What exactly is proprietary fx trading?

[fibbos]

Ladies and gents,

I'm looking for a job as a proprietary fx trader. I've asked around but still have many questions. Here's what I know so far, and I appreciate any new information that you could give me.

1. Prop traders get a monthly salary, plus a cut from the profit they make. My question is - how does one determine the profit sharing ratio? If it does exist - what could be expected as the minimum profit sharing percentage a new prop trader should expect? And, what can an experienced and profitable prop trader expect? i.e. what's the min. and max of the profit sharing ratio.
2. Banks and sometimes corporations employ fx prop traders. Most of the jobs are in London.
3. Prop traders are not interbank dealers, although dealers may have prop trading accounts.
4. What is the best way to look for this type of position? Ads on Bloomberg usually look for experienced prop traders, so how does one with no experience start - cold calling perhaps?

Many thanks for your comments.

 

[anley]

Don't worry about the pay or %'s, they'll get sorted out in the future.

A good way to start in any financial organisation is in the Back Office. Take any job there and once inside work your way up. It may take you 3-5 years but then for most people in any type of job I'd assume the timescale is the same.

And don't get fooled by this 'Prop Trade' saying, there are very few people who make their money in a Bank by buying/selling their own ideas. Most of the money is made off the bid/offer spread and client flow.

I have 2 friends who both call themselves prop traders doing pretty much the same job for 2 different banks. The stupid one thinks he's a trader. But the clever one freely admits that if he couldn't buy the bid and sell the offer then his dept would lose money overall. As he himself says, 'why try and get push it and play market direction'.

 

[saiyan]

I personally don't know much about prop trading since I trade my own account, but check out http://www.fxww.com .

They have a training program for those with little experience but this site is still new so it might only become practical later on in the year.

 

[fibbos]

anley and saiyan,

thanks for your comments. Working in the back office is a good way to start, but I do not think it's the only way.

Regardless of what market one trades, I think the two skills/expertise a trader must have is market analysis and risk management. These skills can be developed without having any work experience in the back office. If someone wants to be an interbank dealer, having back office experience is almost a must. However, a prop trader who is not a dealer/market maker can skip the back office experience because he places his orders with the interbank dealer. At least that is what I think - please someone correct me if I'm wrong.

I like the idea of being a prop trader because one does not have to feel pressured to trade. what I mean is if you're a dealer, you have to trade regardless. for an example you have no firm views on the market direction, or the market is currently moving from where you think it will go next and suddenly a customer order comes in and you're stuck with a position in the market. I think a prop trader have the "luxury" to wait for setups to develop i.e. wait for trades with good risk/reward to show up...

 

[anley]

The only reason I said the back-office was because then you're inside the bank and can network. Hell, I'd say if you got a job clearing up the coffe cups your chances are 1000% better than applying via letter or cold-calling.

 

[Robertral]

The only reason I said the back-office was because then you're inside the bank and can network. Hell, I'd say if you got a job clearing up the coffe cups your chances are 1000% better than applying via letter or cold-calling.

depends on what you have to offer.

 

[The General]

Robertral,

It's a nice thought but doesn't happen that way. For instance the trainee graduate trainee program for the major banks whittles 1500 to 30 and you can bet your bottom dollar that these aren't (academically) stupid people and they are near to the top of their respective classes.

One thing I did find was that a student doing a summer job at an IB or some kind of work experience is a massive advantage. Failing that clearing up/getting coffees and sandwiches for arrogant b*****da for 18 months is definitely the way to go.

Yes back office can work. But your first foray into the fron office will be the coffee syndrome in any case.

Cheers,

The General.