The top 3 guys who make over 1 million a year at my firm...

I think you may have misread my post. I wasn't asking you to repeat all your experiences, I was trying to encourage others that spread (others ... as in NOT YOU!) to report if this is useful information in their trading.

I'm not challanging your experience or suggesting there is anything wrong with your style of trading. You are clearly in the right firm learning very interesting techniques. I'm just trying to move beyond a self centered view of the information and see what spreaders with less experience -- less or no trench time -- have gained from your posts. We know the tree has fallen in the forsest (you have told us that ... and then told us again) now I want to see if anyone has heard the sound and if any of those that have heard it are actual spreaders that have learned something. Many ET threads, even those written by interesting guys doing interesting things, end up as having only entertainment value. I'm hoping someone will come back and ratify that your thread has actual trading value in their little trench.

BTW ... when I say someone, I do mean someone other than you!!

Quote from s0mmi:

>> It's easy for me to have stories to tell from the trenches because I'm doing this every single day and its a 24/7 career. Also I have seen the numbers... I know the amount of people coming in, leaving... and I have a very reliable estimate as to how much 'risk' someone makes and how much they would take home per year. And trust me, the number is not pretty. It's actually pretty shocking.

Put it this way, from all the traders I've heard about, and seen, and all the successful guys, and the ones I have sussed out info from... it seems like for us to make 250k/year on a 75% split, the average punter would need a max stop/risk threshold of ~20k daily. It gets tested over 6k about twice a month. Where it lands for the day is random. This isn't someone who is using the model of 'high activity trading' for rebates, though as their return would be much much less (due to their very short stop losses and high rate of churning).

This already means a deposit in the account. This isn't counting a rogue 3-months where some huge announcements come, like out-of-nowhere ECB announcements etc.

>> I wish there were big outrighters at my firm who were consistent and had great ideas enough to provide useful information for but unfortunately there aren't. When we had little 'class talks' with the biggest guys in the firms, all on separate occasions they mention the necessity for spreading as a solid and reliable edge over time.

They said, even if you don't spread two legs, always watch for the relative value and if you're buying something then buy it because it's cheap relative to something else etc.

We used to have a huge number of outrighters in the office. 90% of the office was outright only. But this was between 2007-2011. Most of them are all gone. They never adapted. They would see spreading as stupid and useless and never believed it. They never really tried to give it a go. Lots of them got wiped out

The saturation of algorithms and bots have deteriorated price action. Your reason for entering/exiting became a little less clear now. There's no longer a certain number in the book you can front-run, and hitting out if it

>> I will be perfectly honest with you as well, over the past month I have taught myself how to trade outrights because many of the spreads I am involved in are actually more risky leg-to-leg than the outrights. The spread volatility needs to double or triple for there to be less risk and for them to provide opportunity of trading multiple times a night without the use of legging extensively.
More...
 
@Sommi, thanks for the insight into your trading at prop firm.

A little query....
After $ 4k a month expenses at prop firm, profit split, taxes, house rent(assuming a rental home) and other expenses, do you feel its better trading with a prop firm than trading your own capital?
 
If traders are flat or lose, a prop firm makes money from fees. If traders make money, a prop firm makes a lot more money. A major risk of a prop firm is the margin capital deposited by the traders, which I assume is considered property of a prop firm. So a prop firm gets paid to own a call option! Very nice position for them!

The one thing I am positive about is that if there is a winner in a prop firm, the owners would be one.
 
liked the first post, i also have found a time stop valuable; if a trade doesn't work as it should within a certain time frame, i get out. sometimes, i'm wrong on it. but more often than not, that time stop saves me a lot of problems trying to get out of a 'bad' trade when everyone else is doing the same.
 
Among all prop firms out there: show me one example of a prop firm that would open institutional accounts with liability limited to the institution only! I doubt they exist. Maybe they fear the black swan risk from pairs, and want a free put from a human being in case any margin deficit takes place from black swans.
 
Quote from gaj:

liked the first post, i also have found a time stop valuable; if a trade doesn't work as it should within a certain time frame, i get out. sometimes, i'm wrong on it. but more often than not, that time stop saves me a lot of problems trying to get out of a 'bad' trade when everyone else is doing the same.
More...

What kind of stop loss order would save a trade from higher than planned loss due to a gap, and the azz of the trade owner from the liability of a margin deficit?
 
Vitually all of the strategies that are responsible for his profit would not be possible with his own capital ... or at least with the level of capital he currently has.

Quote from kkfx:

@Sommi, thanks for the insight into your trading at prop firm.

A little query....
After $ 4k a month expenses at prop firm, profit split, taxes, house rent(assuming a rental home) and other expenses, do you feel its better trading with a prop firm than trading your own capital?
More...
 
Quote from tradingjournals:

If traders are flat or lose, a prop firm makes money from fees. If traders make money, a prop firm makes a lot more money. A major risk of a prop firm is the margin capital deposited by the traders, which I assume is considered property of a prop firm. So a prop firm gets paid to own a call option! Very nice position for them!

The one thing I am positive about is that if there is a winner in a prop firm, the owners would be one.
More...

Of course prop firms owners operate out of self interest. It's not a charity. If a prop firm or basically any business can get its clients to sign a silly deal where the clients take all the risk, do all the work, and put up the money - then yes, they'll probably try to take advantage of that.

Some props are total scumbags and prey on young newb traders and do this. Then, some of them don't even payout on time, or abscond with their clients funds. There are a lot of scumbags out there in all businesses, clearly many in the financial and trading world.

But, some prop firms (very, very few these days) are reputable, have been around for years, and have hundreds of testimonials of their traders getting paid on time and not totally ripping them off on commish. That's the best a trader can ask for.

You're totally judging Sommi's position from the firm's perspective. Seems like from his perspective he's got them dealing with all the headache of administrative matters (which are a major pain in the ass for traders to deal with, especially if you're trading 16hr days), he's got a cool setup where his lifestyle is awesome - he gets to wear whatever he wants, work hours that he wants, has flexibility on what instruments and styles he wants to trade; and finally, he got good mentorship from traders there and also has a bunch of mates to shoot the shit with on a daily basis which is important given that he's clearly stressed out about his gig.

Do you think he would have been better served just starting out w/ a retail account and get up the whole learning curve as quickly as he has?

So many probably 12 y/o posting on ET nowadays. Anyway, I should mention that Sommi in my experience is wayy too enthusiastic about recommending day trading to the average joe. I wouldn't. The job of a disc trader requires a lot of talent in different areas that the average person does not have. You don't just put in the Gladwell-esque 10,000 hours and can ensure a decent living. No way. Most people would be much better off doing something else. This industry is getting tougher and tougher and the rules and regulations are not enforced for larger players. I believe Sommi's story, it's not that outlandish. But I think he's projecting his enthusiasm and almost zeal for prop trading to people that generally have little to no chance of success. If it's 1998 or 2007 - yeah, prop is good b/c even if you were one of the 5% that made it the rewards were huge. Now, it's much more difficult and less lucrative. Even the money Sommi is making he could've made if he went to a good Uni and ended up at a good tech firm. And there the income is somewhat guaranteed and you have career safety. Just my .02
 
Any firm that provides the tools to earn and learn deserves their pound (maybe even a pound and a half) of flesh. He is learning a trade that, if he is talented enough, can allow him to earn very serious money and the reason he is willing to break his ass all those hours every day is that he loves it. He is not dreading the open on Monday (or Sunday night!); he'll be pleased to be back in the game.

I have my issues with a kid that is in the game for two years and thinks the rest of us have shown up at the lecture hall to here his wisdom. But if I wrote off everyone who is self centered, I would have no one to talk to ... not even myself! In another year or two when he's a bit more confident the lecturing tone will fade. BTW ... if Martinghoul wants to lecture I'll bring my own chair and provide the popcorn.

I'm sure there are good prop firms and bad ones just like there are good restaurants for a cook to work in and those owned by pricks. You can't begrudge the prop owners for protecting their capital and making money. They provide something that is priceless to the right guys. A place to learn a very complex game while earning enough to keep a roof over their head. Like I said ... priceless for those that can cut it.
 
Quote from melo:

Of course, no argument with a stance that says "this is what's worked for me, this is my style, etc. " Just that you have given the impression here and there in this thread that you believe you have scope to up your game. You are (seemingly) firmly of the opinion that it'll be as a result of more screen time, more action. However, measuring some of the things that you rely on, believe, experience etc., might highlight a route to P&L improvement. It doesn't require venturing into quant territory, or backtesting.

That said, I have trouble accepting that true 'relative value inefficiencies' can be identified and traded without some quantitative framework. Unless we're using the terminology with different understanding
More...

Hey melo (or Martinghoul),

I've been following this thread with much interest, as I've walked a similar path to s0mmi through my trading career. Good on him for putting it out there, though I'd bet he sometimes wishes he hadn't bothered.

Whilst I've found that the analysis process s0mmi describes to be perfectly adequate for the local trader, where a shorter holding period can tolerate a quick (rough) approximation, I have also struggled to move beyond these methods.

So I'd definitely appreciate it, and perhaps it would be helpful to others reading this thread, if you could describe how one would go about quantitatively testing the relationships between two similar instruments? Any two will do.

What software would you use, what tests would you perform and why? How would you interpret the resulting data? What are the best educational books to get a handle on this? Anything that can shine some light on the correct processes would be awesome.

Regards,
 
You must log in or register to reply here.
Back
Top