Day Trading Firms vs. Prop Trading Firms

[pdicartery]

What is the difference between the two? When you go in for an interview, how can you spot the firm to be a day trading firm or prop trading firm?

The reason I am confused is because I have been interviewing with various companies and they all seem to have trading activities during the day only and hence, I think they are day trading firms. But they keep saying that they are NOT day trading firms and they are prop trading firms. Somehow I think they are trying to eliminate their images as day trading firms and telling people they are prop trading firms. What do you guys think?

 

[Don Bright]

Quote from pdicartery:

What is the difference between the two? When you go in for an interview, how can you spot the firm to be a day trading firm or prop trading firm?

The reason I am confused is because I have been interviewing with various companies and they all seem to have trading activities during the day only and hence, I think they are day trading firms. But they keep saying that they are NOT day trading firms and they are prop trading firms. Somehow I think they are trying to eliminate their images as day trading firms and telling people they are prop trading firms. What do you guys think?

Proprietary trading takes many forms: Day trading, pairs trading, M&A, scalping, swing, portfolio management, hedge funds, etc.

Back in the 1990's a bunch of "day trading" firms were formed and eventually shut down doing "SOES" trading, and other nasdaq intraday trading.

Most firms have traders who engage in several time frames and methodologies.

"Prop" comes in two types...One, the "stock exchange floor trading business model" (like ours) where the traders are independent, keep 100% of their profits, put up some risk capital ($20K or so), and use $mill or more of the firm's capital to trade with. Two, employee type firms who pay you a percentage if you make money for them. Very few of these around any more, most of the "jobs" have become not necessary due to the evolution of trading technology, program trading,etc.

Hope this helps...

Don

 

[blufftrader]

Why would I put up 20 k for 100 percent payout when i could put up 5k and get 100 percent and the same buying power and no trader is independent unless we didnt have to pay anyone commissions were still working for someone no matter how you want to put it.

 

[Don Bright]

Quote from blufftrader:

Why would I put up 20 k for 100 percent payout when i could put up 5k and get 100 percent and the same buying power and no trader is independent unless we didnt have to pay anyone commissions were still working for someone no matter how you want to put it.

As in most businesses, there are those desperate ones who choose to take the money from those who have little chance of success (ala lotterys, keno tickets, bingo, video poker, etc.) ....remember, most business ventures fail due to lack of capitalization. But, hey, if you make it, good for you.

When you have enough captial to ride the swints that occur in this business, then you will have a much better chance for long term success. We have taken a few "under our wing" here in Vegas with small $$, and yes, some have prospered, but they have worked 80 hours a week at the same time.

One must look at the overall "big picture"when getting involved in trading...how many multi millionaires are you working with? How many have helped you with your business plan...??

It's not about "coming in on the cheap" - it's the chance for success you have, by having training, on going help, and the ability to speak directly to successful traders on a daily basis.

Please, to the board a favor, and tell us who you're speaking of, and share with us the answers to my questions. ....heck, I answer a lot of questions, I would like to see someone else do the same.....

and, if you choose not to answer now...share with us in 6 months how your trading career is working...at least you'll be able to hlep others....regardless of how ell you're doing...and, isn't that what a chat board is all about??

All the best,

Don

 

[blufftrader]

Don you know most traders in your firms are not millionairs only people getting Rich are the owners and alot of firms ask for 5k and will back you up more then 5 k as long as you have shown progress and that doesnt mean your making money yet. Your rates are high and your asking traders for alot of capital so tell me how many of your traders trade over a million shares and get .0025 deal Ill tell you how many none. You charge .003 or just for a LLC to start a company threw you. Do right by your traders and that doesnt mean just training them to be good traders but that means stop taking a chunk of the traders paycheck besides its our money were putting up were taking the risk not you.

 

[NTB]

It's unbelieveable what a sense of entitlement you rookie traders feel. You really need to grow up and understand the real world.

 

[Don Bright]

Quote from blufftrader:

Don you know most traders in your firms are not millionairs only people getting Rich are the owners and alot of firms ask for 5k and will back you up more then 5 k as long as you have shown progress and that doesnt mean your making money yet. Your rates are high and your asking traders for alot of capital so tell me how many of your traders trade over a million shares and get .0025 deal Ill tell you how many none. You charge .003 or just for a LLC to start a company threw you. Do right by your traders and that doesnt mean just training them to be good traders but that means stop taking a chunk of the traders paycheck besides its our money were putting up were taking the risk not you.

Remember, we were all traders long before we became "owners" - and yes, I agree that if you show real promise that you "may" have a chance...but since it makes no sense for us bring on traders through a revolving door, vs having traders who can take advantage of a few $million to take part in the strategies that actually work (capital intensive, $1-$5mil minimum for most)....and I doubt your $5k firms will allow that kind of capital use (they simply don't have the captial, not a big deal, just reality...

I really do wish you the best...but it's the bottom line that matters...and our most successful traders may pay more per share, but they know they are getting "value added" so their bottom line rules their decison.

With the exodus of traders from the other 2 major firms lately, I can say with all certainty that rates are going back up at other firms because they have passed their stage of enticing traders with "loss leader" pricing...who wants a "bank" wio doesn't make money and give their traders safety and security needed.

Again, all the best and good luck!!

Don

 

[blufftrader]

strategies that actually work you say if you were a trader you should know that your success and me learning from you doesn't guarantee the same results but in the trading world as long as you have 5k or 20 k in your case were all more then welcome to trade and pay commissions and if your strategies actually work hire all of elite and dont aks them for 20 k down since you know they will make money on your proven successful strategies and weren't you an accountant in your past career not a trader

 

[mschey]

There are very few traders who can make it with just 5k in trading capital. If you only have 5k and really want to take a shot at trading, then you must focus on finding a place that offers training. Next, see if you can sit next to that person or people who are going to work with you for an hour and make sure he/she really makes money. Learning from an experienced and profitable trader is far more valuable then getting a great deal on commissions, IMO.

 

[bighitter1]

Over the years don has constantly made excuses for brights obscenely high rates. To sit here and say guys trading 1 million or more shares a month paying .004 -.007 is competitve is crazy. Over the years when someone brings up commissions you always revert to your strength and capital. If i put down 5k who cares if the company's here 5 years from now if my rates are 50-70% cheaper than yours and they give me 100-1 leverage. I'd assume much of the leverage you speak of is pairs leverage or market on open orders than require large buying power but much of it is not ever needed.Somebody trading 2 million shares a month with you is spending a min of 8-10k a month in commissions with you verses 5k or less at many other big vendors from hold brothers to echo. Echo will give a 2 million share a month guy .0025 and somewhat unlimited leverage. Isn't echo a strong company? And you require much higher money down. So if i can save 3-5k a month thats 60k a year who really cares what happens with my 5k down. Don why are your rates more than any other prop house out there? I mean you could say gs clearing but then carlin clears threw gs and there rates are much lower than yours. Don't get me wrong brights a great company but there are many other great companys around that are much cheaper.