i know failure rate for most retail guys is 90% or something like that, and higher for intraday traders. I've heard that only 10-20% of prop traders make it on average. Do they fail for the same reasons as retail traders, or is it mostly other factors like stresses of intraday trading, emotionally managing large amounts of capital, something else?
why does prop trading have such a high turn over?
- Thread starter spectastic
- Start date
Because trading is hard, really hard.
Of course in hindsight or paper trading it seems really easy. And there is always a small minority of people printing money at any particular point in time to make it look easy.
We all know why trading is really hard, it is a long list, not just one thing in particular.
Of course in hindsight or paper trading it seems really easy. And there is always a small minority of people printing money at any particular point in time to make it look easy.
We all know why trading is really hard, it is a long list, not just one thing in particular.
Trading is hard and prop trading with very tight stops and conditions is really really hard.
Prop trading is a not a viable product the way it is sold. The firms know the trader will fail but want to lock in the training fees etc. It is a deception predatory marketing, prop trading should be made illegal by SEC.
Prop trading is a not a viable product the way it is sold. The firms know the trader will fail but want to lock in the training fees etc. It is a deception predatory marketing, prop trading should be made illegal by SEC.
I think you are confusing true prop with a lot of the 'programs' out there at the moment.
To give you an example, when I was hired (>15yr ago), I took part in a multi-month, in-house training program (London, UK). I did not pay for this training. In fact, I received a base salary for the first 6 months, regardless of any profits drawn during this period.
Needless to say, as a prop trader I traded firm capital, desk / platform fees were deducted from my trading account (starting after x months, I believe 6, but not 100% sure anymore), and I paid very low (tiered) commissions.
All of this was so the firm's interest were largely aligned with the trader. Unfortunately I don't think there are many deals like this around for people looking to get into trading.
Prop Trading the way it was during the rise of electronic trading 2000-2008 is basically dead and replaced by machines.
The average prop shop who had its people trained was more or less a market making operation and most of the guys who worked there were spreaders in short term interest rate markets. There were several exchange programmes for new traders and firms to lower fees and huge volume rebates.
Computers got better, profit margins lower and in the end people traded for the volume rebates. A few people were able to stay because they've gained very good market knowledge which translated into research edge.
Nowadays the old prop model doesn't exist anymore as there are just a couple of dinosaurs left...and these guys all look for programmers and IT - guys, too
The average prop shop who had its people trained was more or less a market making operation and most of the guys who worked there were spreaders in short term interest rate markets. There were several exchange programmes for new traders and firms to lower fees and huge volume rebates.
Computers got better, profit margins lower and in the end people traded for the volume rebates. A few people were able to stay because they've gained very good market knowledge which translated into research edge.
Nowadays the old prop model doesn't exist anymore as there are just a couple of dinosaurs left...and these guys all look for programmers and IT - guys, too
You can tell from these responses that few have ever set foot in a prop trading firm!
1. if you are successful at a prop shop you do not go home and trade because you will lose. the props have the tech and low fees.. duh if not then do not trade with them
2. you can walk into a prop shop with nothing and trade demo and if they like what thay see will give you a chance. if you suck competlely and cannto follow directions without a mentor then they will not give you a mentor.
3. getting a mentor at a prop shop is really just a trainer who works with groups and it is a weed out process always based on your risk. they want you to make money but they do not want risk.
4. prop shops can make a ton of money off of a break even trader or losing trader. there are multiple income streams built into the prop shop it is not always about them making their 20 %!! they have more than that built into the system and that is why they want lots and lots of short term trades with with double the fees! aka spreaders as so many like to talk about which means also that most lose at spreading which is true!! even at prop firms.
5. Most great traders are a FLASH IN THE PAN!! this means they do very well over a very short run and then they slowly bleed equity or they blow out quickly on a trade error or a bad trade.
the reaosn they lose is because they are paying fees even low and they are trading in markets that cannot be beaten 100 % of the time no matter how good you are at trading. YOU are still human and make mistakes no matter what. unlike computers that never change what they are doing...ever.
1. if you are successful at a prop shop you do not go home and trade because you will lose. the props have the tech and low fees.. duh if not then do not trade with them
2. you can walk into a prop shop with nothing and trade demo and if they like what thay see will give you a chance. if you suck competlely and cannto follow directions without a mentor then they will not give you a mentor.
3. getting a mentor at a prop shop is really just a trainer who works with groups and it is a weed out process always based on your risk. they want you to make money but they do not want risk.
4. prop shops can make a ton of money off of a break even trader or losing trader. there are multiple income streams built into the prop shop it is not always about them making their 20 %!! they have more than that built into the system and that is why they want lots and lots of short term trades with with double the fees! aka spreaders as so many like to talk about which means also that most lose at spreading which is true!! even at prop firms.
5. Most great traders are a FLASH IN THE PAN!! this means they do very well over a very short run and then they slowly bleed equity or they blow out quickly on a trade error or a bad trade.
the reaosn they lose is because they are paying fees even low and they are trading in markets that cannot be beaten 100 % of the time no matter how good you are at trading. YOU are still human and make mistakes no matter what. unlike computers that never change what they are doing...ever.