prop firms

[mnx]

Quote from nysekiller:

A friend of mine is thinking of going to a firm called Golden Market Management, or something like that. Has anyone here heard of them?

sure. I've never traded there but I've definitely heard of them. The guy who started it used to be part of swift montreal...

they use sterling trader pro. hopefully someone who's traded there can give you the inside scoop, that's all I got...

mnx

 

[OddTrader]

Quote from Don Bright:

Our traders are only liable for the amount of money that they put up, thus the term "Limited" in the LLC. This is, of course, unless they violate the rules of law or agreements.

FWIW.

Don

Hard to understand if both statements above and below are true.

Please kindly comment. Thanks.

Q
http://www.stocktrading.com/NewBT-Questionnaire.shtml

Trading on margin or short selling may result in losses beyond your initial investment. When you trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk.
UQ

 

[Don Bright]

Quote from OddTrader:

Hard to understand if both statements above and below are true.

Please kindly comment. Thanks.

Q
http://www.stocktrading.com/NewBT-Questionnaire.shtml

Trading on margin or short selling may result in losses beyond your initial investment. When you trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk.
UQ

Ours applies to licensed traders, the other refers to "margin" which applies to retail customers of brokerage firms. No one "borrows" from us....they are all trading our $$, their portion is used for P&L purposes. If something crazy happens, and the trader has followed the rules, we would have to cover any excess losses...again, "Limited Liability" Company.

Don

 

[TM_Direct]

[
Trading on margin or short selling may result in losses beyond your initial investment. When you trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk.
UQ

[/B][/QUOTE]


Your potential for loss on a short is unlimited....On a reg. margin account, if you buy say GOOG at 300, you could lose not only that position, but other positions in your portfolio to help maintain overall account equity of 30%. IE: you had 200k in fully paid for equity and then do the purchase of GOOG...you could lose not only the Goog, but also the 200k in fully pd. equity.

 

[OddTrader]

Quote from Don Bright:

Ours applies to licensed traders, the other refers to "margin" which applies to retail customers of brokerage firms. No one "borrows" from us....they are all trading our $$, their portion is used for P&L purposes. If something crazy happens, and the trader has followed the rules, we would have to cover any excess losses...again, "Limited Liability" Company.

Don

I believe the prop firm's overall/ aggregate position generated by all prop traders should be constantly hedged, in order to protect other profitable prop traders.

 

[OddTrader]

Quote from TM_Direct:
Your potential for loss on a short is unlimited....On a reg. margin account, if you buy say GOOG at 300, you could lose not only that position, but other positions in your portfolio to help maintain overall account equity of 30%. IE: you had 200k in fully paid for equity and then do the purchase of GOOG...you could lose not only the Goog, but also the 200k in fully pd. equity.

Are there any pointers for how prop firms managing their prop traders' risks in general?

Perhaps that's exactly what some prop traders would expect from a prop firm's expertise and knowledge in risk management model/ execution.

 

[TM_Direct]

Quote from OddTrader:

Are there any pointers for how prop firms managing their prop traders' risks in general?

Perhaps that's exactly what some prop traders would expect from a prop firm's expertise and knowledge in risk management model/ execution.

I have seen and heard of several firms that go belly up because they usually have a few 'big time' players who command huge amounts of BP....they may only have 10k of their own money up, but the firm gives them 500k in BP because they have a good track record....unfortunately, all it takes is a couple of bad days and next thing you know, other traders BP and possibly payout is effected. Bright seems to have the best and most consistent risk management methods, mostly because they are focused on long term growth and profitability instead of the quick smash hit success of a lot of these one hit wonder firms...IMO

 

[mschey]

Quote from TM_Direct:

I have seen and heard of several firms that go belly up because they usually have a few 'big time' players who command huge amounts of BP....they may only have 10k of their own money up, but the firm gives them 500k in BP because they have a good track record....unfortunately, all it takes is a couple of bad days and next thing you know, other traders BP and possibly payout is effected. Bright seems to have the best and most consistent risk management methods, mostly because they are focused on long term growth and profitability instead of the quick smash hit success of a lot of these one hit wonder firms...IMO

I don't seen someone commanding a whopping 500k in BP ever putting a firm out of business. With only 10k up, one bad day and they are gone...as a trader...but not the firm.

 

[TM_Direct]

Quote from mschey:

I don't seen someone commanding a whopping 500k in BP ever putting a firm out of business. With only 10k up, one bad day and they are gone...as a trader...but not the firm.

Uhmmm....if they only have 10k of their own $$ at risk, but using 500k in bp lose 100k....where is the balance of the loss coming from?

 

[Don Bright]

Quote from TM_Direct:

Uhmmm....if they only have 10k of their own $$ at risk, but using 500k in bp lose 100k....where is the balance of the loss coming from?

Mschey will cover the balance, LOL.

Actually, as long as a trader does not violate any rules or regulations, the Firm will cover the difference. We've had to eat a few bucks on a few occasions.

Don