Schonfeld Traders R.I.P.

Pareto's ratios were not just 80/20, thats the minimum. In nature and human performance there are other ratios that are also common : 90/10, 95/5 and 99/1. Study a little bit about worldwide wealth distribution, or pea plant production distribution and you might find coincidences in the data.

Anyway, one thing this brought up for me is the number of posts i have seen where veteran traders (im assuming) say stuff like you ahve to work every hour of the market day, extra hours after the close, etc to make a good living.

Maybe initially the inundation of data seems productive or necessary. But my experience in applying Pareto's knowledge to trading ended up looking something like this change;

1. before - study 100s of charts, read news, do financial research, watch cnbc bloomberg, go to trading meetings, get employed by firm, trade all day for firm, commute 2 hours each day.

2. now - run programmed scans for trading setups (5 minutes), organize new candidates with archived candidates (10 minutes), backup all data (5 mintues) thats day before or after close work from on room in my home.

trading day - fire computers up 30 min before open, check sheets, trade actively 2 hours, take 1.5 to 2.5 hour break, cautiously trade the closing 2 hours. Close trades and cancel open orders before close. save layouts,

3. repeat.

so basically in 4.5 hours a day i run this business, some days even less, thank you wilfred pareto. i will work extra when im simplifying this process...with the goal of yielding more time for other endeavors. i didn't mention i ditched all news cnbc bloomberg..all the noise...sometime i check bloomberg website just to snapshot where the other markets are trading when im up like tonight.

thats it.
 
trader taxes are simple.....get k-1, file schedule e, list reasonalbe unreimbursed partnership expenses (which are usually very small), the trading part of taxes is done in about 20 minutes .
 
The WSJ ran a few stories about prop traders leaving big banks due to new restrictions on prop trading under Fin Reg - which pundits expect will pass the Senate soon.

Schonfeld was listed as one of the prop trading firms that bank prop traders may wind up going to.

This may be another reason why Schonfeld let go the smaller under-performing traders, to free up desk and office space for these big-bank-big-time traders. I also agree that all successful businesses prune out under-performers.

I saw on one of the threads (at Elite or elsewhere) that someone said that Goldman was pressuring its prop trading firm clients over FINRA Regulatory Notice 10-18 (the notice looking for beneficial-owners). Many prop trading firms are not regulated by FINRA but (I believe) Goldman is.
 
Quote from Robert A. Green:


This may be another reason why Schonfeld let go the smaller under-performing traders, to free up desk and office space for these big-bank-big-time traders.
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Would not make much sense. The bank prop traders lose their edge if they leave the bank. Schonfeld and other bigger prop firms have been through this before in the past. A few might be able to keep their edge through certain connections, but most lose it.
 
"to free up desk and office space for these big-bank-big-time traders"

1. These types will demand a very high level of IT infrastructure performance if their domain is HFT - surely every big prop firm thinks that their build and staffing is at that level, but a firm like Tower Capital might have an edge over Schonfeld in that regard.

2. These types will demand a very high level of ongoing capital committment and risk tolerance if their domain is not HFT - they are carrying substantial positions.

3. They are not going to sit in a big space with the other traders. IMO it would be a victory to get them to take any kind of space in a firm's central office unless it's an IB with a Manhattan address. I have a headhunter in London who specializes in placing capital with these types - if they have the track record they have little problem getting capital placements on their terms. There is alot of sidelines cash laying about at the moment from equities and fixed income liquidations - only a portion stays with precious metals and energy.
 
Swing/ position traders wont have this problem :) Algo's arn't much, if any, of a threat on the daily charts. I'll probably get flamed for saying this, but how long till the day traders here on ET realize that unless they can successfully automate their trading, they don't stand much of a chance? Guys like Lescor are the future going foreward in the intraday enviroment.

Kon
 
I've been day trading from home for 3yrs. So I dont understand why people trade other peoples money? If you have 50K to start out and have a little education and a plan, you should be making 100-200K/ year after 18-24ths and if not, then you should not be in this business.

I would like to see how these so called high flying traders at GS and other banks do when they trade their own money. My guess is crap otherwise why would they trade other peoples money ?

Lets face it once you are profitable over 18mths and have strict loss limits. It then just becomes a matter of how many zeros to trade.

I think most independent traders cant really go over risk units of $1000 with a 3:1 target just to hard to enter exit on an intra day basis. This limits your earnings to 500-1000K/year.

Which for me is fine as I'm on the west coast and focus on gappers and like to finish trading by 11:15EST. I do throw a few core trades out there always SSO/SDS plays on the SPY.
 
man are you serious, they are closing shop over 50-75k, what kind of traders are employing over there, if thats all they making they should closed long ago
 
Quote from slapshot:

I too have noticed what "seems" to be more bots lately.

However, the size that they seem to be trading is pretty small for the most part, at least in e-minis and Euro contracts. At least this is my perception anyway.

I can't remember the last time I saw a 200 or 300 or 500 contract print on ES. I used to see them all the time at breakouts. Instead I see a whole bunch of 1 and 5 and 10 car trading getting pinged back forth by small traders and bots from S/R levels - with no big size hardly ever coming in to run the bots and pikers over like used to happen frequently in the past. The markets just seem "quiet" all the time. There is little frantic buying or selling.

I believe this is a problem that is actually amplified by what seems to me to be a lack of "crowd" trading. There have been so many failed breakouts and patterns lately.

My personal opinon is that due to the horrible economic policies of this administration (specifically the last 4 years of Frank/Dodd) that have brought the USA to it's f***ing knees, that too many big players are simply content to sit or trade small. They are all trying to stay off the radar of legislators and/or keeping their risk smaller.

The markets are still scared 2 years after the "crisis", the "recovery" is all government and media spin. Unemployment still sucks. The new proposed laws (and the mindset) has not revived very much.

I am pretty confident that if employment ever gets better and the Dems are stopped from getting ready to tax and target the Golden Goose (retirement funds) and other horrible ideas they have proposed, that things will pick up someday.

Meanwhile, trade 1/2 size and be more patient.


Ive been seeing and saying the same thing since march of 09. Thats when the US essentially collapsed and all the insanely stupid policies of wall street and the idiot federal reserve took over. No one can make a judgement about the future. There is even more debt than before and even more confusion. People complain about HFT which may be a problem, but when you destroy the economy wipeout peoples savings it screws things up really badly


Just my .02, I can't actually prove any of it.
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good read. Yes picking up pennies intraday is a dead game. whether you scalping, tape reading, trading the open those edges are gone or so small these days. I used to trade this way, but I couldn't do it anymore after a while

I tend to hold my trades intraday for a long period of time so I'm not 100% worried about being flushed out/flashed


Its a tough game out there.
 
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