Quote from cornholetrading:
......The incentives you brought up for training a new trader are an excellent point that many firms for some reason have not used. But then again they could not bring in 10-15 people at a time and do that.
The other big thing you mentioned about being taught to trade scared is so true. It seems many places teach how not to lose money but it is never brought up how to make it. All defense (if you call enforcing 1 tick defense) and little offense.
I believe that the problem with these firms is that the risk managers forget their job title of RISK manager; they are NOT supposed to be PEOPLE managers, and seem to forget that.
The problem is that in the absence of anyone to train the newbies most prop firms will tall the risk teams to coach or guide newbies, to answer questions and give emotional support to newbies with doubts. But those risk fools take that as meaning that THEY are the office boss, and the teachers of the recruits, and given that the newbies are often the only traders who will listen to their bull-shit they love to dispense it. Usually risk types are frustrated failed traders with something left to prove to themselves and the market, but without anyway to claim their revenge. It eases their egos to feel like they are still part of trading, still active and still valuable. Needy people at best, and as a newbie if they are in charge they expect you to listen, as does their boss who employs them. Most good traders are too busy ot too selfish to teach newbies, and because there are so many recruits who want or need advice the job is given to the wrong people, who have tons of free time on their hands (watching other do your old job better than you ever could is very boring I am told), so they need to keep themselves busy and look for excuse to create themselves work to justify their salaries.
Risk managers love stopping people out as they feel like they are high and mighty and are making the BIG decisions, when they fail to realize that the big decisions are made by the traders and they are like the servants left to clean up after a party. The traders make the money, and without traders their is no risk job!! They are really just a paid snitch for the owner, like a school prefect with a tiny role that they feel the need to inflate in importance.
I enjoy helping newbies to learn, especially I enjoy unraveling the bull-shit they learn from the trainers, and I would gladly coach 1-3 recruits per time for a cut of the recruits P&L, but the firms want to maximize profits and would rather pay a MUG a small salary to dish out bad advice so that they can keep the maximum amount of money that the newbies make if they become successful. Besides those risk types HATE me involving myself, as they see it as me treading on their toes. They feel that they are the ones who were chosen to be paid to do the teaching and I should butt out. The fact that I ACTUALLY have something to teach and they don't seems to escape their attention!!!!!!
I do believe that their failed risk approach is handed down from upper-management and/or the owners. Those guys who were successful many moons ago on the floor say (most prop futures firms are owned by former floor traders) and who fail to realize that the markets are different and their ways are out-dated. Trading on the floor and the screen is very different, proven by the large number of floor traders who failed to make the transition. The owners don't get that THEY need to evolve just the way the traders have to. the problem is that they usually seem to have ideals as to how they want their firms to be run without realizing that THOSE ideals are usually the biggest limiting factors to the firms success. Just like a bad trader it is their unwillingness to change that causes problems.
I think that the defensive approach newbies are encouraged to take with tight stops is largely designed to increase the trips that people do. Sometimes in certain markets it is better to have one trade and lose 4 ticks but allow the trade to breathe and potentially be a winner than to leap into trades 10 times and lose 10 individual ticks, plus all the brokerage that goes with it. Different market conditions require different trading strategies and time frames, and even different risk-tolerances per trade and most of these firms don't get it. They don't understand that ONE size does NOT fit all. And so the newbies die a death of a thousand cuts slowly and these firms continue to have massive turn-over and so many failures, the failures being paid for by good traders who cannot leave and the badly taught traders left to struggle to find another REAL job after being fired.
Most firms are too greedy and want to be TOO big and quite frankly just don't care. They don't realize that with quality tuition far more people would get it and become successful with them, and as people had been well taught and good traders pay less to fund bad traders everyone could be happy. The good firms remain small and really nurture newbies into good traders, unfortunately they are few and far between and so most stick to the failing revolving door, commission based business model allowing traders like me to profit from the failures that they produce.
There is not enough room for every firm to be successful, and bad firms pave the way for successful firms to feed off, or usually very good individual traders to feed off more like. But a tiny handful of good firms exist out there, unfortunately seeing as nobody is allowed to criticize and threads are deleted it is impossible for newbies to know in advance, and so they are left to walk blind into the mine-field. Talk to traders in the markets, as they will usually know the reputations of many firms, and if you don't know anyone then you better do your research and heed any warnings that you do come across, as otherwise you could be in-store for some nasty shocks down the road.
Good luck and I hope that my long winded posts have provided some help to newbies as to what to beware of. I suppose that a few existing traders will laugh at the common prop firm observations too.
Once again I state that all the above is my personal opinion and I am in no way implicating any particular firm, rather I am generalizing about the industry based on my own observations and the observations of many friends who combined have worked at several firms. I therefore believe that these generalizations have some substance and so should remain posted leaving the newbies to differentiate for themselves the wheat from the chaff. I feel I have to say that due to the absurd paranoia on these boards with legitimate threads being deleted.
As I said good firms and bad firms do co-exist and so I am not advertising for anyone either as that seems to be forbidden also.
