Am I Cut Out For A Career In Prop Trading? Questions I have About Prop Trading

Huh boy. Lot of my answers should be relevant but some of it also probably outdated. Disclaimer: former prop trader here

1. This largely will depend on what asset class you're trading. Assuming you're based in the US for instance, it would be standard to be in the office by 6:00 AM EST and working a little past an hour post market close. For me personally, my firm traded primary interest rate derivatives but trainees started out in the European/Asian hours, so the work hours looked something like 8:00 PM - 8:00 AM. Once I transitioned into cash equities and later derivatives at other firms, 7:00 AM - 5:00 PM was more frequent, with occasional late night snipes if we wanted to be awake for a high anticipated event elsewhere in the globe (my heads pulled an all nighter when Brexit happened).

2. Again, will be firm dependent. Also, "programming" is a very broad term. If you mean in the sense I'm calling some package libraries in R/Python, probably quite frequently. Data wrangling, TCA (transaction cost analysis), backtesting, etc are pretty regular tasks in a trader's toolkit. Now if you're talking more in terms of simulating new trading algos, testing signal efficiencies for a new hypothesis, then this of course, will be way more prevalent in a quant oriented shop.

3. This certainly seems to be the trend, but I think there will always be a need for the human discretionary aspect (I am biased with this answer as I certainly preferred and thrived in this environment more). There's no doubt automation has been rising in the industry, but it's also bit of a hyperbole to say that the human element of trading will be dead in a few years. 

4. Honestly, you don't need sophisticated advanced math knowledge, contrary to popular opinion. You'd be surprised how a bulk of seemingly complicated models are really just an aggregate of math equations at a high school level. Most people hear "quant" and immediately imagine stochastic calculus (and it certainly is used in the field), but for all intents and purposes, you just need to have a firm grasp of probability & statistics. Certain people will definitely have a natural intuition, but it can be a skill that can be developed. Mental math ability in my opinion, is getting less prevalent but still doesn't hurt to have. 

5. It's a numbers game. Sent a mass exodus of emails to firms that I believed to be a reasonable "reach" (I didn't bother applying to firms that I knew were outside my league, because for a lot of these firms, you don't get a chance to interview again after you get dinged the first time). There's multiple ways to get your foot in the door and no one right way to do it 

6. I got fortunate enough to land a job right out of undergrad, granted it was a "lower tier" firm but hey, beggars can't be choosers. I was certainly not an established finance professional, most my background was learning stuff at university, and I'll tell you right now 95% of that will be irrelevant to what you learn on the job and how you'll fare (though I still encourage reading up on the job as much as you can).

7. Yes. Any training program that demands you to require capital, I would avoid at all costs. Textbook chop shop.

8. This will really vary from individual to individual. For instance, at my first firm, we had a college like "Draft" system where senior traders pick from a pool of trainees and I was 1st pick by a long shot. However, in the first 2-3 months when we began real trading, I was probably closest to the bottom in terms of performance. I did take the initiative to get extra training (even though work hours were already 12 hours+ min), just chit chatted with a bunch of my other colleagues to bounce ideas and get a feel for their sense of intuition, and really just kept at it. I also really just figured out ways to implement methods beyond what was offered in trading (at my first firm, they did NOT teach any coding or anything), so I ramped up on that. Not too long after, I was at the top again, even got a new inspiration to help take the firm to the next level, and was really praised for my persistence. Your efforts will show. Of course, you can try your best and still fail, which at that point, it's really a decision call on the individual to make if they really want to move forward or not. And really, there's no shame in moving on from something you decided it's not for you if that's the case. 

9. I just went in with the mentality "I signed up for this, if I can't make it, I can't make it". Also being an undergrad from a target, I knew that if worst came to worst, I can easily get a cushy job elsewhere. What was 1-2 years of reduced compensation? Generally speaking though, most firms these days will offer you a guaranteed starting salary (on par or sometimes even above average to other finance jobs) and the bonus aspect of your compensation gets bigger as you become more full fledged. When you start out, I wouldn't worry about the money too much, and just go in with a great do or die attitude.

10. Most of my trades are fundamentals driven. I do use "technicals" but probably not in the sense of what most people might imagine: cup & handle pattern, head & shoulders, ascending wedge, etc. The technicals is more for having a sound game plan in terms of entry and optimizing take profit exit points. 

11. I trade crypto for myself now (lol). But different asset classes will have overlapping elements to general trading but also niche factors unique to that said class. For instance, if you're trading FX, you're going to be much more honed in on what the ECB's sentiments have been, general interest rate decisions by the Fed, and overall macroeconomic global picture. Of course if you're trading US equities, while the Fed decisions is still important, you're going to be laser focused more on the recent M&A announcement from a couple companies, a product launch/demo etc. Contrast this to commodities markets, where it's going to be a lot more focused on supply/demand forecasts of corn produce for the year, and how the drought on the northwest will impact your estimates, etc. 

12. I really enjoy it. It's intellectually stimulating, and it's a very classic eat what you kill type of environment. It's also pretty pragmatic in the sense that you have to balance out a mix of keeping up with news events, being technically sharp in coding, utilizing mathematics, and also being creative. Most people probably assume I'm some computer algo whiz but really, I'm closer to an old school "discretionary trader" that happens to have some of the newer basic abilities in my arsenal. I also went solo not too long ago so the freedom aspect of that is very nice (more part time than full time now at this point).