Prop Futures Trading Frequency & Style

[Load_the_boat]

I have an interview this summer with a Prop Futures Firm. My concerns which I have only partially expressed with this firm is the number of trades I will be expected to make in an average day and being able to choose what I want to trade and how I want to trade it. I understand that traders will vary greatly within a firm but I just wonder how many possible trades I can take in an average day. I realize it doesn't make sense to make just a few trades each day but don't have any idea what the lowest trading frequency threshold is with some of these firms. Also I want to be able to trade products I'm comfortable with trading. For instance, the ER2 Russell Index would be at the top of my list but I would be willing to try other products as well.

I feel I would be hard pressed to make over a dozen trades in an avg trading day with the ER2 for instance. I suppose this could change with experience but I think from my own trading experience with futures (only 1 month retail) I would estimate I would make between 6-12 trades on a typical trading day. I would rather do size on a fewer number of trades then be strongly encouraged to trade 50 times a day. As far as my definition of a trade would be getting in at 1-3 price levels (sometimes avg in and other times adding to a winner) for a particular trade and that would count as just 1 trade even though I may get filled at diff levels.

As far as trading style goes I would like to set my own parameters on initial risk, break even stops, profit targets. Don't want to be risking a few ticks to make several ticks on the ER2 for instance.

I want to do prop rather than retail so I can work up to a bigger size much quicker as I have limited trading funds. Although I think some of the training will be beneficial I won't depend on it to teach me how to trade.

I guess I don't understand the Futures prop model too well. Do most firms make the lion's share of profits from a % they take from traders profits? What % from commissions and desk fees? I also wonder how many traders trade more than one product on a daily basis?

I realize each firm is very different but would be interested in hearing from traders and their experiences with different firms.

Thanks,
Load_the_boat

 

[Lefty62151]

Hello:

I realize that my office does things differently than many. For us, it is not how many trades you make, but how profitable you are. What we find is that profitability is a function of smart use of capital. Specifically the most profitable traders know how to recognize opportunities and they put as much capital as they can to use when the risk to reward is very favorable.

Based on your post, it may be that you don't yet have a systematic approach to the markets. That means you don't have an edge. Perhaps the firm you land with will teach you, or it may come to you in an inspirational moment (church for instance). Perhaps you will learn to channel one of history's great traders and use their skills. I understand that some practioners of hypnosis claim to be able to induce a trance state so you can get in touch with deceased traders like Gann and Livermore. I am sure you will do just fine.

Good luck

Lefty

 

[TSGannGalt]

Quote from Lefty62151:

Hello:

I realize that my office does things differently than many. For us, it is not how many trades you make, but how profitable you are. What we find is that profitability is a function of smart use of capital. Specifically the most profitable traders know how to recognize opportunities and they put as much capital as they can to use when the risk to reward is very favorable.

Based on your post, it may be that you don't yet have a systematic approach to the markets. That means you don't have an edge. Perhaps the firm you land with will teach you, or it may come to you in an inspirational moment (church for instance). Perhaps you will learn to channel one of history's great traders and use their skills. I understand that some practioners of hypnosis claim to be able to induce a trance state so you can get in touch with deceased traders like Gann and Livermore. I am sure you will do just fine.

Good luck

Lefty

Good advice as usual, Lefty.

 

[FredBloggs]

remember that a prop shop will offer lower costs than you currently pay as a retail trader.

this can obviously affect your trading style.

lower costs means you can feasibly scalp for a few ticks. this will mean you could well identify more opportunities.

id keep an open mind. the last thing a prop shop will want is some new unknown risk coming through the door demanding he trades his method.

nothing to say you cant trade your method alongside another method requiring a higher frequency of trading.

who knows - they may be totally ok with you doing as you please! so keep an open mind.

good luck

 

[Load_the_boat]

Thanks for the advice Fred I'll try to keep an open mind. Yes Lefty maybe I'll dust off my Ouija board and get a hold of Jesse Livermore for some trading tips, thanks for that pearl of wisdom.....

 

[cornholetrading]

It really depends on the firm you go with. Some like to scalp it up and have their traders doing 40-100+ trades a day and others don't care as long as you are making money. I would say that almost all of the higher volume traders have cut down drastically in the last year. Where they use to trade 20-50 times a day now they trade 5-15. One thing though is sometimes if you are new to trading or to trading futures a firm might want you to start out trading more in order to figure out the market, make mistakes, and try to figure out something that works for you. They want you doing this trading 1 lots where if you get beat up you actually don't lose that much. In theory it would speed the learning curve up. After a little while though you will see if your firm is pressuring you to trade a lot to make money on commissions from you or if they are more concerned with you making money. Trading well regardless of volume is the key. What they watch out for though are those that do not trade much and do not make any money. Then it comes across like the person is either not trying hard enough to find good trades or is too scared to hit the mouse from fear of making a mistake or losing money.