Prop Futures Trading Firm

[gmst]

Quote from Maverick74:

By definition, all directional strategies can be scaled. These firms have a certain culture, I know that's hard for a lot of guys to understand, but it's true. They don't need to hire you to make a directional trade. They can do that themselves. And many of them do! BTW, just to prove my point, I have lots of friends that have successful CTA's. They have "audited" track records. Many of them tried to tap the prop route because they were getting tired of the audits and thought it would be easier to raise money. Not a one of them could get hired. Not one. All of them have documented performance going back years. The problem was, they were all directional guys.

Thanks Mav for this concrete information. Not one - wow! It really puts me in a more sober mood

After reading above, it seems that opening a CTA and raising 1-10 MM is easier than getting capital from a futures prop house to trade purely directional strategies.


Edit: I think and this is purely a guess - that getting into a prop futures house for a pure directional player might still be possible - but probably not in US. Maybe in some other country where financial markets/mindset is not this developed ....probably BRIC countries, maybe even Singapore....just guessing at this point.

 

[Feeman]

Quote from gmst:

You are offering a different viewpoint than bone and Mav - both respected traders. I am curious - what is your source of knowledge - do you work in a futures prop firm ? Or are you making an intelligent guess, especially about your 2nd paragraph? Thanks.

I have many friends in the hedge fund world as well as CTAs.

 

[bone]

Quote from Feeman:

And don't be believe they won't be interested in directional trading. These folks are in the business of making money. If you got something that's scales, they'll listen.

The OP and thread concerned the prop futures business model, and in that regard you are a bit naive in terms of what kind of trade appeals to them in terms of a potential new hire off the street.

 

[Feeman]

Quote from bone:

The OP and thread concerned the prop futures business model, and in that regard you are a bit naive in terms of what kind of trade appeals to them in terms of a potential new hire off the street.

Let me repeat this:

"I have many friends in the hedge fund world as well as CTAs."

Do you see the word prop in that comment?

 

[Maverick74]

Quote from Feeman:

It should be pointed out that if, in the unlikely event, you'd get hired by a reputable prop or hedge fund, the system you bring will no longer be exclusively yours. They will take ownership of it, dissect it and ascertain how it works, so be careful before you take the plunge.

And don't be believe they won't be interested in directional trading. These folks are in the business of making money. If you got something that's scales, they'll listen.

This quote of yours implied you were also referring to prop firms.

 

[Chicago_CTA]

Quote from Feeman:

It should be pointed out that if, in the unlikely event, you'd get hired by a reputable prop or hedge fund, the system you bring will no longer be exclusively yours. They will take ownership of it, dissect it and ascertain how it works, so be careful before you take the plunge.

And don't be believe they won't be interested in directional trading. These folks are in the business of making money. If you got something that's scales, they'll listen.

This has always scared me about approaching any futures prop firms. They'd love to steal your idea, program it into an algorithm and leave you useless to them.

If you have good techniques & methods, better to raise private capital. Just my opinion.

 

[Feeman]

Quote from Maverick74:

By definition, all directional strategies can be scaled.

But in reality they can't, especially if your trading illiquid electronic instruments like FX E-mini Dow, most grains, metals and energies.

So if your strategy trades ES, ZN, or FESX to name a few, size won't disrupt the market.

 

[Feeman]

Quote from Maverick74:

This quote of yours implied you were also referring to prop firms.

Agreed, I should have deleted prop.

 

[Maverick74]

Quote from Feeman:

But in reality they can't, especially if your trading illiquid electronic instruments like FX E-mini Dow, most grains, metals and energies.

So if your strategy trades ES, ZN, or FESX to name a few, size won't disrupt the market.

Huh? FX is illiquid? The Dow? Metals? Have you heard of the LME? Energy? The most liquid contract in the world. You realize the cash markets for these products dwarfs the futures markets right?

 

[Feeman]

Quote from Maverick74:

Huh? FX is illiquid? The Dow? Metals? Have you heard of the LME? Energy? The most liquid contract in the world. You realize the cash markets for these products dwarfs the futures markets right?

I'm speaking of FX futures such as those traded on CME; ditto for the other instruments. There is little liquidity in YM, CL, SI, ZW and many others.

The OP is talking about FUTURES as far as I can tell.