Where is their money? ))

B

beliylebed

Hello, dear sirs!

I've read a lot here about trading at proprietory firms.

But I can't understand what is the main aim of those prop firms who offer 90-98% payout for remote traders and $7-3 comission for 1000 stocks? I guess, they get much more money from their own trading than from remote traders comission (some part of wich goes to their own BD partner, by the way) or from 8-2% payout discount. Why do they offer this job to people?

Is it possible that offering remote trading possibility with such high payout they simply rise there volumes and get lower comission from their Broker? Or do they anyway makes a lot from this payout discount or from comission?

Where is their money? ))

Thank you.
 
Clearing firms make money clearing trades as do prop firms.
There is risk involved giving some schmuck credit with $5 Grand to his name, hence the haircut. Office space is not free, neither is technology. Take a look at the number of "prop firms" today vs 1999, if it was such a gold mine, why are there so many less?

What are you trying to ask here?
 
I didn't get your last question. Sorry, my english isn't perfect, probably.

I know how brokers earn. But subcontractors say on their sites that they earn with their traders. Is it true? - that was my question.

I've already found where is their money... Here is the hyperlink to SEC act against Warrior Fund - http://www.elitetrader.com/vb/showthread.php?s=&threadid=192906&perpage=6&pagenumber=1 . Comission is a big part of their interest unfortunately as I understand. ((

Any way, small trader who can't deposit 25000 usd at once and maintain such amount to qualify for pattern traders, has no other possibilities to trade exept of via proprtietory companies. I hope that in the end SEC will stop catching witches. I would not mind if new "Warrior" try to earn on me. It's a symbiosis.
 
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