Differences in Retail vs Prop trading

D

DSRE

Just poking around for some knowledge, as it seems there's a whole world hidden from retail traders unless you go work for a firm or do some digging.

Let's use bitcoin as an example, how would the trading differ. In regards to strategy, tools, information available

As a retail, I'd imagine just swing trade using lows or highs or use some TA strategy that I've back tested.

Does working for a firm, allow you to find an edge or quantify it easier? Maybe from the way the teach you, or analyse you..
 
DSRE said:
Just poking around for some knowledge, as it seems there's a whole world hidden from retail traders unless you go work for a firm or do some digging.

Let's use bitcoin as an example, how would the trading differ. In regards to strategy, tools, information available

As a retail, I'd imagine just swing trade using lows or highs or use some TA strategy that I've back tested.

Does working for a firm, allow you to find an edge or quantify it easier? Maybe from the way the teach you, or analyse you..
More...

It’s definitely not easier.
There is no Prop vs Retail methodology.
Each firm or individual has its own approach.

Usually Prop firms make markets.
They have capital, skilled teams and technological advantages.

BTC wise I know no firm trading it.
Maybe they arb btw the different exchanges.
Expressing a directional view might be seen as gambling.

They mostly look for inefficiencies.
Or they make markets or speculate.
 
It's almost always some combination of long/short and can involve physical, OTC, forwards, futures, structured products.

Market making, relative value, arbitrage, asset management (managing hedging and hedge books).

Prop is a different thing entirely. Much more levered. Much less room for stupid mistakes.
 
All I can say here that prop firms have a team approach. There is the analyst, the trader, the IT guy, backoffice and risk management.

Retail thinks that all it takes to become profitable is to join a prop firm because they have some sort of secret or special strategy. In reality they only employ people who already are successful in their field. Risk is way too high, so it's not worth to learn or teach on the fly.

The main difference between retail and prop is just knowledge and skills. All you can do as a prop trader you can do as a retailer, too.

When it comes to tech advantage, a retailer can just join an arcade, post his first loss and pay the desk fee in order to enjoy commission reduction and a proper low latency infrastructure.

But you need to know how to trade first. TA isn't getting you anywhere.

BTC is probably the easiest market out there to learn since there is zero central authority intervention, the number of market moving variables and cross flows are really low, you have the full derivative range to express your views and market access doesn't cost you a fortune.

You can start market making with a 10k account, a 10$ vultr.com VPS and some python skills.

But you have to know how to trade :)
 
Sekiyo said:
It’s definitely not easier.
There is no Prop vs Retail methodology.
Each firm or individual has its own approach.

Usually Prop firms make markets.
They have capital, skilled teams and technological advantages.

BTC wise I know no firm trading it.
Maybe they arb btw the different exchanges.
Expressing a directional view might be seen as gambling.

They mostly look for inefficiencies.
Or they make markets or speculate.
More...
Most prop firms have some crypto exposure. DRW, Jump, Heymeyer, etc. There are many more.
 
minmike said:
Most prop firms have some crypto exposure. DRW, Jump, Heymeyer, etc. There are many more.
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Because you can see their book ?
Believe half what you see.
None what you hear.

Having exposure means nothing.
I can be short 20K ES contract
Then having exposure.
But it’s a hedge.
Yup. Yup.
 
VEGASDESERT said:
Every "prop" firm is quant / tech driven.

They don't lose.
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Nah, that's BS. There are prop firms blowing up left and right.

Sekiyo said:
Because you can see their book ?
Believe half what you see.
None what you hear.

Having exposure means nothing.
I can be short 20K ES contract
Then having exposure.
But it’s a hedge.
Yup. Yup.
More...

No, because they said they have crypto books plus they're making markets for most aggregators and OTC venues
 
MrMuppet said:
No, because they said they have crypto books plus they're making markets for most aggregators and OTC venues
More...

Reminds me the hype around Elon Musk (I believe) “He owns BTC” and we later heard he has something like 1BTC. Lol.

Not sure they’re making shady crypto markets.
Certainly the legal derivatives around it.

Well ... “Shady” isn’t an argument as they’re more profit driven than ethic driven.
 
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