Getting a Job as a Day Trader

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Getting a Job as a Day Trader

Getting a Job as a Day Trader

Day Trading from home and starting out with a small account isn’t the only option for those that want to day trade…as a career. While it is a viable one, and I do it now, I didn’t start out that way.

In 2005 I had just finished university, and had fallen in love with trading based on a stock market course I took where we traded demo accounts and tried to make as much money as possible during the semester. I did pretty well, and figured trading stocks all day would sure beat making cold calls 12-hours a day or something like that (when I went to business school I originally thought I would be a stock broker. Do they still exist?).

In my initial job search I saw a posting for “Proprietary stock trader.” That caught my attention. I read the job summary and it sounded awesome. At the time I had no idea what a proprietary stock trader was, but learned that it is a trader that trades company money to make a profit. That is it. No clients, no shuffling papers, just show up and buy and sell stocks (and other assets as well–varies by firm) all day to turn the money they give you into more money.

The job ad said things like:

-need fast reflexes

-make extremely quick decisions

-excellent at video games

-interest and skill in online poker

-no experience required, must be willing to learn

Are you kidding me?! Did I drink too much at my goodbye-university-bash? That sounds awesome!

I applied. Went through three interviews and was accepted into a training class. My training was mostly composed of learning how the stock market worked, placing bids and offers…pretty generic stuff. Coming up with ways to profit was left to us, the traders. NOTE: Not all firms are like this; some will provide you with training and strategies that are proven, and you just need to follow their plan.

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Me and few guys in my training class–who I am still friends with–met every day after the market closed and pounded out strategy ideas. We all did very well. I was a “prop trader” for 6 years until I decided to branch out and do it on my own. But it was a great experience; I loved every minute of it, and still have a large number of friends who are prop traders today.

If I have tweaked your interest here a few things you should know about getting a job as a day trader.

You don’t need to trade from home with a $100 or $1000 account trying to build it up. There are “prop firms” all over the world that hire people, train them and give them money to trade. If you are good, basically you’ll be provided with as much capital as you can utilize. For some traders, that will be millions. You show up at the office and you trade, typically in a very relaxed environment (no suits).

Some firms will also allow you to trade remotely (don’t go into an office and instead you trade from home) although this is typically reserved for consistently profitable traders with a proven track record.

Of course there is lots of competition and if you aren’t profitable after a certain period (determined by each firm) you’ll be let go. Which means it is up to you to work your ass off, because there is always someone else willing to take your spot.

You don’t need experience as a trader to be hired. Just be willing to learn, and dedicate yourself. If you don’t have a proven track record, don’t call yourself a trader when you submit your resume or go for an interview. Express that you have an interest in the markets, want to learn and want to trade for a living.

So that all sounds pretty good; here are the drawbacks.

Typically you’ll be paid based on performance. No salary, generally. You get a cut of what you make and that is it. Payouts range from 50% to 99% of your profit, although this can be deceiving. Typically high payout firms will charge you higher commissions for trades, while lower payout firms charge less. This isn’t always the case, but the company is going to be making money off you somewhere. Find out where it is.

Becoming consistently profitable can take some time, as many of you who are already trading on your own know. That means you may be trading in the office for months, and not getting a pay cheque. Plan for at least 6 months of not making much at your prop trading job. After that, if you are showing a profit and they are willing to increase your capital it becomes very possible to make a good living as a prop trader. I still know many prop traders; some make US$50,000 and are happy with that, others make US$500,000+. You determine what a “good” living is.

Final Word

This is not meant to be a how-to on getting a prop trading job. It is just an introduction, so you can run a Google search (for ‘Proprietary trading firms’ in your city) and see what firms are available in your area. Most people don’t know about prop trading firms, but if you want to potentially make trading a career, like I did, it is a viable option. Also, you start out with more capital and have guidance, so you’re likely to make a living at trading quicker than if you try to grow a small account from home.

Prop firms don’t just trade stocks. Nearly every asset is tradable, but it will vary firm. Typically the firm’s website will tell you what they trade and the markets you can access as a trader.

Read through the prop firm’s website as it will answer more of your questions and tell you how to apply.

Trading is still a tough business and most people who attempt prop trading don’t make it. There are no guarantees you’ll make money, but if you are determined, dedicated and willing to put in the work, making a living as a day trader is possible. This is just one more way to do it.

How Do I Get a Trading Job Anyway?

by Myra Thomas 27 April 2020

How do I get a trading job?

Getting your first trading job requires a bit of work. It’s a competitive business, after all, and offers the potential of making some of the best money in finance. The bigger trading firms – commodity firms, investment banks, and retail banks – will often interview at the top universities. If you’ve just completed a math or economics undergrad program or an MBA degree, your school is a wonderful resource for entry level spots. Make sure to take advantage of the recruiting days on campus.

The firms that come to these events interview for associate positions. These new hires will move about through different trading groups or desks, taking a variety of training classes along the way. These classes are rigorous and intended to eliminate the low hanging fruit. To be successful, it helps to have a stand out personality.

The smaller trading firms do advertise assistant trader positions. However, there are still many trading positions that will never be advertised. This is when it helps to know someone in the industry. Because it’s common for people to move into trading from some other area, your connections at this step are important. How do you make these contacts if you’ve never worked in the industry? Think college internships, or use your school’s alumni network if you’ve already graduated.

Finding alternative routes into a firm can also work. Take a look at the list of member firms on different exchanges and visit their Web sites or contact them directly. Remember, mutual fund firms also have trading desks. Look at jobs in the analyst department or at one of the many firms that support trading operations. There are companies that service and provide applications and clearing services to trading firms. And a huge number of people support trading operations in everything from network management to accounting. A position in a related department or organization can provide you with inside information on job openings at a trading operation.

What types of trading jobs are available?

Whatever firm you work for, new folks generally start out as assistant traders. At a small shop that may mean making coffee runs, building spreadsheets, and doing lots of research. If you want to start at a smaller firm, do your research before you apply. It helps to know exactly what they do and how you can help them. Look for what products they trade, what professional organizations they belong to, and where their management started before working there. Traders from larger institutions are the ones who’ve started many of today’s smaller firms. The interview process is tough, which is how they winnow out applicants who can’t deal with high amounts of stress.

At a big firm, you’ll do more coffee runs, build more spreadsheets, and do a lot more research as you learn about the extensive and complicated nature of the business. But don’t assume that you’ll get lots of authority right away. They don’t put new hires without a track record in charge of millions of dollars.

Generally, you’re required to hit the ground running. Firms need to see how you react and deal in a risky and very error-intolerant environment. Most of the real experience comes when you begin trading. There are a variety of things to trade, including stocks, bonds, commodities, fixed income, or derivatives products. If you have considerable experience and an educational background in mathematical modeling and programming, then you can build and back test trading models.

What is a proprietary trading firm or prop shop?

Proprietary trading is trading with the firm’s assets, as opposed to for customers. Most major firms and banks have proprietary trading groups. The difference between these and pure “prop shops” is that the latter do nothing but trade.

What’s better to get – an MBA or a CFA?

The bigger firms are looking for the best and brightest from the pool of math and economics majors. It certainly helps to get your foot in the door by having the necessary educational background. The MBA is generally a good place to start. For traders, the MBA is becoming increasingly expected, especially for those looking to work at larger firms. However, a CFA (chartered financial analyst designation) is something a smaller number of traders do obtain, especially if they’re working on the sales side or as analysts.

The non-profit CFA Institute, which awards the CFA, describes the designation as a “self-study graduate level program for investment professionals.” There are three separate exams for the CFA, but there are also prerequisites to garnering the certification. Additional details on the CFA can be found at the association’s website.

The big firms expect their new hires to have an MBA from a top-tier school. Many prospective candidates have already finished the degree before they get an official trading spot.

What kind of program should I do at school to get a trading job?

For those in an MBA program, it helps to focus your degree on finance or economics. Most MBA programs require some sort of concentration, and others offer the option of a dual concentration. Some dual concentration programs require the student to complete additional credit hours beyond the normal degree.

For those interested in an even higher-level degree, it doesn’t hurt to go for the PhD in math. While a lot of work, there’s lots of money to be made by those willing to take this path. Generally, quantitative trading jobs require someone with a Ph.d. (Quants are essentially high-frequency traders.)

But no matter the degree, nothing replaces the on-the-job experience, and doing your homework is the best thing you can do to land your desired position. There are traders who started out as analysts, and even traders who began their careers by learning the in’s and out’s of the business at a financial news service.

Should You Quit Your Job to Trade Stocks?

Trading is often viewed as a high barrier-to-entry field, but this is simply not the case in today’s market. Now, anyone with ambition and patience can trade, and do it for a living, even with little to no money.

Sound fantastic? It is, and there are so many options available to people with the desire to put in the time to learn.

The New Era of Trading

Changes in technology and increasing volumes on the exchanges have brought about a number of very low barriers-to-entry trading careers. In some cases, no personal capital is required, and, in other cases, only a small amount of capital will be required to get you started, in order to verify your commitment to trading. With markets so interlinked, it’s always open trading time somewhere around the globe, and many of those markets can be accessed with relative ease. This means that even people who have full-time jobs or children at home can trade—it is just a matter of finding the right market and opportunity.

This is not to say that trading is an easy business; it can be very tough to stay in for the long haul. As we look at some different trading alternatives available today, you will see that you are able to enter the market, but your ultimate success depends on you. We will look at these options in-depth to see if they offer full- or part-time career opportunities or if they can simply be used to generate additional income.

Quit Your Job To Trade Stocks?

Available Trading Options

People often think that full-time traders with advanced degrees and a high pedigree only work for investment banks. Equally as common is the thought that, in order to trade, you need large amounts of capital and expendable time.

It is probably true that to work for an investment bank or onto a major institutional trading floor, you will need to have connections or a prominent educational background that sets you apart. However, in this article, we will focus on how the average person, with either extensive or very little trading experience, can enter into the arena of trading and creating wealth.

Trade Independently

The first option—and likely the easiest because it is so flexible and can be molded around daily life—is trading from home. However, day trading stocks from home is also one of the most capital-intensive arenas. This is because the minimum equity requirement for a trader who is designated as a pattern day trader is $25,000, and this amount must be maintained at all times. If the trader’s account falls below this minimum, they will not be permitted to day trade until the minimum equity level is restored either by depositing cash or securities. 

Therefore, potential traders need to be aware of the other markets that require less capital and have lower barriers-to-entry. The foreign exchange (forex) or currency markets offer such an alternative. Accounts can be opened for as little as $100 and, with leverage, a large amount of capital can be controlled with this small amount of money. This market is open 24 hours a day during the week, and thus provides an alternative to those who cannot trade during regular market hours.

The contract for difference (CFD) market has also expanded. A CFD is an electronic agreement between two parties that doesn’t involve ownership of the underlying asset. This allows gains to be captured for a fraction of the cost of owning the asset. As with the forex market, the CFD market provides high leverage, meaning smaller amounts of capital are needed to enter the market. The stock market can also be traded using a CFD. While the stock is never owned, the contract allows profits/losses to be reaped from speculating on the underlying stocks or indexes by mirroring its movement.

High leverage does mean higher risk, but if a trader does not have a large amount of capital, this market can still be entered with very low barriers. Educating yourself on the risks involved and building a strong trading plan are absolute musts before partaking in any trading activity, but when you’re highly leveraged, it becomes even more paramount.

Proprietary Trading Firms

Proprietary trading firms have become very attractive with their training programs and low-fee structures. If the idea of trading from home does not appeal to you, working on a trading floor might. A day trader working for a proprietary trading firm is typically a contractor, not an employee. They receive no wages or perks—just a share of the profits made from trading whatever the firm is into. The trader is provided with company capital (or leveraged capital) to trade and the risk is partially managed by the firm. While personal discipline is still very much required, trading for a firm takes some of the weight off of a trader’s shoulders.

Working for a firm may also require working in an office during market hours, although some firms allow traders to trade remotely from home. The benefits of working with a trading firm can include free training, being surrounded by other successful traders, constant trading ideas, greatly reduced fees and commissions, access to capital, and performance monitoring.

Many proprietary trading firms will accept people who have shown initiative in their backgrounds and have some education in their prior field. This is because the firm can monitor a trader’s risk, and those not showing promise can be released with very little overall loss to the firm.

Pay in a firm is based on performance and is normally a percentage payout of your net profits after fees. Some licensing may be required, depending on the structure of the company. Even if it’s not, though, passing the Series 7 exam will mean that there are more firms with whom you are available to trade. Each firm operates a little differently, so find one that suits your needs, personality, and circumstances. Some require you to use some of your own capital. If you run a search for a list of proprietary trading firms, you will be able to see what is available to you.

The Bottom Line

Once you’ve decided which trading method fits you the best, the next step is crucial. If trading from home is the main interest, you must decide what markets you will trade in based on your capital and interests. You must then make a comprehensive trading plan, which is also a business plan (trading is now your business), and decide how you will operate as a trader. Next, explore different online brokers and compare what they offer. Seek out a mentor or someone to help you. Then it is time to start trading.

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