Draw? - Day trading for a prop firm

Considering a day trading position at a proprietary trading firm. Has a training program and everything that looks appealing. My background is mainly assisting buyside equity traders, so this would be a good opportunity to transition to an execution role.

This one questionnaire that I got back from this job was that during the 6-8 month training period I would be "eligible for a draw if I met modest P&L performance goals" and if that was ok. I'm assuming this is talking about compensation, because I believe comp is linked to your performance and while training you are obviously not making that much if at all in the way of P&L. Anyone know what a "draw" typically is? Can't find any info online and would just like to learn what I can...


Thanks

A "draw" is basically a sum paid in advance of, and deducted from , future profits. So for example most traders would take a draw in the first few months whilst getting to know the system and building up their positions, it is a way of stopping people doing too much too quickly especially if the markets are quite or overly volatile. To all intents and purposes a draw is a loan secured against your future income.

Thanks for the response. From what I've read, everyone refers to it as "just enough to get you by.". Do you or anyone else have any experience with this figure? I'm curious if it's like the equivalent of 30k/yr, 40k, etc. I'm aware it most likely varies from firm to firm but wasn't sure if anyone had any personal experience.

Thanks

Takedown said:

Thanks for the response. From what I've read, everyone refers to it as "just enough to get you by.". Do you or anyone else have any experience with this figure? I'm curious if it's like the equivalent of 30k/yr, 40k, etc. I'm aware it most likely varies from firm to firm but wasn't sure if anyone had any personal experience.

Thanks

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It depends on the firm you're working for and your level of experience/track record. If it's one of the futures trading arcade type places and I'm guessing you have no prior experience/track record (?), you could be looking at £500-£1,000 a month.

It will tend to be as little as possible for as short as possible time span, the theory being that even if you are half decent trader a couple of months should be enough for you to start paying your way.
The other factor is that the company giving you the draw is at risk for those funds, if you are unlucky enough to start off with a few loosing trades or days the amount the company is in the "hole" for can quickly grow.

Monthly draw can be anything. Some places give zero. But as a new employee with no record you should expect £500-£1000 for first couple months. After that its zero-10k+ a month depending on your p/l.