Should I join this prop firm or keep trading for myself?

[tommcginnis]

No opportunities to transition to something else finance related outside the prop trading industry after you leave or "retire" from trading?

You should be doing that right now. *Every* trader should -- whatever "edge" gets us into the black right now, could disappear over the next quarter -- what are you going to do about it? What are you doing right now? Are you investigating other "indicators" than the ones you use now? Other time frames? Other markets? Other risk criteria? In a way, your investigations into an NYC prop are part of this -- absolutely. But maybe you'll codify your trading -- maybe you'll teach yourself Python, and formally code it. Maybe you'll put it into C or Java, and speed it up and allow for more size? Maybe you'll see an ad for a programmer that's worked in financial markets, and you can stroll up and observe, "Hello -- I've got the programming, the fin experience, *and* I come with my own proven algos" and they scoop you up, and you're headlining the next Angel Capital Club dinner-meeting.

"Always be learnin'!"

 

[Ajm1734]

There is a bunch of questions to answer first:
1. how does your strategy scale with size (e.g. would you be able to accomodate 10x the size)?
2. do you have other ideas that you want to research and that require institutional support?
3. are they going to give you any support/development help?
4. are they providing infrastructure that you need to run your strategies?
most importantly,
5. what is the end goal?
and finally
6. did you like the people you met?

If 5 is "I want to run my own large(er) business" or "i want to make money at a larger scale working for someone else", your best bet is to take the job - worst case you will have some connections. 1 - 4 will give you a sense of the quality of the opportunity; there are a lot of prop shops in the NYC and if you have interesting ideas you can find opportunities fairly easily. #6 is probably key - working for assholes in a risk-taking role is a very sad space to be (trust me, I know that situation well).

1. Maybe 3-4x more? Probably not 10x but maybe on some very liquid names I could go huge.

2. Yes, several.

3. Yes.

4. Yes, I really don't need much more support for what I currently do other than scaling it up, but for my other ideas I probably would need the support/infrastructure if I were to develop new strategies based on them.

5. I'd like to get big and branch out and become a bigger and more versatile trader. I'm not looking to stay small forever (then again if I made mid six figures and invested excess profits in long term dividend stocks would that be such a bad thing?) Maybe I'm greedy and getting ahead of myself but that's how I'm wired. Always thinking growth and expansion.

6. Yes, great people. Still, you never know until the lights come on and everyone's trading. And the environment wouldn't be what I'm used to trading as a lone wolf. So I think there'd be an adjustment period.

 

[sle]

1. Maybe 3-4x more? Probably not 10x but maybe on some very liquid names I could go huge.

Hmm. Not sure it makes sense assuming that's the only strategy. Here is my thinking, without knowing much about your strategy.
* Your current buying power right now is 800k and you think you have 3-4x that in terms of capacity. Let's conservatively assume that it's 3x at 2.4mm.
* You made 200k last year, so your return on smaller scale GMV was 25%. Assuming lower market volatility, and larger capacity requirements, you are probably talking 15%-ish returns on the new GMV.
* 15% * 2.4mm = 360k. Your share is 40%, so you are taking home 144k. You can probably make the same just trading your current capital.

4. Yes, I really don't need much more support for what I currently do other than scaling it up, but for my other ideas I probably would need the support/infrastructure if I were to develop new strategies based on them.

That is the key. If you have other actionable ideas, then having access to more capital and better infrastructure is worth the stretch. Also, do you think there is an opportunity to learn new products etc?

5. I'd like to get big and branch out and become a bigger and more versatile trader. I'm not looking to stay small forever (then again if I made mid six figures and invested excess profits in long term dividend stocks would that be such a bad thing?) Maybe I'm greedy and getting ahead of myself but that's how I'm wired. Always thinking growth and expansion.

Yeah, you are getting a bit ahead of yourself, but it's good to have an idea of where you want to be, IMHO.

 

[Ajm1734]

Hmm. Not sure it makes sense assuming that's the only strategy. Here is my thinking, without knowing much about your strategy.
* Your current buying power right now is 800k and you think you have 3-4x that in terms of capacity. Let's conservatively assume that it's 3x at 2.4mm.
* You made 200k last year, so your return on smaller scale GMV was 25%. Assuming lower market volatility, and larger capacity requirements, you are probably talking 15%-ish returns on the new GMV.
* 15% * 2.4mm = 360k. Your share is 40%, so you are taking home 144k. You can probably make the same just trading your current capital.


That is the key. If you have other actionable ideas, then having access to more capital and better infrastructure is worth the stretch. Also, do you think there is an opportunity to learn new products etc?


Yeah, you are getting a bit ahead of yourself, but it's good to have an idea of where you want to be, IMHO.

All good points. If a big deciding factor in moving is the better infrastructure and growth potential in multiple ways, what if I decided to stay as a retail trader and keep doing the same thing, get to a point where I've scaled my current edge to the max and stick to that, and the moment I sense or see that the edge is diminishing, I try to get on board with a firm with better infrastructure for other ideas? (I know, from the outside sounds like a very selfish way to look at things, but I do have to look out for myself in this situation). Or would that stunt my growth in exploring the new horizons?

 

[tommcginnis]

...A great back & forth, you two.

 

[sle]

Or would that stunt my growth in exploring the new horizons?

Do you think you going to learn new things from working at a prop shop? If it's a reasonably collaborative place, or if your boss is going to give you some guidance, you probably will and then it's worth doing. If it's a bucket shop (with gold plated buckets but buckets nonetheless), you might be miserable.

 

[Andras]

it very much depends on the dd of your trades. if the dd is very low, you have very low risk playing your own money, you can simply scale up yourself, why work for others?

Exactly, most times the issue is having low confidence on ourselves and we shy away from doing things, even when we can do them

 

[Arnie]

30, single and making money and you don't know if you should move to NY??

Man, start packing!

You are miles ahead of most guys just starting out in prop.

 

[Andras]

30, single and making money and you don't know if you should move to NY??

Man, start packing!

You are miles ahead of most guys just starting out in prop.

Am sure there might be other factors to consider, moving is not really easy. You have to think properly before you move.

 

[clockwork71]

"I like it here in Wisconsin"

I'm not sure you are thinking clearly right now... Just kidding! Good luck.

I'm almost sure its those cheese hats.

Although in all fairness, we wear Buckeye hats.