Why no salary or draw at trading firm?

Discussion in 'Professional Trading' started by IWT2008, Mar 31, 2008.

  1. IWT2008


    I keep reading that it is very difficult to trade effectively when you HAVE TO make money.

    When you HAVE TO make money to pay your bills I am sure that your decision making in regards to your trading becomes altered.

    Why then do not more professional trading firms offer a salary?

    Even if it was a small salary with a bonus structure based on performance?

    Especially when someone is just learning how to trade.

    I would think that if a company sees potential in that person to become a great trader they should be willing to guarantee their income in some way shape or form.

    Telling someone that they have a guaranteed income (even for only a few months) while they learn how to trade would, IMHO, take away that psychological pressure therfore making them a better trader quicker.
  2. Because they lost so much money with so many newbies who couldn't trade profitably at all.
  3. IWT2008


    Wouldnt that be a result of the firms ability to teach?

    If the problem is with the new trader than perhaps they could screen better...
  4. i gues its just supply and demand. i was one of the last traders in my firm to get a draw (2001), after that nobody did, we still got traders to trade. i dont think most people who trade think they work for there firm, i think they feel as they work for themselves.

    Why would they pay to train someone when there are many traders they can poach from other firms by giving them a better ticket plan.

    Its not like new traders who come into trade are usually great employees, they went to state school for college (SUNY Albany for me) and cant get a job at a I-bank
  5. what goods a draw 2k draw on a .008 if you wanna scalp.

    its better then blowing up your own cap, but assuming you scalp, whats the point.

    i'd rather pike it up on no draw and a .0002 with tight down limits, then end up gross pos but net neg/even.

    most awkward moment at my previous firm was when someone blurted out, "isn't 7 bucks at Scottrade on 1000 better then .008?"

    just depends on what you wanna do.
  6. and btw, next time you think you really want that draw, ask to get a .002 or .0015 / your rates at cost...nothing absurd like .0002, but their costs, around .0015-.002 in exchange for no draw and ...well....lol let me know how that goes.
  7. fusionz


    I don't see why a trading firm like echo or assent would offer a salary, since traders there aren't hired in the first place and are basically self-employed.
  8. cstfx


    Professional firms do offer a salary. Plus vacation time and health ins. and usually complimentary memberships to the gym. They go by the name Merrill, Goldman, Jeffreys, Morgan, etc.

    The prop firm, for the most part, is far from professional. Most are run by guys who you'd think stepped right off the screen from the Sopranos (season 2 or 3?).

    The old model prop does not care if you succeed or fail so long as they teach you how to churn your account and generate commissions. And if you blow up, they are other people to replace you. Just look thru the threads here of people wondering what they are going to do now that Tuco imploded.
  9. Merrill, Goldman, Jeffreys, Morgan, etc. is more for traders who want be carried on the firms back, hand holding and spoon feeding while they go through the inevitable losses and trial and error process...

    ... Only to have to give a huge chunk of their profits to the firm once they finally get profitable. In effect, they have havent really paid you a salary anymore than they have actually advanced you some of the future profits that they anticipate you would eventually make.

    How do they know this?...well they actually dont but I suppose they want the fancy Ivry league degree and high GPA average as some reasonable indicator of your chances of succeeding. The academic credentials in this sense is nothing more than pure risk assessment;

    This is why the Echos, Assents and Brights of the world have a place in the prop trading world. Their outlook is more like... if you think you have what it takes then stop bitching about salary, go get your Series 7, put up the capital and we will give you a shot...

    After-all we have nothing to lose and possibly everything to gain by giving you a shot. Otherwise dont waste our time because there is no way we are going to pay you a salary. You will be paid according to what you are worth and your performance is the best indicator of that. Its all up to you.

    Salary is a nice little perk (if you can get it) though my take on this is any trader that is truly worth his salt does not need a salary because they are already experienced enough and competant enough to forgo one; besides that, you could never pay a really good trader enough salary i.e. their abilty to make money is absolutely priceless.

    Try paying 33 year old John Arnold a salary...ehhh :)
  10. don't bother lookning for a salary at a prop shop as you won't find it. No independent contractor organization pays salaries. This is no different. Why should they pay you? You will likely blow up anyway and they gained nothing only lost. Why should they take the risk on you when you are not willing to take the risk on yourself?
    #10     Apr 1, 2008