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Trading with Prop Firms or with your own money?
- Thread starter killer007
- Start date
If a firm pays salary this factor shouldn't be underestimated. Only a small proportion of traders that have reached long-term profitability actually make large enough sums of money so that their basic living expenses are small compared to what they earn. (You know most people spend more when they earn more.) So, if a trader is having a bad month, a salary pays the bills. This means a trader isn't under so much preassure to make money. Feeling like you have to trade even though opportunities in the market don't present themselves significantly increases probability of large losses.
leverage, leverage, leverage.
Quote from killer007:
what is the benefit of trading with a prop firms?
if ppl have enough money won't they be better off to trade with their own money?
I wrote an article a while back outlining some of the reasons to, and not to, consider a prop type firm.
Say you have $1,000,000 - you can use that to trade with, risking all of it...or you can put up $50,000 with a Firm, and use their money to trade with...thereby using the same capital or more, while only risking (max) the $50K.
We have some other things that make prop trading preferable over retail...no wash sales, no matching trades, mark to market accounting, triple tax net and exemption from FICA. Some, but not all "may" work for some, but "all" do with our model.
But, as I've said a million times, "to each his own" - we are not for everyone.
Don