Prop Today vs 10 Years Ago?

C

canuck

I used to prop trade equities for several years about a decade ago, and am now seriously considering going back to it.

I know a lot has changed, but wanted some feedback from you guys as to what to expect and how to adjust my style. I understand that prop today is much harder than it was a decade ago, I'm trying to fully understand the environment before jumping in again.

1) Are there less prop traders trading directional/breakout strategies because computers and rebate trading dampen moves?

2) What's the dominant and profitable style of prop trading - directional, rebate, arb, etc ?

3) Are there still guys banging away hundreds of trades per day or are people picking spots and trading less but going big in terms of size?

4) Do most guys still focus more on the high volume opening and closing?

5) Anyone else from the early 00's have any feedback on how the market has changed?

Thanks guys, I appreciate any info!
 
Would like to hear some useful answers to the OPs question, instead of the inevitable.. "HFT's have ruined it for everybody.." Like it was ever easy..

Trying to make it work with Forex.. Love the MT platform, and leverage, no registration, fund with credit card. Just can't get the same win consistency I get w/stocks.. :(
 
Quote from jtrader99:

I think they used to actually make money ten years ago.

LOL!
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You need to define they. If they= owners, then as long as they have traders, they could win but not lose. If they=traders, as a group I believe they lose. If prop trading were good, the OP would have been on the f..... list and not quit it 10 years ago to be back now.
 
Quote from esc_trader:


Trying to make it work with Forex.. Love the MT platform, and leverage, no registration, fund with credit card. Just can't get the same win consistency I get w/stocks.. :(
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That is because it is a negative sum. Stocks in a bull leg is a positive sum. Since you do not make it in forex, it shows that one does not have skills or that skills cannot be gotten in zero sum.
 
Quote from canuck:



2) What's the dominant and profitable style of prop trading - directional, rebate, arb, etc ?
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If I were a prop trader, my dominant style would be to put money in my cash account, assuming the prop firm owner does not have an option to hold it for some time, which would mean I would given him options for free.

If I were a prop firm owner, my dominant style would be any style that brings commissions and profits from the activities of my traders.
 
@canuck: where did you trade 10 years ago?

I used to trade with Swifttrade (Ottawa then Montreal) and made tons of cash in rebates, arb, and hft. It was easier back then because we took advantage of many glitches.

Wasn't really trading since it was mostly gimmicks.

Then it all started to become more and more efficient which had a negative impact on our bottom line.

Some traders adapted or had different styles and kept making money. I had to quit I was barely making $2 to $3k per month, keeping 30% of that!

I am now a banker, although thinking of trying prop trading equities myself again after 10 years as well :D
 
1) Are there less prop traders trading directional/breakout strategies because computers and rebate trading dampen moves?

QE has hurt volatility. HFTs have helped liquidity.

2) What's the dominant and profitable style of prop trading - directional, rebate, arb, etc ?

None of the above.

3) Are there still guys banging away hundreds of trades per day or are people picking spots and trading less but going big in terms of size?

Both but less of each.

4) Do most guys still focus more on the high volume opening and closing?

Many do.

5) Anyone else from the early 00's have any feedback on how the market has changed?

Regulations have hurt small investors. More barriers to entry and more costs associated with leverage and trading. Lots of scams going around.

Thanks guys, I appreciate any info!
 
Quote from EvOTraderV2:


2) What's the dominant and profitable style of prop trading - directional, rebate, arb, etc ?

None of the above.

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Thanks for the feedback!

Are you saying there is no dominant style or the dominant style is something different?

RE: Zino, yes I was a Swift guy ;)

I left because I was able to get a job trading at a hedge fund. Long story, but the fund became all quant, at the end I wasn't even trading, just helping program models as the computer techies didn't know a bid from an ask.

The fund eventually died a while back, and I'm at a crossroad. While I 'can' program, I'm certainly not a programmer. No hedge fund will hire a guy without full programming degree with C+, Python etc.... unless I have a ready-to-go model.

And I still love trading. While I traded futures for years, in my own account I've been very successful trading equities with a long-term long/short absolute return style. The problem is that I can't exactly count on $X per month, some trades I've had on for years (ex. Google)

So with my love of trading, I've thought about getting back into equities. Futures I've traded, but I think if I incorporated my successful long-term strategies into intra-day trading, I should be able to have an edge.

While I've thought about a PM role, they prefer full CFA's, which will take me several years to obtain. Which is frustrating, since my performance over the past few years has been much better than the typical mutual fund PM of under-performing a 'benchmark' by a few basis points.

According to this thread, intra-day equities trading sounds impossible. I find that hard to believe, as I use my own levels for long-term entries and exits.

Is the consensus that intra-day equities trading is dead? I don't mean 1,000 trades per day, I mean putting on several large trades. I'm not interested in competing with the computers, but looking at larger intra-day moves.

I appreciate the feedback
 
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