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How do prop trading firms make moneY?
- Thread starter tshin01
- Start date
How do props make money... you kidding me buddy... you go to an interview at their office, they talk with you nonchalantly about the usual stuff, then they utter something like "the market is hard these days so you really have to think well before you choose to be a pro trader... many of our traders who used to make ten, twenty or thirty thousand dollars a day are now making only one thousand dollars a day or so... you have to take that into conisderation before starting"
They also tell you "you have to deposit about [$10K/$25], if you lose this sum but we believe in you, we'll let you keep trading so to get it back"
You buy the dreams they sell you, you put your cash in, they charge you commissions and even more commissions on bullets, they push you to trade high volume so to "capitalize on the moves", they tell you that their statstics show that all profitable traders used to make at least 10 trades a day right from day 1 at the job.... and the really really profitable ones used to make at least 50 trades a day just to begin with..
You buy the dreams..... you trade volume.... what you give to the market you give to the market, the prop take the commissions and when your account starts to be low they have a talk with you and tell you that the market is difficult, they must fire the unprofitable traders, and they simply kick you out.
Now to be honest this isn't my personal story, i was stupid and naive enough to go prop but i was smart enough to simply refuse to surrender to the constant pressure they put on me to increase my volume. i couldn't see why i should do so, in the market of oct 2002 - feb 2003 (time i was prop). eventually their constant nagging and pressure and 24/7 sour faces at me, made me leave. i was only down $2000 when i left.
But i have very well seen what happened to traders who were sitting next to me in the room, who were much much slower than me to awake from the fantasy. they lost all their account and then were kicked out. they are still blaming the market and the crooked specialists at the nyse for taking their money.
no doubt you have all read "rem. of a stock operator", unfortunately i only read it after i left the prop. the book made it even clearer to me how **stupid** i was to fall for their bs and go prop, and also made it clearer to me how smart i was to refuse to adhere to their pressure for volume. there is absolutely no difference between prop rooms and the 1920 bucket shops. and i am sure you all remember jesse livermore's rule #1:
D O N ' T B E A S U C K E R !
They also tell you "you have to deposit about [$10K/$25], if you lose this sum but we believe in you, we'll let you keep trading so to get it back"
You buy the dreams they sell you, you put your cash in, they charge you commissions and even more commissions on bullets, they push you to trade high volume so to "capitalize on the moves", they tell you that their statstics show that all profitable traders used to make at least 10 trades a day right from day 1 at the job.... and the really really profitable ones used to make at least 50 trades a day just to begin with..
You buy the dreams..... you trade volume.... what you give to the market you give to the market, the prop take the commissions and when your account starts to be low they have a talk with you and tell you that the market is difficult, they must fire the unprofitable traders, and they simply kick you out.
Now to be honest this isn't my personal story, i was stupid and naive enough to go prop but i was smart enough to simply refuse to surrender to the constant pressure they put on me to increase my volume. i couldn't see why i should do so, in the market of oct 2002 - feb 2003 (time i was prop). eventually their constant nagging and pressure and 24/7 sour faces at me, made me leave. i was only down $2000 when i left.
But i have very well seen what happened to traders who were sitting next to me in the room, who were much much slower than me to awake from the fantasy. they lost all their account and then were kicked out. they are still blaming the market and the crooked specialists at the nyse for taking their money.
no doubt you have all read "rem. of a stock operator", unfortunately i only read it after i left the prop. the book made it even clearer to me how **stupid** i was to fall for their bs and go prop, and also made it clearer to me how smart i was to refuse to adhere to their pressure for volume. there is absolutely no difference between prop rooms and the 1920 bucket shops. and i am sure you all remember jesse livermore's rule #1:
D O N ' T B E A S U C K E R !
absolutely not.
the prop firm really owes you nothing. i don't understand why people bitch and moan about how prop firms operate. they are essentially giving you the tools AND the tremendous buying power (capital) to be a big swinging dick.
why are people expecting everything to be NO risk and free? wake up!!! get out of this industry if you believe otherwise.
if you are a good trader, you will never have to bitch and moan about your prop firm. i'm sick of guys getting smoked in the markets and then blaming/ragging on the prop firms they worked at (common flaw...blame someone else for your bad trading). talk to any real consistently successful trader and they will NEVER complain about the prop firm or the broker they worked under. only the scared pikers who don't make a dime complain about the frivolous things.
people just don't realize you're the same damn trader regardless of the prop firm you work for.
the prop firm really owes you nothing. i don't understand why people bitch and moan about how prop firms operate. they are essentially giving you the tools AND the tremendous buying power (capital) to be a big swinging dick.
why are people expecting everything to be NO risk and free? wake up!!! get out of this industry if you believe otherwise.
if you are a good trader, you will never have to bitch and moan about your prop firm. i'm sick of guys getting smoked in the markets and then blaming/ragging on the prop firms they worked at (common flaw...blame someone else for your bad trading). talk to any real consistently successful trader and they will NEVER complain about the prop firm or the broker they worked under. only the scared pikers who don't make a dime complain about the frivolous things.
people just don't realize you're the same damn trader regardless of the prop firm you work for.
Quote from dafa:
I'm new in this prop thing, try to make a decison, I understand prop will cut profit if put low capital, but do they share loss ?
for example I put 10k, loss 5k, I want to quit, do i get back 5k or 7.5k(prop share 2.5k). TIA
This is prime example of a trader who was not able to succeed in the markets (he was not profitable even after several MONTHS!). To me, YOU ARE NOT A TRADER! Don't call yourself one, don't tell other people you are one. The real definition of a trader is someone who MAKES A LIVING trading. You are nothing more than an amateur taking a crack in another profession.
Notice his bitterness towards his firm. He blames THEM for not succeeding. Was he down $2000 because of his FIRM? NOT! Ultimately, it is the trader who determines his fate, not the prop firm.
He can go trade his 100-200 share lots through his ameritrade account. He'll be happy making his $50 a day. I prefer to have the 5+ million buying power prop firms allow me and be able to maximize my profits. Why the hell would you join a prop firm and trade small volume? Totally pointless. Actually, why become a professional trader to only trade small volume? Don't waste your time!
Notice his bitterness towards his firm. He blames THEM for not succeeding. Was he down $2000 because of his FIRM? NOT! Ultimately, it is the trader who determines his fate, not the prop firm.
He can go trade his 100-200 share lots through his ameritrade account. He'll be happy making his $50 a day. I prefer to have the 5+ million buying power prop firms allow me and be able to maximize my profits. Why the hell would you join a prop firm and trade small volume? Totally pointless. Actually, why become a professional trader to only trade small volume? Don't waste your time!
Quote from yars:
How do props make money... you kidding me buddy... you go to an interview at their office, they talk with you nonchalantly about the usual stuff, then they utter something like "the market is hard these days so you really have to think well before you choose to be a pro trader... many of our traders who used to make ten, twenty or thirty thousand dollars a day are now making only one thousand dollars a day or so... you have to take that into conisderation before starting"! blah blah blah
Quote from RichSohn:
You are nothing more than an amateur taking a crack in another profession.
Well you have to start somewhere. I do agree with you that if I had known better what a prop firm is, I would have never gone there in the first place. However, as I wrote, I was stupid enough to fall for the fantasy they professionally sold me, and, once again, I was stupid enough to buy.
btw oddly enough, I am doing much better now. I guess that their constant pressure on me to increase volume and to be more aggressive (in a flat basing market) just had an adverse affect on my state of mind. I was not blaming them for my losses, but I did realize that I can't succeed in such a trading room atmosphere. It seems that I was right (at least for myself) since I am faring much better now.
Regarding the bitter tone of my previous post, I can't help notice the outright violent tone of yours. So yeah we're only posting opinions here that's why there exists a forum. However suit yourself.
cheers
yars
Quote from RichSohn:
absolutely not.
the prop firm really owes you nothing. i don't understand why people bitch and moan about how prop firms operate. they are essentially giving you the tools AND the tremendous buying power (capital) to be a big swinging dick.
why are people expecting everything to be NO risk and free? wake up!!! get out of this industry if you believe otherwise.
That pretty much sums up this community. There are VERY few traders on this site....something that took me a few months to figure out. WWWAAAHHHHHHHHH....bitch and bitch.
I believe Sambatrade in his earlier posts were concerning the NYC Lynx, which is the not the same as the San Diego Office of ASSENT which Dustin trades with. Different management all together...
Just to clarify...thanks...
Just to clarify...thanks...
Not all firms or prop shops or even firm branches are the same.
There are different kinds....
1. Those who share profits and want you to make money and put time into training you for FREE.
2. Those that train you to churn commissions and send you packing.
3. Those that charge for everything, including your use of the bathroom or trading capital.
4. Those prop shops that charge low as possible commissions, keep expenses down, and create an atmosphere for trading where people work together.
It is up to you to find the offices that fit CAT 1 and 4...
They are out there!!!!
Good Luck!
There are different kinds....
1. Those who share profits and want you to make money and put time into training you for FREE.
2. Those that train you to churn commissions and send you packing.
3. Those that charge for everything, including your use of the bathroom or trading capital.
4. Those prop shops that charge low as possible commissions, keep expenses down, and create an atmosphere for trading where people work together.
It is up to you to find the offices that fit CAT 1 and 4...
They are out there!!!!
Good Luck!