CMR Interviews: David Abramson On What Prop Trading Firms Are Looking For

Summary

In this insightful interview, Jason Shapiro speaks with David Abramson from First New York, one of America's largest and most successful proprietary trading firms. They delve into the firm's approach to hiring and managing traders, emphasizing the importance of risk management and a long-term perspective. Abramson shares his experience with thousands of traders, discussing what it takes to succeed in the trading world, the value of being contrarian with discipline, and the firm's unique culture that fosters collaboration and a focus on making smart trades. The conversation highlights the challenges of the trading business and the principles that have contributed to First New York's enduring success.

Takeaways

• 📈 David Abramson from First New York discusses the hiring and monitoring process for traders within a successful prop trading firm.
• 💼 First New York is one of the largest and oldest proprietary trading firms in the U.S., with a focus on risk management and long-term success.
• 🎓 The firm has a rigorous training program for new traders, aiming to develop them into partners over time.
• 🚫 David emphasizes the importance of not being contrarians for the sake of it, but understanding risk and having a disciplined approach.
• 🔍 When evaluating potential traders, the firm looks for a track record of success in various market conditions and a realistic understanding of one's strengths and weaknesses.
• 📊 The firm's approach to risk mitigation includes smaller allocations for riskier strategies and a focus on capital preservation.
• 💰 First New York prefers traders with a directional tilt rather than market-neutral, beta-neutral, or sector-neutral strategies.
• 🤝 The firm values a collaborative environment where traders can share ideas and support each other's success.
• 🏆 Success in trading is not about the money but the process, discipline, and understanding of one's capabilities.
• 🚫 David advises against the pressure to constantly make money and instead focuses on making smart trades and managing risk.
• 🌟 The firm's culture is not about luxury or status symbols but about the business of trading and making money in a disciplined manner.

Q & A

What is the name of the firm that David Abramson works for?

David Abramson works for First New York.

What is David Abramson's role at First New York?

David Abramson's role at First New York is Head of Trading and Head of Talent Acquisition.

How does David Abramson describe the firm's approach to risk management?

David Abramson describes the firm's approach to risk management as focusing on risk-reward over time, understanding market conditions, and having discipline in both good and bad times.

The firm does not run any outside capital as they do not want to feel the pressure to put money in the market when it shouldn't be.

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How does First New York's compensation structure differ from other firms?

First New York prefers higher performance bonuses over management fees and does not pay for infrastructure or poor real estate decisions. They want to pay for alpha and share profits with those who generate it.

What is the firm's view on traders who are looking to make money all the time?

The firm believes in taking a long-term view and does not expect traders to pull a rabbit out of their hat in the first week, month, or quarter. They emphasize the importance of proving one's ability to make money over time.

What is the firm's policy on traders who want to manage a large amount of capital from the start?

The firm is cautious about allocating large amounts of capital to new traders. They prefer to see a track record of success and risk management before increasing the allocation.

How does David Abramson feel about the importance of being honest with oneself in trading?

David Abramson believes that being honest with oneself about strengths and weaknesses is crucial in trading. He emphasizes the importance of self-awareness and not lying to oneself about one's abilities.

What is the firm's perspective on the lifestyle of a trader?

The firm encourages a business-like approach to trading and managing money. They advise against excessive spending and emphasize the importance of keeping life and work in check.

How does First New York support its traders and assistants?

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