Prop Trading

So this was discussed a few weeks ago but im bringing it back in light of this recent craigslist posting. Everything i have heard/read says its a bad idea. But i am drawn to it like a moth to a flame. Is this a poor decision for a kid right out of school? The money needed isnt a problem i guess; other than if i f@&K up id be super pissed. I welcome all ideas for or against. Thanks guys.

I would do something else. But if you have no other job offers and don’t care about potentially burning $10k, I guess you don’t have much to lose. Also, make sure this company is legit before signing up. Good luck.

This position is ideally suited for someone right out of school with limited other options. The potential is very high, but obviously so is the risk. But what better time to take that risk than fresh out of undergrad?

I’ve looked at this. Search prop trading on AF. Some good stories, but for every rising star, there were 10 individuals barely breaking even. There are firms that do not require a capital contribution. Wolverine and Chimera Trading are two worth considering. Let me know if you have more questions.

I’ve looked at this. Search prop trading on AF. Some good stories, but for every rising star, there were 10 individuals barely breaking even. There are firms that do not require a capital contribution. Wolverine and Chimera Trading are two worth considering. Let me know if you have more questions.

You should probably know that it might be the worst time ever for prop trading. I traded equities for 7 yrs and have met hundreds of traders over the years. The attrition rate in this business has always been really high, but the general consensus from all the profitable guys I know is that most of the edges have disappeared (mostly in part with the structure of the equity markets) and the risk/reward setups just really aren’t there anymore. Now that doesn’t mean there aren’t ways to trade and make money, but just taking a look at how far rates have come down and how many traders have left the industry (I think schoenfeld laid off 15% of their traders not too long ago) with firms also shutting down should tell you something about the industry. I’m not familiar with that firm, but I would be very cautious of anyone that advertises on craigslist/kijiji and as QuantJock said earlier, try to look into firms that don’t require deposits - they have more vested interests; not selling picks and shovels.

Not to concerned overall about this specific company but more that every time i see something like this i wanna jump all over it. Man would i be upset if i blew 10k… And ya craigslist is sketch, didnt look to much but the company didnt come up on google. -BValGuy- This is exactly my line of thinking. Quant- Ya, and the way i see it is those 10 guys are just giving their cash to the 1 successful guy. I will look into those two and research more about what they have to offer. Spreads- Exactly what i mean, everything you see says that its dead, people are getting sent home all over, how is a guy like me supposed to jump in there and come out ahead. I think the hardest part would be that you are limited to the trading hours and that at the end of the day you need to close out all positions. Thanks for all your ideas and thoughts guys, ill send an email and see if its even for real. Whats the harm in talking with the guy, right?

you asking a forum if you should do it probably says your not ready. trading requires confidence, knowledge and experience. You sound dedicated but not confident in your experience/knowledge. I would recommend trading stimulation for a little while, that will tell you if you’re ready or not. However going to a prop firm will give you some knowledge and experience you need. so maybe you should go. Be careful though, prop trading is full of phonies. I’ve heard of coastal many times, but have yet to read any reviews on them. They must be new. But I’ve seen multiple advertisements of new prop firms that are “partners” or affiliated with coastal. I think coastal is running some business model where they find/train successful traders then tell them to open a branch in X location, offering them clearing rates for all deposits they pull in. It’s a pretty good win. They can make money on the volume rate spread, payout ratio, maybe monthly membership charge, and probably take opposite positions on all traders since 95% lose. again this is all speculation, I don’t know anything about coastal besides seeing 3-4 affiliations.

The greatest trait a trader can have is the ability to adapt. Markets are constantly changing, adapt or die. Only 4% end up surviving more than 4 years from what I hear.

If you are really going through with it, and have chosen a firm, make sure you search the internet for people who have actually gone through the programs, and read their comments. Some of these prop trading firms are bordering scams. Some are honest and will try to teach you, some just throw you into it without real guidance. be very careful

You should go to for more insight, although the first response might accuse you of being a shill! :stuck_out_tongue:

I would be careful. If 10g is “funding” your account, these most definitely have to be day trading strategies(Cant exactly apply convert arb strats or mean reverting things on 40g levered). Then you have to consider the fact Algo firms basically put the entire day trading industry out of work. It would probably be a lot fun though, and who knows the exit opps might land you on a great desk with some good performance.

Thanks again for all the thoughts guys. Spreads- good suggestion, Ive been reading through the posts on elitetrader, wow sounds like lots of people hate their lives. Also, you read things like this, not good for the ego.

Ok guys, well i am meeting the guy to discuss the position in more detail in a few days. I figure that nothing bad can come from meeting up and if nothing else it will help polish my interviewing skills, which are rusty. Any “must ask” questions that i should be sure to inquire about? Spreads- is Schottenfeld group similar to the one you mentioned? I believe that was his former place of employment? I read about the little insider trading thing but other than that are they well regarded?

Schoenfeld (sp?) could be a different firm than who you’re referring too, but to my knowledge they were a prop firm but only offered salaried positions (no deposits). A very solid trading operation. Here’s a question to ask this guy…‘how has sub-pennying and broker-dealer internalization affected your business model’. And if he doesn’t know what those are; I’d run, not walk, out the door! Considering this ad was posted on craigslist and may be borderline legitimate don’t be afraid to ask as many questions as you want. I’d avoid questions like (what my buddies sometime asked me) what does the average guy make, or how long have these guys traded, because they simply can’t answer those - unless he says everyone is killing it, it’s total bullshit. You can ask him, ‘how much money have you made from trading’, a HUGE part of being in a good firm is the training/mentorship provided. If their biz model is ‘throw enough mud vs a wall’, which could be the case advertising on craiglists, training is everything and if the top guys don’t make any money, why affliate with them.

Oh yeah and if that insider trading is what I think you read, don’t look too much into it. From what I read it seems almost everyone could be guilty of it.

S2M - update, how was the interview?

Well it was interesting. Rather informal and we just talked about what a typical day would be, how he plans on running things. He worked at this Schottenfeld group in NY. I cant find any information about them on the net but on linkedin there are a number employees. This was his boss, He liked it there but said he wanted to move back home, he is originally from the area i live in. Lives about 15 min from my house actually. Appears to be a baller but who knows, not that hard to live big when you just moved back from the east coast. Soo the job. very interesting. He and his partner provide the training. Its about 3-4 weeks and its free. He also provides the office, computers, software, whole 9-yards. I dont pay for anything except for trades, which he was saying is about .01-.013 per share. That seemed a little high to me but then again i wouldnt have any other costs like a “desk fee”. He said he is looking for 3-4 other people, preferably 1-2 with experience and then 1-2 like me. Said his gameplan was to grind out a year of returns that he could show around and then get a cash infusion from investors?, or whatever you want to call them. And then bank huge i guess? The 10K is locked up for a year, per SEC if i understand. But if i loose say 4k and am like F-this i can walk any at anytime i just have to wait till the year is up and i get it back. He is planning on starting this on 1/1/11. He was understanding that i got level 1 in a week here and then im going to Buenos Aires for two weeks so it was kinda like, call me when you get back and we will follow up with any more questions you think of and go from there. He was a very chill dude, has a wife and 4 kids. Has been trading 10 years. He really stressed that this job is not for everybody. Stressed that i was not getting a paycheck and that i kept what i make (99%). Made sure i have a cash cushion to last a few months until become profitable (or drop out i guess). Also said id trade like shit if i was hurting for cash and just making random trades to pay for car payment or whatever. What do i think about it all? I think i must be missing something. I get everything for free and keep 99% of what i make. The trades commissions seem high. I like that he is a cool dude that i could chill with in a office all day. Said if we did decent this year he knew the people to approach to get some cash from (my payout would go down) but we would be trading larger positions. O ya My 10k is levered up 10x. Im just going to focus on level 1 for the next week and demolish it. Then party my ass off in BA. Also be on the lookout to buy a business or something (how far can 40k pesos go, equivalent of my 10k, or at least how long can i last down there haha). Think it over and if i dont get any call backs on the other positions i apply to ill probably take it. Something else worth thinking about is that ive read that companies dont like it when you’ve got prop trading experience. Is that true? Its not like im hurting for a job, i just think it would be an interesting opportunity. I dont want to torpedo my future employability or MBA chances if it is generally looked down on.

Trading isn’t necessarily bad, there are some very tangible qualities you’ll develop, however don’t translate well onto a resume (e.g. formal skills, gambling, etc.). So I wouldn’t necessarily say it hurts, but I wouldn’t count on it for much - unless you were building a resume specifically for it. There’s a few red flags that flashed in front of me, the most obvious being that 1-yr lockup. That sounds like total hore$hit to me, I don’t know where in the SEC that comes up and something not typical in the industry! I’m assuming you’re trading intraday, e.g., no overnights? The leverage doesn’t seem anything spectacular, my previous firm allowed for 50:1 intraday, 30:1 overnight (which I don’t recommend going too high, haircuts can kill your account). And those commission rates are out of this world! Now I know you mentioned you’re not paying any fees or taking a split, but if he’s having you churn trades through volume those rates become significant, if not then they may actually not be too bad. In terms of ‘the appearance’ of the guy, well that’s something that’s really hard to guage. Some people that appeared very successful made their income NOT from trading; they could have have made it from something entirely different and not related to the industry or maybe they were still actively trading (breakeven/slightly +/-) but made their money through management or backing, etc. And one of the most profitable traders i’ve ever met drove this very modest nissan altima, you’d think he was around 100-200k a yr., but consistently made 7 figures. I wouldn’t jump to any conclusions yet (although I don’t know what the hell is going on with the, ‘grind out a year and get some investors’???), you can pursue the training since it’s free. I would hope some of it would be in real-time? If you get to the point of seeing trades you’ll be the best judge to see how viable this is.

Yep sounds risky.