There is this US equities shop that is recruiting for traders. I’ve never done trading before, but is this type of compensation structure common for a junior trader? How would this type of experience pay off in the long run?
are you prop trading?
TA05, how’s their training program?
I don’t know … I just heard about them today at our university’s career fair. I scheduled a five hour on site visit next Monday.
From other posts I’ve seen on prop trading, beware firms that demand a ‘capital contribution’ or the like up front.
They’re not asking for a capital contribution: the capital is provided by them, but they share in the profits.
Do they pay you a base salary? It sounds like you need a bit more information.
They don’t pay a base salary.
Never any type of trading? You might as well get started with a paper based account to get a feel for the market.
why on earth would you start a paper based account when you can go trade at that firm with their capital and get the real feeling of what it is like
this is a very common pay structure for prop trading firms, most won’t pay base salary for entry level position, you’re lucky if they do but it will be extremly low
if you live with parents, or have other source of income to get you by, go ahead and try it for several months
for most people it takes more than 6 months to become good and actually start making decent money out of it (after firm takes their cut)
Prop trading = Goldman Sachs
Daytrading = what everyone else who sits in front of a computer scalping for pennies does while pretending to call themselves “prop traders”
A wise man once told me that when you start in trading, make sure you are risking other people’s (company) money. If you ever get any good, you could always go on your own afterwards.
> why on earth would you start a paper based account
> when you can go trade at that firm with their
> capital and get the real feeling of what it is
> this is a very common pay structure for prop
> trading firms, most won’t pay base salary for
> entry level position, you’re lucky if they do but
> it will be extremly low
> if you live with parents, or have other source of
> income to get you by, go ahead and try it for
> several months
> for most people it takes more than 6 months to
> become good and actually start making decent money
> out of it (after firm takes their cut)
Even after going through a training program you’ll spend a few weeks running a paper/virtual account before they let you loose. In the interim, you might as well dip a toe into the market and immerse yourself in this volatility. You’re guaranteed to learn something.
is this for Swift Trade ?
\\\"Sometimes the Bird sometimes the statue \\\"
I worked for Title and there they will let you trade on your 1st or 2nd day just to get a feel. they keep you to lots of 100 and ensure that you show discipline before you can up your size. it was incredibly tough getting by for the first few months as you make nothing but i ended up becoming profitable but then accepted a job working for a PM as the salary was much more appealing than being extremely ghetto. have AT LEAST 6 months worth of cash or else you won’t make it. it was the #1 reason why I got the job I have today working for the best, largest, non-subprime inflicted company out of the US in the industry.
What is the rationale for 100% commission… my guess (based on random thinking on how their business model works)
a) They give you 100% commission for X amount of time. This enables you to get by and really be motivated to make money. Also, it enables them to give you a smaller amount of money to trade with for you to get by (with life’s expenses), as it is 100% commission - also minimizing their loss with the risk that you go negative.
b) They bring down the commission % as you get better, as your chance of losing money for them decreases, but they up the amount that you can trade/risk as well, so you don’t necessarily make more money for yourself but you make more money for them.
They boot you if you can’t get past (a), losing as little money as possible.
Sounds interesting/cool - esp. MattLikesAnalysis - - - I am intrigued to try this out at some point . . seems fun
note: just because it doesn't make sense doesn't mean that it's not merry.
Umm I belive it is more like this:
your compensation is based 100% on comission meaning no base salary but what you take home is only from profits you make on trades
now the profits on trades are split with the firm, when you first start out it might be something like 50/50, if you get better perhaps you can re-negotiate with them to be able to take bigger cut for yourself, say 60/40
at the same time if you get better, you can ask to increase the base amount of cash you can work with (the size of trades you can work with)
you won’t get paid every day, losses from one day will carry over to next day so you have to make up for poor performance but I’m sure if you’ll be consistenly week after week in the negative, they’ll boot your ass because you are losing their money not your own
Can we stop calling it commission and say ‘100% from P/L’ or ‘paid only from profit’?
Philip - It was my understanding he gets paid 100% from the profits (I.e. 30% of profits) and not paid 100% of the profits. Maybe MattLikesAnalysis can comment on the payout scales?
If you are getting paid 100% of the profits, then good for you (maybe).
if he’s going to take home 100% of the profits, what is the firm going to get out of this? How is the firm going to pay for the trading platform, office rent, etc.
> Can we stop calling it commission and say ‘100%
> from P/L’ or ‘paid only from profit’?
> Philip - It was my understanding he gets paid 100%
> from the profits (I.e. 30% of profits) and not
> paid 100% of the profits. Maybe MattLikesAnalysis
> can comment on the payout scales?
> If you are getting paid 100% of the profits, then
> good for you (maybe).
oh ok yeah you are completely right … I was thinking the company would take a loss on the person
would make more sense if he kept all the profits after operating expenses as stated above
> if he’s going to take home 100% of the profits,
> what is the firm going to get out of this? How is
> the firm going to pay for the trading platform,
> office rent, etc.
Commissions, desk fees, data fees, etc.
what happens is that if your balance at month end is negative, this gets carried over to the next month and is your obstacle to surpass if you want to make anything next month. if you are overall profitable in a month with no outstanding amounts owed for previous months, then that is split in half and they will also then take system fees out as it costs them north of $300 for your trading platform and other services during the month. our monthly fees were $120 for the trader each month but they did not start charging this amount until you become profitable which is nice enough.
the major reason why they do not pay you any salary whatsoever is because 90% of traders will never be profitable in the long-run. remember this stat and incorporate it into your decision.
they say that you should be an above average poker and video game player to be good at this and I agree fully. you need to be able to gamble, but know when you’re beat and know when to stop and to never wait for the river when you know the odds are stacked too high against you. its all about the ability to take small losses consistently while not hoping to make millions on a single trade. its a very difficult field and although it was one of the best experiences i’ve ever had, it was EXTREMELY stressful, especially considering I was living on borrowed money and no other opportunities elsewhere.
if you feel nervous going into the CFA exam, you will not be able to be a successful trader. you’re born a trader.
we had 16 seats at our office and they turned over 2.5x over 4 months.
> if you feel nervous going into the CFA exam, you
> will not be able to be a successful trader. you’re
> born a trader.
Do any of you guys know anything about being a remote trader for a prop firm? Does that qualify as work experience toward the charter? Does anybody have any insights into whether this is a good position to pursue?
So basically you’re asking what the deal with daytrading your own money, at home, on your own computer, while paying the company a % of your profits is? Whatever cut that company is taking from you, I’ll cut it in half if you trade through Limo Driver Capital LLC and I’ll provide the exact same service (none) or better (call you once a day with an “atta boy” or “go get ‘em tiger”).
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