How can I with no experience become a proprietary trader???

I'm a freshman at a non-target. I have no work experience or special skills to put on a resume. The only thing good, thus far, is I have a 4.0, honors society, Phi Betta Lambda member. I have NO money, so I can't trade, instead i just spend a lot of time virtually trading and reading books... probably the same amount of time a prop trader does. I'm literally obsessed and deeply passionate about trading, not investing. So how would I break into trading? With no experience? I've been learning about the markets for six years, and blew up a couple mini forex accounts because i was greedy and of course had no real money at stack, kinnda like poker.... only in poker i've had better results... However, in my virtual account trading stocks i'm always doing pretty well.. yes i lose often but i cut my losses and let my profits run..

 

if you're trying to prop trade, experience will be the most important thing you need to gain. Unfortunately, academics really don't help you much in prop trading(although it is necessary to have a good gpa to get into a good shop.)

Ok, so you have been learning and trading for six years and still haven't had any success on the mini-account? There is obviously some factor in your learning equation that needs to be changed. From my perspective, it sounds like you have no risk controls that should be implemented. Trading live capital is a 180 degree turn from trading demo capital. Sit down, identify your weaknesses and strengths, evaluate your decision making processes, draw up a trading plan that will remedy your weaknesses with some sort of risk control.

Stay on the demo until you can be profitable for 6 consecutive mos. When you have a solid track record on the demo, put funds into a mini account. Trade that and try to build a live track record for one year. If you are successful, with your good grades, you should be able to get into a decent prop firm.

 

yeah in forex i was trading 50:1 leverage and usually leveraging everything.. i got levereged out most of the time... i took too much risk exposure.. because i only had about 500 dollars in my account at any given time, paycheck to paycheck... but now i have no job and can't find one.

thats all though a good 1 year track record? I mean from what i know in one years time it isnt really a good indication of future success... Thats basically what i'm doing right now, as far as, the demo is concerned... I already know what im doing wrong.. and when i fix my mistakes, im profitable... but then my greed and emotions get in the way and i take bigger risks.. since i have very little money..

 

Also, concerning prop shops what would be a better trading vehicle, forex, stocks, or futures??? I do best with stocks by far I think its because they are less volatile and more trend oriented, as opposed to forex, which is all over the place in the short term.

 

WHOA! 50:1 and getting margin called?! my assumption was right, you have no concept of risk control whatsoever.

You need to develop a plan to manage your risk. Try taking trades with 1:3 risk/reward ratio, with a stop no greater than 30 pips, and not risking more than 3% of your account balance on any one trade. Once you get up 30 pips, move your stop to entry to eliminate risk. Stage trail your stop.

Follow these three sentences to a T, and your trading will drastically improve.

One year is a good indicator of future success, because most people don't even last one year. Either because a) they have no risk control b) they don't know what they're doing c) don't have determination and resilience. Greed will kill your trading.

There are all sorts of prop shops, you should do what you know and perform best in. Stock are not more trend oriented. Forex is the most trending market.

 

okay so i just got a job at subway EAT FRESH lol. After reading this post,

//www.wallstreetoasis.com/forums/travel-on-resume-0

im seriously considering following my dreams and thru hiking the Appalachian Trail. For prop trading do you think it will look good on a resume? I mean i have 4 years to save up during school and trade, but if i save up this year and a little bit on next year, take off 6 months from everything in March and hire from Georgia to Maine. Do you think it would look good for proprietary trading?

 

hehehehe...i was kidding...i am an FI guy and actually believe cramer is a stupid idiot...if only you could see him yelling at bernanke and bill poole last friday @stop trading... but seriously, this is not a serious post...can I ask "how do I become an astronaut?"

 

dude for anyone who hasnt seen the Cramer clip that you are referring to, go watch it immediately on youtube "cramer blows a gasket" he is hilarious

it really is as bad as he says...but if the Fed did lower rates today and open the discount window the dollar would continue to weaken and inflation would likely become rampant

i wanna be a mother fckin hustler when i grow up...better ax somebody

 

Cramer is a fuckin' nut. If the fed lowers rates inflation is going to go out of control. History has shown that keeping prices under control is the best way to maintain a stable economy, and so the fed is right to be hawkish. Whats more, the feds job is not bailing out investors who take overly large risks.

If hedge funds were buying those ridiculously priced CDO tranches we wouldn't see so many subprime loans issued, because banks would be stuck with the stuff that can't be securitized and sold. This is the dog's whack on the nose for doing something stupid.

Junkbondswap - love the Snoop quote

 

...see my post above about breaking into trading. To get good at trading 1)Fund an account and start Trading 1 futures product. 2) Read extensively about risk management, trade sizing, and discpline. Managing risk and sizing trades properly (probably 1 contract to start) is much more important then good ideas. Trade with tight stops and first and foremost preserve capital. 3) Learn everything fundamental about that one product whether it be Oil, Hang Seng Index Futures, S&P 500 futes, or whatever.

 

@inthe123: I have one year of experience as a market research analyst and a few months in an underwriting department at an insurance company.... the point is to get enough work experience to apply for an msf and set aside money to start trading again so I can show a good track record. I've also been applying to jobs that are more directly related to finance but its not been easy so far to get interviews.

@1000talents: thank you for your succint advice, you're completely right about the networking, thats probably the best area I can gain an edge in. I have used the search function quite a bit but most people are asking about the top prop firms (many of which are market making firms heavy on quant) whereas I'm looking for a smaller, less prestigious, middle tier firm that's still legit with a good training program.

FNYS and trillium sound great but I'm thinking my academic record might present a bit of a challenge. I just want a good non-scammy firm to start trading at. I'm convinced my trading record will eventually open other options for me but right now I'm thinking my choices for breaking into trading are to suck it up and try to develop a good record at a trading arcade or network and go back to school?

Again, thanks a million for your input, I truly appreciate it

 

I was in a similar situation as you. Liberal arts degree and such. Key is to network and show that passion to trade. And with a little luck you'll land somewhere. Happened to me. True story.

Not sure what the scene is like in FL for prop trading but yea no lie I think NYC/Chicago has more opportunities. First thing I would do is search for those prop firms. This site does list non-top shops and if you use google there is a huge list with addresses and websites compiled by someone on a blog (you'll know what I'm talking about when you find it). I found it by doing a search and I'm sure you will as well.

I know that shops in Chicago have intern programs you could try out. Worst thing you could do is move to NYC/Chicago, get into a shop and actually hate trading. Contact those firms first.

As for the MSF, I wouldn't necessarily say it's useless for trading but it does depend on the program. Princeton's MSF is more quant-y and closer to a MFE than say an MSF at the University of Illinois. Princeton's is more likely to place in trading. Again, depends on the program. There are other's on here who are more qualified to speak about MSF's than me so I may be wrong.

 

If you're not a star, whether that be as a student or as a proven trader, it's nigh impossible to get your foot in the door at a place that's not just a trading arcade. What's the minimum level of income you could accept? Would you want to be an intern or a clerk? Why would they want you when they can find other people with more experience? Not trying to be a buzzkill but I'm just trying to be honest. It took me a couple years to get to where I want to be but I "made" it eventually.

With that said, it took a lot of networking and bootstrapping. Daytrading your PA is not going to impress anyone unless you produce a lengthly track record. What do you really bring to the table? Can you code? Do you have an edge?

Trust me, there are a lot of prop shops under the radar but you have no idea because they don't advertise. They don't have websites or put up job postings. The ones that do are the big shops and they do formal recruiting. Occasionally you may see some new postings on something like Craigslist but you should be careful about what you're getting into.

As for the best path... You need to show quantifiable reasons that they should take notice. Build a trading application, write a robust trading journal, etc. Going to school will cost you, but it may be a good chance to re-roll the recruiting dice. You'll just need to be a star the second time round.

 
Metamorphosis:
If you're not a star, whether that be as a student or as a proven trader, it's nigh impossible to get your foot in the door at a place that's not just a trading arcade. What's the minimum level of income you could accept? Would you want to be an intern or a clerk? Why would they want you when they can find other people with more experience? Not trying to be a buzzkill but I'm just trying to be honest. It took me a couple years to get to where I want to be but I "made" it eventually.

With that said, it took a lot of networking and bootstrapping. Daytrading your PA is not going to impress anyone unless you produce a lengthly track record. What do you really bring to the table? Can you code? Do you have an edge?

Trust me, there are a lot of prop shops under the radar but you have no idea because they don't advertise. They don't have websites or put up job postings. The ones that do are the big shops and they do formal recruiting. Occasionally you may see some new postings on something like Craigslist but you should be careful about what you're getting into.

As for the best path... You need to show quantifiable reasons that they should take notice. Build a trading application, write a robust trading journal, etc. Going to school will cost you, but it may be a good chance to re-roll the recruiting dice. You'll just need to be a star the second time round.

I definitely took a risk and went back to school (risky cause I had very little money) and someone noticed me. That's good advice and that's how I got in.

 

thanks inception and metamorphosis for your feedback.

Metamorphosis, dont worry about being a buzzkill, I'm not looking for someone to sugarcoat the truth so I appreciate you giving it to me straight. To answer your questions, I have some other sources of income so I can probably accept a much lower salary or even 100% commission if that makes the prop shop more comfortable in taking a risk in me. I am not against being an intern as long as it is a solid firm where I'll have a chance to prove myself.

In regards to giving myself an edge, I like your idea about writing a trade journal and I think its very doable for me. I want to learn to code, not sure exactly where to start but I honestly I havent researched it much at all. Can you elaborate a bit on what you mean by build a trading application? do u mean create my own trading platform software? or design my own algo trading systems?

 
albi7918:
In regards to giving myself an edge, I like your idea about writing a trade journal and I think its very doable for me. I want to learn to code, not sure exactly where to start but I honestly I havent researched it much at all. Can you elaborate a bit on what you mean by build a trading application? do u mean create my own trading platform software? or design my own algo trading systems?

Ideally it would be those things (custom made trading execution app, pricing app, grey/black box algos), but if you don't know ANY programming, it's quite a long road. With that said, there are a few places to start.

Excel/VBA-based pricing models: these can be quite good and get the job done if you don't need a lot of speed in your trading. If you don't know VBA, I suggest you start learning. User-defined functions, events, procedures, etc. Here's an example that I found: http://www.optiontradingtips.com/pricing/free-spreadsheet.html

Python is an easy/easier language to learn which means you can produce results a lot more quickly. It has a lot of functionality right out of the box due to its robust libraries. I would recommend to people that are just starting out. Again, if speed is not important in your trading, you'll be able to get by.

 

QuickFix is what you should look into once your programming is much better. If you can understand it, it will give you the power to build your own custom trading applications that can actually execute orders. This is far beyond what anyone interviewing for an entry level trading assistant job could even begin to claim, so it would set you apart. With that said, you probably won't get to this point until much, much later on so it may not help you right now. If you want to build something actionable in your current state, I would recommend doing a lot of backtesting. There are free trading platforms in the marketplace that will allow you to this and I'm afraid I'm not familiar with all of them, so I'm sure they all have their strengths and weaknesses. These are often made for non-technical users so you do something worthwhile.

 

I think your options after three years at such a prop shop are great, IF you manage to survive three years. Even established places (like Optiver), tend to pay a decent base and provide you a 2-month training, but quickly get rid of you if you fail to perform. Make sure you understand what kind of shop you are going into and what tenure most junior people can expect to have.

CFA can be good to do on the side if you have the time

 

best way is to go through the recruiting process for Equity and Fixed Income Analyst Programs at every IB you can find. Even though you might not be in college anymore you can sometimes apply through this method (if you have no experience in the buiss. and no MBA) Otherwise just apply during the fall and be upfront about what you want to do. You'd probably have to start as a traders assistant and just put in your time and wait patiently to get your shot. As far as getting on to the prop desk, at most firms, it will be a matter that you work out after you have gotten there and have gotten a seat as a trader. Direct hires to prop desks are generally already experienced prop traders or of truly exceptional quantitative ability and training. The only other way it happens is when someone goes through a summer internship working on that desk and establishes himself as worthy of being a traders assistant (aks. trader in training) on that desk. Otherwise, it will likely come down to politics and getting in with the right people once you've gotten into the general equity or FI S&T pool of hires. It is very unlikely you will get a direct hire to so desirable a desk without them first getting some more exposure to you. **ALSO- Some Hedge Funds have started to implement JR trading programs (on a very small scale of course) for those who demonstrate exceptional promise. This would blow any banking option clear out of the water.

 

there are other threads about this. generally you're not gonna start out on a prop desk. you're also not gonna start out actually making prices on a flow desk either. you will sit on a trading desk and learn. in the meantime you will try to add value as best you can and be grateful.

 

I think that if you said that, then I would ask you what experience have you had that makes you think prop is what you want to do.

Secondly, what makes you qualified to be a prop trader?

I tend to agree with Jimbo. Just get on a trading desk, shut up, learn, do what you are told, and like it. Once you build a realationship and show some sort of aptitude for trading, then sharing your ambition might be okay.

 

the typical path would have to be invent a time machine and go back in time to pre-Volcker Rule when prop trading groups were not outlawed at bank holding companies. So assuming you did that:

  1. is it all about who you know? No. It's all about PnL and whether your strategy fits their portfolio. Networking is important like everywhere else but recruiters should be all over you if you have a verifiable PnL with large enough assets.

  2. it's not years or experience per se. More like "how many years of awesome PnL with large AUM?" More the better obviously.

  3. usually prop desks at BBs only hired experienced traders - whether from HFs, prop trading firms, or flow traders at BBs that start to stand out. Further degrees are not whats important for experienced hires- It's all about #2.

  4. given #2, absolutely.

p.s.- I'm not a prop trader or even work at a BB but my understanding is based on various career bios and a short discussion in 08 with a hedge fund trader that used to work as an MBS porp trader at lehman. I'm 99% sure my view is correct.

 
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