Many people seem to want to try a career in trading but aren’t sure how to get started. This will be a multi-part post where I’ll go through my trading career and give some advice to people who want to follow suit.
The beginning: Near the end of 2009 I was lucky to find my way into a prop trading firm. This was my first job after graduating university and hopefully my last. I say this was lucky for a few reasons.
- I was able to treat this as an extension of school, I hadn’t gotten accustomed to getting a steady paycheque and I was able to treat it as more of a learning process; not expecting any income
- I was young still and able to live with my parents during the beginning of my trading career so I didn’t have many expenses
- I was young and foolish enough to have an unwavering belief in myself
I applied online to this firm that a friend from university told me about and got a call back for an interview a few days later. I borrowed my parents car and drove downtown for the interview. I was nervous, in my ill-fitting suit, wondering what I was in store for. I stepped off the elevator to be greeted by bright red, green and yellow walls with a bunch of guys walking around in t-shirts and jeans. I was so nervous I asked the first guy I saw for Mr. Smith, he laughed and said “oh, you mean Bill, yeaaaaaa….. he’s not a ‘mister'”. After waiting in the reception area I was called in for my interview with ‘Bill’, he was leaning back in his chair casually tossing a stress ball up and down. He explained to me how the job worked, what it was like, and compared it to playing poker… ‘cash games, not tournaments’. Which I loved since I was pretty heavily into poker at the time. He was asked if I was OK with how the job was structured and that was pretty much it.
The deal at this place was as follows:
- Traders are divided into ‘Students’ and ‘Traders’
- Students receive 0 pay
- You are a student until you make $2000 in a month, then you graduate to trader and get 40% of your profits
- You have a set loss limit per day which fluctuates based on performance (this is literally programmed in to your computer. When you start its $50, as soon as you’re down more than $50 a little clock would pop up, you had 5 minutes to get flat. If the 5 minutes are up the system covers all your positions for you, that’s it, you’re locked out for the rest of the day.)
- The floor provides the trading capital and software
Class: I got an email a few days later telling me when training would start. I showed up eager for the training to begin, there were about 15 people with me in my ‘class’. The training wasn’t anything special; this is an uptrend, this is a downtrend, this is what a level 2 is , how to use their software etc. As basic as the information was, the instructor (Bill) was intense! I think he wanted to create a fear based atmosphere because he was quick to fire anyone for anything. One girl showed up 30 minutes late and claimed she misread the email, she was told ‘If you’re too stupid to read an email you’re too stupid to trade!” Fired right then and there, our class of 15 was whittled down to 9 or 10 by the end of the week. After a week of training it was finally time to go out on the trading floor.
Starting On the floor: The floor was completely different from the classroom, it was a really exciting, fun environment; brightly covered walls, filled with great people all chasing the day trading dream. There was a buzz to the place that made me feel this is where I needed to be and what I needed to be doing. To start we were only allowed to trade GE with 100 shares, and we would get yelled at if we took more than a 4 or 5 cent loss (4 to 5 dollars with 100 shares!). I personally don’t think this was a good way to start learning to trade, maybe they were trying to instill discipline of taking small losses to us or they thought scalping was the way to go. Needless to say it was pretty tough to make $2000 in a month scalping GE with 100 shares and many more of the students dropped off. There seemed to be a constant revolving door there, hiring virtually anyone with a pulse and firing them just as quickly. The first few months I lost pretty regularly as it was with most of the new students, it was an ongoing joke that they should simply make an algorithm that takes the opposite position of any new students. Even though I was losing I must have been doing something right because they kept me around, then things started to turn around….
Keep checking back for part 2!
*I’m not using people’s real name