Wisdom on a prop trading career

R

ronnym789

Thanks for taking the time to read this post. I'll try to make it brief.

I was forced out of the US Air Force seven years ago due to a workplace injury as an IT professional. It developed into a severe chronic illness that left me unable to maintain employment. I was forced to become a stay at home dad and I have been one for the last five years.

One year before I was kicked out of the military, I was exposed to an educational trading company and I bought into it. I loved everything about trading but I ran into a couple problems (low capital and crippling pain) so I stopped.

I figured out what was causing my health problems and worked my butt off for the last 3 years to restore my health. I no longer struggle with chronic illness.

Now that my children are all in school, I have been thinking about finding a proprietary trading firm to work with. I believe that teams perform better than individuals and I prefer working with people than by myself anyway.

After scouring through this forum for answers, this is what I have learned about a potential career as a new trader at a prop firm:

1. Proprietary trading firms are ideally looking for traders with great track records of success. The trader seeks out these firms so that way they can have greater access to capital to make more money. Win-win for both as each takes a cut of the profits.

2. Some prop firms will allow new traders to come in as long as they put up some capital at risk and buy into their educational program. (I'm leery about this approach because I don't know how to discern whether or not the firm is legit. I also wonder if the firm will truly coach new traders through their trading mistakes long enough for the trader to become profitable.)

Or some firms are looking to bring on students finishing from colleges with STEM degrees.

3. Get a regular full-time job and trade on the side. Once trading becomes profitable enough to live on, consider quitting full-time job to become a full-time trader or a prop trader.​

Are these observations usually true? Is there anything else that I'm missing or that I have wrong?

My ultimate goal would be to become a trading coach/trainer but (obviously) I would want to excel as a trader first.

I have two final questions:

1. Are there any great remote prop trading firms that train and coach new traders into becoming excellent traders?

2. Do you have any suggestions for me as an aspiring trader in my position?

Thank you!
 
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Hi ronnym789, sorry to hear about your struggle but happy to hear you are better. First, understand that not all prop firms are set up the same and have the same goals or generate profits from the same source.
Joint Back Office-JBO-prop-These are broker-dealers that take your money as first loss and provide leverage. You are required to take a FINRA exam and be registered with that BD. These firms generally generate revenues from marking up commissions and charging for training. Their profit split is typically small so their incentive is to see you be active but not lose their money.
Traditional Prop- They can be Broker-Dealers or not. They are set up much like a hedge fund but are not looking for capital which is funded by the partners, not you. They only make money when you make money. You will be an employee with some type of contract. If they are a BD you will be required to take the FINRA tests.
 
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Now to respond to your questions. #1. JBO prop firms don't care but traditional prop want to see a track record or that you have some type of strategy they are interested in, usually with a unique data set or process. They prefer systematic trading. #2. Yes, JBO Prop. #3. Not a question, but trading on the side to start makes sense. Final Questions: #1. Not that I'm aware of. #2. Find a simple process that works for you that fits your capital base and your tolerance for risk. Never just copy or follow a service.
 
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fan27 said:
Based on your previous experience, I suggest focusing your efforts on some sort of IT related career. You have a family to support and with an IT/Software job you can easily have a six figure salary and trade on the side.
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It would be very challenging to get back into an IT related career. Although I rarely struggle with chronic illness anymore, I have other medical issues such as carpal tunnel and spine problems that would make it very hard for me to work in IT again. (With that said, swing trading appeals to me the most since I don't have to sit behind a computer all day).

Robert Morse said:
Now to respond to your questions.

#1. JBO prop firms don't care but traditional prop want to see a track record or that you have some type of strategy they are interested in, usually with a unique data set or process. They prefer systematic trading.
#2. Yes, JBO Prop.
#3. Not a question, but trading on the side to start makes sense.

Final Questions:
#1. Not that I'm aware of.
#2. Find a simple process that works for you that fits your capital base and your tolerance for risk. Never just copy or follow a service.
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Are there traders that eventually become profitable at a JBO prop firm? I personally don't mind taking a long string of losses at the beginning. That's all normal and part of attending UHK (University of Hard Knocks). Losses = money spent for learning.
 
I'm not the best person to ask that. I'm not a fan of those props firms. I was in one for a year and was not happy back in 2010. I would stick with a customer account with less leverage or learn futures where there is natural leverage. It sounds self-serving as that is what we offer but it is also how I feel.
 
Robert Morse said:
I'm not the best person to ask that. I'm not a fan of those props firms. I was in one for a year and was not happy back in 2010. I would stick with a customer account with less leverage or learn futures where there is natural leverage. It sounds self-serving as that is what we offer but it is also how I feel.
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That's a fair response and very honest. I suppose it doesn't surprise me to see that's what you stand by now so good for you .

Anyone know anything about intermediate term JBO firm profitability?
 
ronnym789 said:
It would be very challenging to get back into an IT related career. Although I rarely struggle with chronic illness anymore, I have other medical issues such as carpal tunnel and spine problems that would make it very hard for me to work in IT again. (With that said, swing trading appeals to me the most since I don't have to sit behind a computer all day).
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If that is case, I suggest finding a situation that has regular income and do trading as a second source of income. Unless you have a big pool of capital to work with which you don't, relying on trading for steady income is a fools errand.
 
fan27 said:
If that is case, I suggest finding a situation that has regular income and do trading as a second source of income. Unless you have a big pool of capital to work with which you don't, relying on trading for steady income is a fools errand.
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I agree. I do have a steady source of income from my military service and on top of that, my wife works. I'm in a position to consider trading part time even though I don't have a large amount of capital to work with.
 
ronnym789 said:
I agree. I do have a steady source of income from my military service and on top of that, my wife works. I'm in a position to consider trading part time even though I don't have a large amount of capital to work with.
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You don't need a lot of capital. If you're right more than you're wrong anyway.

Look at trading high delta, near dated options to emulate trading the underlying.
 
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