takrupp

Nice to see Sergey taking the credit on this. In reality, I think it speaks to geek think: "Why not collect all of the wifi data out there since you are trolling the streets anyways? Who cares what the application is for this, but more data is good."

At some point, you need to hire some paranoid guy to run everything by and then take his word with a grain of salt. A quick check with anyone running a 64-bit encryption key on his DD-WRT hacked router would be able to tell you that a lot of people are going to freak when you tell them your network has been logged by the largest info aggregater this side of the NSA.

I think people are slowly realizing that social networks are going to be open and WILL use your data for whatever their business model needs in order to make money. Its still going to take some time though for that to fully sink in.

I think the vocal people who feel burned fit into the early adopter category. I was on Facebook when it was only in a handful of schools and it was an amazing tool. At that time, it was well understood that your info was locked down to people outside your network.

Now these Facebook dinosaurs (who overlap a lot with the tech crowd) feel lied to because things changed. That beautiful network where you could share personal moments with friends is gone. Expectations were set and then dashed. This pissed me off, and, while even though it is only a vocal minority now, a lot of other people too.

Even though it sucks, I'm only on Linkedin now. I knew when I joined it was an open platform and anything I put up there would be viewed by current and future employers, which I'm okay with because that was my expectation. Facebook is trying to share people's data in an open way, akin to Linkedin, its just that the data people put up there was meant only to be shared with people that they knew, not for instance, the HR department of the company you are interviewing with.

Front running is at most a grey area, and what is front running to you, the trader, is different than what the legally malicious definition is.

Don't get me wrong: These firms do provide liquidity, which is great for anyone trading in the markets, but if you are going to try to play these firms' game of running liquidity providing strategies or even stat-arb style strategies, on their home court you just aren't going to be very effective. That is unless you are running something totally new. (Side note: I knew a guy trading MBS based off of an obscure NY state housing law. The strategy was totally unique, and ran like clock work. If you have something like that, than you could be marginally successful. He was making like 300k a year off of 60k in capital).

Interactive Brokers has an internal prop fund, Timber Hill, that uses the trades happening on the brokerage to execute their trades (its a proprietary form of liquidity - every major electronic brokerage does this). Basically, you aren't just paying for the trade you are also paying for it in that you don't have direct access to the markets and IBKR will front run you before your trade is ever executed. Its like an implicit trading cost thats hidden.

Volatility trading is more math-focused, but requires discretionary trading as well. Its less automated, and requires more specialized knowledge than other strategies. Volatility strategies aren't run by random people coming out of school or other industries. They are almost always run by a trader with a very well developed back-end including a quant (who is trained in volatility modelings - not as easy as the books lead you to believe) and still a very sophisticated trading system with access to both the options exchanges (which are unwieldy) and "normal" equities exchanges.

Its all possible, but can you make a living at it? Its a big maybe. Can you actually make more than your normal job or even a fraction if you were with a well endowed quant fund? No way. Not unless you have been in the industry for a long time.

The problem is access to liquidity. People do do it themselves, but they can only trade very small amounts of money and thus make only a little return (albeit with pretty limited risk). If you have a good brokerage account (like most prop firms) or are a bank you can essentially trade for free. Your brokerage account will only charge you for the overnight holding as the cost of capital (you get charged transaction costs but no need to buy leverage). So, firms with a good amount of capital can use their balance on a brokerage account and who do not have overnight holding (common for these strategies) essentially don't need capital to trade.

Its just how much you want to scale. Also, if something goes wrong, you can lose your capital very quickly. An easy risk to cover for a multi-strategy prop firm, but it could sink an independent trader. I've spoken to a lot of these guys, and a new strategy mysteriously losing 1MM+ in a couple minutes is pretty common.

Back to access: The types of connections these firms have to exchanges are very expensive. If you dont have the scale necessary to cover 10k per month per connection than you can't compete with all of the other players in the market. Then it goes down to execution speed, colocation, etc - those are the things that make non-bank prop firms like Tradebot or Getco successful. The strategies are only a part of the equation, the trading systems are what really separates the pack.

Most of these firms have way more developers than traders, and the developers they have would make Google jealous.

One the hats I wear is that of a recruiter (its business we operate here) focused on finance and biotech. I couldnt agree more: MBAs aren't that hireable right now, even in banking. In fact a good junior, with 2 years of experience, are much more placeable. As for higher degrees, if you want into banking or business, comp sci, physics, applied math, statistics are better MS degrees.

I dont have an MBA, and havent pursued one thus far, but for the cost and knowing the job market, I think the article is mostly right. Good managers can teach business stuff as long as the talent is dynamic enough. Those analytical skills, though, are highly valuable in this market to smart hiring managers.

We also rock the 3-partner model - No problems yet. Easy to mediate decisions. We each have our core focus and can make game time decisions ad hoc, but if strategy is involved or a big decision needs to be made, the third person usually has very valuable insight, especially when two partners are butting heads.

If you have a new product though, it can be tough if there isn't a market yet. Its tough coming up with something truly new, but that's when I've been most excited. After that, listening is very important. Everything we have done with our new iterations has been customer driven.

I still envy Apple, even though this is mostly good advice. They are very feature forward, but their nitch asks for it, so maybe that can be seen as the "customer asking for it".