Friday, January 29, 2010

How Prop Firms Can Attract the Right Talent

My recent post took a look at how traders can make themselves attractive to proprietary trading firms. Now let's take a look at how prop firms can attract promising trading candidates.

The best way that prop firms can recruit top people is by being ethical and honest. Please take a look at the extraordinary post from Bella at SMB Capital on "The Failure Rate of a Proprietary Trader". How many prop firms would dare talk about failure and the sobering reality that the majority of prop traders don't sustain a living from trading? How many would play down the promises of riches and, instead, emphasize the importance of hard work and skills building?

Kudos to SMB for telling it like it is. It's one reason I'm honored to work with the firm. (And, no, they didn't solicit this post).

As Bella emphasizes:

"The market requires that you become an elite performer. Most people can 'punch the clock' at their jobs, do average work, and be appreciated by their employers. Heck you might even get promoted. Try this as a trader and the market will swallow you like a shark does squid. The best trader on our desk grinds it out daily like a steam pipe fitter."

Ultimately, all any prop firm can do is what a college basketball or football team can do: give you the best shot at big league success possible. The coaches can provide the training, teach the plays, and offer the encouragement--and then it's up to each player to make the most of practice and playing time.

So if you interview at a prop firm, listen for pie-in-the-sky promises and listen for tough love about the challenges of trading. If one firm lures you with the promises and the other encourages you to think long and hard before taking the challenge, you'll know the firm to choose: the one with the integrity to acknowledge and assist the steep learning curve ahead.



Michele said...

"Ultimately, all any prop firm can do is what a college basketball or football team can do: give you the best shot at big league success possible."

With all due respect, I don't know any ball team that charges you $5000 to join.

seedworker said...

5000 is a good day of trading. What is an education worth? Did you not have to pay to attend college?

RAEckart said...

You'll put in more than $5000 in either time or elite sports training to make a college team these days. And you'll want to make sure your money is well spent if it means making an elite team.

Take Dr. Steenbarger and SMB's advice and do your homework.

Ionized said...

a retail account means you have to put in $25k to pattern day trade..

i don't see a problem with only $5k.

Walter Sobchak said...

When I first started trading on my own (not firm a firm) it cost me 30K and a year before I was consistently profitable. So putting up 5K (if that's the requirement) to have the support of a firm is a steal.

The other thing is that 90% of traders fail. Keep in mind the failure rate any business start up is 90%. If you treat your trading like a business, and are aware of the 1/10 rate of success from the get go, your success or failure will come as no surprise.

passiontotrade said...

Some of my friends did pay $30-$60K for "training". I paid $5K to a firm that didn't teach much more than I can get out of any $50 book. I've looked at SMB's program and it looks substantially different than what I got. I just wish I'd known about them at the time I went elsewhere. I definitely would have chosen SMB's program over the academy's. From SMB's blog it looks like they have a certain trading style so it makes sense to me that if you want to join the firm you have to know how to trade their style. That requires training by them. If you don't join the firm for whatever reason, that solid education and skills development is still good to apply however you see fit. Compared to the potential income, the 5 or 7K cost looks like a good return on your investment. Dr. Brett's later post emphasizes the need to separate the training aspect from the job hire.