Commodity Broker, trade on the side

N

newguy1

Is it possible to be a commodity broker for a small firm and trade forex or futures for your own account?

I currently work as a trader, but prior to graduating I thought about becoming a broker. I had a position offered from Smith Barney, but they made it clear that I would not be allowed to trade my own account as a daytrader would.

I'm wondering if things could be different because i'd be working at a smaller shop (nobody has ever heard of it), and its futures, not equities.

I'd have to be series 3 licensed. Does this sound like something that can work, or am I going to get the same answer I got at Smith Barney, which was "no".

Is this going to be a conflict of interest?
 
It varies from desk to desk.
I was an institutional trader and we had a "20 day holding period" and could not traffic in any names that were mentioned in any research in the past 48 hours.

I forgot to mention........a few guys were in and out of QQQQ, SPY and futures with no holding period. Then we were bought out for 2B!

Why not concentrating on your job?
 
I guess let me explain:

I didn't really want to spill this all out on the internet. But hey, this is who I am.

I got out of school earlier this year, and picked up a job working at HLV Capital. I made money right off the bat there but I had some concerns (not much, just like 50 bucks net a day after the 50/50 split; it was enough to live on.

The main one was that my managers tried to convince me to focus on recruiting and becoming a potential manager: "The real money is made in commissions and running an office, not trading"

So, at least they were honest about their intentions; they didn't really trade during the day.

Then one day I received a phone call from my current employer. It came out of the blue, and he offered a nice deal. I was mainly attracted by the 1500 for trading flat for the month, and the fact that we were part of a "hedge fund"

Well, this is my 3rd month into it, and I have a positive pnl, but it turns out i'm not getting the 1500 because I didn't do volume (i only traded on average 1000 shares a day)

But thats not really a huge deal. I posted a rant under a different screename the other day (nobody) because I didn't want to just put myself out there on the internet. If you read that post, you'd see that I was not happy with the fact that nobody in my shop has been profitable.

Even my own boss has said, "i'm struggling, i'm in a funk". Thats not exactly encouraging.

This post is too long, but I'm letting it all out there. Why leave? Well I love trading but...let me explain some more. At HLV, I was getting a pat on the back and on my way to being kind of like a Swiftrader you constantly see in Trader Pnl (btw, good job!), only to have to learn to trade a totally different way. I took my current job because the kind of high volume trading at HLV depended largely on the low commish and I thought, "what if that changes"? I knew it would be difficult to trade the same strategy.

The first month swing trading was definitely difficult, but iI've been pretty consistent in my 3rd month. Now i'm having to think about leaving this job, not because I am doing poorly at trading or that I dislike trading. Its primarily because there were a whole string of things promised that never came through, and that nobody in my office is profitable. That is kind of disturbing. Who knows? It might only be a matter of time before this place just blows up. I mean, how long can my employer sustain constant losing? I'm not saying he's a bad trader, or that any of my co-workers are bad traders...but how much of a drawdown can he really sustain himself...at some point he might just say, "i'm not good right now, I think i'll take an extended break".

So I've been forced to think about finding other opportunities in trading, be it trading or trading-related.

So there it is. Thats who I am. I don't feel bad airing this stuff out on the internet, because I'm going to be bringing some of these issues up after hours Monday.

Any suggestions are welcome.

Good luck to everyone.


(btw, the thing about my managers at HLV, I don't think thats typical. I had some interaction with a trainer from their NY office, Pete. He was great, and people in my office were at least profitable after a very short time. Some people like my current boss think trading LU for a penny is a losers game. Well I can say it surely wasn't in my office. I didn't realize how hard trading could be (how much can go wrong) until I started swing trading more volatile issues, and watching some of my co-workers loose a couple grand holding a loser on 500-1000 shares. Managing your risk at HLV on 5000 shares was definitely easier; easier to take a flat, easier to take a loss...things didn't get out of hand like that just due to the tight range on things like LU, NT.)

...in fact, as I edit this post, I'm fairly certain a friend of my employer will read this, and if he is so inclined, will direct him to the post. But i'm not going to take it off. Everything I've said is true; your pnl is either red or black. You either make promises and hold them or you don't. And my concerns are as real as they get, without trying to personally insult anyone. But I need some advice, and thats why I am here. People usually get flamed on at ET just for having a long post. But I'm just putting myself out there. I have to, because there are too many experienced people at this board to be afraid of taking some heat in exchange for good advice.
 
On top of that, I'm not one those guys that is overly obsessed with a "good training program".

We have a guy in my firm that had good training at FNYS, and then a hedge fund. So he's fairly experienced and can talk about a lot of things.

Its too bad that he hasn't had A SINGLE green day this month...and he's taken some pretty big hits relative to the share size.

My point is that getting into a great program isn't the Holy Grail, because I've met someone who found a way to turn all that knowledge into losing trades.

I guess thats why i'm probably too obsessed with finding traders with green pnls. Not so I can get babysat, but just to see what works; I want to have some faith in another trader's ability. Right now, the only person I believe in is myself, and thats not the kind of attitude I want to have at work. (i've even faded some of my manager's calls just because he was wrong so many times...it doesn't feel good to do that, even when the trade is green) I've already seen too much of what doesn't work....I feel like I'm trading by myself.
 
Been there, done that, I will not trade with anyone but my own screens.

PROP = POISON!

Learn to trade futures (ES,NQ,US,YM) alone, your money, your screens, your own pace. I commend your ability to recognize a smelly situation.
 
Quote from newguy1:



The main one was that my managers tried to convince me to focus on recruiting and becoming a potential manager: "The real money is made in commissions and running an office, not trading"

So, at least they were honest about their intentions; they didn't really trade during the day.
More...

Of course ! Refreshing post on prop trading , what are you thoughts on the Trader P&L thread ?
 
i've really only glanced at it a few times. But two traders come to mind.

I don't remember their names, but they both do very high volume. One of them has been attacked frequently as having a fake pnl. Both report great pnls.

The reason these two traders interested me was because they confirm something I believed: you can make 1-4 grand scalping on high volume....and it doesn't necessarily take years of experience to get there either.

Whether its LU or something faster, these traders have reportedly done it.

And thats really the only thing I've keyed in on. Why? Because i've met a few people either online or in person who are 100 percent sure that this kind of trading is a losing method. Interestingly enough, none of these people had ever attempted to do so with low commission rates.

I thought about it myself, and said, "why didn't I just continue scalping pennies?" Aside from possibly having commisions go from low to high, it looks like you can't trade this way for a living without a prop firm. I don't want to say you can't, but it would be harder to trade this way on your own, vs. swing trading 500 shares. Then there's the problem with scaling it out. It looks like you can make a great living trading this way, but you might have to give up a decent chunk through a split and it seems like theres more upside per trade using other methods.

And thats it. I think the trader pnl is a great place for traders who have made it. Now for newbies like me, I'm not so sure if posting is good. I think for some one who is new, posting results could add a little undue stress/pressure. But its a pretty cool thing to look at as an aspiring trader.
 
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