Tips for a new Proprietary Trader?

Quote from warrenbuffet:

I am surprised there wasn't a real structured training program. Basicaly I was monitoring what the senior trader was doing, asking questions, and he will sometimes ask me if i notice something, but it's hard to understand fully.

Afterwards, i went on to the computer and was testing out the software, and getting a feel of the market, making trades on my own with fake money (kind of like a simulation) but i was not very succesffuly at it 'cuz i didn't know exactly what i was doing... they say it takes sometimes, but i was really sadden by the fact taht there's not a structured training program. Is this usually how it is at other firms?

Also, a lot of the traders were using primarily the Openbook(seeing how many people are looking to buy a certain stock at a certain price for how many shares, and selling at whatever price, to see the trend... etc)

I was wondering if anyone could explain to me their strategy in this so i could have a better understanding of how all these work =\
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hey bro. welcome to the markets.
The trainin program at most firms is close to none existin... why? simple, if you have to learn mostly on your own then you create your own personalized style of trading, there fore diversifing their risk. Is a simple equation. If you teach all your traders how to trade just like you do, then isn't it cheaper just to take more shares yourself? But if they trade in a slightly different manner, then you're not putting all your eggs in one basket and that's good for bussiness.


Openbook... I guess you're refering to the level 2 screen. The trick to reading is is that it basically gives you a good idea where liquidity adders are standing. So right there you are seeing half the equation. You can search for patterns, and easily make some sense out of it, after a few days of looking into it and thinking about it 6 or 7 hours in a row.
When you figure it out, you'll be halfway to visualizing the equation, the other half are liquiity removers. The guys who wont post their orders but take the orders posted on the level 2.
Liquidity adders use limit orders, removers use market orders. If you have only market orders, no bussiness happens, if you have only limit orders, no bussiness happens. If you have them both then you got yourself a market.
Dont try to figure it all out in one day, for the first week or so, just try to figure out what's going on in front of you... after a month or two, you'll have a clue. After six months you'll feel right at home. :D
 
Quote from eusdaiki:

Im a rebate trader... perhaps that's why I like stuff with plenty of volume in it... JDSU, SUNW, and that sort...
However the advange I see to stocks with higher volume to a newby is that they have better liquidity, allowing to enter/exit constantly, and most times they're stocks that wont open the spread easily... I think that stock priced around $25-35 with very high volume, and a dense level 2... like intl, pfe, msft,ge, c... are great for learning.

I also find choppy markets to be very profitable... if one's simply looking for ranges and not for the range to be broken. is just a matter of looking for the rght strategy... and at least in my case, when I started I used to throuw away too many trades waiting for that big trend to start...
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I highly recommend against this using this advice from the onset. Entering and exiting costs lots of money - avoid it until you understand price action and volume flow. Your operating costs are going to be overwhelming trading more than 20k shares a day (which is waaay to much per day anyway).

Establish a plan that fits your personality - if you want pennies from the market, make a plan that minimizes transaction costs versus frequency, I personally do not do this, so I cannot talk about rebate trading or scalping as some call it.

I trade 3-30 minute time frames and scale a lot. Honestly, in the beginning, I recommend you minimize frequency and exercise your ability regarding patience and emotional stability, this means low volume and low share size - to the point of not caring if the price moves against you for .50 or so. Whatever... this is all subjective but be VERY cautious of people who recommend to trade high volume from the start.
 
Quote from Mike805:

I highly recommend against this using this advice from the onset. Entering and exiting costs lots of money - avoid it until you understand price action and volume flow. Your operating costs are going to be overwhelming trading more than 20k shares a day (which is waaay to much per day anyway).

Establish a plan that fits your personality - if you want pennies from the market, make a plan that minimizes transaction costs versus frequency, I personally do not do this, so I cannot talk about rebate trading or scalping as some call it.

I trade 3-30 minute time frames and scale a lot. Honestly, in the beginning, I recommend you minimize frequency and exercise your ability regarding patience and emotional stability, this means low volume and low share size - to the point of not caring if the price moves against you for .50 or so. Whatever... this is all subjective but be VERY cautious of people who recommend to trade high volume from the start.
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hmm... the thing is that being a prop firm trader, Im assuming that his operation costs from entering exiting a lot are close to none... paying less than a $1 per trade in commissions. If trading at the nasdaq, you can even make commisions count in your favor. The advantage of entering exiting many times is that one becomes used to the markets, as well as becoming used to exiting positions without fear of getting stopped out... learning not to carry price moves against you of more than 0.03.
Scalping offers the advantage of having many entry points throughout the day, so you never get that feeling that you missed your train but you learn to catch up on the move even if you enter it late.
 
Please, if you dont know what something is just say "I dont know what that is". You are going to confuse the poor kid. Open book is not level 2's, its the NYSE Specialist limit book that can be seen by the public. Buy limits and sell limits are placed and shown in the Open Book.

Quote from eusdaiki:

Openbook... I guess you're refering to the level 2 screen. :D [/B]
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I would add not to use Yahoo as a source of info (you mentioned them early as a website you would follow). If you are in a prop shop I would assume you have better sources of news than Yahoo...
 
Quote from Steve Tvardek:

Please, if you dont know what something is just say "I dont know what that is". You are going to confuse the poor kid. Open book is not level 2's, its the NYSE Specialist limit book that can be seen by the public. Buy limits and sell limits are placed and shown in the Open Book.
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And wouldnt that information be displayed next to the quotes from ecns and such... on the level 2?
 
Quote from eusdaiki:

And wouldnt that information be displayed next to the quotes from ecns and such... on the level 2?
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No and you should stop while your ahead
 
The open book is a seperate box, I guess you can position it next to your level 2's but its a different monster altogether than just your level 2 quotes. Used properly, it can be a huge asset, unfortunately it takes quite awhile to know how to use it the right way.

Quote from eusdaiki:

And wouldnt that information be displayed next to the quotes from ecns and such... on the level 2?
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interesting... at my firm we have the openbook displayed inside the level 2 with a NYB MMID... but I guess you're right as it might need a different interpretation than that of a nasdaq level2.
 
At Generic in the Carlin Trader program the NYSE open book is displayed in the level 2. All open book orders were titled NYOB while the quote was labeled NYSE. The was also the liquidity quote which could be displayed outside the montage.

At echo i don't have the ability to merger them, i have to have a seperate box which eats up space on my screen and that by far is the biggest drawback. I don't know why it was designed that way since you can have the arca and inet books in the level 2 with the quote.

People need to remember we all use different programs and different looks to trade. Don't just tell someone they can't see it that way when perhaps their software lets them. To many people on this site want to be right and shove it down your throat. Grow up its not high school.

Nothing is set in stone, just like there is no one right way to trade.
 
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