Age Restrictions on Prop Firms?
- Thread starter Jacob
- Start date
I'm not 100% sure about this, but perhaps if you trade "foreign securities" through IB they may not be held to the PDT rule. So Canadian or European stocks. Not 100% sure. Also, if you don't use margin at all, cash only, you might be able to get around PDT. Not 100% sure. And of course there is futures and FX.
@Jacob I'm going to give you an anecdote that hopefully saves you from a potential very painful catastrophe.
I, like you, am a college student. One of my best friends on our school hockey team was in sort of your position. This individual decided that he wanted to trade. He was graduating with a Film BA and, despite him being Cum Laude, his job prospected were limited. He ended up taking a "job" a what many consider to be the perhaps the best JBO.
They really did a good job convincing him that this was a job. They brought him in for an "interview" which I gave him some pointers to prep for as a math and stats student. He came back and told me about the questions...these were questions that would have been freebies on my intro stats midterm freshmen year. He's not a dumb guy, he had just never been exposed to this stuff, but he got all the questions essentially completely wrong. They would not have received partial credit on the aforementioned midterm. Despite this lackluster performance, he was pleasantly surprised to learn he got the job.
Even I was a bit naive about what would follow. I thought "well [pleasant film major buddy] would have absolutely no business on the Chicago prop/HFT scene but there's more than one way to trade." Well graduation rolls around and he begins "working." He shows up with his Ferragamo shoes and belt to this traveling three ring circus eager to learn. They proceed to give him some "training" more designed to get him to pass the Series 56 than to prepare him to make any money. After a month or so of live trading I ask him how's he's doing, he's an honest guy and tells me "I'm roughly even but net of Desk fees and other fees I'm down about 3K of my initial 5." The downward spiral is beginning. Thankfully, his family has more money than God so his NYC apartment and replenishing his account were no skin of their backs. I tried my best to help him out despite not being an equities guy. I introduced him to VXX and taught him about some of its term structure dynamics. He didn't really listen. He had been "trained" to trade sexy tech stocks and basically his training amounted to "we're gonna give these guys a crash course in scalping--give them the absolute worst FOMO we can and make them fear missing the move so much that they give away thousands in commissions without really having a good reason for entering a trade." Even the basics of risk management were totally ignored. I could text him right now asking what his VaR limits were each day roughly and he'd reply "what's VaR?" This is not the type of training that professional traders receive.
After maybe four or five months of floundering without any real success or having read a single book besides "reminiscences of a stock operator", he decided he'd had enough of arrested development with this company and moved to the west coast with his girlfriend and took a sales job...something he should've done upon graduating. He's much better off these days.
This firm in my opinions has no morals. This was not a "partnership" this was closer to a service. They provided him with the technology to trade and access to the market. The only issue is that this is a "job" (allegedly), so they get kids who would be better off doing just about anything else to waste months of their lives paying for NYC apartments and sitting at a computer screen full of charts that as mine as well be a slot machine. It's a dishonest business model. Even if they told him that 95% fail just the premise of the business is enough for me to say these guys deserve to be put out of business by the SEC. They prey on eager kids with money and give them the confidence to tell girls at bars they're professional traders. Their success is not contingent on their traders' profitability, it's contingent on their recruits' optimism. Don't be a recruit.
You're 19 and you're in school. If you want to trade, do it yourself on a very small level. If you want to trade *professionally* you're gonna need mentorship. Get yourself a STEM major and a LinkedIn. On LinkedIn, go follow the Chicago prop trading companies. Get to know what they're looking for. They aren't looking for Ferragamo belts and mad scalpers. Read Sinclair's books, take probability, calculus, linear Algebra, learn to program. Stay away from the JBOs. If one of these Chicago places sees on of those on your resume they'll throw it out.
Message me if you have any questions about the above.
EDIT: TL;DR if your trading job doesn't pay a salary, it's not a job.
I, like you, am a college student. One of my best friends on our school hockey team was in sort of your position. This individual decided that he wanted to trade. He was graduating with a Film BA and, despite him being Cum Laude, his job prospected were limited. He ended up taking a "job" a what many consider to be the perhaps the best JBO.
They really did a good job convincing him that this was a job. They brought him in for an "interview" which I gave him some pointers to prep for as a math and stats student. He came back and told me about the questions...these were questions that would have been freebies on my intro stats midterm freshmen year. He's not a dumb guy, he had just never been exposed to this stuff, but he got all the questions essentially completely wrong. They would not have received partial credit on the aforementioned midterm. Despite this lackluster performance, he was pleasantly surprised to learn he got the job.
Even I was a bit naive about what would follow. I thought "well [pleasant film major buddy] would have absolutely no business on the Chicago prop/HFT scene but there's more than one way to trade." Well graduation rolls around and he begins "working." He shows up with his Ferragamo shoes and belt to this traveling three ring circus eager to learn. They proceed to give him some "training" more designed to get him to pass the Series 56 than to prepare him to make any money. After a month or so of live trading I ask him how's he's doing, he's an honest guy and tells me "I'm roughly even but net of Desk fees and other fees I'm down about 3K of my initial 5." The downward spiral is beginning. Thankfully, his family has more money than God so his NYC apartment and replenishing his account were no skin of their backs. I tried my best to help him out despite not being an equities guy. I introduced him to VXX and taught him about some of its term structure dynamics. He didn't really listen. He had been "trained" to trade sexy tech stocks and basically his training amounted to "we're gonna give these guys a crash course in scalping--give them the absolute worst FOMO we can and make them fear missing the move so much that they give away thousands in commissions without really having a good reason for entering a trade." Even the basics of risk management were totally ignored. I could text him right now asking what his VaR limits were each day roughly and he'd reply "what's VaR?" This is not the type of training that professional traders receive.
After maybe four or five months of floundering without any real success or having read a single book besides "reminiscences of a stock operator", he decided he'd had enough of arrested development with this company and moved to the west coast with his girlfriend and took a sales job...something he should've done upon graduating. He's much better off these days.
This firm in my opinions has no morals. This was not a "partnership" this was closer to a service. They provided him with the technology to trade and access to the market. The only issue is that this is a "job" (allegedly), so they get kids who would be better off doing just about anything else to waste months of their lives paying for NYC apartments and sitting at a computer screen full of charts that as mine as well be a slot machine. It's a dishonest business model. Even if they told him that 95% fail just the premise of the business is enough for me to say these guys deserve to be put out of business by the SEC. They prey on eager kids with money and give them the confidence to tell girls at bars they're professional traders. Their success is not contingent on their traders' profitability, it's contingent on their recruits' optimism. Don't be a recruit.
You're 19 and you're in school. If you want to trade, do it yourself on a very small level. If you want to trade *professionally* you're gonna need mentorship. Get yourself a STEM major and a LinkedIn. On LinkedIn, go follow the Chicago prop trading companies. Get to know what they're looking for. They aren't looking for Ferragamo belts and mad scalpers. Read Sinclair's books, take probability, calculus, linear Algebra, learn to program. Stay away from the JBOs. If one of these Chicago places sees on of those on your resume they'll throw it out.
Message me if you have any questions about the above.
EDIT: TL;DR if your trading job doesn't pay a salary, it's not a job.
If you have trading experience and know what you are doing, prop firms can be a good idea (e.g. Avatar or Hold), if not, then I would go the traditional route first.
T3 and Hold Brothers will allow you to trade equities with leveraged money (usually 20 or 30 to 1) with a $5k deposit, but you have to get a series 57 license. Now being able to make money is a whole different story. For some people depositing and being willing to lose $5k, in order to satisfy your curiosity and interest in prop trading and "getting it out of your system", can help you move on to more promising career opportunities in 6 months to a year. Hopefully you will not pass on more stable career prospects in the meantime, or damage your resume in a way that you cannot get into true trader positions in the years to follow.
A bunch of good advice. I'd only add that none of this has anything to do with your age, even if people say "at your age you don't understand...." It's all your lack of experience and education combined with not knowing what you don't know. This combination can easily happen at any age, as we see on ET all the time.
Robert Morse
Sponsor
It is a matter of state property law. As a Class B members of a firm (which is what most prop firm setups are), you technically own property. In New York/New Jersey for example, you must be an adult 18+ years of age.
There may also be an in house rule component to the age minimum requirement at a firm.
There may also be an in house rule component to the age minimum requirement at a firm.