How do prop trading firms make moneY?

chiguy has it completely correct. I was going to write more, but he pretty much nailed it. One must understand that these "hybrid" shops are a joke. In fact, there is a good chance that the sec/nasd is going to ban them altogether in the near future.

The short to the question asked is commissions. Plain and simple those firms make tons of money off of commissions. If anyone wants detailed numbers of cost of trades please say so.
 
Retail outfits charge a heck of a lot more than prop firms on commissions.

"hybrid" shops are a joke? you're pretty much saying that ALL firms on the street are a joke then? there aren't any pure prop or pro firms. andover, schonfeld, worldco, hold, echo, bright....they offer both type of deals.

i'm not sure where you're coming from. NASD/SEC banning them? give me a break. even JPMorgan, Goldman have their own prop groups.

Quote from Jonnytrade344:

chiguy has it completely correct. I was going to write more, but he pretty much nailed it. One must understand that these "hybrid" shops are a joke. In fact, there is a good chance that the sec/nasd is going to ban them altogether in the near future.

The short to the question asked is commissions. Plain and simple those firms make tons of money off of commissions. If anyone wants detailed numbers of cost of trades please say so.
More...
 
Quote from Jonnytrade344:


The short to the question asked is commissions. Plain and simple those firms make tons of money off of commissions. If anyone wants detailed numbers of cost of trades please say so.
More...

yeah give us some numbers why not.

i say bottom line is, a trader shouldn't think he's making a shortcut to easy money by going prop. getting in with more size will simply speed your way south if you don't know what you're doing. and you can't really blame props for their "do size" sales pitch and "do size" trading strategies, because that's their business model. a trader should be aware of that, because he should be aware of the way the industry he is a part of works.
bottom line that's all there is to it imho... if their business model is beneficial to you as well, feel free to do business with them!

cheers
 
Quote from 50 cent:



yeah give us some numbers why not.

i say bottom line is, a trader shouldn't think he's making a shortcut to easy money by going prop. getting in with more size will simply speed your way south if you don't know what you're doing. and you can't really blame props for their "do size" sales pitch and "do size" trading strategies, because that's their business model. a trader should be aware of that, because he should be aware of the way the industry he is a part of works.
bottom line that's all there is to it imho... if their business model is beneficial to you as well, feel free to do business with them!

cheers
More...

Their business model is not beneficial to me. Bottom Line.
 
i think people get the wrong ideas about pro(p) firms by reading all those negative comments above.

i trade pro because I want to have the leverage, and I want DOT access. For me there are no alternative to pro firms and I co-exist very well with their business model.
I pay 1 cent per share, trade ca. 1m shares per month and despite that lousy rate I'm really happy with my pro-firm because I make money. The only reason why you make/lose money is because of YOURSELF. In this business you have to work harder than in any other if you want to be successful.
How can people expect to make money if they just go into a pro office and try trading strategies that were invented by others and shared by dozens ???
You have to spend most of your time to innovate your trading and find new ideas, backtest them etc.....otherwise you will only survive for as long as the market is willing to support you.

Believe me, if you have discipline, willing to work hard and willing to go new ways, you will be profitable, no matter which broker you trade with.

Oliver
 
I know AB Watley tries to charge everyone a desk fee and other charges which amount to an extra 1000+ a month. Secondly, I know of traders that were brought in and talked to about there performance often, whether it was due to volume or profitability.


As for Prop or pro. If you can make money who cares where you are. Aren't you in it for the money anyways? As for volume, when I first started I was only trading 800 shares a day my first week. Within a few months I was trading 10,000+. Now, 3 years later, I trade about 60-80k a day. My point is, I was presured to trade more and more. I traded at my own pace though. I made money all along and was never fired for low volume.
 
look, prop trading firms like caliber lynx bright make money by charging a spread off their costs. in addition some charge desk fees and other stuff. overall for beginning traders they're probably decent places because in return for paying them they'll teach you how to trade certain strategies. for a cost, they provide a service just like any other business. eg: if you want to learn how to be a short trader, caliber and lynx are probably good places to learn. if you want to pair trade/mmkr then bright might be a good one. additionally, they provide leverage for people to trade size, for that some charge a percent of your upside and a spread over costs on commissions. a business like any other.
 
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