Security Deposit and Loss Deduction

E

elitetradesman

At prop firms requiring security deposit, how is loss deducted from the deposit?

Say I put a $5K security deposit for 10:1 leverage.

If I lose 5K at the start, is the entire loss deducted from my deposit, or just a portion of it?

If I have made the firm money larger $5K in the past and then lose just $5K, will the loss be deducted in a different way?

Or is it different from prop firm to prop firm?

Thanks!
 
it has nothing to do with leverage. if you lose $100, $100 is out of your account.

They give you leverage on more money. But that doesn't mean they will supplement you loses.
 
Quote from elitetradesman:

At prop firms requiring security deposit, how is loss deducted from the deposit?
More...

With most prop firms, your "deposit" (capital contribution) is a hedge against the firm's losses in its master account on the trades you make in the sub-account.

If you lose the 5k, then it is deducted from your deposit. If you're profitable, then any forward losses are still taken out of your profits (assuming you're keeping a running balance over and above the original deposit). If not, then a loss dips into the original deposit.

Hope that helps...
 
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