Prop trading graduate programs?

[RowanC]

Hi


I was reading someones prop experiences in the UK

link: http://backtestwizard.com/you-dont-really-want-to-work-at-a-prop-trading-firm/

Effectively he states that some props just want a rebate and so make their traders go into really low volatile spreads.

The traders make bugger all because their is minimal movement and spends all day watching the spread.

Is this what happens in some of the aussie props? Propex ? genesis ?

I could understand it the incentives behind this.

Do aussie props get rebates from exchanges directly or indirectly through brokers??

Prop firms often get brokerage from trades. That's why they will encourage grads to trade spreads or turnover a high volume if they trade outrights. It's beneficial because if a new trader is a loser or even breakeven, the firm can still turn a profit. Plus it helps with covering the fixed costs/desk fees etc.

That said it is the belief of many firms that they have a higher probability of producing a profitable spread trader than they do an outright trader. Also spread traders can increase their size to a larger scale, which is another benefit.

I would say that even though firms encourage grads to turnover volume, given the fact that you are getting the best possible deal you can (certainly compared to a retail trader), it's not a bad thing as such.

I think the Australian firms seem to care a whole lot more about producing profitable traders rather than just acting as brokers.

 

[OmegaTrader]

Prop firms often get brokerage from trades. That's why they will encourage grads to trade spreads or turnover a high volume if they trade outrights. It's beneficial because if a new trader is a loser or even breakeven, the firm can still turn a profit. Plus it helps with covering the fixed costs/desk fees etc.

That said it is the belief of many firms that they have a higher probability of producing a profitable spread trader than they do an outright trader. Also spread traders can increase their size to a larger scale, which is another benefit.

I would say that even though firms encourage grads to turnover volume, given the fact that you are getting the best possible deal you can (certainly compared to a retail trader), it's not a bad thing as such.

I think the Australian firms seem to care a whole lot more about producing profitable traders rather than just acting as brokers.

I haven't done it but I would think it is good experience for the trainee/grad. They get free training and exposure in exchange for their time.

And if successful later down the track access to capital.

I suppose the downside in the back of my mind (in the cynical area), is if your are in a situation where either the capital is too small for too long or fees are too much relative to what you make.

In which case you can leave with knowledge. But you are back to square one if you want to be a trader.

Basically Genesis or Propex are the only discretionary ones mentioned as legit. Being a quants too hard for mere mortals.

So back to retail. Which without significant capital or mentoring your dead again.

I would like to go down the prop route.

Being the devil's advocate.

What other options are there to be trader?

I know Trader is a broad term. You know what mean though



Cheers

Omega Trader

 

[RowanC]

I haven't done it but I would think it is good experience for the trainee/grad. They get free training and exposure in exchange for their time.

And if successful later down the track access to capital.

I suppose the downside in the back of my mind (in the cynical area), is if your are in a situation where either the capital is too small for too long or fees are too much relative to what you make.

In which case you can leave with knowledge. But you are back to square one if you want to be a trader.

Basically Genesis or Propex are the only discretionary ones mentioned as legit. Being a quants too hard for mere mortals.

So back to retail. Which without significant capital or mentoring your dead again.

I would like to go down the prop route.

Being the devil's advocate.

What other options are there to be trader?

I know Trader is a broad term. You know what mean though



Cheers

Omega Trader

I really don't think there is a downside to having a go with either Propex or Genesis. At the very least you get a good trading education so to speak. You'll have a pretty good idea of where you are at after 3 months. That's not to say you'd be profitable by then however. I wouldn't take a job with these guys over anything like a banking/investment banking grad position though.

I don't think access to capital is an issue as if you're profitable that will increase. The desk fees early in your career are likely the biggest hurdle assuming you can live cheaply ie with your parents or something similar. However that's not even a factor until you go live.

There are also firms (or arcades) out there, more so overseas, that will give you access to cheap commissions and leverage (for stocks). So if you wanted to go it alone that is an option. But certainly do your research as there are some shady operators. But that's another way in.

But if you're keen on trading and I assume you are a uni student at the moment - then I think have a go. If you haven't already got a job lined up you have nothing to lose IMO.

 

[mjim]

I haven't done it but I would think it is good experience for the trainee/grad. They get free training and exposure in exchange for their time.

And if successful later down the track access to capital.

I suppose the downside in the back of my mind (in the cynical area), is if your are in a situation where either the capital is too small for too long or fees are too much relative to what you make.

In which case you can leave with knowledge. But you are back to square one if you want to be a trader.

Basically Genesis or Propex are the only discretionary ones mentioned as legit. Being a quants too hard for mere mortals.

So back to retail. Which without significant capital or mentoring your dead again.

I would like to go down the prop route.

Being the devil's advocate.

What other options are there to be trader?

I know Trader is a broad term. You know what mean though



Cheers

Omega Trader

Hello ,
Could you please elaborate on "Basically Genesis or Propex are the only discretionary ones mentioned as legit.
Do you mean other's (even with AFSL) are just "Education sellers" masquerading as Prop shops! based on business model of - 100 pay $300 fee for a "TEST" and hope 99 fail and "Oh we only sell education like the big Univercities so don;t ask if we can trade or not!)

 

[RowanC]

Hello ,
Could you please elaborate on "Basically Genesis or Propex are the only discretionary ones mentioned as legit.
Do you mean other's (even with AFSL) are just "Education sellers" masquerading as Prop shops! based on business model of - 100 pay $300 fee for a "TEST" and hope 99 fail and "Oh we only sell education like the big Univercities so don;t ask if we can trade or not!)

I think these guys are just the most well known and established.

But as you say, if a "Prop Shop" ever makes you pay for "training", run for the hills as a general rule.

 

[OmegaTrader]

I really don't think there is a downside to having a go with either Propex or Genesis. At the very least you get a good trading education so to speak. You'll have a pretty good idea of where you are at after 3 months. That's not to say you'd be profitable by then however. I wouldn't take a job with these guys over anything like a banking/investment banking grad position though.

I don't think access to capital is an issue as if you're profitable that will increase. The desk fees early in your career are likely the biggest hurdle assuming you can live cheaply ie with your parents or something similar. However that's not even a factor until you go live.

There are also firms (or arcades) out there, more so overseas, that will give you access to cheap commissions and leverage (for stocks). So if you wanted to go it alone that is an option. But certainly do your research as there are some shady operators. But that's another way in.

But if you're keen on trading and I assume you are a uni student at the moment - then I think have a go. If you haven't already got a job lined up you have nothing to lose IMO.

Hello ,
Could you please elaborate on "Basically Genesis or Propex are the only discretionary ones mentioned as legit.
Do you mean other's (even with AFSL) are just "Education sellers" masquerading as Prop shops! based on business model of - 100 pay $300 fee for a "TEST" and hope 99 fail and "Oh we only sell education like the big Univercities so don;t ask if we can trade or not!)

I think these guys are just the most well known and established.

But as you say, if a "Prop Shop" ever makes you pay for "training", run for the hills as a general rule.

Thanks everyone for your responses.

TLDR

In summary



In my opinion it is not legit to pay $,000's to learn how to trade and or not given a fair go.

Genesis and Propex seem legit because they offer free initial training


What are ballpark desk fees?


In reference to Rowan C,

Yeah I think getting free exposure is really really good.

In terms of being retail trader the capital and experience needed vis a vis for a job is way too much for me.

As a curiosity what are ballpark desk fees be?

As I said I'm not a genius or highly network individual or even mature yet

so based on realities a prop seems like a good option.

I don't think realistically I could get into a quant or investment bank.

I can't even get work experience.





In reference to mjim,



I have come to the conclusion that university is a rip off in terms on value especially in a digital age, increased education...

but bare with me it sanctioned by society through HELP/HEX debt and parents like other conventions and is a good excuse as any to be lazy millennial and not work for a while. Unfortunately at 17 you don't think in this manner or about a concept called future.

In terms of legit,

My reasoning or intentions if you like is that If a prop is not visible through others/forums,online websites, career websites e.tc then its not a legit option for me.

If I don't know about it its not an option.

If it is a quant it's not an option (for me).

If it requires previous experience its not an option.

If it asks for thousands of dollars its not an option

As Rowan C stated. I think a good heuristic rule is to not pay money upfront .

Cowboys always ruin it for everyone.

I've already paid 30k for a degree with what questionable benefits as mentioned.

I have searched a lot of websites, googled a lot

been to meetup trading groups run by so called props, been to seminars, e.t.c.

Basically these are(Poprex, Genesis) the two majors dscretionary ones with presence.

These are the questions I research/ask:


If you tell me who you work for,any costs, the details of your program and what you do, then I can comment otherwise its not legit and I will go for your throat as a cowboy


Tell me who are you lol


I can rationalise actual prop's predicament, being lumped in with with the cowboys

but remember traders will get old and some will leave, so who will they employ then.......

You need trainees.You need a future.

charging money will scare everyone away. The consensus among my retail trading group that meets every week is that 99% of the courses are BS or can be self taught.

It take balls to give free training and put yourself out there. It takes balls to deal with idiots. You have to give people a chance if your going to find future traders. You have to sort through the metaphorical sh**t.




maybe you are a cowboy who just wants the cash with no risk....:rocketwho

hahah

maybe were all cowboys in our own way

looking after our own social and capitalist self interests :rocketwho


Nevertheless

I don't know all of the props obviously but certainly it is very hard to find any others in Australia apart from genesis(was aliom) and Propex easily who wil give you a go.

I am not stating that all other props are not legit, what I am actually saying that it is not an option for an inexperienced trainee such as myself if I can't find adequate training, legitimacy/reputation or I have to pay $000's.

That is my situation and explanation.

I hope that clarifies what meant.



In summary

Sorry for rambling and.....




In my opinion it is not legit to pay $,000's to learn how to trade and or not given a fair go.

Genesis and Propex seem legit because they offer free initial training and have presence


What are ballpark desk fees?

Thanks

OmegaTrader

 

[Triathlete]

Thanks everyone for your responses.

In summary

Sorry for rambling and.....

In my opinion it is not legit to pay $,000's to learn how to trade and or not given a fair go.

Genesis and Propex seem legit because they offer free initial training and have presence


Thanks

OmegaTrader

You may be right, but what other options are available to retail traders if they cannot get into these two firms or do not make the cut because they are not up to their expectations...???

I would think...

1) Being Self taught

2) Having found a mentor that has been there done that and has time to teach you.

3) Or Pay an educator

I took the 3rd option and happy with my results...

 

[RowanC]

What are ballpark desk fees?

Thanks

OmegaTrader

When you go live (trading with real money), there are fixed monthly costs that you have to cover. So they are different for every person as the software that you might need at the end of the day is up to the individual. However as a rule of thumb I would say that you should expect to pay something like $1000-$2000pm.

Often times the bulk of the expense is the cost of Xtrader or CQG as they are expensive.

However I don't think new traders should get too caught up with worrying about that too much. Focus on getting profitable.

At the end of the day a prop firm is not the element that will define your success or failure as a trader. IMO it is the ability to deal with the ups and downs of trading.

In reality all the education you need can be found online for virtually nothing.

A prop firm however does have the added benefit of being an environment that can help you succeed. You get to talk with other traders and see how they go about it and see the discipline that it might take. Where as if you are to go it alone you don't have that level of support.

 

[OmegaTrader]

You may be right, but what other options are available to retail traders if they cannot get into these two firms or do not make the cut because they are not up to their expectations...???

I would think...

1) Being Self taught

2) Having found a mentor that has been there done that and has time to teach you.

3) Or Pay an educator

I took the 3rd option and happy with my results...

When you go live (trading with real money), there are fixed monthly costs that you have to cover. So they are different for every person as the software that you might need at the end of the day is up to the individual. However as a rule of thumb I would say that you should expect to pay something like $1000-$2000pm.

Often times the bulk of the expense is the cost of Xtrader or CQG as they are expensive.

However I don't think new traders should get too caught up with worrying about that too much. Focus on getting profitable.

At the end of the day a prop firm is not the element that will define your success or failure as a trader. IMO it is the ability to deal with the ups and downs of trading.

In reality all the education you need can be found online for virtually nothing.

A prop firm however does have the added benefit of being an environment that can help you succeed. You get to talk with other traders and see how they go about it and see the discipline that it might take. Where as if you are to go it alone you don't have that level of support.

Triathlete

I think that in my experience, this is a common economic problem in everyday life I can't remember the exact economic term.

But essentially for some goods and services such as doctors and lawyers, you can't test the quality beforehand so it's hard to make rational decisions unlike physical goods say a tomato where I can tell if it's fresh or rotten etc

education is like that, you can't really tell so its hard to make a rational decision

That is why I would prefer to not pay for education and in digital age information is a lot cheaper as RowanC stated virtually free apart from the opportunity cost and time it takes to learn.


RowanC

I totally agree with what you are saying and this ties in to what triathlete mentioned as mentoring. I totally agree that being profitable at the end of the day is the most important.

In terms of fees, that's alot.

$12,000 - $24,0000 a year.

There is no way a beginner could ever pay that off with limited capital unless he is a genius.

no way:

Say A beginner has 50,000 effective capital.

Then he needs to make (12/50 =.24 or 24/50 = .48)

between 24% and 48% a year

I don't think that is fair, especially since he be restrained in the strategies he can use and also is not working.

If the prop covers the desk fees through rebates and as part of the training then it would be ok.

But if you have to pay such high desk fees, its not economical for a trainee.

Otherwise you might as well just get the free training and leave.

That sounds terrible though.....

What else can i do?

It's hard because part of me really wants to trade but the other part thinks its a pipe dream.




Investment bank NO out of my league

Quant NO not smart enough


Retail No not experienced enough, not enough capital

Prop Maybe

Hobby Definitely

So I have to get another job that I hate??

idk

At this rate I might as well be a passive diversified index investor my whole life






Cheers

Omega

 

[skc]

In terms of fees, that's alot.

$12,000 - $24,0000 a year.

There is no way a beginner could ever pay that off with limited capital unless he is a genius.

no way:

Say A beginner has 50,000 effective capital.

Then he needs to make (12/50 =.24 or 24/50 = .48)

between 24% and 48% a year

I don't think that is fair, especially since he be restrained in the strategies he can use and also is not working.

If the prop covers the desk fees through rebates and as part of the training then it would be ok.

But if you have to pay such high desk fees, its not economical for a trainee.

There are a few things not quite right with what you have said here...

- There's nothing "unfair" about prop shops charging desk fees. The costs are real.
- The shop doesn't usually "charge" the trainee cash desk fees. It gets subtracted from your P&L account. The shop expects this P&L account to be in the negative for some time for a new trainee... and pretty much wear that cost if the trainee doesn't make it.
- Forget the concept of "effective capital". It's not relevant. $25k a year over is $100 per day, or $12.5 an hour. To make that kind of money, size is of no concern. You just need skill.

It's hard because part of me really wants to trade but the other part thinks its a pipe dream.

Investment bank NO out of my league

Quant NO not smart enough


Retail No not experienced enough, not enough capital

Prop Maybe

Welcome to reality! Except getting a job and then succeeding in Prop is probably a lot more difficult than you seem to think as well.

 

[OmegaTrader]

There are a few things not quite right with what you have said here...

- There's nothing "unfair" about prop shops charging desk fees. The costs are real.
- The shop doesn't usually "charge" the trainee cash desk fees. It gets subtracted from your P&L account. The shop expects this P&L account to be in the negative for some time for a new trainee... and pretty much wear that cost if the trainee doesn't make it.
- Forget the concept of "effective capital". It's not relevant. $25k a year over is $100 per day, or $12.5 an hour. To make that kind of money, size is of no concern. You just need skill.



Welcome to reality! Except getting a job and then succeeding in Prop is probably a lot more difficult than you seem to think as well.

Thanks SKC

Sorry for the rant in advance

Yeah as I said

If the prop covers the desk fees through rebates and as part of the training then it would be ok.

Actually I think is really great if you can get it. Also to get mentoring is amazing.

However

(Sorry to disagree)

But I think effective capital and opportunity cost are very powerful concepts.




In the beginning when you don't have a job and your opportunity cost is low or if your retired and retail trading for a hobby or small amounts....

then working for free/ a low amount is inconsequential.

My effective opportunity cost is $0...


But if you have other options. Then it needs to be factored in to your decision making.



A really good example is your statement

The shop doesn't usually "charge" the trainee cash desk fees. It gets subtracted from your P&L account.


That is the same as me paying for it.





I would have got that money. But I haven't due to fees. Now you could argue well you have to pay that anyway. But would you pay $24,000 in fees at those small volumes as a retail trader? idk?

Assuming I'm profitable of course -losses are another matter. But those fees are part of their business, they don't lose $1000 for me to use their software they are already paying for it. It's already a cost they have.



Reality is funny. Everyone pushes you to go to Uni....

Then you can't get a job in finance and it’s your fault....

Get a job somewhere else....


So you all you can get a part time job with no future.


So why did I go to uni again???

Oh it's my fault that were increasing deficit and our economy is slowing.

oh I forgot

I didn't create the CDO's and GFC
I didn't let multinational pay low taxes.
I didn't create middle class welfare.
I didn't create the bureaucracy
I didn't create increased machination

I didn't force central banks to print money like lollies which is being channelled into inflated property markets.

Maybe I should just try harder.

One day I get a job that is vaguely in my study area. One day when I'm 35. Then I might get a loan for a house If I’m lucky.


:rocketwho

And then everyone wonders why millennials stay at home.

haha



cheers

Omega

 

[RowanC]

Triathlete

In terms of fees, that's alot.

$12,000 - $24,0000 a year.

There is no way a beginner could ever pay that off with limited capital unless he is a genius.

no way:

Say A beginner has 50,000 effective capital.

Then he needs to make (12/50 =.24 or 24/50 = .48)

between 24% and 48% a year

I don't think that is fair, especially since he be restrained in the strategies he can use and also is not working.

If the prop covers the desk fees through rebates and as part of the training then it would be ok.

But if you have to pay such high desk fees, its not economical for a trainee.

Otherwise you might as well just get the free training and leave.

That sounds terrible though.....

What else can i do?

It's hard because part of me really wants to trade but the other part thinks its a pipe dream.


Cheers

Omega

Like skc mentioned I wouldn't get caught up in thinking about ROI at all. In reality it's not relevant for traders. I can trade 1 ES with $500 and at $12.5 a tick, you're ROI is virtually limitless.

Prop firms are generally fair to any trader who profitable.

When you go live you get a fair bit of room to move. They might let you trade 5 futures contracts with a $1000 max daily loss. Put together a good month or two and that increases. Again as skc mentioned they expect you to be in the red early in your career. It doesn't really matter in truth.

And as you get more profitable the terms of your contract get better too.

 

[OmegaTrader]

Like skc mentioned I wouldn't get caught up in thinking about ROI at all. In reality it's not relevant for traders. I can trade 1 ES with $500 and at $12.5 a tick, you're ROI is virtually limitless.

Prop firms are generally fair to any trader who profitable.

When you go live you get a fair bit of room to move. They might let you trade 5 futures contracts with a $1000 max daily loss. Put together a good month or two and that increases. Again as skc mentioned they expect you to be in the red early in your career. It doesn't really matter in truth.

And as you get more profitable the terms of your contract get better too.

Thanks for the info.

I going to try for the two props after bit of preparation and self learning. It's a great opportunity for a trainee if you can get it and I don't doubt the reputable ones are genuine.


If I get it or it works out who knows.

 

[RowanC]

Thanks for the info.

I going to try for the two props after bit of preparation and self learning. It's a great opportunity for a trainee if you can get it and I don't doubt the reputable ones are genuine.


If I get it or it works out who knows.

Best of luck Omega.

 

[OmegaTrader]

Best of luck Omega.

Thanks I'll need it

 

[skc]

Assuming I'm profitable of course -losses are another matter. But those fees are part of their business, they don't lose $1000 for me to use their software they are already paying for it. It's already a cost they have.

There are two main components of desk fees... one is software license costs which are cost per head (so the shop is not already paying for it). The other is fixed costs like office, IT, compliance, utilities etc. Sure the shop is paying for those whether you are a trainee or not... but using the same argument then no one should pay for these costs. Yet they have to be paid for somehow...

So you all you can get a part time job with no future.

So why did I go to uni again???

Job is what you apply for. Future is what you make of it.

I once spoke with an aspiring trader... who had a short sting with a Prop shop but didn't make the cut in the end. I told him that, if you want to be a trader badly enough then you will do what it takes for that to happen. It might be stacking shelves at Woolies at night while sleeping on your parents couch for a year... in order to save up enough capital to trade a few contracts. The private trader route is a perfectly legitimate way to make trading a career.

Are there opportunity costs? Of course. But so is everything in life.

Anyway... I don't know your circumstances so take or leave what I say as

 

[Klogg]

Reality is funny. Everyone pushes you to go to Uni....

Then you can't get a job in finance and it’s your fault....

Get a job somewhere else....


So you all you can get a part time job with no future.


So why did I go to uni again???

Oh it's my fault that were increasing deficit and our economy is slowing.

That's a very negative view. Just because you have a Uni degree, it doesn't guarantee you a job or a successful career, you need to work for that.

The University placement arrangements in Australia (and in fact, around the world) have many failures, but don't let that slow you down. You are where you are - you can either let it bog you down (along with 95% of others), or you can find a way to progress from here.

For you to post here and seek advice, you clearly care more than most. Don't let a potentially crappy system get in your way.

 

[mjim]

You may be right, but what other options are available to retail traders if they cannot get into these two firms or do not make the cut because they are not up to their expectations...???

I would think...

1) Being Self taught

2) Having found a mentor that has been there done that and has time to teach you.

3) Or Pay an educator

I took the 3rd option and happy with my results...

Re: Option 3> So to keep it simple for everybody.. Some of us are in the category who can't get in to these Legit and Reputable Firms ( 2 mentioned in Australia) and we are smart enough to learn and pay for a reasonable fee butalso smart enough to smell a snake oil salesperson from miles away selling education or masquerading as prop.. HOW DO WE FIND no BS "Educator"

 

[Triathlete]

Re: Option 3> So to keep it simple for everybody.. Some of us are in the category who can't get in to these Legit and Reputable Firms ( 2 mentioned in Australia) and we are smart enough to learn and pay for a reasonable fee butalso smart enough to smell a snake oil salesperson from miles away selling education or masquerading as prop.. HOW DO WE FIND no BS "Educator"

I can only speak for myself and the educator I went through.

The website address is in my blog post.....

 

[Klogg]

I can only speak for myself and the educator I went through.

The website address is in my blog post.....

I'm not sure of the reputation of this particular site, but most places that say "Learn to trade in a day" really do worry me...
(they have it on their front page)