Do prop traders really make a living?

elbanner41 · Dec 22, 2007

I have heard of all sort of stories and hype about how one can really carve out a great way of making a living in the world of prop trading.

I am curious to know if after all is said and done -Does anyone end up being able to support a family and maintain a comfortable and prosperous life style?

Obviously, there must be a number of successful people out there,but are they the exception or the norm?

If one joins a legitimate prop firm,I am assuming that the firm generates most of their revenue from trading profits, would they seriously train newbies to actually become consistent winners. Does the "technology" to transform a rookie into a seasoned and profitable trader exist considering that as I understand it majority of investors/traders are losers in the long run?

A final point, Do prop firms actually depend on trading profits for their revenues or are they really
just another form of commission houses?

lescor · Dec 23, 2007

Your question is really "can people make money trading"? Whether you trade out of a prop account or not is not the determining factor. Either you know how to trade or you don't. Either you have the work ethic and capital to figure it out or you don't.

The majority of both prop and retail firms make their money on commissions. If you trade, they profit. Whether or not YOU profit is all up to you. Guys who trade at prop firms are nothing special, they're just traders trying to make money, like everyone else.

Don Bright · Dec 23, 2007

Over half our people have been with us for more than 5 years. I guess they're making a living, or they wouldn't be here.

It's funny when people say xx$ of traders lose money....yes, maybe a big percentage of brand new people have a hard time (just like 90% of all business ventures fail), but "traders" are here, year after year. We have about 50%+ with us the second year, better than "most business ventures." It's not easy, it is simple (trading), but not easy. You need to know what to do, and you need adequate capital to work with.

Happy Holidays,

Don

elbanner41 · Dec 24, 2007

I hear what you Guys say and I guess the bottom line is that yes the potential to make a living exists,but the skill and the ability to actually succeed is no easy task and most probably most prop firms really want your commission/fee dollars more than a share of your trading profits.

My point being that the prop industry is just another face in the brokerage industry and that if one wants to make prop trading a full time profession the risk of failure to a certain extent is not any less than trading with a personal retail account.

The incentive to train and transform rookies into professional traders by prop firms seems to be regarded as a secondary activity. In fact, I noticed that a lot of prop firms sell training programs and is just another revenue source.

Thank you guys for your thoughts and I think I do have a better understanding of the prop industry.

If I have missed something , I am more than glad to be informed.

BlueHorseshoe · Dec 25, 2007

Quote from Don Bright:

Over half our people have been with us for more than 5 years. I guess they're making a living, or they wouldn't be here ...

Doesn't hold at all. Sounds like your traders are net losers Don.

brokerboy · Dec 25, 2007

Quote from Don Bright:

Over half our people have been with us for more than 5 years. I guess they're making a living, or they wouldn't be here.

It's funny when people say xx$ of traders lose money....yes, maybe a big percentage of brand new people have a hard time (just like 90% of all business ventures fail), but "traders" are here, year after year. We have about 50%+ with us the second year, better than "most business ventures." It's not easy, it is simple (trading), but not easy. You need to know what to do, and you need adequate capital to work with.

Happy Holidays,

Don

You require 25k for the most part so you are getting better financially sound people in the door. Trading is an addiction and if your well financed you might stick with it 10 years making very little for the challenge. I am sure you would agree with that at some level. All things being equal in life if you swing a bigger bat there is a better possible outcome.

traderpro · Dec 25, 2007

Quote from lescor:

Either you know how to trade or you don't. Either you have the work ethic and capital to figure it out or you don't.

One of the best statements . My good friends brought me into this business back in 1997 and they would push " work ethic". I looked at them and said "When do i get to 7 figures" And Brian/Joe two brother's and Mike M all from Datek told me this"Millionaires do today what others donât, so they can have tomorrow what others wonât" Me i don't want credit for someone else's ideas i enjoy having my own. Lescor knows. First learn how to trade, bad training can ruin a career and build your capital. Go out and read the book The Wolf of Wall Street to learn about this game if it's entirely new to you. And in life "YOU REAP WHAT YOU SOW."

Merry X-mas

elbanner41 · Dec 26, 2007

Quote from traderpro:

Quote from lescor:

Either you know how to trade or you don't. Either you have the work ethic and capital to figure it out or you don't.

One of the best statements . My good friends brought me into this business back in 1997 and they would push " work ethic". I looked at them and said "When do i get to 7 figures" And Brian/Joe two brother's and Mike M all from Datek told me this"Millionaires do today what others donât, so they can have tomorrow what others wonât" Me i don't want credit for someone else's ideas i enjoy having my own. Lescor knows. First learn how to trade, bad training can ruin a career and build your capital. Go out and read the book The Wolf of Wall Street to learn about this game if it's entirely new to you. And in life "YOU REAP WHAT YOU SOW."

Merry X-mas

More...

I agree that yes you do need to learn on your own,but it does help to have a pro give you some pointers.
I compare this to how I achieved my 2 handicap in golf. It took a couple of years,but I did it with a lot of work and practice and not to forget I had a good mentor.

I am a firm advocate of learning with a mentor. The problem is finding that mentor.

Don Bright · Dec 26, 2007

Quote from brokerboy:

You require 25k for the most part so you are getting better financially sound people in the door. Trading is an addiction and if your well financed you might stick with it 10 years making very little for the challenge. I am sure you would agree with that at some level. All things being equal in life if you swing a bigger bat there is a better possible outcome.

OK, yes...we do tend to get more financially sound, possibly more disciplined, and surely more dedicated than some of the smaller firms. But, I have seen very few totally "addicted" traders (yes, we have/had some, but very few).

Ane, yes again, as you accumulate a little money, the compounding can start taking place (whether actual interest or business/share size).

Happy New Year!

Don