I'm really skeptical of anyone who says they can get consistent ticks, even 1-4 ticks /day. If *anyone* could get any consistent ticks, using ES you could just raise your contract size to where you'd be a millionaire in a year or two. If you have even 20 consistent ticks, you would be a quiet millionaire trading from exotic beach via satellite.
Sorry for raining on your guys' parade. I could be wrong, though.. and now wouldn't that be sweet.
2 things you should not concern yourself with, when you are first learning how to trade: 1) how much money you are making, and 2) how long it's going to take until you are making money.
Your singular focus should be learning how to trade correctly. If you rush the learning process, and pick up bad habits in the process, you will only have to un-learn them in the future. Making money will take care of itself, when you you trade well.
When I first left the floor, I traded prop for a year at Schoenfeld, and they did not have any minimum P&L threshold requirements for any of their traders. Legitimate prop houses are more concerned with how a trader controls his risk, than how much money he is making. This is a sentiment that should also be your overriding concern.
Last edited by tigertrader; October 23rd, 2010 at 10:08 AM.
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I never understood why anyone would join a prop firm for futures unless they didn't have to put up any capital to trade. Paying for prop firm education doesn't make sense to me either, since the firm benefits from teaching the trader to make money. Education should be a cost of doing business for the prop shop in a profit sharing arrangement.
Finally, a trader can get the same margin on futures as a prop shop without giving away a cut of profits. Equities prop shops, on the other hand, offer margin a trader otherwise couldn't get.
A good prop firm doesn't require you to put up any capital. That's the attraction for most.
If you don't have alot of capital, and you can get into a shop that isn't going to nickel and dime you, it's a decent path.
EVERY prop firm will require you to deposit funds upfront to cover potential loses... unless you are a proven trader with an excellent track record. And if that's the case they'll take a hefty percentage of your profits.
I couldn't agree more. I traded somewhat successfully under fundamentals, then got frustrated due to a bad patch and jumped to the 'dark side' of TECHNICAL trading. It was a steep learning curve at first, and the two questions I kept asking were the two above!
The only thing that answering those questions does is deflate you to a point where you want to quit and also helps you lose money.
I remove all instances of 'money' from my charts, my dom etc. I don't speak in dollars either as it is too much pressure. I used to make 2K a day in my normal business (before recession) and now for some reason it is a big deal of making $20.00 per day trading!
The key understanding for me was the 'being right'. Our EGO's are fragile (well, most of us) and the thought of being wrong more times than right just destroys us mentally.
In my opinion, one must remove the EGO so being right isn't an issue. Once you have done that, then trading for money or training time isn't as much of an issue. You must only compare your success against your own and that will keep you somewhat motivated!
The best attitude is to go in with full disclosure to your EGO, "I am going to pay money to do this, this is going to take me a while to learn and be competent in" and then ask yourself is that OK. It is a lot like building your dream home. You will have a budget and an estimated completion date, but it will always cost more and take longer to complete then you ever imagined and so goes life.
It is amazing the psychology involved.
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This post has been selected as an answer to the original posters question
Here's the deal if you are an experienced trader, and you are considering a "partnership" with a prop firm. You will have access to the kind of buying power you never would have had when you traded independently. However, the trade-off is your payout is going to be 30-35% of your net P&L, depending on the firm and depending on if you are trading equities or futures.
So, you must be able to scale your trading to the point, where you are making substantially more money than you were making, when you were trading independently, just to earn what you were earning when you were trading independently. And you are going to have to trade from their offices; they will not allocate capital to you, and allow you to trade remote.
If you are a beginner or an inexperienced trader, it might be difficult to find a prop firm in this ( HFT dominated) environment, that will "hire" you, and teach you how to trade their money. Schoenfeld recently terminated about 1/3 of their traders, due to their inability to make money in these markets. The exception is if you have quant skills, then you will be in demand.
One caveat: If a firm requires any kind of deposit, the odds are they are not a prop house, but a commission house, that is more interested in churning your commissions or engaging in liquidity rebate trading.
Last edited by tigertrader; October 23rd, 2010 at 02:16 PM.
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