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After you are profitable - Now what?

  • #41
  • Jul 24, 2009 3:14am Jul 24, 2009 3:14am
  •  Yuppie
  • Joined Jun 2007 | Status: ̿ ̿ ̿̿'̿̿\̵͇̿̿\=(•̪●)=/̵͇̿̿/'̿̿ ̿ | 2,727 Posts
Quoting smittens4212
"I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. [b]Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during...

smittens,

Thank you for quoting that.

I read that exact article in the FT some time ago.

What he said has really stuck with me.

I did not realise he was so young - thought he was 50 or so.

Also, in addition to that article, he also gave one tip for the future... and it was this...

Hemp

Do a little research on it...


Magnus
  • #42
  • Jul 24, 2009 3:16am Jul 24, 2009 3:16am
Quoting scooby-doo
The odds are very much stacked against you as a relatively small retail forex trader.

if, however, you are one of the lucky ones then arrange to see some large trading floors and show them your consistence results for > 6 months
Yep, they could probably do with a laugh
  • #43
  • Jul 24, 2009 3:28am Jul 24, 2009 3:28am
Quoting Mary Pippins
There it is, in a nutshell, what we're all aiming for when we start out and push on when the going gets tough.


I looked at a few prop houses here in London and I can confirm what Taksid says that the fewest deal with spot FX and if they do then only as a small sidekick.
Heard some of the guys saying that FX is not trading it's gambling, you can't make money in retail because of the spread etc. because they'd deal only with instruments traded through exchanges.

However, they'd often promte their low trading cost per entry, their 3D tape reading...

Not true.

I work in a prop firm as a remote trader and we trade spot quite large.

What you have been 'told' might be true for the person you spoke to but its a coarse generalization and could not be further from the truth.

It strongly depends on whether you are self-backed or not...but even if the house lets you work with their money, and if you're good, you can keep up to 90% of the profits (provided your acc. is over a certain size).

So, in a nutshell, don't be fobbed off by one-sided information. This is a big playground and some kids in it talk nonsense.

regards
daytrading
Enter Signature
  • #44
  • Jul 24, 2009 4:21am Jul 24, 2009 4:21am
Quoting daytrading

It strongly depends on whether you are self-backed or not...but even if the house lets you work with their money, and if you're good, you can keep up to 90% of the profits (provided your acc. is over a certain size).
Seriously, 90%? What sort of size are you talking about here? Is there a minimum monthly volume? US or UK based firm?
  • #45
  • Jul 24, 2009 4:42am Jul 24, 2009 4:42am
start investing in some real physical business that would be my next goal...holding partnership or self owning of few companies
  • #46
  • Jul 24, 2009 4:48am Jul 24, 2009 4:48am
Quoting pipmutt
Seriously, 90%? What sort of size are you talking about here? Is there a minimum monthly volume? US or UK based firm?
We're in the UK, Asia and US.

You're entitled to keep 90% of your profits if your acc. size is £1m and over.

As a self-backed trader, you can trade what you like when you like and the size you like.

If you are backed, you can still trade what you like and when you like but you get daily limits dictated (which is the same if you work for a bank).

regards
daytrading
Enter Signature
  • #47
  • Jul 24, 2009 4:55am Jul 24, 2009 4:55am
Quoting daytrading
Not true.

I work in a prop firm as a remote trader and we trade spot quite large.

What you have been 'told' might be true for the person you spoke to but its a coarse generalization and could not be further from the truth.

It strongly depends on whether you are self-backed or not...but even if the house lets you work with their money, and if you're good, you can keep up to 90% of the profits (provided your acc. is over a certain size).

So, in a nutshell, don't be fobbed off by one-sided information. This is a big playground and some kids...
May be I should have qualified my anecdote a bit more or rather the question I posed in the end.

It is quite clear to me that I haven't seen it all because I checked out a handful of prop houses and that there surely must be some good one's out there.

Therefore I should have asked: How can I sort the wheat from the chaff when looking for a good prop house?
And what drawback(s) can I reasonably expect even with the good ones?


However, one thing I believe will hold true for the vast majority
of them:
Far less then one in a hundred will become a trader starting to learn in those houses, as some of them boast putting you through their course will equip you with the skills needed to succeed.
I believe in those places you gotta hit the ground running FAST or you'll sink and your deposit with you.
Be like a post stamp! Stick to it until you get there!
  • #48
  • Jul 24, 2009 4:57am Jul 24, 2009 4:57am
Quoting andrewnair
Now what?


Now that you have been successful in trading, after sometime of learning and struggling, you have made it. You are now making consistant profit. You have taken looses before and now you are better than most.


Now what? What's the next step?


Think about it, you have a 50k account and are trading with returns of 10% which is about 5k a month (this kind of returns are much better then most pros out there; in percentage i mean). Is that enough? Can 5K buy you that boat you wanted or that car of your dreams? I used to think about that,...
marry a lovely girl

Yusuf
  • #49
  • Jul 24, 2009 5:00am Jul 24, 2009 5:00am
Quoting pipmutt
Yep, they could probably do with a laugh
Sorry not getting it, why you think they'd be laughing?
Be like a post stamp! Stick to it until you get there!
  • #50
  • Jul 24, 2009 5:01am Jul 24, 2009 5:01am
Quoting daytrading
We're in the UK, Asia and US.

You're entitled to keep 90% of your profits if your acc. size is £1m and over.

As a self-backed trader, you can trade what you like when you like and the size you like.

If you are backed, you can still trade what you like and when you like but you get daily limits dictated (which is the same if you work for a bank).

regards
daytrading
Thanks for the info, when you say daily limits does that include minimums and maximums, ie you have a minimum/maximum volume to trade per day? How about returns, is there a minimum monthly?
  • #51
  • Jul 24, 2009 5:11am Jul 24, 2009 5:11am
Quoting Mary Pippins
Sorry not getting it, why you think they'd be laughing?
It's a bit like taking your playstation baseball game results into the Dodgers and asking for a job
  • #52
  • Jul 24, 2009 5:19am Jul 24, 2009 5:19am
Quoting pipmutt
It's a bit like taking your playstation baseball game results into the Dodgers and asking for a job

Lol Now that is funny, but is that a fair comparison?

I mean what the heck are they doing so differently that calls for such a ridiculing comparison?

The only things I can imagine they do different is the amount of capital they can amass to push price in a certain direction and they can actually see order levels and target them.
Be like a post stamp! Stick to it until you get there!
  • #53
  • Jul 24, 2009 5:22am Jul 24, 2009 5:22am
Quoting Mary Pippins
May be I should have qualified my anecdote a bit more or rather the question I posed in the end.

It is quite clear to me that I haven't seen it all because I checked out a handful of prop houses and that there surely must be some good one's out there.

Therefore I should have asked: How can I sort the wheat from the chaff when looking for a good prop house?
And what drawback(s) can I reasonably expect even with the good ones?


However, one thing I believe will hold true for the vast majority
of them:
Far less then one in a hundred will...
Ok, here is how I see it after 22 years dealing with it in one way or another:

To figure which houses are decent, you find out WHO set them up, why and when (our place was one of the first after the collapse of the open outcry market at the LIFFE and the necessity for the pro's to continue was the drive behind it).

So, the guy's who created the place were traders with a record and serious money beind them. They were not interested to live of desk fees - which does not work anyway without some money making machines in the place to keep it profitable.

Given that, if you enter the place as a novice you will be taught what worked for the creators in the first place - and that (in the decent places) is a good thing.

If you come in as a pro with a record, what difference does it make what they teach? You got your own recipe to make money.

Lastly, in the right place they have no interest in letting you sink - given you show potential. The advantage for professionals is the fact that you can tap a pool of huge margins and reduced wholesale fees instead of dealing with the retail crowd and their limitations - once you're big enough.

You need to check your premises and find out what you already have (in terms of money and experience) and where you want to go from here.

And one more thing: even though I am telling all this here, the only way you can trust this stuff is by making your own enquiries - go out and ring firms or write to them! They are business people like you and one has to make the first step - most of the time it will be you...until you have a name in the industry.

regards
daytrading
Enter Signature
  • #54
  • Jul 24, 2009 5:25am Jul 24, 2009 5:25am
Quoting Mary Pippins
Lol Now that is funny, but is that a fair comparison?

I mean what the heck are they doing so differently that calls for such a ridiculing comparison?

The only things I can imagine they do different is the amount of capital they can amass to push price in a certain direction and they can actually see order levels and target them.
Sorry, I didn't mean to ridicule, no offence meant.

I dunno, trading a few hundred k virtual retail with a bucket shop vs trading multiple millions institutional, I think the comparison was fair.
  • #55
  • Jul 24, 2009 5:27am Jul 24, 2009 5:27am
Quoting pipmutt
Thanks for the info, when you say daily limits does that include minimums and maximums, ie you have a minimum/maximum volume to trade per day? How about returns, is there a minimum monthly?
No.

It's the good old-fashioned way: you're allowed to lose X dollars per day; how you do it (or better how you avoid to lose) is up to you.

regards
daytrading
Enter Signature
  • #56
  • Jul 24, 2009 5:38am Jul 24, 2009 5:38am
Quoting daytrading
No.

It's the good old-fashioned way: you're allowed to lose X dollars per day; how you do it (or better how you avoid to lose) is up to you.

regards
daytrading
I must be missing something because it sounds like a good deal. I guess for self backed you're paying the 10% for access to the preferred deals they've got set up as a result of their volume? Is there anything else you get?

What's the downside, there's got to be one!
  • #57
  • Jul 24, 2009 5:47am Jul 24, 2009 5:47am
Quoting pipmutt
I must be missing something because it sounds like a good deal. I guess for self backed you're paying the 10% for access to the preferred deals they've got set up as a result of their volume? Is there anything else you get?

What's the downside, there's got to be one!
You misunderstood what I said:

If you're self-backed, you keep everything you make - your costs are the desk and clearing fees (I don't have desk fees since I work from home as a remote trader...I only pay clearing fees/commissions).

If you are backed by the company and make money (they will start by backing you small on a 50/50 profit share), you will then move up to the point where you keep 90% of your profits.

You still have trading costs in the same way that you pay for the spread with a retail broker and their lousy execution when it comes to size.

The overall downside you're looking for is that this is a risky business - and frankly, I have not seen many make it for very long if at all.

regards,
daytrading
Enter Signature
  • #58
  • Jul 24, 2009 6:04am Jul 24, 2009 6:04am
Quoting daytrading
You misunderstood what I said:

If you're self-backed, you keep everything you make - your costs are the desk and clearing fees (I don't have desk fees since I work from home as a remote trader...I only pay clearing fees/commissions).

If you are backed by the company and make money (they will start by backing you small on a 50/50 profit share), you will then move up to the point where you keep 90% of your profits.

You still have trading costs in the same way that you pay for the spread with a retail broker and their lousy execution when...
It just gets better and better!

This certainly sounds like something worth taking a second look at, the impression I've always had of prop shops up until now is they're a bit shady in some way, not based on anything factual I hasten to add.

If the trader is self funded and doesn't pay a desk fee what's in it for the shop, is it simply that you're adding to their volume or are they getting some sort of rebate from somewhere? And how can they afford to let a backed trader keep 90% of gains, that sounds extremely generous somehow, even 50/50 would be generous. I'm assuming they're allocating investors capital, what about their returns?

Sorry for all the questions but there's obviously something I don't understand here.

Also, would you mind giving a few pointers to look out for or relevant questions to ask when making enquiries? Thanks.
  • #59
  • Jul 24, 2009 6:08am Jul 24, 2009 6:08am
Quoting daytrading
Ok, here is how I see it after 22 years dealing with it in one way or another:

To figure which houses are decent, you find out WHO set them up, why and when (our place was one of the first after the collapse of the open outcry market at the LIFFE and the necessity for the pro's to continue was the drive behind it).

So, the guy's who created the place were traders with a record and serious money beind them. They were not interested to live of desk fees - which does not work anyway without some money making machines in the place to keep it profitable....
Thank you for sharing your insight, one can tell that you know what you're talking about. Your advice really adds to my persepctive in this very difficult path I've chosen.
Be like a post stamp! Stick to it until you get there!
  • #60
  • Jul 24, 2009 6:27am Jul 24, 2009 6:27am
Quoting pipmutt
It just gets better and better!

This certainly sounds like something worth taking a second look at, the impression I've always had of prop shops up until now is they're a bit shady in some way, not based on anything factual I hasten to add.

If the trader is self funded and doesn't pay a desk fee what's in it for the shop, is it simply that you're adding to their volume or are they getting some sort of rebate from somewhere? And how can they afford to let a backed trader keep 90% of gains, that sounds extremely generous somehow, even 50/50 would...
Last post on the topic since I am busy.

Have you ever watched Dragons Den? 50% of something is better than 100% of nothing - or worse, 100% of the losses.

If you are a profitable trader, they have every interest in adding their capital to your own - which in turn increases your margin possibilities.

If you are a self backed trader, you have with some shops the opportunity that the firm doubles your stake (you bring £500K and for 10% of the overall profits, they double it by letting you trade as if it was £1M).

So, for the opportunity to be able to trade twice the size, or amt. of contracts etc., you pay a small fee. For the firm not much outlay for a good deal of money and any trader with some brain would give 10% away for potentially doubling his profits.

Example:

If you have £500K and you make an avg. of 3% per month, you make £15K - thats all yours, no fees.

If you get bumped up to £1M, your 3% are worth £30K, less 10% (-3K) = £27K.

I am not disclosing any returns or other details here for they are irrelevant to the discussion.

Facts are: the less experience (i.e. track record) and money you have to bring to the table (and the more you rely on the fact that someone stakes you), the less freedom you have in terms of dictating the rules, trade size and strategy in the beginning.

If you can prove that you can stand on your own feet albeit with small of your own money, the better the chances that money will come to you.

Good Luck.

regards
daytrading
Enter Signature
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