How do I become a proprietary trader? - Trading-Lab

scalper · #1 06-27-2007, 08:49 PM

hello all,

I've been trading part-time for 7 months now with decent results. I scalp US stocks(both listed and naz). I'm considering becoming a proprietary trader and wanted to hear from someone who has been there, done that. what are the steps to join a proprietary trading firm?

thanks in advance

scalper

Alchemist · #2 06-29-2007, 05:14 PM

Hello scalper,

First of all, I wanted to congratulate you on deciding to undertake this exciting project: becoming a proprietary trader. Proprietary trading can be a life-changing event, if approached properly.

In order to become a "true" proprietary trader, you would first need to get sponsored for a Series 7 license. I say "true", because I've heard there are firms who are able to let you trade using leverage over 4:1 even if you are not licensed. However, fees are usually higher than "regular" proprietary trading deals. Approach a trading firm you like. Ask as many questions as you feel like. Don't be afraid to. Have them show you what platforms they offer their traders, ask whether they offer any in-house training and, last but not least, get a commission proposal in writing from them. Also, do you get to keep 100% of your profits/losses?

Once you get fingerprinted, send your papers in, and hear back from them, you can schedule an appointment to take your test. I will not go over the whole process, as I took my S7 many years ago, and things may have changed. The material tested on the Series 7 exam covers basic securities industry laws and regulations, how financial instruments are issued and traded. It also has a section on options, if I remember correctly.

Once you pass the S7, you are ready to take the leap! Take your time to get acquainted with the new environment. Meet with other traders in the office. Exchange ideas and...ask lots of questions. Usually they will start you with 10x equity. Oh...I forgot to mention. Almost 100% of proprietary firms require a "deposit" to join their firm. This deposit varies, but is usually $10K minimum. Some firms will take you in even with $5K. This deposit goes into your capital account at your newly joined firm. It is segregated from other traders' funds and any losses from your trading will be offset by money deposited into this account

There are so many other things I'm sure I'm leaving something out. Feel free to ask more questions. I will be delighted to answer them!

Happy Trading!

scalper · #3 07-02-2007, 04:29 PM

wow...thank you very much for your exhaustive post!!!!

So I have to get this Series 7 first, uh?! I heard it's a tough exam, isn't it? can you suggest any good study material for it? I'm tempted to go the without-S7-route as I've never been a good test taker. Series7 is highly timed correct?

Also, when you say, "Usually they will start you with 10x equity", that means with $10K I would get $100K buying power, correct? isn't it a bit low to earn enough to make a living at trading?

thanks for your helpful post!

Alchemist · #4 07-05-2007, 06:49 PM

Hello scalper,

I used the Dearborn Passtrak 7 preparation/exams material. it is now published by Kaplan. you can find it here:

http://www.businesssavvy.com/PassTra...rakSeries7.htm

I took A LOT of sample exams, literally in the 100s. Yes, it's a highly timed test. You should spend no more than a certain number of seconds on each question. If I remember correctly, it's like an average of 20 seconds on each question. Don't be afraid. you will do well. Just take as many sample exams as possible right before taking the actual test.

with regard to the 10x equity question, that is what they usually START YOU WITH. Then, when they get to know your trading style and can better assess your risk, they would have no problem increasing your buying power up to 30x or more. my best advice would be not to worry too much about buying power at the beginning as you will most likely not need it anyway. Concentrate on building a sound trading plan and sticking to it.

hope this helps. if you have any other questions, don't hesitate to ask!

Happy Trading!

ProTrader · #5 07-10-2007, 05:54 PM

once they get to know your style, the sky is the limit in terms of buying power. give the risk management guys time to get acquainted with your trading strategies. also, don't worry too much about that NOW. get your S7 first!

ManhattanTrader · #6 07-16-2007, 04:52 PM

ask the firm of your choice LOTS of questions. Remember: it's YOU interviewing them, not the other way around

daytraderB · #7 07-18-2007, 09:12 PM

these days prop firms take everyone with $5-10K to put up and a license. You are not a big risk to them, as they offset any losses from your deposit money. That is why it's YOU interviewing them, as manhattantrader says, and not the other way around…..

FabMav · #8 07-31-2007, 10:29 PM

true proprietary trading is not like that. You get paid a salary, benefits, and a bonus at the end of the year. The firm DOES risk their money on you. It's also very difficult to get into those firms. An IVY LEAGUE degree is required at least.

Firms like Echotrade or Bright and most of the others in the field, are "disguised" retails firms. you put up a deposit which is at risk => just like opening your own retail account at IB. nice thing is that you can get higher leverage than you would with a regular retail account.

scalper · #9 08-06-2007, 07:52 PM

Quote:

Originally Posted by FabMav

true proprietary trading is not like that. You get paid a salary, benefits, and a bonus at the end of the year. The firm DOES risk their money on you. It's also very difficult to get into those firms. An IVY LEAGUE degree is required at least.

Firms like Echotrade or Bright and most of the others in the field, are "disguised" retails firms. you put up a deposit which is at risk => just like opening your own retail account at IB. nice thing is that you can get higher leverage than you would with a regular retail account.

fabmav, can you share a few of these "true" proprietary trading firms you are talking about? Thanks

FabMav · #10 08-08-2007, 04:25 PM

the first coming to mind is First New York Securities. They also have offices in London. http://www.firstnewyorksecurities.com/index.htm

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#1 06-27-2007, 08:49 PM
scalper Junior Member Join Date: Jun 2007 Posts: 29	How do I become a proprietary trader? hello all, I've been trading part-time for 7 months now with decent results. I scalp US stocks(both listed and naz). I'm considering becoming a proprietary trader and wanted to hear from someone who has been there, done that. what are the steps to join a proprietary trading firm? thanks in advance scalper

#2 06-29-2007, 05:14 PM
Alchemist founder of Trading-Lab Join Date: May 2007 Location: New York, NY Posts: 296	Hello scalper, First of all, I wanted to congratulate you on deciding to undertake this exciting project: becoming a proprietary trader. Proprietary trading can be a life-changing event, if approached properly. In order to become a "true" proprietary trader, you would first need to get sponsored for a Series 7 license. I say "true", because I've heard there are firms who are able to let you trade using leverage over 4:1 even if you are not licensed. However, fees are usually higher than "regular" proprietary trading deals. Approach a trading firm you like. Ask as many questions as you feel like. Don't be afraid to. Have them show you what platforms they offer their traders, ask whether they offer any in-house training and, last but not least, get a commission proposal in writing from them. Also, do you get to keep 100% of your profits/losses? Once you get fingerprinted, send your papers in, and hear back from them, you can schedule an appointment to take your test. I will not go over the whole process, as I took my S7 many years ago, and things may have changed. The material tested on the Series 7 exam covers basic securities industry laws and regulations, how financial instruments are issued and traded. It also has a section on options, if I remember correctly. Once you pass the S7, you are ready to take the leap! Take your time to get acquainted with the new environment. Meet with other traders in the office. Exchange ideas and...ask lots of questions. Usually they will start you with 10x equity. Oh...I forgot to mention. Almost 100% of proprietary firms require a "deposit" to join their firm. This deposit varies, but is usually $10K minimum. Some firms will take you in even with $5K. This deposit goes into your capital account at your newly joined firm. It is segregated from other traders' funds and any losses from your trading will be offset by money deposited into this account There are so many other things I'm sure I'm leaving something out. Feel free to ask more questions. I will be delighted to answer them! Happy Trading!

#3 07-02-2007, 04:29 PM
scalper Junior Member Join Date: Jun 2007 Posts: 29	wow...thank you very much for your exhaustive post!!!! So I have to get this Series 7 first, uh?! I heard it's a tough exam, isn't it? can you suggest any good study material for it? I'm tempted to go the without-S7-route as I've never been a good test taker. Series7 is highly timed correct? Also, when you say, "Usually they will start you with 10x equity", that means with $10K I would get $100K buying power, correct? isn't it a bit low to earn enough to make a living at trading? thanks for your helpful post!

#4 07-05-2007, 06:49 PM
Alchemist founder of Trading-Lab Join Date: May 2007 Location: New York, NY Posts: 296	Hello scalper, I used the Dearborn Passtrak 7 preparation/exams material. it is now published by Kaplan. you can find it here: http://www.businesssavvy.com/PassTra...rakSeries7.htm I took A LOT of sample exams, literally in the 100s. Yes, it's a highly timed test. You should spend no more than a certain number of seconds on each question. If I remember correctly, it's like an average of 20 seconds on each question. Don't be afraid. you will do well. Just take as many sample exams as possible right before taking the actual test. with regard to the 10x equity question, that is what they usually START YOU WITH. Then, when they get to know your trading style and can better assess your risk, they would have no problem increasing your buying power up to 30x or more. my best advice would be not to worry too much about buying power at the beginning as you will most likely not need it anyway. Concentrate on building a sound trading plan and sticking to it. hope this helps. if you have any other questions, don't hesitate to ask! Happy Trading!

#5 07-10-2007, 05:54 PM
ProTrader Senior Member Join Date: Jun 2007 Posts: 109	once they get to know your style, the sky is the limit in terms of buying power. give the risk management guys time to get acquainted with your trading strategies. also, don't worry too much about that NOW. get your S7 first!

#6 07-16-2007, 04:52 PM
ManhattanTrader Member Join Date: Jun 2007 Posts: 45	ask the firm of your choice LOTS of questions. Remember: it's YOU interviewing them, not the other way around

#7 07-18-2007, 09:12 PM
daytraderB Member Join Date: Jun 2007 Posts: 63	these days prop firms take everyone with $5-10K to put up and a license. You are not a big risk to them, as they offset any losses from your deposit money. That is why it's YOU interviewing them, as manhattantrader says, and not the other way around…..

#8 07-31-2007, 10:29 PM
FabMav Member Join Date: Jun 2007 Posts: 33	true proprietary trading is not like that. You get paid a salary, benefits, and a bonus at the end of the year. The firm DOES risk their money on you. It's also very difficult to get into those firms. An IVY LEAGUE degree is required at least. Firms like Echotrade or Bright and most of the others in the field, are "disguised" retails firms. you put up a deposit which is at risk => just like opening your own retail account at IB. nice thing is that you can get higher leverage than you would with a regular retail account.

#10 08-08-2007, 04:25 PM
FabMav Member Join Date: Jun 2007 Posts: 33	the first coming to mind is First New York Securities. They also have offices in London. http://www.firstnewyorksecurities.com/index.htm