How do I break in with a legit prop firm?

It seems to me that being honest in interviews is naive at best. Are you honest when you play poker? No one expects you to be honest. To survive as a trader you're expected to price things according to what the market will bear, not according to what they're truly worth.

But if you do insist on being honest in interviews, at least consider "mirroring". Here's a Forbes article: http://www.forbes.com/sites/acton/2013/05/22/want-to-nail-an-interview-use-mirroring/
 
TooOldForThis said:
It seems to me that being honest in interviews is naive at best. Are you honest when you play poker? No one expects you to be honest. To survive as a trader you're expected to price things according to what the market will bear, not according to what they're truly worth.

But if you do insist on being honest in interviews, at least consider "mirroring". Here's a Forbes article: http://www.forbes.com/sites/acton/2013/05/22/want-to-nail-an-interview-use-mirroring/
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I'm honest playing poker in that I'm playing to take your money, and I will mix up my betting accordingly. I'm not going to tell them what I have. I'm not sure what you mean about honesty, but I'm not going to start lying in interviews. The mirroring part is something I'll consider. However, I'm afraid I already come off as a little phony, because of the anxiety or trying to put on a good first impression so I'd have to really practice it. I've had different personalities interview me from very humble people to some of the cockiest people on the planet to complete smart asses who seemingly are trying to embarrass you when you're already nervous. There's a mixed range of characters out there. Thanks.
 
I can sorta vaguely remember being very young and naive once so I have sympathy for you. In fact, I can recall my first attempt at getting a job with a resume was a complete disaster probably for similar reasons.

Let me try to argue for a different way of looking at the interview interaction... The people who interview you are not expecting you to tell the truth. What they expect is that you will tell them the answers that they want to hear, to the best of your ability. When you instead tell them the truth they naturally conclude that you are not the sharpest tool in the shed. Why should they hire you if you can't figure out what the answers are supposed to be?

I'm reminded of another practical piece of information that should be imparted to the young. The person who makes the final decision on hiring you is usually your immediate supervisor. (If it's not, beware that your immediate supervisor might not want you there; what you want is for your hire to be a wonderful decision that your immediate supervisor made; you want your immediate supervisor to be invested in the decision to hire you.) So your immediate supervisor is the person you should make happy. Your primary job is not to make money for the company, it's to make your supervisor look good. Of course making your supervisor look good is partly about your skill at interpersonal interactions and partly about how well you do your job. But when you do something brilliant, be sure and fob off most of the credit to your immediate supervisor. By doing this you're not going to damage your position; everyone will know that you're just doing your job, i.e. buttering up the boss. And someone thinking of improving your position will see that you butter properly and will be more inclined to hire you.

But as a practical matter, I don't see how you can go wrong by admitting that you love stocks, love trading and are very interested in every possible aspect of the market. I would think that any company would want to hire people like that for any of their positions. It's not a matter of being truthful, it's a matter of making sure that you move the message in the direction needed. The world is an exceedingly complicated place and there are always very many different ways of describing the same situation. Choose the one that they want to hear. It will make it clear that you're a smart guy (who is less likely to cause them problems).

The same thing applies to stock market prices. The objective is not to estimate the "true value" of stocks. It's to estimate what the other participants will estimate the value of the stocks. And the other participants are doing the same thing. There is no room for truth in stocks. Prices are about perceptions, at most.
 
I'm making the transition myself from finance/cap markets to tech after 4 years of not breaking in. My story is the same as yours, except I made a little money.
My 2 cents. Learn to code.

People look at you a lot more seriously if you can code. And if you never make it to the front office, you have a backup career in tech.

A note on meritocracy, projections and the real world. Drop the ego. It's not who is the best, it's who plays the game the best.
 
TooOldForThis said:
The big advantage young traders have is that they can usually arrange for their living expenses to be incredibly low. Get a crappy part-time McJob (weekends only) and keep practicing trading. Even if it doesn't work out you'll still be young and you'll have a great story for later, when you're looking for a real job.

Do look around for a method of trading and a broker that allows you to keep your expenses low. Of course these go together. But I get the idea that you're smart enough to do this. I think you understand trading as a business which is the important thing.

Right now I'm too busy in academia to spend much time trading but I have the money. :(

Life is like that, you will either have enough time or enough money but it seems like almost never both.
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TooOldForThis said:
The big advantage young traders have is that they can usually arrange for their living expenses to be incredibly low. Get a crappy part-time McJob (weekends only) and keep practicing trading. Even if it doesn't work out you'll still be young and you'll have a great story for later, when you're looking for a real job.

Do look around for a method of trading and a broker that allows you to keep your expenses low. Of course these go together. But I get the idea that you're smart enough to do this. I think you understand trading as a business which is the important thing.

Right now I'm too busy in academia to spend much time trading but I have the money. :(

Life is like that, you will either have enough time or enough money but it seems like almost never both.
More...





Speaking from experience - no real professional prop firm is going to hold your hand and give you what your looking for. They expect and hire only those people who have a proven track record and that can demonstrate profitability. ( Everything is about the money )

I'm not talking about those places that you'll have to give them your capital to join their firm nor the ones that make their money based off of your trading commissions or these newer type of props that make you pay 5 or 10K down for the initial training program and if your good enough they'll move you up and you'll be able to trade the firms capital.

I'm talking about working for a professional prop firm using their money and lots of it to make yours. It's not an easy business model to follow and I can't explain to you the amount of pressure you have to encounter when your down for the month or months. The bills don't stop coming in and you only eat what you kill so you must be prepared for the losses which are in fact a BIG part of this business. The firm only wants you to be up money and when your not it doesn't matter why because there's NO excuses just results.(very high turnover rate)

If your math minded and have a proven track record then trade for yourself and do it on your own. If you need money then perhaps seek out family and friends and go for it on your own - that's if you really got what it takes and have a good method / system.

However, please believe me when I tell you that nobody in this industry is going to show you how to make money trading. In addition, those that say they can trade and offer services won't back it up with P&L statements.

You'll have to come up with your own way of finding the answer and looking outside yourself is going to be a disappointment.

Best Wishes 322170
 
Hi,
I was a trader at a large IB and can tell you why you haven't been able to break into trading.

Firstly, your experience at a prop-shop is a liability. You're not going to make money in the markets by reading charts or watching CNBC. There are some TA traders that are profitable, but all of the easy "TA" trades have been eaten up by algo's, and TA has always been more of a pseudo-science than anything else anyway. By saying "I was a trader at this prop shop" is like trying to be a medical doctor despite refusing to vaccinate your kids. In other words, the difference is ideological.

Secondly, learn about pricing and valuation theory--especially as your math background would give you a pretty good advantage. Understand how options are priced (binomial models and such, rather than Black-Scholes) and why, what valuation theory is (the price of a security is the sum of all of its future cash flows brought back to its present value), how to analyze the major 3 financial statements, and know and understand what CAPM/APT are. These are what major firms use when they trade, even if you may disagree with the theory itself, by knowing them you will be recognized as having "potential."

Successful firms use algo's to remove redundancy and traders primarily work on and improve models used by the algo's, unless your in S&T or less liquid markets. If you want to be buy side (or a liquidity taker) then you'd want even more analytical knowledge and experience.

TL;dr

Read up on core valuation and pricing theories (which is the basis for why and when to make a trading decision), brush up on your finance (you'll enjoy the math), and pitch your math background as proof of 1- your comfort with numbers and 2- willingness to be challenged & learn new things.

Best of luck.
 
To me, at least, the definition of a "legit" prop firm is a firm whose business model does NOT require a deposit or risk capital from the trader, and the trader is hired as and paid as an employee of the firm. While these types of positions are available in Chicago, they tend to hire smart people with what the firm principals believe to be a viable strategy. These firms will typically pay their employees on a W2 or a K1.
 
bone said:
To me, at least, the definition of a "legit" prop firm is a firm whose business model does NOT require a deposit or risk capital from the trader, and the trader is hired as and paid as an employee of the firm. While these types of positions are available in Chicago, they tend to hire smart people with what the firm principals believe to be a viable strategy. These firms will typically pay their employees on a W2 or a K1.
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I concur with that Bone. In London same as the US we have seen a plethora of 'pay to play' outfits calling themselves prop firms and these vastly out number the type of firms you describe above. Typically the pay to play outfits will look to net out £1k a month via a combination of desk/clearing/platform fees after costs.
 
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