getting back into the business after 10 years
so about 10 years ago i was a successful sellside rates prop trader...was in the business trading for about 5 years, after 6 years working in tech writing software. i met a mentor on the sellside who taught me how to trade, how to see the market, how to do research, how to identify patterns and how to recognize positioning etc..
i don't have a network to tap into...the few people i knew are long retired.
my mentor retired and i lateraled to another bank and had a good couple years...made 10mm trading interest rates prop my last year, positions averaging 100k of dv01 risk (100m 10yr notes....50m 30yr bonds, etc..), and then i semi-retired for family reasons. my mentor has passed away, and i miss him...i was lucky to be taught by him. anyway, i'm now looking to get back into the business. i was a prop trader...never made money from the flow side of the business...but never got to be very senior and make a reputation either. if i had stayed a couple more years, i think i could have been an MD making 40mm+ and made a name for myself. never really got a BIG payday...got paid 500k my last year which was good (5% of my P&L), but those savings are long gone.
anyway, i'm now a member of the poor class, trying to get back to where i left off...but the world seems to have changed. i have a little money, 100k to trade futures at a retail broker and trade my strategy....i think i can make 30% returns while staying within the risk params of the multi managers (max drawdown 5-10%...sharpe over 1.5)...all trading intraday us interest rates...curve vs curve mean reversion with outright duration overlay. not exactly arbitrage...but not outright punting either.
However, i'm no longer trading 100mm 10yr notes...i'm trading a 100k futures account at Interactive Brokers the equiv of 1-2mm 10yr notes levered (i know...poor)...but i think i can still hit 30% returns (not scalping...but typically trading 2-4 hour swings in the rates market). However, 30% of 100k is peanuts. I can use more leverage to make more $$....but then my swings will be a larger % of capital and i'll expect to see 10-20% drawdowns to make 60% instead of 5-10% drawdowns...which i suspect would not look good from a platform perspective (if i'm wrong, please enlighten me).
The good thing is that unlike most other markets, the US rates market is the deepest most liquid in the world....trading 1mm vs 100mm is just as easy as trading $1 billion with 200mm-400mm on the tight bid/offer pretty much all the time (yes, eventually you hit liquidity constraints, but avg trading volume in the US rates market is over $500 billon per day, so scaling a strategy in US rates is not a concern vs single stocks in the equity market) ...so a trader like me is trading on the same playing field as the prop guys at Goldman...a true meritocracy...just smaller size.
so, how can i parlay this trading knowledge/ability to get back into the business...ideally a trading PM seat at a multimanager? my past experience, while i think relevant to today's markets (i see the same patterns as 10 years ago) most people completely discount because it was 10 years ago. if i was on the other side, i would probably think the same thing...so i get it...but its frustrating...rates trading based off patterns is really all i'm good at.....but i am good...i think i could have easily gotten a trading seat at a multimanager 10 years ago when i was still at the bank.
i want/need to trade a larger slug of capital...and getting a seat on the sellside is no longer an option, as headcount is half what it used to be, and i don't know anybody in the business anymore.
i understand that in order to get a seat trading institutional money, you generally need to be coming from an institution seat (the old cliche, "its easiest to get a job when you already have a job") but there must be some way for a person with my knowledge and ability to prove that i have the ability, and thus get a seat?
ideas / suggestions?
Hi VP in S&T - FI, check out these resources:
More suggestions...
I hope those threads give you a bit more insight.
Best to hit up your network. Any old contacts from your sellside days that can introduce you to funds?
As you said, it's difficult to get a seat these days. Going back to school (ie MBA) probably won't open any doors to rates trading either.
i'm in a similar position....would love to hear what some multimanager PMs think
anybody? what would you suggest i do in this situation?
i don't have a network to tap into...the few people i knew are long retired.
Your situation is tough and I don't think there is a high chance that MM platforms would consider you at this point, given the abundance of candidates wanting to jump to MM + your time out of the market.
Have you considered prop firms to run your strategy?
I would think these prop firms would have fewer requirements and hence a higher chance for you to land a seat there. If you can perform as you said, you can build a more "institutional" track record after a couple of years, and then hopefully you can move on to a better seat.
All the best.
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