A path towards profitability
- Thread starter garachen
- Start date
Never tried manually trading stocks. I don't like the way they are taxed. I only use them for the long term/short term tax differences.
Haven't tried forex either.
Pretty strictly futures and sometimes cash bonds.
To start with it needs to be a contract (or spread) that has a good number of manual traders. Starting with something on ES, while possible, wouldn't be my first choice. It's so heavily automated it can be hard to tell what is happening. ES overnight would be a different story.
Maybe stocks have lots of manual traders. I really haven't looked.
Combined with your other posts, I guess that you relied greatly on tape reading for your past manual trading. Charts not necessary there of course. You make money from your unbiased ability to see who's winning the short term tug-of-war. In a way, it's a retail version of HFT and the results can be extremely consistent. Quite often, the best indicator is the speed of your fill. Theoretically you can also be in better control of the longer time frame by applying the short-term "feel" continuously, but that's not really where you focus on. Maybe I'm wrong.
Out of curiosity, how much on average are your traders taking home (and I believe you have many good traders)? If it's a lot, are you still looking to hire?
I actually think you've summed it up quite well. Surprising really.
Last year I paid out between 200-400k per person. Split between base salary and profit sharing. It's maybe a little higher that the typical trading company but not as high as it would be it they forwent the base salary option.
This isn't what I pay starting out. I start quite low until they can prove they are on track for 1m a year.
I haven't hired in a while because it's rather time consuming to train someone. I've been thinking about how to do it more efficiently.
"Pretty strictly futures and sometimes cash bonds."
* Ah .. hey .. do you mean:
Pretty strictly fixed income futures and sometimes cash bonds.
Or
Pretty strictly any kind of futures and sometimes cash bonds.
There's a world of difference here, imho.
Any kind. Good point. Strict treasury futures vs cash bonds is highly specialized and requires writing direct to globex, brokertec, espeed and implementing all those crazy auction scenarios. Then your clearing firm has to offset cash with futures and go along with the whole thing. It's quite a bit of work. Done it before. Not currently.
Certainly is a world of difference
Agreed
So .. sounds like book delta / microstructure games, and futures only due to favourable leverage, commissions structure, tick increments & tax treatment?
Perhaps we had a somewhat similar background, in terms of trading style, when starting out. The only difference is that my world is stocks while yours is futures. FYI, I'm a retail trader using mouse clicks. I used to ponder about working for a firm like yours for the benefit of "microstructure improvements" (not leverage), but I'm a novice (started in late 2009 with 20K mainly because I couldn't get a job) and wouldn't feel comfortable managing fear when other people's money are involved. Good luck to you in 2012 nevertheless!
Quote from Rationalize:
Agreed
So .. sounds like book delta / microstructure games, and futures only due to favourable leverage, commissions structure, tick increments & tax treatment?
Yes. That's what my manual trading style boils down too. It's as boring as sin. Our auto trading is completely different though. Several strategies are very latency sensitive and all of them have been optimized pretty carefully
Boring but effective is nothing to sneeze at.
That's why ET's here, for intraday entertainment interludes..
Where'd you say the majority of your P&L comes from, algo/manual (after costs) ?