Trading for a living

Quote from toe:

Gwac, I have no particular experience in this area to offer, but I do have a simple observation. You appear to be very well prepared financially and you are an experienced fx trader, you are also aware that there is a world of difference between trading for an FI and going solo.

I'm sure if you search widely enough you will find many people who will give you their experiences, but none of them can tell you how it will work out for you. You have enough experience that you may make it and enjoy it, and you have enough experience to know that you may not. Of course you would like a winning solo career, but now you must make the decission based on whether YOU can afford a losing solo career.

If you dont mind I have a question for you (as I am newbie to fx). Who do you imagine your broker/s will be? Will you pay the same commissions/spreads as you do now. Do FI FX traders have any advantage with spreads/commissions. What sort of timeframe do the pros trade given the spreads (which to me seem to kill short time frame trading)?
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Before i make a change i am trying to understand other`s
experiences and whether this is something that i could deal
with. I plan on using futures and oanda. I expect i will
be paying a tad more per round trip in the futures mkt, but
nothing too dramatic. Oanda has the lowest spread that
i know of so i will use them if i go this route. You just have to
watch oanda and its skewing of the spread. Fi`s have
many bank systems in front of them so at any given time
especially in the morning the spread between the different
banks is zero and sometimes I have ability to buy and sell
at the same time between the bank and make a point for
no risk. In the morning the euro spread is 1 point but each
bank has a different 1 point spread so that works to your
advantage. I will not have this ability with the brokers.
 
Quote from gryphes:

Haven't read this entire thread, so don't know if you detailed the nature of your trading job. I was a trader at one of the primary dealers back in NY and left to go on my own. I did not have much client order flow to rely on and basically had to position the market to make money which was a big help in the transition to proprietary trading. I would think carefully about whether you are primarily profitable due to what your firm provides (order flow, research,etc) or yourself.
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75% comes from prop 25% from flows. How are you
doing? Are you happy you left.
 
I have a friend who

left his prop bank dealing room ( not FX ) to join
an open outcry futures exchange

he has been doing ok ... maybe not as well

since then trading his own money and doing

paper ( commissions )

not sure how he would be doing if he were to only
rely on his own trading.
 
Quote from gwac:

75% comes from prop 25% from flows. How are you
doing? Are you happy you left.
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Definitely glad I left. Was in NYC for 12 yrs and ready for a change. Took the opportunity to move to CA and explored the west coast for a year before settling. The hardest thing to get over is the annual bonus but the easiest thing to leave behind is the upper mngmt who often come from backgrounds like investment banking or sales.
 
Quote from mtzianos:

I assume you are referring to spot forex brokers (FXCM, Oanda, RefcoFX, Man, etc), as in currency futures it's just another contract.

Why would anyone prefer those spot forex brokers, over the transparency and -nowadays- decent liquidity of CME currency futures?

I've looked into those spot fx deals on several occasions since 1998 (when there was no globex currency futures) and right now I can think of no advantages in using spot forex.

Only reasons would be:

1. Small account, as CME futures are over 100k
2. Trading of "strange" currency pairs

Am I missing something?
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A fair point and one I will attempt to answer and justify! Before I do I will say that I don't trade with any US based brokers anymore - I don't know if it is they have less ethics or it was becuase I have not actually met them but all the ones I dealt with in the US were awful. I have not dealt with Oanda but am put off by my previous US experiences.

I trade decent size (say 5m a ticket) in cable and euro dollar. The first reason I don't use futures is purely because I am used to spot as have being doing it for so long. By having various brokers on it means you have a reference point to check you are hitting a valid bid or offer whereas in futures I would constantly be having to make the points adjustment to check. That would not be good for my style of trading. Secondly by having various brokers on it usually means you can get a choice or 1 pip price as they are not usually all quoting the same price. Thirdly I get a 2 pip price all the time even when it is very volatile - does futures have this even when it is very volatile. I have been told all ids and offers can be pulled for short periods as say figures are released. I also believe that futures are shocking for cable. I would also say that I use various ECNs as well not just brokers. I hope that answers why I don't use futures although I accept someone else could justify perfectly well why they do. It is something I am considering but to date can see no need to change.

Back to the original topic, another area I would consider if I was the person considering making the change. When I started out I did so from home and thought it was ideal. I hated it though after a while. If you do go solo either set up an office away from your home and get in other traders or rent a desk at an arcade/prop shop.
 
Quote from gwac:

These are all very good points

My finanaces are in order, my kids education money is put aside,
I have enough in retirement accounts that i would not have
to add any to be able to retire in 15 to 20 years very comfortable.
My house is paid off. My 2 cars are paid off. I have summer
place paid off. MY wife stays home. I am a very lucky person.

I only need about 40% of what I make right now to live on.
So I have gotten my financial situation in order just in case
my luck runs out.

Also if I had expectations of making a million i would have already
quit. I would be happy to make 50k in my first year. Trading
for someone and trading for yourself are like nite and day.
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hey gwac, take a years leave and go for it...worstcase you will lose your trading capital, not a big deal as its ur risk capital. you can always go back to your job, otherwise you might regret in few years for not doing it when you had a chance. just my thought
 
I think a lot of people here would be happy to trade jobs with you.
I think 75K is not enough to make anywhere near the same amount of money you are currently making and the risk is considerable. Also FX markets are good now , it won't always be the case. You should be a multimarket player. Are you trading in all kind of pairs or just the majors, do you rely on some kind of privileged info or sophisticated systems in your prop trading ?
Retail spot FX is not a place IMO to bet "large" amounts of money (i.e . 1M +) you can not trust the dealer and their systems. I have yet to find one that I can trust , I wouldn't'even trust them to trade in 100K lots , except for multi day positions if I had what I feel is the proper capital to do it . Some guys here have access to several phone brokers, platforms etc, but I am sure their fixed cost goes way up . Futures is the way to go for short term trading, Euro FX has plenty liquidity, don't know about yen but cable is not as liquid.
 
Quote from gwac:


The problem with me trading from home with my own account
is that if they found out it would be considered a conflict
of interest. I could be fired and word travels fast. It would
be next to impossible to ever get a job in the field again.

It a good idea but it is not worth the risk.

thanks for the response. [/B]
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Maybe you should get your wife to regsiter an account and then trade it for her, doing maybe up to four hours per night to get used to trading your own money. Do it for a year and limit your funds to 10k. Slowly work your way into trading for your self and see what the pressure's like.

There's no law preventing your wife trading fx and would be the best way of seeing if you can do it without having to take unnecessary risks.

Good luck with what ever you do and hope you can make it on your own. Theres nothing like having the independance to run your own race.
 
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