Tips for a new Proprietary Trader?
- Thread starter warrenbuffet
- Start date
The firm wants you to put down money because 95% of the people who start prop trading lose it in the first few months. It normally takes a good year to be profitable and a few years to learn how to make steady income. If you put up money you should get a 100% payout. Do not pay more then a penny a share. If you are paying a penny a share you should not have anymore then $100 a month in platform fees. You need to just your cost down and donât let them bleed you. If you are paying like 7/10âs a share to learn then you should not pay more then $225 a month in platform fees. These are not good deals but for a new guy they are fair. The firm makes money off your volume so do not give up your payout unless youâre on a gross deal. Also stop following MRK you canât trade it and if you do youâre a jackass. You learn with the 250,000 to 1,000,000 volume share a day stocks. You donât trade news stocks or large caps. You only trade stocks between 930 to 1130 and 215 to 345. I now just gave you $1000 of dollars of free advice for your first 6 months of trading. Who wants to bet he does not listen to it?
a couple of tips.
You wont find a holy grail of trading in any particular book. There are many good books out there, and many not so good ones on the subject. Take what fits you and discard the rest.
[I personally like Daytrader's bible by richard wyckoff... as it deals with the psychological aspects of trading, and he was one of the pioneers of daytrading back in the early 1900's]
Trading is 90% psychological, 10% technical. There are many trading systems and strategies that are very profitable if traded with discipline.
Start very small. ***100 share blocks for me*** and look only into your gross numbers [dont worry about net profits till later] Once you're profitable in pennies making dollars is only a matter of multiplying.
When trading, consider the latest news old news. By the time it hits, cnbc or marketwatch, or any other. The market has already reacted. 'Buy on the rumor, sell on the news. '
Choose one stock and marry it for a month or two. Think of nothing more than that one stock. Forgett the markets, forgett the news. Worry only about price.
-I personally like GE as it is soo big that they dont follow the market all the time, some times it leads the markets, and you never know what news are going to afect them. So you end up discarting news and reports and you worry about price.
Dont go into technical analisis for day one. Just use a chart of mayor indicators to have a view of the big picture. But try to figure the smaller patterns, the one's in level 1 level 2... a few minutes or even seconds at the time. Once you get those, start looking for bigger patterns... the best traders [in my opinion pit traders] dont care what the markets are doing or about technical indicators [as for them any technical indicator is old news] the care about the price. Simple as that.
One more thing, when Greenspan speaks try to be out of the market while he's speaking and then watch how things get very violent right after... watch the carnage dont be a part of it, at least for the beggining.
You wont find a holy grail of trading in any particular book. There are many good books out there, and many not so good ones on the subject. Take what fits you and discard the rest.
[I personally like Daytrader's bible by richard wyckoff... as it deals with the psychological aspects of trading, and he was one of the pioneers of daytrading back in the early 1900's]
Trading is 90% psychological, 10% technical. There are many trading systems and strategies that are very profitable if traded with discipline.
Start very small. ***100 share blocks for me*** and look only into your gross numbers [dont worry about net profits till later] Once you're profitable in pennies making dollars is only a matter of multiplying.
When trading, consider the latest news old news. By the time it hits, cnbc or marketwatch, or any other. The market has already reacted. 'Buy on the rumor, sell on the news. '
Choose one stock and marry it for a month or two. Think of nothing more than that one stock. Forgett the markets, forgett the news. Worry only about price.
-I personally like GE as it is soo big that they dont follow the market all the time, some times it leads the markets, and you never know what news are going to afect them. So you end up discarting news and reports and you worry about price.
Dont go into technical analisis for day one. Just use a chart of mayor indicators to have a view of the big picture. But try to figure the smaller patterns, the one's in level 1 level 2... a few minutes or even seconds at the time. Once you get those, start looking for bigger patterns... the best traders [in my opinion pit traders] dont care what the markets are doing or about technical indicators [as for them any technical indicator is old news] the care about the price. Simple as that.
One more thing, when Greenspan speaks try to be out of the market while he's speaking and then watch how things get very violent right after... watch the carnage dont be a part of it, at least for the beggining.
Mostly good advice, but one part is just your personal experience, and completely unsuitable as general advice:
"Also stop following MRK you canât trade it and if you do youâre a jackass. You learn with the 250,000 to 1,000,000 volume share a day stocks. You donât trade news stocks or large caps."
"Also stop following MRK you canât trade it and if you do youâre a jackass. You learn with the 250,000 to 1,000,000 volume share a day stocks. You donât trade news stocks or large caps."
There is a journal by Goodpunk or something like that who started out like you I think. You can find it in the journal section. If I were you I would read that over and over and learn from his mistakes. It is really good read.
Then work 14 hour days until you get profitable.. And if you cant do that.. Then quit while the game is good.. That is if your not one of the priveleged few who has this in the blood.
ORM
Then work 14 hour days until you get profitable.. And if you cant do that.. Then quit while the game is good.. That is if your not one of the priveleged few who has this in the blood.
ORM
First of all, what a nice community I've found. Thank you all so much for your enthusiastic interests in my current affair.
I really appreciate all your help and guidance.
Since there has been "MANY" helpul hints, and I have many follow up questions I would like to ask the correspondants, I guess I will just list the question along with the name of the person who my question derive from. But feel free to jump in on any of these inquiries.
Lescor: Could you describe some of these different styles and techniques of trades you were talking about? Sorry for this ignorant question, but i start work this coming monday, so as of now, i am pretty clueless of how exactly datraders operate... (other than the fact that they usually tend to spot trend and performane technical analysis (different indicators and such), and base their decisions on them as opposed to a long term investor who tend to look for a competitive edge within a company over its competitors, and often time based their decision on fundamental analysis) How long does a proprietary trader usually hold his stock before he sells it again? I've heard most of the time traders usually buy and sell within minutes. And what would be a good method for beginner? I will probably learn about some of these on monday when I start work, but I am just so excited about this job that I would love to have some good idea before I go in. =)
AAAintheBeltway: When you say I must make it an obsession to trade only with the prevailing trend, and entery on pullbacks in a trend... is the reason to trade in a prevailing trend because these are the stocks that the crowd is concentrating on, therefore will most likely produce a high volatility due to the amount of people making a decision on buy and sell. And by entering on a pullback in a trend, you're securing shares at a low price hoping it would rise when the trend goes back up?
Brokerboy: the reason I should learn with the 250,000 to 1,000,000 volume share a day stocks is because these tend to be stronger cmpanies with more investors investing in them on a daily basis, (so one, i wont be as much risk as opposed to investing in a small companies with small volume traded, since they are not stable, and secondly, since there is 250,000 - 1,000,000 volume share a day trade on these stocks, there is a high volatility(movements) therefore, more opoortunities to capitalize as a daytrader when a market spurs up and down.?
But why shouldn't I trade news stocks or large caps(what do you mean by large caps? what does this mean.)
And lastly, the reason to concentrate my trading from 9:30-11:30 and 2:15-3:45 is because that's when the market first opens (therefore is the time when there will be a big movement, either from news from a previous day, or shares already bought overnight which were executed at 9:00.
And the reason for 2:15-3:45 is because that is when the market near its end, meaning another important time when the investors is likely to make a deal before the market closes...
Now I do not have a lot of experience in this, but i have recently installed QuoteTracker and been tracking a lot of these flu vaccine producing companies, but in general, it seems that there is usually a high traffic movement in the time you listed, and most of the time, the market always ends up dropping in price when it's near the end of the market (i'm thinking it's due to daytrader closing their deals and selling their investments after what they have already capitalized in the previous hours.)?
eusdaiki: Buy on rumors, and sell on the news? But where can i hear all these rumors from? I can imagine if you work for a big investment bank, you will probably gain some insider knwoledge from your clients, or companies you deal with on a daily basis, or even collegues. But what about for a prop. trader?
=========================
So as a beginner, I should start out small and invest in the bigger and more stable companies who will not have too much ups and down? And then, after i'm more comfortable with trading, move on to the more volatile choices with bigger risk and rewards when i actually know what i'm doing?
Also, when it comes to noticing trend and the time for buying and selling, is this mostly based on my knowledge of tech. analysis? And which is more important, the news on the market and the stock, or simply the trend and the crow reaction. If you based your decision on a certain news and predict on a up or a down on the market on your own, wouldn't this give you a better head start on securing a good investment(assuming you're right) And if you simply just follow the herd, how are you knowing when the herd will take you north or south? (again, tech analysis?)
Finally, I was wondering if anyone could describe a typical top down approach and the methology they use when it comes to trading. Starting from research, reading the news, to deciding which market to invest, when to invest... etc
WHEW! I dont think I have ever written a bigger post than this one. But I just had so many questions on my mind, and i have all the intentions on learning and becoming a better trader.
Also, if anyone could suggest some good books I would really appreciate it. =) I hope your eyes are not hurting after this, and if you have finished reading this whole thread, i suggest you take your eyes off the screen for a few minutes before replying, i hear it's not good to stare at a screen for a excessive long time
I really appreciate all your help and guidance.
Since there has been "MANY" helpul hints, and I have many follow up questions I would like to ask the correspondants, I guess I will just list the question along with the name of the person who my question derive from. But feel free to jump in on any of these inquiries.
Lescor: Could you describe some of these different styles and techniques of trades you were talking about? Sorry for this ignorant question, but i start work this coming monday, so as of now, i am pretty clueless of how exactly datraders operate... (other than the fact that they usually tend to spot trend and performane technical analysis (different indicators and such), and base their decisions on them as opposed to a long term investor who tend to look for a competitive edge within a company over its competitors, and often time based their decision on fundamental analysis) How long does a proprietary trader usually hold his stock before he sells it again? I've heard most of the time traders usually buy and sell within minutes. And what would be a good method for beginner? I will probably learn about some of these on monday when I start work, but I am just so excited about this job that I would love to have some good idea before I go in. =)
AAAintheBeltway: When you say I must make it an obsession to trade only with the prevailing trend, and entery on pullbacks in a trend... is the reason to trade in a prevailing trend because these are the stocks that the crowd is concentrating on, therefore will most likely produce a high volatility due to the amount of people making a decision on buy and sell. And by entering on a pullback in a trend, you're securing shares at a low price hoping it would rise when the trend goes back up?
Brokerboy: the reason I should learn with the 250,000 to 1,000,000 volume share a day stocks is because these tend to be stronger cmpanies with more investors investing in them on a daily basis, (so one, i wont be as much risk as opposed to investing in a small companies with small volume traded, since they are not stable, and secondly, since there is 250,000 - 1,000,000 volume share a day trade on these stocks, there is a high volatility(movements) therefore, more opoortunities to capitalize as a daytrader when a market spurs up and down.?
But why shouldn't I trade news stocks or large caps(what do you mean by large caps? what does this mean.)
And lastly, the reason to concentrate my trading from 9:30-11:30 and 2:15-3:45 is because that's when the market first opens (therefore is the time when there will be a big movement, either from news from a previous day, or shares already bought overnight which were executed at 9:00.
And the reason for 2:15-3:45 is because that is when the market near its end, meaning another important time when the investors is likely to make a deal before the market closes...
Now I do not have a lot of experience in this, but i have recently installed QuoteTracker and been tracking a lot of these flu vaccine producing companies, but in general, it seems that there is usually a high traffic movement in the time you listed, and most of the time, the market always ends up dropping in price when it's near the end of the market (i'm thinking it's due to daytrader closing their deals and selling their investments after what they have already capitalized in the previous hours.)?
eusdaiki: Buy on rumors, and sell on the news? But where can i hear all these rumors from? I can imagine if you work for a big investment bank, you will probably gain some insider knwoledge from your clients, or companies you deal with on a daily basis, or even collegues. But what about for a prop. trader?
=========================
So as a beginner, I should start out small and invest in the bigger and more stable companies who will not have too much ups and down? And then, after i'm more comfortable with trading, move on to the more volatile choices with bigger risk and rewards when i actually know what i'm doing?
Also, when it comes to noticing trend and the time for buying and selling, is this mostly based on my knowledge of tech. analysis? And which is more important, the news on the market and the stock, or simply the trend and the crow reaction. If you based your decision on a certain news and predict on a up or a down on the market on your own, wouldn't this give you a better head start on securing a good investment(assuming you're right) And if you simply just follow the herd, how are you knowing when the herd will take you north or south? (again, tech analysis?)
Finally, I was wondering if anyone could describe a typical top down approach and the methology they use when it comes to trading. Starting from research, reading the news, to deciding which market to invest, when to invest... etc
WHEW! I dont think I have ever written a bigger post than this one. But I just had so many questions on my mind, and i have all the intentions on learning and becoming a better trader.
Also, if anyone could suggest some good books I would really appreciate it. =) I hope your eyes are not hurting after this, and if you have finished reading this whole thread, i suggest you take your eyes off the screen for a few minutes before replying, i hear it's not good to stare at a screen for a excessive long time
I have a few tips to add here:
Temporarly remove "Investing" or "Investment" from your vocabulary. It doesnt belong in any prop trading strategy.
People who start out in this business need to realize that there are hundreds if not thousands of variations on trading strategies and it is up to the trader to find one that suits them and make it their own. This takes time and the general rule that most traders fail I think comes from the fact that they just didnt have the time, patience or determination to find it.
Once you read or learn a certain strategy that seems to work, start thinking about scalability. You cant just multiply the number of shares to measure how much you can make.
And finally, what I personally think was very helpful is to print out a chart of every stock you traded for the day and write in where you got in and where you got out. My memory is somewhat photographic and this really helped me consolidate my day's trading.
Good luck!
Temporarly remove "Investing" or "Investment" from your vocabulary. It doesnt belong in any prop trading strategy.
People who start out in this business need to realize that there are hundreds if not thousands of variations on trading strategies and it is up to the trader to find one that suits them and make it their own. This takes time and the general rule that most traders fail I think comes from the fact that they just didnt have the time, patience or determination to find it.
Once you read or learn a certain strategy that seems to work, start thinking about scalability. You cant just multiply the number of shares to measure how much you can make.
And finally, what I personally think was very helpful is to print out a chart of every stock you traded for the day and write in where you got in and where you got out. My memory is somewhat photographic and this really helped me consolidate my day's trading.
Good luck!
If there are people in your office that you SEE making money (note: there is a gap in perception among many traders about how good of a trader they think they are and how well they actually trade), ask them as many questions as they will allow to build a large base of trading knowledge. It's ok to ask what you think are stupid questions because you're better off knowing now than getting hurt later on.