Trainee trader at prop shop/trading arcade

Guys,

I am interesting in getting a Trainee Trader position at a prop shop/trading arcade. I understand there is usually a 3 to 6 month stage where the firm will train you up and have you on sims, and then after that "let you loose" on the market to trade with their capital if you show promise. 50/50 splits would seem to be the norm.

Naturally, I'm guessing they'll assess the level of risk they are willing to take with each individual based on their performance and business objectives. What I'm interested to know is what kind of £ ball park figure a trained grad can expect to handle after training and generally (percentage-wise) how much of a return on that capital a prop shop/trading arcade would expect e.g. each month. I am really just trying to understand what the earning potential will be for me.

many thanks,

Ray

raytino said:

Guys,

I am interesting in getting a Trainee Trader position at a prop shop/trading arcade. I understand there is usually a 3 to 6 month stage where the firm will train you up and have you on sims, and then after that "let you loose" on the market to trade with their capital if you show promise. 50/50 splits would seem to be the norm.

Naturally, I'm guessing they'll assess the level of risk they are willing to take with each individual based on their performance and business objectives. What I'm interested to know is what kind of £ ball park figure a trained grad can expect to handle after training and generally (percentage-wise) how much of a return on that capital a prop shop/trading arcade would expect e.g. each month. I am really just trying to understand what the earning potential will be for me.

many thanks,

Ray

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3 to 6 months seems like a long time to have you training. It's not cheap (lot of overhead) to have you in the office not earning money for the firm, so 2-3 months max would be more likely as to your "training" period. Going in with no capital will mean a ****ty deal for you- 50/50 is probably close to accurate. They will probably let you trade their conservative (high commission generating) system to start out with and it will take several months to dig out of the hole you will more than likely be in after your first 2 or 3 months of trading. Just being honest. Use the experience to learn as much as you can, but with a 50/50 split you can never make a living trading (either renegotiate a better deal, or leave once you have learned something)

They will probably let you lose around $2,000 (will only really be maybe $1000 out of their pocket because of the markups) before they show you the door. If you happen to be that 1 out of 5 traders that becomes a profitable trader, the prop firm will make 50% of your net profit as well as the markup on your commissions. If your net positive $10,000 in a month (on say 750K shares), you take home $5,000 and the prop firm takes home $5,000 PLUS probably another $1,500-$2,000 in commission markups. 1 good trader out of 5 is not that bad of a business model for a prop firm training greenhorns.

I'd say don't bother with an arcade unless your getting a good salary and a good split.Most of the scalping opportunities in futures markets have dried up as algorithmic machines are much faster and have taken over.It's only the established traders that are making money now and is harder than it's ever been for a trainee.My advice is ethier work for a real prop shop not an arcade,a bank or hedge fund if you want to trade.

Firstly a decent trainees position will have no set defined learning period on the Sim as different people take to it at different speeds, also a good trainee program will access your attitiude to risk and characteristics and put you into a product that gives you best probability of success.
A buddy system which ties you up with an experienced mentor also gives you a better chance of success.
Dont worry you can still make a living even on a 50/50 although it is harder now than it was 2 years ago for the reasons Welco11 has stated. But if you are realistic about your P&L targets and disciplined you can still make reasonable money and as you build a track record so the splits and commissions should turn further in you favour.

raytino said:

Guys,

I am interesting in getting a Trainee Trader position at a prop shop/trading arcade. I understand there is usually a 3 to 6 month stage where the firm will train you up and have you on sims, and then after that "let you loose" on the market to trade with their capital if you show promise. 50/50 splits would seem to be the norm.

Naturally, I'm guessing they'll assess the level of risk they are willing to take with each individual based on their performance and business objectives. What I'm interested to know is what kind of £ ball park figure a trained grad can expect to handle after training and generally (percentage-wise) how much of a return on that capital a prop shop/trading arcade would expect e.g. each month. I am really just trying to understand what the earning potential will be for me.

many thanks,

Ray

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I joined a prop house a couple of years ago starting trading us and german notes before moving on foreign exchange. to be honest, dont expect anything amazing in your first year. e.g by the end of my first year I had an overall max trade size of 200 lots spread over 3 contracts but you will find that if you wanna survive you should use your max size sparingly thereby giving you room to 'breathe'. I stated on a total of 5lots so the volume curve can rise rapidly if you impress. Most new traders lose in their first couple of months but turn it round after so dont be alarmed if initially you start losing! money-wise if you're getting a 50/50 split or above the chances are you will have a very small basic (if any) which is a double-edged sword since you have less to cover in terms of costs (almost all prop firms paying you a basic require you to cover it) but obviously have less security come the end of the month. the place i was at gavea reasonable basic but that comes at a price i.e say if you geta 35% cut, you make £150,000 (after bro costs) in your first year (which would be pretty f**kin good going!), you get a salary of £25000, desk cost of around £10,000, you'll get around £52000-£25000-£10000 so £17000 which is ok but not amazing. The real money comes if you can crack it after 2-3 years and be making upwards of £500000 as companies realise that if you are generating more it pays to give you a bigger cut to keep you happy plusalso they can take a smaller slice of a larger pie! so at my old company they paid around 35% upto around £400000, 50% to about £800000 and over that around 65%. As a wise man once said its a marathon not a sprint and those who can keep up stand to reap the rewards! Having said this, my basic was capped at £50000 so you have to keep making!

I run a prop firm and I give my traders 100% payout from the start with commissions being about a penny a share, after they are profitable and trading more volume they get better deals with their commissions. I started with a firm with a 50/50 split and let me tell ya its hard enough to make money but when you are giving away 50 or 40 percent to the house is just plain greedy by the house. All the trader is going to do is start searching for better deals and most firms still try to hold power in renogotiations because they think the trader still needs their capital.

Anyone know of people that have started on these trainee courses and gone on to make good money within a couple of years?

bears21 said:

I run a prop firm and I give my traders 100% payout from the start with commissions being about a penny a share.

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I think you're comparing apples with oranges - UK prop firms are mostly futures not stocks.

That said, if you can do 100% payout and a penny per contract backing traders in futures, you should open up a shop over here!!

Arbitrageur, are the guys doing fixed income futures at arcades generally doing well?

bears21 said:

I give my traders 100% payout from the start

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I'm pretty sure you're leaving out details here. Because it sounds completely ridiculous otherwise. You give 100% of profit to the trader while assuming all the downside risk? Doesn't sound like a rock solid business plan there mate, feel free to correct me if I've misread your post.

Does 1 cent a share cover the possible loses of traders? Trade futures so not sure how share trading works out in a prop shop environment.

UKUK said:

Arbitrageur, are the guys doing fixed income futures at arcades generally doing well?

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depends who you speak to, the guys I know have good months and bad months, but overall seem to be generally doing well.

until last week, the bund had been pretty slow trading in the spead for a few months apparently, but picked up nicely since the stocks dumped.

welco11 said:

My advice is ethier work for a real prop shop not an arcade,a bank or hedge fund if you want to trade.

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I haven't start looking for a job yet, but I think I'll try the buy side; any name of good real prop to suggest where to be a trainee trader??

(The more I read around in this forum the more I realize that it could be difficult to assess real quality and honesty of a company...)

Tks

iagho said:

I haven't start looking for a job yet, but I think I'll try the buy side; any name of good real prop to suggest where to be a trainee trader??

(The more I read around in this forum the more I realize that it could be difficult to assess real quality and honesty of a company...)

Tks

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Hi,

There are quire a few companies out there. For a start try;

TCA (Traders Clearing Alliance)
Schneiders (Scheiders Trading Associates)

Also take a look at http://www.efinancialcareers.com/. A few advertise on here...

Tks a lot Richie, I'll start fom there : )

I wouldnt bother with arcades...everyone will tell you that being a local is not what is was and the opportunities to make good money when you are a junior with no capital are pretty much non existant. Get a job that pays a wage...you will be much happier trust me.

maximm2008 said:

the opportunities to make good money when you are a junior with no capital are pretty much non existant

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Are you on crack?

The markets are so volatile right now the opportunity is higher than ever imo so long as you are on right side of the market!

N00bs look at the charts of the most markets and you will see what i mean

black-star said:

Are you on crack?

The markets are so volatile right now the opportunity is higher than ever imo so long as you are on right side of the market!

N00bs look at the charts of the most markets and you will see what i mean

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well volitile or not if you are on the right side of the market you are going to make money!

I was talking about the fact that juniors have to trade tiny size with extremely tight limits as their prop firms arent going to allow them to do their ar*e and loose them a sh*t load of money. So if you are a little local trading 5 lots in the bund and your boss says " you are getting stopped out if you are 10 ticks down" then its f*cking tough to make any money as you cant see any pain on any trades even if, fundamentally, you are right in your idea.

I wasnt taking about market conditions.....

maximm2008 said:

well volitile or not if you are on the right side of the market you are going to make money!

I was talking about the fact that juniors have to trade tiny size with extremely tight limits as their prop firms arent going to allow them to do their ar*e and loose them a sh*t load of money. So if you are a little local trading 5 lots in the bund and your boss says " you are getting stopped out if you are 10 ticks down" then its f*cking tough to make any money as you cant see any pain on any trades even if, fundamentally, you are right in your idea.

I wasn't taking about market conditions.....

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I understand what you are trying to say, does this mean that "back in the day" trainees where given larger size to start trading with or that company's would be more lenient with stops?

I'm just curious i have not been involved in the arcade business long enought to know.


I'm pretty sure Paul rotter started in Bunds with a 5 lot?

black-star said:

I'm pretty sure Paul rotter started in Bunds with a 5 lot?

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yep, and worked his way up. At his peak he was churning 360,000 spins a day out in the bund/bobl/shatz complex & building trades up to 10,000 lots.

I met him - a very interesting and funny German. (Czech actually)

black-star said:

I understand what you are trying to say, does this mean that "back in the day" trainees where given larger size to start trading with or that company's would be more lenient with stops?

I'm just curious i have not been involved in the arcade business long enought to know.


I'm pretty sure Paul rotter started in Bunds with a 5 lot?

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I am no expert either as I have not been doing as long as a lot of people on here but from what I am told from really experienced traders and from what I have seen as well is that the dynamics of the most liquid futures markets has changed. 10 years ago there were no way near as many participants as there are today and with the rise of algorithm trading and the more extensive use of futures for hedging rather than speculation has lead to much harder conditions for todays grads who are starting. Players with the balance sheet to do so can manipulate locals as they know exactly what locals look for and how they will react to certain situations and with such tight stops most end up being sitting ducks. Something I hear a lot from older traders who have made money and are established is that they dont think they could have got to the level they are at in todays markets....but they stay profitable as they are able to take hits or see more pain than a grad without being stopped out or given the boot after losing 2k. I have seen loads of grads get the axe even though I think they would have ended up being good traders just because they had a bad start and hit their a/c stop before they could prove themselves...

Even Paul Rotter did his a*se when he first started but he got a second chance and made it count...but for every 1 Paul Rotter there are 1000 who dont make it....(not saying that you wont mate, just making the point)...

This is just my opinion but I see more and more people leaving the prop game so it cant just be me who thinks this way.