Prop House confusion

[london88]

I find myself in a bit of a tight position and need some help to decifer all the conflicting information. I have been reading about prop houses and arcades for a few days and I still
don't seem to have all the information.

I just came out of uni with a 1st in Management and Finance (Dissertation on CAPM in China) and have 2 years work experience with IBM in various financial and strategic roles (this was not a grad scheme). I have been interested in trading for over 2 years and trading for a while on CMC. Applied to most of the top banks got a few final stages but no offer! Financially things are tight and prop houses would appear to get me to where I want but I am confused:

In general do they pay a salary during their training schemes? Or do you pay for the priviledge?
How come many of the clearers are other larger prop houses or institutions part of a group?
How can you determine the reputation of such a business when the information is limited and or they do not state their regulatory affiliations?
Is an IMC certificate required? Will it be viewed as a plus?

What do they look for, people they can mould or free thinkers?

I apologise if all the questions have been answered elsewhere.

 

[london88]

My own ignorance and impatience got the better of me. After further research I have the following two links to offer some insight to my questions and others people my have

T2W Day Trading & Forex Community

TOP STORIES: Working for a prop trading house

 

[r4jen]

Prop house rarely pay a salary, and these days its hard to get backed unless you go through some sort of trading programme. One such programme is Global Trading community, which is in conjunction with CFT. They basically have a trading course, and simulator trading, then depending how well you do you get to trade live. But you have to pay for the training though.

 

[bullcar]

a simplistic answer:

An "arcade" is somewhere where you pay to play. And you play with your own cash.

A proprietary Trading House, is where you trade with the money of the house. Its 100% House money to begin with, but as you get more successful, you will find its more like a joint venture.

There is a middle ground - a mix of prop and arcade.

The Arcade "US Style", does not as far as I am aware exist in the UK anymore. The business models of bums on seats did not work.

Basically we are left with Prop Houses, who may have a small proportion of "self-backed" traders on an historical basis

 

[Parky]

Actually I think it is the other way around, most trading rooms are risk averse, and that is to say they provide leverage and trade funding and want to help traders slowly wean themselves off of house cash and onto a fully self financed footing. This enables them to use the cash to support other traders and so on and so forth. Some traders such as spread traders, arbitrage traders and Options traders are always likely to need to lean on house leverage when they see a market opportunity but this is the benefit of trading in a trading room, flexibility.
Very few trading rooms now offer 100% backed accounts and only two that I am aware of continue to take on new blood via a trainee trader program. As Bullcar says none of these offer salaries, they all operate on a payment of percentage of profits and given that trading tends to be a slow burn it is not an environment you should enter if you need to earn money from day one.
Most trading rooms can be split into two factions, those that are FSA registered and members of the exchanges they offer, these have direct market connectivity and all the benefits that brings. Then there are some that merely take space inside Banks or other trading rooms and are "lodgers". All will have to have clearing arrangements with bigger General Clearing members, this is purely because of the huge amounts of money required to clear client funds and become members of exchanges like the CBOT which are prohibitively expensive to become clearing members of. The reputation of the trading rooms can be determined in many ways, as stated are they exchange members, are the FSA registered, what is the turnover, how long have they been around and then looking at websites such as Trade2win and looking for feedback.