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

If we can hook Martin up with Doctor Dre even PSY's numbers will be dwarfted!

Quote from Martinghoul:

Ozzie STIRs and bonds, heh? I am involved in that sh1zzle, although it's such an b-a**-ackward mkt, it's crazy :).

Cash-settled bond futures and physically-settled STIRs! You Ozzies are cray-zeeee!
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Quote from bawr:

So your firm allows you to borrow a certain amount of money and gives you a "desk" in exchange for $4k a month. How much do they let you borrow? You can borrow about USD $8 million from IB for that sum, subject to margin requirements.

I think it is insane for a trader/speculator/investor to not know or care about his risk adjusted return.
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>> It's a prop firm. They have a lot of limits under their belt. We don't really 'borrow' money. They already have it borrowed for us.

In the futures market, whatever capital you have you can control a leverage 20 to 1. So if you had $5,000 working capital you can control $100,000 (approximately) worth of the standardized contract. In bonds, the cost is a lot cheaper. And my firm has big economies of scale relative to a retail punter so its even cheaper for them.

>> I just said my Desk was $4k/month because it includes a few things. There's charts, there's the software program, there's a small fee to the firm in order to have a desk permanently kept there and for upkeep. It all adds up to around $4k. I have the pro package of X_Trader as well. Other people have costs as low as $2.4k but I don't like to cut corners.

>> What is my risk-adjusted return? You just know your daily pnl low/highs. We are day traders. The game is different. We are not exposed to multiple fundamental shifts. We got dollar and daily stops. We are hedged through figures. It's just a different ball park.

My company have thrown a lot of limits to me. But I could go retail and say, give two exchanges approximately $450,000 and then call that as my working-capital and try to make a return on it. That's a rough number.

My firm is very generous. It's a great place. You can get limits to try anything you want. All you need to do is manage that dollar stop.
 
Quote from sle:

I am sorry, maybe I am missing something. So far, what I gather is that you are trading the firms capital doing some FI spreads (STIRs/bond futures etc, all the rage down under). What is your payout ratio? is it tied to your metrics, like Sharpe?

The numbers that your are throwing around ($40-$50k/month) are not that big, you are making $500-$600k for your firm and if they are paying you even 30% (the deals I know that pay out this much require a crazy sharpe, though), it's just $200k per year. You could be working half as much to make the same at a bank and learning more


Do you think you would be able to keep that up for long? Just curious...
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>> Once again, I think you guys are coming from a different world to me... the world of Day-Trading and Futures does not need to involve these statistics. All my firm cares about is that you're profitable. It's a niche job... as we know, and the market doesn't owe you anything, but it's a great substitute from kissing a boss' ass.

>> Also just because I can make $40-50k one month doesn't mean I would make it the next month. There's variance. On top of this, market slow downs... as well as the fact that I am sizing up at the same time, so I have to experience painful hurdles.

By the way, the split is not 30%. The starting is 50/50 in the Prop trading world. As you make more for the firm, you go up... people tend to approach 65-75%. The big hitters/swingers get to 80-85% or special deals (with lots of money to back themselves in the account as a safety net... or a lot of activity-per-month that the firm loves).

>> Everyone here knows trading is an insanely difficult game. I've got... 2.5 years experience. How much can I expect to earn? I can't make 7-figures right now, the risk is too great.

The world of prop trading is a pyramid-scheme of sorts (as I described earlier) and a deferred-compensation scheme. You make little-money for a long time in 'hopes' that you get immune/get a few lucky rogue announcements that allows you to get to a point over-time where you are comfortable, mentally, handling a lot of money swings etc.

>> The age-old question that everyone asks is how much we need to make... the truth is that, believe it or not, many guys just love the fact that they can make between 60k to 150k/year and work a job where they are allowed to wear anything (ANYTHING) in the office, and not have a boss, and work for themselves.

I only informed you guys of my insane hours just to let you know I'm not of the norm. Many of my friends have wives, girlfriends, rent to pay.... I am still relatively young and my face/body can still take a lot of bare-knuckle beatings.

I also realised that half of the game is almost a scam. We work insane hours (Asia + Euro sesssion is crap... so most people are doing hours of 6pm to 4am every day as the norm).

And then you need to get consistent, make money, pay yourself, re-invest in your own account with the firm, get more limits, keep the confidence, keep making money...

It's unfortunately not that simple. There are so many hurdles. You can wait it out for 7-9 years in hopes you just 'get over' the size factor and increase... but there's no real example to go by.

If I really need to beat that bank salary consistently, it's only worth it (too me) when I am on 75% split (at least) and making ~200k/month... lets say you get to win 6 to 9 (out of 12) months in the year... there you have it.

>> Anyway I just shared my goals with you. I thought everyone in the industry would be like this. Quite the opposite. Everyone prefers the turtle-walking pace and laid back attitude. Most people are just happy not being in a dreaded office environment. It's a boys-club for everyone. Dinners, night outs, gamble session on the U.S. job figure, not having to write reports or a boss to own up to... complete freedom.

I don't see it like this, though. I just see very very long hours and little reward so far.
 
We are actually quite pleased to hear that because we are not eager for you to do any dancing at all!!!

Quote from Martinghoul:

I ain't gonna be doing no funny dancing!
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Quote from s0mmi:

>> It's a prop firm. They have a lot of limits under their belt. We don't really 'borrow' money. They already have it borrowed for us.
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Sorry, since you used the term "borrow", I assumed you trade instruments where actual borrowing is involved.

In the futures market, whatever capital you have you can control a leverage 20 to 1. So if you had $5,000 working capital you can control $100,000 (approximately) worth of the standardized contract. In bonds, the cost is a lot cheaper. And my firm has big economies of scale relative to a retail punter so its even cheaper for them.
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I understand the mechanics of the futures markets. If your goal is to obtain leverage in the futures markets, why not do it via a retail account, where plenty of leverage is available? Why do you need your prop firm? You mentioned your firm's economies of scale, but in the futures markets, favourable implied interest rates are available to everyone. You don't need economies of scale.

>> What is my risk-adjusted return? You just know your daily pnl low/highs. We are day traders. The game is different.
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I don't believe the game is different at all. You are trying to make money with money (yours or someone else's). You need to know your rate of return.

My firm is very generous. It's a great place. You can get limits to try anything you want. All you need to do is manage that dollar stop.
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What happens if you have a catastrophic loss? Who picks up the tab, you or the firm?
 
I'm not understanding what level of leverage you are able to utilize. I will take your $5,000 account size as our example. If I am trading day trading crude as a retail client at say AMP, Crossland or any one of a handful of lower margin firms here in the US I can trade four CL contracts representing a total of 4,000 barrels of crude and in that stance each tick will represent a $40 change in my P&L ... $10 per tick per contract. In an unhedged dirctional trade I would not trade more than one contract if that were my account size but that is the risk profile I choose. Here we are speaking of what I could trade retail.

By 20 to 1 leverage do you mean you could -- leaving aside whether you would or not -- trade 80 CL contracts? That sounds if not impossible at least improbable. If you can take any standardized future contract ES, CL, GC, SI or one of the grains or bonds and tell me what your buying power is with a $5,000 deposit -- using a number of contracts -- it will be clear to me. I'm not getting what 20 to 1 means to you in terms I understand. If you are talking about holding overnight then you can calculate in that fashion but, again, in contracts.



Quote from s0mmi:

In the futures market, whatever capital you have you can control a leverage 20 to 1. So if you had $5,000 working capital you can control $100,000 (approximately) worth of the standardized contract.

I
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Quote from Swan Noir:

I'm not understanding what level of leverage you are able to utilize. I will take your $5,000 account size as our example. If I am trading day trading crude as a retail client at say AMP, Crossland or any one of a handful of lower margin firms here in the US I can trade four CL contracts representing a total of 4,000 barrels of crude and in that stance each tick will represent a $40 change in my P&L ... $10 per tick per contract. In an unhedged dirctional trade I would not trade more than one contract if that were my account size but that is the risk profile I choose. Here we are speaking of what I could trade retail.

By 20 to 1 leverage do you mean you could -- leaving aside whether you would or not -- trade 80 CL contracts? That sounds if not impossible at least improbable. If you can take any standardized future contract ES, CL, GC, SI or one of the grains or bonds and tell me what your buying power is with a $5,000 deposit -- using a number of contracts -- it will be clear to me. I'm not getting what 20 to 1 means to you in terms I understand.
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Swan, it sounds like they are mostly trading spreads. Now most "conventional" spread markets have very low margins as well. However, it's possible they are trading across markets that are "correlated" but do not get margin relief from the exchanges. In that regard, doing those in a retail account would require you to drastically overpay for volatility.

Think of Bright Trading as an analogy. Don will let you trade GE against the SPY with sick size because they are "correlated". But you would never get any kind of margin relief in a retail account for trading GE against the SPY.
 
Quote from bawr:

Sorry, since you used the term "borrow", I assumed you trade instruments where actual borrowing is involved.



I understand the mechanics of the futures markets. If your goal is to obtain leverage in the futures markets, why not do it via a retail account, where plenty of leverage is available? Why do you need your prop firm? You mentioned your firm's economies of scale, but in the futures markets, favourable implied interest rates are available to everyone. You don't need economies of scale.



I don't believe the game is different at all. You are trying to make money with money (yours or someone else's). You need to know your rate of return.



What happens if you have a catastrophic loss? Who picks up the tab, you or the firm?
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+1.
 
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