My Experience at a Prop Firm

Quote from Don Bright:

Never really traded Naz stocks "back in the day" - sticking with NYSE listed (back then, primarily due to the execution methodology that was favoring the MM's way toooo much).
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When was this? Was it the time period between the end of SOES trading and before ECNs took center stage? I started in '98 when Island liquidity was taking off. I read about the glory days of SOES bandits, but I couldn't imagine what it was like between the end of SOES and before Island..

Never traded many listed stocks, always too many nightmare stories about the specialists. Now the specialist is dead & everyone is complaining about hybrid and how much worse it is. Ironic twist of fate, a lessor of two evils I suppose..
 
Quote from Trader KGB:

When was this? Was it the time period between the end of SOES trading and before ECNs took center stage? I started in '98 when Island liquidity was taking off. I read about the glory days of SOES bandits, but I couldn't imagine what it was like between the end of SOES and before Island..

Never traded many listed stocks, always too many nightmare stories about the specialists. Now the specialist is dead & everyone is complaining about hybrid and how much worse it is. Ironic twist of fate, a lessor of two evils I suppose..
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Those that complain about the Specialists, for the most part, simply don't understand how to trade on the same side as the Specialist. On the Naz, before SuperMontage, where all the MM's are now back in control (IMO), we did have a time of decent ECN trading of Naz stocks, but before that, the MM's actually had time to decide if they wanted to honor their bids/offers, which was absolutely insane, so we tended to go with the Listed stocks.

Nowadays, since we do so much quantitative trading, we don't worry so much about executions, merely pricing, and with the NMS rules, we don't have to worry about poor pricing (as much anyway).

And, FWIW, the Soes Bandit period was a joke, and most "bandits" ended being robbed in the long run.

Don
 
pineman,

I agree with your comments.

One day the only thing that will matter is the golden rule:

"Do unto others as you would want others to do unto you."

Tom
 
Quote from javs5150:

What are sweeps?
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Rather than closing the book when large orders come in, and then filling all the orders in the book at one price (providing price improvement), the hybrid simply sweeps each price down or up as needed, hitting every bid price/offer price. I like it because I still like to make "outside envelopes" - for example, if the NYSE bid is 42.10, and I'm a 42.02 bid, I sometimes get my order filled without the 42.10 bid fading away, and then simply hit the 42.10 bid (I'm not normally a scalper, but in these cases, I figure what the heck).

Don
 
Let me add here that many of you on this thread seem to be going after "equity" prop firms. While I agree that most of the "equity" only prop firms are gone, there are plenty of futures and options firms out there. No one seems to be attacking those. So again, please let's stay away from blanket statements like "all" prop firms are bad or "all" prop trading is going away. In fact, prop trading has never been stronger or more well capitalized.

Back to the original poster of this thread. Let me ask you a question, the firm that you traded for, the one with all the crooks and liars, etc, had you not traded for them, what was your alternative? Did you turn down a job at Goldman to work for them? Did UBS make you an offer? What about Susquehanna?

Some of you that scorn prop firms don't realize that you have NO choice but to go to those firms. These firms are giving you guys the opportunity to make an extraordinary income instead of flipping burgers. Be careful what you wish for.
 
Quote from CutsThrough:

I actually agree with the OP's general point about daytrading firms taking advantage of young college grads - pumping thier heads with the get rich quick mantra.

But, the fact is that manual labor (traders hitting keys) is the key input of thier business model. What's unfortunate is that they are not honest about this. I would like to see just one daytrading firm say that, yes, they make money from commission and that they view that as justifiable as they are giving a trader leverage and access to the market thereby drastically increases thier chances of making money - if they have a head for trading.

What often happens instead, however, is that the firm pitches itself as a place of independence and an opportunity that puts one's destiny on auto-pilot. Nothing could be further from the truth. The cognitive dissonance kicks in when the new trader, who thought he was going to get rich quick, comes in everyday and is panicking about being able to pay his rent or buy lunch that day while he's in thousands of shares of stock.

So, we really have two issues here:

1. Daytrading firms disguising thier busines model and preying on those who are not operating with full information (and are inexperienced in the ways of the world). I mean, what kind of business model bases its longevity on the inferiority (stupidity) of its key input?

2. There is a sample selection effect whereby daytrading firms draw in fish. These are guys who seek out failure, who place big bets and don't leave until they've given it all away. Last I checked, gambling was illegal in most states in order to stop people from hurting themselves in this way.

I'm not here to make a normative assessment about how daytrading firms prey on fish. I'm simply saying that it's co-creative. And the OP should first look at himself and the personality traits that made him fail. A fish is a fish. Yes, it's sad that daytrading firms are there to help you fail quicker, but walking in the door in the first place is one's own fault. And believe me, I'm speaking from experience.
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Excellent post, very much on point !

Thanks for speaking the truth unlike others !
 
Quote from TOM134:

pineman,

I agree with your comments.

One day the only thing that will matter is the golden rule:

"Do unto others as you would want others to do unto you."

Tom
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Fully Agree.....now that Prop model of scalping is dead and the well is almost empty....let me see who else is left for them to con !
 
Quote from Maverick74:

Let me add here that many of you on this thread seem to be going after "equity" prop firms. While I agree that most of the "equity" only prop firms are gone, there are plenty of futures and options firms out there. No one seems to be attacking those. So again, please let's stay away from blanket statements like "all" prop firms are bad or "all" prop trading is going away. In fact, prop trading has never been stronger or more well capitalized.

Back to the original poster of this thread. Let me ask you a question, the firm that you traded for, the one with all the crooks and liars, etc, had you not traded for them, what was your alternative? Did you turn down a job at Goldman to work for them? Did UBS make you an offer? What about Susquehanna?

Some of you that scorn prop firms don't realize that you have NO choice but to go to those firms. These firms are giving you guys the opportunity to make an extraordinary income instead of flipping burgers. Be careful what you wish for.
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Mr. Maverick74....

You are funny !

It is Pineman, anyway, re-read my 2nd post in this thread that will help you answer some of the questions that you feel are so far fetched or hard to believe !


I started out at DH Blair, 44 Wall St. so making money wasn't new to me....like i stated Bank of America took over my firm, I was a trader on the stock loan desk, so at 35 with everything in place I took my package....$ was not an issue for me !



As far as offers... i had an offer on the table for BONY, in West Patterson, turn it down, too far to travel, Had another offer for Prime Brokerage on the UBS desk, turn it down, you don't go from stock loan to Prime Brokerage !



As far as Props Firms, will like I stated, at least I ask questions, etc did my due diligence and still got conned, but i am glad I had a shot at a dream and found out that it was a nightmare for all the reasons before that i have stated....so unlike you, I was never down and out on my luck or was I rejected !


Never had my back against the wall or had to beg for lunch money, etc. I went in there with a clean heart to learn trading !




To tell you the truth, I was given a title shot( Job offer) by the Master of PROP TRADING Robert Kanter of ETGroup, note you have to wear a suit, professional setting, class act, at least when he first started out !



If I can recall he was at 150 Broadway back in '92, you put up no money, they paid you to learn the art of trading, etc.... I just starting a family then and the timing was bad coming from DH Blair. So for close to 15 years I was thinking man, i was given a shot....when I finally got in touch with him, he sold the business, i guess that should have been my sign that trading against the specialist is now a dead business....




Also, I had offers at Echo, my 2nd choice, and hold brothers, but I wanted to learn the ins and outs by the Master, in this case the head trader.....no one on here can't dispute the track record of ETG, they produce some of if not the best traders, I know of two now that have their own Hedge Funds, also, the Head trader on our sell side came from ETG.




I was just conned by a set of lowlife scums !




The main reasons why I made this thread is to warn naive college grads, like someone said, this business will mess them up mentally and financially !
 
Quote from Don Bright:

Rather than closing the book when large orders come in, and then filling all the orders in the book at one price (providing price improvement), the hybrid simply sweeps each price down or up as needed, hitting every bid price/offer price. I like it because I still like to make "outside envelopes" - for example, if the NYSE bid is 42.10, and I'm a 42.02 bid, I sometimes get my order filled without the 42.10 bid fading away, and then simply hit the 42.10 bid (I'm not normally a scalper, but in these cases, I figure what the heck).

Don
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How does one anticipate or see a sweep about to occur so they can put on a position to profit from the sweep?
 
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