I see groups of traders coming together to work out better deals from their existing prop firms but how hard would it be for these traders to start their own prop firm? Is it just software and a clearing firm that is needed to start a prop? Seems like if you get rid of the middle man it would be beneficial for all the traders involved. Maybe there is a minimum number of shares that have to be traded for the clearing firm deal, and many other rules that I can't even think of. But since prop firms pop up everywhere all the time it makes it seem pretty damn easy to make one. So, is it logical for a group of traders to just create their own prop firm to get a better deal?
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How difficult is it to start a prop firm?
- Thread starter angerbridge
- Start date
Somebody is going to have to put up the money and ultimately be responsible for what happens
Quote from InvestorTerry:
Somebody is going to have to put up the money and ultimately be responsible for what happens
I'm not sure how much it would be but I know if someone wants to start there own branch of an existing prop firm the risk capital that must be put up front is pretty small. But if it were a group of 10 successful traders, splitting the initial cost shouldn't be hard as long as it is reasonable.
Putting together a group to start your own office or subgroup of one of the good pro/prop firms is not a bad idea but starting your own is not at all realistic. Apart from simple things like legal, accounting, and back office costs you simply will never do anywhere near enough volume to make it worthwhile. Who are the general partners, who are the limited, who pays for the tens of thousands of dollars in startup costs? Who is legally responsible when the exchange does its audits? Starting a firm is no small matter.
Sure sounds good starting your own firm. But you would have to get "permission" or suffer the consequences. They don't call him da Don for nothing. You think it's a coincidence that two brothers have a little family business set up in Vegas?Quote from insert:
Don ........ ooooh Don !!!!
deal with competition here if you want to survive
Quote from opt789:
Putting together a group to start your own office or subgroup of one of the good pro/prop firms is not a bad idea but starting your own is not at all realistic. Apart from simple things like legal, accounting, and back office costs you simply will never do anywhere near enough volume to make it worthwhile. Who are the general partners, who are the limited, who pays for the tens of thousands of dollars in startup costs? Who is legally responsible when the exchange does its audits? Starting a firm is no small matter.
Yah all the costs not associated with trading do seem like the big problem, but how much could they be? If it is just a group of 10 traders all trading remotely there would be no costs for trading equipment, office, and all that junk. No IT problems cuz the software will come from a third party. Issues that arise from trades being busts, getting stuck pending, popping out of no where etc.... could be handled without hiring anyone specific. Legal and accounting are expenses any trader has to cope with anyways so I don't know how much they would matter. The way the firm is set up would be tricky, would it be possible to split the responsibilities 10 ways?
As far as start-up costs they would only be relevant if they were astronomical. If it is just tens of thousands then that is fine. Imagine how much money you would save not having to pay anything per ticket.
I am sure starting a firm is not as easy as it seems but I still don't see anything that makes it impossible or just plain stupid.
Quote from LeonPhelps:
Sure sounds good starting your own firm. But you would have to get "permission" or suffer the consequences. They don't call him da Don for nothing. You think it's a coincidence that two brothers have a little family business set up in Vegas?
haha.. The firm wouldn't be near Vegas. So I don't think I would have to be "dealt with" by the Bright boys.
Who is going to put up the 1.5 million for the net broker requirement? Who is going to pay the average 250k a year in expenses to maintain your BD and comply with all the regulations?
Who is going to put up the additional capital over the 1.5 million to protect traders funds from others who go debit? Who is going to manage all the risk on the accounts? You guys have obviously not thought this through. LOL.
Who is going to put up the additional capital over the 1.5 million to protect traders funds from others who go debit? Who is going to manage all the risk on the accounts? You guys have obviously not thought this through. LOL.
Mav,
This guy has no clue. I started to respond to his original post a while ago but stopped part way through and asked myself why the hell am I wasting my time responding to this asinine post. The guy has no clue about the 'trading business'. No idea what his background is, maybe a trader who has had modest success and thinks he can boost his profits by starting his own prop firm,lol. The over simplification of starting a firm shows his complete lack of knowledge on the subject and even more importantly, lack of prior research into the subject before making his first post.
Angerbridge's thoughts on starting a prop firm are like a mechanic who says to himself, hmmmmm............... I am a pretty good mechanic and know everything about cars, I think I should start my own car company. I mean seriously how tough can it be, I'll just get a few of my mechanic buddies together, throw in a couple of bucks, and we'll starting building cars out of the garage in my house.
Thanks for mentioning just a few of the considerations that Mr. Anger has not yet learned about.
This guy has no clue. I started to respond to his original post a while ago but stopped part way through and asked myself why the hell am I wasting my time responding to this asinine post. The guy has no clue about the 'trading business'. No idea what his background is, maybe a trader who has had modest success and thinks he can boost his profits by starting his own prop firm,lol. The over simplification of starting a firm shows his complete lack of knowledge on the subject and even more importantly, lack of prior research into the subject before making his first post.
Angerbridge's thoughts on starting a prop firm are like a mechanic who says to himself, hmmmmm............... I am a pretty good mechanic and know everything about cars, I think I should start my own car company. I mean seriously how tough can it be, I'll just get a few of my mechanic buddies together, throw in a couple of bucks, and we'll starting building cars out of the garage in my house.
Thanks for mentioning just a few of the considerations that Mr. Anger has not yet learned about.