How To Go From Retail To Institutional Trader

I don't understand why you would go to the trouble to get accepted if you actually know how to trade. I'm not expert, so this is just my opinion, but if you have a low 5 figure account and know how to trade, wouldn't futures provide everything you need?

I think most trading institutions are full of traders who don't have a clue. If forced to trade their own accounts, they would do quite poorly. The reason most survive is simply off the fees from their "professional services". They make their 1-2% regardless of their track record.

Given that you are from a well off family, I understand that you might need the prestige and ability to show that you have made it. But in my opinion, working for someone else is a major drawback, and if you can actually trade, then your 5 figure account should be plenty to work with. Most positions that you seek I think have so many qualifiers that have nothing to do with education or ability. Its like acting. Being good isn't good enough. You gotta suck up to this person or that person, and if you are a girl, you probably have to sleep with the producer as well! The fact that trading is all about performance, why make it more difficult by trying to fit into a certain culture and have to be good, when trading just requires that you be good?
 
Fundlord said:
Did you try to apply to investment banks, hedge funds or even private equity ?
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Nope, IB or PE doesn't interest me at all even if it pays well. Although I did apply to one hedge fund in my city in which the investment industry is very small unlike Chicago, SF, New York.

Also coming from a state school, there is a very low chance you can get in unless you have tons of experience or connections. But honestly I did not want to take on massive amounts of debt just to get a degree in which there is already oversupply of labor.

If I were to do it all over again, my recommendation would be to transfer to a university where you know the firms that you want to work for recruit from there. Change your major to something more quant oriented like computer science, math, engineering. Or start building up your resume with experience/internships related to trading. I know it's really stressful transferring, but if it's what you really want, I'd do it. (At least this is what the consensus is on most forums, I was in your shoes but read it when I was already a junior at my uni)

When I was in college, I was making a killing in 2011 trading so the opportunity cost of doing an internship making cold calls wasn't worth it at all. But it may have hurt my future =p

Also I used to take ridiculous amounts of risk similar to you when I was at uni due to my limited capital. But now I've cut down since my account has grown and now I am aiming for consistency and preservation instead of homeruns...albeit I should have went for the juggular last Thursday.

How about joining a prop firm and taking your skills there? They will give you access to trade bigger capital and you can start making big $, if your trading strat is solid as you say.
 
heavenskrow said:
If I were to do it all over again, my recommendation would be to transfer to a university where you know the firms that you want to work for recruit from there. Change your major to something more quant oriented like computer science, math, engineering. Or start building up your resume with experience/internships related to trading. I know it's really stressful transferring, but if it's what you really want, I'd do it. (At least this is what the consensus is on most forums, I was in your shoes but read it when I was already a junior at my uni)
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Listen to this.

If you remember the investment study where 80% of your returns can be attributed to the right allocation, sometimes you have to be in the right place at the right time. Right skillset in the right business era. Btw, Gordon Gekko is an archetype of a bygone era.

Also, it would be interesting (or depressing) to know how many of these career trader threads originated from some guy in Podunk, Nowhere.
 
Most institutions don't want to hire maverick traders. They want you to fill a role in a machine. They don't need you to be able to fill that role today as it's generally pretty specialized (like trading a particular sub-sector of stocks) but they want to know that you are trainable and will be successful. To this end, if you want to work in the institutional world, you need to prove to the institutions that you are trainable. The easiest way to to that, is to demonstrate your ability to learn in your undergraduate and graduate curriculums. A track record on a small account doesn't prove that you are trainable.

There are some institutional roles that do hire mavericks. For this role, think from the hiring managers perspective. If he's going to get paid or fired by the performance of his hiree, what will he look for that he can explain to his boss if the hiree doesn't work out? "I hired a 21yo from a state school who made 100% on a 10k account punting on fxcm with 50:1 leverage." probably won't carry as much weight as "I hired him to trade Asian currencies because he has a phd in economics from Penn State and studied China's monetary policy actions with respect to their economy"
 
k p said:
I don't understand why you would go to the trouble to get accepted if you actually know how to trade. I'm not expert, so this is just my opinion, but if you have a low 5 figure account and know how to trade, wouldn't futures provide everything you need?

I think most trading institutions are full of traders who don't have a clue. If forced to trade their own accounts, they would do quite poorly. The reason most survive is simply off the fees from their "professional services". They make their 1-2% regardless of their track record.

Given that you are from a well off family, I understand that you might need the prestige and ability to show that you have made it. But in my opinion, working for someone else is a major drawback, and if you can actually trade, then your 5 figure account should be plenty to work with. Most positions that you seek I think have so many qualifiers that have nothing to do with education or ability. Its like acting. Being good isn't good enough. You gotta suck up to this person or that person, and if you are a girl, you probably have to sleep with the producer as well! The fact that trading is all about performance, why make it more difficult by trying to fit into a certain culture and have to be good, when trading just requires that you be good?
More...

I plan on continuing to trade my account but as I said but it seems like a pipe dream to go from 8000$ (my original sum) to 8/9figures (personal monetary goal) in this day and age without taking absurd risk with a high chance of blowing up and losing it all.
 
heavenskrow said:
Nope, IB or PE doesn't interest me at all even if it pays well. Although I did apply to one hedge fund in my city in which the investment industry is very small unlike Chicago, SF, New York.

Also coming from a state school, there is a very low chance you can get in unless you have tons of experience or connections. But honestly I did not want to take on massive amounts of debt just to get a degree in which there is already oversupply of labor.

If I were to do it all over again, my recommendation would be to transfer to a university where you know the firms that you want to work for recruit from there. Change your major to something more quant oriented like computer science, math, engineering. Or start building up your resume with experience/internships related to trading. I know it's really stressful transferring, but if it's what you really want, I'd do it. (At least this is what the consensus is on most forums, I was in your shoes but read it when I was already a junior at my uni)

When I was in college, I was making a killing in 2011 trading so the opportunity cost of doing an internship making cold calls wasn't worth it at all. But it may have hurt my future =p

Also I used to take ridiculous amounts of risk similar to you when I was at uni due to my limited capital. But now I've cut down since my account has grown and now I am aiming for consistency and preservation instead of homeruns...albeit I should have went for the juggular last Thursday.

How about joining a prop firm and taking your skills there? They will give you access to trade bigger capital and you can start making big $, if your trading strat is solid as you say.
More...

I am planning on doing my masters in finance from a target university which is just an extra 10 months after I finish undergrad.

Trading my own account and then joining a prop firm next summer seems like the only opportunity I have right now and then join an institution after my masters depending on how successful I become as a prop trader.

The thing is I only trade currencies and index futures. No bonds, individual stocks, options or commodities outside of gold/silver.
 
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newwurldmn said:
Most institutions don't want to hire maverick traders. They want you to fill a role in a machine. They don't need you to be able to fill that role today as it's generally pretty specialized (like trading a particular sub-sector of stocks) but they want to know that you are trainable and will be successful. To this end, if you want to work in the institutional world, you need to prove to the institutions that you are trainable. The easiest way to to that, is to demonstrate your ability to learn in your undergraduate and graduate curriculums. A track record on a small account doesn't prove that you are trainable.

There are some institutional roles that do hire mavericks. For this role, think from the hiring managers perspective. If he's going to get paid or fired by the performance of his hiree, what will he look for that he can explain to his boss if the hiree doesn't work out? "I hired a 21yo from a state school who made 100% on a 10k account punting on fxcm with 50:1 leverage." probably won't carry as much weight as "I hired him to trade Asian currencies because he has a phd in economics from Penn State and studied China's monetary policy actions with respect to their economy"
More...

This one has deaf ears.
 
Fundlord said:
I plan on continuing to trade my account but as I said but it seems like a pipe dream to go from 8000$ (my original sum) to 8/9figures (personal monetary goal) in this day and age without taking absurd risk with a high chance of blowing up and losing it all.
More...
Hmmm.. I see.... 8/9 figures is a huge sum. Once again, just my gut reaction, but if you think you are worth that much money, if you think a firm will pay you this much money, then I assume you have to make multiples more of this for the firm. So this comes back to if you can trade or not.

Now I do think that there is a huge difference between trading for yourself, versus for a firm. Whereas you can easily get out of a position that is 10 or 20 contracts, doing this at an institution level would require a much different strategy. In fact, the fact that a retail trader can choose to stay out of the market if conditions aren't favorable, this is a bigger advantage over a fund that needs to always be invested in something in the market.

But since your goal is a huge paycheck, and trading is actually secondary importance, then I can see how getting in with a lucrative firm is more important.
 
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