Thank you, You seem very honest with your answers. I am with a Big firm and i have to say its a dog it dog world out there, my advise to you is to have a target ROI, from your posts you are not giving importance to ROI, which is very important if you want to stay in this business. Your ROI only should increase which means you are doing it right, if its not then you just got lucky with your previous trades as simple as that and market is all ever changing. Dont give importance to Algos and computer trading. the fundamental trading concepts and behavior still triumph any Algos or Computers any day, you have to learn them which is difficult and boring to be successful.
Buddy,let`s not mix things up.Are we talking about the time stop or the hard $ stop??The startegy i use involves overnight holdings ,where i usually scratch out(if you know what i mean).So do the 3 big heros or some of them,i`m sure.So $10K is never enough,if we are talking about the time stop.even $30K is petty.$8K for the 1 GC contract to hold overnight,for e.g.The only way to trade $10K account is to find a trend on the weekly,and try to ride it.
>> Your problem is that you want to give preferential treatment to one stop over the other. Time-stop and dollar-stop are two essential things to maintaining any account. There's a reason why everyone says trading is literally just 90% money management. The strategy you use involves overnight holdings. How often are you watching it? If you are just placing bid/offer then walking away, then I got some bad news for you son, that is going to get you crushed. You are missing out on a lot of opportunities. False breaks, re-breaks, and ranges. Also, you are trading Gold commodity which can shoot off one way or another. So you would only be suited to do momentum plays in that. You are trading it 'day to day' but you are betting on the outcome on the end of a session and you are missing out all the opportunities in between. If you really want to trade your strategy why don't you get involved in products that more less than commodities? For example, U.S. Bonds? Maybe cheaper equity prices? Calculate how much heat you can take from a 1% or 2% move one direction and work from there.
>> My investment was $0. I am sitting here like 16-20 hrs a day. I sleep on my bed next to my PC, then wake up and I'm back again looking for trades and just waiting around. I didn't deposit anything into this firm at all. There was no initial cost. Just time cost/cost of labour at working a 'real job'. >> As a basic rule, once you start wanting above a $10k/stop the company is only beginning to ask you to start to save up for about two-times that amount. So if I have a $20k/stop they want me to save up, through trading, $40k in there and then make with-drawls for personal income anything beyond the $40k. The owners are very generous and nice. If I wanted to only leave $20k in there, they would let me... and just let me pay it back whenever... and they would probably even forget and not really care unless I start to perform real badly. Also, I am entitled to all that money obviously. It's just why they give me access to higher limits, the account needs to be protected first. >> I pay some rent and desk every month, only $4k. But for the limits I have, I do not pay anything for cost of borrowing, or margin account. It all comes down on the company. What is my ROI? Where do I even start?
I trade CL outright -- directional, no spreads -- so I don't need access to cash markets or more leverage. In fact I only use a small fraction of the leverage that is available to me so prop is not something that fits for me. While I am enjoying this thread -- a window on a world I know little about -- the Aussie prop shops seem awfully casual by American standards. Is what you desrcibe in terms of the cushion they require down under and how casual they can be about it common or is your firm unique? My impression of how it is done here is that they want a big enough cushion so that if they shut you down their risk is non-existent or limited to a few pennies relative to the scheme of things. No way if they think that requires 40K are they letting you roll the dice with only 20K up. The deposit is not so much to augment their capital but rather to be sure that those dollars you put up that are tapped first are also the last dollars to be tapped. Ultimately they want to be in the business of providing services to more sophisticated traders including access to capital but they don't want to be in the business of providing that final, vulnerable layer of capital that goes in a heartbeat when things head south. In effect they want to be holding the prefered while you are in the common. I think the props that have survived in NYC and Chicago are pretty rigid on their deposit rules compared to your description.
>> My firm is very, very unique. The other prop firms I've heard of are extremely risk averse. They even go so far to TEACH YOU HOW TO TRADE and limits your trading strategies. I am often hearing guys say that they were told, "we generally want you to scratch if it goes against you, or take a tick loss immediately." Everyone is limited to the in/out game. >> This really nasty and promotes the prop firm as being a brokerage-house. In fact, all prop firms are pretty much that, but at least with my firm if you have enough commitment and dedication and use your stops wisely you can branch out of this small restrictive type of trading (that is not scalable at all). >> Also 90% of the people at my firm do not actually trade the way I do, or the way I described. They actually are the in/out quick-stuff type of traders. People just want to dump risk in certain hot-stops and exit as soon as it goes against them. They can't take the pain of sitting there for 3-5 hrs at least, working it out.. kind of like a puzzle that you have to solve with the time-ticking all the time and new pieces being thrown at you simultaneously. >> By the way, when I talk about the 'cushion'... the guys in-charge are smart and have seen it all. With their wise experience, they get a feel for the type of trader they are handing risk over to. They've watched you for over a year or two... they openly say that some guys they can't leave for 30-minutes, but others (like me) they only need to check up on my account once a month. It varies that much from trader to trader. >> Are there many discretionary type of futures trading firms in NYC and Chicago? Do guys sit there like me, with multiple monitors, over 20 X_trader ladders, and autospreaders, just waiting around to trade certain spreads etc.? >>I should also note that some places seem 'loose' because you won't know the full story. For example, some people may do a lot of activity and generate +$6,000/month extra money for the firm. They would see you as an asset. If it's been 10-months, they would know they've made $60,000 off you in the background from your brokerage activity. So if you start to struggle -$15,000... they are not batting an eyelid because they know your break-even point is like -$60,000 in your account.
So your firm allows you to borrow a certain amount of money and gives you a "desk" in exchange for $4k a month. How much do they let you borrow? You can borrow about USD $8 million from IB for that sum, subject to margin requirements. I think it is insane for a trader/speculator/investor to not know or care about his risk adjusted return.
Ozzie STIRs and bonds, heh? I am involved in that sh1zzle, although it's such an b-a**-ackward mkt, it's crazy . Cash-settled bond futures and physically-settled STIRs! You Ozzies are cray-zeeee!
I am sorry, maybe I am missing something. So far, what I gather is that you are trading the firms capital doing some FI spreads (STIRs/bond futures etc, all the rage down under). What is your payout ratio? is it tied to your metrics, like Sharpe? The numbers that your are throwing around ($40-$50k/month) are not that big, you are making $500-$600k for your firm and if they are paying you even 30% (the deals I know that pay out this much require a crazy sharpe, though), it's just $200k per year. You could be working half as much to make the same at a bank and learning more Do you think you would be able to keep that up for long? Just curious...