I'm a successful private trader. What's the best career path for me?

aicccia's picture
Rank: Baboon | 143

I did the military for 5 years after highschool and I'm now going to Columbia GS, financial economics.

I started studying and trading the currency markets when I was 18(7 years ago) and I've become successful, using just price action and trend lines to trade trends that last a few days to a few weeks.
Been doing 5% to 7% a month for the last 2 years.

I used to think I wanted to join the finance world and make a name for myself, however I've realized that anywhere I go, I'll have to ignore most of what I've learned about trading and investing(because my methodology is fairly radical) and adopt the investment methodologies of my employer, and the investment philosophies of the mainstream finance world(you know, the worship of FA)**.

These would be the same investment methodologies and philosophies that have not only led to the repeated stock market crashes in the 12 years,but also, for the most part, failed to predict them.

I know I could just graduate with a degree and then just sit on a beach somewhere, but that's a boring wasted life. I want to make a name for myself, learn the ins and outs of the financial world, and develop networks of peers so that I could someday start my own financial business.

Is there a certain sector I could go into so that I could continue my trading on the side? Or are there hedge funds or banks where I could used my own skills? Or something else?

Thanks for the advice.

**Read the intelligent investor, total respect for Warren Buffet's patience, but I think as money can always be made quicker and more predictably through price action analysis.

Comments (39)

Dec 18, 2012

sounds like you should look into Prop Trading

Dec 18, 2012

5%-7% on what capital base? Do your strategies scale?

Dec 18, 2012

Yes they scale. I wouldn't waste my time building a strategy that exploits a temporary inefficiency.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 18, 2012
aicccia:

Yes they scale. I wouldn't waste my time building a strategy that exploits a temporary inefficiency.

you'd be surprised how we see this and you see this would vary. My seat at my firm costs the company $25,000 a month. I am salaried as well, (not included in this amount) and bonus on performance. For the company to get value out of you, they need at least double that per month, including costs.

Dec 18, 2012

Thanks for the info guys.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

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Dec 18, 2012
trazer985:
aicccia:

Yes they scale. I wouldn't waste my time building a strategy that exploits a temporary inefficiency.

you'd be surprised how we see this and you see this would vary. My seat at my firm costs the company $25,000 a month. I am salaried as well, (not included in this amount) and bonus on performance. For the company to get value out of you, they need at least double that per month, including costs.

Gotcha. Thanks.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 18, 2012

If you are truly annualizing at between 80-125% per year, you should have little trouble getting seeded. The problem is, nobody is going to believe those returns. If you can get that track record audited by a reputable firm and the numbers are what you claim, some multi-strat fund would probably give you some money. I think that it is highly doubtful that the results are anywhere near as good as you think they are.

Dec 18, 2012
SirTradesaLot:

If you are truly annualizing at between 80-125% per year, you should have little trouble getting seeded. The problem is, nobody is going to believe those returns. If you can get that track record audited by a reputable firm and the numbers are what you claim, some multi-strat fund would probably give you some money. I think that it is highly doubtful that the results are anywhere near as good as you think they are.

Where did you get 80-125%? You are a HF partner and I'm not even in a FO role and I even know if you annualized 5-7% its like 40%-60% annual returns.

    • 2
Dec 18, 2012
yeahright:
SirTradesaLot:

If you are truly annualizing at between 80-125% per year, you should have little trouble getting seeded. The problem is, nobody is going to believe those returns. If you can get that track record audited by a reputable firm and the numbers are what you claim, some multi-strat fund would probably give you some money. I think that it is highly doubtful that the results are anywhere near as good as you think they are.

Where did you get 80-125%? You are a HF partner and I'm not even in a FO role and I even know if you annualized 5-7% its like 40%-60% annual returns.

(1.05^12)-1 = 79.59%
(1.07^12)-1 = 125.22%

    • 1
Dec 18, 2012

.

Dec 19, 2012
SirTradesaLot:

If you are truly annualizing at between 80-125% per year, you should have little trouble getting seeded. The problem is, nobody is going to believe those returns. If you can get that track record audited by a reputable firm and the numbers are what you claim, some multi-strat fund would probably give you some money. I think that it is highly doubtful that the results are anywhere near as good as you think they are.

This is good advice, and if you're seriously annualizing 80%-125%, and have been for some time (and you've gotten it audited), you could simply start your own fund. Those numbers are insane, why give someone else part of your returens when you can do it yourself?

"My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."

Dec 19, 2012
mikesswimn:

Those numbers are insane, why give someone else part of your returens when you can do it yourself?

I would almost discourage you from joining a Wall Street firm and having their "investing methodologies and philosophies" shoved down your throat. The only name you'll make from this route is when you get sued for overly aggressive trades using shareholders' money.

Create an S-Corp and seek an Angel Investor. Or find someone with a similar trading strategy and form a partnership. Working for someone else you'll have to give up nearly half your income up front in taxes. If you have your own business you can duck and dodge some of those taxes (or at least buy some fly shit with pre-tax $).

Make opportunities. Not excuses.

Dec 18, 2012

edit: im at a HFT, the costs of our setups are a lot of that cost. if you're manually doing it, with reasonable software, your costs will be vastly reduced.

Dec 18, 2012

Look into prop trading roles. If you can substantiate your trading record, some shop will seed you. Even if it isn't the best to start, at least build a record that you can take to a better shop after awhile.

Dec 19, 2012

You sound like a good guy, so i will give my unbiased $0.02
Seeing that i currently work at a hedge fund, specifically a fund of funds, first you might be overstating your returns 5% monthly will make you one of the best managers right now.

Your strategy might be working but it might not be scalable - i cant count how many times we see good small managers AUM $5-10M give them another $5M and they can't sacle the strategy. You might think it is scalabe but you will never know with a sub $100k trading book.

Finally if you are really into your strategy you should look the prop direction because no solid bank might be that welcoming for an under dog, keep your cool and know you are in a very critical industry.

Dec 19, 2012
monkeyDD:

You might think it is scalabe but you will never know with a sub $100k trading book.

Well currencies are supposedly the largest financial market, but point taken. I wonder how dry it gets in between markets for a minor pair.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 19, 2012

I have a friend who started out as a trader for a bank but then started his own 3 person shop for propriety trading. I don't see why you can't make a name for yourself even if you successful on your own?

Dec 19, 2012

First, that is an amazing return. I understand what you are saying. Even being profitable, it is kind of boring to trade from your apartment. I think with returns like that, if you can show your monthly statements to prove your returns to a potential employer, you should have no issue getting into a prop. trading firm.

By the way, how do you find time to trade that much while attending graduate school?

Dec 19, 2012
andres17:

By the way, how do you find time to trade that much while attending graduate school?

I'm not trading a lot. It averages out to about 1-2 trades a day. I risk 0.5% of my capital per trade, maybe I risking more than the norm? What is the normal risk per trade is in the professional world? 0.1%?

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 19, 2012
aicccia:

I'm not trading a lot. It averages out to about 1-2 trades a day. I risk 0.5% of my capital per trade, maybe I risking more than the norm? What is the normal risk per trade is in the professional world? 0.1%?

Risking only 0.5% for a private account seems very little, especially if you are only doing 1-2 trades per day. I'm now trading my PA for a couple of weeks and I'm risking about 4% per trade. How many of your trades are winners?

Dec 19, 2012

Seems like prop is for you. I believe most prop shop requires 3 years of audited profitable track record. shldnt be a problem for you

Dec 19, 2012

Used to trade Forex a few years back, but never traded consistently enough to fine tune my trading strategy. When you say 5%-7%, are you saying you don't have a losing month? I would assume that all technical trading strategies dry up for periods of time, but that they win out in the long term. Is it just candle sticks and trend lines? I've read up on numerous traders claiming they double their accounts monthly, but I could never take it seriously. Just curious to hear your general strategy.

Dec 19, 2012
SlikRick:

Used to trade Forex a few years back, but never traded consistently enough to fine tune my trading strategy. When you say 5%-7%, are you saying you don't have a losing month? I would assume that all technical trading strategies dry up for periods of time, but that they win out in the long term. Is it just candle sticks and trend lines? I've read up on numerous traders claiming they double their accounts monthly, but I could never take it seriously. Just curious to hear your general strategy.

Interested as well...

Dec 19, 2012

what specific pairs, market session, and leverage you are trading on?

Jan 12, 2013
ST Monkey:

what specific pairs, market session, and leverage you are trading on?

With my school schedule, I've given myself about 15 min 3x a day to check the markets: 7 am before class, 3 pm after class, and 11 pm before I hit the rack. So I trade on the 8 hour tf, and I'll trade any pair where I see a trend clearly ending/beginning. The account has 1:50 leverage but even with 10 positions, I'm just using about 1/3 of it. Like I said earlier, with stops, I'm risking 0.5% of the account per trade. I pay close attention to how the currencies correlate and avoid opening essentially duplicate orders such as on EUR/JPY and AUD/JPY, but its hard to truly diversity in currencies when there's only 8 or so major base currencies.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 19, 2012

Whenever there are these threads, the one question that always goes unanswered is the capital base... So... Can you break that trend and at least provide a range?

Jan 12, 2013
Benjammin822:

Whenever there are these threads, the one question that always goes unanswered is the capital base... So... Can you break that trend and at least provide a range?

About $5,000. I am a married student, with no part-time job, attending Columbia, with no parental financial support, so I am essentially already breaking the first rule of not trading money you can't afford to lose. However I know its critical to build a track record if I want to continue trading my own way in the professional world.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 19, 2012

I second Benjammin - the range will provide more pespective.
Also if you are consistentily averaging 5% each month, what is your worst monthly loss?

Jan 12, 2013
monkeyDD:

I second Benjammin - the range will provide more pespective.
Also if you are consistentily averaging 5% each month, what is your worst monthly loss?

There's been a few months where I'm essentially break even balance-wise. But equity-wise I'm up. I the inter-weekly trends of 10-15 currencies. Currencies usually have 1-2 inter-weekly trends. Some times these trends last for 3 days, sometimes they last for 30 days. So for me to just break even in a month, that means I've completely missed over half of all the trends that happened that whole month on each currency.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Jan 12, 2013

.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 19, 2012

How do you define "risk" when you say you only "risk" .5% of your capital per trade? DO you mean you intend to use a .5% stop loss? I say this because if your "risk" as I would define it - the amount of capital committed in the trade - is only .5% per trade, and you do 1-2 trades per day, that means max risked capital per month is 2*.5%*25 trading days per month = 25 basis points of your capital, but you generate 5% returns, so... your return per individual trade is 20x??? unless you are trading deep OTM options with some crazy gamma profile and are timing them perfectly, I think you must be risking a lot more capital...

Jan 12, 2013
DkrCap:

How do you define "risk" when you say you only "risk" .5% of your capital per trade? DO you mean you intend to use a .5% stop loss? I say this because if your "risk" as I would define it - the amount of capital committed in the trade - is only .5% per trade, and you do 1-2 trades per day, that means max risked capital per month is 2*.5%*25 trading days per month = 25 basis points of your capital, but you generate 5% returns, so... your return per individual trade is 20x??? unless you are trading deep OTM options with some crazy gamma profile and are timing them perfectly, I think you must be risking a lot more capital...

Yes 0.5% stop loss.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Dec 19, 2012

OP, I understand where your coming from as I initially wanted to make a name for myself also and I think many people do. I went to a successful boutique ER firm and it didnt work out unfortunately. Nonetheless, I realise that I made it to the top (arguably) and to be honest, the only way to make money is working for yourself. I think its better starting your own thing if you earn those returns and build a company. You would get plenty of st cred. I realise that you can be a slave and work up in the industry but if you have a gift, in your case market intutition, go with it. I feel like I have a gift at picking small cap equities. So my plan now is to get into any field that I can make good money and build up a capital base so that I can begin my trading strategy. Thats my plan for 2013. I have been investing for 7 years in the market and have made plenty of losses. Point is, if you have the ability, it's far more satisfying buuilding an empire on your own as you will earn far more credibility and often try and be poached that way. Dont discount this opinion.

Jan 21, 2013

Aside from prop trading, you might want to consider a FX focused trend following CTA or HF. Most of these funds are quantitatively inclined, hence you would need to acquire a new set of skills in statistics, programming and quantitative trading.

Jan 13, 2013

i have been able to do similar numbers for 3-4 months but never year over year, well done!

Jan 13, 2013
Comment

I don't accept sacrifices and I don't make them. ... If ever the pleasure of one has to be bought by the pain of the other, there better be no trade at all. A trade by which one gains and the other loses is a fraud.

Jan 20, 2013