If you're looking to go prop, get paid

This is for anyone out there who has never actually worked for a legitimate proprietary trading firm.

Do not go to work for any firm which doesn't pay you a salary and give you a contract. End of story. Do not join a firm which wants you to trade on a simulator for a month. Do not join a firm which wants a "capital contribution". You don't need them to leverage your money. You can do that on your own and keep all the profit.

Most firms which advertise are not well capitalized. The people in charge want to make a million dollars with no risk. They don't give you enough size to actually make any money. They want you to work a night job and then come work for them all day for free. They hope if they hire 20 people, one of them will be a star trader and make them a million and maybe they'll lose $30,000 on the rest...tops. Even if you figure it out, it will take months before they give you enough to size to make it worthwhile and during that time, you still have to eat.

All the legitimate firms are in the big cities. Chicago, New York, London, Singapore...a couple in Gibraltar. You will have to move. You will probably need a degree and being young definitely helps. I know all of this because I've worked for several of them.

Any firm which is in it for the long haul is not going to expect you to work for 8 hours at night and then come in and trade to the best of your abilities for 6 hours the next day. It's a job. You're an investment. Real firms know if they want the ROI, they have to actually put up the cash.



SFL

easy to say "get paid", but of the 50+ prop firms in London, including the very big ones, less than a handful pay anything these days during grad training.

Even after training, usually pay is just a profit split.

chocolate13 said:

Even after training, usually pay is just a profit split.

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which is where the big money is made. In the bigger scheme of things, a salary for a good trader is going to be chump change. If someone wants a wage, they should be looking at an IB.

Surely if your a good trader at an IB you'd be rewarded very well too?

Also you say dont go somewhere that expect you to trade on a simulator for a month. Well if your brand new to trading and dont have a clue what your doing, i think the best thing for you and the firm would be trading on a simulator for the month until you get an understanding of trading. And i think like what Arbitrageur said if you want a paid salary people go to an ib.
Everyone knows there is a risk of going to a prop where you dont get a salary and only a few survive so if people cant survive on there own capital for 6months + then maybing they shouldnt be looking at prop trading. As the harsh reality is props cant pay every single person who steps out the door, your a business to them just as much as they are a business to you

How can you expect a firm to pay you a fat salary regardless of wether you make them any money or not.. There would be no incentive for traders to put in the massive hard work and dedication needed to actually make any money for the firm.. given what a small proportion go on to make good money as things are this would be a recipe for disaster for the firms.

Also how can you expect them to let you loose straight away on the live market with huge size? The amount of money they will lose on the ones that don't make it will be astrtonomical. It would also make it harder for traders to become good as everyone loses money to begin with and the psychological impact of seeing your account go as far down as it would like this would be hard to recover from. When you are ready for the size they will give it to you. They want you to make as much money as possible for them just as much has you do.

If you make it a prop firm you will have nothing to complain about and you will be oh so happy with the profit split rather than a salary... If you can't do it then why should they keep throwing their money at you... they are a business not a charity after all.

I'm with sfl here... The best prop firms let you lose with ten thousand lots on the bund from day one. They usually recruit the first friday of every month.

Don't let anyone tell you any different.

cylinder said:

Surely if your a good trader at an IB you'd be rewarded very well too?

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True, but you'll have to wait longer before you get the chance to make a lot, and even if you are making a huge profit, you won't get nearly as high a percentage of what you earn at an IB as you could at a prop firm.

Clearly, none of you have traded prop.

Of course you will make more money in the long term with a split. Of course you will not get a 1,000 lot to start. What I'm saying is, if you have enough money to live comfortably for 6+ months, as crude lover suggests, you should just trade your own account.

I worked for a firm in Chicago which paid a salary and then gave a percentage above and beyond a certain number. This firm made a lot of money from it's traders. They put up a lot of money because they didn't want guys thinking about the money when trading. If you're concerned about your rent, you're going to make trades based around that. I don't care how disciplined you think you are or if you think you can work a night job and then trade effectively in the morning. We looked at a simulator for three days. Then they gave us all a 1 lot and said "Go to it." Trading a 1 lot to start was fine because I knew my rent was paid.

And by the way, one of the guys was down $30,000 at his low and six months later he was up $1 million. Firms which don't pay salaries are never going to let you lose $30,000. You will be lucky if they don't pull the plug after $10,000. And these places shut down constantly. If a place pays a salary, you know they aren't going anywhere anytime soon. I moved 2,000 miles to take a job with a prop firm which didn't pay a salary only to see the whole thing shut down in four months. This was a reputable firm. The guy who ran it has written two best-sellers and is known in the financial world. They told us we all had one year, minimum, and they were in it for the long haul. Uh huh. They hired about 30 traders. They lost $20,000, net, the first two months and fired ten people. Another $20,000 and another two months later, they fired the rest of us. They decided it was more profitable to stick with the brokerage/education side of the business.

I've got news for you. If you don't know anything about trading, you're not going to make money for six to eight months...if not longer. Show me a guy who can go that long without collecting a paycheck and I'll show you a guy who probably doesn't need to trade at all.

And yes, Arb, I know very few firms pay and I'm just saying you're better off finding one that does even if the split is less than one that doesn't pay. Just because you're getting paid a salary doesn't mean you're not going to make a lot of the money on the split and in order to make any money from the split, there has to be a split. You have to be able to sit there long enough to figure out the game. If you have enough money in the bank to cover your living expenses for a year, open your own account, negotiate a good commission rate and trade for yourself.

I'm not knocking the idea of prop firms. If you can find one that pays a salary, I highly recommend it. But most do not and I'm telling you, from experience, you will be putting yourself in a situation which is not conducive to becoming a good trader.

SFL Trader said:

Clearly, none of you have traded prop.

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Tee he he

SFL Trader said:

Clearly, none of you have traded prop.

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titter :innocent:

SFL Trader said:

Clearly, none of you have traded prop.

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Is that available via metatrader?

SFL Trader said:

Clearly, none of you have traded prop.

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Yeah and a lot of us dont talk about ourself in third person in our profile oh sorry i mean yes and crude_lover doesnt talk about himself in third person in his profile

SFL Trader said:

If you have enough money in the bank to cover your living expenses for a year, open your own account, negotiate a good commission rate and trade for yourself.

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But it will take at least a year to become consistently profitable if you ever do. meanwhile you will need money not just to live off but to pay for your set up and to trade with.

at a prop firm you only need to worry about your living costs and these are easy to budget and predict. The firm will provide you with top notch, very expensive kit and will cover your losses.

Costs to DIY = Years living expenses + same again at least for your TT, CQG, Bloomberg, squawk etc + Trading capital/Margin + high probability of losing your own money.

Costs at a prop fim = Living expenses


Also a prop environment with successful traders around will help you succeed and when you are ready to scale up your size the firm will be able to let you do so more quickly than you will yourself.

Aspire said:

Costs to DIY = Years living expenses + same again at least for your TT, CQG, Bloomberg, squawk etc + Trading capital/Margin + high probability of losing your own money.

Costs at a prop fim = Living expenses


Also a prop environment with successful traders around will help you succeed and when you are ready to scale up your size the firm will be able to let you do so more quickly than you will yourself.

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Great Points Aspire, For those who are considering DIY At home trading vs. Prop! Early on in my trading startup, I wouldnt have been able to continue to be sustainable if it wasnt for a very supportive Wife. I know my dream of a trader would have died at one point early in my career because of Drawdowns & Taxes.

Even after you're established a Track Record Scaling does become a problem for the DIY(ers)

Because when it comes to scaling, everyone knows "It's not what you know, It's Who you know"

lol, 'none of you trades prop'. Love that.:cheesy:

Ok. So somebody tell me for whom you worked. I worked for MarketWise in Colorado and TradeLink in Chicago...as well as some others. Please...share a success story with me. Tell me how you went to work for a firm which didn't pay you a salary and how you struggled by working nights at McDonald's and how you started with a 1 lot or a 100 shares and made over $500,000 in your second year. Or $200,000. Or $100,000. Or $10,000.

Give the newbies who are reading this a reason to pay attention to your slams. Tell them why they should listen to you and tell them why I don't know what I'm talking about.

luckyd
You have a very loving wife

crude
I enjoy talking about myself in the third person. It makes me think I'm not me. But that's the only time I do it. If I want to be me, then I talk about myself in the 2nd person

SFL Trader said:

Ok. So somebody tell me for whom you worked.

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And this is probably the big difference.... You say worked for - we would say work for.

And no, I didn't struggle by working nights at Mcdonalds. I came into this properly prepared and with the professional attitude required to succeed and made sure I had the funds to live on (Extremely frugally, admittedly) for long enough to give myself a decent chance.

Yes, I traded 1 lots for a long time. But thank god I did otherwise my account would've gone down so much that I may have lost the self belief and confidence to get where I am now. I believe it is very rare that the firm won't give you more size than you need and be keen to see you progress, develop and make more money for both you and them when you're ready.


Nobody is saying that prop trading isn't high risk - high reward. Few people succeed at it but why should a firm turn around to those that are not good enough or hard working enough and say "nevermind here's £30k a year to live off while you waste our capital pursuing your dream of becoming a successful trader". They are not charitees. It is not their role to take over from a spoilt little rich kids parents supporting him as he waits to have the world handed to him on a plate.

What we are saying is that the way things are done currently works reasonably well for the firms (Still no guarantees anyone from each group of grads will actually cover the losses of everyone else... Plus traders learn at their expense but can **** off and get a better deal as soon as their initial contract is up) and provides an excellent opportunity to anyone who wants to become a trader, is properly prepared, and understands what they will have to do and go through to succeed.

I say "worked for" because I prefer trading on my own. And as I stated before, I've worked for several firms which have shut down. Not due to them giving me a thousand lot After awhile, it gets old.

No, they are not charities and no one is asking for a handout. It's simply the cost of doing business. One of the firms I worked for received a huge ROI on the salary they paid me as well as the salaries they paid some other guys. Huge. And I'm not saying don't go prop. I am a big advocate of prop trading. Highly recommend it. But I don't know a single person who ever made it at one which didn't pay a salary or a draw of some sort because most people just can't afford to sit there long enough to figure it out. Obviously you could. You're the exception. I know guys who ate hot dogs for three months and then heard the magic words, "We're shutting down."

I stated that this thread was for anyone who hasn't worked for a firm. If you haven't, I'm just saying do your research. Make sure the company has been around for awhile and is well funded. Insurance companies pay new producers a salary even though they haven't generated any sales. Brokers or salesman of any sort get paid a draw of some type. I'm not saying the jobs are the same but I am saying the concept is the same. And actually, this post is for prop firm owners as well. Your traders are an investment. Some investments pay off. Some don't. That's the risk but a firm which doesn't give it's traders some kind of living expenses is actually short-changing itself. One of my best friends made $3 million for his firm and that never would have happened if they hadn't paid him a salary. He couldn't have taken the job if there was no salary. If your trader is thinking about the rent, it's going to affect his trading. It's that simple.

By the way, Aspire, you didn't name your firm. If you currently trade for one and you like your deal and the owners are looking for new talent, I'm sure there are plenty of guys on here who have six months worth of living expenses saved up and would love to get an interview.

The "spoilt rich kid/world on a plate" comment was kind of ridiculous and not remotely relevant to anything I've said.