Quote from dantes:
Prop (Proprietary) Trading usually refers to market activities with the firms (Brokerage Firm, Investment Bank, Bank or Trading Firm) own money that aims to make money but does not support other activities of the firm such as market making and VWAP activities, or relies on mathematical or systematic stuff such as arbitrage or statistical arbitrage. Normally this means that Prop Trading can be a very diverse array of activities, but it usually involves speculative positions on the direction of the market, both short and long term.
Then we have Arcades: firms that invite people to come and share their infrastructure and access to financing but you have to trade your own money. Some arcades then take a cut of your profits, charge you fees for the infrastructure as well as clearing and brokerage. Many Arcades add to that financial backing: they put up money for you to trade with and take an even larger share of your profits and share your losses. Some Arcades are independent businesses and some are set up by clearing and brokerage firms
Many Arcades are rather depressing outfits with less then state of the art set ups in terms of technology and infrastructure. But there are exceptions.
My advice would be: if you are young (in your 20s) get the right education and apply to a trading firm or investment bank. There you get to learn how the pros do it and your upside potential is much bigger, plus you get paid and get a business card. if your are old (in your 40s) find a really good arcade that work on fees only principle at a brokerage firm (Etrade runs them for example) and trade away. if you need more money, find an investor.
