Trainee prop trading options, prep, credibility in Australia - Outsider Research

[undercurrent]

I am starting this thread to put my outsider research on the prop firms in Australia.My main focus is on trainee options and credibility.

I found that when looking at this path that information is fragmented in all different places, there is different opinions, self interest and sometimes just bs hyperbole online.

Any insiders or past experiences would be good.

Omega

Before you even start researching Prop firms, understand your motivations for going the Prop Trading route.
Many folks have vague assumptions about Prop Trading.
They end up being disappointed when they face the reality after few months in the firm.

 

[OmegaTrader]

Before you even start researching Prop firms, understand your motivations for going the Prop Trading route.
Many folks have vague assumptions about Prop Trading.
They end up being disappointed when they face the reality after few months in the firm.

Could you please elaborate on you comments....
Do you work for a prop ? etc

 

[undercurrent]

My background is irrelevant. This is the internet after all...
So lets come to the point...
Why do you 'really' want to get into a prop shop and not trade your own trading account ?

 

[Mr J]

I didn't want to be explicit, in case someone here worked there, but there is a clear difference between Aliom/Epoch/Genesis and Star Beta/Propex. As you have figured out the first group are very much focused on these rebates, they have a very high churn rate and low-edge strategies. Aliom even had a brokerage office on their trade floor

That difference is debatable.

 

[CanOz]

Mr.j is back....wow....everyone coming back to check out the new ASF? Welcome back MrJ

 

[OmegaTrader]

My background is irrelevant. This is the internet after all...
So lets come to the point...
Why do you 'really' want to get into a prop shop and not trade your own trading account ?

I think this is already implied in previous posts,

However explicitly

1) To expedite the learning curve ( I am still an amateur/learning)
2) To share in monetary capital ( I have limited capital)
3) To share in externalities (ideas and resources etc)
4) The perception of social legitimacy (Pops up in the back of the mind every now and then )

In exchange for time, energy effort and a pound of flesh...

Now tell me who are you who who ...

haha

 

[biggestBSD]

Hi everyone, I'm new here but I've traded prop for about 5 years at several firms (still currently trade) and would like to give you my thoughts and opinions:

- ALL firms (except Phoenix) conduct trainee programs due to the availability of the ASX new trader rebate. It is in their interest to recruit new trainees every 3 months or so as the firm gets refunded the entire exchange fee ($0.99) for the first 20000 lots executed by the new trader within a year. Most firms will stop trainees out at -10k in their accounts so at worst the firm is break even or small up after the rebate. I have seen spreadsheets where a particular firm projected that trainees will not make any money and instead relied on the recruitment of 7-10 people every 3 months for the 20k worth of rebate. You do the math.

- The failure rate of these trainee programs is EXTREMELY high (>90%). Now you may think, oh but I'm different I'll definitely make it as I work harder than everyone else, I've got a particular edge etc etc. Wrong. The odds are not in your favour, especially given the fact that some of the trainers at particular firms are completely incompetent and offer no real winning strategies whatsoever. Most people quit after 2 years or so as they cannot make any money, just check out Linkedin profiles.

- If you do manage to make it past the trainee stage, firms then make money off brokerage and volume rebate.

- I will add that at Star Beta that there is more focus on profit split rather than volume as described above, and they are definitely more loose with their trading parameters (can confirm, am punter). For example, you will hear stories that so and so made 200k in a day - what you won't hear is that they risked 400k to do it and the large downsides that were incurred when the market didn't come back. Nor will you hear about when no one at any firm has made any money for months (which was the case for 2016, the toughest on record).

- Trading is not glamorous, it is a hard, tiresome slog where you are competing against people that are smarter than you, faster than you and have more information than you. If you can't afford to lose, do not trade. If you need to pay rent, have a mortgage, bills etc, do not trade. If you need to make money, do not trade. The likelihood of succeeding as a new trader, especially in the current market conditions is infinitely small. The fact is that these training programs are designed to sell you a dream that you'll get rich, when in all likelihood you'll get chewed up and spat out by the market.

 

[Mr J]

Lol brutal.

Welcome back MrJ

Thanks mate, been a while!

 

[OmegaTrader]

Hi everyone, I'm new here but I've traded prop for about 5 years at several firms (still currently trade) and would like to give you my thoughts and opinions:

- ALL firms (except Phoenix) conduct trainee programs due to the availability of the ASX new trader rebate. It is in their interest to recruit new trainees every 3 months or so as the firm gets refunded the entire exchange fee ($0.99) for the first 20000 lots executed by the new trader within a year. Most firms will stop trainees out at -10k in their accounts so at worst the firm is break even or small up after the rebate. I have seen spreadsheets where a particular firm projected that trainees will not make any money and instead relied on the recruitment of 7-10 people every 3 months for the 20k worth of rebate. You do the math.

- The failure rate of these trainee programs is EXTREMELY high (>90%). Now you may think, oh but I'm different I'll definitely make it as I work harder than everyone else, I've got a particular edge etc etc. Wrong. The odds are not in your favour, especially given the fact that some of the trainers at particular firms are completely incompetent and offer no real winning strategies whatsoever. Most people quit after 2 years or so as they cannot make any money, just check out Linkedin profiles.

- If you do manage to make it past the trainee stage, firms then make money off brokerage and volume rebate.

- I will add that at Star Beta that there is more focus on profit split rather than volume as described above, and they are definitely more loose with their trading parameters (can confirm, am punter). For example, you will hear stories that so and so made 200k in a day - what you won't hear is that they risked 400k to do it and the large downsides that were incurred when the market didn't come back. Nor will you hear about when no one at any firm has made any money for months (which was the case for 2016, the toughest on record).

- Trading is not glamorous, it is a hard, tiresome slog where you are competing against people that are smarter than you, faster than you and have more information than you. If you can't afford to lose, do not trade. If you need to pay rent, have a mortgage, bills etc, do not trade. If you need to make money, do not trade. The likelihood of succeeding as a new trader, especially in the current market conditions is infinitely small. The fact is that these training programs are designed to sell you a dream that you'll get rich, when in all likelihood you'll get chewed up and spat out by the market.

Thank you very much for your feedback.
So would you say that it is a waste of time to enter these programs?
Given the opinions you have expressed

 

[biggestBSD]

Thank you very much for your feedback.
So would you say that it is a waste of time to enter these programs?
Given the opinions you have expressed

If you go in wanting to learn new things about the market and approach it from an education perspective, then give it a go.

But given current market conditions I find it hard to see how new traders would make money given that experienced folk are struggling.

It's probably already been recommended but check out NO BS Day Trading, he makes some excellent points in his FAQ on his website

http://www.nobsdaytrading.com/free-info/for-inexperienced-traders/

 

[OmegaTrader]

If you go in wanting to learn new things about the market and approach it from an education perspective, then give it a go.

But given current market conditions I find it hard to see how new traders would make money given that experienced folk are struggling.

So it is learning in exchange for earning the firm rebates.
Would that be right?

 

[skc]

Hi everyone, I'm new here but I've traded prop for about 5 years at several firms (still currently trade) and would like to give you my thoughts and opinions:

Awesome handle!!

- ALL firms (except Phoenix) conduct trainee programs due to the availability of the ASX new trader rebate.

Interesting... never heard of this before.

- I will add that at Star Beta that there is more focus on profit split rather than volume as described above, and they are definitely more loose with their trading parameters (can confirm, am punter).

I can vouch that Propex's equity training is nothing like what you've described. At there they have
- A trainer who genuinely cares and is one of the best traders around.
- A long term commitment to support the trainees - some has been around 12-18 months.
- A higher success rate - a cohort of 5 traders who started 3 years ago, 4 of them are still around. While I don't know their individual P&L, I have little doubt they have at a minimum achieved survivability and competency.

The fact is that these training programs are designed to sell you a dream that you'll get rich, when in all likelihood you'll get chewed up and spat out by the market.

Reality bites.

 

[biggestBSD]

I can vouch that Propex's equity training is nothing like what you've described. At there they have
- A trainer who genuinely cares and is one of the best traders around.
- A long term commitment to support the trainees - some has been around 12-18 months.
- A higher success rate - a cohort of 5 traders who started 3 years ago, 4 of them are still around. While I don't know their individual P&L, I have little doubt they have at a minimum achieved survivability and competency.

That is fantastic to hear!!!!! It is a stark comparison to my experience with (and anecdotes of) various futures training programs Maybe you could try that one OmegaTrader.

Skc, you may not have heard of it as (I'm assuming) you're in equities and it's for ASX 24 contracts, so I've included the link for the ASX brochure

https://asxonline.com/content/dam/asxonline/public/documents/schedule-of-fees/asx_047354.pdf

 

[Mr J]

Omega, the best education is a ton of screen time. That said, starting at a prop firm gives some major learning advantages. One is you'll start trading from ladders (which most retail traders don't), and this is pretty eye opening at first. Another being surrounded by like-minded individuals. It gives other significant advantages that Trembling Hand pointed out years ago (far more size than you can get funding yourself, no drawdown to you personal account etc).

Can't speak of any of the current training programs.

 

[OmegaTrader]

That is fantastic to hear!!!!! It is a stark comparison to my experience with (and anecdotes of) various futures training programs Maybe you could try that one OmegaTrader.

Skc, you may not have heard of it as (I'm assuming) you're in equities and it's for ASX 24 contracts, so I've included the link for the ASX brochure

https://asxonline.com/content/dam/asxonline/public/documents/schedule-of-fees/asx_047354.pdf

Maybe I should set up my own firm and trade rebates???
hahah




Also what is

experienced folk are struggling.

What is struggling in terms of number for experienced folk? etc

 

[minwa]

Nor will you hear about when no one at any firm has made any money for months (which was the case for 2016, the toughest on record).

The likelihood of succeeding as a new trader, especially in the current market conditions is infinitely small.

Nice post !

Is it because everyone trades spreads and that's been tough ?

 

[biggestBSD]

Maybe I should set up my own firm and trade rebates???
hahah




Also what is

What is struggling in terms of number for experienced folk? etc

hahaha why not if you've got a spare few mil for margin

i know a few guys quit cos it just got to the point where they weren't making anything at all, but don't know any specific numbers like how much they were making beforehand sorry.

 

[OmegaTrader]

hahaha why not if you've got a spare few mil for margin

i know a few guys quit cos it just got to the point where they weren't making anything at all, but don't know any specific numbers like how much they were making beforehand sorry.

plus application fees+ setup costs+ stress costs.

but it is guaranteed.....

ahaha

Probably get better return in other places though

thanks for all of the info and your help.

I think Skc has a deal with propex in qld???

The equities one, not the bond one IDK

just speculating..

 

[biggestBSD]

Nice post !

Is it because everyone trades spreads and that's been tough ?

I think hedgedhog said it perfectly earlier in the thread when he mentioned the low interest rate environment, it meant the market locked up massively, less opportunities etc etc

 

[minwa]

I think hedgedhog said it perfectly earlier in the thread when he mentioned the low interest rate environment, it meant the market locked up massively, less opportunities etc etc

That's sad how prop is mostly structured. Directional traders would've/should've had a great year.