Well, then you wander into the realm of Peak6, DRW, Ronin Capital etc. where in fact they are set up like a hedge fund and if you are 'successful' they will throw a couple hundred mill your way in terms of daily capitalization buying power. I was at Ronin for a couple years myself with an OTC energy trading group I ran - 2008 market crash dried up the liquidity instantly.
Where are the TRUE Prop Trading firms?
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Well, then you wander into the realm of Peak6, DRW, Ronin Capital etc. where in fact they are set up like a hedge fund and if you are 'successful' they will throw a couple hundred mill your way in terms of daily capitalization buying power. I was at Ronin for a couple years myself with an OTC energy trading group I ran - 2008 market crash dried up the liquidity instantly.
No, they're still around. Btw here is one of their interview questions: "If you have 9 marbles and one is heavier than the other 8. How can you use only a balance beam to figure out which is the heavy one if you can only use it twice."
Wonder what kind of answers they get (lol), and what do they actually want for that one?
9 marbles is 1 one more then 8.
Place 4 marbles on 1 side and 4 marbles on the other side. If the beam is balanced and no marbles roll off then we know that the remaining marble is the heavy one.
However, case #2 is one side goes down. We now know the heavy marble is 1 of the 4 on that side.
Take 1 out, that leaves 3. Take 2 of the 3 and place on the left side of beam. Take the other 1 (mark it), and add a safe (known not heavy marble to the other side).
If the sides balance then we know the 1 out is the bad one. However, if side B goes down then we know it is the marked one. If the side A goes down then we know it is one of the 2.
This is the best I could do on first thought.
Wait I got it...
Take 3 against 3. If one side goes down then we know it is one of the 3. If not then we know it is the other 1 of the other 3 that we held out.
Take the 3 heavy marbles. Take 1 out. That leaves 2. Weigh the 1 against the other. If one side goes down then that's it. If they are balanced then it is the one out!!
Bingo.
Place 4 marbles on 1 side and 4 marbles on the other side. If the beam is balanced and no marbles roll off then we know that the remaining marble is the heavy one.
However, case #2 is one side goes down. We now know the heavy marble is 1 of the 4 on that side.
Take 1 out, that leaves 3. Take 2 of the 3 and place on the left side of beam. Take the other 1 (mark it), and add a safe (known not heavy marble to the other side).
If the sides balance then we know the 1 out is the bad one. However, if side B goes down then we know it is the marked one. If the side A goes down then we know it is one of the 2.
This is the best I could do on first thought.
Wait I got it...
Take 3 against 3. If one side goes down then we know it is one of the 3. If not then we know it is the other 1 of the other 3 that we held out.
Take the 3 heavy marbles. Take 1 out. That leaves 2. Weigh the 1 against the other. If one side goes down then that's it. If they are balanced then it is the one out!!
Bingo.
Excellent question.
The reason why I WAS looking for a prop was to get access to a large Portfolio.
Think about it: When a trader makes 10k consistently with a 100k Portfolio, how much does the trader with 10 Million? Right, 1 Million. And how much she gets using a 50/50 profit split model? Right, 500k. Thats the motivation behind finding a prop.
However, im not loooking anymore for a prop because they are much more interested in candidates having a degree and have already worked at a hedge fund (or similar) than being profitable.
Another Problem with going to a prop is that you might not have full autonomy regarding to the trading strategy. Maybe you are required to adhere to their risk schemes, what might mean that you cannot apply your profitable strategy. In addition, other restrictions might exist.
So your right, at the end of the day you are much better off alone as an independent trader than joining a prop firm anyway.
Another fact is that the true prop trading business nowadays mainly use quantitative Trading. So they are looking for programmers (i.E. C++) who develop strategies and backtest using MATLAB. However, is this automatic trading really more successful than the "old school" manual trading? I doubt it.
Another thought is, that maybe there are better ways to get access to a large portfolio than joining a prop. Any ideas of such possibilities?
http://financerank.net/Trading/prop_trading/ : a list to help with your research.
Thanks for those two links