Originally Posted by
Daytr
That is absolutely incorrect re beating the index.
Prop traders do virtually year in year out otherwise they wouldn't have a job.
And as I don't just trade equities, but FX & Commodities amoung other things the measure is quite irrelevant.
You have never worked on a trading floor so it's probably best not to speculate on what they can & can't do or achieve. There are many types of traders. Some specialise trading one product like US Treasuries, equities, Crypto, or could the European Repo market, FX, Credit, Commodities etc. Some are are long only traders, others trade long & short and some trade across a range of products as I do. Some traders specialize in a particular financial instrument, be a spot trader, forward trader, arbitrage or option trader and again some will do all of the above.
I knew some traders at some banks that earned $20M bonuses back in the day and there is the private equity & hedge fund traders who generally get very large performance bonuses and matching an index would not be considered performing. You might not lose your job initially bit if that's all you could return year in year out then it's likely you would get sacked.
What I think most of you guys are getting mixed up with is fund managers in the equities world, that is not proprietary trading.