Endicott's genuine advice to young people who want to make it as pro traders

[endicottsteel]

Yeah I know everyone on trading forums wants to give you 'advice'. I was inspired to write this due to some of the nonsense being written on the TST thread. I just want to share what I would have done differently if I was back in my 20s and was learning this business again. Hopefully this may help someone.


Firstly make the decision that you truly want this and that you will do anything to make it work by sacrificing 2 years of your time towards the goal of making consistent money as a trader. You are submitting this time to give yourself the best chance of making it where the best people write their own cheque and life freedom.


Once you have made the decision tell all of your family and friends, fully commit.


Step 1 - To give yourself the best chance of success you must be surrounded by and have day to day exposure to successful professional traders. I know people don't want to hear this, that's just the way it is imo. This means joining a prop firm and moving to NYC, Chicago, London, Frankfurt, Singapore or Sidney. That's right you need to be somewhere where there are a ton of professional traders and there are plenty of firms. You are going to learn more in a month than 5 years from your bedroom trading in your pants. If you want it bad enough you will find a way to move to one of these locations. You will meet other professional traders who know other traders in the city, that’s the way it is.


Step 2 - Outgoings/Expenses – unless you have $50k-100k which most don’t you absolutely need to keep these down to a minimum for 2 years as you may not earn anything from trading in the first 6 to 24 months. Your accommodation is likely to be your biggest cost living in one of the cities above. If you want it badly enough you will find ways to keep costs low. For example in London where I am based renting a single room somewhere central would cost you £750pm. If however you were willing to live slightly further away from the centre you could find something for £400-£600pm. If you really have limited funds and you want it badly enough you will share a room, that's what a lot of migrant workers/students do and pay £300pm each. If you have limited funds you will need to do what it takes. You will not be spending time at home anyway, just sleeping mainly. Join a no frills gym - you will need to be working out to keep your energy levels high and cope with the stress of trading. Prepare your own food, cheaper, cleaner, healthier. this should be obvious. For trading you need to be physically & mentally fit. You need to be well rested and emotionally balanced. It comes down to how much you want it. If I was 25 now and living in a rural area of US, I just know I could move to Chicago and find somewhere to live for $400pm, I don’t care what anyone says I know I could do it. I would find an area away from the centre with a fairly fast transit into the financial district, I would find other young professionals who want to share, I would share a room if I had to. When you are young to have to push yourself and be willing to do things others are not if you are going to make it.


Step 3 - If you are on limited funds get a weekend/evening job. You will be at your prop firm 30 minutes before market open and leave 30 minutes after the close. I don't advise you to be one of the guys who stays at the firm 16 hours a day, it's not healthy and you will burnout. I would aim to be there 8 hours a day. It is possible to get a casual job working saturday/sunday and a couple of evenings and pay all of your living expenses. It is possible if you want it badly enough, it isn't possible if you do not sacrifice and if you have expensive tastes. If you do not need to make money from trading in the first 2 years you stand a much better chance.


Step 4 – Make a list of all the prop firms in your new city of choice and research them thoroughly. Email/call/visit them in person. Personally I would try and find a firm that specialises in one market area, the more niche the better. I would also try and find a firm that trades spreads.


Step 5 – Joining the firm. You need to convince the decision makers in the firm that you are worthy of a shot. Convey your story to them, tell them of your sacrifice, tell them you just moved to a new city and you completely sacrificing 2 years of your time knowing you may make nothing for 6 to 24 months. The decision makers are normally the firm owners however experienced traders will often take on grads and have small teams they look after in return for a profit split. In my experience firm owners will listen to these experience traders and take up their recommendations. Don’t be afraid to approach these traders directly instead of the firm owners or usual route, if you can convince these guys you are in.


Step 6 – Still can’t get in to a decent firm? If you are still hitting brick walls absolutely don’t waste your time. Ask traders/firm owners if you can help out in the office for free, ask if you can sit with traders and be their errand boy. Finally if you still cannot get a shot you may have to take the step of putting up money as ‘first loss’ i.e. offering some capital to the firm in the form of a deposit. Do not confuse this with joining a ‘pay to play’ firm which is really a training and education firm pretending to be a prop firm. I am talking about offering up say $10k in a first loss agreement. You really should try and avoid putting in capital but if it’s your only way in that’s what you will need to do. If you don't have $10k you need to work 7 days a week and save it. If you can't save $2k pm you don't want it badly enough you may as well quit now.


Step 7 – Trading & Strategy – I have purposely not mentioned anything on this. When you are new to the game the most important thing is to get into the environment where there are other professional traders. Get in there and be a sponge.


Good Luck.

 

[K-Pia]

Only birds can teach you to fly.

 

[Maverick74]

Nice post Endicott. You are a smart guy and a hard worker. The TST thread is like that bar down the street with the same two loud drunks that are there everyday shouting at the rain. Let me say this, I think the advice you offered was good advice 10 years ago. As some one who has been in this business now for 20 years and seen it evolve to where it is now and where it's going, here is what I would tell people. One, get a real job. For 99% of the people on this forum, you need to make a living and trading will not do that for you. The long term return on risk assets over the last 100 years is about 7.5% in nominal terms and if you hold those assets long term there are no end of year tax consequences. Very few people are going to beat those returns on a risk adjusted basis. If you do insist on trading, go to school, study math and computer science. For the love of Jesus, Mary and Joseph, study math and statistics. Trading today is VERY quantitative and no, you can't use a straightline ruler to achieve independent freedom dphoenix.

Understanding data, how to collect it, clean it, analyze it and model it is very important. There is more noise now then ever in the market and you have to put in a lot of work to separate the signal from the noise today. Now I know what some of you are going to say, you are too old to study math or stats or data analysis. Well, I got bad news for you, if you are too old for that, you are probably too old to trade because that IS what trading is. Most of the people on this forum are hobbyist traders. The definition of a hobby is one, it costs money. And two, it's meant to fill time. And that is what most are doing here, losing money and filling time. Why? I could write a book about it. Maybe you don't like to spend time with your wife and kids. Maybe you think it's an out to escape a corporate job you hate. Maybe it brings some meaning to your life you can't find elsewhere. But what it is not for most here is a profession.

If I was giving advice to a 22 year old kid, I would tell him to get his ass in school. Study math, economics, computer science, logistics, etc. I would tell him to focus on trading books that are full of math formulas and not charts. That is the litmus test. Open the book, if you see charts, toss it. If you see code and formulas, give it a look. Look when I was younger I hated math too. I didn't understand it's purpose in the world. I couldn't make the connection. As I got older and I delved deeper into it, I found order and structure in math. Math connected things. It built the bridge from theory to implementation of an idea. It quantified things. It tested things. It explained things. Now that didn't make learning math easier, but it did provide the purpose for it. The truth is, there is no easy way to make money in this business. At least not honestly. If you are allergic to hard work, you better keep that office job.

Now this is not meant to be a debby downer post, but a wake up call. I ran a regional prop firm office for many years. I had many ET guys go through that office. I was privy to their account statements and their p&l as I managed their risk and saw all the trades they put on. It was fascinating to see the evolution one makes in the road to failure. Most these guys were smart, most were hard working. Almost all of them were even well capitalized. We gave them access to every market under the sun, so that was not an excuse. We gave them access to equities, options and futures. So that was not an excuse. We gave them the ability to daytrade, swing trade, hell even hold long term portfolios. So that was not an excuse. We gave them access to over a dozen trading platforms. So that was not an excuse. We even lent them capital and gave them access to whatever margin they needed. So that was not an excuse. Hell, we even let guys trade with debit accounts for months on end allowing them to recover losses. So that was not an excuse.

Of course the easy out here is to simply say they didn't have an edge. That's a cop out. Why? Because they didn't even have the tools to develop an edge. And that is where the math, stats, programming, etc all come in. So out of the 40 something traders I over saw how many of them made money? None. How many of them blew out their accounts? Almost all. It's kind of a cruel psychological self destructing process really. It's like an alcoholic. They can't simply stop drinking because someone tells them they have a problem. Their moment of clarity only comes about after they are pulled out of a car at 3am by the jaws of life and rushed to the ER only to barely survive but to find out the woman and her two children in the mini-van that he hit did not. It's only then it seems that such a person sees their own reality more clearly. With trading it seems the same. Losing money is not enough. One has to completely self destruct and lose everything before they find their clarity.

This is only advice. Do with it what you will. And of course, good luck.

 

[endicottsteel]

Nice post Endicott. You are a smart guy and a hard worker. The TST thread is like that bar down the street with the same two loud drunks that are there everyday shouting at the rain. Let me say this, I think the advice you offered was good advice 10 years ago. As some one who has been in this business now for 20 years and seen it evolve to where it is now and where it's going, here is what I would tell people. One, get a real job. For 99% of the people on this forum, you need to make a living and trading will not do that for you. The long term return on risk assets over the last 100 years is about 7.5% in nominal terms and if you hold those assets long term there are no end of year tax consequences. Very few people are going to beat those returns on a risk adjusted basis. If you do insist on trading, go to school, study math and computer science. For the love of Jesus, Mary and Joseph, study math and statistics. Trading today is VERY quantitative and no, you can't use a straightline ruler to achieve independent freedom dphoenix.

Understanding data, how to collect it, clean it, analyze it and model it is very important. There is more noise now then ever in the market and you have to put in a lot of work to separate the signal from the noise today. Now I know what some of you are going to say, you are too old to study math or stats or data analysis. Well, I got bad news for you, if you are too old for that, you are probably too old to trade because that IS what trading is. Most of the people on this forum are hobbyist traders. The definition of a hobby is one, it costs money. And two, it's meant to fill time. And that is what most are doing here, losing money and filling time. Why? I could write a book about it. Maybe you don't like to spend time with your wife and kids. Maybe you think it's an out to escape a corporate job you hate. Maybe it brings some meaning to your life you can't find elsewhere. But what it is not for most here is a profession.

If I was giving advice to a 22 year old kid, I would tell him to get his ass in school. Study math, economics, computer science, logistics, etc. I would tell him to focus on trading books that are full of math formulas and not charts. That is the litmus test. Open the book, if you see charts, toss it. If you see code and formulas, give it a look. Look when I was younger I hated math too. I didn't understand it's purpose in the world. I couldn't make the connection. As I got older and I delved deeper into it, I found order and structure in math. Math connected things. It built the bridge from theory to implementation of an idea. It quantified things. It tested things. It explained things. Now that didn't make learning math easier, but it did provide the purpose for it. The truth is, there is no easy way to make money in this business. At least not honestly. If you are allergic to hard work, you better keep that office job.

Now this is not meant to be a debby downer post, but a wake up call. I ran a regional prop firm office for many years. I had many ET guys go through that office. I was privy to their account statements and their p&l as I managed their risk and saw all the trades they put on. It was fascinating to see the evolution one makes in the road to failure. Most these guys were smart, most were hard working. Almost all of them were even well capitalized. We gave them access to every market under the sun, so that was not an excuse. We gave them access to equities, options and futures. So that was not an excuse. We gave them the ability to daytrade, swing trade, hell even hold long term portfolios. So that was not an excuse. We gave them access to over a dozen trading platforms. So that was not an excuse. We even lent them capital and gave them access to whatever margin they needed. So that was not an excuse. Hell, we even let guys trade with debit accounts for months on end allowing them to recover losses. So that was not an excuse.

Of course the easy out here is to simply say they didn't have an edge. That's a cop out. Why? Because they didn't even have the tools to develop an edge. And that is where the math, stats, programming, etc all come in. So out of the 40 something traders I over saw how many of them made money? None. How many of them blew out their accounts? Almost all. It's kind of a cruel psychological self destructing process really. It's like an alcoholic. They can't simply stop drinking because someone tells them they have a problem. Their moment of clarity only comes about after they are pulled out of a car at 3am by the jaws of life and rushed to the ER only to barely survive but to find out the woman and her two children in the mini-van that he hit did not. It's only then it seems that such a person sees their own reality more clearly. With trading it seems the same. Losing money is not enough. One has to completely self destruct and lose everything before they find their clarity.

This is only advice. Do with it what you will. And of course, good luck.

superb post Mav. I still think there is some juice left at prop firms but only for the best players and there are absolutely no easy edges now. I base this on what I see prop traders making £250k+ p/a people who have built up large accounts, of course most prop traders fail this is a performance activity. So many have fell by the wayside, I have met people who 10 years ago had +£100k months and now cannot make a bean. As you say in your operation you removed every single barrier for people to make money in a professional environment and people still couldn't make it, it really is much harder than people think, so many people fail due to bad risk management. Trading from your bedroom in your pants is just never going to work. The way to still make it as a prop trader imo is to focus on markets where others are not trading and algos are not seeking to liquidate people on the shorter time frames. So for example synthetic spreads where the algos are pushing the flat price around to liquidate people and you are using that movement to play rich/cheap in your synthetic spread. Another example might be trading in a real niche area, say for example you would only trade mid and back curve ags. I don't trade this but I know it is a market that algos are unlikely to play as their is easier meat for them elsewhere. specialise, specialise, specialise.

 

[Maverick74]

superb post Mav. I still think there is some juice left at prop firms but only for the best players and there are absolutely no easy edges now. I base this on what I see prop traders making £250k+ p/a people who have built up large accounts, of course most prop traders fail this is a performance activity. So many have fell by the wayside, I have met people who 10 years ago had +£100k months and now cannot make a bean. As you say in your operation you removed every single barrier for people to make money in a professional environment and people still couldn't make it, it really is much harder than people think, so many people fail due to bad risk management. Trading from your bedroom in your pants is just never going to work. The way to still make it as a prop trader imo is to focus on markets where others are not trading and algos are not seeking to liquidate people on the shorter time frames. So for example synthetic spreads where the algos are pushing the flat price around to liquidate people and you are using that movement to play rich/cheap in your synthetic spread. Another example might be trading in a real niche area, say for example you would only trade mid and back curve ags. I don't trade this but I know it is a market that algos are unlikely to play as their is easier meat for them elsewhere. specialise, specialise, specialise.

Yeah if I had to write a formula for someone, I would tell them to find a very illiquid market. Learn everything in the world about that market and get every piece of data about it. Build a pricing model. Build a risk model. And then go to town.

 

[zdreg]

Yeah if I had to write a formula for someone, I would tell them to find a very illiquid market. Learn everything in the world about that market and get every piece of data about it. Build a pricing model. Build a risk model. And then go to town.

this post presents the best case for trading illiquid markets.

even liquid markets like the US markets have pockets of illiquidity which can be exploited.

 

[zdreg]

Only birds can teach you to fly.

perhaps. if you can fathom the aerodynamics of the physiology of birds perhaps someone can design a plane and someone can manufacture it. then someone has to teach themselves to fly it. it sounds like a grand extrapolation, but maybe not. (maybe that is the way the inventors of the airplane got their start.)

 

[lucysparabola]

Yeah I know everyone on trading forums wants to give you 'advice'. I was inspired to write this due to some of the nonsense being written on the TST thread. I just want to share what I would have done differently if I was back in my 20s and was learning this business again. Hopefully this may help someone.


Firstly make the decision that you truly want this and that you will do anything to make it work by sacrificing 2 years of your time towards the goal of making consistent money as a trader. You are submitting this time to give yourself the best chance of making it where the best people write their own cheque and life freedom.


Once you have made the decision tell all of your family and friends, fully commit.


Step 1 - To give yourself the best chance of success you must be surrounded by and have day to day exposure to successful professional traders. I know people don't want to hear this, that's just the way it is imo. This means joining a prop firm and moving to NYC, Chicago, London, Frankfurt, Singapore or Sidney. That's right you need to be somewhere where there are a ton of professional traders and there are plenty of firms. You are going to learn more in a month than 5 years from your bedroom trading in your pants. If you want it bad enough you will find a way to move to one of these locations. You will meet other professional traders who know other traders in the city, that’s the way it is.


Step 2 - Outgoings/Expenses – unless you have $50k-100k which most don’t you absolutely need to keep these down to a minimum for 2 years as you may not earn anything from trading in the first 6 to 24 months. Your accommodation is likely to be your biggest cost living in one of the cities above. If you want it badly enough you will find ways to keep costs low. For example in London where I am based renting a single room somewhere central would cost you £750pm. If however you were willing to live slightly further away from the centre you could find something for £400-£600pm. If you really have limited funds and you want it badly enough you will share a room, that's what a lot of migrant workers/students do and pay £300pm each. If you have limited funds you will need to do what it takes. You will not be spending time at home anyway, just sleeping mainly. Join a no frills gym - you will need to be working out to keep your energy levels high and cope with the stress of trading. Prepare your own food, cheaper, cleaner, healthier. this should be obvious. For trading you need to be physically & mentally fit. You need to be well rested and emotionally balanced. It comes down to how much you want it. If I was 25 now and living in a rural area of US, I just know I could move to Chicago and find somewhere to live for $400pm, I don’t care what anyone says I know I could do it. I would find an area away from the centre with a fairly fast transit into the financial district, I would find other young professionals who want to share, I would share a room if I had to. When you are young to have to push yourself and be willing to do things others are not if you are going to make it.


Step 3 - If you are on limited funds get a weekend/evening job. You will be at your prop firm 30 minutes before market open and leave 30 minutes after the close. I don't advise you to be one of the guys who stays at the firm 16 hours a day, it's not healthy and you will burnout. I would aim to be there 8 hours a day. It is possible to get a casual job working saturday/sunday and a couple of evenings and pay all of your living expenses. It is possible if you want it badly enough, it isn't possible if you do not sacrifice and if you have expensive tastes. If you do not need to make money from trading in the first 2 years you stand a much better chance.


Step 4 – Make a list of all the prop firms in your new city of choice and research them thoroughly. Email/call/visit them in person. Personally I would try and find a firm that specialises in one market area, the more niche the better. I would also try and find a firm that trades spreads.


Step 5 – Joining the firm. You need to convince the decision makers in the firm that you are worthy of a shot. Convey your story to them, tell them of your sacrifice, tell them you just moved to a new city and you completely sacrificing 2 years of your time knowing you may make nothing for 6 to 24 months. The decision makers are normally the firm owners however experienced traders will often take on grads and have small teams they look after in return for a profit split. In my experience firm owners will listen to these experience traders and take up their recommendations. Don’t be afraid to approach these traders directly instead of the firm owners or usual route, if you can convince these guys you are in.


Step 6 – Still can’t get in to a decent firm? If you are still hitting brick walls absolutely don’t waste your time. Ask traders/firm owners if you can help out in the office for free, ask if you can sit with traders and be their errand boy. Finally if you still cannot get a shot you may have to take the step of putting up money as ‘first loss’ i.e. offering some capital to the firm in the form of a deposit. Do not confuse this with joining a ‘pay to play’ firm which is really a training and education firm pretending to be a prop firm. I am talking about offering up say $10k in a first loss agreement. You really should try and avoid putting in capital but if it’s your only way in that’s what you will need to do. If you don't have $10k you need to work 7 days a week and save it. If you can't save $2k pm you don't want it badly enough you may as well quit now.


Step 7 – Trading & Strategy – I have purposely not mentioned anything on this. When you are new to the game the most important thing is to get into the environment where there are other professional traders. Get in there and be a sponge.


Good Luck.

Nice post Endicott. You are a smart guy and a hard worker. The TST thread is like that bar down the street with the same two loud drunks that are there everyday shouting at the rain. Let me say this, I think the advice you offered was good advice 10 years ago. As some one who has been in this business now for 20 years and seen it evolve to where it is now and where it's going, here is what I would tell people. One, get a real job. For 99% of the people on this forum, you need to make a living and trading will not do that for you. The long term return on risk assets over the last 100 years is about 7.5% in nominal terms and if you hold those assets long term there are no end of year tax consequences. Very few people are going to beat those returns on a risk adjusted basis. If you do insist on trading, go to school, study math and computer science. For the love of Jesus, Mary and Joseph, study math and statistics. Trading today is VERY quantitative and no, you can't use a straightline ruler to achieve independent freedom dphoenix.

Understanding data, how to collect it, clean it, analyze it and model it is very important. There is more noise now then ever in the market and you have to put in a lot of work to separate the signal from the noise today. Now I know what some of you are going to say, you are too old to study math or stats or data analysis. Well, I got bad news for you, if you are too old for that, you are probably too old to trade because that IS what trading is. Most of the people on this forum are hobbyist traders. The definition of a hobby is one, it costs money. And two, it's meant to fill time. And that is what most are doing here, losing money and filling time. Why? I could write a book about it. Maybe you don't like to spend time with your wife and kids. Maybe you think it's an out to escape a corporate job you hate. Maybe it brings some meaning to your life you can't find elsewhere. But what it is not for most here is a profession.

If I was giving advice to a 22 year old kid, I would tell him to get his ass in school. Study math, economics, computer science, logistics, etc. I would tell him to focus on trading books that are full of math formulas and not charts. That is the litmus test. Open the book, if you see charts, toss it. If you see code and formulas, give it a look. Look when I was younger I hated math too. I didn't understand it's purpose in the world. I couldn't make the connection. As I got older and I delved deeper into it, I found order and structure in math. Math connected things. It built the bridge from theory to implementation of an idea. It quantified things. It tested things. It explained things. Now that didn't make learning math easier, but it did provide the purpose for it. The truth is, there is no easy way to make money in this business. At least not honestly. If you are allergic to hard work, you better keep that office job.

Now this is not meant to be a debby downer post, but a wake up call. I ran a regional prop firm office for many years. I had many ET guys go through that office. I was privy to their account statements and their p&l as I managed their risk and saw all the trades they put on. It was fascinating to see the evolution one makes in the road to failure. Most these guys were smart, most were hard working. Almost all of them were even well capitalized. We gave them access to every market under the sun, so that was not an excuse. We gave them access to equities, options and futures. So that was not an excuse. We gave them the ability to daytrade, swing trade, hell even hold long term portfolios. So that was not an excuse. We gave them access to over a dozen trading platforms. So that was not an excuse. We even lent them capital and gave them access to whatever margin they needed. So that was not an excuse. Hell, we even let guys trade with debit accounts for months on end allowing them to recover losses. So that was not an excuse.

Of course the easy out here is to simply say they didn't have an edge. That's a cop out. Why? Because they didn't even have the tools to develop an edge. And that is where the math, stats, programming, etc all come in. So out of the 40 something traders I over saw how many of them made money? None. How many of them blew out their accounts? Almost all. It's kind of a cruel psychological self destructing process really. It's like an alcoholic. They can't simply stop drinking because someone tells them they have a problem. Their moment of clarity only comes about after they are pulled out of a car at 3am by the jaws of life and rushed to the ER only to barely survive but to find out the woman and her two children in the mini-van that he hit did not. It's only then it seems that such a person sees their own reality more clearly. With trading it seems the same. Losing money is not enough. One has to completely self destruct and lose everything before they find their clarity.

This is only advice. Do with it what you will. And of course, good luck.

as usual with ET, two extremely quality posts will go mostly ignored. These were worth the read and will reward anyone who dares to follow them.

 

[zdreg]

One has to completely self destruct and lose everything before they find their clarity.

this is a most interesting truism in many life situations. it would make for a thread in chit chat to debate how much one has to first lose in life before having the clarity of vision to make a great leap forward.

 

[newwurldmn]

Only birds can teach you to fly.

I can learn to fly from an ostrich?