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

Quote from 5Pillars:

...Don tried to put me in a headlock and convince me that no one can make money trading futures --- JK Don! :D
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Just a headlock? Hmmm... Don's getting soft... Bob isn't gonna like that he's not doing full-nelsons anymore! :D :D :D
 
Quote from cashonly:

Leverage varies with your style and how much you have hedged (long stock vs. short stock), but starting at 5:1 and up (many use 30:1) is typical.

Cash
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Hi Cash,

What would be a typical range (specific please) of leverage in general for remote prop traders' intraday (never overnight) trading on only QQQQ alone based on purely directional long/ short trades, without any hedging or pairing? TIA.
 
Quote from OddTrader:

Hi Cash,

What would be a typical range (specific please) of leverage in general for remote prop traders' intraday (never overnight) trading on only QQQQ alone based on purely directional long/ short trades, without any hedging or pairing? TIA.
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Specific to who? I have traders we know real well that we've given 50:1+. I also have traders we know real well that we've limited to 5:1.

Generally, for what you're describing, you'd probably be looking at 20:1 to start and then based on your personal volatility, it would be adjusted.

Cash
 
Quote from Shazbatz30:

Can you recommend a few reputable firms that allow good overnight leverage?
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No, I'm not allowed to post it. If you do a search in the upper right hand corner for prop firms and overnight leverage you will get a lot of results. There are countless firms that do this.
 
Quote from Don Bright:

On average, hedge funds pay 5 times the commissions that our traders pay, just FYI.

S7 is not big deal. 1. 5 day "cram course". 2. 4 week online course (2 nights per week I think). 3. Buy books and CD ROM, study a couple of weeks on your own.

(Take it early, take it often, LOL"

Don
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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?
 
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?
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If the firm has only prop trading and nothing else, they make $ from your commission.

BTW most of the prop firms charge you commission higher than retail like IB unless you are proved profitable with large volume.

I wonder if there are prop firms that charge you option commission lower than IB (i.e. lower than 0.75 per contract).
 
Quote from cashonly:

I would think there are two primary reasons why people don't trade prop:

1. Series 7 license - A lot of people just don't want to put in the time and effort to get this license and it's required to trade prop. You're basically stepping up to the next level of commitment in your trading career. However, if you're currently trading profitably retail, and need the capital advantage that prop offers in order to increase your bottom line, the time involved to get this is insignificant compared to the financial rewards of getting additional capital to use profitably in the market.

2. SIPC protection. In a prop firm, you don't have SIPC insurance like you do at a retail brokerage. Generally speaking this is not an issue, however, some prop firms have gone under, taking their traders money with them. You just need to find a firm that is financially stable and is not depending on it's member's money for capital. And if you're still concerned, you just need to decide if the rewards outweigh the potential risks. If you're trading retail and making $5K/month, then you switch to prop for the additional capital, putting in $15K to start, and then are making $20K/month, after one month passes, you're ahead of the came even if the firm did go under.

I'd be interested in other reasons people don't go prop if they're doing well retail and want to step it up to increase the bottom line.

Cash
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I am completely new in this. Can you bring a list of websites of prop firms?

Thank you
 
Quote from cashonly:

Specific to who? I have traders we know real well that we've given 50:1+. I also have traders we know real well that we've limited to 5:1.

Generally, for what you're describing, you'd probably be looking at 20:1 to start and then based on your personal volatility, it would be adjusted.

Cash
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Fair enough, thanks.
 
OK, lets go this route.....A dozen retail firms will offer commission in .02 to .035 range (some may even be lower depending on volume) on stable platforms with good tech and brokerage support.

That being said...lets have folks on the prop side offer commission ranges for traders doing from 100K shares a day to 1 million plus shares. And I KNOW other things matter...like leverage...however, if a scalper is trading 500K+ shares a day...a penny here and their is a ton of money.

I only interested in an expanded conversation, I am retail and do not need any leverage (thus I am not interested in going Prop).....I am only interested in furthering the discussion for folks interested in Prop.

Good Trading to all sides!!
 
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