I think without a structural edge, most automated traders lose. Automation can't make negative expectancy positive. If you are simply asking can any strategy be automated in practice, sure. The firms in Chicago are automating because they have a "structural" edge and they found that replicating that edge thousands of times a day enhances their overall profitability.
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List of Montreal Props?
- Thread starter VielGeld
- Start date
I think without a structural edge, most automated traders lose. Automation can't make negative expectancy positive. If you are simply asking can any strategy be automated in practice, sure. The firms in Chicago are automating because they have a "structural" edge and they found that replicating that edge thousands of times a day enhances their overall profitability.
Quote from Maverick74:
Profitable traders have far more to gain going prop then trading in a retail account. It's the unprofitable traders that should stay retail to minimize fees until they are able to turn a profit.
Isn't one advantage of going props to minimize fees, especially with futures trading? Roundtrip fees are higher with a retail account. I can see advantages in technology (speed, automation, routing options) offered by prop firms that you listed. Could you list advantages for a manual trader?
Quote from tradingmanual:
Anyone with $75,000 can open a prop office.
I agree with Maverick74 that $75000 is low here. It seems like tradingmanual is talking about the model used by firms like Title Trading, WTS, .. (based in Canada), while Maverick is referring to the Chicago model (which is different from Don Bright model).
Quote from Maverick74:
Bank traders don't make shit. A good prop trader will make far more then a good bank trader. Think of a bank trader as working for the federal government. Good steady salary, good benefits, but very little upside.
Most major banks in Canada have prop desk and the upside is not "little" like you mentioned. A friend of mine works on TD Canada Trust prop desk. (The bank doesn't advertise for prop trading position and instead wants to keep its prop trading activity under the radar.) I agree with tradingmanual that, when compared to the model of "prop shops", not "trading firms", banks are where you want to work for.
You both have good points to make and it seems like you're looking at the issue from different viewpoints.
Quote from Don Bright:
And, don't forget to mention that many if not most retail firms trade against their own customers, match trades and all that.
In some situations this can work to a retail customer's advantage and I'm not talking about the insignificant price improvement that's actually front running.
Quote from tradingmanual:
maverick and don are in selling prop as that is their 'niche business' as there are traders that want 10:1 leverage or more.
Maverick isn't selling anything. He believes in the Chicago model and I've seen his extensive argument of the Chicago model vs. Don's model.
Quote from Maverick74:
If you think guys are making a living in a retail account trading then you probably also believe super models are sleeping with short bald fat guys. I can lead to the creek but I can't make you drink the water.
Some people a good living from a retail account. You can include me in this list. One just needs to try to find out about different options and where he/she wants to fit in.
tradingmanuals
Guest
That is the point, once a trader is 'profitable' at speedtrader there is no reason to work for a prop firm and the intra-day leverge for futures is same whehter it's prop or retail. the leverage pretty high even for retail. Why pay the firm a percentage of your profits and with computer automation why need manual traders. That is a catch 22 for prop firms. profitable traders leave the firm and trade thier own system. most work prop firms cause they don't have the capital to open even retail brokerage account to daytrade. or other reasons.
Quote from traderchi128:
Why
Do
You
Bother?
This guys is beyond clueless. I love how he believes profitable traders should trade retail and not go to a big firm where one can get big capital backing, access to top technology/analysts, and work with other top traders.
Nah..he's right....the good traders should stay at home and trade 5 lots of Russell futures in a t-shirt and sweat pants.
Gotta love ET.........
Quote from tradingmanuals:
That is the point, once a trader is 'profitable' at speedtrader there is no reason to work for a prop firm and the intra-day leverge for futures is same whehter it's prop or retail. the leverage pretty high even for retail. Why pay the firm a percentage of your profits and with computer automation why need manual traders. That is a catch 22 for prop firms. profitable traders leave the firm and trade thier own system. most work prop firms cause they don't have the capital to open even retail brokerage account to daytrade. or other reasons.
You continue to not understand the argument. You must be focusing on one type of firm when you make these arguments. As I told ES, all these firms are different. There are a million reasons why one would trade prop over retail. Could be tax reasons, commissions, the basis trade, technology, order flow, leverage, software, etc.
Most futures traders trade prop to trade the basis or some related trade. You can't do that in a retail account. These guys are not flipping e-minis all day long.
In the stock world, retail commissions are just too high. I'm sorry, even at IB they are horrendous and you don't even get the pass thru rebates.
Well, looks like this discussion has bloomed quite nicely.
To add my bit on HFT and all that: are they really all that bad? As far as I can tell, they've only really been affecting true scalpers, and they're in an arms race for the best tech at the best cost anyway. It's not a war that's going to end well once this edge has been milked to hell and back.
Anyway, prop firms. Thanks for the suggestions so far. Keep e'm coming!
To add my bit on HFT and all that: are they really all that bad? As far as I can tell, they've only really been affecting true scalpers, and they're in an arms race for the best tech at the best cost anyway. It's not a war that's going to end well once this edge has been milked to hell and back.
Anyway, prop firms. Thanks for the suggestions so far. Keep e'm coming!
Let me add a few words about prop trading for a canadian bank: yes it does exist - although, has someone mentioned, you never hear about it as banks keep this stuff very close to the vest.
A typical deal for a trader at the bank I used to work for was 75K base salary, buying power of 10 million, 1/3 of profits and a "desk" fee of 150k to pay IT, secretary, office, bloomberg and what not.
This is an extremely competitive environment and just to get in takes a great deal of luck on top of everything else. At the bank I used to work, they had what they called a "rotation" program that you had to do for 2 years in 4 different trading departments of the capital market division. After those 2 years only would a trader become prop trader if he as proven himself to management.
Now here are a few observations about this:
1) the guys and girls you are competing with just to get in the program have INSANE backgrounds! I have seen resumes of guys with 4.0 GPA from MIT, others who have been trading for big banks from around the world, computational finance geniuses and what not.
2) It is so hard to get in that when you are in you really dont want to mess up: if you have 2 loosing quarters, you are out. I can tell you for a fact that traders are so scared that they barely ever take risk and will finish the year basically flat (0-5% return). Of course that makes no sense for the bank but anyway thats the way it is.
3) For the prop trading desks, equities are for schmucks and if you hope to work for one of them, you better brush up on your fixed income knowledge. Smart money has and always will be in bonds, sorry if I break your bubble.
4) The really good traders eventually get their own hedge funds inside the banks with the banks seed money and may or may not be authorized to sollicit external clients. I know a few who have reached this holy grail and trust me they are not your average joe walking into a churn and burn prop shop!
A typical deal for a trader at the bank I used to work for was 75K base salary, buying power of 10 million, 1/3 of profits and a "desk" fee of 150k to pay IT, secretary, office, bloomberg and what not.
This is an extremely competitive environment and just to get in takes a great deal of luck on top of everything else. At the bank I used to work, they had what they called a "rotation" program that you had to do for 2 years in 4 different trading departments of the capital market division. After those 2 years only would a trader become prop trader if he as proven himself to management.
Now here are a few observations about this:
1) the guys and girls you are competing with just to get in the program have INSANE backgrounds! I have seen resumes of guys with 4.0 GPA from MIT, others who have been trading for big banks from around the world, computational finance geniuses and what not.
2) It is so hard to get in that when you are in you really dont want to mess up: if you have 2 loosing quarters, you are out. I can tell you for a fact that traders are so scared that they barely ever take risk and will finish the year basically flat (0-5% return). Of course that makes no sense for the bank but anyway thats the way it is.
3) For the prop trading desks, equities are for schmucks and if you hope to work for one of them, you better brush up on your fixed income knowledge. Smart money has and always will be in bonds, sorry if I break your bubble.
4) The really good traders eventually get their own hedge funds inside the banks with the banks seed money and may or may not be authorized to sollicit external clients. I know a few who have reached this holy grail and trust me they are not your average joe walking into a churn and burn prop shop!
Quote from VielGeld:
^ That sounds about right for a bank.
What if you have a lot of experience? Does that change anything or do they put credentials above anything else?
From what I have seen, doesn't mean a whole lot because they want to "mold" you the way they want. Experience is never going to hurt of course but I don't know exactly to what extend it does help.
Quote from VielGeld:
^ That sounds about right for a bank.
What if you have a lot of experience? Does that change anything or do they put credentials above anything else?
Experience = Managing millions of dollars with a good consistent track record and a strategy that's scalable.
Trading your own 5-6 digits account for a few years means pretty much nothing.
Quote from heiasafari:
Let me add a few words about prop trading for a canadian bank: yes it does exist - although, has someone mentioned, you never hear about it as banks keep this stuff very close to the vest.
A typical deal for a trader at the bank I used to work for was 75K base salary, buying power of 10 million, 1/3 of profits and a "desk" fee of 150k to pay IT, secretary, office, bloomberg and what not.
This is an extremely competitive environment and just to get in takes a great deal of luck on top of everything else. At the bank I used to work, they had what they called a "rotation" program that you had to do for 2 years in 4 different trading departments of the capital market division. After those 2 years only would a trader become prop trader if he as proven himself to management.
Now here are a few observations about this:
1) the guys and girls you are competing with just to get in the program have INSANE backgrounds! I have seen resumes of guys with 4.0 GPA from MIT, others who have been trading for big banks from around the world, computational finance geniuses and what not.
2) It is so hard to get in that when you are in you really dont want to mess up: if you have 2 loosing quarters, you are out. I can tell you for a fact that traders are so scared that they barely ever take risk and will finish the year basically flat (0-5% return). Of course that makes no sense for the bank but anyway thats the way it is.
3) For the prop trading desks, equities are for schmucks and if you hope to work for one of them, you better brush up on your fixed income knowledge. Smart money has and always will be in bonds, sorry if I break your bubble.
4) The really good traders eventually get their own hedge funds inside the banks with the banks seed money and may or may not be authorized to sollicit external clients. I know a few who have reached this holy grail and trust me they are not your average joe walking into a churn and burn prop shop!
It's the same here in terms of competitiveness. Only now with Dodd Frank, banks can no longer have internal hedge funds. And on top of that, most of our banks here got rid of their prop desks entirely.
Having said that, I lived in NY for two years and worked for what most people thought at the time was a bucket shop at 110 Wall Street. That was because the guys with the real resumes were at Goldman and JP Morgan. What those guys didn't know, was the people sitting around me were taking home 3 to 5 million a year. And those bankers sitting on a desk trading were making 150k base plus maybe 250k to 500k bonus. They also worked 80 hours a week, the guys at my firm worked about 50. The bank guys had 2 weeks vacation a year. The guys at my firm would take off the entire summer to bum around Europe. Trust me, the the bank is not the way to go.