Prop Shops in Australia

[skc]

ive got a question:

Im currently at uni studying economics and finance at sydney uni. My worry is that ive been hearing that a lot of traders need to know how to program. How much truth is there too this? I just cant get my head around how exactly coding is used to trade as well.

Would you recommend me learning coding like C++ or java, maybe VBA or even how to use matlab. I might change my major and do computer science

thanks

Not all trading methods require coding. I am sure having some coding skill wouldn't hurt, but it's not a pre-requisite. I personally don't use any coding in my trading... I do use a progrom that someone else has coded, however.

I wouldn't go changing uni major just on the outside chance that coding skill will help you land a job in trading. You still need to know how to trade no matter how good your coding skill is. In other words, if you can't trade, coding isn't going to help your prospects. And if you are looking to be a quant in a investment bank or something... that's a whole different category altogether.

For a young computer literate, well learned person as yourself, you should be able to teach yourself coding as you explore different ways to trade.

 

[db94]

I reckon the Spreaders are all arm chairs economists so I'd think it would do you some good to learn that...especially trading the curve.

Can't understand why a Prop Shop would need coders unless it was designing algoes..

I think I may have been reading info from America. Although the prop shop Optiver (or maybe tibra), stated that they want more maths and computer science than say finance and economics.

I guess it would depend on what youre trading and the company

 

[CanOz]

I think I may have been reading info from America. Although the prop shop Optiver (or maybe tibra), stated that they want more maths and computer science than say finance and economics.

I guess it would depend on what youre trading and the company

Optiver are market makers...maybe Tibra too. Do you want to trade or just add liquidity?

Find out what SMB's or Propex's qualifications are. Uni not needed i think...

 

[db94]

Optiver are market makers...maybe Tibra too. Do you want to trade or just add liquidity?

Find out what SMB's or Propex's qualifications are. Uni not needed i think...

Just trade. I have actually spoken to Guy Bower once or twice from Propex (very helpful) about working as a trader. He said coding can help but isnt that essential. Ill look into SMB, do you have a link, I only got a website for a firm in New York. Are there any other discretionary trading firms?

Thanks

 

[CanOz]

Check out

http://www.prop-traders.net/

Can't seem to get it to load but they had a list of Prop Shops around the world...

 

[db94]

Check out

Can't seem to get it to load but they had a list of Prop Shops around the world...

thanks

 

[SilverRanger]

Hi,

Is it normal for prop shops to have a stop loss clause whereby any losses beyond this amount will be fully payable by the trader himself?

 

[kid hustlr]

I'd say so.

For what its worth its just good business to have that clause.

If you were the type of guy who tried hard over a number of months/years, slowly bled away and then decided to walk away and you were slightly under your clause I HIGHLY doubt they would come after you.

If you walked in there, traded above your size and lost a lot of money (selling volatility or something) then they might come after you.

In effect it's to stop guys coming in and taking a 'free hit'

 

[skc]

Hi,

Is it normal for prop shops to have a stop loss clause whereby any losses beyond this amount will be fully payable by the trader himself?

Yes if your losses were the result of breaching your contract... e.g. Not stopping when the limit is reached, size too large, trading drunk etc.

I don't know what happens if it's a result of, say... the exchange went down and market moved adversely while that happened, or a large gap in an overnight equity position, or a fat finger!

 

[Valued]

What do prop shops do to manage straddles? What happens if one person shorts the Nikkei and another goes long? Is there some system in place to stop this or do they take both of these trades?

Also, do prop shops only have day traders sitting at screens all day or do they for example have larger more up stairs type traders pulling big volume/money on bigger trades that might last days or weeks? E.g. would a prop shop start risking 1% or 2% of their entire capital on very big EOD trades?

 

[SilverRanger]

Yes if your losses were the result of breaching your contract... e.g. Not stopping when the limit is reached, size too large, trading drunk etc.

I don't know what happens if it's a result of, say... the exchange went down and market moved adversely while that happened, or a large gap in an overnight equity position, or a fat finger!

Yes, it is your second scenario that I am worried about. When that happens the stop loss clause protects the prop shop, not the trader. The downside risk is uncapped and is on you, while the upside is shared, doesn't sound like a fair game to me.

 

[skc]

What do prop shops do to manage straddles? What happens if one person shorts the Nikkei and another goes long? Is there some system in place to stop this or do they take both of these trades?

Don't know but I think any position will be managed at an individual level and at an aggregate firm level. You don't want the whole firm going long Nikkei even when every individual trader is within their limit. Although I doubt this would happen just based on pure probability.

Also, do prop shops only have day traders sitting at screens all day or do they for example have larger more up stairs type traders pulling big volume/money on bigger trades that might last days or weeks?

Yes. There are traders who hold days/weeks, especially spreaders.

E.g. would a prop shop start risking 1% or 2% of their entire capital on very big EOD trades?

I highly doubt it.

Yes, it is your second scenario that I am worried about. When that happens the stop loss clause protects the prop shop, not the trader. The downside risk is uncapped and is on you, while the upside is shared, doesn't sound like a fair game to me.

The downside risk is not uncapped. If you operate within the parameters set for you then your downside risk is $0.

If your manager says you can hold $1m FGE and it gaps 90% down on you, I don't know if they can come after you. Sure you and your manager probably won't have a job anymore, but you operated within the parameters set for you so it's not a breach of contract.

 

[SilverRanger]

The downside risk is not uncapped. If you operate within the parameters set for you then your downside risk is $0.

If your manager says you can hold $1m FGE and it gaps 90% down on you, I don't know if they can come after you. Sure you and your manager probably won't have a job anymore, but you operated within the parameters set for you so it's not a breach of contract.

Hmm...looks like it all depends on the contract you sign then. From the one that I see you will be liable for losses beyond this limit, even if you operated within the parameters (and hence my question on whether this sort of clause is normal).

 

[skc]

Hmm...looks like it all depends on the contract you sign then. From the one that I see you will be liable for losses beyond this limit, even if you operated within the parameters (and hence my question on whether this sort of clause is normal).

On the bottom left corner of this site you can download a pdf "Guide to Prop Trading" which talks about this issue.

http://www.propex.com.au/about-us/about-propex

Other shops may be different of course.

 

[Trembling Hand]

Hmm...looks like it all depends on the contract you sign then. From the one that I see you will be liable for losses beyond this limit, even if you operated within the parameters (and hence my question on whether this sort of clause is normal).

There is much better deals than that. If you trade within limits (and to be frank they are very large limits and not fixed in stone) there should be no way you are asked to cough of cash. Even when a disaster hits.

Be careful of places that look like a prop shop but are really just trying to sell training & earn rebates on commish.

 

[skc]

To all the aspiring traders out there... check this out.

http://www.seek.com.au/job/25826034

Australia's leading proprietary trading firm is now recruiting Trainee Equities Traders for its Gold Coast office.

We provide professional traders with the best facilities and support network to build their trading careers. Our management team has decades of trading experience in the futures and equities industries and have been funding and training successful traders for over 10 years.

We are looking for people with some experience in trading the Australian share market, either at a professional level or an active personal level. Applicants are expected to have a passion for the financial markets, be highly motivated and determined to succeed.

Successful applicants will be offered a position in our Gold Coast office to complete an intensive training program. Those successful at this level will be offered a live trading contract with us with generous trading limits and a profit share.

For more information and to apply, please visit our website at http://propex.net.au/equities-traders. Be sure to download the Guide to Proprietary Trading on our site for more information.Do not apply or send your CV via SEEK or you will not be considered.

 

[Quantmil]

Hi Guys,

I am quant trader currently running a few automated strategies on US Equities. What I do is about 90% automated.

I understand that Propex focuses on discretionary trading at least in the training so my question is, could I as a mostly automated trader get a spot there?

 

[skc]

Hi Guys,

I am quant trader currently running a few automated strategies on US Equities. What I do is about 90% automated.

I understand that Propex focuses on discretionary trading at least in the training so my question is, could I as a mostly automated trader get a spot there?

If you have a method that is profitable and robust, they will certainly be interested to hear what you have to offer. You may have to adapt your algos etc to their systems (I have no idea what you use or what they use for US equities) but it should not be a deal killer.

If you are an experienced trader (which sounds like you are) then apply through Propex's website under experienced trader. The ad above is for relatively less experienced trainees.

 

[Quantmil]

I applied and they are interested so far but I believe there is a bit of uncertainty at the moment about the automation.

What I would like to do anyway is move more towards discretionary trading for several personal reasons.

 

[CanOz]

I applied and they are interested so far but I believe there is a bit of uncertainty at the moment about the automation.

What I would like to do anyway is move more towards discretionary trading for several personal reasons.

Is it possible to use your automated systems edge as a statistical edge in your discretionary trading?