Simple advice for those starting prop

Quote from Dogballoon:

Saw this comment by SDLT13 in a great thread started by limitdown. Just wanted to draw attention to it and throw it out there, as it's good, consolidated advice. Carry on with the afternoon doldrums :)

:

I have been a prop trader since 99. I ran a group of 25 traders a year into the business. We were big swingers and most of the guys made a killing. Here are some of the most important things I learned about this business.

Some people are doomed to failure because of their attitude.
Some people will fail because of their expecations. Others will fail because of their work ethic. And still others will fail for the usual reasons, discipline, money managment, etc.. If your serious about being a trader here is what I suggest:

First, start with a reputable firm where you dont have to worry about any capital investment you put in. Second, work for a group that has succsesful traders. I mean guys that are making atleast 2K a day on 100K tickets, a 2-4 cent average is a good trader on that volume. The most important thing to be succsefull is to have a good mentor, someone that will work hands on with you. This person will have a stake in you and you will probably not have a great deal. But that doesnt matter at first, the main thing is to learn to be profitable. Any good trader who can make those numbers will have a good enough system for you to learn.

Allow yourself atleast 6-9 months of learning and not making any money. You are launching a business it takes time to get it off the ground. If you have pressures to make money to pay expenses, you will put too much pressure on yourself and increase the chance of failure.

Stay away from negative people, negative perspectives. I read so much of it on this site. LEARN from your mistakes. Memorize every day in the market. If you trade XYZ, watch every trade go off, watch every level 2 movement. At the end of the day go over the charts, go over what happened and what could have tipped you off so you can look for it next time. STOP being pessimistic and starting working your ass off. ASK QUESTIONS. Figure out why something happened. I have learned so many patterns that institutions display when buying or selling, that over time I saw them get smarter and trade better for more liquidity.

Don't trade for pennies, trade for momentum, trade for the dollar. Trade stocks that move. Start with 100 shares, take your licks, and learn how to punch back. The best type of trading for me is when I know I am right or wrong right away. That is trading at the moment of truth. When you learn to be right, you will learn to punish them. When your wrong get out. Take losses, its part of the business. Dont be emotional, trade like your a computer. I hear all these guys talk about all the programs in the market. The programs have brought trading back for the real traders. The programs provide alot of liquidity and volatility in todays markets. I love them. They are so predictable.

Just some thoughts...
More...

Best advice I've seen in this place in a long time.:D
 
Quote from FulltimeTrainee:

ChaosNSX

Thanks very much for your helpful advices.

In fact, it's my second month in the prop. The first month I has graduated in the firm by using rebate trading. As result, I don't have much experience on trading volatile stocks and I still don't know any profitable setup to exploit. Anyway, I'm trying to find out these setups in my daily observation and trading. I do around 50 roundtrips a day with 200 share lots.

The way I trade, I look at ecn activity, when I feel the price is going up, I go long, when I feel the price is going down, I go short. If the price go against me 1 cent, I take the loss immediatly, I have been quite discipline. It depends a lot on how accurate my intuition is to the price direction. I would use the 1-min chart and the s&p future to help my intuition. I do have stochastic and few moving average on my chart, but I just look at them as reference, my final decision for entry and exit is always based on what I see on the level 2. I have been trading like this for 2 weeks now. It's not really successful yet. I'm about breakeven.

I know many here would advice newbies to start off with illiquid stocks with about 500k to 1 million volume. However, the stocks I trade are the most active NYSE stocks, because my style applies better on them, since I need to get in and out quick, I always need liquidity. I'm looking forward to develop and tweak my trading style till it becomes profitable.
More...
Im in Costa Rica...
those symbols you are trading are good for getting a couple of cents with huge volume... You cant expect to get any big moves out of them, the only way to go is higher volume. You're gonna get a lot of help in october when the ecns start paying rbates on nyse stocks, that'll probably boost your income. The good thing about those markets is that you can easily scale up to 10-15k shares, that's when you see the money.
what branch r u at?

Chaos, those symbols probably wont move 12 cents in the whole day...
 
Quote from eusdaiki:

Im in Costa Rica...
those symbols you are trading are good for getting a couple of cents with huge volume... You cant expect to get any big moves out of them, the only way to go is higher volume. You're gonna get a lot of help in october when the ecns start paying rbates on nyse stocks, that'll probably boost your income. The good thing about those markets is that you can easily scale up to 10-15k shares, that's when you see the money.
what branch r u at?

Chaos, those symbols probably wont move 12 cents in the whole day...
More...


Will the ecns on nyse charge as much as they charge on nasdaq stocks for taking out liquidity? If they do, that means I will have to tweak the way I entry and exit, I use market key all the time.

I'm at Montreal.

Those stocks do move over 12 cents a day. Today I short Ge at 34.99 twice, the first time I caught 3 cents, the second time I caught 15 cents.
 
The thread opening post is all great advice... except for just one little sentence:

<i>"Dont be emotional, trade like your a computer."</i>

Bullshit. Did you know that the absolute best way to ensure you remember something, is to feel strong emotional sensations while you experience it?

Most super-traders are always cool & collected, or at least they appear to be. However, I've met quite a few traders at the 7-figure level who are total hotheads. Loudly cursing, slamming their desks, shouting "Allahu Akbar" and shooting their AK's in the air after a particularly successful trade, etc.
Believe it or not, I routinely do all of those things (ok... maybe not the gunfire, but I do all the rest of it.)
 
Your behaviour doesnt change the fact that most newbies trade with too much emotions.
They shud not stick with their gut feel when a trade go against them.
This was the way I understood it headed at more or less newbies starting prop. trading.

Its completely different of a far more experienced trader (i.e. you obviously) go with his gut feel.

:)
 
You must log in or register to reply here.
Back
Top