Proprietary and Self-Employed Financial Trading

[Want2Trade]

Is employment by a proprietary trading firm or similar workplace typically compatible with becoming a self-employed trader?

I have a BS in CompSci, and have recently realized my fascination with financial markets. I am currently educating myself in finance, as well as the math prerequisite to dabbling in machine learning. I have been considering applying for a job in the trading space, as in addition to building capital, this seems like a great opportunity to surround myself with experienced mentors and team members, without having to wander through the maze of advertised mentoring services that may be of questionable value. However, I would not want to bar myself contractually from building a self-employed trading business, and I'm not sure if this type of prohibition is common.

I realize that definitive clarity is only possible by reading a specific company's employment contract; I merely want to know whether this is a concern in general. Is it usually permissible for a proprietary trader to manage a personal trading business as well, or at least to start one if and when their employment ends? Is this a path that a significant number of eventually-self-employed traders take?

 

[IAS_LLC]

Depends what you mean by prop firm....If you're talking about Optiver, Jump, etc....you wont be able to trade anything outside of your retirement account and even then are required to hold positions for a minimum period of time (30 days is what I recall). Smaller firms may have different policies, but any big firm will have restrictions in place to eliminate conflicts of interest.

 

[Robert Morse]

Is employment by a proprietary trading firm or similar workplace typically compatible with becoming a self-employed trader?

• At traditional prop firm, you get a salary vs P/L with a W2. You're an employee.
• At a JBO prop firm with your money as first loss, you are a partner and get no salary and get paid with a K1. This is closer to self employment, because if you make no money trading, you get no pay.

 

[nooby_mcnoob]

I have been considering applying for a job in the trading space, as in addition to building capital, this seems like a great opportunity to surround myself with experienced mentors and team members, without having to wander through the maze of advertised mentoring services that may be of questionable value

Think about what you can do for them as opposed to the other way around.

 

[JSOP]

• At a JBO prop firm with your money as first loss, you are a partner and get no salary and get paid with a K1. This is closer to self employment, because if you make no money trading, you get no pay.

But your money is conmingled with the firm's money since you are the firm's partner not its client so they are not required to segregate your money with theirs. So tomorrow if they want, they can just disappear and there goes all your money. There has been stories of this sort being published on ET here. So be aware of all the risks and benefits of proprietary firms.

Honestly I don't know why everybody is now all of sudden "realizing their fascination with financial markets" when they have a stable job with guaranteed paycheque as long as they show up. Everybody is dreaming of becoming instantly rich when the S&P just experienced a 26% drop wiping out an entire year of gains just a month ago and huge hedge fund companies that used to manage billions of dollars of assets are closing their doors. And this guy wants to go into trading. LOL

Anyway...

 

[qlai]

when they have a stable job with guaranteed paycheque as long as they show up.

That is no longer true, if ever was. Globalization, fairly or unfairly, is leveling out wages. As one gets older, it's more difficult to complete for wages. At least in my industry.

 

[mushinseeker]

If you are good at math and great at comp sci or vice versa, get a job in Data science while taking a masters degree...w/ good experience and a MS degree, in 5 years you'd be at > $125k with a mid sized firm w/ a good work//life balance... spend $$ wisely, invest and you will be set by early 40's. I wish I took that path.Now if you are really good at the above AND don't mind the extremely competitive environment you can go into the hedge fund space as a quant and add another 20%? to that 125k...

 

[Stockolio]

If you are good at math and great at comp sci or vice versa, get a job in Data science while taking a masters degree...w/ good experience and a MS degree, in 5 years you'd be at > $125k with a mid sized firm w/ a good work//life balance... spend $$ wisely, invest and you will be set by early 40's. I wish I took that path.Now if you are really good at the above AND don't mind the extremely competitive environment you can go into the hedge fund space as a quant and add another 20%? to that 125k...

If you are really smart and understand the economy, why work for somebody else ? What are the advantages of being a worker in your opinion ?

 

[mushinseeker]

It's not an issue of working or not for 'the man'. I've been a FTE for a company for only about 5 years from 21 yo till 52. It's just the space I am commenting on. The trading space gives you the possibility of being a Ray Dahlio and be >$500m net worth. But for every Dahlio in the trading space, there is a Mark Beniof in the comp sci space. IOW, smarts is smarts and can be monetized in other arenas. Since he has a BSCS degree there are other paths other than trading.. example.. find 3-5 tools- Splunk, Workforce,etc and know it inside out see how much you can make.. I bet lots...

 

[JSOP]

That is no longer true, if ever was. Globalization, fairly or unfairly, is leveling out wages. As one gets older, it's more difficult to complete for wages. At least in my industry.

At least you won't lose more money than you have even when you lose your job to "globalization". Wait until the OP loses money in trading, let's see then if he/she still has his/her "fascination" with the financial markets.

I will still wish him/her the best in his/her trading endeavour but it just seems to be such a shame that one has invested so much into acquiring some valuable knowledge/skill in one area only to toss it away to go to a totally unrelated area of finance just for the money especially when the financial market is not even doing too well and one is not even going to be rewarded financially.