prop is designed for you to be SELF-employed. institutional ranks have been been thinned by 70% in the last 2 years. any "new" openings will be filled by far more qualified persons than you. in fact I would recommend that you don't list prop firms on your resume.
First, thanks to all who have offered me advice. I am thinking about going to a b-school to get my MBA, possibly looking into getting some sort of quant degree, but I admittedly know little about the field. What would be the best area of focus to get my MBA in in terms of improving my chances of breaking into the institutional arena?? What kind of advanced degrees are highly sought after by hedge funds and asset management firms? Is getting the chartered market technician certification important?- I am studying for that now- I figured that at least that can't hurt my chances...Thanks.
Check out the financial engineering programs at CMU and Berkeley. They are challenging and hard to get into. CMU says they want real world experience but I don't think they really mean prop traders. Why not try getting a backer or finding funds of your own? Even the biggest funds had to start somewhere.
A CMU dergree could get you a quant position, same goes for a physics/math phd. If you are planing to trade derivatives, especially more complex ones, being a desk quant is probably the best single way to get there. To be honest, desk quant is such a good spot that I even know a few derivatives traders that went from trading to beging a desk quant. As for "slim to none" chances - I have never worked for a "prop firm", so I have no idea about the background and capability of people there. I do for example know a guy that from being a head quant at a big 10 went to become a prop trader, but that is at a prop desk at a large fund, not a prop firm. I do think that it is possible to become an institutional trader with pretty much any degree. The trick is getting into the door and that's were being a PhD in math helps better then have traded stocks at home.
And when the employer to be checks the NASD website and views all of the places you were registered what do you say? "Gee sorry...I didnt think they looked good on my resume" That is horrible advice.
The firm I am at is working in close relation with hedge fund incubators. Most money managers that start funds without a 3 year audited track record obtain startup capitol from friends, family or business associates. And unless your fund is large already most Inst. will not invest with you.
Search for hedge funds and you will find this was discussed. There are funds of funds (run by large institutions or as independent entities e.g. the Market Wizard author has set up a fund of fund to invest in funds run by market wizards) which invest in other funds. There are fund marketers who charge you commission plus fees for raising funds. Personal marketing and PR (writing for industry publications or sites e.g. many people who write for street.com are fund managers. Look at Mohnish Pabrai, he has been systematically marketing himself.) Investor conference in other countries. Ethnic marketing. targeting specific communities.
Honestly, 95% prop. traders don't know much about technical stuff in general. Prop. traders are in a sense, handed down a speicific style or technique which they build on. There is no need to have a broad knowledge of the market compared to a system trader. I've rarely met a discretionary trader who trades based on statistics or other rational and logical tests. Most don't need to, they have the intuition to overcome "odds". But system traders are more compatible to hedge funds because of the reliability of profits. One risk in a discretion funds needs to consider is that the fund is relied on the individual. For a system fund, even if the trader or manager gets sick, there's always someone else who can execute the system, for discretion, it doesn't work that way. The human elements kicks in too. Most discretionary trader goes bust in the long run and system traders out-perform in the long run. This becomes true the more the fund grows. Try having a superb 1 lot trader suddenly trade a 100 lot. They'll get shaky and the performance will drop. It's just the same as a paper trader and a real account trader. There's psychological boundaries based on size. Personally... all the prop. traders I've met need to read more books... and stop telling me, "XXX works because it 'LOOKS' like it does"... Bunch of BS...
pretty strong words, and very true most Prop traders are more the unwieldy type that just don't fit into the corporate model, and hence would need to demonstrate prior corporate or managerial experience to bridge the gap. This is a significant issue. Another issue is the lack of uniform education and reading the financial press (newspapers, magazines, books, websites, etc) or even attempting to get published and contribute to the general mind share. Most prop traders don't even read the WSJ on a regular basis and / or IBD and use some of that analysis. This is what those Hedges and Institutional firms look for, and what B School attempts to give you, and even a number of students/grads never achieve. So, you're odds of success are better than even on your own, and what you can give yourself, however, being within a team has its rewards also.