Questions From An Aspiring Prop Trader
Hey guys,
Recently I've realized that I seem to have an affinity for trading stocks. I've been recording buy/sell prices for the past 3 months now with good results. Unfortunately, recording is all I can do as I do not have a substantial amount of money to speculate.
If I keep up the good work my father has agreed to loan me $10,000 to trade in the stock market (under my own condition that if I lose 5% I sell everything and give it all back to him and then pay him back for the loss). I may be able to make a pitch to my uncle for another contribution, although I don't know how large it would be. Trading with real money is different, but I excel at detaching myself from emotions (even with money). With that in mind, I think I'll trade in a very similar fashion, but we'll see. Anyways, time to get to the point.
Assuming I continue to speculate well, even with a real portfolio of $10,000+, I would very much like to pursue a career as an equity prop trader. I just have a few questions.
1) What are the monthly/yearly gains for the typical prop trader at a respectable firm? In terms of percentage increase of his/her starting amount. I'd like to have some percentages to compare my own results to.
2) Do prop traders usually get paid by commission on their profits alone, or do they have a base salary with incremental bonuses added to it based on performance? Or does it just vary based on the place that hires you?
3) While one's resume and one'e education are obviously important, do you think a year's worth of exceptional trading with real money would speak louder to the employer? I'll give an example. Let's say an individual tried to get a job as a prop trader and showcased a 50% profit by the year's end. I would imagine this bit of information is more important than anything else to the employer?
Thanks for your time guys. I appreciate it!
There are no typical monthly/yearly gains for the 'typical' prop trader. There are traders who don't make enough to survive and then there are others who rake in millions per year. This is a job based on skill and commissions range from 50-80% of profits gained depending on the prop shop you work for. For example,m Chimera Securities is 50% while Tower Hill is 80% so it varies based on where you work. Finally, education is important but if you have real trading experience even better.
Brandon,
But there's gotta be an average performance for the prop traders who survive for more than a year or two. Do you think they outperform the market by 5% over the course of the year? 10%? 15-20%?
Your performance record doesn't mean anything when it comes to "top" proprietary firms in the SIG, Jane Street, etc. tier especially because most of their strategies are market making and therefore attempt to be market neutral. Such experience will merely serve as a flag for your interest in markets in general.
If you want to try for a place like Gelber that will let you run your own strategies, then your experience becomes more relevant.
Awesome, thanks for the info. Would you happen to know the name of a couple proprietary firms based in Chicago and NYC that allow you to use your own strategies, other than GelberGroup?
Also, do you know what the compensation is like at these firms?
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