Prop Firm Dislike/Hate

[rmorse]

Quote from colin76:

Prop firms do not require a deposit.Prop trading is where you trade the firms capital and you negotiate a split of the profits.I think you are getting Prop and Retail trading confused.

A prop firm is an entity that trades it's own money. If the traders are employees or limited or general partners is not important to the term prop firm. Most prop firms are broker dealers. A retail account is any account in an individual's name, not an entity.

 

[swiftmike99]

Quote from colin76:

Prop firms do not require a deposit.Prop trading is where you trade the firms capital and you negotiate a split of the profits.I think you are getting Prop and Retail trading confused.

+1

If a firmy makes a penny on your commisions it's Retail, if the firms makes only money when you make money Prop firm. Some prop take deposit some don't usually depends on the payout structure.

Whats the name of the company all hate is directed at? Without it this thread is useless.

 

[Maverick74]

Quote from swiftmike99:

+1

If a firmy makes a penny on your commisions it's Retail, if the firms makes only money when you make money Prop firm. Some prop take deposit some don't usually depends on the payout structure.

Whats the name of the company all hate is directed at? Without it this thread is useless.

This is of course false. Rmorse has the correct definition.

 

[rmorse]

Quote from swiftmike99:

+1

If a firmy makes a penny on your commisions it's Retail, if the firms makes only money when you make money Prop firm. Some prop take deposit some don't usually depends on the payout structure.
----------------------------
If a firm makes money on commissions, they are a licensed broker dealer. If the person they make commissions on is a member of the firm, then it's part their model to make money, and that trader is either a partner or an employee. I personally don't like the JBO model, but for many traders with VERY little capital, you're offered an opportunity to run your own book with your capital as first loss and firm capital and infrastructure at your disposal. Without their help, every trader with under $25k can't trade.

So take the time and effort to look at the JBO as more of a partner your getting into business with for at least a year, rather than who offers the best commission. Too many traders here only care about their deal, rather than the people your signing papers with.

 

[JSHTrader]

Quote from rmorse:

Quote from swiftmike99:

+1

If a firmy makes a penny on your commisions it's Retail, if the firms makes only money when you make money Prop firm. Some prop take deposit some don't usually depends on the payout structure.
----------------------------
If a firm makes money on commissions, they are a licensed broker dealer. If the person they make commissions on is a member of the firm, then it's part their model to make money, and that trader is either a partner or an employee. I personally don't like the JBO model, but for many traders with VERY little capital, you're offered an opportunity to run your own book with your capital as first loss and firm capital and infrastructure at your disposal. Without their help, every trader with under $25k can't trade.

So take the time and effort to look at the JBO as more of a partner your getting into business with for at least a year, rather than who offers the best commission. Too many traders here only care about their deal, rather than the people your signing papers with.

Great post +++++1

 

[rmorse]

Quote from colin76:

why should i put up a deopit to trade prop? confused by that-I started my career in 1997 was mpoor prop trading then- nowadays firms seems to act like bunny boiler opps- do they take a cut on the commsion generated? I know they do for a fact, thats there business model

Again, I don't like the JBO model either. No one is made to join. I've asked this question before on ET threads. colin76, let's say the JBO was your firm. Your friends and family money, let's call it $5MM (Yes I know most have less, many have more.) Your overhead, your compliance, your risk. You are going to run your Broker Dealer to make money for you and your investors which took you around one year to put together and get licensed and make a deal with a Prime Broker.

What deal would you offer traders?

 

[JamesVU2000]

Quote from Maverick74:

There are no prop jobs at banks anymore thanks to Dodd Frank. And hedge funds? Yeah, even a billion dollar hedge fund might have a trading desk of 5 guys. Most hedge funds maybe one or two.

The fact of the matter is, if you want to trade, the prop firm is your only opportunity. Most of them now are pay to play. The "real" prop firms in Chicago are hiring programmers, not traders.

I think it explains the markets largely emotionless behavior.

 

[Maverick74]

Quote from colin76:

I trade mainly EUREX products, not sure which u guys trade- but its best to go to direct to the market- cut out the middle man etc- this business is all about making money- so why let a clown take take a cut?

You are getting all your models confused. Futures firms don't take deposits, equity firms do. Completely different business models. And the futures firms take a cut because it's THEIR money.

 

[Maverick74]

Quote from colin76:

why should i put up a deopit to trade prop? confused by that-I started my career in 1997 was mpoor prop trading then- nowadays firms seems to act like bunny boiler opps- do they take a cut on the commsion generated? I know they do for a fact, thats there business model

Because no one wants to trade 500k shares a day on IB's pos platform. And half the guys on ET don't have the 30k to get around the pattern day trader rules. Once again, the equity model is different then the futures model.

 

[JSHTrader]

Quote from Maverick74:

Because no one wants to trade 500k shares a day on IB's pos platform. And half the guys on ET don't have the 30k to get around the pattern day trader rules. Once again, the equity model is different then the futures model.

Def this. People trade with props to get around the PDT rule and cuz their routes t
Better than retail brokers. That's pretty much.