how does prop trading compensation work?

[Dogballoon]

Quote from B1010:

A trader can be down $3000 in his account for a month. But the firm can be up on him $3000. If the trader took $3000 out of the market that month but his commissions are $6000. The trader will have to take another $3000 out of the market plus more commissions before he will be cut a check by the firm.

If traders up money in his account, the firms always up money. But trader can be down money in his account and firm still be up money.

Yes, this is it. Obviously results vary between people, but generally you are playing with a deck stacked against you.

Also for the people who are confused, if you are down GROSS regularly, the firm will boot you. If you are up GROSS regularly, but down NET, very often they'll hold onto you for as long as you can take it, especially if you're grossing a pretty consistent number. I've heard of a firm holding onto a guy with a $20,000 net debt because they could keep charging him something above .006 and he just kept churning for them.

Obviously the firm will not want you to talk to anyone else about their rates, or the firm's cost, because then that would spoil the fun, especially if you're one of their churn monkeys. Only firms like Genesis will say: how much vol you doing? Okay, here's a standard rate.

 

[Casey30]

First of all,

If you are down gross consistently you shouldn't be trading real money. You should be paper trading.


Secondly, what is wrong with firms making money? I thought that is how capitalism works. I don't think we would have any firms if that they weren't able to make a profit. If you cut hair in a salon, the owner takes a cut of every haircut you do. If you sell real estate out of an office, the office takes a cut of your commissions. If you work for IBM, you should know they are more then adequately covering their costs as well as making a profit off your labors. If you work for Goldman, and you make squat trading, I am sure they will fire you. If you make 10 million for them I am sure they are going to keep more then 50%.

Bottom line is, LEARN HOW TO TRADE. Don't cry about these firms ripping people off. Guess what, if you don't like your firm, find another. If you don't like the costs, check others out. It's a free country. If you signed a non-compete, that's your fault. Your an adult, deal with it.

I started out at 1.6 cents a share and 6 dollar tickets. I shopped around and got better deals without having to leave my current firm. If your firm values you as a trader they will work with you. IF YOU CAN"T TRADE YOUR WAY OUT OF A PAPER BAG, THEY WON'T.

If you don't like it, TRADE YOUR OWN MONEY AT HOME BY YOURSELF. That is a reasonable option for some traders.

Enough said.

 

[Dogballoon]

Oh sure, nothing's wrong with a firm making money, as the industry has value and firms should have an incentive to offer services. I personally love trading, and I am glad to provide money to my firm which has been good to me.

Capitalism thrives in environments where information is transparent and competition is encouraged. Some firms/groups out there are decidedly against competition, trying to lock their labor down and charge as much as possible. There's no reason for that except for the fact that they CAN do it, as the structure of the industry is different from normal jobs.

New people come into this industry all the time and have no basis to understand how the fees work without asking experienced traders. There's nothing wrong with explaining how it works, especially if they will be find themselves trapped and having their trading suffer due to the issues of an unnaturally high debt, and a non-compete that wouldn't hold up in court anyway.

I would bet you're someone who runs a group, given the emotional nature of your response.

Quote from Casey30:

First of all,

If you are down gross consistently you shouldn't be trading real money. You should be paper trading.

Secondly, what is wrong with firms making money? I thought that is how capitalism works. I don't think we would have any firms if that they weren't able to make a profit.
I started out at 1.6 cents a share and 6 dollar tickets. I shopped around and got better deals without having to leave my current firm. If your firm values you as a trader they will work with you. IF YOU CAN"T TRADE YOUR WAY OUT OF A PAPER BAG, THEY WON'T.

 

[B1010]

Quote from Casey30:

First of all,

If you are down gross consistently you shouldn't be trading real money. You should be paper trading.


Secondly, what is wrong with firms making money? I thought that is how capitalism works. I don't think we would have any firms if that they weren't able to make a profit. If you cut hair in a salon, the owner takes a cut of every haircut you do. If you sell real estate out of an office, the office takes a cut of your commissions. If you work for IBM, you should know they are more then adequately covering their costs as well as making a profit off your labors. If you work for Goldman, and you make squat trading, I am sure they will fire you. If you make 10 million for them I am sure they are going to keep more then 50%.

Bottom line is, LEARN HOW TO TRADE. Don't cry about these firms ripping people off. Guess what, if you don't like your firm, find another. If you don't like the costs, check others out. It's a free country. If you signed a non-compete, that's your fault. Your an adult, deal with it.

I started out at 1.6 cents a share and 6 dollar tickets. I shopped around and got better deals without having to leave my current firm. If your firm values you as a trader they will work with you. IF YOU CAN"T TRADE YOUR WAY OUT OF A PAPER BAG, THEY WON'T.

If you don't like it, TRADE YOUR OWN MONEY AT HOME BY YOURSELF. That is a reasonable option for some traders.

Enough said.

Agreed. And even if you do trade your own money at home your still paying commissions on your trades. they are ust going to a broker instead of a prop firm.