Training at Arcade

[Tubbs]

Does anyone care to enlighten us on the training techniques used at prop shops and trading arcades? I think this would be a valuable comparison to stuff found in most technical analysis books. Or maybe the usual stuff IS used.

I only went to one interview, but never took the position. There they were focussed on using Market Profile. I have studied it ever since.

Regards,

Tubbs

 

[RichieE]

Does anyone care to enlighten us on the training techniques used at prop shops and trading arcades? I think this would be a valuable comparison to stuff found in most technical analysis books. Or maybe the usual stuff IS used.

Most arcade traders that I've meet are focused on scalping short term interest rate futures (e.g. EURIBOR) using low risk and high trade volume spread strategies such as boxes and calendar spreads.

It's widely believed that the high turnover techniques are used to ensure that the arcarde maximises the commissions they charge. However, a lot of directional volatility is stripped out using these spread combinations making it easier to trade.

 

[fcmisc]

What exactly do you mean by Box Spread? Is it an options play, as described here (Box Spread), or something purely involving futures?

Most arcade traders that I've meet are focused on scalping short term interest rate futures (e.g. EURIBOR) using low risk and high trade volume spread strategies such as boxes and calendar spreads.

It's widely believed that the high turnover techniques are used to ensure that the arcarde maximises the commissions they charge. However, a lot of directional volatility is stripped out using these spread combinations making it easier to trade.

 

[DC STOXX]

http://www.trade2win.com/boards/spreads-trading/27033-box-spreads.html

 

[Directional]

Tubbs,
market profile is commonly used when traders are trading the outrights directionally, or inter-market spreads such as bund/bobl, it formed a core part of the training programme at Refco/Marex and I believe Mind over Markets was the MP handbook used at the time.

Calendars is much more about maths and basically working the spreads against other spreads to get onto advantageous prices - direction becomes much less important.

 

[RichieE]

What exactly do you mean by Box Spread? Is it an options play, as described here (Box Spread), or something purely involving futures?

The term 'box-spread' caused me some confusion since it appears to relate to different strategies depending on whether they are used in the futures or the options markets. (Hence the thread given by 'black-star' in a previous post).

 

[Tubbs]

Gentlemen, thank you for your replies. So the next question is - do neutral direction stratagies offer more potential over the long run?

 

[fcmisc]

Gentlemen, thank you for your replies. So the next question is - do neutral direction stratagies offer more potential over the long run?

In my view:

- neutral direction strategies are easier to learn, but less scalable (that's not to say you can't pull a good six figure income out of them)
- due to transaction and spread costs they are more suitable for professionals with software and DMA.

A lot of the edge comes from speed of execution. So it's hard to say whether or not there's more potential over the long run.

 

[PualoP]

The problem i see with the box spread is the execution risk. Actually putting on/taking off this kind of trade is inherently difficult and prone to getting legged and/or just not getting filled!!

When you consider the high costs, medium risks, low frequency of trading and low returns I think overall the box spread has a negative expectation.

Just my 2 cents.

 

[Directional]

but doesnt the fact that a box spreader generally aims to take a more than a fat tick, maybe even several, give a bit of wiggle room with regards to working onto the prices?

if you're doing single tick trading in the calendars, then its impossible to roll more than 12-16 legs, depending on the cost of a spin, before all your profit is gone in costs. A box by definition is a minimum of 16 legs, even more if you try to improve your price through the implieds.

 

[Pitscum]

Does anyone care to enlighten us on the training techniques used at prop shops and trading arcades? I think this would be a valuable comparison to stuff found in most technical analysis books. Or maybe the usual stuff IS used.

I only went to one interview, but never took the position. There they were focussed on using Market Profile. I have studied it ever since.

Regards,

Tubbs

yes i can enlighten you on the training techniques they employ:

they churn; you burn.

 

[fcmisc]

yes i can enlighten you on the training techniques they employ:

they churn; you burn.

I joined a prop firm as an employee rather than independent trader.

I was shown the mechanics of trading. So as what a bid/ask is. And then how to work spreads manually. Then how to use an autospreader. that's all basic stuff, and doesn't show you how to make cash though.

I then watched everyone in the firm lose loads of money, before half the traders were made redundant.

 

[DC STOXX]

I joined a prop firm as an employee rather than independent trader.

I was shown the mechanics of trading. So as what a bid/ask is. And then how to work spreads manually. Then how to use an autospreader. that's all basic stuff, and doesn't show you how to make cash though.

I then watched everyone in the firm lose loads of money, before half the traders were made redundant.

lmao,
Please name and shame.
I hear so often about these places but i don't understand how they survive, i mean even when 1/100 traders get really lucky quickly in the churn and burn shops; no doubt they blow up pretty quick because they never had the read opportunity to learn when they where n00bs.

 

[fcmisc]

lmao,
Please name and shame.
I hear so often about these places but i don't understand how they survive, i mean even when 1/100 traders get really lucky quickly in the churn and burn shops; no doubt they blow up pretty quick because they never had the read opportunity to learn when they where n00bs.

Hmmm... Did you also ask me to name and shame another firm on another thread? I'd rather not upset anyone to be honest.

maybe it would be useful for someone to compile some articles about genuine training given to professional traders at arcades. I haven't met anyone who seriously trades using technical analysis, even though it's mentioned so much on this forum. Everyone I know does spreading of some sort or another.

 

[fifty2aces]

Hmmm... Did you also ask me to name and shame another firm on another thread? I'd rather not upset anyone to be honest.

maybe it would be useful for someone to compile some articles about genuine training given to professional traders at arcades. I haven't met anyone who seriously trades using technical analysis, even though it's mentioned so much on this forum. Everyone I know does spreading of some sort or another.

I think the reason is that people trading directional strategies with technical analysis are less concerned about commission costs, so they are happier to trade from home. And prop shops teach spreading strategies because of the risk profiles, and (perhaps slightly cynical) because the increased number of transactions means they make more on commissions.

I think you should name and shame any firm which behaves like that - as long as you are honest about them. In the end it will either force bad firms out of business (which they deserve), or make them improve their business model.

 

[DC STOXX]

Hmmm... Did you also ask me to name and shame another firm on another thread? I'd rather not upset anyone to be honest.

maybe it would be useful for someone to compile some articles about genuine training given to professional traders at arcades. I haven't met anyone who seriously trades using technical analysis, even though it's mentioned so much on this forum. Everyone I know does spreading of some sort or another.

I'm pretty sure i have not asked anybody to name or shame anybody until now...I know there are arcade/prop shops out there who don't even trade spreads and trade from T/A / Price action....use the search function on the forum

 

[charliechan]

Hmmm... Did you also ask me to name and shame another firm on another thread? I'd rather not upset anyone to be honest.

maybe it would be useful for someone to compile some articles about genuine training given to professional traders at arcades. I haven't met anyone who seriously trades using technical analysis, even though it's mentioned so much on this forum. Everyone I know does spreading of some sort or another.

their pool of knowledge is no different to anyone elses. they use the same old sfuff when trading directional outrights as anyone else. the arcades have gone from scalping spreads to ta based approaches. they dont have the inside info or super computers, order flow info etc

its not so much the techniques the trader uses, it's whats inside - understanding, a professional approach, patience, discipline etc.

 

[RichieE]

their pool of knowledge is no different to anyone elses. they use the same old sfuff when trading directional outrights as anyone else. the arcades have gone from scalping spreads to ta based approaches. they dont have the inside info or super computers, order flow info etc

its not so much the techniques the trader uses, it's whats inside - understanding, a professional approach, patience, discipline etc.

I had the impression that most arcardes/prop houses work their grad courses on the same basis.

They seem to train you up to to trade spreads and other structures to start with using technical analysis or price action as entry signals. The market they will normally start you off in are STIRs due to their high liquidity. However, after the initial training period you will be expected to do your own future learning and research.

Is that an accurate assessment?

 

[mikmo]

Can I just ask what you guys think market making companies like MET, Mako, Liquid Capitals as graduate jobs? Are they trading arcades? How do they differ?

Are roles at that type of trading company as good in terms of renumeration and exit options as say a role in a traditional asset management company? Barclays Wealth Management, Coutts, etc?

... Oh and first post, hi all. Been reading for a while, interesting stuff on here.

 

[fifty2aces]

Can I just ask what you guys think market making companies like MET, Mako, Liquid Capitals as graduate jobs? Are they trading arcades? How do they differ?

Are roles at that type of trading company as good in terms of renumeration and exit options as say a role in a traditional asset management company? Barclays Wealth Management, Coutts, etc?

... Oh and first post, hi all. Been reading for a while, interesting stuff on here.

I'm not really sure, but I don't think it would be in the same category as Barclays Wealth or Coutts - a better comparison would be a flow trading role in an investment bank.