Anyone with Prop Trading Experience?

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Analti_Calte_Equity

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I just signed with a prop trading firm and they are pretty laid back in terms of the trader’s choice of trades, strategy, and style. Does anyone have experience in day trading - - what kind of strategies did you like to use? My mentor is the head trader, but I don’t really want to ask him too many questions as I don’t want his doubt to affect the amount of leverage given to my trades. We use Sterling Trader Pro and Lightspeed Trader.
 
Regarding prop trading firms, I was always told to find out who had the most experience or was consistently doing the best, and stick with them. It may not be a bad idea to sit in with your mentor for a few sessions, especially since I’m sure he understands that you are new.
 
Muddahudda Wrote:
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> Do they pay you or do you pay them?
$5K minimum initial capital deposit allows a trader to trade with $50K of firm capital at their own will with larger trades acceptable if approved. Traders keep 90% of their profits with the firm taking 10% of profits.
I think that is pretty standard for prop trading firms.
 
I did this for 5 years, and I had some good years, and some lean ones. If your good, you can live a VERY good life…short hours, flexibility, as much vacation time as you like, and a skill that you can fall back on.
However, understand that prop trading is career w/ a VERY high attrition rate. Where I worked, they hired 20 people, and 18 left due to blowups, stress, or just failing at the job. The stress can be brutal, and the highs/lows can start to wear on you.
Also, prop trading at that level is not considered a venerable position on Wall Street. To get into a respected firm, I had to take a position I was wholely overqualified for b/c I was viewed as a “smart guy but a risk due to my background”. The big banks and corporations like to see names they recognize on your resume…if they haven’t heard of the firm, they tend to assume it’s bullsh1t. Furthermore, they will never understand what you do, regardless of how many times you explain it.
If you can’t find anything else (and thats understandable given the finance job environment), I say take the position and try to shoulder up w/ the highest earner in the place. Try to emulate him. Don’t do this for more than a year if you can’t make money w/in the first 6 months, and not consistent by a year.
Also, if your dead set on becoming a prop trader, try to get a job at one of the top firms like First NY. Lightspeed is a good platform, but their compliance dept are ballbreakers.
-PeteyPete, CFA
 
i traded for a short period of time. i suggest scalping as a beginner’s way to get profitable quickly. i used sterling, its pretty good, no complaints really. if you show success in scalping, its likely you’ll get your leverage ramped up much quicker than your non-scalping peers as your trading style is much more stable and you’ll rarely blow up. you’ll build more character in each month of prop trading than any year of your life.
one final tip, if you make a really bad trade (i.e. enough to stress about), walk away. go for a 10 minute break minimum and calm down. don’t let your emotions override your trading strategy.
 
Why did you stop scalping if it was profitable? Is it sustainable and could you earn a proper living?
 
Are you purely trading equities? Does your firm allow you to trade more exotic products like options and futures?
 
Muddahudda Wrote:
——————————————————-
> Why did you stop scalping if it was profitable? Is
> it sustainable and could you earn a proper living?
likely. almost all of the stable, prop trading for life individuals at my firm were scalpers. its the only way you can make a living in my opinion, without being some extreme outlier.
why did i stop? i got a stable job that provided me with work experience that counts towards the cfa. simple as that.
 
MattLikesAnalysis Wrote:
——————————————————-
> Muddahudda Wrote:
> ————————————————–
> —–
> > Why did you stop scalping if it was profitable?
> Is
> > it sustainable and could you earn a proper
> living?
>
>
> likely. almost all of the stable, prop trading for
> life individuals at my firm were scalpers. its the
> only way you can make a living in my opinion,
> without being some extreme outlier.
>
> why did i stop? i got a stable job that provided
> me with work experience that counts towards the
> cfa. simple as that.
Does prop trading not count as CFA work ex?
 
Chuckrox8 Wrote:
———————————
>
> Does prop trading not count as CFA work ex?
Prop trading counts – I had a stable job with a decent base and low payouts for profit sharing. I want a high risk high profit sharing job in this environment. I just didn’t really like working the long hours for less bonus money and picking up the slack for people on the team that were cut due to the economy.
 
Analti_Calte_Equity Wrote:
——————————————————-
> Muddahudda Wrote:
> ————————————————–
> —–
> > Do they pay you or do you pay them?
>
> $5K minimum initial capital deposit allows a
> trader to trade with $50K of firm capital at their
> own will with larger trades acceptable if
> approved. Traders keep 90% of their profits with
> the firm taking 10% of profits.
>
> I think that is pretty standard for prop trading
> firms.
Do you mean that they will lever your position 10 times ? Or will the firm invest 10 times what you invest ?
Basically are you getting into an arcade ?
 
drop the indicators, moving averages, oscillators.
only focus on price, time, and volume. If you want, incorporate mean reversion signals, every now and then those work ok. Avoid shorting.
 
Analti_Calte_Equity Wrote:
——————————————————-
> Chuckrox8 Wrote:
> ———————————
> >
> > Does prop trading not count as CFA work ex?
>
> Prop trading counts – I had a stable job with a
> decent base and low payouts for profit sharing. I
> want a high risk high profit sharing job in this
> environment. I just didn’t really like working the
> long hours for less bonus money and picking up the
> slack for people on the team that were cut due to
> the economy.
i’m quite sure prop trading does not count toward cfa work experience.
cfai’s blurb is this “You must spend at least 50 percent of your time in the investment decision-making process”, but I know that working for oneself does not count.
as a prop trader, you technically work for yourself. the only person you make recommendations to is you so you essentially work for yourself.
i’ve never met someone who’s prop trading experience qualified and i know a few who tried to use it… i could see how managing a bunch of prop traders would count based on this definition “Supervising, directly or indirectly, persons who practice such activities”, as you’d be managing individuals who are making recommendations to themselves.
if you can prove me wrong, i get my cfa 6 months sooner, no harm no foul…
anybody heard of anyone whose prop trading experience counted towards the 48?
 
Maybe this is a silly question, but from those of you who’ve done it - what kind of money can one make with a 5K deposit?
I assume you start small and then scale up to where you can make a living - but what are those thresholds and what are the numbers? 20K, 60K, 100K, 400K, 1MM a year?
What is considered big money in these shops and how many are doing it?
 
This is a great thread. Is it easy to get into a position like that or is rather selective?
Like if i show up at the door with 10k and a can do attitude do they let ya in thinking ok this guy is either going to work out great or blow his cash and is no biggie for us (am i right that they take your losses out of that initial deposit?)
 
LPoulin133 Wrote:
——————————————————-
> Maybe this is a silly question, but from those of
> you who’ve done it - what kind of money can one
> make with a 5K deposit?
>
> I assume you start small and then scale up to
> where you can make a living - but what are those
> thresholds and what are the numbers? 20K, 60K,
> 100K, 400K, 1MM a year?
>
> What is considered big money in these shops and
> how many are doing it?
That’s the question I’d like to hear an answer to as well.
 
Chuckrox8 Wrote:
——————————————————-
> Does your firm
> allow you to trade more exotic products like
> options and futures?
Yeah - they are a member of the Chicago Board Options Exchange
 
Matt,
I’ll be submitting my work experience (that includes some prop trading) later this year. I never once thought that it wouldn’t count.
Regarding the whole “how much can you make” question
Only from experience, no one at the place I was at would hold positions over night and we were allowed to use pretty much however much leverage as we wanted. So on 5,000, I could put in like 2,000,000 in orders if I wanted to. So if you have a wafer-thin edge, you could easily make 500-1000 a day. I knew some guys who on maybe 10,000 capital would make like 100-300k a year. However, there were also guys who didn’t make nearly that amount. Too much variation and stress for me given how much leverage we were using.
 
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