People often ask ne the value of trading at a prop firm.  And there are many value adds that a prop firm brings to a trader, but I want to focus on one powerful performance driver.

Competition!

When SMB first formed a JV with the Kershner Trading Group our younger traders were in awe at the PnL numbers of the legacy KTG traders.  There were/are some of the best traders on the Street.  It gave them inspiration to be better.  It gave them confidence that they could make multiples more of what they were.  They were exposed to some strategies that they could co-opt with their strong trading skills to add PnL.  They saw how the best traders were those most tapping into KTG’s competitive advantage, superior trading technology.  KTG offers the best trader technology on the Street for prop trading.  Period.  They watched traders use massive amounts of buying power (20-30m) during special situations to make more.

They were the young guns looking up at traders they wanted to become.

3 years later and a very interesting firm dynamic has emerged.  Our better NYC traders have increased their PnL 10xs.  Mostly it was because of the daily work they do to improve and firm infrastructure.  But an important contribution was competition.  Most interestingly, while at KTG’s firm party in Austin this weekend, some of those legacy KTG 7-figure traders asked me about how our top guys were trading so impressively.  How are they doing it? They were now trying to emulate some of the strategies that were working best in NYC.

I sat with an exceptional trader and friend, who shared something I had never heard about why to stay at a prop firm.  He said that KTG invests in training new traders and their development.  This new blood energized this 7-figure legacy trader to keep improving.  He doesn’t want to get passed by the guys coming after him in NYC.  And this has helped him elevate his game.

The best NYC want to surpass the best Austin traders.  The Austin traders want to know what the heck those young NYC traders are doing so they can make more.  But perhaps more importantly, they do not want to get passed.

When you see a trader at your firm put on 30k shares and you have 10k that gets you thinking.  Hey I am better than him.  I have to step up my size.  When you see a trader put up 50k intraday, you say hey I am better than him.  And if you are competitive as most top traders are, you step up your game.

All of this needs to be done with traders doing more of what they do well and bigger and slowly adding new strategies that show edge.  But to be pushed, the desire to be the best at the firm, to make the most, fuels the best traders to become better.

Competition!  It fuels improved performance.

*no relevant positions