Non-Employees Trading Prop Shop Money

[cjbuckley4]

A corollary question is: Why do all prop shops want kids just out of college and as employees. Why can't we - aging in range from 40-66 (mostly Ph.Ds in statistics and CS) - just trade someone else's capital, make them a fairly interesting amount of money in a short period of time, and be on our ways?

They want kids out of [a top STEM] college because we're industrious and open minded. We'll work 60 hours a week for 100K plus bonus without batting an eye. We don't come in thinking we already know what's going on. They aren't running a brothel, they don't want people that earn them money short term and get out of their ways...they want career minded people who respect their IP and trading methodology enough to know its gonna take more than a couple months to gain an appreciable knowledge of the industry, let alone sail away on a yacht to start their own firm.

With all due respect, I think this thread is a perfect example of this phenomenon. I know a lot more than three prop companies who COULD do what you want to do. I honestly don't know of any who would, so I don't think it's worth mentioning them. I've been offered interviews with probably 15 different shops this year. There's selection bias here, because I wanted good training, not a high stakes arcade of sorts like you seem to want, but the few I interviewed with and am now acquainted with just wouldn't be interested. They have 200+ really smart people who know their role. Their highest volume SPX trader will still have a beer with the back office compliance software guys and the back off software guys know they could probably get a job at Google/Facebook/Microsoft if they shopped around. They don't have room for a group of guys who undervalue the prop shop and overvalue their own experience. Don't bother with the Jumps, HRTs, Tezas of the world, that's not gonna be your sweet spot.

TL;DR: they hire us because we're just as capable as a PhD but we're cheaper and want equitable relationships with our employers. Reasonable short term pay + knowledge in exchange for hardwork + a desire to contribute to the team.

Since you really aren't getting what you want here and I don't want to just berate you, the closest thing I know of to what you want that might be interested is HTG Partners. I have no experience with them and only anecdotal knowledge.

 

[aucociscokid]

Thanks, for pointing out HTG.

Does anyone actually know anybody over there? I got voicemail when I called an automated response when I sent an email. We're reluctant to send our strategies off into cyberspace as they seem to want. Would just welcome the opportunity to speak briefly with somebody there first.

Regret that I left the impression we undervalue prop shops and over-value our strategies. As I said, we engineer strategies and algo program them. We've never actually traded a $ ourselves. We are realistic that, should we enter into a relationship with a capital provider, the split would be in the provider of the capital's favor. We're just looking for a better split than we've received in the past. As I said, we two banks traded the same strategy of ours and made billions each; we got $150k from each, a total of $300k out of which we had to pay our team. That's also why - despite Rentec using our strategies - we wouldn't go back to them.

As I said, we develop and program strategies, but we come as a team. We're more than willing to work long term for a prop shop. We're a strategy factory. Let some shop make us an offer, keeping in mind that the goal is for us to put together maybe $200k ASAP to trade ourselves.

We're professionals with proven track records and established reputations. We're not gamblers or playing high-stakes arcade games.

 

[ScalperJoe]

Thanks for that Xela....very interesting.
re: "Achieve an Average Net P&L greater than $0 for each product traded (evaluated at the end of the 10th trading day)"
That is the only rule for the 10 day period that could be difficult to meet.
Many systems can easily go into drawdown mode for 10 days or more.
Thus, it's best to only trade one or two instruments during the 10 day trial.

Yes, on the 11th day of the live account, you are only backed with the maintenance margin for the product(s) you are trading. The equity becomes your maximum allowable draw.

For example, on day 11 if your net profit is $300, then you have $300 to lose before being sent back to the combine.

Therefore, the MOST IMPORTANT metric is the amount of equity you build on days 1-10 of the live account, since that is the accurate comparison to opening a retail account (i.e. the substitute to TST) and trading with your own funds.

 

[syswizard]

Thanks for the clarification.

 

[DT3]

Yes, on the 11th day of the live account, you are only backed with the maintenance margin for the product(s) you are trading. The equity becomes your maximum allowable draw.

For example, on day 11 if your net profit is $300, then you have $300 to lose before being sent back to the combine.

Therefore, the MOST IMPORTANT metric is the amount of equity you build on days 1-10 of the live account, since that is the accurate comparison to opening a retail account (i.e. the substitute to TST) and trading with your own funds.

This is probable wrong thread for this but where are you getting this from?

No where on the site does it say the equity you build in the first 10 days becomes your stop out point. The only thing different between the first 10 days and after is that you're asked to be 45% profitable and show you made more then $0.

 

[aucociscokid]

Once a true alpha is calculated for a daily, SPY long/short strategy, would it be possible to interest a prop shop in trading it? Or trade managed accounts, or having a fund built around it by others? Or otherwise make money with it using OPM? The "true alpha" would be 20%+ annually.

As mentioned, we're a group of primarily academics. Institutions, funds, etc. have made money trading our strategies. Our business plan is to develop strategies such as the one above with the intent of others trading them in order to generate money to continue R&D on others, such as a 1-minute (or more realistically 1-hour) long/short one. The 1st strategy will be "alpha tested" by the new year. Once that one is cash flowing we can do forex, FI, commodities, etc. in 3-6 months. Daily strategies tend to require significant amounts to trade, but also throw off significant returns. Shorter ones, less money to trade, even larger returns.

 

[ScalperJoe]

This is probable wrong thread for this but where are you getting this from?

No where on the site does it say the equity you build in the first 10 days becomes your stop out point. The only thing different between the first 10 days and after is that you're asked to be 45% profitable and show you made more then $0.

"No where on the site does it say the equity you build in the first 10 days becomes your stop out point."

Click the link. Fourth bullet point on the right under Funded Trader Rules (11+ Days)

https://topsteptrader.desk.com/customer/portal/articles/1950861-funded-trader-rules

• Ensure my Account Balance does not return to $0

When you start the live account, you have a "$0" starting balance. Therefore the equity you build on Days 1 to 10 becomes your "stop out point" since by their own rules, your balance cannot return back to the starting balance, which is $0.