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Payout/Salary structure in top prop firms?
- Thread starter ronin266
- Start date
traderchi128
Guest
Quote from Maverick74:
See, this is the problem. Equities and futures are two different things. I can't even think of a firm that exists in both spaces. There is no point to making markets in equities as the cash outlay is too intensive. If you want to be an HFT firm (not the same as market making), then you are way behind. You'll need to spend millions in technology just to catch up with the worst firm in the space. Same goes for HFT in the futures space. Seriously, just can this idea and find a good firm to work for. You have absolutely no idea how competitive this space is.
Actually Schonfeld/Opus, First NY, Schottenfeld...etc all exist in both spaces. Some also are trading options. It wasn't that way yrs ago, but with equity trading changing so drastically over the years, people had to make changes and trade other instruments.
Well, nobody had replied me to the question of the first post.....
Any trader at a normal prop please?. Looks that there are only arcades people around ET ffs. I know the payout structure of pure profit split firms. But i´m interested in the hybrid model that´s implemented in other firms.
Mav, why you find it so difficult to find a firm trading both instruments?. There are firms that trade far more than 2 things in various timeframes. Anyways, it doesn´t have ANYTHING to do with the damn payout structure that i´m asking about here. I know that you try to help etc, but common, you´re being over negative here, attacking the idea directly without giving any help.
Any trader at a normal prop please?. Looks that there are only arcades people around ET ffs. I know the payout structure of pure profit split firms. But i´m interested in the hybrid model that´s implemented in other firms.
Mav, why you find it so difficult to find a firm trading both instruments?. There are firms that trade far more than 2 things in various timeframes. Anyways, it doesn´t have ANYTHING to do with the damn payout structure that i´m asking about here. I know that you try to help etc, but common, you´re being over negative here, attacking the idea directly without giving any help.
Slightly off topic, but related:
Wouldn't starting a prop group be very cumbersome and very expensive? I would think the overhead of a prop group (where you are hiring new traders) would be very high. You would need a compliance guy, a CFO, a great risk manager, an HR person. This infrastructure would be comparable to an institutional statup hedgefund and would run like 700-1MM/year. Then you have market data, office space, etc. That could be another 100-200k/year.
If you are hiring 7-10 new traders (read college students) and want quality people. You'll have to pay salaries comparable to investment banks (70k + all the appropriate taxes = 100k.)
So your first year expenses would be about 1.5MM. To break even you would have to start with a capital base of like 5-10MM and that's assuming its all your own money (ie. no profit split with an LP, etc).
Are these economics reasonable, Don or Mav or anyone else who would know?
Wouldn't starting a prop group be very cumbersome and very expensive? I would think the overhead of a prop group (where you are hiring new traders) would be very high. You would need a compliance guy, a CFO, a great risk manager, an HR person. This infrastructure would be comparable to an institutional statup hedgefund and would run like 700-1MM/year. Then you have market data, office space, etc. That could be another 100-200k/year.
If you are hiring 7-10 new traders (read college students) and want quality people. You'll have to pay salaries comparable to investment banks (70k + all the appropriate taxes = 100k.)
So your first year expenses would be about 1.5MM. To break even you would have to start with a capital base of like 5-10MM and that's assuming its all your own money (ie. no profit split with an LP, etc).
Are these economics reasonable, Don or Mav or anyone else who would know?
Quote from newwurldmn:
Slightly off topic, but related:
Wouldn't starting a prop group be very cumbersome and very expensive? I would think the overhead of a prop group (where you are hiring new traders) would be very high. You would need a compliance guy, a CFO, a great risk manager, an HR person. This infrastructure would be comparable to an institutional statup hedgefund and would run like 700-1MM/year. Then you have market data, office space, etc. That could be another 100-200k/year.
If you are hiring 7-10 new traders (read college students) and want quality people. You'll have to pay salaries comparable to investment banks (70k + all the appropriate taxes = 100k.)
So your first year expenses would be about 1.5MM. To break even you would have to start with a capital base of like 5-10MM and that's assuming its all your own money (ie. no profit split with an LP, etc).
Are these economics reasonable, Don or Mav or anyone else who would know?
Those numbers sound about right. The overhead is outrageous. This guy is dreaming. He would be far better off going to an already existing prop firm and starting a group. Just last year he was actually looking to join a prop firm. Not sure whatever happened with that. But he should have stayed there if he ever got into one.
Quote from ronin266:
Well, nobody had replied me to the question of the first post.....
Any trader at a normal prop please?. Looks that there are only arcades people around ET ffs. I know the payout structure of pure profit split firms. But i´m interested in the hybrid model that´s implemented in other firms.
Mav, why you find it so difficult to find a firm trading both instruments?. There are firms that trade far more than 2 things in various timeframes. Anyways, it doesn´t have ANYTHING to do with the damn payout structure that i´m asking about here. I know that you try to help etc, but common, you´re being over negative here, attacking the idea directly without giving any help.
This has nothing to do with the products traded. I only brought that up because I don't think you have the slightest idea of the capital commitments needed to trade products that don't have offsetting margins. I'm not being negative, I'm being real. My best advice is go join an existing prop firm.
Quote from ronin266:
Mav,
Only Equities and Futures daytrading, mostly market-making and neutral strategies. The group will not be a big one, since the strategy needs close cooperation among a controllable group of people (2 experienced traders and 5-8 fresh newbies from college ,7-10 ppl max in total).
Do you use the expression "5-8 fresh newbies from college" as if they are not that bright and will take a very low salary because they are hungry to learn how to trade? This makes me seem like you are not willing to pay the right amount, and why not hire a monkey and sell the normal crap about equity and low salary......
If you were serious, we would be reading a proper business plan. And I don't mean some crap on Microsoft Word. right now you are here:
http://www.entrepreneur.com/article/81188
and you need to be here:
http://inventors.about.com/library/bl/toc/bl_biz_plan_1.htm
it's not the best, but it's more than you gave us.
you take us seriously, then we will take you seriously.
good luck
Quote from newwurldmn:
Wouldn't starting a prop group be very cumbersome and very expensive? I would think the overhead of a prop group (where you are hiring new traders) would be very high. You would need a compliance guy, a CFO, a great risk manager, an HR person. This infrastructure would be comparable to an institutional statup hedgefund and would run like 700-1MM/year. Then you have market data, office space, etc. That could be another 100-200k/year.
He does not need to hire a CFO, Risk Manager, Compliance guy, or a HR person. If it is a small group to start he can do all of the above.
Also a lot of people trade from home now with just basic high speed internet. Maybe he might have to spend a little money here to get some dedicated lines, but not going to cost you 1MM year.
Let's assume OP has low 7 figure of capital. He can just open a Prop IB account and he can be in business the next day. Does not sound to cumbersome to me...But I do agree with Mav, might be easier to run a sub-group.
Quote from operator:
He does not need to hire a CFO, Risk Manager, Compliance guy, or a HR person. If it is a small group to start he can do all of the above.
Also a lot of people trade from home now with just basic high speed internet. Maybe he might have to spend a little money here to get some dedicated lines, but not going to cost you 1MM year.
Let's assume OP has low 7 figure of capital. He can just open a Prop IB account and he can be in business the next day. Does not sound to cumbersome to me...But I do agree with Mav, might be easier to run a sub-group.
If he has 10 PM's, of which only 1 is a "trusted" guy; he'll need those services if he wants to ensure college kid #5 isn't trading on insider information or college kid #6 isn't embezzeling his money.
Then he needs a risk manager to ensure that all 12 books aren't really just short risk premium in different ways.
For christ sake, can anyone just answer my question??? LOL
I´m starting to get annoyed by all this negative stuff.
Mav, If you really would have good intentions you would simply pm me your arguments and everything would be fine, now that you´re just trolling in the thread, I see no use from your "experience/knowledge". Seriously, I had some respect for you due some of your old posts, but man, you just became a common ET troll.
I´ve a business plan, EVERYTHING is already calculated, EVERYTHING starting from the worst zombie apocalypse Armageddon nuclear war scenario. LOL
We will trade like a sub LOL. What were you thinking, that I´m gonna waste money trying to compete with the high tech collocated guys or starting a deep pocket prop office? LOL LOL LOL. Learn to read what one writes ffs.
I really didn´t received ANY info about my question till now. Maybe prop traders hired from college for this offices never had to join ET and waste their time here.
I´m starting to get annoyed by all this negative stuff.
Mav, If you really would have good intentions you would simply pm me your arguments and everything would be fine, now that you´re just trolling in the thread, I see no use from your "experience/knowledge". Seriously, I had some respect for you due some of your old posts, but man, you just became a common ET troll.
I´ve a business plan, EVERYTHING is already calculated, EVERYTHING starting from the worst zombie apocalypse Armageddon nuclear war scenario. LOL
We will trade like a sub LOL. What were you thinking, that I´m gonna waste money trying to compete with the high tech collocated guys or starting a deep pocket prop office? LOL LOL LOL. Learn to read what one writes ffs.
I really didn´t received ANY info about my question till now. Maybe prop traders hired from college for this offices never had to join ET and waste their time here.