Trading For a Proprietary Firm

Hi guys,

I'm looking at a few different ways to capitalize on my successful trading despite not having a huge capital base myself. I am trading for a few friends and family members. I was thinking why stop there?

I am living in Perth, Western Australia. I was wondering do Proprietary firms based in say New York or London allow traders based off shore to trade for them allowing me to stay in Australia. If so, does anyone know of such firms that do this?

Some of you guys might know that I am trying to start up a hedge fund. I'm finding it hard to find much info on doing this so I thought I'd explore the avenue of trading for a Proprietary firm as well. Any info is highly appreciated!

This post is so weak I so want to fire you and you don't even work for me....

Trading is so scalable to best bid/offer size there is no need to use additional capital, people that go to a prop shop are usually one's without any knowledge and/or <1k capital (for the stocks it would be different since leverage is not so flexible).
So your trying to start a hedge fund and no info on the whole Internet? You poor pumpkin....
I think there is a website...ehm Google? And yes, I've already research the topic and know the information...

(my opinions)

Forget about starting a "hedge fund" or working for a prop firm. The costs to startup a fund are extreme in the current regulatory environment, and most Forex "prop" firms seem very dubious to me (i.e. "we charge you $5000 to take our course then we hire you .....) If you are not a very active (scalper), then what money would "prop" firms make off of you?

Forget ZuluTrade (unfairly charge potential investors) and Collective2 (less investor activity here) as signal provider services.

Though their site is buggy and "less than perfect", I would recommend getting an account linked up with Currensee.com with the intention of becoming a "Trade Leader" in 3-6 months time. They have many registered CTAs as trade leaders and I truly believe they try to evaluate properly and examine the risks of people who apply. (Though many still do "poorly" after some significant money has arrived to manage.)

You are going to need a $5000 account and have at least 3 months performance before you apply to be a Trade Leader. Trade your account professionally and have a trade plan and risk management system. They are going to look at all your trades and history, if you are a "hack", "martingal-er", or "wild child"... forget about it.

If you can show a professional return... 2%, 3%, or +4% a month with low risk comparatively, you might be accepted. Within a year, many of their Trade Leaders (who have returns of 40-50% or higher annually) have $500,000 or more under management.

Your compensation as a Trade Leader is 15% of your investors' gains.
Attract $300,000 of investor money and do 40% for them. You will make $18000. It's meager... but it's a start, with little to no startup costs for your business.

If you don't have a $5000 forex account, then work a part-time job in off-market hours and save the money. As long as you are not a "glued-to-the-screen" scalper, you should be able to work a part-time job anyway... while being a Trade Leader.

As you make money from the Trade Leaders program, put a majority into your own personal account as well... and compound.

$400,000 under management (as Trade Leader) x 40% annually x your 15% cut of profits = $24,0000.

plus your personal account $10,000 x 40% annually = $4,000.

You can survive on $28,000 for a year I would assume. Then take the next $20,000 you make during the second or third year and spend it starting your fund.

Currensee is very attractive if you can show professional-style trading and money management.
They advertise for you, do the accounting for you, etc.
You can concentrate on trading.

Starting a "hedge fund" in the U.S. can cost $20,000-$50,000. Accounting, compliance, and legal advice add up.

Becoming an exempt CTA registered with the NFA is much less costly.
Many of the Trade Leaders from around the world are registered as such in the U.S.

(sorry for the long post, but these are my thoughts about becoming a "pro" or attracting money as an undercapitalized trader)

If your as successful as you say, just build up your own account. Prop firms want you to trade their system and one bad quarter and your out the door.

Prop firms are popular in equity markets since retail equity traders/investors are stuck with huge commission fees, low leverage (if at all), PDT rules, and often don't have direct market access to the exchange and ECNs.

Retail forex, however, doesn't suffer from these limitations. So few prop firms are even around that focus on forex... it's a real problem to retain talent when your trader can take what they've learned and get the same execution environment and fee structure from a retail broker on their own.

Thanks guys, particularly Intu. Has definitely given me something to think about. I am in the process of applying with currensee. I think I'll head down this path for the next 12 months. After that if I'm still successful it might be worth pursuing the hedge fund option and apply with Barclayhedge and autumngold.

I just wish it was easy to set up a hedge fund in Australia! I mean there is enough info on the net for US hedge fund startups but can't really say the same for Aus.

Any more info regarding this topic is more than welcome...

If you want to share your signals with others and take commisions for your trades you should try zulutrade. They have a provider who had 30million $ following him.

it is not only one....a lot of providers are followed by a 6 digit numbers....

@domingo , yes i just pointed out the top one with the huge amount of 30m , lets see who can top that in zulutrade.

bianco,
you have a point....true he was one of the most popular....and good...like ever!!
2 sad 2 see him going down the hill like that. Btw he still has not closed the open possitions resulting now of a dd >2000 pips...

His drawdown just wont end , but he has many followers left waiting patiently him to recover , maybe he will ..who knows.

Iknow!!!! he is waiting for the market to return..but who knows when and if this will happen....imo, he should ve closed them when damage was bellow 1000 now there is no room left...i stil lwonder on the 8M that are still faithfully following him.

Jack, were you able to find a suitable prop shop for your equity trading? I recall you were searching for one not to long ago.. curious what Toronto has to offer.

Yeah, I'm guessing you read other online message boards

I was looking for a better place than the company I was with at the time (since the previous prop firm had some tech issues and people were leaving in droves.) So I found a smaller private capital firm to join.

The new place is a much better setup overall, so I'm quite happy. The firm's two equity partners sit right in front of me, so bouncing ideas around is easy to do. Small office, maybe 8 people working there in total.. very good group.

That's great, congrats.

I have never really personally been exposed to such, No need, especially trading one instrument only..plus its spot fx.. although I'll have to say its quite intriguing being in an environment such as that. (As opposed to sitting in my office in a pair of underwear and a t-shirt....) Must be nice to talk to fellow traders in person, rather then an online forum.

Any big shooters making a killing around you? I love downtown Toronto... (live in burlington)

Erik

-2658 pips closing on today such a shame - it was a really good trader!!

Hey mate moving to a prop firm can be a good option but its not for everyone, its alot more intense and you will be consistently under pressure untill you prove yourself. Im working for a prop firm in sydney your best bet would be to move here or to Melb if you want to make a real crack out of a prop career.

As for other peoples comments about not needing a prop shop.. a good firm will provide you with more capital then you can imagine (if your profitable and not a cowboy that is) I'm 21 years old no way i could be trading with the size/risk parameters without my firms backing.

I know a few blokes who were sick of splitting their profits with a prop firm, went and traded their own account and have been regretting it ever since. Also a great place to learn with the best systems surrounded by profitable traders (the losing ones dont last long!)

Oh and yeah as Intu said you really have to be an active trader for it to be worthwhile

Forex or equities?

If forex, could you describe the business model? Profit split? Risk model?

And you're right about the environment of a prop, and being surrounded by good traders. That's one plus. Though, people often grow dependent on it and soon learn they have trouble thinking for themselves when they trade on their own... hence a lot struggling when they go at it alone.

I'm in fixed income futures, the firm offers pretty much any futures contract and australian equities. There are a few Forex traders here mostly trade currency futures.

Not going to get into profit split details but its fairly reasonable and gets better with time. Same with risk model, it all depends on you and how much experience you have so I can't comment.

As for people being being 'carried' by experience traders, this doesnt really happen here, really its just general trading experience which i think is most important of all.

Yeah, I'm at a firm that does equities and futures as well, so I know where you're coming from.

My points earlier about capital only relates to forex on it's own... the leverage and cost structure you can get at a retail forex broker is good enough to not really need a prop firm (unlike equities and futures.) This is, of course, if you're already a profitable trader and don't need a place to teach you the craft.