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Jobs or Allocations: Which is best step for developing traders?

There is good news, extra-good news and not-so-good news for the developing trader community. The good news is that hedge funds and banks are hiring again. The extra good news is that established hedge funds are now starting to make allocations to developing traders in the hope of finding their next stars. The not-so-good and unsurprising news is that the retail market is generally a waste of time and energy.

So if you are a talented and ambitious trader, should you start by looking for a job or should you start by concentrating on your track record in order to attract an allocation?

Never a simple answer to this one but if in doubt, go for the job.

I personally learned a huge amount from some of the more experienced traders that I worked with in my early years. I would not have had the focus and maturity to build a successful trading business whilst probably having to work another job. Sure the bank got it’s pound of flesh but I gained invaluable knowledge and had the opportunity to trade full-time.

If you are interested in applying for a trading job, you can message me directly via Twitter, contact me via LinkedIn, or via FXWW and I will keep you updated on what’s available.

But as we know, the world is unfair. The present job market is heavily skewed toward a certain type; young, mathematical, heavily-systematic and geographically flexible. If you don’t tick these boxes, then you will need to aim for an institutional allocation. The obvious next question is what are the performance parameters?

(Firstly, get your head around the concept of Notional Capital! If you make $3k profit on a $10k account, this does not necessarily equate to a 30% return in our world. If your average trade size is 20k and your maximum overall open position is say 40k, then it’s fair to say that your Notional Capital is $10k. Your average leverage in this example being 2:1, your maximum leverage 4:1 and your RoI 30%. But most traders only keep risk capital in their trading account and use extra leverage. So as a rule of thumb, whatever your maximum open position is, divide this by 4 and that is a rough estimate for your Notional Capital.  In the above example, if your maximum open position was 200k, then your Notional Capital was 50k, so your 3k profit equates to 6%).

Keep monthly losses (on Notional) below 4%, keep overall losses below 10%, average a monthly return of 1.25%, and do all of this with a consistent strategy and risk-management process; if you can do this over a 12-24 month period then you will attract potential investors.

Good luck out there++