Quote from Swan Noir:
I trade CL outright -- directional, no spreads -- so I don't need access to cash markets or more leverage. In fact I only use a small fraction of the leverage that is available to me so prop is not something that fits for me.
While I am enjoying this thread -- a window on a world I know little about -- the Aussie prop shops seem awfully casual by American standards. Is what you desrcibe in terms of the cushion they require down under and how casual they can be about it common or is your firm unique? My impression of how it is done here is that they want a big enough cushion so that if they shut you down their risk is non-existent or limited to a few pennies relative to the scheme of things. No way if they think that requires 40K are they letting you roll the dice with only 20K up. The deposit is not so much to augment their capital but rather to be sure that those dollars you put up that are tapped first are also the last dollars to be tapped. Ultimately they want to be in the business of providing services to more sophisticated traders including access to capital but they don't want to be in the business of providing that final, vulnerable layer of capital that goes in a heartbeat when things head south. In effect they want to be holding the prefered while you are in the common. I think the props that have survived in NYC and Chicago are pretty rigid on their deposit rules compared to your description.
>> My firm is very, very unique. The other prop firms I've heard of are
extremely risk averse. They even go so far to TEACH YOU HOW TO TRADE and limits your trading strategies.
I am often hearing guys say that they were told, "we generally want you to scratch if it goes against you, or take a tick loss immediately." Everyone is limited to the in/out game.
>> This really nasty and promotes the prop firm as being a brokerage-house. In fact, all prop firms are pretty much that, but at least with my firm if you have enough commitment and dedication and use your stops wisely you can branch out of this small restrictive type of trading (that is not scalable at all).
>> Also 90% of the people at my firm do not actually trade the way I do, or the way I described. They actually are the in/out quick-stuff type of traders. People just want to dump risk in certain hot-stops and exit as soon as it goes against them. They can't take the pain of sitting there for 3-5 hrs at least, working it out.. kind of like a puzzle that you have to solve with the time-ticking all the time and new pieces being thrown at you simultaneously.
>> By the way, when I talk about the 'cushion'... the guys in-charge are smart and have seen it all. With their wise experience, they get a feel for the type of trader they are handing risk over to. They've watched you for over a year or two... they openly say that some guys they can't leave for 30-minutes, but others (like me) they only need to check up on my account once a month. It varies that much from trader to trader.
>> Are there many discretionary type of futures trading firms in NYC and Chicago? Do guys sit there like me, with multiple monitors, over 20 X_trader ladders, and autospreaders, just waiting around to trade certain spreads etc.?
>>I should also note that some places seem 'loose' because you won't know the full story. For example, some people may do a lot of activity and generate +$6,000/month extra money for the firm. They would see you as an asset. If it's been 10-months, they would know they've made $60,000 off you in the background from your brokerage activity. So if you start to struggle -$15,000... they are not batting an eyelid because they know your break-even point is like -$60,000 in your account.
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