prop firm dilemma

Quote from 50 cent:

CalTrader is right. I now trade futures and rarely make more than 2 trades a day. I capture larger intraday moves. My win/loss ratio is ranging 40%-60%, and my risk/reward ratio is anywhere between 130%-250% (winners 1.3 to 2.5 bigger than losers on average). I am profitable, and getting better.

But oh, no, I produce so little in commissions! I really suck as a trader don't I? I should get fired! Besides, I trade futures.. what a criminal.. according to a recent chat session here on Elite, futures are a zero sum game and I am destined to lose eventually... what should I do? Can anyone help me? :D :D
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Dont worry ... Now that you've learned what part of the "game" is in this industry you can bypass all the clowns and salespeople - well they are usually one in the same - and get on with making money.
 
Quote from Don Bright:

First off, there is NO "system" ever, will never be, cannot be, and please don't grow old looking for one. Any firm that says they have a "system" is full of it, period!

We provide the lower capitalized businessperson/trader with the ability to gain full access to the markets (without having to buy an exchange membership), we provide the capital to use to make sizable gains Free of Charge, we do our best to provide the best training possible, based on today's markets (from the best traders on the planet).

This is Your Business, not ours...we facilitate you in making it possible for you to have a very (very) low barrier to entry. The money you put up allows you to keep all your tradinig profits. How in the World do you expect to trade without any money? The "special deals" that we offer a select few traders, are usually backed by our personal money (we have a few groups here in Vegas).

I have spoken at great length about the "firms" who offer free entry, just to bury the average person with high fees and no chance to get ahead.

You certainly don't want something for nothing, and neither do we. This is a business relationship and both sides need to have their eyes wide open.

If there were a "system" then we would simply program our computers to trade for us.

(I hope I don't sound upset, I'm not at all...I can understand your question, but you need to take a look at it from another angle).

If you were a good trader (you may well be)...would you pay everything, take all the risk of your own money, just to make your pals rich? Of course not...

All this has to work for both sides....

See you in NYC!!

:)

Don
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hey don,

thanks for the cogent response. for your model, it makes sense. however, i am aware of several prop firms ( and i am sure there are many more ) that actually have the software and systems in place that allow them to split profits with their carefully selected traders and request zero money up front. they do quite well, by the way, due to superior software / systems. in addition, banks, trading firms, hedge funds etc have never required capital from their traders--yet they seem to be doing well.

i can clearly see the advantage to the firm to require capital contribution, but fail to see the advantage or reason from the trader side of things.

see you in NYC !

surfer
 
Usually I have found that the best firms are not necessarily those with the lowest fees, but those who offer the best support at fair and competivie pricing. By that I mean, fair commissions, adequate training when necessary or appropriate and execution systems that are up to date with up to date facilities. The key to finding a great firm is Balance..everything working well together.
 
I personally think that the best solution (for an equities trader) is to go remote with a prop firm. You get the leverage, you get the good rates, and you keep your freedom and don't have them pressuring you. Win-win situation. I agree that if you want to trade equities and not futures, you'll have trouble with buying power unless you go prop. So remote looks like an excellent solution.
 
I would love to trade futures vs. equities, but all my capital (6 figure range) is tied up in IRAs and 401k's. I would hate to take the hit by taking it out prematurely. Heck, at my tax rate + a 10% stinger that is not a hit, that is bitc** whipped.

Right now I am doing well trading my IRA, but obviously I have a lot of limitations and have to be creative to take advantage of down moves in the market since I cannot short or buy options.

So I am probably looking at an equities prop firm that I can get into for 20k max (10k is more realistic).

How much capital does one need to realisticly trade futures? I am probably looking at equity futures, precious and industrial metals as they are the areas that I know relatively the most about.
 
couldn't you take a 60 day loan out of your IRA and replace it with no penalty. Add that to that 20K and you meet the requirements for minimum equity. Hopefully you will add to that amount in 60 days and you can replace the loan. Just a thought.
 
Yes, I have considered a 60 day rollover. In fact that is probably the way I will try to go. Right now I am trying to build up my IRA so I wont feel bad if I cannot get it back in 60 days.
 
Gotta disagree 50.
For the most part you are right, but if you don't generate massive volume, than the firm will find another way to make ya pay.

i.e.........higher commish......desk fee......lower payout to name a few
 
Casey I don't understand how you can say you shouldn't be trading prop if you only trade 10k a day.

first and foremost I agree with the other posts about looking out for #1 and trade your way and your style!

The hell with what other people want, unless your with a firm that wants you to trade a certain way, than maybe you shouldn't be with that firm.

But you mean to tell me that if(and the key word is if) you clipped 20cents on 5000s lot, 10k round trip, you wouldn't be happy with $1000 day?

Thats 20k a month.

My point is that volume should have nothing to do with it as long a your green in the end.

Again unless your at a firm that demands or expects heavy volume
 
Quote from Soesman:

couldn't you take a 60 day loan out of your IRA and replace it with no penalty. Add that to that 20K and you meet the requirements for minimum equity. Hopefully you will add to that amount in 60 days and you can replace the loan. Just a thought.
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the risk quotient for this plan goes off the top end of the chart...

the downside is you pay a 10% penalty on the withdrawal...only your losses of the principal are compounded by the 10% penalty and any other taxes that are due.

with agressive tax policies being implemented by cash strapped municipalities (see article in WSJ 2/16/4 - 2/18/4) it is most likely your 10% penalty will be required on the quarterly tax payment date, and if paid by next year's April 15th date, will be with acrued penalties

this all adds up to double risk....

sometimes these simple solutions to find money, really need to be thought through on a spreadsheet and not on a whimsheet

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reason and substance over emotion!
 
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