Advice needed about top traders!
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braye:
Thank you! Finally, someone here with some real institutional background to dispell myths, half-truths, and shed light on the reality of trading in institutions and the rigours of getting in.
But like I said, when it comes down to it - trading is about
1) risk mgmt (cutting losses)
2) valid strategy (letting your winners run)
3) emotional control
Having been to a top school, I hate to believe that my b-school profs were right about "efficient market" theory. But for the most part, it's very very difficult to do better than the market. It's not impossible, but definitely a nontrivial activity.
And if you want to make decent $ without that much of a big risk, then be a middle man like the ibanks and be a dealer. Take a little out of each trade in the spread and do that all day.
And far as the pay, what I wrote in an earlier post gives you a pretty darn accurate guideline to actual salaries ranges. So, don't go around thinking everyones makes $1M/yr at an ibank trading desk. haha.
good luck to you Nick. A good track record is worth alot..
trader99
Thank you! Finally, someone here with some real institutional background to dispell myths, half-truths, and shed light on the reality of trading in institutions and the rigours of getting in.
But like I said, when it comes down to it - trading is about
1) risk mgmt (cutting losses)
2) valid strategy (letting your winners run)
3) emotional control
Having been to a top school, I hate to believe that my b-school profs were right about "efficient market" theory. But for the most part, it's very very difficult to do better than the market. It's not impossible, but definitely a nontrivial activity.
And if you want to make decent $ without that much of a big risk, then be a middle man like the ibanks and be a dealer. Take a little out of each trade in the spread and do that all day.
And far as the pay, what I wrote in an earlier post gives you a pretty darn accurate guideline to actual salaries ranges. So, don't go around thinking everyones makes $1M/yr at an ibank trading desk. haha.
good luck to you Nick. A good track record is worth alot..
trader99
"But like I said, when it comes down to it - trading is about
1) risk mgmt (cutting losses)
2) valid strategy (letting your winners run)
3) emotional control "
That's all. I just want to add, one thing doesn't get mentioned that often(??). DO NOT CHANGE STRATEGY EVERY 2-3 TRADES. Other words, do not think too hard. There is no more consistent way to lose money even if you cut loses IMO.
1) risk mgmt (cutting losses)
2) valid strategy (letting your winners run)
3) emotional control "
That's all. I just want to add, one thing doesn't get mentioned that often(??). DO NOT CHANGE STRATEGY EVERY 2-3 TRADES. Other words, do not think too hard. There is no more consistent way to lose money even if you cut loses IMO.
Cesko wrote:
"That's all. I just want to add, one thing doesn't get mentioned that often(??). DO NOT CHANGE STRATEGY EVERY 2-3 TRADES. Other words, do not think too hard. There is no more consistent way to lose money even if you cut loses IMO."
Sure, I agreed. But it would fall under the emotiona discipline category. With emoitonal discipline, you wouldn' tbe changing things right and left and stick with your game plan.
trader99
"That's all. I just want to add, one thing doesn't get mentioned that often(??). DO NOT CHANGE STRATEGY EVERY 2-3 TRADES. Other words, do not think too hard. There is no more consistent way to lose money even if you cut loses IMO."
Sure, I agreed. But it would fall under the emotiona discipline category. With emoitonal discipline, you wouldn' tbe changing things right and left and stick with your game plan.
trader99
Bachelier wrote:
"Another "naive" question from a rookie, allthough not that much of a rookie as nick.
Do large sell side or buy side institutions hire people from humbler territories for responsible proprietary trader positions, if they have an excellent P&L track record?"
Yes. In the end, this is a performance oriented job right? If you can make good returns(i.e. percentage, don't think dollars!) then you can go anywhere.
So, go work on your track record and doors will be open to you.
But you gotta remmeber to think in % terms not dollars which is useless in an institutional setting. If you say you make $1M dollars last year it may or may not impress them. If you had $10M then a $1M is only 10% return or a $100M a $1M is only a 1% return. Not that big of a deal.
But if you had a $100K and turned it into $1M that's 10x fold. Now, that gets interesting. But if you could do that then why bother work in institutional setting?
Just trade your $ and get 100% instead of the cut. Right?
Anyhow, but more realistically, you want to work in an sintatituonal enviroment so you get a chacne ot trade with a much larger account and make some meaningful return even if the cut is smaller.
A hedge fund manager gets 1% plus 20% performance fee. So, for a $100M fund with a 50% return that would be $50M and a 20% cut would be $10M. Not a bad paycheck. Though prop firms give you a HIGHER cut like 40-90% depending on the firm, you don't have $100M to play with. So, there's tradeoff, but you get to keep more of the money.
hope that helps,
trader99
"Another "naive" question from a rookie, allthough not that much of a rookie as nick.
Do large sell side or buy side institutions hire people from humbler territories for responsible proprietary trader positions, if they have an excellent P&L track record?"
Yes. In the end, this is a performance oriented job right? If you can make good returns(i.e. percentage, don't think dollars!) then you can go anywhere.
So, go work on your track record and doors will be open to you.
But you gotta remmeber to think in % terms not dollars which is useless in an institutional setting. If you say you make $1M dollars last year it may or may not impress them. If you had $10M then a $1M is only 10% return or a $100M a $1M is only a 1% return. Not that big of a deal.
But if you had a $100K and turned it into $1M that's 10x fold. Now, that gets interesting. But if you could do that then why bother work in institutional setting?
Just trade your $ and get 100% instead of the cut. Right?
Anyhow, but more realistically, you want to work in an sintatituonal enviroment so you get a chacne ot trade with a much larger account and make some meaningful return even if the cut is smaller.
A hedge fund manager gets 1% plus 20% performance fee. So, for a $100M fund with a 50% return that would be $50M and a 20% cut would be $10M. Not a bad paycheck. Though prop firms give you a HIGHER cut like 40-90% depending on the firm, you don't have $100M to play with. So, there's tradeoff, but you get to keep more of the money.
hope that helps,
trader99
Beg to differ.....
How do you out perform the market?
Well think outside the box for a second
First the golden rule of trading is cut your losses short and let your profits run.
If we are in a bull market you want to buy all of the stocks that are going to outperform the indexes.
These stocks will constantly be testing their 52 week high as they are going higher and higher.
Now some of these stocks will start to not have money flowing into them for different reasons and they will under perform the market.
This is why you use trailing stops and stop out of them.
Add to the ones that are working.
You are now owning a higher % of stocks that are out performing the market and a lower % of stocks that are underperforming the market and you outperform the market.
than you can always add margin to the mix.....
It's not rocket science. Yet everyone tries to make it that way.
Bear market reverse this....
Robert Tharp
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