Proprietary Trading vs. CTA

Quote from Lornz:

Chicago?

Why not head down to the Bahamas... :cool:

www.quantres.com (I have no affiliation with them)

But... If your system is any good, why not try to come up with the money on your own? The reward is much greater...
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Interesting! It looks like a dream work environment.... It looks like they are a prop firm in the real sense....
 
Ditto what bone said. 50% sliding is about right. If you get offered 40% or less it might not even be worth it. Most of these firm want intraday only and some retain profits up to a level so its 50/50 split on profits AND losses AND expenses ,starting from zero each quarter. If you're for real you can make money and people can tell when you describe what you're doing (there's only a few categories that work)
 
Quote from rosy2:

Ditto what bone said. 50% sliding is about right. If you get offered 40% or less it might not even be worth it. Most of these firm want intraday only and some retain profits up to a level so its 50/50 split on profits AND losses AND expenses ,starting from zero each quarter. If you're for real you can make money and people can tell when you describe what you're doing (there's only a few categories that work)
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Thanks rosy2. But this is contradicting what bone wrote for futures prop trading ('Chicago' firms). The traders are not supposed to take any capital risk...
 
Quote from chinook:

The traders are not supposed to take any capital risk...
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Well, they are going to fire you if you are $XXXXX amount in the hole.

If you get paid out for the second quarter bonus and suffer a big loss in the third quarter they are going to count that debit against Q1 and Q2's profit until you make up that difference. They are also going to have a commission haircut and a desk fee. They will do everything they can to nickel and dime you to death. If you are really good, and you leave some capital with the firm for 'float' - that's when you can get to that 75% split. If you are really really really really good most will make you a partner in the firm.
 
Quote from bone:

Well, they are going to fire you if you are $XXXXX amount in the hole.

If you get paid out for the second quarter bonus and suffer a big loss in the third quarter they are going to count that debit against Q1 and Q2's profit until you make up that difference. They are also going to have a commission haircut and a desk fee. They will do everything they can to nickel and dime you to death. If you are really good, and you leave some capital with the firm for 'float' - that's when you can get to that 75% split. If you are really really really really good most will make you a partner in the firm.
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Indeed, I was expecting to get %profit sharing for new equity highs, not during recovery from a drawdown.... Unnecessary fees and nickel and diming are the scary parts that I'm hoping I won't encounter...
 
Quote from rosy2:

(there's only a few categories that work)
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I've placed several clients here locally in Chicago. Spread traders and black box guys seem to dominate - I know of very few pure scalpers these days. Ten years ago they were all scalpers and the spread traders were a minority. IMO it just got harder and harder to hold a big scalp position with all the market turbulence. There was a time in the late 90's and early 2000's where there was just enough latency where manual scalpers using a good execution platform like X-Trader could do really well. These days you need to either have blinding speed and automated rules-based position management (the black box crowd) or you need some staying power and a better-behaved market to trade (the spread guys).

Most of the guys that I know that made the real FU money had some sort of unique quasi spread arbitrage going. Black box spread trading seems to be the ticket these days. That's why Harris Brumfield (Trading Technologies) bought Tick-it late last year.

http://www.tickit.com/
 
Quote from chinook:

Indeed, I was expecting to get %profit sharing for new equity highs, not during recovery from a drawdown.... Unnecessary fees and nickel and diming are the scary parts that I'm hoping I won't encounter...
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Well, if they are supplying the risk capital you need to look at it from their perspective and they surely feel obligated to extract their pound of flesh. At least these days the contracts conform to Illinois "At Will" employment statutes and you can walk. Up to five years ago the Chicago prop contracts were about the equivalent to indentured servitude - and I do not mean that as a joke (GHC).

The big thing these days is that none of the firms wants to take on what they perceive to be "risk". Automated, rules-based trading systems and spread / arbitrage strategies appear to be the preferred methodologies.
 
Quote from bone:

Well, if they are supplying the risk capital you need to look at it from their perspective and they surely feel obligated to extract their pound of flesh. At least these days the contracts conform to Illinois "At Will" employment statutes and you can walk. Up to five years ago the Chicago prop contracts were about the equivalent to indentured servitude - and I do not mean that as a joke (GHC).

The big thing these days is that none of the firms wants to take on what they perceive to be "risk". Automated, rules-based trading systems and spread / arbitrage strategies appear to be the preferred methodologies.
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Yes indeed, an automated, rules-based trading system is what I'll be offering. They will be supplying the risk capital; that's why I am interested to learn more about what kind of %profit split they're offering these days.
 
Correct but you aren't on the hook for the $XXXXX if you find yourself escorted to LaSalle St. one day. Trading losses accumulate indefinitely until they get worked off before a trader gets paid.

My desk fee was $1,200 per month but the commission rates they gave me were better than any rates I've gotten from a retail broker. They definitely try to nickel and dime you to death. If you consistently break even they will keep you on forever LOL.

Quote from bone:

Well, they are going to fire you if you are $XXXXX amount in the hole.

If you get paid out for the second quarter bonus and suffer a big loss in the third quarter they are going to count that debit against Q1 and Q2's profit until you make up that difference. They are also going to have a commission haircut and a desk fee. They will do everything they can to nickel and dime you to death. If you are really good, and you leave some capital with the firm for 'float' - that's when you can get to that 75% split. If you are really really really really good most will make you a partner in the firm.
More...
 
Quote from the1:

Correct but you aren't on the hook for the $XXXXX if you find yourself escorted to LaSalle St. one day. Trading losses accumulate indefinitely until they get worked off before a trader gets paid.

My desk fee was $1,200 per month but the commission rates they gave me were better than any rates I've gotten from a retail broker. They definitely try to nickel and dime you to death. If you consistently break even they will keep you on forever LOL.
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the1, I assume you didn't put in any risk capital? But I think the desk fee was in a way 'security premium' for the company.

What kind of %profit split were you working with?
 
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