i know it has been metioned by some how a prop shop on your resume will potentialy hurt you. what about if you started an llc, and traded for yourself, and had mild success, but after 3 yrs, decided you wanted something with more upside potential. just wondering bc i am about to graduate college and thought about the llc. thanks for any advice
transitioning into an institutional career from prop
- Thread starter BOSS_HOG
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Well, in real life (which is different) any flow trader has some kind of prop view on his book, there is no real way to hedge all the risks while keeping at least some of the profit. If you think otherwise, you are wrong.
Not true. A fully hedged book is far more diffucult to maintain then a book repsenting a market view - think about it yourself.
Well, for one there are probably as many traders going to HF as going from them - I am one of the latter. The main reason to go HF is fatter paycheck. That's the reason to go from IB to HF too
I have to note that the highest paid trader I know was at an IB.
Quote from sle:
Well, in real life (which is different) any flow trader has some kind of prop view on his book, there is no real way to hedge all the risks while keeping at least some of the profit. If you think otherwise, you are wrong.
Not true. A fully hedged book is far more diffucult to maintain then a book repsenting a market view - think about it yourself.
Well, for one there are probably as many traders going to HF as going from them - I am one of the latter. The main reason to go HF is fatter paycheck. That's the reason to go from IB to HF too
I have to note that the highest paid trader I know was at an IB.
Observations: First off, we have hedge funds involved in BT, and AB Capital is a Hedge Fund (you can guess what the 'B' in "AB" stands for).
"Hedge funds" for the most part have nothing to do with "hedging" (I said "for the most part)....we try to simply outperform the market (not too tough these days, lol), and put on and take off positions to carry out this task. Short term market direction, market disparities (futures/options/equities/etc.)....and since we can move quickly, we can "run the hedge fund" much like our trading account.
The simple methods that can return 12% - 25% or so per annum allow great flexibility and not much risk. But this "managing" (I use the term loosely....how much "managing" is really required, especially compared to trying to make a few hundred grand for yourself in your own trading.?) idea as a "job" is simply that, a job. Most "managers" simply try to "lay off" risk by employing other fund managers, and so are not really "managing" anything.
(As always, there are exceptions). If you want to get into being a "hedge fund manager" then set you goals a bit lower to begin with, hone your trading skills, not just your sales skills. If you show consistency, the money will come to you, and you won't have to chase it. And if it doesn't, who cares? You're making good money on your own.
If you can't make money trading, then what in the World makes you think that other people should give you their money? OPM sounds nice, but you can see the downside these days....the OP are getting a little upset by the treachery and tactics employed.
The regulatory conerns focus primarily on the loose structure of the small "hedge funds" and (I think) rightfully so. There is great room for unethical activity....and a really good "trader" wouldn't bother with a 2% /20% deal unless he had a hundred million or more to play with (thus giving him a minimum "draw" of $2 Mil. Which means you have to talk the poor (rich) investors into paying you double what they can receive from a bank jus off the top.
The larger firms (Billion or more), can probably put a few traders to work, but not that many "discretionary traders." More likely, the "jobs" are more robotic in nature ...especially since so much is automated these days. Those big bonuses and extraordinary salaries are something to tell your grand-kids about.
The next couple of decades will see the beginning of the demise of mutual funds and the like (probably happen sooner than later with Putnam helping out). Like most bureacracies, they will eventually eat themselves up.
Please understand that I am NOT saying that daytrading or prop trading is the answer either...not by a long shot. It is the mind set of the next generation of entrepreneurs that will make the difference....regardless of what field is chosen, it will be the individual thinker who succeeds...the "team player" was fine in the "old days" of the 1990's etc., but when you found out that the team has left you stranded, then you really start to think about how you can avoid going down the tubes the same way.
I'm also not a "doom and gloomer" ..but I like to be a realist. And I really think that the top 10% of achievers will be of the individual and entrepreneurial mind-set. How long can you be comfortable waiting for the "axe"....? How many "Company players" are now without their pension or the proverbial "gold watch.?" Start a business, work hard, don't screw anyone over, and do what you love doing....(again, this may sound trite and trivial, but it's always worked for us).
Anyway, enough babbling....I am simply hoping that some of you will think about doing it (whatever "it" is) yourselves....lead the pack, and don't get caught up in the trappings of being taken care of by the "team."
OK, heading off for an evening of Blackjack and a Saturday night of Simon and Garfunkel live (reunion, again....).
Don
Oops, forget to hit submit....It was a good night, last night....came back home to get ready for radio show....
Well, that was exactly the point.
QUOTE]Quote from Don Bright:
The larger firms (Billion or more), can probably put a few traders to work, but not that many "discretionary traders." More likely, the "jobs" are more robotic in nature ...especially since so much is automated these days. Those big bonuses and extraordinary salaries are something to tell your grand-kids about.
[/QUOTE]
I suspect that the fund I have worked at and your fund are two different worlds (not to say that any of the two worlds are bad). If you really think that running a big OTC derivatives book at a bank is robotic in nature, well, good for you. I would say that scalping equities sounds far more robotic, but then again, I have never traded equities.
I am also not sure where the "not too many discretionary traders" idea came from - there are large prop desks at any big firm, trading instruments that no "prop" firm (or whatever you define yours as) would be able to deal with. With all due respect, I do not think there are any prop firms that trade exotic derivatives, for example.
I suspect that the fund I have worked at and your fund are two different worlds (not to say that any of the two worlds are bad). If you really think that running a big OTC derivatives book at a bank is robotic in nature, well, good for you. I would say that scalping equities sounds far more robotic, but then again, I have never traded equities.
I am also not sure where the "not too many discretionary traders" idea came from - there are large prop desks at any big firm, trading instruments that no "prop" firm (or whatever you define yours as) would be able to deal with. With all due respect, I do not think there are any prop firms that trade exotic derivatives, for example. [/QUOTE]
'OK
I will certainly concede that "running an OTCl derivatives desk would be pretty intense....and would be glad to come by to visit yours. Send me a PM, if you don't mind, I would like to see the action.
My thoughts are directed more towards the individual working for themselves attempting to transittion into a trading job.....and although I have seen many electronic "desks" in action, II am always open to seeing something new.
l(more later, I'm in a hotel with TV WEB and a crappy keyoard)....
II will check my PM tomorrow....I'll be happy to return the favor.
Don
Sorry for the typo's in the last post...those "TV Web" systems with remote keyboard, leave a lot to be desired.
Just to re-iterate...I would love to see anything involved in trading those "exotic" derivatives....if there is something I am unaware of, invite me to your trading desk.
Our focus in the schools (away from Bright Trading), is showing students, young and older, that they can't really rely on any big firm or institution to carry them along with a "job." We hope to instill in these students the confidence to be their own boss, in whatever field they choose. We all see that the jobs are dwindling, and the time of the entrepreneur is dawning once again. Don't be intimidated by anyone, especially in the trading world...a bunch of fancy jargon and flashy offices does not equate to success, either individual or corporate. How fancy were the Enron offices, how "exotic" were their deriviatives?
The 60 Minutes special about the guy who sold his software company and then got burned by an accounting firm (financial planning, my butt!)....and paid 13 million (or so) for fees to arrange a "complicated derivatives play" for tax advantages. This was nothing more than a delta neutral, common products (underlying) spread, where they sold the loser to take the tax loss....how "friggin" imaginative....and he still got caught holding the bag, and facing jail time....while the accountants are home free.
So, don't listen to those "brokers" et al...they will only make you "broker." Learn what you can, make your own choices, and try to be independent!
Back to you all...
Don
Just to re-iterate...I would love to see anything involved in trading those "exotic" derivatives....if there is something I am unaware of, invite me to your trading desk.
Our focus in the schools (away from Bright Trading), is showing students, young and older, that they can't really rely on any big firm or institution to carry them along with a "job." We hope to instill in these students the confidence to be their own boss, in whatever field they choose. We all see that the jobs are dwindling, and the time of the entrepreneur is dawning once again. Don't be intimidated by anyone, especially in the trading world...a bunch of fancy jargon and flashy offices does not equate to success, either individual or corporate. How fancy were the Enron offices, how "exotic" were their deriviatives?
The 60 Minutes special about the guy who sold his software company and then got burned by an accounting firm (financial planning, my butt!)....and paid 13 million (or so) for fees to arrange a "complicated derivatives play" for tax advantages. This was nothing more than a delta neutral, common products (underlying) spread, where they sold the loser to take the tax loss....how "friggin" imaginative....and he still got caught holding the bag, and facing jail time....while the accountants are home free.
So, don't listen to those "brokers" et al...they will only make you "broker." Learn what you can, make your own choices, and try to be independent!
Back to you all...
Don
They are about ..... big funds use these in various plays, large corporations use some interesting techniques to offset various risks. Mortgage banking firms have entire trading floors set up to hedge their various portfolios and also to make pure profits from trading - embedded options can be abstracted under certain risk compositions.
There are actually quite a few organizations that utilize a proprietary trading component in their structure. That is, a unit that exists to make profits purely from trading the firms capital - although they may also be involved in hedging portions of portfolio risk.
I know that they exist, I would like to visit one where the traders are fully discretionary with the Firm's capital....
Don
