Career change & would appreciate some input.

Changed careers & time-to-time progress (if any)

I've been working at a major US brokerage company as a techie for longer than I'd like to admit, but I'm now transitioning to become a trader. I have gone through the rounds of buying books, courses, etc which I've studied carefully and I've demo-daytraded the YM and stock gappers with good results (but too short a trading history to declare conclusively profitable in the long run). Also I've been moderately profitable on live swing trades, so I'm a little better than a rookie.

Originally I was going to daytrade with my own account for great work/life balance, but I grew a yellow tail and will join a trading desk as a trader. The setup seems to be similar to an arcade, but it's not exactly because the desk itself is an LLC and they provide insurance after 90 days. Also there are a few options for leverage: No personal risk:keep 60% of profits. (I was not offered this option). $5000 buffer account:keep 90%. $10000:keep 95%. Also the hours 8:30am-6:30pm are a bit long, which conflicts with my original ideas for work:life balance. Plus other guidelines include needing to stay with the desk for 120 days or else pay a penalty, paying for own trading toys (e-Signal, etc)...

Is this some kind of hybrid arcade? I'm a bit confused about how to classify what this is -- I'm really trying to avoid it being a job, and would rather think of it as making the firm work for me via leverage.

I don't like the fact that I have to put money upfront to buffer the firm's risk, but at least I'll be in an environment for at least 120 days learning how some of the successful traders succeed and practice discipline. I was thinking that after I've had enough experience (could be months or could be years), I could negotiate the contract hours or revert back to my original trading from home plan.

I think they didn't really quiz me on the interview because they saw that I went to a top college. I'm still kicking myself all these years for never having taken advantage of the fact that I did!

Does my course of action sound ok? If not, what would you do?

Avatar said:

Does my course of action sound ok? If not, what would you do?

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Hi Avatar,
I'm in no position to offer any useful advice (sorry); I'm just replying to welcome you to T2W and to say that I rather envy your particular set of problems. It sounds to me that whichever road you take, you'll do okay at worst and probably a great deal better than that! One request please . . . there's quite a history on these boards of new members starting a thread with an interesting introductory post - much like yours. They get various replies and then disappear never to be heard of again. The subscribers to the thread never get to find out how the story unfolded - very frustrating. The request is that you let us know what you end up doing and how you get on.
Good luck,
Tim.

I've read many of those posts and have extracted whatever knowledge I could extract from those threads. I'm sorry that I've only come across 1 thread that has surfaced with progress.

With enough support and ears, I have all the intention of keeping people posted. Alas, I think a lot of those who are not seen again are those likely to have fallen by the wayside. Who would want to be the harbinger of their own failures?

My only problem is (as other threads have discussed) getting any kind of support from people who merely hear/read news and statistics but never understand why. "Oh it's dangerous... too risky... bla bla bla" Yes it is, and that's where education and experience come in. In fact I don't even want to discuss where I'm going with my colleagues when I leave. I have a feeling they will view my change with great skepticism and might have subconscious wishes to confirm their doubts. That's because the confirmation of their doubts equates to the confirmation of the fact that they've chosen to be at a job.

Avatar said:

I've read many of those posts and have extracted whatever knowledge I could extract from those threads. I'm sorry that I've only come across 1 thread that has surfaced with progress.

With enough support and ears, I have all the intention of keeping people posted. Alas, I think a lot of those who are not seen again are those likely to have fallen by the wayside. Who would want to be the harbinger of their own failures?

My only problem is (as other threads have discussed) getting any kind of support from people who merely hear/read news and statistics but never understand why. "Oh it's dangerous... too risky... bla bla bla" Yes it is, and that's where education and experience come in. In fact I don't even want to discuss where I'm going with my colleagues when I leave. I have a feeling they will view my change with great skepticism and might have subconscious wishes to confirm their doubts. That's because the confirmation of their doubts equates to the confirmation of the fact that they've chosen to be at a job.

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Hi again,
I take your general point about traders who 'fall by the wayside'. However, I'm very surprised to hear that your work colleagues might adopt the attitude you describe. My current employer (who's also a close friend and knows about my trading ambitions) dismisses it all as 'sheer gambling'. I've become used to such comments from people who know nothing about the subject. Actually, I rather enjoy them now as I have a number of well rehearsed replies. But, given that you work for a major brokerage firm, I would have expected your colleagues to understand, accept and support your decision with enthusiasm!
Tim.

My colleagues and I take care of back-end technology, which is a cost center to the company and it shows in the bonus pool. Some of them may be once bitten twice shy from the market swings of 2000ish and never bothered to learn the way things work. There is a sense of discontent in the tech department when all you ever hear these days is record earnings, and the ones who really reap the benefits are the privileged few and the revenue makers. There is a slight sense of resentment around here, yet people seem content to keep doing what they're doing. I was very resentful, but later I reasoned it was I who put myself in that situation to be a techie. A lot of the contentment has to do with the fact that many are married with children and they need job security. I'm single, so I can take that risk.

It's not just my colleagues, but a lot of people are skeptical as I'm sure you have come across, especially given my own track record back in 2000. All I can say is that I've become a better trader because of it and persevered when a lot of people gave up.

I must add that not every colleague is negative about trading. There are some who are believers. It's the more conservative folks who have been trained to be risk-intolerant when it comes to making business decisions that are most skeptical.

I see where a lot of members go. ET. No wonder they don't come back!

There are some thing s that worry me about the setup you are describing
Firstly until you know what they are charging you for your desk, systems and more importantly transaction cost you cannot know if you have a chance or not. 5k or 10k can get eaten up very quickly by high transaction costs.
reason they have 120 day or pay penalty is that if you leave or they kick you out or you lose x% ?
In this sort of environment do not expect to make money off the bat, need to give yourself at least 6 months.
Thinkinf that the hours of 8:30am-6:30pm are a bit long is a worry. You have to dedicate yourself totally to maintain an edge in that environment. I know people who manage to get away with a few hours and trade for themselves very successfully but they are a tiny minority and certainly not starting out.
For the guys employing you it is a numbers game. The risk they take is minimal. Even less if they do not have to cover your losses due to your putting up stake which will be the first equity to draw down sould you lose money.
I suggest as soon as you can you get friendly with the people who have been there for a year or more and find out how they are doing , what deal they have and what tey have discovered about the company.
Good luck. I wish you every success.

They don't charge me anything for my desk. The transaction costs are .005/share, so that's the same as IB's rates. Initially I don't have to make up the volume, but later on I'm expected to make up $80/day in commissions.

The 120 day period is if I decide to quit and they need to make up for training me, etc.

I work efficiently, so I'm not too worried about the hours. I do wish I lived closer to shorten my commute because I'd have to get used to sleeping at 11PM sharp every day.

They will put me on a short leash so I don't get too much drawdown in the beginning.

I haven't joined the firm yet. So far, I've been learning their microtrading strategy after work and the person I'm working with is likeable. The more I work with him, the more confident I become. That's got to be a good sign.

Thanks for the good advice, TWI. I appreciate it.

I'm now scalping on a simulated account for a prop firm. Their (or any) scalping method is quite intense. It requires one to be physically and mentally fit. It's very tough on the eyes watching all the scrolling numbers all the time. The discipline required has been a good lesson and I don't mind staying later than usual to crunch out all the extra hours work to gain an advantage. There's quite a few newcomers, and I'll have to ask serious questions about profitability next week. I hope more rest will make it easier on the eyes, but if it gets too intense, I might have to find another way.

On the side, I'm trying out Tradestation and am trying to write some automated trades that will help leverage my time while I'm working during the day. I am still wondering why Tradestation still doesn't have a stop limit order function.

So far I'm feeling ok. I wish I had more time in the evening for picking out some swing trades or options spreads and program Tradestation, but the weekend will have to suffice for now.

I've been improving my scalping skills but not good enough to do it with real money yet. There are still some keys to the puzzle that I haven't yet tweaked for myself. I've gotten better at knowing what to look at, so my eyes aren't so stressed any more. Improving by the day is comforting.

Tradestation is still on hold.