Which Prop CME Futures Firm?

[Laissez Faire]

If your intuition was wrong, then it wasn't genuine intuition. Genuine intuition is never wrong.

That is intuition.

How can you expect to intuitively know if a market will go up or down if you have no experience trading that market?

If your intuitive system were really good - then you'd trade that and stake up on it. Fund a small micro account or do one of those funded programs you mentioned on page 1.

 

[DrCornwallis]

How can you expect to intuitively know if a market will go up or down if you have no experience trading that market?

If your intuitive system were really good - then you'd trade that and stake up on it. Fund a small micro account or do one of those funded programs you mentioned on page 1.

I have no 'intuitive' system.

I have technical analysis, which I learned on an online course (Mtk Structure, Divergences, Fib Levels, etc etc), and which experience has taught me, the conventional application of which is generally pretty fkn useless, WITHOUT also having an intuitive eye for the flow of the market.......so I am far from the finished article, but Rome wasn't built in a day.

I do however already know that I can run a small FX account profitably....whether I could pass one of those Online Prop evaluations and stay funded, is another matter. Running a £2K FX account where I am taking £20 risk per trade. 1%. No big deal, and the cfd broker lot sizes generally allow for any size that suits. Not so in the futures markets. Also the prop firms basically force the trader to take ~25% allowable risk on each trade. You don't need a Phd in Maths to know that sooner rather than later, everyone is going to blow up under these parameters, no matter who you are......then there are these Trailing Drawdown, where a trader can be running an account in profit, and still break the rules.....any prop firm (i.e. most of them) running these 'intraday' trailing drawdown schemes is completely and utterly beyond the pale in my view.

.......all seems like a bit of a circus game tbh.......but still, could a trader hit one of these prop firms, on a good run of form like we all have from time time, and make out like a bandit? sure....

.

 

[Same Lazy Element]

but yes it’s a bit silly when you see the quant naysayers. I like the “they’re just hired to impress potential investors” line, when top prop firms have so many PhDs (from what I’ve heard and seen on LinkedIn) or people with a masters in mathematical finance and zero investors. They’re there because they generate alpha!

Nothing, including sophisticated mathematics is really "required" to be successful in this business. It helps, however, to have a good grasp on the basics like statistics, simple linear algebra etc. Most of the alpha is relatively simple, it's finding it that's hard. Everything, including non-quant strategies benefit from injecting some quantitative thoughts. Just the same, every quant strategy benefits from adding some common sense. It's hard to say what the right balance is and it's silly to deny that both are important. I would venture, however, that it's much easier to achieve success by leaning heavily on the quant side than by trying to develop intuition.

PS. As for Nav and Igor, they are sufficiently quantitative to build sophisticated automated strategies and play pretty complex games around the order book. I also got a sense that both are doing a fair number of shady things (e.g. both have been sanctioned for spoofing, btw) and that a lot of their manual games have been less successful in the last 2-3 years.

 

[snowman80]

@Same Lazy Element true but garachen (someone who has a masters in mathematical finance) and owns a real trading company (not trading arcade) that does a lot of algorithmic trading laid out a process for how he teaches manual trading based off of intuition in a thread here:
https://www.elitetrader.com/et/threads/a-path-towards-profitability.236208/

He also said:

“That's right. This method of manual trading I presented purposefully has nothing to do with math. That's why I said math is not required to be successful.

That doesn't mean that modeling intensive approaches don't work. Of corse they do but from my experience the edge captured by a manual trader is quite a bit larger than what most algorithms are capable of.

Yeah. I can price a Bermudan swaption off the Mexican yield curve which was a great skill for when I was a quant but not so useful for manual trading.” -grach 2012

considering he mentions that he expects his manual traders to average 7 figures a year and he said his strategies as a whole (automated and manual) have a sharpie ratio of 7-9 that’s pretty good for just “guessing”, no? But garachen does say that a high degree of “mathematical intuition” is necessary for all trading even the method he lays out which isn’t math based.

I just wouldn’t be so quick to knock an approach that involves watching the book/charts/correlations/news and trying to sense out momentum and mean reversion. That’s how Nav Sarao traded and he did 8 figures a year for many years (and recently) and averaged around 100,000 contracts a day in the ES. I BELIEVE (maybe you know someone that actually knows) that this is how Igor oystacher traded/trades and he was one of the biggest traders in the ES (but he also owns 3red which does a lot of quant/algo stuff from what I understand)

but garachen did say

“I don't hire people to teach them to manually trade anymore because generally there's a better use of everyone's time, but I'm not opposed to them picking it up.” -in 2014

other posts show him being a bit more bearish on manual trading, that it’s gotten harder but it could still be done at a high level. I asked him some stuff about intuitive manual trading a few months ago and he didn’t say anything along the lines of “that can’t be done anymore”.

I’d bet that DRW still has people trading in the old school manner at a high level but they probably don’t hire people to trade like that anymore. From what I understand the top places don’t pay out that much (I’ve heard 25-50 percent for jump, drw, and the like) so I don’t think it would be easy to retain the best manual traders. I don’t think that’s the primary reason for so much algorithmic trading among the top prop shops just that it could be a small contributing factor. Algorithmic traders benefit from their infrastructure, tech and teamwork so it makes sense that you could still retain some of the best quants with a lower pay out. Plus if they decide to jump ship they get to keep their IP. Just think that those could be some reasons for the quant/algo revolution among prop shops (I’m an outsider but that’s what is happening from what I can gather) outside of quantitative approaches just being vastly superior to discretionary manual.

but yes it’s a bit silly when you see the quant naysayers. I like the “they’re just hired to impress potential investors” line, when top prop firms have so many PhDs (from what I’ve heard and seen on LinkedIn) or people with a masters in mathematical finance and zero investors. They’re there because they generate alpha!

these top shops are interested in maintaining and expanding their moat which comes from technology, IP, code etc etc

an old school charts and intuition gunslinger adds nothing to their moat

 

[bone]

If there was, for example, an experienced German Basis Trader with a track record whose wife was getting transferred to London - then sure, DRW would likely interview him about a job in their London office. DRW has a Houston office and I'm sure it's there for one reason: Energy. And that means Swaps and most of those physical markets are still voice broker-intensive.

But their typical hire is either straight out of college or even someone without a degree who demonstrates exceptional problem solving and technical expertise. All of the young hires are pretty much expected to be proficient at programming or data mining and statistical analysis.

these top shops are interested in maintaining and expanding their moat which comes from technology, IP, code etc etc

an old school charts and intuition gunslinger adds nothing to their moat

 

[snowman80]

But their typical hire is either straight out of college or even someone without a degree who demonstrates exceptional problem solving and technical expertise. All of the young hires are pretty much expected to be proficient at programming or data mining and statistical analysis.

yeah that sounds about right

last guy i know who went on to work at jane st didn’t even seem that interested in trading. he was a young kid, sharp, math background, great coding etc

but i’m sure if you have years of experience trading for big oil or maybe ADM or Cargill they would love to speak to you just for the insights alone.

 

[Same Lazy Element]

last guy i know who went on to work at jane st didn’t even seem that interested in trading. he was a young kid, sharp, math background, great coding etc

I would draw a distinction between a de fact technology firm like Jane Street or Hudson River and an old school prop firm like DRW or Ronin (RIP). I think you can get pay well while being purely a smart technologist in the former, but you definitely have to be comfortable with the market and risk in the latter.

 

[bone]

I wouldn't personally label DRW as "Old School" per se.

I would draw a distinction between a de fact technology firm like Jane Street or Hudson River and an old school prop firm like DRW or Ronin (RIP). I think you can get pay well while being purely a smart technologist in the former, but you definitely have to be comfortable with the market and risk in the latter.

 

[2rosy]

I wouldn't personally label DRW as "Old School" per se.

one way to draw a distinction is number of firms spawned from a firm. more "trading" firms will have more children