uh okay, if u say so. just making sure i know how prop shops work b4 i get involved, that's all. everyone is entitled to dumb questions so as to not make dumb mistakes. i would rather learn from others who have exp with prop shops than cost myself $ cause i didn't know. sorry for askin. shish.
Proprietary Trading Firms
- Thread starter optionzztrader
- Start date
uh okay, if u say so. just making sure i know how prop shops work b4 i get involved, that's all. everyone is entitled to dumb questions so as to not make dumb mistakes. i would rather learn from others who have exp with prop shops than cost myself $ cause i didn't know. sorry for askin. shish.
OK guys....let's review....LOL.
You put up a bit of capital...
You use our money to trade with...Free of Charge (intraday).. perhaps a $million or two.
You keep all your profits....you are responsible for losses
You get interest on your money...
You get interest on short stock ...(retail does not give that to you)
If your strategy requires large overnight positions, you MAY be charged what is called "haircut" (a risk fee)....as follows...
For "hedged Positions, such as pairs, mergers, etc.
You use 6 times your equity with NO haircut.
6-12 times your equity, you pay 2% per year
12-18 times your equity =4% per year....(charged daily)..
18-30 times your equity = 6% per year....
Over 30 times, we discuss....
Same exact business model used on the exchanges for their floor traders....for as long as I can remember....
You are taxed on "triple net" with a K-1 ...
You are exempt from FICA withholding....
Hope this helps a bit...
Don
You put up a bit of capital...
You use our money to trade with...Free of Charge (intraday).. perhaps a $million or two.
You keep all your profits....you are responsible for losses
You get interest on your money...
You get interest on short stock ...(retail does not give that to you)
If your strategy requires large overnight positions, you MAY be charged what is called "haircut" (a risk fee)....as follows...
For "hedged Positions, such as pairs, mergers, etc.
You use 6 times your equity with NO haircut.
6-12 times your equity, you pay 2% per year
12-18 times your equity =4% per year....(charged daily)..
18-30 times your equity = 6% per year....
Over 30 times, we discuss....
Same exact business model used on the exchanges for their floor traders....for as long as I can remember....
You are taxed on "triple net" with a K-1 ...
You are exempt from FICA withholding....
Hope this helps a bit...
Don
hey mr bright
at BT, if a prop trader has a catastrophic loss, do other prop traders have to use their initial deposits or portion of their accts to make up for loss? i see this with other prop firms where the initial deposit is used to make up for the loss. thanks.
is this standard for all prop firms or just certain prop firms depending on how they are set up. as i see with genesis, echo i.e., their prop firms are set up this way.
just wanting to know if BT operates like this. if they don't, i will definitely get with ur firm when i can scrounge up some trading money. don't care about the extra little costs. i am not interested in helping other prop traders out if they lose their shirts due to not managing risk cause that's just plain stupid. losses are losses, but minimizing them is essential as u know and key to trading instead of holding onto them.
btw, made an excellent trade today in TIE stock options as follows:
TIE
05/17/2006 O STC .TIEQS - TIE MAY 37.5 Put 30 $1.60 $45.00 $4,754.85
05/17/2006 O BTO .TIEQS - TIE MAY 37.5 Put 30 $0.95 $45.00 ($2,895.00) $1,859.85
Total Realized Gain/Loss for TIE $1,859.85
Total Realized Gain/Loss $1,859.85
this is why i freakin love options. SO MUCH LEVERAGE FOR SO MANY SHARES.
thanks.
Sure, net income from trading (single net), minus trading expenses paid through your account with Goldman Sachs (double net), minus trading expenses incurred personally, like training, websites, computers, etc. ..turned in to us in December and used to reduce your K-1 eanings (Triple net)....and our traders are exempt from Self Employment Taxes (FICA).
Pay tax on 1 number...no worry about keeping track of trades, etc., like retail traders....and our people receive interesst on short stock sales, retail traders don't ( a "must" for pairs trading and mergers, etc.)...
Don
yep, sure sounds pretty good to me as to reason why they possibly charge a little more. sounds like BT attempts to do all backend stuff and them some so traders can focus on just trading. pretty cool!!!
i believe don bright offers a "nothing down" program for traders who dont have the capital to put up. not sure if this is still available, but you should ask him about it.
Quote from marketsurfer:
i believe don bright offers a "nothing down" program for traders who dont have the capital to put up. not sure if this is still available, but you should ask him about it.
he and i have already been in touch. that would be cool tho.....lol!!!
and trading those options would free up his capital for other prop traders who prefer to trade those equities which require tons of dough.