Prop Shop Info: M&N Trading + Some Thoughts

Ok, this is my first post. I got to know wso couple of weeks ago, and I am writing to contribute something to this website: my experience and thoughts about prop trading. I am a huge ignorant, so you are more than welcome to contradict my thoughts, and enlighten me.

First, this is not my first language, so please be lenient w my grammer, and whatever I write is 100% based on my EXPERIENCE, not from what I’ve read or heard from a friend of a friend of a friend.

I just graduated from the university of southern California with business (corp fin) and accounting undergrad degrees. So far, my experiences are ML private client service, PE research asstnt, commodities & forex broker (and managed futures cold-caller for HF, and yes I do have series 3 and member of NFA), and prop trader trainee. I am joining the military service for 2 yrs (it’s a duty) soon.

As you might see from the prop shop ranks, there is a firm called, M&N Trading. This is my story with the firm.

This firm is in Chicago, IL and Newport Beach, CA. My posting is solely about Newport Beach office. This is a trading company that posts “Trader Trainee” position in Monstertrak. If you narrow down your search to California, you’ll find how to submit a resume.
One day, I was lucky enough to get the first round interview (fyi, there’s only one interview round). The interview is very informal, and the interviewer would be the head of the firm, Anthony Lazarra (is this the right spell…?). The interview questions are easy, and for somehow, I was picked as one of the three trainees. He picks three to four trainees about four times a year.

The first two days, he taught us about some basic knowledge about the markets and bonds. BTW, this prop shop trades fixed income derivatives, specifically, butterflies – this is spread. There are TUT, FOB, TUB, etc that buy 5 year cash and sell 10 year future….. It’s been a long time but I still do remember that it was straightforward.

After that he will put you on the trading desk w trading simulation. The office looks like this: first of all, the whole office is freakin DARK. On one side of the wall, there are about 12 large TV screens showing CNBC, real time quote of cash/futures price of treasuries, and bunch of graphs I still have no idea (even half of the traders wasn’t sure….). Right in front of the screens, there is a first row desk for newcomers. The trading desk is long but there are only four computers: one on the very right for the tech, and three for the very left. In the middle of the first row, there’s only empty desks, no computers. The new trainees have to spend the next two to three months on that empty desks, calculating something like what happens to bond A and B if A was sold 25 basis points higher…. Something I still have completely no idea about the purpose.

You just calculate you’re a** off for months and write down prices. My description is vague because I really don’t know what and why I was calculating. I really do hope Andy has a purpose for that. Then Anthony tells you to start trading. How do we trade w/o computer? You look the charts and quotes on the TV in the wall (remember?) and write down what u would buy/sell on a paper, sum Profit/Loss, and give it to Anthony at the end of the day. The problems were that the TV screens were hung upper side of the wall and the desk is right below that you have to look up to see what’s going on. If you look up like that for hours, you’ll think about having a cast on ur neck. Another problem is that there are bunch of unidentified graphs. Only seniors know what that is. You can ask them, but an hour later they shift graphs, so you are lost again.
For some reason, if you are strong enough to hang in there for months, he will put you on the desk w computer (left side of the long desk). At the end of the three months, he will decide who stays and who get kicked out. The chances to become the trader are EXTREMELY LOW. If you make it to a trader, he will pay you about 30k (I guess), and you have your own desk on the second row. The third row is for Andy, one Korean tech guy, and one or two legendary traders I heard from Andy that he makes 5k every day. SO that’s how it looks. A dark office with three rows of desks, and a wall w TVs.

During the three month trader trainee program, you earn NOTHING. No salaries. The job posting says you’ll make 50k to 100k based on your performance, but first you need to be picked as a trader, and he will give you really tiny risk capital that your chance of making 100k within three yrs would be pretty much similar to getting into GS IBD with 2.5 GPA from non-target. Oh, and every Friday, you get lunch orders from traders, and you should drive 20 miles w your car, and deliver the meals to them. Bring them lunch isn’t bad. Actually I read that it is like a tradition that newcomers take lunch orders.

But.... you take lunch orders + take the meals w ur own car + you work for free = it sugs.

I left the firm long before I finished the program. I could not imagine myself staring the screen all day (this is prop trading – no client interaction, no talking at all during the trading hrs), in the dark room for my entire career. Exit opp? There is no such a thing. You can just buy a great trading platform at home and trade until you die. It can be a good thing because u don’t have to apply hedge funds or other firms. As long as you have the TRADING SKILL, GOOD TRADING SW, you r good. But I wanted to work with clients and I obviously wasn’t learning anything (Andy doesn’t care about you, and there’s no trainer. So you r on ur own. All you have is quotes and mysterious charts. Good luck).

I don’t think Andy is a bad guy (or maybe I do). But what most students, including me, get confused is that, in the world of sales and trading, you get only what you hunted. If you work as a salesman, you get paid only when you close deals w clients, and trader, only when you profit from the trade. Of course some firms give base salary for newcomers but those firms would be like only big firms, not prop shops. I think that is one major diff between IBD analysts. Don’t expect hourly wages from prop shops. Don’t expect anything at all from them. Also, even if you couldn’t make it does not mean you are not a trader material. Most prop shops I know suck at training people, which I think is why M&N spends tons of time recruiting trainees while totally failed to nurture a trader. Training an employee cost a lot, especially if you r a trader or banker. But the shops dont want to spend money on you. So people leave w/o learning, and the shops recruit again, viscious cycle goes on.

In my personal humble opinion, if you want to be a trader, start from well established BB firms, not prop shops. If you coudlnt get into BB after undergrad, get ms fin math or fin engineering and apply again. This was my experience with M&N Trading. Thank you for reading!!!!