Prop trading looks great, then why most retail traders don't simply join in?

[Cache Landing]

Don,

Thanks for the straight forward response. I think the issue for me has always been the concern that someone from a prop firm was going to tell me to fit into their strategy. I do day trade some, but mainly swing trading options. My strategy is specifically aimed at reducing commissions. Thus reducing the amount of money a prop firm would make from me. It would suck to put almost a decade into developing a good strategy only to have a prop firm tell you to do something else.

 

[Bullet]

Quote from Don Bright:

You'll understand that, for business reasons, it is better to not post details of what our traders pay per se'.

A million shares a day on average? Your giving me a pretty wide range (100k to 1Mil shares per day)...that's like me saying 1 cent up to 10 cents.... There would be a sizeable difference.

.004 for all shares above 1,000 on any order NYSE. First thousand is a sliding scale, or a negotiated rate based on capital usage requirements, overall volume, account size and several other factors....I really can't be more specific on a public forum.

I think pricing bottomed out about 18 months ago, and may actually be going up. The number of traders coming here from other major firm's has risen considerably over the last 6 months.

If you're trading nearly a $million shares per day of NYSE, then it would be worth your while to come out here, or Chicago when I'm there...and then call the other guys, see what they tell you.

It makes no sense to get into a public price war....and I don't see anyone else "showing their hands" here (but I never really have). Generally we see traders trying to out - do each other, LOL. And, it's generally "apples and oranges".

(Sorry)

Don

Fair enough Don. And although I do not agree with you, regarding the bottoming of commission pricing (at least on the retail side), I respect your view point as you have been in the game longer than most.
Best of luck to you and your traders!

 

[Maverick74]

Quote from marketsurfer:

you don't need a series 7 to trade prop.

becoming a partner in a sub llc provides one the leverage etc without need of the series 7.


please correct me if i misunderstand the legality here.


surf

All you need to do to avoid the series 7 requirement is to form an LLC and have one member of that LLC hold a series 7 and make them your series 7 nominee. Just joining a sub LLC will not work.

 

[Maverick74]

Quote from jackpearson:

The question should be, if you're a profitable trader, why go thru any prop firm? I'd suggest that the vast majority of the true long term profitable traders don't use 30-1 margin. ...and if they do, they're walking a tightrope everyday. One never know when a 9/11 incident or other unknown events will happen. Exposing one's self to massive leverage seems like a great way to have a very short trading career.

Trade on your own & control your own destiny. Your financial risk isn't tied to little Leroy down the hall who went full margin on a stock that just got halted & will open 99% down after the halt. All the talk of "it never happened before in my firm" will change to "it was a risk you knew was involved" when the firm gets in trouble & your money has disappeared.


just my thoughts.

I can't name one trader I know that is profitable trading from home. That's why. There are far more advantages to trading in an office then just leverage and lower rates. Nothing beats being around other traders.

 

[Maverick74]

Quote from Cache Landing:

I agree, series 7 and 65 are a cake walk.

Mr. Bright,

My question was related to how prop firms make money. Every time I've asked, someone skirts around the issue by talking about how much the firm pays in fees and such. The firm is there to make money. If you claim that the traders keep 100% of their profits, the money has to come from commissions, correct?

Maybe Maverick can help me out on this one?

Prop firms make money on commissions, carry, capital charges, and is some cases payment for order flow.

 

[Maverick74]

Quote from Shazbatz30:

Can you recommend a few reputable firms that allow good overnight leverage?

There are many that do. Use the search function and type in "prop firms" and "overnight leverage". You should get plenty of results.

 

[dandxg]

Quote from Maverick74:

I can't name one trader I know that is profitable trading from home. That's why. There are far more advantages to trading in an office then just leverage and lower rates. Nothing beats being around other traders.

Maverick,

I have been wondering about just the same because I have give some thought to prop recently.

After reading many threads about prop on this forum it seems it can work both ways no? Some prop traders have mentioned they have emotional lunatics trading next to them, that would be drastacting, no?

If you traded at a firm with ppl who you could benefit along with in some form then it would make good sense.

 

[5Pillars]

My experience has been to only trade with other traders that I completely trust and that I get along with very well. If you can find a group of guys that you all get along well, and you all have similar ways of thinking, then you can do some really powerful work together.

The problem is, anytime $$$ are involved, it takes some strong charactered personnel to get a group together that does not start to work against one another (greed and egos suck!!!).

 

[Bullet]

Quote from Maverick74:

I can't name one trader I know that is profitable trading from home. That's why. There are far more advantages to trading in an office then just leverage and lower rates. Nothing beats being around other traders.

I am not looking to debate you on this issue, however, I know of several traders that are extremely profitable that trade out of their homes. I traded in an office for several years, and have been trading out of my home now for 4 years.....and I am not sure I would ever consider going back to an office.

There are aspect of an office that I miss very much, but on the whole, I prefer trading at home and chatting with other traders over IM or the phone.

Lots of ways to skin the same cat I suppose.....its all about the money!

Good trading to you Mav!

 

[dandxg]

Quote from 5Pillars:

My experience has been to only trade with other traders that I completely trust and that I get along with very well. If you can find a group of guys that you all get along well, and you all have similar ways of thinking, then you can do some really powerful work together.

The problem is, anytime $$$ are involved, it takes some strong charactered personnel to get a group together that does not start to work against one another (greed and egos suck!!!).

Yeah I could see the greed being a problem for most. I must be different when I see people doing well I study them not get angry at them. Succesful ppl motivate me.