'Prop" then drop

Several of my friends are prop shop traders. Me too worked at a similar one before. I tend to agree more with Bright. It's a lot of team effort, and working together to trade multiple markets and instruments.

The hire and fire type of firms do not have as high a burn rate as what Gridsman says, ironically because they tend to give full time employment only to interns who make money at least that was the impression I got. In a sense its fair, because it cant affect you too much if you get fired as an intern.

I quit bcos my boss paid me so low and the strategy that i was handled made so little money that my bonus would never make me comfortable. In the end I decided to change jobs and do something else altogether.

Here is an interesting article about how its like to work for a prop shop. Not much more than what you can read off this thread. But nonetheless interesting. http://finance4traders.blogspot.com/2009/06/tips-for-setting-up-your-own-trading.html.
 
Quote from handle_this:

Deal flow is an edge being on a desk with high volume.

Having a huge amount of money to trade with can become an edge if you can handle it, just as too little can be detrimental and not realistic.

Information is an edge obviously.

How is the difference between two companies equities an edge ? Lets stay statistically they correlate and then they come undone, you sell thinking statistically they will revert to mean, yet they blow out further. You find out later the insiders were buying and the leading company has "news" only a few knew about- how does a trader have the edge ?

Kepping a simple pairs trade example........ hypothetical, but could happen

With one trade you may not have an edge, but over many trades, you will find that you will have more winners then losers in pairs trading. That is your "statistical edge". Also, keeping winners larger then losers helps..

The trick is to exit your losers when they revert to the mean whether you have a profit or not. Remember, just because they revert to the mean doesn't mean you will have a profit... just get out.

It also helps to have a predetermined exit point on the position(both legs) for the un-forscene

But you will have an edge....
 
Quote from Midas:

You mean a revolving door of neophytes trading 100 share lots paying a desk fee make more for a company than several 100 experienced traders trading 1 to 5 (plus) million shares per month, plus haircut interest.

I don't think so.

You should think harder.

Experienced good traders have a lot of negotiating power and often bring down their costs & commissions to the point where the margins are very slim. They have more potential risk.

Remember Worldco? Their top traders were a net loss to the company.
 
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