Can Prop firms benefit well-capitalized traders?

H

Hello_Dollars

Since leverage is apparently the main benefit of associating with a prop firm, it seems that reasonably well-capitalized traders (mid six figures-plus) would be better off remaining on their own. Is that correct or are their some other advantages of trading with a prop firm that would outweigh the disadvantages (namely, the loss of of control)? Thanks.

Regards,

HD
 
The only thing a prop firm can do for a well capitalized trader is give him much better ticket costs than he could get on his own. If a scalper this could be big, for someone making only a couple of trades a day, not much.

Also maybe that ttrader wants to sit in a big room with other traders to get some ideas, instead of trading from home
 
Firms like Track Trade now charge .005 including ECNs...There are
other firms in the pipeline...Are you saying that prop firms will charge significantly less than .005 including ECNs....
 
Quote from Hello_Dollars:

Since leverage is apparently the main benefit of associating with a prop firm, it seems that reasonably well-capitalized traders (mid six figures-plus) would be better off remaining on their own. Is that correct or are their some other advantages of trading with a prop firm that would outweigh the disadvantages (namely, the loss of of control)? Thanks.

Regards,

HD
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so, which firm do you represent?

and since you're so blatent, in dismissing prop traders less than mid-six figures from your discussion....

why would you need them?
 
Sorry Limitdown. I guess I haven't yet learned the proper etiquete of this site. It was an honest question from an individual trader without any affiliation to (or, frankly, much knowledge of) the proprietary trading world. Perhaps one day when I'm an "Elite Member" like yourself, I'll know better. My bad.
 
Prop Traders serve a wonderful purpose for the trader who has not had time to build capital but yet seeks an opportunity in trading...There are lots of intelligent traders who seek the freedom of independence and need a start whereby Prop Firms are willing to put up and risk their capital...

This does bring up the reasoning of probabilities of success...The question is what are the probabilities of the success for a new trader that puts up 5 to $10,000 when the monthly costs are 12 times $199 for the capital...12 times $100 to $250 for the software...These costs are a major portion of the initial capital...
 
Quote from drprotrader:

Prop Traders serve a wonderful purpose for the trader who has not had time to build capital but yet seeks an opportunity in trading...There are lots of intelligent traders who seek the freedom of independence and need a start whereby Prop Firms are willing to put up and risk their capital...

This does bring up the reasoning of probabilities of success...The question is what are the probabilities of the success for a new trader that puts up 5 to $10,000 when the monthly costs are 12 times $199 for the capital...12 times $100 to $250 for the software...These costs are a major portion of the initial capital...
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Agree 100% with the first paragraph. As for the second, I know prop LLCs that absorb these expenses.
 
You also have to consider what you could do with the money elsewere. Trade instruments not offered by your prop firm, invest in real estate, etc.

They're basically letting you use their money for free, why not do that and diversify and grow your money elsewhere as well?

If you hold large positions longer term, then the cost of carry with the leverage might not be worth it.
 
Quote from drprotrader:

Who are some of these firms...and what are their rates...do they require series 7...
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Redwood Trading is one, PM for rates, and yes to trade in the prop account you need to be licensed. Remote traders do not need a license.

rttrader -
 
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