How Bank and Prop Traders Think

Proprietary trading firms and bank desks give their traders capital, and in return they impose rules that most independent traders never apply to themselves. Every position has a limit, every day has a profit and loss that someone else reads, and every bad week has to be explained in writing. Those rules are a large part of why professionals survive. This course teaches them to traders who work alone.

How do professional traders manage risk?

With limits set before trading and enforced by someone other than the trader. A desk trader has a maximum loss per day and per month, limits on position size and exposure, and a manager who reduces their capital after a drawdown. The course has you write the same framework for yourself and report against it.

How do bank traders think differently from retail traders?

They are judged on process and risk as much as on profit, and they expect to explain every position. A good trade that lost money is accepted; a reckless trade that made money is not. The course trains this separation of decision quality from outcome through weekly written reviews.

Who is this course for?

Independent and funded traders who want to run their trading like a professional desk. No programming is needed.

What you will be able to do

• Describe how bank and proprietary trading desks are organised, paid and limited.
• Set desk-style risk limits for your own trading: per trade, per day, per month and by exposure.
• Write a daily risk report and a weekly position review in the format a desk head expects.
• Separate the quality of a decision from its outcome when reviewing your own trades.

Syllabus, module by module

1. Inside a trading desk

   Market making, flow trading and proprietary trading, and how each desk earns its money.

2. Limits and stop-outs

   Value at risk, loss limits, position limits and what happens when a trader breaks one.

3. The daily P&L

   Marking positions, attributing profit and loss, and explaining a bad day in writing.

4. Information flow

   Research, sales flow, data and the discipline of separating information from noise.

5. Conviction and size

   How professionals scale positions, cut losers and decide when not to trade.

6. Decisions and outcomes

   Judging a trade by the process behind it, and how desk heads review traders.

How the certificate is earned

Weekly desk exercises and two graded problem sets: a written risk-limit framework for your trading, and eight weeks of daily risk reports and position reviews on a simulated book. On a pass you receive the Course certificate in Proprietary Trading Practice, issued by the Institute with a verification code. Read how certification works.

Before you start

The Trading Plan: Ideas, Information and Rules.

• The Trading Plan: Ideas, Information and Rules