to your deposit. That's why is is not recommended to trade prop for anything under $25k deposit. Even then, you've got to be conservative in your stops....and then face the "death by a thousand cuts" situation.
Sorry maybe I'm not clear.. I've been offered firm capital before. No deposit/ no risk. But, after I did the math, I couldn't make enough to justify the opportunity cost after splits starting. I think Maverick is right about some things. What I'm trying to say is that it doesn't matter if you are a directional trader, what I look for a in prop is significant proprietary edge, long term backing, long term commitment. I guess I should explain. I went down the futures route because for a retailer its only way to get enough leverage, pdt rules, etc. Futures are difficult for most to win at. I'm extremely good. So for me, it makes sense to give it a shot. I think there could be more edge in equities or futures spreads. So, if you need to trade equities then you need a prop. A futures trader doesn't need a prop. My sense is that the whole notion of prop edge is starting to have difficulty.. I see the future as more being small operational hedge funds. When the industry starts to understand that then I think discretionary/creative types like myself will find more opportunity. I still don't understand why Don says he uses the floor trader model though because he doesn't have/offer a CME seat to my knowledge. To me a floor trader is a trader with a seat/lease...
The floor trader model that I speak about is simply getting access to the markets, and having p&l go into your trading account. The same thing my brother and I enjoyed for a decade or more. We had to buy seats, our traders just take an exam. Similar benefits as floor traders, use of capital, routing, etc. Maybe not all the "whispering" that goes on, LOL. Don
Don, would you consider backing Lucias? He has sent me about 20 e-mails looking for backing. He says he is an extraordinary trader. I think he wants a salary too. You guys can work out the details. I'm not even charging a finders fee. This one is on the house.
Already asked Don years ago.. Don said if you start trading futures with less then 100k then you go broke. Last appx year, took about 45k to 100k with less then 10% drawdown... Maybe we should ask why if Don has 60 million why he needs a traders 25k? This is a much better question. Why does a top 50 trader need or even care about taking a traders 25k? Doesn't make much sense to me...
Thanks, Mav. But I'll have to pass. I would think that there are Chicago firms that would work for him. Maybe not pay a salary, but give him a fair split with his futures? Don
Oh sure, throw him back at me in Chicago. Thanks. No, he likes the heat and dry air of the dessert. And that lovely Italian restaurant next door is a nice perk if you throw in maybe a complimentary dinner once a month. Don, he can trade the SPY instead of the futures. Give the kid a look. If he loses money for you, just take him home and have him do some work around the house. You said you have a dog right? Well that dog ain't going to walk himself.
While I do not know, or care, whether Don has 60 million it seems to me that if he has 60 (or even just a paltry 20) he might not want to piss any of it away backing traders that have zero skin in the game. And if he ever decides he is in the business of throwing up his money so others can speculate with it I hope he sends me a PM ... cause I'm there in a flash!!