What's the logic of the capital requirement at a prop firm?
- Thread starter Druckenmiller
- Start date
calibur, you are just tugging the party line and you know it. Are you a recruiter ?
here is the good advice:
-There is no magic training class. There is nothing wrong with training, but it is no substitute for experience and self paced learning. People who pay thousands of dollars for a 3 day class are looking for a shortcut to success that doesn't exist. A 3 year salaried internship is more like what it would really take, and good luck finding a deal like that.
-There is no such thing as completely free training. Training is a profit center. They will get their money out of you one way or another or else they wouldn't do it. They are running for profit businesses not charities to teach trading. When they tell you the training is free, it is a marketing gimmick, everybody wants something for nothing. At least Bright charges for it up front, they are being honest about it. The other firms will find a sneakier way to recoup their cost.
-There is no difference in the success rate of traders at firms that require capital vs. those that don't. The faiure rate at all firms is over 50% a year.
That is the real hard truth that the recruiters do not want you to know.
-There is no magic training class. There is nothing wrong with training, but it is no substitute for experience and self paced learning. People who pay thousands of dollars for a 3 day class are looking for a shortcut to success that doesn't exist. A 3 year salaried internship is more like what it would really take, and good luck finding a deal like that.
-There is no such thing as completely free training. Training is a profit center. They will get their money out of you one way or another or else they wouldn't do it. They are running for profit businesses not charities to teach trading. When they tell you the training is free, it is a marketing gimmick, everybody wants something for nothing. At least Bright charges for it up front, they are being honest about it. The other firms will find a sneakier way to recoup their cost.
-There is no difference in the success rate of traders at firms that require capital vs. those that don't. The faiure rate at all firms is over 50% a year.
That is the real hard truth that the recruiters do not want you to know.
The reason for capital is that whenever you go into business with anyone, in any business, you want to have some "true" risk on both sides. The idea of having a "money man" take all the financial risk sounds great to many people, unless they think "long term." The $20K or so number came from the exchange trading floors, where your clearing firm would 'underwrite" your trading with Millions if you took the initial, small risk.
I look at it this way: You put up some of your "family money"...we up a lot of our "family money"...and we hope that you like your family's money as much as we like our family's money.......
The amount doesn't really matter, it's not a "franchise fee" (how stupid are those...you buy a donut franchise, and then you have to buy equipment and sell donuts....at least in trading, the money is still yours unless you lose it yourself.
We attract a pretty confident group of traders who take this game seriously enough to risk a little capital and are willing to take advantage of what we offer. Again, we make exceptions for some on the amount of money required.
The whole idea is to align yourself with a reliable firm who is only going to make money if you do well. The measley commissions for a few months of a dead end trader are not worth squat....only serious, long term, successful traders make the equation work for the firm and the trader.
Schonfeld is a good training ground, but many leave after they know what they're doing....but I am always a bit intrigued by firms that have "team leaders" who don't trade....makes one wonder....
Anyway, different business models for different people...
Don
I look at it this way: You put up some of your "family money"...we up a lot of our "family money"...and we hope that you like your family's money as much as we like our family's money.......
The amount doesn't really matter, it's not a "franchise fee" (how stupid are those...you buy a donut franchise, and then you have to buy equipment and sell donuts....at least in trading, the money is still yours unless you lose it yourself.
We attract a pretty confident group of traders who take this game seriously enough to risk a little capital and are willing to take advantage of what we offer. Again, we make exceptions for some on the amount of money required.
The whole idea is to align yourself with a reliable firm who is only going to make money if you do well. The measley commissions for a few months of a dead end trader are not worth squat....only serious, long term, successful traders make the equation work for the firm and the trader.
Schonfeld is a good training ground, but many leave after they know what they're doing....but I am always a bit intrigued by firms that have "team leaders" who don't trade....makes one wonder....
Anyway, different business models for different people...
Don
Am wondering why some office managers hardly trade, it must mean that they are making more money managing the traders (thru commissions) than trading himself?!
Any comments?
Any comments?
the logic behind a capital requirement is to prevent the lottery ticket.
Guys who have something to lose........no matter will trade different than if they have nothing at stake.
Usually the capital requirement is kept small to let people in though.
I mean hey we are letting guys into our office for what someone who worked at a part time job for few months could scrap together.
Your original question was should I be avoiding firms that require one?
I'd ask quite a few other questions than a capital requirement.
Are the majority of the traders profitable? Can I talk with some of them?
Are they happy with the firm?
I would also serious ask myself about my situation if as a beginning trader I can't put up any capital at all.
Guys who have something to lose........no matter will trade different than if they have nothing at stake.
Usually the capital requirement is kept small to let people in though.
I mean hey we are letting guys into our office for what someone who worked at a part time job for few months could scrap together.
Your original question was should I be avoiding firms that require one?
I'd ask quite a few other questions than a capital requirement.
Are the majority of the traders profitable? Can I talk with some of them?
Are they happy with the firm?
I would also serious ask myself about my situation if as a beginning trader I can't put up any capital at all.
I was just looking up those posts myself.
You beat me to the punch, Robert.
You beat me to the punch, Robert.