newb question about prop trading
so I've heard prop trading can be highly lucrative but I really don't know what it is
do traders have discretion in their trades or do they just execute on behalf of others or an algorithm? i imagine this varies from place to place?
I have a bunch of experience trading small cap stocks and options. I guess my approach is highly speculative and volatile. should I think of getting into prop trading?
prop trading is trading the firms capital. you dont execute on behalf of customers, you are the customer essentially.
ok that helps clarify. so would a new trader have discretion to do various trades with X amount capital or something? or do they execute trades/strategies from someone more senior or a black box? thx for helping a newb out!
No offense, but people who have experience trading on their own know very little about options, or about the bigger world of trading, in general. The work done on the trading floor of a major investment bank is very different from what is done by an amateur at home, or for that matter, by most traders at hedge funds. For 99.9% of the people looking to get into this business, don't waste your time focusing on prop desks. 1) you most likely will not land a prop position without having first established yourself as a trader on a regular desk. 2) you will learn much more starting out on a regular desk on the sell-side that does both market-making and prop, in addition to interacting with sales and structuring, as that's how most of the big P&L deals are done these days (and often with interaction from PE and IBD, as well).
prop shops are only lucrative IF YOUR good at what you do 2 yrs down the line. if they give u enough capital to play with. if you can survive on 25000 for a year before you ever get to trade.
no offense taken skins1. are you referring to various hedging and arbitrage strategies involving black-scholes/etc? I admittedly don't really use that personally. it's still unclear to me what level of independence individual traders have...?
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