transitioning from prop

Discussion in 'Prop Firms' started by mrmoose, Nov 29, 2003.

  1. mrmoose


    i have been (and remain) a reasonably successful prop equity trader since 1997. While I am still making a living, i am making less then i have and do not see things getting better for the industry as a whole. I also question if prop firms as we know them are a sustainable economic model. my question is are there people on this board who has left prop trading for hedge fund or to trade futures or currency and been successful and how did they go about it.
  2. mr_minty


    hi moose,

    i also was a prop equity trader..started in 1999 and traded prop for about 3 years and made the move this year into trading my own account (futures)..

    for me, it has honestly been a wonderful experience transitioning from prop to trading my own capital. sure, i miss the bp that my firm provided as well as the fact that i didn't risk a dime, but i feel i am a much better trader now than i was before..

    it may sound strange, but i think i developed some bad psychological habits while i was trading prop, which i focused on unlearning before i left.

    instead of trading a style that fit my personality i would often force trades or disregard trades depending on the time of the month( either protecting my profits or swinging to get a check). I also traded a style that revolved more around my payout schedule than my psychology. despite being profitable, my trading was very sloppy.

    another strange thing is that going to an office everyday, i felt like i was supposed to do something. when u have no money on the line, u just sorta feel like u have to do something with all that capital, even when the environment doesn't warrant it.

    and even though u know discipline and controlling your volatility is important, when i traded prop i would, once in a while( or more!), break my rules and get burned pretty badly...and because it wasn't my own money, i didn't quite feel the sting that i should have, and it took me longer to get that out of my system than i felt it should have.

    but the real world is all about transaction costs and drawdowns, something that just wasn't focused on at the prop shop i worked at. so before i left, i really focused on building the emotional and methodological skills necessary to preserve capital. my trading tightened up, i defined my entries and exits a lot better, i sat on my hands when things looked shady and focused on building a profitable business..and i worked harder too, backtesting things, thinking of different ways to approach a problem, etc...anything to build up the conviction that i could trade my own money with confidence..

    it hasn't been easy, of course, but it has been very rewarding. the freedom is the best part of it for me.. no one secondguessing me, telling me i can't overnite a position,'s funny, i have no ill feelings about prop trading. it's how i got started...but it always felt like an intermediate step in my career as a trader...and now i feel like i'm much closer to what i've always wanted to be...

    hope that helps and once again, this has just been my experience. i'm sure others are dramatically different.
  3. jeffgus



    I have a very similar story to your and love the transition, I now trade all products have all the freedom that Prop Shops never allowed. The Prop model is DEAD and a Hybrid model between hedge fund, micro, swing and access to all products including currency is winning structure. I have been working with my group for 2 years and see nothing but good things for traders with a plan, discipline, and a edge.
  4. mr_minty



    COOL...that's sweet...i would love to trade currencies, but i know nothing about them at the moment...i just trade the eminis...

    i agree with you about the prop situation, although to be fair, i don't know much about the business side of these things..
  5. same as any other business. someone gives you cap, and he thinks he owns you.
  6. mr_minty


    LOL! :) that about sums it up in a nutshell!
  7. jeffgus


    That is correct, but the true professionals will respect your business if you treat them well and run your business as an incubator model over the customer model.