Should I quit my hedge fund day job?

[Burt99]

Hello everyone,

This is my first post, I've been lurking for a year or so on or off; my day job is so busy that I haven't been able to spend enough time looking on this website.

Over the last year or two I have fed my interest in day trading by reading about 4 or 5 trading books; technical analysis, mental-side, candlestick patterns, etc, reading forums and running trades in demo mode on MT4. I have a couple of strategies that are open to me during the hours I have spare but I don't really have very much time with the job being what it is.

I currently work for one of the more famous hedge funds in Europe, working on the software side of the desk of a very large algo trend-based fund. The pay is great but the hours are horrible and the pressure is constant; it's a real carrot and stick job and it feels like I am always one errant release away from the sack. Frankly it's just not that enjoyable any more. Before this job I spent 5 years working in various investment banks in London and I'd rather not move back there for quality of life reasons.

The thing is I'm spending more and more time thinking that I should start trading for myself; to do this obviously I would have to quit the day job. I have knowledge and exposure of the markets through the job but have not had that much direct exposure to the quant models being used. So I wouldn't be able to leave armed with any trade secrets! What I do have is the ability to very easily be able to automate my backtesting, or write any number of applications/tools that could help make the trading process quicker/easier. So I guess I would initially feel more comfortable starting to trade proper with an algo type approach, or semi automated.

What I would like to hear is feedback from anyone who has faced the same decision as me? How has it been? I've seen a few biogs that are similiar to mine; e.g. backgrounds in finance and IT; does this background help at all or is it even a hindrance? Am I mad to think about leaving the job?

I could support myself and my family ok for a year or so until I learnt the ropes.

All feedback appreciated.

cheers
Burt99

 

[Masquerade]

I'm not from the same background but...

I think you should set aside some money and quit. I don't know about the trading though, I don't feel it's a great idea. Maybe you could incorporate it with another job. Quitting and trying to make trading work will put a lot of pressure on you and it's going to make succeeding much harder.

 

[Shakone]

What do your family think about you doing this? What if it takes more than a year to learn the ropes, and then even more years to get a livable wage from it? Is it possible for you to get some other type of work to supplement your trading, freelance perhaps?

 

[Hoggums]

Do NOT quit your job under any circumstances until you are already making money. So so many people give up their jobs thinking- how hard can it be? - and waste 6 months to a year of their life slowly losing money before they realise they need to get a job again.

This is not something you can just quit your job on and start making enough money to live on. Very few people make it in this business and having a degree, software knowledge and being good at mathematics will not help you at all other than being able to prove your auto-systems don't work before wasting money on them.

Start trading in your spare time with spare money and determine realistically if you have what it takes while still keeping the day job going. Don't throw away a career on a dream that has no current basis in reality.

As a background - I am in IT in the financial industry. It took me 4 years of trading, went bust twice before I started making money. I'm now in a position where I'm making more money trading than in my day job - but continuing to work until I have enough backup funds so that if disaster happens I have enough money in the bank to start over to earn a decent living.

This is one thing people do not consider when trading for a living - what if you do go bust? - and you can never say it won't happen. What if the Al Quaeda manage to set off a nuclear device in London and you can't get through to close your positions because your brokers offices have been blown up? Doesn't matter what stops you have in place - on such an event it is likely the market will gap and it may be difficult to fill your exit.

Unlikely - perhaps - but you can't say it'll never happen - and if you are a full time trader and you've lost all your capital - what will you do?

 

[glyder]

i agree with hoggums.
Dont quit your job.
I'm similar to you Burt99 as regards work, same city industry, although different job area, same issues as you - I find financial services not as enjoyable as it has been over the last decade or so.

Personally I don't think my market / technical experience helps much with trading, apart from terminology etc. probably to rely on that as an additional 'extra' compared to someone coming from, say, a carpentry backgound, would be to delude myself.
I wouldn't give up work until I see a good long record not just of consistent profits but of consistently compounding profits.
Learn while you are on the job, take all the time you can,review markets on different time frames after close each evening if you can't look in the day- you'll need an understanding wife. Be patient and do your best to build a big pot of capital for when the time comes.
I'm pretty confident that should i need to I could pay the bills and live by trading e.g. if I lost my job.
Thats some comfort but I don't want to just survive / exist from trading, I want freedom / time to myself. The position I'd like to be in ultimately is needing relatively few pips per month to survive whilst still making sensible money management and risk decisions. - eg, en example off top of my head, 100 pips per month @ £200 per pip = £20K per month, a good start, especially if it leaves you money to compound. Its relatively stress free and not time consuming to make that 25 pips pips per week, 5 pips per day, or 10 pips every few days or however, any additional to that will be a bonus.

So why not hone your techniques on a small account or demo whilst building a big trading pot.
Once you have an edge and plenty of capital, trading will no longer be about the trading, the indicators, or trying to achieve triple digit pips etc etc, just about pulling the max money in the fewest pips and time. Boring, safe and profitable.

Thats the aim for me. You'll find plenty of people who will tell you its not a realistic goal and a few who will tell you it is.
In reality its up to the individual to make it happen,the critical part of trading for me is all in your head. The decisions and strategies (and capital) will all be yours. I find unless I have money that matters at stake I'll just click the mouse whenever.

Also look around this and other trading sites, you'll see that 1 year is not long to learn, plenty take longer than that to succeed, if ever at all. Myself included. Save your money for your trading pot, don't pressure yourself to learn during a year off work.

 

[Burt99]

Thanks for the replies everyone, you all seem pretty much in agreement.

I guess the problem lies in that this job makes me work too hard to be able to spend more than a few hours here and there looking into trading. I'm not sure that that will ever be enough to find out if I've got what it takes. Plus I'm normally totally brain-dead by the time I'm finished! It seems like a catch 22.

My family would probably appreciate seeing more of me TBH. The way I've been looking at is that I do have investments in assets that should yield a decent amount a year whilst interest rates are low and this country's (not the uk) unemployment benefit is very generous for the 1st year; so that would take the pressure off trying to earn from trading somewhat in the short term. I don't want to look back in 10 years and wish that I had been brave enough to take the plunge...but it's a dilemma I tell ya!

One of the strategies I can do in the time I have and which I have been looking into is similar to that proposed by glyder; relatively straightforward, could be automated but not much chance of making too many pips. Say 30-40 a month; winning or losing 8-9 pips a go at x hundred quid a pip. I still haven't sussed whether it is worth backing with real chips yet though.

By the way what do people think is the right amount of capital to start out with? (ignoring the value of back up funds for now). Lets talk in percentages/multiples, not absolute values. E.g. say my back-testing and demo-testing might indicate that a 3 month drawdown was about the worst I might expect.

 

[DashRiprock]

mate why don't you just get a cushy job somewhere else?

look Im tellin you you dont need to be at the screens for 10 hours 6 days a week to make money from trading. QUALITY over QUANTITY innit bruv

i see you are talkin about forex which for me is to advise against; try energy futures, bond/rate futures or equity/indecies. there are a few good reasons why this is, but very briefly:

1. centralised locations, spread opportunities, more mkt info available
2. generally have set trading hours
3. prop firm territory

so if you could get a cushty job doing programming or something quanty (so that is probably looking moving away from mkt facing firms, but you will kno wmore than me where the best place for your skills is) you still could trade for a few hours either the open or the close of one contract somewhere...

then look it if goes OK (or even if it doesn't go OK) you can then try going to some market making props as a programmer/trader or something? You have HF exp. and shown risk taker and trading experience so you have a good chance of getting at least an interview, neh?

I dont 100% agree with everyone saying "DONT QUIT YOUR JOB" because some people need a little stick as well as carrot to get their **** into gear, but i do 100% DISagree that you need all day every day to make money as a professional trader.

for e.g. trade the close of the US equity markets and look at the biggest winners and biggest losers and try a strategy that front runs short covering/long liquidation. no idea if there is any edge there whatsoever but the PDT rules need $25k which youve probably got, the coding would be simple for highlighting the stocks (which you can do), you would need to be at the desk from 7-9 deffo, notwithstanding "secondary" trading stuff like reviews, journals, tax accounts yadda yadda yadda.

so get a cushy 9 - 5 and play with your kids and trade the close for a couple years

 

[brettus]

Thanks for the replies everyone, you all seem pretty much in agreement.

I guess the problem lies in that this job makes me work too hard to be able to spend more than a few hours here and there looking into trading. I'm not sure that that will ever be enough to find out if I've got what it takes. Plus I'm normally totally brain-dead by the time I'm finished! It seems like a catch 22.

My family would probably appreciate seeing more of me TBH. The way I've been looking at is that I do have investments in assets that should yield a decent amount a year whilst interest rates are low and this country's (not the uk) unemployment benefit is very generous for the 1st year; so that would take the pressure off trying to earn from trading somewhat in the short term. I don't want to look back in 10 years and wish that I had been brave enough to take the plunge...but it's a dilemma I tell ya!

One of the strategies I can do in the time I have and which I have been looking into is similar to that proposed by glyder; relatively straightforward, could be automated but not much chance of making too many pips. Say 30-40 a month; winning or losing 8-9 pips a go at x hundred quid a pip. I still haven't sussed whether it is worth backing with real chips yet though.

By the way what do people think is the right amount of capital to start out with? (ignoring the value of back up funds for now). Lets talk in percentages/multiples, not absolute values. E.g. say my back-testing and demo-testing might indicate that a 3 month drawdown was about the worst I might expect.

Spend more time with your family. If that means trying to trade or changing jobs, i think you should spend more time with your family.

 

[DashRiprock]

Spend more time with your family. If that means trying to trade or changing jobs, i think you should spend more time with your family.

Yeah I agree ' cos your wife is tiring brettus out and I dont want to be called in as back-up!

 

[Black Swan]

so I'm guessing you earn north of 150K a year and you're asking guys here, who dream of that salary, if you should quit that safe environment, in times of increbible economic uncertainty.? I think folk have been far too polite to you..just stfu and gtf..

 

[DashRiprock]

so I'm guessing you earn north of 150K a year and you're asking guys here, who dream of that salary, if you should quit that safe environment, in times of increbible economic uncertainty.? I think folk have been far too polite to you..just stfu and gtf..

Black Swan did you rake more or less than that last year?

 

[brettus]

so I'm guessing you earn north of 150K a year and you're asking guys here, who dream of that salary, if you should quit that safe environment, in times of increbible economic uncertainty.? I think folk have been far too polite to you..just stfu and gtf..

If he's earning 150k a year, then he could easily go get a 100k a year job, thats only 9-5. Spend more time with your family. Not sure why you assume he's making that much though. I think 100-120k tops for these sorts of jobs.

 

[Black Swan]

Black Swan did you rake more or less than that last year?

less..for me and my 'ickle syndicate. They won't start a TEC fooktard thread though saying how 5hite I am..

 

[Black Swan]

If he's earning 150k a year, then he could easily go get a 100k a year job, thats only 9-5. Spend more time with your family. Not sure why you assume he's making that much though. I think 100-120k tops for these sorts of jobs.

I'm basing my estimation on looking in on the e-fc site from time to time and Alborne, 'tis about the going rate for good guys in the big funds doing what I think he does.

 

[Masquerade]

so I'm guessing you earn north of 150K a year and you're asking guys here, who dream of that salary, if you should quit that safe environment, in times of increbible economic uncertainty.? I think folk have been far too polite to you..just stfu and gtf..

What's the point of making money if you're too tired and unhappy to spend it? It's good money but if you asked people to work 20hrs/day 5-6 days/week they'd soon turn their backs on it.

Quit job, get less stressful job, enjoy life and figure out whether the trading lark is for you without putting all your eggs in one basket (as I said in post #2.)

 

[DashRiprock]

bert mate,

well you know seriously what is interesting here is that in yout first post you say that you could probably be dead quick at the backtesting - im sure you could - but you know backtesting means that you trade a rule based system yeah?

the backtesting that your HF does will probably (I say probably, but its a safe bet) use data / information that you just wont be able to afford on your won? right? and its a algo based HF anyway right.....?

... and what if, when it turns out its your coin on the line, your a sh1t systematic trader? its in one of the market wizard books, find the trading that suits your personality - that doesnt mean that straight away you should jump in 100% trading systematically IMO, just like someone giving up a job as a traffic warden shoulnd necessarily jump in to writing deep OTM "punch me in the face" calls.

 

[Jason101]

You are asking people who are mostly wannabe you's, who spread bet at 10p- £1 a pip and consistently lose and work as dustmen, admin or are un employed???

Are you feelin it?

 

[bangkokgee]

You are asking people who are mostly wannabe you's, who spread bet at 10p- £1 a pip and consistently lose and work as dustmen, admin or are un employed???

Are you feelin it?

spot on jason,use your own contacts in the industry for my sins i was an ex broker(salesman)ask the traders you know who trades managed accounts.
when i had enough i placed money with a broker and let a pro trade it,first month i made 6k second 72k on two heating oil contracts packed in my job moved from hongkong to place of my choice
this gave me income while i learnt what trading was all about stress free,i found a mentor and used some cash to find out what was around,now i trade 9 month max a year and basically do what i want stress free,i can always get a job if the **** hits the fan but have 3 incomes so hope that wont happen.
you should give it your best shot you wont be happy if you dont try and if you have skills you can always get a job again god forbid.goodluck hope you get what you want

 

[Burt99]

Thanks for the replies, there's been some good feedback here, which is what I was hoping for. I certainly don't want to **** anyone off.

 

[brettus]

You are asking people who are mostly wannabe you's, who spread bet at 10p- £1 a pip and consistently lose and work as dustmen, admin or are un employed???

Are you feelin it?

I dont think Dash, myself and Blackswan trade 10p-£1 a pip, plus i think the general feedback is that he should enjoy his life more, if that means quitting his job and getting a lower paid job with more time off or trying to trade. His job is highly sort after, so i'm sure he can get a job with similar or better pay if it doesn't work out.