Retail Traders Seeking Solace at Prop Firms

Trading Comes Back in Vogue…But Will Retail Traders Get It Right This Time?

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Sep 13, 2012, 08:35 ET

SALT LAKE CITY, Sept. 13, 2012 /PRNewswire/ -- Nearly a generation separates the go-go '90s from today. Gone are the days when retail traders could quit their jobs on a whim, open up a trading account, and glut their portfolios on a panoply of issues that ended in .com. For many retail traders, these lucrative times ended harshly and abruptly in March of 2000.

For those retail traders that survived, the next party ended again in December of 2007 and retail traders were again left scared, scarred, bitter and disappointed. Fast forward to today, and retail traders are still largely (and justifiably) skittish when it comes to the market.

Can retail traders get it right and actually prosper in the market without having their heads handed to them or are they destined to ignominious failure? Indeed, several prominent politicians, former New York Governor Elliot Spitzer among them, have actively advised retail traders to quit picking individual stocks.

However, a select demographic of retail traders seems to have found success among proprietary trading firms.

Maverick Trading is a boutique proprietary trading firm headquartered in Salt Lake City. The firm's business model diverges significantly from other models common in the industry. The most notable differences are: the firm focuses on position and swing trading rather than day trading; its traders use options almost exclusively; there is an established and tested system of training, mentoring, and coaching provided to all traders; and, the traders have an equity interest in the firm itself.

Maverick's model has performed surprisingly well in attracting traders to the firm. Maverick has expanded its base of traders by over 30% in 2012 alone.

Joining the firm is not a "come as you are" affair. Maverick is extremely selective in the traders it brings on board to trade the firm's capital, offering positions to between 4% and 5% of applicants. This selectivity has wrought benefits for the firm: its retention rate among traders exceeds 95%.

"Traders come to the firm for a variety of reasons. Most want to learn how to trade professionally. Some want access to the firm's capital, but the common thread among our traders is that they want the professional supervision, risk controls, and professional network that exists in the Wall Street trading houses," said Jon Frohlich, Chief Operating Officer of Maverick Trading. Frohlich continued, "There are plenty of businesses out there that make money promising to teach people to trade. Maverick's results speak for themselves. Where retail traders get into trouble is when they get back to their offices and trade by themselves. They're trading in a vacuum and very few people can succeed that way."

Maverick's Founder and Head Trader, Robb Reinhold recently spoke about the firm's growth. "Strategically, we see the trend in Maverick's growth continuing through the end of the year and well into 2013 in both the Stock and Options Division as well as the FX Division. The key to remember is that we didn't undertake this expansion just to get big. Maverick is looking for traders who are willing to learn and willing to trade in a collegial environment. By being as selective as we are, we're able to bring on people who will make money for themselves and the firm over the long run."

Jim DeMuth, Chief Recruiter for Maverick's FX Division, said, "We've seen increased interest in currency trading from people who have no prior experience. There's an undercurrent of genuine worry among applicants who want to be in a position to at least hedge themselves against devaluation of the dollar. These applicants see Maverick not only as a way to make money in currencies but as a way to hedge the value of all their assets in case the Fed keeps printing money."

Currently, Maverick's near-term market outlook is neutral to slightly bullish. The firm's traders have few active positions compared to historic trading activity. Frohlich was able to confirm that there were an abnormally high number of contingent orders placed by the firm's traders for both bullish and bearish positions. "As a firm, we don't have a problem being in cash until the market asserts a direction. Our traders are trained to trade the market in front of them, not the one they might wish for."

In the near future, Maverick is continuing its expansion program and is currently working on its second book in a planned series of four.

"The feedback we've received from our first book, Maverick Trading, has been outstanding. In our second book, we're going to discuss techniques for the more advanced trader and also really drive down into the psychological aspects that help the traders at the firm be successful," said Darren Fischer, co-author of Maverick Trading: Professional Techniques to Create Generational Wealth. Publication is planned for early 2013.

To the original question: Can retail traders get it right this time? The answer, for those who are willing to put in the time and training with an established prop firm is a resounding and profitable YES.

About Maverick Marketing:

In operation since 1997, Maverick Trading is a premier proprietary trading firm with Divisions in Options/Equities and FX.

To learn more about Maverick Trading, visit: www.mavericktrading.com

To learn more about Maverick FX, visit: www.maverickfx.com

SOURCE Maverick Trading